Santa Clara County 2023-2024 - California Grand Jury Reports

October 01, 2024 — Sorry I missed the deadline. Your email went to the spam file so I did not see it and I had a bad case of Covid most of

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F5: Councilmembers Becker and Park have engaged in unethical behavior on the dais by insulting, humiliating, and intimidating constituents and volunteers. Councilmembers Becker and Hardy explicitly encourage this behavior by laughing, snickering, or eye-rolling. Councilemembers Becker, Park, Hardy, Jain and Chahal implicitly encourage these behaviors by failing to call out inappropriate conduct. Disagree. Once again this finding is just an opinion. There are many constituents and volunteers who have a different opinion. Council members are supposed to endure wild accusations and outright lies from members of the public. This is frustrating and exhausting. Everyone is free to express themselves as they choose, even council members. Sometimes this is with humor and sometimes with facial expressions. There is nothing illegal or wrong with such and one should not make assumptions about someone else’s actions or intent. Also I am only responsible for my own reactions, not other people’s. We should treat each other with respect, and it is not my job to “police” others. Actions

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R1e: Councilmember Hardy should attend one-on-one conflict resolution training to learn to work more effectively for the good of the City. This recommendation should be implemented by October 1, 2024. (4) The recommendations will not be implemented because it is not warranted or is not reasonable, with an explanation thereof. This recommendation is an effort to paint the majority of the council with a negative brush. I am not the cause of any conflict and I work well with others. My decisions and votes are independently derived with an intent to benefit the city both in the short term and long term. Recommendations 5c. Councilmember Hardy should pledge to train with an ethics expert from an established outside entity that specializes in government ethics. This recommendation should be implemented by October 1, 2024. (4) The recommendations will not be implemented because it is not warranted or is not reasonable, with an explanation thereof. The recommendation is unwarranted. I, along with the majority of the city council, took the recent ethics training led by our excellent City Attorney. I also took the ethics training offered by the city for candidates led by Dr. Tom Shanks. Respectably submitted August 25, 2025 Karen Hardy City of Santa Clara Council Member District 3

September 11, 2024 — Via Email; Hardcopy to Follow Via U.s. Mail September 11 , 2024 Honorable Beth McGowen Presiding Judge Santa Clara*

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F1: From the beginning, the City was impatient and overmatched in its negotiation posture with the 49ers to the long-term detriment of the City/Stadium Authority. Response to Finding 1: The City/Stadium Authority generally agrees with this finding in that the original Stadium agreements did include provisions that put the City/Stadium Authority at a disadvantage in a number of areas. City/Stadium Authority notes, however, that one primary objective of the City/Stadium Authority, to minimize the contribution of public funds and to protect the City's general fund from liability to the maximum extent possible, was achieved, as noted in the Civil Grand Jury's Finding 3.

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R1: Given the long-term nature of the various agreements, the 49ers' sophistication, and the history of past disputes, the City/Stadium Authority should engage advisors with specialized knowledge to determine options to level the playing field. Response to Recommendation 1: The recommendation has been partially implemented and will continue to be implemented going forward. The Stadium Authority has and will continue to hire consultants with specialized expertise in areas including the following: legal, marketing, audit and financials, systems implementation, and security. Santa Clara City Council and Santa Clara Stadium Authority Board Official Response to Santa Clara Civil Grand Jury Report Entitled "Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers"

F2: The City has not studied the actual economic impact of the Stadium. The 49ers have produced their own studies, which they use to tout long-term unverified benefits and frame all discussions surrounding the success of the Stadium. Response to Finding 2: The City/Stadium Authority agrees that it has not conducted a comprehensive study of the full (direct and indirect) economic impact of the Stadium. The City/Stadium Authority does have detailed information on "direct" revenues generated by Stadium operations to the City and the Stadium Authority. This information is presented to the Stadium Authority Board quarterly in the form of Stadium Authority Quarterly Financial Reports. These documents outline revenues and expenses from stadium events. Specific to revenues, the Quarterly Financial Reports outline the following revenues: Stadium Revenues Rent 0 NFL and Non-NFL Ticket Surcharge 0 Stadium Builder License (SBL) Proceeds Santa Clara City Council and Santa Clara Stadium Authority Board Official Response to Santa Clara Civil Grand Jury Report Entitled "Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers" General Fund Senior and Youth Fees Base rent Performance rent Sales tax All such reports have been provided to the Grand Jury and are available to the public on the Stadium Authority's website. To date, the City/Stadium Authority has not invested public dollars to conduct an economic impact study that examines direct and indirect financial benefits. While there are "indirect" economic impacts that benefit the City (e.g., hotel tax), this information has not historically been tracked and reported as "Stadium related" because it is difficult to ascribe to Stadium Authority operations based on the data the City and Stadium Authority receive. Regarding the most recent economic impact study conducted and released by the 49ers, the City/Stadium Authority has no comment as we were not consulted on any aspect of such study.

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R2: The City should commission its own report to determine the Stadium's actual economic impact over the last decade. This recommendation should be implemented by July 1, 2025. Response to Recommendation 2: The recommendation requires further analysis before it can be implemented. There are clearly "indirect" economic impacts from Stadium operations that benefit the City of Santa Clara and the greater region, (likely increases in City transit occupancy taxes and sales taxes being the most obvious). However, looking at such information in hindsight and determining the amount of such revenues that should be ascribed to Stadium Authority operations would be extremely difficult. (See also, City/Stadium Authority response to Finding 2, above.) Before it proceeds with a comprehensive economic impact analysis, the City/Stadium Authority intends to analyze the appropriate methodology and time period for such an analysis. This analysis will be completed within the next 6 months. Based on the results of this analysis, the City Council/Stadium Authority Board will proceed with a comprehensive economic analysis of Stadium direct and indirect economic impacts.

F3: Measure J's promise to protect the City's General Fund has been realized. The funding structure from the Stadium Lease has successfully allowed the Stadium Authority to pay off Stadium construction loans and fund required Waterfall reserves faster than originally planned. Response to Finding 3: The City/Stadium Authority agrees with this finding.

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R3: The May 2024 settlement agreement gives the Board/City Council new flexibility to divert Excess Revenue from the Stadium Authority to the City's General Fund. When diverting Excess Revenue, the Board/City Council should be mindful of the long-term financial health of the Stadium Authority and request the Treasurer to produce a long- term plan for funding all required Stadium reserves, including reserves for capital improvements. This recommendation should be implemented by October 31, 2024. Response to Recommendation 3: The City Council/Stadium Authority Board agrees with this recommendation, and it will be implemented. The Treasurer will provide a report to the Stadium Authority Board showing a current projection of the long-term plan. In addition, a Facilities Condition Assessment is currently underway which will help to inform the Stadium Authority Board and staff of the appropriate level of capital improvement reserves necessary to maintain the Stadium. A recommendation will be brought forward upon completion of the Facilities Condition Assessment and for presentation to the Board during the next Budget Study Session in early 2025.

F4: The City/Stadium Authority agreed to use ManCo, an affiliate of the 49ers, with an inherent conflict of interest to handle the Stadium Authority's financial interests in non- NFL events. Response to Finding 4: The City/Stadium Authority agrees with this finding that there are inherent conflicts of interest; however we also note that there are material advantages and efficiencies to having one entity manage the Stadium for both NFL and non-NFL events, and that this arrangement is not atypical for similar venues throughout the country. Of course, care must be taken to provide proper oversight and accountability where such an arrangement exists, and the City/Stadium Authority is committed to providing such oversight, with critical self-assessment and improvements where needed, going forward. Santa Clara City Council and Santa Clara Stadium Authority Board Official Response to Santa Clara Civil Grand Jury Report Entitled "Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers"

F5: The City/Stadium Authority failed to ensure that the Management Agreement included a fair termination clause. Response to Finding 5: The City/Stadium Authority partially disagrees with this finding due to a lack of any clear definition of what would constitute a "fair termination clause." City/Stadium Authority does agree that the termination clause is not ironclad and that, as a result, the Management Agreement performance standards have been challenging to enforce.

F11: Per the Stadium Lease, the Stadium Authority failed to negotiate pertinent details about buffet costs in the contract, such as parameters on cost thresholds and alcohol. The Stadium Authority accepted responsibility for buffet costs but failed to follow up when the expense was omitted from ManCo's budgets. Response to Finding 11: The City/Stadium Authority partially disagrees with this finding. Although the buffet costs language in the Stadium Lease is not extensive, the understanding of the City/Stadium Authority staff at the time of negotiations for the original Stadium agreements was that Santa Clara City Council and Santa Clara Stadium Authority Board Official Response to Santa Clara Civil Grand Jury Report Entitled "Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers" buffet costs would be covered by Facility Rent paid by StadCo to the Stadium Authority. In hindsight, particularly since current City/Stadium Authority staff was not involved, it would not be fair, or useful, to now characterize this as a failure in City/Stadium Authority negotiations or "follow-up." It should be noted that any contract term ambiguity on buffet costs was addressed under the terms of the May 2024 Settlement Agreement with revisions to the Stadium leases that now impose clear limits (caps) on buffet cost reimbursements and add provisions for Stadium Authority audits of such costs.

F12: A Multi-Use Community Facility at the Stadium was one of Measure J's original promises and was memorialized in the Stadium Lease. The current designated space for the Community Room at the Stadium is not easily accessible nor is it pragmatic for most civic events. Response to Finding 12: The City/Stadium Authority agrees with this finding.

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R12: The Stadium is not an appropriate location for a Community Facility. The Stadium Authority should work with the 49ers to identify and procure an alternative space for community needs. This recommendation should be implemented by June 30, 2025. Response to Recommendation 12: The recommendation has not yet been implemented and further analysis is required to determine the existence and viability of alternative locations that are acceptable to both parties. City/Stadium Authority staff will aim to discuss with StadCo/ManCo and identify alternatives by June 30, 2025. However, it is important to note that if the agreed-upon . alternative includes relocation and/or facility modifications, it is unlikely that such changes can be made (implemented) by June 30, 2025.

F13: The FIFA World Cup commitments for the City and the Stadium Authority were made without consultation with the City/Stadium Authority. Response to Finding 13: The City/Stadium Authority agrees with this finding. Current staff were not involved at the time, and the Stadium Authority does not have a record of substantive communications between staff and StadCo/ManCo regarding the original proposed terms for the FIFA World Cup event.

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R13: The Stadium Authority should insist on consultation and prior notice before any major Stadium event commitments are made. This recommendation should be implemented by December 31, 2024. Response to Recommendation 13: This is a matter of ongoing discussions between Stadium Authority and ManCo, with improved communications and opportunities for input already implemented. The Stadium Authority intends to further implement this recommendation as follows: Within the next two Non-NFL Event booking cycles, Stadium Authority staff's intent is to formalize this consultation and notice process, including Stadium Authority opportunities to approve certain major events in advance.

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R7: The Stadium Authority should retain the expertise needed to meaningfully weigh in on ManCo's Marketing Plan to ensure that the Stadium Authority's profitability is maximized. The Stadium Authority should also establish a yearly audit procedure to measure and analyze each season's Marketing Plan against its outcomes, updating Santa Clara City Council and Santa Clara Stadium Authority Board Official Response to Santa Clara Civil Grand Jury Report Entitled "Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers" future plans based on this analysis. This recommendation should be implemented by December 31, 2024. Response to Recommendation 7: The recommendation will be implemented within the next 6 months. The Stadium Authority retained the services of an outside expert to review ManCo's Marketing Plan in 2021 and will do so in the future. As noted in our response to Finding 10b, above, the Stadium Authority released a Request for Proposals and has awarded a contract to an independent consultant to study the market potential trends and financial performance for stadium events and concerts at publicly-owned venues. The Stadium Authority will attempt to obtain market-based revenue information. It is important to note that information for public facilities will be easier to attain; while we solicit information from privately-owned stadiums, it will be up to the discretion of those facilities to release such information. The Stadium Authority also plans to hire consultants in the future to assist with review and input for each year's Marketing Plan. Stadium Authority staff will also review the annual Marketing Plan against performance and industry baselines. Note, such a review is technically not an "audit" and is better characterized as a performance evaluation.

R8: As part of the Marketing Plan, Stadium Authority should require that ManCo produce a marketing plan that maximizes profits for the Stadium Authority and incentivizes ManCo marketing staff to prioritize the profitability of the Stadium Authority. This recommendation should be implemented by December 31, 2024. Response to Recommendation 8: The recommendation has been partially implemented, and additional efforts will be taken to provide ongoing oversight of ManCo's Marketing Plan going forward. Please see our aforementioned responses to Findings 8b and 10b, as well as Recommendation 7. It is also important to note that the sole objective of the Marketing Plan is not to maximize profits. There are other considerations, such as the impact on the City's reputation and booking of events that pose significant public safety and community impact challenges. Notwithstanding, the Stadium Authority believes that maximizing profits is an important issue and this will continue to be an ongoing matter that we address through oversight of ManCo's activities. Santa Clara City Council and Santa Clara Stadium Authority Board Official Response to Santa Clara Civil Grand Jury Report Entitled "Outplayed: Measure J, the City of Santa Clara, and the San Francisco 49ers"

R9: The Stadium Authority should review and ensure that it receives all a) non-NFL event ticket surcharges for all event attendees, and b) ticket revenue for all suite attendees owed to the Stadium Authority. This recommendation should be implemented by October 31, 2024. Response to Recommendation 9: The recommendation has been implemented to the extent possible and the Stadium Authority's ability to provide oversight and confirm receipt of appropriate revenue has greatly improved in the last two years since the implementation of a Financial Management System. Stadium Authority staff has access to ManCo's Financial Management System and currently reviews non-NFL event ticket surcharge and ticket revenue for suite tickets sold to ensure that Stadium Authority is receiving these revenues that are owed. Stadium Authority staff will continue to review this annually as part of the year end close and review of quarterly revenue information.

R10: The Stadium Authority should hire a professional third-party consultant, not affiliated with the 49ers, to analyze the reasonable expectations for non-NFL events such as: An analysis of the market revenue potential for non-NFL events at the Stadium. An analysis of ManCo's Marketing Plans, comparing successful (FY 2022-23) and unsuccessful (FY 2017-18) bookings to potential market revenue.

September 10, 2024 — Via Email; Hardcopy to Follow Via U.s. Mail September 10, 2024 Honorable Beth McGowen Presiding Judge Santa Clara

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F2: Councilmembers Becker, Park, and Chahal do not understand and/or do not follow established parliamentary and meeting procedures. Response to Finding 2: The Santa Clara City Council/Authority Board disagrees with the finding. Through their individual responses, some Council members have addressed this finding. The City Council, as a whole, declines to comment on the extent to what individual Councilmembers may or may not “understand” parliamentary procedures. However, at this juncture and collectively, the City Council desires to state that compliance with parliamentary procedures is an important part of their collective and individual responsibilities. The City Council acknowledges and agrees that the Mayor is the presiding officer at Council meetings, and deserves deference; but also notes that, under existing meeting rules, the Mayor’s determinations on points of order can be appealed and overturned by majority vote (See Robert’s Rules of Order Sections 23 and 24).

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R2a: Councilmember Becker should pledge to attend trainings in parliamentary procedures so that his behavior is more reflective of an elected who is dedicated to the electorate. These recommendations should be implemented by October 1, 2024. Response to Recommendation 2a: The Santa Clara City Council/Authority Board partially disagrees with the recommendation in that we believe all members of the City Council should attend training in parliamentary procedures. This is especially true given that the Governance and Ethics Committee is recommending that the Council amend its Meeting Management Protocols and transition from a system based on Robert’s Rules of Order to a system based on Rosenberg’s Rules of Order, with modifications tailored to confirm with other City Council adopted and desired policies (see response to Recommendation 3, below). Given the City Council election occurring on November 5, 2024, the training will be timed to coincide with the new Council member onboarding process in early 2025. At that time, it will be offered to all Council members.

R2b: Councilmember Park should pledge to attend trainings in parliamentary procedures so that his behavior is more reflective of an elected who is dedicated to the electorate. These recommendations should be implemented by October 1, 2024. Response to Recommendation 2b: The Santa Clara City Council/Authority Board partially disagrees with the recommendation in that we believe all members of the City Council should attend training in parliamentary procedures. This is especially true given that the Governance and Ethics Committee is recommending that the Council amend its Meeting Management Protocols and transition from a system based on Robert’s Rules of Order to a system based on Rosenberg’s Rules of Order, with modifications tailored to confirm 4 “Irreconcilable Differences: Santa Clara City Council” with other City Council adopted and desired policies (see response to Recommendation 3, below). The City Council does agree to implement this recommendation as follows: Given the City Council election occurring on November 5, 2024, the training will be timed to coincide with the new Council member onboarding process in early 2025. At that time, it will be offered to all Council members.

R2c: Councilmember Chahal should pledge to attend trainings in parliamentary procedures, so he can demonstrate a better working knowledge of the parliamentary process. This recommendation should be implemented by October 1, 2024. Response to Recommendation 2c: The Santa Clara City Council/Authority Board partially disagrees with the recommendation in that we believe all members of the City Council should attend training in parliamentary procedures. This is especially true given that the Governance and Ethics Committee is recommending that the Council amend its Meeting Management Protocols and transition from a system based on Robert’s Rules of Order to a system based on Rosenberg’s Rules of Order, with modifications tailored to confirm with other City Council adopted and desired policies (see response to Recommendation 3, below). The City Council does agree to implement this recommendation as follows: Given the City Council election occurring on November 5, 2024, the training will be timed to coincide with the new Council member onboarding process in early 2025. At that time, it will be offered to all Council members.

F3: Some Councilmembers do not uphold their responsibility to conduct the City’s business professionally and efficiently. Response to Finding 3: The Santa Clara City Council/Authority Board partially agrees with the finding and believes that the issue is not limited to only “some Councilmembers.” Specifically, the City Council acknowledges that, from time to time, and more frequently than is desirable, the behavior of City Council members (both collectively and individually) does not adhere to best practices for conducting City business in a professional and efficient manner.

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R3: The City should adopt the formal resolution for Meeting Management Procedures developed and presented by staff to the Governance and Ethics Committee meeting on December 4, 2023. This resolution would tie meeting procedures to the City Code of Ethics and Values, and Behavioral Standards for Public Meetings, codify rules regarding respectful and professional language on the dais, and initiate more productive meetings to keep the Council and public focused on City business. This recommendation should be implemented by October 1, 2024. Response to Recommendation 3: The Santa Clara City Council/Authority Board agrees with the recommendation, and it will be implemented. At their July 2, 2024 Governance and Ethics Committee, the Committee heard an item entitled “Review Meeting Management Protocol Options and Rosenberg's Rules of Order and Provide Direction to Staff”. At the meeting, direction was provided to return to the committee with a Meeting Management Protocol based on Rosenberg’s Rules of Order. 5 “Irreconcilable Differences: Santa Clara City Council” The item is currently scheduled to go before the Governance and Ethics Committee for discussion and recommendation at their next meeting, expected to take place in early October. Once considered by the Governance and Ethics Committee, the revised policy will be presented to the full City Council for its consideration and approval. Any such proposal is subject to City Council approval in its sole discretion.

F4: Some Councilmembers have become preoccupied by personal and political vendettas resulting in verbal attacks, mocking, and disparaging members of the public and community volunteers from the dais without consequence. Councilmembers have ignored the public’s request to address their behaviors. Response to Finding 4: The Santa Clara City Council/Authority Board partially disagrees with the finding. The City Council, as a body, does not believe that it is appropriate to provide an opinion on the motivations for individual Council members' actions or non-actions. We do agree, 2 “Irreconcilable Differences: Santa Clara City Council” however, that any verbal attacks, mocking, or disparaging remarks are not appropriate behavior.

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R4a: The City should establish an Independent Ethics Commission to oversee the behavior of Councilmembers and to ensure they model positive engagement with the public and reclaim the public’s trust. This recommendation should be implemented by October 1, 2024, and should be ongoing. Response to Recommendation 4a: The Santa Clara City Council/Authority Board agrees with the recommendation, and it will be implemented. However, as noted in the Civil Grand Jury’s report, there are several models for how to structure and appoint members to an Independent Ethics Commission. The City will release an RFP by October 1, 2024, to solicit assistance from a qualified consultant to identify options and best practices for the structure, powers and duties for such commissions, with a goal of establishing this body in 2025.

R4b: The City should hire an Independent Ethics professional and adopt robust ethics training strategies supported by policy. This recommendation should be implemented by October 1, 2024. Response to Recommendation 4b: The Santa Clara City Council/Authority Board agrees with the recommendation, and it will be implemented. In March 2024, the City conducted a solicitation for a consultant to perform a review of the City’s ethics documents per Council direction. The law firm of Liebert Cassidy Whitmore (LCW) was selected, and their work is ongoing. The scope of work was based on the City Council direction to hire consultant for the review of existing City Ethics documents (e.g., Behavioral Standards of City Councilmembers and Code of Ethics and Values). In addition, the scope includes developing recommendations for improvements based on review and benchmarking; a presentation and engagement with Governance and Ethics Committee on recommended changes; and a presentation to City Council based on Governance and Ethics Committee review. If needed, to align with the Grand Jury recommendation for “robust ethics training strategies,” the scope of work with LCW will be modified, or an alternative consultant will be engaged. The City anticipates LCW will present its work/findings to the Governance Committee in October 2024. Any policy amendments will require City Council approval. Training on 6 “Irreconcilable Differences: Santa Clara City Council” new/amended ethics policies will occur following their implementation, which is anticipated to occur in Spring 2025.

R4c: All Councilmembers should participate in regular training and counseling with an established outside entity that specializes in government ethics to implement training seminars and workshops for Councilmembers to learn how to maintain collegiality on the dais by using proven techniques and best practices to avoid tense exchanges, bad behavior, misconduct, and incivility, and how the rest of the Council can positively influence the behaviors effectively. This recommendation should be implemented by October 1, 2024, and should be ongoing. Response to Recommendation 4c: The Santa Clara City Council/Authority Board agrees with the recommendation and it will be implemented. Implementation of this recommendation may not be feasible by October 1, given the City’s procurement and contracting timelines. Further, with the impending City Council election that will occur on November 5, 2024, it would be more appropriate and cost- efficient for this training to occur in early 2025. Historically, the City has covered the cost for a few members of the City Council to attend the Cal Cities “Mayors and Council Members Academy.” The academy is held annually, but the City has not allocated sufficient funds for all Councilmembers to attend if they desire to do so. Going forward, the staff will include sufficient funds in the proposed budget for all Council members to attend the annual academy. The next sessions are scheduled for January 22-24, 2025, and January 29-31, 2025. According to Cal Cities, “Whether you’re a new mayor or city council member, or you’ve been serving your community for years, this academy is for you. The academy covers the legal, financial, and practical fundamentals to your job as an elected city official. Just as vital, you’ll have opportunities to foster relationships with your peers.” Specific to this recommendation, prior Cal Cities Mayors and Council Members Academies have included sessions on: • Understanding Public Service Ethics Laws and Principles: AB 1234 Training • Harassment Prevention Training for Supervisors and Officials (AB 1661) • Developing an Effective City Council and Manager Team - Key to Good Governance and City Success • Your Legal Powers and Obligations • Open Government and Conflicts of Interest Note: In the fall of 2023, the City Attorney’s office conducted a 3-hour, in person AB 1234 training with the City Council. In addition to a majority of Councilmembers, more 7 “Irreconcilable Differences: Santa Clara City Council” than 80 City staff members and members of the public attended. Topics included: ethics generally, local City ethics policies, conflicts of interest, gift limitations, disclosure requirements, Open Meeting laws (Brown Act) and Public Records Act laws. An updated version of this training will again be provided by the City Attorney’s office sometime in the fall of 2024.

F6: There has not been an employee satisfaction survey since 2019. Response to Finding 6: The City Council/Authority Board agrees with the finding.

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R6: The City should conduct an annual employee satisfaction survey, administered by a third party, which can be answered anonymously. This recommendation should be implemented by October 1, 2024, and should occur annually. Response to Recommendation 6: The Santa Clara City Council/Authority Board agrees with this recommendation. The City conducted a procurement process and hired a third party to do an Employee Survey in 2018/2019 and agrees another Employee Survey is warranted. Staff will conduct a procurement process with the goal of having an employee survey completed within the next 6 months.

F7: City staff is exceptionally professional, well prepared, and consistently maintains their composure regardless of behaviors exhibited by the Council. Staff’s behavior is a model for the Council. Response to Finding 7: The City Council/Authority Board agrees with the finding.

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R7: The City should commend City staff for their exemplary work ethic and professionalism. This recommendation should be implemented by August 1, 2024. Response to Recommendation 7: The Santa Clara City Council/Authority Board agrees with the recommendation; it will be implemented by way of a formal City Council resolution to be presented and adopted at a Council meeting by no later than October 22, 2024. The adopted Resolution will then be distributed to all City staff. 8

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R1a: The City should hire a conflict resolution professional and adopt robust conflict resolution training strategies. This recommendation should be implemented by October 1, 2024. Response to Recommendation 1a: The Santa Clara City Council/Authority Board agrees with the recommendation, and it will be implemented. The City is working to identify an appropriate conflict resolution professional or firm that has experience with elected bodies. The City intends to structure the training in two parts: First, a one-on-one session that will be offered to each Council member, followed by a group session with the entire City Council. Implementation of this resolution may not be feasible by October 1, given the City’s procurement and contracting timelines. Further, with the impending City Council election that will occur on November 5, 2024, it would be more appropriate and cost-efficient for this training to occur in early 2025.

R1b: Councilmember Park should attend one-on-one conflict resolution training so he can learn to behave in a manner reflective of an elected official. This recommendation should be implemented by October 1, 2024. Response to Recommendation 1b: 3 “Irreconcilable Differences: Santa Clara City Council” The Santa Clara City Council/Authority Board partially disagrees with the recommendation in that we believe all members of the City Council can benefit from conflict resolution training. As noted in the response to Recommendation 1a, the City is working to identify an appropriate conflict resolution professional or firm that has experience with elected bodies. The City intends to structure the training in two parts: First, a one-on-one session that will be offered to each Council member, followed by a group session with the entire City Council. Implementation of this resolution may not be feasible by October 1, given the City’s procurement and contracting timelines. Further, with the impending City Council election that will occur on November 5, 2024, it would be more appropriate and cost-efficient for this training to occur in early 2025.

August 13, 2024 — HonorableBethMcGowen, PresidingJudge SuperiorCourtof California,SantaClaraCounty 191North FirstStreet,SanJose Ca 95113*

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F1A: I agree that there is a broken relationship among Councilmembers and the Mayor.

F1B: Disagree in part- The general statement is not a statement for the whole city council including the Mayor. I will agree however that the City's adopted ethical and behavioral standards are violated on the dais.

F1C: Disagree in part. I fully believe that Mayor and Councilmembers, including myself, engage in very robust discussions. I will agree that there have been petty grievances and squabbles from all members of the City Council. However, we can all do better to avoid any of these types of behaviors.

F2: Disagree wholly. Councilmembers Park, Chahal and myself understand parliamentary procedures, in fact Councilmember Park is by far the most educated on parliamentary procedures often citing it during council meetings. I have had extensive experience in parliamentary procedures from my time on the Santa Clara Planning Commission (2018-2020), Santa Clara Architectural Review (2019) and the Santa Clara City Council (2020-present).

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R2a: While I disagree with the finding of the Civil Grand Jury and their belief that I need training in parliamentary procedures, I will agree to take the recommended training because I can always learn more and better educate myself further in parliamentary procedures. Extra education is always a good thing, which all members of the City Council should take advantage of. The recommendation has not yet been implemented, but will be implemented in the future, with a timeframe before October 1st, 2024.

F5: Disagree in part, as it is a selectively applied finding. As stated previously, I find it surprising how much the Civil Grand Jury missed viewing all the hours of footage.

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R5b: While I strongly disagree with the Civil Grand Jury's assertion of a lack of ethics, I will strongly agree that all Councilmembers should take regular ethics training on top of their required Brown Act and Sexual Harassment trainings. I will agree to take the training as recommended because additional ethics training does no harm. In fact it is good governance to have refreshers on ethics and the Brown Act. I thank the Civil Grand Jury for their service and for their work in identifying areas that the City Council as a whole can improve which in return benefits our community. While I may not agree with all their findings, I believe the Civil Grand Jury was appropriate in identifying the needs to the Santa Clara City Council to work together and put aside any differences to assure that there is unanimous support behind the 2024 $400 Million bond measure that our city desperately needs for planning the future. Anthony Becker Santa Clara Councilmember District 6

June 13, 2024 — Outplayed:

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F1: From the beginning, the City was impatient and overmatched in its negotiation posture with the 49ers to the long-term detriment of the City/Stadium Authority. The Civil Grand Jury heard repeatedly that during the negotiation process, the City’s primary concern was protecting the City’s General Fund and not ending up in the same situation as other cities that had built stadiums for major sports teams and lost public money. City staff members worried about the political dangers of bringing such a big entity to a small city, but they also believed the long-term revenue projections were optimistic and that they would be able to insulate the City. However, the mostly eager City Council gave the upper hand to the 49ers from the beginning. At a December 15, 2009, City Council meeting, the City Council voted to put its own ballot measure on hold to allow a “citizen-sponsored” Stadium initiative written and funded by the 49ers to move forward. A qualifying initiative requiring voter signatures guaranteed that the Stadium measure would be on the June 8, 2010, ballot and less likely to be challenged. If the measure had been put on the ballot solely by a City Council vote, the measure could have been subject to potential legal challenges and delayed (Mintz, 2009). In addition to writing the initiative and funding the collection of signatures by “Santa Clarans for Economic Progress,” the 49ers spent $4.5 million to make sure it passed (Mintz, August 2, 2010). The Civil Grand Jury learned that some things were non-negotiables for the 49ers from the start. Specifically (a) they would not change their name from the “San Francisco 49ers” to the “Santa Clara 49ers,” (b) the lucrative luxury suites would be owned by the 49ers and all revenue from the suites for both NFL and non-NFL events would belong to the 49ers, (c) a 49er company would manage the Stadium year-round, and (d) all advertising media revenue would belong to the 49ers, except the Naming Rights revenue. After Measure J passed, City staff began negotiating the key agreements that would define the relationships between the Stadium Authority, the 49ers, StadCo, and ManCo for the next 40 years. These key agreements were the Ground Lease; the Stadium Lease, which included the terms for the SBLs; the Naming Rights Agreement; and the Management Agreement. City staff had recognized during the term sheet negotiations that the 49ers did not want the Stadium on their balance sheet. To that end, the Stadium was leased to the 49ers. This allowed the 49ers to reduce taxes by keeping the Stadium asset off their balance sheet and by keeping large income streams, such as from the sale of SBLs and Stadium Naming Rights, off their income statement. Using the 49ers as the management company concerned City staff at the time, who recognized it was a conflict of interest for the 49ers to simultaneously be a tenant and a property manager; but the City had used the now defunct local Chamber of Commerce for decades as the manager of the Convention Center, which was also considered a conflict. That arrangement made management of the Stadium by the 49ers more palatable to the City Council. In retrospect, overlooking this conflict of interest was a major negotiating mistake. Overall, City staff would spend the years 2007-2013 negotiating complex terms, contracts, and amendments to those contracts with the 49ers. During that time, as many as three days per week of City staff time were devoted exclusively to these negotiations. The Civil Grand Jury learned that after so many years of negotiating, the City Council was frustrated and impatient to finalize the Stadium’s legal agreements, ultimately allowing themselves to be outmaneuvered by the 49ers on some key terms discussed below. Property Tax Reassessment While Property Tax does not affect Stadium Authority revenues or the General Fund directly, Measure J did state that in addition to providing funding for libraries, senior activities, and youth sports, the Stadium would “also provide substantial new revenue for the Santa Clara Unified School District” (SCUSD) (Measure J at Section 2.A.4, 2010). Nevertheless, one of the best examples of the sophistication of the 49ers contract bargaining position is regarding property taxes, or possessory interest taxes, for the Stadium. Property tax assessment for the Stadium is explained as follows: California’s property tax system assesses all property at its full value. (Cal. Const., art. XIII, g 1; Rev. & Tax. Code, $ 401.) Full value is the cash price that the property would bring on the open market, assuming neither buyer nor seller could take advantage of the exigencies of the other, i.e., fair market value. Newly constructed property is assessed at its fair market value as of the date of completion and upon a change in ownership, with increases otherwise limited to two percent per year. While publicly owned property is generally either immune or exempt from taxation, private possessory rights in public property are subject to taxation… Possessory interests in public property encompass a wide array of rights, including concessions, leases, airport permits, air rights, and mining rights. Taxation of possessory interests places rights holders in public property on equal competitive footing with rights holders in private, taxable property, who pay rent or contract prices informed by the owner’s property tax. And, in doing so, taxation of possessory interests fulfills the constitutional mandate that all owners of non-exempt property pay their fair share of the property taxes funding provision of local, public services. (County of Santa Clara et al. vs. Santa Clara County Assessment Appeals Board No. 1, Superior Court of California, County of Santa Clara, Case No. 19-CV-347946) The 49ers and the Stadium Authority share year-round Stadium expenses. There is an exception per Article 4.3.1 of the Stadium Lease, in that some of the most valuable sections of the Stadium are designated as exclusive “areas” and are reserved for year-round use by the 49ers. These include the 49ers museum, all commercial areas (restaurants and team store), an owner’s club and team suite, the locker rooms and training spaces, an auditorium, an audio/visual hub, and, most valuable of all, the suite tower and all 174 suites. The contract also gives the 49ers year- round rights to lease the commercial areas of the Stadium for retail, restaurant, or other purposes. Finally, the 49ers can use the Stadium year-round for marketing, promotional events, tours, and meetings as stated in the Stadium Lease: 4.3.1 Tenant’s Exclusive Facilities. (a) For the entirety of each Lease Year during the Lease Term, including during each the Stadium Authority Season, Tenant shall have the right to use and operate Tenant’s Exclusive Facilities, including (i) the Stadium Commercial Areas, including the Team Store and the Hall of Fame, depicted on the Stadium Plans, the revenues from which shall constitute Tenant Revenue as provided in ARTICLE 13 below, (ii) Tenant’s Administrative Space depicted on the Stadium Plans, (iii) locker rooms and related training space, (iv) the Stadium Audio Video Facilities, (v) the Owners’ Club, including the Team Suite, and (vi) the Suite Tower and all of the Suites in the Stadium, but excluding any Premium the Stadium Areas and Press Areas located in the Suite Tower. Tenant will have the exclusive use of Tenant’s Exclusive Facilities, the Tenant’s Parking Spaces, and the Intellectual Property Rights attendant thereto, at all times during the Lease Term, subject only to the provisions of the Stadium Lease Documents Because of the 49ers’ year-round ownership of these “exclusive areas” and the resulting revenues from non-NFL events, the Office of the Assessor, County of Santa Clara (County Assessor’s Office) assigned the full value of the Stadium to StadCo’s possessory interest. The 49ers appealed its 12-month property tax assessment to a County Assessment Appeals Board (AAB), the local forum for property owners to challenge property tax assessments. The 49ers contended that they officially operated the Stadium for only six months because the Stadium Lease established two six-month seasons, one for StadCo and one for the Stadium Authority (Stadium Lease at Section 1.2.1, 2012). The AAB agreed with StadCo’s argument and reduced the original property tax assessment by half. The County Assessor filed a lawsuit to reverse this decision stating that StadCo was the principal at the Stadium (and the Stadium Authority was subordinate) with its year-round access and control to key areas and revenue streams, notably the luxury suites, restaurants, and other commercial areas. However, on January 23, 2024, the Superior Court of California, County of Santa Clara (Superior Court) denied this challenge, allowing the AAB property tax reassessment to stand resulting in a $180 million cut in property taxes over 30 years (County of Santa Clara et al. vs. Santa Clara County Assessment Appeals Board No. 1, Superior Court of California, County of Santa Clara, Case No. 19-CV-347946). The revenue shortfall from the AAB decision is large. The impact is decreased funding for multiple entities: • SCUSD: 40% (-$2.4 million per year). • West Valley College: 11%. • City of Santa Clara: 10%. • County of Santa Clara: 18% • Santa Clara County Office of Education: 4%. • A fund created under state law for augmenting local education revenue: 15%. • A local water district: 2%. The judgment also caused the same entities to have to issue a one-time refund of $36 million to the 49ers, including $13 million from SCUSD. In hindsight, this appears to be another well-planned long-term play by the 49ers as the Stadium Lease specifically gave them authority to challenge a property tax assessment (Stadium Lease at Section 9.1.2, 2013). The Civil Grand Jury learned that the 49ers designed the contract so a year- long property tax bill could eventually be contested. While this may have been a winning tax minimization strategy and a well-calculated and sophisticated 49ers negotiating position, local schools and the greater community are the losers. Measure J – New Jobs

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R1: Given the long-term nature of the various agreements, the 49ers' sophistication, and the history of past disputes, the City/Stadium Authority should engage advisors with specialized knowledge to determine options to level the playing field.

F2: The City has not studied the actual economic impact of the Stadium. The 49ers have produced their own studies, which they use to tout long-term unverified benefits and frame all discussions surrounding the success of the Stadium. The text of Measure J projected that there would be significant economic benefits resulting from activities that support the Convention Center, local hotels, and restaurants, and that the Stadium would “encourage new restaurant and retail services to support daily business activity” (Measure J at Section 2.B.1, 2010). The broader long-term economic benefits from the Stadium that were cited in Measure J are either unproved or unrealized. Recent media reports issued by the 49ers purporting to show large economic benefits from the Stadium are self-serving and incomplete (Simon, 2023). In fact, the City has never done a comprehensive assessment of the City-wide local economic benefit of the Stadium, which could support or refute the claims made by the report conducted by the 49ers. Although the Stadium’s website continues to advertise opportunities for temporary gameday and special event positions, it is unclear how many permanent positions were created after the initial construction of the Stadium (Avalos, 2014). Additionally, there is no evidence that the Stadium has increased Convention Center business, or that the Convention Center has benefitted from NFL and non-NFL events. Likewise, Measure J’s promise that the City’s Northside would become an entertainment destination has not come to fruition. Local hotels have seen an increase in their revenues due to large NFL and non-NFL events, as was expressed by general managers who called into the August 30, 2022, City Council meeting, during which the Council, acting in its capacity as the Board, was going to decide on a settlement agreement with the 49ers. The settlement agreement was related to the termination dispute with ManCo, and the Civil Grand Jury learned that the calls were coordinated by 49ers staff. In sum, Measure J’s promise to create new jobs and realize economic benefits related to the Convention Center has not been meaningfully evaluated. Nevertheless, the 49ers tout this benefit to the City during disputes with the Stadium Authority. This topic is beyond the scope of the Civil Grand Jury’s investigation. However, it is an important element in understanding the success of Measure J and should be evaluated by the City. Measure J – Taxpayer Protections

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R2: The City should commission its own report to determine the Stadium's actual economic impact over the last decade. This recommendation should be implemented by July 1, 2025.

F3: Measure J’s promise to protect the City’s General Fund has been realized. The funding structure from the Stadium Lease has successfully allowed the Stadium Authority to pay off Stadium construction loans and fund required Waterfall reserves faster than originally planned. Measure J stated that the Stadium development would not require or impose new or increased City taxes. Stadium Authority would lease the Stadium to an affiliate of the 49ers (StadCo) for an initial term of 40 years. The affiliate would pay a minimum base rent as well as the Stadium’s operating expenses if the expenses exceeded the Stadium Authority’s operating revenues. This would ensure that the Stadium Authority would have the funds required to pay both the rent to the City and operating expenses of the Stadium. The promise of taxpayer protections has worked out well for the City and, by extension, the Stadium Authority. City taxpayers have been well-protected from covering the cost of building and operating the Stadium. In addition, the Stadium’s funding structure has allowed the Stadium Authority to pay down construction loans and fund reserve accounts ahead of schedule. The Stadium Authority has sufficient revenue flows to pay for its share of the Stadium operations expenses, to pay for the Stadium Authority staff, to pay down the loans incurred building the Stadium, and to provide funding for various reserve accounts related to long-term Stadium operations. Measure J Promise on City Revenue: Missed Opportunities, Unfavorable Contracts The Stadium’s operating contracts have favored the interests of the 49ers to the long-term detriment of the City. This section contains some of the analysis and commentary created by the Grand Jury Expert’s thorough review of Stadium Authority and the 49ers records. The topics covered in this section are: • How the Money Flows to the City. • How the Money Flows and Does Not Flow to the Stadium Authority. • The Challenge with PSCs. • Deficiencies in the Management Agreement with ManCo. • Luxury Suite Revenue. • Buffet Costs. How the Money Flows to the City In the early years of the Stadium’s operations, the total money estimated to flow annually to the City was approximately $3 million, or roughly 1% of the City’s annual budget. According to information learned by the Civil Grand Jury through its investigation, this was estimated to grow to about $4 million in fiscal year 2024-2025. Measure J contains a provision for excess revenues to be paid to the City, but this provision has not been realized as of today. The City receives money primarily from the following three sources (Measure J at Section 4.3, Article 4, 2010) which are broken out below. 1) Fixed Base Rent As noted above, fair market rent for the City’s land, as defined by Measure J, consists of Fixed Base Rent and Performance Rent. The annual fixed rent from the Stadium Authority to the City increases yearly. It started at $180,000 and beginning in year 11, has grown to $1 million for the current fiscal year (Measure J at Section 17.20.020 (f)), 2010). The Fixed Ground Rent has been consistently paid as outlined in Measure J. 2) Senior and Youth Fee There is a 35-cent Youth and Seniors Program NFL game ticket surcharge. The surcharge has delivered $230,000-$250,000 to the City annually (Santa Clara Stadium Authority, 2024). The May 2024 settlement agreement increases the surcharge to 40 cents per NFL game ticket, raising approximately an extra $30,000 annually. 3) Performance Rent Performance Rent is the other element that is designed to make up part of the calculation that results in a payment of fair market value to the City. Performance Rent is a complicated feature in Measure J. Performance Rent is derived from the profits from the Stadium Authority-owned non-NFL events. For a variety of reasons, the City’s General Fund has not consistently received as much of the anticipated money as expected. And the lack of Performance Rent has been a major source of mistrust between the City, the Stadium Authority, and the 49ers. Additionally, it has become the most controversial and most discussed Stadium-related item during Council meetings. Per the Stadium Lease Article 6.4.2, Performance Rent is calculated from half of the Stadium Authority’s profits from non-NFL events (Figure 4, row 1), less credits for half of the Fixed Ground Rent (Figure 4, row 5), and less credits for accumulated overages in PSCs not reimbursed to StadCo from the current and prior years. Figure 4 below uses information obtained from the Stadium Authority financial records as referenced in the Methodology section of this report. All figures $K Actual Actual Actual Actual Actual Actual Actual Actual Actual TBD Budget 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 1 Non-NFL Events (NNE) Net Income $5,208 $6,079 $5,317 $5,163 $19 ($2,741) ($510) ($286) $8,809 $7,756 $6,000 2 Original 2013 Forecast $5,000 $5,150 $5,305 $5,464 $5,628 $5,796 $5,970 $6,149 $6,334 $6,524 $6,720 3 % Actual vs. 2013 Forecast 104% 118% 100% 94% 0% -47% -9% -5% 139% 119% 89% 4 City Performance Rent = 50% NNE NI $2,604 $3,040 $2,659 $2,582 $9 ($1,371) ($255) ($143) $4,405 $3,878 $3,000 5 Credit – 50% Base Ground Rent ($90) ($108) ($125) ($143) ($160) ($178) ($195) ($213) ($230) ($248) ($500) 6 Credit – PSCs over threshold $0 $0 $0 ($660) $0 $0 $0 $0 $0 $0 $0 7 Net Performance Rent to City $2,514 $2,932 $2,534 $1,779 $0 $0 $0 $0 tbd tbd tbd 8 Fixed Ground Rent Paid to City $180 $215 $250 $285 $320 $355 $390 $425 $460 $495 $1,000 9 Senior and Youth fees to City (estimate $230 $230 $230 $230 $230 $250 $100 $230 $250 $250 $230 10 Actual Payments to City General Fund $2,924 $3,377 $3,014 $2,294 $550 $605 $490 $655 $710 $745 $1,230 11 Original Measure J Estimates $2,820 $2,913 $3,007 $3,104 $3,204 $3,306 $3,410 $3,517 $3,627 $3,739 $4,090 12 % Actual vs. 2013 Forecast 104% 116% 100% 74% 17% 18% 14% 19% 20% 20% 30% Figure 4: History of non-NFL Events Income and Stadium Authority payments to the General Fund Figure 4, Rows 1-3 show that net income from non-NFL events was at or near original expectations for the first four years of the Stadium operations, and the City received almost $10 million in Performance Rent. Since then, the City has received zero Performance Rent due to: 1) Two controversial years of zero profits or losses on ManCo-managed non-NFL events (fiscal years 2018-2020). 2) Two years of almost no non-NFL event activity due to COVID-19 (fiscal years 2020-2022). 3) Most recently, despite a non-NFL event net income record high, due to the dispute over PSCs (fiscal years 2022-2024). The May 2024 settlement agreement allowed $7.1 million of Stadium Authority litigation reserves to be liquidated and paid to the City as Performance Rent for the fiscal years 2022-2024. The May 2024 settlement agreement is explained fully in the section of this report titled “Management Agreement Termination, Litigation, and Settlements.” How the Money Flows and Does Not Flow to the Stadium Authority Stadium Authority Revenues The bulk of the Stadium Authority revenue comes from five sources: 1) Facility Rent paid by the 49ers. 2) A 10% ticket surcharge on all NFL ticket sales. 3) The Stadium Naming Rights payments received from Levi Strauss & Co. 4) The SBL revenue from payments for new or transferred seat licenses. ot ENN ot stnemyaP ASCS aralC atnaS fo ytiC 5) Revenue from non-NFL events. Other much smaller sources of revenue include interest income and a $4 ticket surcharge for non-NFL events. Figure 5 below shows a revenue budget of $62.8 million for fiscal year 2024- 2025 (Santa Clara Stadium Authority, 2024). Figure 5: Stadium Authority 2024-25 Revenue Budget The May 2024 settlement agreement will change the Stadium Authority’s fiscal year 2024-2025 budget. It should increase revenue in future years by raising the non-NFL ticket surcharge from $4 to $8. Stadium Authority Expenses The Stadium Authority’s expense budget has six main categories: 1) The Stadium operations expenses shared with the 49ers, including items such as engineering, groundskeeping, and insurance. 2) Stadium operations and management expenses owned by the Stadium Authority, including the costs of servicing and marketing SBLs, utilities, and the Stadium Authority administrative expenses. 3) Payments to the City for Fixed Ground Rent, Youth and Senior Services, and Performance Rent derived from non-NFL events net income. As noted previously, Performance Rent has been zero in recent years because of the legal dispute with the 49ers over PSC. 4) Debt Service: The Stadium Authority has been successfully paying down the Stadium loans over the past 10 years. 5) “Excess revenue”: All excess revenue flows through what is known as the “Waterfall,” described in the next section. 6) Payments to legal contingency reserves related to the two disputes: PSCs and buffet costs. Figure 6 shows the six categories of the Stadium Authority’s $62.8 million fiscal year 2024- 25 expense budget (Santa Clara Stadium Authority, 2024). Figure 6: Santa Clara the Stadium Authority 2024-25 Budget – Expenses The May 2024 settlement agreement eliminates the expense category 6 (above) Legal Contingency Reserves. All of the money held in litigation reserves is now freed up. Under the settlement agreement, the City will receive approximately $7.1 million of Performance Rent for the 2022-23 and 2023-24 lease years (City of Santa Clara, May 23, 2024). Stadium Authority Excess Revenue and the Waterfall Any Stadium Authority money left after payment of operating expenses and debt service is known as “Excess Revenue” (Stadium Lease Agreement, 2013). The Stadium Authority has had Excess Revenue yearly since the Stadium began operations in 2014. Article 14 of the Stadium Lease prescribes exactly how all the Stadium Authority Excess Revenue is applied. The structure of how Excess Revenue is applied is frequently referred to in the Stadium Authority budget presentations as the Waterfall. The Waterfall ensures sufficient funds are available for ongoing Stadium operating expenses, capital improvements, end-of-life demolition, and paying off any revolving or subordinate loans. The Waterfall can be likened to a forced savings plan. The Waterfall conceptually contains eight cascading buckets of different funds. The first bucket/fund is filled with Excess Revenue from the Stadium Authority budget before the second bucket receives any funds. The second bucket must be filled before the third budget receives funds. The process continues until seven buckets are filled. The key point is that the Stadium Authority has no flexibility in the distribution of Excess Revenues until all the first seven buckets are filled. As of the release of this report, Buckets 1 through 6 are filled. Bucket 7, which requires $70 million for the Stadium Demolition Fund, is approximately 50% filled. Once Bucket 7 is filled, which could happen by the end of this decade, Stadium Authority leadership could have more latitude in deciding how to allocate Excess Revenue, including more diversions to the City’s General Fund. However, the Stadium is aging, and Capital Reserves will be nearly depleted in 2025, so additional Excess Revenues may be needed to fund capital improvement/renovation projects. Figure 7 uses information obtained by the Civil Grand Jury to demonstrate how funds are distributed throughout the Waterfall. Figure 7: Stadium Authority Excess Revenue Distribution Waterfall The rigidity of the Waterfall has frustrated some City officials, who have been vocal about wanting more of the Stadium/Stadium Authority revenue to reach the City’s General Fund. However, this same rigidity ensures the Stadium Authority's long-term financial health and the Stadium’s continued financial viability by requiring the Stadium Authority to set aside sufficient funds for future needs, including long-term infrastructure maintenance and improvements. The May 2024 settlement agreement allows for significant changes to how Waterfall Bucket 7, the Renovation/Demolition Fund, will receive Excess Revenues. Instead of receiving 100% of Excess Revenues, the Renovation/Demolition Fund will only receive 50% and the remaining 50% will go to StadCo to repay the outstanding PSC balance. Once the $11.5 million PSC balance is paid off after the 50% allocation to the Renovation/Demolition Fund, the remaining amounts will flow to the Stadium Authority, with the option to distribute these funds to the City’s General Fund. The Problem with PSCs The costliest and longest continuous dispute between the 49ers and the Stadium Authority has been over PSCs. The core of the dispute has been over a $170,000 per-game Public Safety Cost Threshold (Threshold), or maximum value, originally specified under Measure J that the 49ers must pay for the cost of public safety services at NFL events. Measure J also provided a 4% annual increase to the Threshold. The Threshold could be renegotiated if the costs exceeded the Threshold for three consecutive years. The Threshold was greatly underestimated; in fact, since the Stadium opened in 2014, PSCs have increased substantially and have been well over the Threshold for all games/seasons. Because of the complicated Performance Rent calculations (i.e., any dollar amount over the Threshold becomes an expense or “credit” taken out of Performance Rent revenue), the City has been the biggest loser in the PSC dispute. Public Safety Staffing PSCs for Stadium events include all the costs of planning for safety at stadium events, safety equipment costs, and the full costs of public safety officers for controlling traffic and pedestrian flows, monitoring parking areas, monitoring stadium entrances/exits, monitoring adjacent residential neighborhoods, and providing backup support for any Stadium incidents. PSCs also include fire and public works services. PSCs for 49ers games are paid as follows: • The City bills StadCo for PSCs for each 49er game. • StadCo reimburses the City. • The Stadium Authority reimburses the 49ers for all PSCs above the Threshold. City Police Officers can be mandated to work at Stadium events when staffing and security needs dictate. Even with mandated overtime, the City must rely on officers from other jurisdictions, such as surrounding city police departments, the County Sheriff’s Office, and the California Highway Patrol. Normally, at least 200 badged officers are deployed for large events, and the total costs, including overtime and benefits, are included in the PSC bill from the City. It should be noted that the full security costs for Stadium events also include private security personnel hired by ManCo. Private security personnel are often in the range of 500-800 additional staff. These costs are separate and in addition to PSCs. The Civil Grand Jury did not widely investigate safety costs and contracts at other comparable sports venues but learned that PSCs for Stadium events are among the highest for any stadium in the U.S. for a variety of reasons, including: • The Bay Area is an expensive location, and pay rates for local police officers, including the Santa Clara Police Department (SCPD), can be among the highest in the nation. • Venues like the Oakland-Alameda County Coliseum (Oakland) or Oracle Park (San Francisco) are in larger cities with larger police forces. These cities have more flexibility in assigning officers or getting volunteers to work at stadium events. The SCPD is not as large, and, per a 2021 Memorandum of Understanding (MOU) between the City and its Police Officers Association (POA), the City pays its officers double-overtime (2x regular pay rate) purportedly to incentivize enough officers to volunteer to work at 49ers games. • Unlike some stadiums (e.g., Oakland-Alameda County Coliseum), the Stadium is located near suburban neighborhoods, not near major highway exits. It has access from multiple ingress points and a distributed parking footprint, which requires more traffic/pedestrian control officers than at other stadiums. Public Safety Cost History Figure 8 below shows a history of PSCs from fiscal years 2014-2024 and what the payments entail based on information obtained from Stadium Authority financial records as referenced in the Methodology section of this report. Row 8 shows how much over the Threshold the PSCs have been each year. Since the 2019-20 football season, the gap between actual PSCs and the Threshold value has been about $3 million per year (except for the COVID-19-shortened 2020-21 season). Row 5 shows that PSC per game have more than doubled between the 2014-15 and 2023-24 seasons. All figures $K, except for $ football games Actual Actual Actual Actual Actual Actual Actual Actual Actual TBD Budget 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 1 Total PSCs $2,455 $2,438 $3,085 $2,633 $2,995 $5,417 $888 $5,303 $5,716 $6,034 2 PSC adjustments (1) $0 $0 $0 $4 $8 $790 $128 $308 $94 $0 3 Billable PSCs $2,455 $2,438 $3,085 $2,637 $3,003 $6,207 $1,016 $5,611 $5,810 $6,034 4 # 49ers Games @ Levi's 10 10 10 10 10 12 5 10 12 12 5 PSCs per game $246 $244 $309 $264 $300 $517 $203 $561 $484 $503 6 PSCs Threshold Per Game (+4%/yr) $170 $177 $184 $191 $199 $207 $215 $224 $233 $242 $360 7 Allowable PSCs for season $1,700 $1,768 $1,839 $1,912 $1,989 $2,482 $1,076 $2,237 $2,792 $2,904 8 PSCs Over Threshold $755 $670 $1,246 $725 $1,014 $3,725 ($60) $3,374 $3,018 $3,130 9 PSCs Paid by 49ers (StadCo) $1,257 $1,478 $1,557 $1,680 $1,671 $2,006 $890 $1,814 $2,241 $0 10 PSCs Paid by Offsite Parking Fees $443 $290 $355 $293 $317 $476 $0 $423 $551 $613 11 PSCs Paid by SCSA Discretionary Fund $755 $670 $1,173 $0 $0 $0 $0 $0 $0 $0 12 PSCs Paid by 49ers pending litigation $0 $0 $0 $664 $1,013 $3,664 $3,165 $2,856 $3,632 13 Total PSCs Paid $2,455 $2,438 $3,085 $2,637 $3,001 $6,146 $890 $5,402 $5,648 $4,245 14 Unpaid PSCs (contested depreciation) $0 $0 $0 $0 $1 $61 $126 $209 $162 $0 1. Includes Workers Comp & Depreciation adjustments Figure 8: History of PSCs, PSC Threshold, and PSCs Over the Threshold It is difficult to ascertain why the costs have increased so much. In general, the increase has been attributed to a revised safety plan to provide a heightened level of security; increases in Worker’s ytefaS cilbuP stsoC ytefaS cilbuP stnemyaP Compensation costs; the previously mentioned move to double-overtime pay for SCPD; an increase in the City-calculated overhead rates applied to all City staff working at the Stadium events; and general pay raises. All of these factors appear to have contributed to the increase; however, the Civil Grand Jury could not confirm that there was a definitive cause that accounted for the escalation. History of the PSC Dispute Critical to the PSC dispute and ensuing litigation are the stipulations in Measure J and in the Stadium Lease regarding the Threshold limit; the relationship to Performance Rent; and the allowable three-year renegotiation of the Threshold. The Stadium Lease states if the Stadium Authority cannot or will not reimburse StadCo for PSCs above the Threshold value, then StadCo can credit any unpaid PSCs against Performance Rent (from the profits of non-NFL events) owed by the Stadium Authority to the City’s General Fund (Stadium Lease at Section 7.5.3(a), 2012). Additionally, if the Threshold is exceeded over a consecutive three-year period the amount can be renegotiated (Stadium Lease at Section 7.5.4(b), 2012). In 2017, the Stadium Authority called for negotiations on the Threshold at the end of the third season. The Stadium Authority contends the 49ers did not negotiate in good faith, and the Threshold remained unchanged. Thereafter, the Stadium Authority stopped reimbursing StadCo for PSCs above the Threshold. In 2018, StadCo contested payments to the City for PSC overages (Figure 8, Row 12), and they began to accumulate PSC overages as credits against Performance Rent. Income from non-NFL events was negligible from fiscal years 2018 through 22. Therefore, there was no Performance Rent, and StadCo’s PSC credits had no impact. Income from non-NFL events for the past two seasons, however, has been good (via performances from the likes of Taylor Swift, Beyoncé, Ed Sheeran, etc.), but the Stadium Authority prudently put this income into litigation reserves instead of paying Performance Rent payments to the City. The PSC dispute was settled in May 2024. The agreement includes: • The 49ers allowed a one-time Threshold increase of $108,000 to $360,000 per game. The original 4% annual inflation adjustment stayed in place. • The non-NFL ticket surcharge that attendees pay will double from $4 to $8, and this money will go towards paying the 49ers for PSCs over the new Threshold. • The 49ers agreed to allow the Stadium Authority to pay unpaid PSCs from prior seasons (approximately $11.5 million) by diverting 25% of excess revenues that flow through the Waterfall over the next several years. Consistent with Measure J, the Stadium Lease gave sole discretion to the 49ers to approve any changes to the PSC Threshold (Stadium Lease 7.5.4(b), 2012). This has proven to be an expensive arrangement that gives StadCo control over determining the key element affecting Performance Rent. The Problem with the Management Agreement “The Stadium Authority will be responsible for the management and operation of the Stadium for NFL Events, non-NFL Events and Civic Events, and 49ers Stadium Company will cooperate with the Stadium Authority in the operation of the Stadium.” (Measure J, Article 8) As noted previously, the Management Agreement is a three-way agreement between the Stadium Authority, StadCo, and ManCo, which was signed in March 2012. It is a glaring example of the Stadium contract provisions that heavily favor the 49ers’ interests and something that was never anticipated by Measure J. The Stadium Authority Accepted a Conflicting Interest

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R3: The May 2024 settlement agreement gives the Board/City Council new flexibility to divert Excess Revenue from the Stadium Authority to the City’s General Fund. When diverting Excess Revenue, the Board/City Council should be mindful of the long-term financial health of the Stadium Authority and request the Treasurer to produce a long-term plan for funding all required Stadium reserves, including reserves for capital improvements. This recommendation should be implemented by October 31, 2024.

F4: The City/Stadium Authority agreed to use ManCo, an affiliate of the 49ers, with an inherent conflict of interest to handle the Stadium Authority’s financial interests in non-NFL events. While Measure J contemplated that the Stadium Authority may contract with a Stadium management firm to oversee the day-to-day operations of the Stadium, Measure J made clear that the Stadium Authority was supposed to be responsible for managing the Stadium. (Measure J at Section 8.1(a), 2010). Measure J further states that StadCo is required to “cooperate” with the Stadium Authority in that regard. (Measure J at Section 8.1, 2010). That is not the reality of the current arrangement. The first problem began when the Stadium Authority agreed to use ManCo. The Civil Grand Jury learned that, during negotiations, the 49ers demanded that the Stadium Authority agree to hire ManCo, an affiliate of the 49ers, and it agreed. When the Stadium Authority agreed to use ManCo to provide management of Stadium Authority’s non- NFL events, it should have protected itself from risks associated with the inherent conflicts of interest in performing this role, particularly given StadCo’s competing financial interests in non- NFL events. Specifically, StadCo can earn revenues at the same non-NFL events for which ManCo is responsible for negotiating event terms on behalf of the Stadium Authority. The terms negotiated by ManCo directly impact the profitability the Stadium Authority achieves at these events. The Stadium Authority Agreed to a Lopsided Termination Provision

F5: The City/Stadium Authority failed to ensure that the Management Agreement included a fair termination clause. The Management Agreement states that the Stadium Authority may terminate the agreement only by written notice upon the occurrence of any of the following (Management Agreement, Article 8.1.1, 2012): 1. Fraud or intentional and material misrepresentation by or at the direction of the ManCo in connection with this Agreement. 2. Misappropriation or conversion of any funds received pursuant to this Agreement by or at the direction for ManCo. 3. Willful misconduct of ManCo resulting in an Event of Default, which Event of Default is not cured in accordance with Article 11 of the Management Agreement. It is notable that the contract termination bar is lower for both StadCo and ManCo, requiring only an occurrence of an Event of Default specified in Article 11 of the Management Agreement. An Event of Default is a failure to pay or failure to perform. The Stadium Authority, however, can only terminate in the Event of Default if they also demonstrate that the Event of Default is caused by “willful misconduct of ManCo.” This is a much harder standard to establish, typically requiring proof of intentional conduct done with the knowledge that the event will occur. Barring fraud, misappropriation of funds, or willful misconduct, the Stadium Authority can terminate the Management Agreement only if StadCo also gives approval. This is a prime example of the superior negotiation position that StadCo and ManCo have established over the Stadium Authority, and it is/was a large shift from the cooperative spirit written under Measure J. The Civil Grand Jury also reviewed the termination clauses for the management agreements at Petco Park (San Diego), Golden 1 Center (Sacramento), and SAP Arena (San José) and found no similar termination language. Lack of Financial Transparency

F6a: The City/Stadium Authority failed to ensure the Management Agreement provided the Stadium Authority with full access to financial records.

F6b: ManCo’s financial transparency with the Stadium Authority has improved with the implementation in 2022 of a new financial management system.

F6c: Transaction-level testing generally supports ManCo’s reporting of financial results for non-NFL events.

F7a: The City/Stadium Authority failed to ensure that the original Management Agreement and the 2022 settlement agreement contained sufficient language requiring specific items or methods and performance metrics to prioritize Stadium Authority revenue generation. This has resulted in a failure to hold ManCo accountable for the success of non-NFL events.

F7b: The Stadium Authority failed to use the prescribed Marketing Correction Plan per Article 3.3.1 of the Management Agreement process to hold ManCo accountable for unsuccessful non-NFL event bookings.

F8a: There is no evidence showing that ManCo is negotiating to maximize Stadium Authority profits for non-NFL events.

F8b: The Stadium Authority has failed to ensure the Management Agreement requires ManCo to incentivize its staff to prioritize the Stadium Authority's success. There is no evidence that there are employee sales goals, metrics, or consequences related to unprofitable non-NFL events.

F9a: StadCo/ManCo interprets the Stadium Lease to require non-NFL ticket surcharges be applied to tickets associated with Rental and Trophy Luxury Suites, but failed to remit all corresponding surcharges to the Stadium Authority.

F9b: StadCo/ManCo interprets the Stadium Lease to not require non-NFL ticket surcharges to be applied to Seating Bowl complimentary tickets and Owners Club Luxury Suite tickets.

F9c: Suite ticket revenue submitted to the Stadium Authority does not account for suite ticket revenue for certain suite attendees.

F10a: Most revenue from non-NFL events goes to the promoter, which is typical. StadCo can make money on luxury suites regardless of the event's profitability for the Stadium Authority.

F10b: The Stadium Authority is unaware of the market revenue potential for non-NFL events at the Stadium. The Stadium Authority does not know what net revenues should be expected for non- NFL, ticketed and non-ticketed, events.

F11: Per the Stadium Lease, the Stadium Authority failed to negotiate pertinent details about buffet costs in the contract, such as parameters on cost thresholds and alcohol. The Stadium Authority accepted responsibility for buffet costs but failed to follow up when the expense was omitted from ManCo’s budgets. The Stadium Authority owns the SBLs and all associated revenues. SBL sales were a major source of money for financing the Stadium's construction. There are 942 “Legacy” SBL holders that originally paid at least $80,000 for their seat licenses, and they were promised forty years of complimentary buffets at 49ers games. The Stadium Authority does not dispute that it is responsible for these costs. The buffet cost per season was approximately $1 million. Since the Stadium opened in 2014, ManCo has been responsible for providing a buffet amenity to these SBL holders. However, ManCo did not bill the Stadium Authority for the buffet costs for the first four years of the Stadium operations, and buffet costs were not included in the annual budgets submitted to the Stadium Authority for approval. If buffet costs had been budgeted, these costs would presumably have been included in the rent re-set arbitration. A legal dispute started in 2019 when ManCo billed the Stadium Authority for over $4 million for buffet costs for the fiscal years covering 2014-2018. The Stadium Authority leaders do not dispute they are responsible to pay for the costs of buffets. The dispute over the $4 million invoice has occurred for several reasons. The bills were all submitted after the budget years had concluded; the most delinquent invoice was four years old. During the annual budget process, ManCo failed to include the buffet costs in the annual Stadium operations budgets. When finally submitted, the invoices provided insufficient details to support the more than $4 million of expenses. The information on the invoices often included an expense incurred for alcoholic beverages served at the expense of the Stadium Authority, a public entity. When City staff became aware that the Stadium Authority was expected to cover the cost of alcohol, they were surprised. Almost all of the invoices charge for the same number of guests for every single game during a particular season, with no variation. The invoices lacked any details regarding what kind of food was served and lacked any supporting documentation. The lack of information makes it difficult to know how StadCo determines the number of guests served. This legal dispute over expensive high-end buffets appears to be another example of a naïve or uninformed contract negotiating position by City/Stadium Authority leaders. The Stadium Lease clearly says that the Stadium Authority will provide buffets for high-end SBL holders. However, the Stadium Authority failed to ensure the Stadium Lease, until now, had any limitations on buffet costs (like a PSC Threshold), and it had/has no clarity about whether alcoholic beverages are covered under buffet costs. This dispute was settled under the May 2024 settlement agreement key elements include: • The Stadium Authority must pay all costs for all future buffets for the 942 “Legacy” SBL holders for all 49ers games. • The cost per game is, for the first time, capped at $90,000 per game with a 3% annual inflation adjustment. • All claims by StadCo for payment of buffet costs for all prior years, from 2014 forward, are dismissed. Community Promises Not Fulfilled

F12: A Multi-Use Community Facility at the Stadium was one of Measure J’s original promises and was memorialized in the Stadium Lease. The current designated space for the Community Room at the Stadium is not easily accessible nor is it pragmatic for most civic events. In a letter dated January 10, 2012, from 49er CEO Jed York to Santa Clara Youth Soccer League Executive Board Members, the 49ers stated that they were cognizant that “NFL game day traffic will make trips to the [Youth Soccer] park more complicated.” The letter further stated: To demonstrate our commitment to our community’s young soccer players and their families we are proposing that the 49ers underwrite several regulation-sized additional soccer fields in Santa Clara. These fields would be dedicated and maintained for the use of the Santa Clara Youth Soccer League during NFL game days...We have been part of the Santa Clara community for 22 years and we are committed to remaining a good neighbor to the soccer community. Instead of following through with the above-stated intentions, the 49ers spent years trying to gain access to the 10.8 acres of fields near the Stadium to use as parking during NFL events, including a complicated offer in 2015 where the 49ers would lease the fields year-round, with the promise of eventually underwriting the construction of new fields. The offer died at a City Council meeting packed with angry soccer parents (City of Santa Clara, 2015). Since 2017 (excluding 2020), half of the 49ers’ 44 weekend home games overlap with soccer matches at the Santa Clara Youth Soccer Park (SCYSP), which means children and their families have to get special passes to access roads and deal with rowdy fans who think they can cut through the SCYSP parking lot to get to the Stadium (Simon, 2024). In addition to failing to exhibit goodwill towards their neighbors by not following through on promises made to SCYSP, the 49ers have failed to provide a usable space as a Community Room within the Stadium. Measure J promoted the idea of the Stadium as a Community Facility and in the Stadium Lease, the 49ers agreed to provide a meeting space, as outlined in the Stadium Plans, for community groups and non-profits. The Stadium Authority could schedule Civic Events at any time but would need approval from StadCo during the NFL Season. (Stadium Lease, Amended, Section 4.7.2, 2013). The Stadium Authority has been negotiating for access to a suitable room since 2012; at one point the 49ers offered the Stadium Authority a space being used as a storage area. The peak negotiations occurred in 2017 and 2018, during which time the Stadium Authority developed a reservation process and policy in anticipation of getting a space. Rental of the room includes a minimum four-hour commitment; the associated costs include, at a minimum, security, Guest Services/Engineering, Janitorial, and Room Logistics (set up and tear down of room). If the civic group requires any of the following, the cost is extra: catering (only Stadium concessionaire), furniture rental, AV rental, and IT support (City of Santa Clara, Council Meeting, 2017). Based on all of these factors, the use of the Community Room is likely very costly and has proven to not be very pragmatic. Although there is currently a space called the “Community Room” in the Stadium, it has been used exclusively by the 49ers Foundation primarily to host the 49ers STEAM (Science, Technology, Engineering, Arts and Math) Education program. The room is currently located on the field level of the Stadium, in a service area, lacks windows, and has a maximum occupancy of 225 people. Even if the Stadium Authority had full access to that particular room, escorts are required to enter and leave the Stadium; this is an issue if a civic event is in the evening. Functions at night require additional staff including security, and some staff require a four-hour minimum for a booked event. Additionally, it is a 15-minute walk from the parking lot and there is a fee. To date, the promise of the Community Room for civic events has not come to fruition. FIFA – World Cup Soccer 2026

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R12: The Stadium is not an appropriate location for a Community Facility. The Stadium Authority should work with the 49ers to identify and procure an alternative space for community needs. This recommendation should be implemented by June 30, 2025.

F13: The FIFA World Cup commitments for the City and the Stadium Authority were made without consultation with the City/Stadium Authority. The City and the Stadium will host six FIFA World Cup games in 2026. Selection as a host city/site is a prestigious recognition for the City, the Bay Area, and the Stadium as a world-class venue. Beyond the recognition, the games are expected to provide economic benefits for many City and Bay Area businesses from an influx of out-of-town visitors. The World Cup bid was negotiated and controlled by ManCo and the Bay Area Host Committee (BAHC), without any initial input from City staff or the Stadium Authority. The BAHC is a local organization that was initially created in preparation for Super Bowl 50. Recently it has restructured itself and now works to attract major sporting events to the Bay Area. The President of the 49ers, and ManCo, Al Guido, was also the President of the BAHC when he signed agreements relating to FIFA on behalf of the Stadium Authority. Many consider his multiple roles representing the Stadium’s management company and the BAHC a conflict of interest. Until recently, City/Stadium Authority leaders had no information about the obligations and costs that they had been committed to. The Civil Grand Jury learned that the City/Stadium Authority requested documents relating to their host obligations from the 49ers, BAHC, and FIFA before February 2023 and they were initially denied. Since then, City/Stadium Authority staff have negotiated access to some documents and successfully made redacted copies available via the City’s public website.. Additionally, City/Stadium Authority staff is working on an Assignment and Assumption Agreement and other agreements with ManCo and the BAHC, which will outline all of the services that will be required from the City including public safety commitments. The Civil Grand Jury learned that City officials are counting on the BAHC to raise the funds that will be needed to pay for all of the PSCs for the World Cup. Recent media reporting has stated that the City Attorney has informed the City Council that the Stadium Authority could face multimillion-dollar losses, as much as $38 million, from hosting the World Cup (Williams and Kroichick, 2024). Other large cities hosting World Cup games, such as Vancouver, Toronto, and Los Angeles, each estimate hosting costs of over $100 million. The World Cup matches are not expected to make any money for the Stadium Authority or contribute any money to the City’s General Fund, and extensive efforts to prepare the Stadium for World Cup matches will limit opportunities for other large non-NFL events in 2026. So, while many area businesses will profit from having World Cup events at the Stadium, the Stadium Authority may be financially penalized. The 49ers/ManCo are supposed to make every effort to maximize the Stadium Authority non-NFL events income, but by successfully bidding for the World Cup without consulting with the Stadium Authority officials, the 49ers/ManCo will likely drive down 2026 Stadium Authority income and Performance Rent for the City. Stadium Authority Staff As noted previously, City directors have a dual role as Stadium Authority officers. The lack of a separate Stadium Authority department structure requires staff to divide their time between City business and Stadium Authority business. The relationship between the City, Stadium Authority, and the various 49er entities is complex, but an added dimension has been the difficult partner the 49ers have proven to be. The Civil Grand Jury wants to point out that many of the problems detailed above were the work of City and Stadium Authority staff who are no longer with the organization. The City and Stadium Authority has recently brought in new leadership. The Civil Grand Jury acknowledges that the City/Stadium Authority staff were responsive to the Civil Grand Jury investigation and cooperative. While it remains unclear whether new staff can hold StadCo/ManCo accountable because that will also take the willingness of the City Council/Board, the Civil Grand Jury is encouraged by knowledgeable and professional staff. CONCLUSION Rick Eckstein, a Villanova University sociology professor who co-wrote a book about public financing of stadiums, said that sports teams are typically much more sophisticated than the cities and counties with whom they negotiate stadium deals. “The teams are always about two or three steps ahead of the municipalities in being clever,” Eckstein said. (Weider, 2019) Ten years after the Stadium opened, this report provides a critical retrospective on the promises of Measure J and the resulting contracts between the 49ers, the City, and the Stadium Authority. With the benefit of hindsight, it is clear that some important aspects of Measure J have gone well, especially the taxpayer protections for the City and its residents. For other benefits promised under Measure J, the results, as detailed in this report, are decidedly mixed. While many of Measure J's promises have been fulfilled, the voters anticipated greater benefits. City leaders were excited to entice a major sports franchise with the prospect of a new world- class stadium, and they were impatient to finalize negotiations on contractual terms and conditions for the Stadium. The City appeared to be outmatched by the expertise of the 49ers’ negotiators. City staff understood then that many of the terms in the agreements strongly favored the interests of the 49ers, and some of the staff even understood that the 49ers had sophisticated long-term goals that would significantly favor 49er interests. The resulting Stadium contracts are complicated and intricately interwoven. At the heart of the relationship between the 49ers and Stadium Authority, there is an imbalance of power. The Stadium Authority and City negotiators bear great responsibility for this imbalance. Stadium contracts ceded control and important benefits to the 49ers. Since then, while the 49ers have been difficult partners/tenants, the 49ers were emboldened by the agreements, and the Stadium Authority has historically failed to assert its remaining limited rights and controls. This report has a number of Findings that fault the Stadium Authority’s actions. Sadly, there are fewer Recommendations, as many of the Findings relate to poor Board decisions made for over a decade that cannot easily be undone. The City and the Stadium Authority were clearly outplayed by the San Francisco 49ers. FINDINGS AND RECOMMENDATIONS

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R13: The Stadium Authority should insist on consultation and prior notice before any major Stadium event commitments are made. This recommendation should be implemented by December 31, 2024.

June 12, 2024 — A Disjointed System:

49 páginas 10 hallazgos 11 recomendaciones

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Hallazgos & Recomendaciones 10 hallazgos

F1: The continuum of care for justice-involved people who have committed low-level crimes due to their behavioral health disorder is disjointed between BHSD, CBOs, community programs, the Court, and Custody Health. The County and its partners’ programs and services are too siloed, resulting in a lack of coordinated care.

F2: BHSD staff in Collaborative Court and Custody Health do not systematically collaborate to support the clients they have in common, resulting in clients spending unnecessary time in custody.

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R2: BHSD staff in Collaborative Court and Custody Health should establish more effective systems of collaboration. Some examples could include: • Custody Health being present in Collaborative Court to ensure collaboration in client support. • Have BHSD staff from FDR and Custody Health attend mutually relevant trainings together. This recommendation should be implemented by December 31, 2024.

F3: The current system does not allow for discharge planning for people accused of low-level offenses with behavioral health disorders soon after arrest and booking.

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R3: Appropriate County agencies should create a system that allows for the possibility of discharge planning for appropriate individuals to occur much earlier in the process. This recommendation should be implemented by December 31, 2024.

F4: The current countywide system is not conducive to justice-involved clients with behavioral health disorders establishing a personal connection with a service provider who can help them navigate all available services for the long-term. Such a personal connection could increase the likelihood of clients participating in treatment plans and transitioning more smoothly to the community.

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R4: The County should coordinate systems of care more effectively to make it easier for clients to establish personal connections. Some examples could include: • Increased in-reach services to County Jails (peer navigators, social workers, etc.) to work with clients to build trust and form a relationship to smoothly transition into community programs. • A more coordinated system of communication among service providers countywide regarding clients’ history and needs. This recommendation should be implemented by March 31, 2025.

F5: County services do not have a central repository for client digital records. This impedes coordination of care.

Recomendaciones relacionadas (2)

R5a: To the maximum extent legally allowable, the County should develop an initial plan of how to improve coordination of client digital records across its currently disparate network of data systems in different service areas, beginning with the following agencies: • Custody Heath • BHSD and the CBOs • EPS • Collaborative Court • And other related agencies This recommendation should be implemented by December 31, 2024.

R5b: Once a coordination plan is established, the County should have regular meetings every 6 months to monitor progress and implementation of the plan. This recommendation should be implemented by March 31, 2025.

F6: Collaborative Court judges are often forced to rely on clients bringing paper copies of their CSRs to court to be able to assess their adherence to program requirements. This is a cumbersome barrier toward program graduation and reentry into the community.

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R6: BHSD should devise a reliable and user-friendly system to provide electronic copies of CSRs to judges in advance of each client’s court date. This recommendation should be implemented by December 31, 2024.

F7: Insufficient staffing and an increased workload of BHSD in FDR has negatively impacted staff morale and led to longer wait times for clients who are incarcerated to enter treatment programs.

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R7: BHSD should prioritize staffing and resources in Collaborative Court and FDR. This recommendation should be implemented by December 31, 2024.

F8: Innovative programs such as PARR successfully reduce time incarcerated for their clients.

Recomendaciones relacionadas (1)

R8: The County should prioritize the current PARR program and the proposed expansion of this program for people with behavioral health disorders ensuring an earlier possible referral to Collaborative Court. This recommendation should be implemented by December 31, 2024.

F9: Custody Health’s current procedure for mental health screening and assessment allows too many incarcerated people with non-acute behavioral health disorders to go undiagnosed and untreated.

Recomendaciones relacionadas (2)

R9a: Custody Health should review its procedures for behavioral health disorder screening of newly booked clients to determine why so many are passing through without getting flagged. This recommendation should be implemented by December 31, 2024.

R9b: Once the County determines the issues related to flagging clients the County should fix the screening process. This recommendation should be implemented by March 31, 2025.

F10: Custody Health does not consistently check clients’ court schedules, leading to scheduling conflicts of court dates and medical appointments.

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R10: Custody Heath should consult the Court calendar using a system such as the Inmate Finder website to view court dates to ensure they do not schedule a client’s medical appointments at the same time as their court date. This recommendation should be implemented by September 30, 2024.

June 12, 2024 — Irreconcilable Differences:

92 páginas 9 hallazgos 22 recomendaciones

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Hallazgos & Recomendaciones 9 hallazgos

F1a: The working relationships among Councilmembers and the Mayor are broken.

F1b: Some Councilmembers do not adhere to the City’s adopted ethical and behavioral standards while conducting City business on the dais.

F1c: Councilmembers Becker and Park air petty grievances and engage in squabbles with other elected officials and constituents from the dais.

F2: Councilmembers Becker, Park, and Chahal do not understand and/or do not follow established parliamentary and meeting procedures.

Recomendaciones relacionadas (3)

R2a: Councilmember Becker should pledge to attend trainings in parliamentary procedures so that his behavior is more reflective of an elected who is dedicated to the electorate. This recommendation should be implemented by October 1, 2024.

R2b: Councilmember Park should pledge to attend trainings in parliamentary procedures so that his behavior is more reflective of an elected who is dedicated to the electorate. This recommendation should be implemented by October 1, 2024.

R2c: Councilmember Chahal should pledge to attend trainings in parliamentary procedures, so he can demonstrate a better working knowledge of the parliamentary process. This recommendation should be implemented by October 1, 2024.

F3: Some Councilmembers do not uphold their responsibility to conduct the City’s business professionally and efficiently.

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R3: The City should adopt the formal resolution for Meeting Management Procedures developed and presented by staff to the Governance and Ethics Committee meeting on December 4, 2023. This resolution would tie meeting procedures to the City Code of Ethics and Values, and Behavioral Standards for Public Meetings, codify rules regarding respectful and professional language on the dais, and initiate more productive meetings to keep the Council and public focused on City business. This recommendation should be implemented by October 1, 2024.

F4: Some Councilmembers have become preoccupied by personal and political vendettas resulting in verbal attacks, mocking, and disparaging members of the public and community volunteers from the dais without consequence. Councilmembers have ignored the public’s request to address their behaviors.

Recomendaciones relacionadas (3)

R4a: The City should establish an Independent Ethics Commission to oversee the behavior of Councilmembers and to ensure they model positive engagement with the public and reclaim the public’s trust. This recommendation should be implemented by October 1, 2024, and should be ongoing.

R4b: The City should hire an Independent Ethics professional and adopt robust ethics training strategies supported by policy. This recommendation should be implemented by October 1, 2024.

R4c: All Councilmembers should participate in regular training and counseling with an established outside entity that specializes in government ethics to implement training seminars and workshops for Councilmembers to learn how to maintain collegiality on the dais by using proven techniques and best practices to avoid tense exchanges, bad behavior, misconduct, and incivility, and how the rest of the Council can positively influence the behaviors effectively. This recommendation should be implemented by October 1, 2024, and should be ongoing.

F5: Councilmembers Becker and Park have engaged in unethical behavior on the dais by insulting, humiliating, and intimidating constituents and volunteers. Councilmembers Becker and Hardy explicitly encourage this behavior by laughing, snickering, or eye-rolling. Councilmembers Becker, Park, Hardy, Jain, and Chahal implicitly encourage these behaviors by failing to call out inappropriate conduct.

Recomendaciones relacionadas (5)

R5a: Councilmember Park should pledge to train with an ethics expert from an established outside entity that specializes in government ethics. This recommendation should be implemented by October 1, 2024, and should occur annually.

R5b: Councilmember Becker should pledge to train with an ethics expert from an established outside entity that specializes in government ethics. This recommendation should be implemented by October 1, 2024, and should occur annually.

R5c: Councilmember Hardy should pledge to train with an ethics expert from an established outside entity that specializes in government ethics. This recommendation should be implemented by October 1, 2024, and should occur annually.

R5d: Councilmember Chahal should pledge to train with an ethics expert from an established outside entity that specializes in government ethics. This recommendation should be implemented by October 1, 2024, and should occur annually.

R5e: Councilmember Jain should pledge to train with an ethics expert from an established outside entity that specializes in government ethics. This recommendation should be implemented by October 1, 2024, and should occur annually.

F6: There has not been an employee satisfaction survey since 2019.

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R6: The City should conduct an annual employee satisfaction survey, administered by a third party, which can be answered anonymously. This recommendation should be implemented by October 1, 2024, and should occur annually.

F7: City staff is exceptionally professional, well prepared, and consistently maintains their composure regardless of behaviors exhibited by the Council. Staff’s behavior is a model for the Council.

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R7: The City should commend City staff for their exemplary work ethic and professionalism. This recommendation should be implemented by August 1, 2024.

June 11, 2024 — County of Santa Clara’s Doomed History Book 2023-24 Santa Clara County Civil Grand Jury

32 páginas 7 hallazgos 4 recomendaciones

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Hallazgos & Recomendaciones 7 hallazgos

F1a: The County Executive’s Office, led by the then-County Executive, violated Board of Supervisors policy commitments to an open competitive procurement process that ensures fairness and equal access to business opportunities.

F1b: The then-County Executive modified and extended an existing grant writing and professional writing contract so it could award a history book project to a specific Contractor despite the fact that the Contractor lacked relevant experience.

F2: The County failed to adequately specify the scope of the Contractor’s work on the history book project. This resulted in an unusable manuscript.

Recomendaciones relacionadas (1)

R2: The County should analyze ways it can improve its policies to ensure that contracts include the appropriate specificity regarding terms and conditions to enable the County to pursue legal recourse when those terms and conditions have been violated by the contractor, including but not limited to County Counsel’s and County staff’s role in this process. This recommendation should be implemented by November 1, 2024.

F3a: The County approved and awarded a book contract on an hourly wage basis, inconsistent with publishing industry practice, resulting in over $1 million being spent on a manuscript that was not publishable.

F3b: The County regularly paid invoices without verifying contract performance and without documentation of work done and extended the book contract for a second year without requiring any proof of progress.

F3c: The County failed to clearly delineate project roles and responsibilities, especially for the project manager role.

F4: The County makes it impractical for members of the public to review contracts like the history book contract, causing the public to rely on whistleblowers and news reporters to understand the County’s business.

Recomendaciones relacionadas (1)

R4: The County should require the County Executive’s Office to implement a practical contract search system for the public to view all contracts, including non-competitive (sole and single source) Board contracts and extensions. This recommendation should be implemented by February 1, 2025.

June 11, 2024 — No Strings Attached:

86 páginas 5 hallazgos 5 recomendaciones

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Hallazgos & Recomendaciones 5 hallazgos

F1: The Board’s role is primarily policymaking, oversight, and providing legislative authority. The Board does not have day-to-day operational responsibilities. As such, the Board is ill-equipped to administer and monitor the inventory item grant program.

Recomendaciones relacionadas (1)

R1: The County should put the direction and management of the inventory item grant program under the County Executive’s Office and the Board should provide the County Executive with whatever policy direction the Board finds appropriate for an inventory item grant program.

F2: Although the County has implemented an informational cover sheet, the County’s current inventory item program does not have a consistent solicitation approach, eligibility requirements, or approval criteria, creating great inconsistencies across the Supervisorial Districts in the manner in which County funds are recommended to be awarded.

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R2: The County should use a common online application process for all applicants, regardless of Supervisorial District. The application should include, at a minimum, the following information: • Applicant organization’s mission. • Size of the applicant organization. • Specific amount being requested. • Applicant organization’s annual budget. • Proposed summary program budget, including any indirect and/or administrative fees. • Description of how funds will be used and what County priorities they support. • The amount of matching or other grant or contract funds available or already received by the organization. • Anticipated measurable outcomes for the proposed program.

F3: The existing inventory item program has failed to meet the Board’s stated purpose, which is to give one-time grants to small, start-up CBOs, which would not otherwise have the means or expertise to request grants.

Recomendaciones relacionadas (1)

R3: The County should create a consistent set of rules and guidelines for review and approval of inventory item awards that meets their goal of supporting smaller organizations, considering but not limited to the following: • Limit inventory item grants to organizations that do not have an existing contract with the County. • Set an annual $250,000 cap on total inventory item grants that each Supervisorial District can award.

F4: The current inventory item program lacks effective recipient accountability to ensure inventory item grant money is used for its approved purposes, making it difficult for the County to judge the program’s effectiveness.

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R4: The County should require recipients to provide annual progress reports and financial reports, and, if needed, the County should audit the organization’s expenditure records.

F5: Under the current process, a single elected official has largely unregulated autonomy to award public funds to a particular organization of their choosing using a system that lacks transparency. There is no way to avoid the appearance of favoritism in a grant program that the Board administers itself.

Recomendaciones relacionadas (1)

R5: If the County does not agree with the previous four recommendations, then it should eliminate the current inventory item program entirely.

June 10, 2024 — Continuity Report

35 páginas 6 hallazgos 3 recomendaciones

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Hallazgos & Recomendaciones 6 hallazgos

F1: If You Only Read the Ballot, You're Being Duped

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R1d: 1f. The County should take appropriate action to request that the state legislature consider amending current law to require the County Counsel to review and approve local ballot measure questions before they are voted on. CONTINUITY REPORT

F2: Unsportsmanlike Conduct: Santa Clara City Council F1 F1

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F3: Garbage In, Garbage Out: Santa Clara County Public Contract Data

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F4: Show Me the Money: Financial Transparency Needed

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F5: A House Divided: Cupertino City Council and City Staff

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F6: Conservatorships: A Case for Zealous Advocacy

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Recomendaciones adicionales 1

No vinculadas a hallazgos específicos.

R7c: Mayor Gillmor and Councilmember Watanabe – Dissent Response At the December 8, 2022, City Council meeting, the City Attorney stated that Councilmembers could independently submit a dissenting response if there was disagreement with the proposed

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June 10, 2024 — District Adrift:

42 páginas 9 hallazgos 11 recomendaciones

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Hallazgos & Recomendaciones 9 hallazgos

F1: Trustees are not meeting their basic responsibilities for ensuring accountability and providing community leadership in a number of critical areas detailed in this report. These include SJUSD leadership turnover, trust in leadership, student mental health services, safety plans, stocking Narcan, employee investigations, and hiring processes. Trustees too often accept SJUSD leadership explanations and justifications, which may be inaccurate or incomplete; do not sufficiently question SJUSD results; do not require detailed follow-up to ensure progress; and too rarely ask for SJUSD performance relative to external benchmarks or relative to other school districts within Santa Clara County.

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R1: SJUSD should ensure Board meeting agendas reflect topics important to the community, including those detailed in this report. These topics should be regularly reviewed at public Board meetings, with detailed plans for follow-up to track progress. This recommendation should be implemented by December 31, 2024.

F2: The unusually high levels of leadership turnover since 2021 has been exacerbated by poor leadership practices and low morale.

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R2: SJUSD should authorize an independent third-party assessment, with participant anonymity, to investigate the causes of high turnover over the past three years. The assessment should provide SJUSD with recommendations to reduce turnover, a means to track ongoing turnover as compared to neighboring school districts, and a means to objectively assess the leadership culture. This recommendation should be implemented by December 31, 2024.

F3: On numerous occasions, SJUSD has failed to ensure its management hiring processes meet its own guidelines for integrity and impartiality leading to mistrust in the process.

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R3: SJUSD should authorize an independent third-party assessment of the management hiring process over the past three years with a particular focus on: • impartiality in determining which candidates are selected as finalists. • ensuring results from job skills tests are factored into the determination of finalists. • consistency in determining when management job openings are filled by direct placement versus a full open interview process. This recommendation should be implemented by December 31, 2024.

F4: SJUSD has failed to conduct appropriate or complete internal investigations in multiple instances over the past three years. These failures call into question SJUSD’s understanding of its investigatory responsibilities and have undermined trust among leadership, employees, and the community.

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R4: SJUSD should authorize an independent third-party review of the completeness and correctness of past investigation processes, to identify missteps, and recommend process or policy improvements. This recommendation should be implemented by December 31, 2024.

F5: Based upon multiple data points, SJUSD employees have a low level of trust in SJUSD leadership.

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R5: SJUSD should assess the causes of low levels of trust in the SJUSD leadership and develop a plan and timeline for improvements. This recommendation should be implemented by December 31, 2024.

F6: SJUSD’s current plans to open wellness centers are inadequate and inconsistent with its publicly stated priority for expanded student mental health services. Current plans do not meet the objective of putting a wellness center in all secondary schools. There is inadequate funding for the wellness centers and the planning has largely been left to individual school administrators as opposed to an SJUSD-led plan. Trustees are unaware of SJUSD’s lack of progress relative to other school districts.

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R6a: SJUSD should conduct a comprehensive review of the current state of wellness centers at secondary schools and prepare a detailed public report on the status of the implementation of those centers with specific timelines for implementation. This recommendation should be implemented by September 30, 2024.

R6b: If SJUSD is to fulfill its stated priority to fund mental health services for students, SJUSD should provide a long-term sustainable funding plan for fully staffed full-time wellness centers at all secondary school sites. This recommendation should be implemented by December 31, 2024.

R6c: SJUSD should provide an accelerated implementation plan with a clear timeline to achieve the objective of fully staffed full-time wellness centers at all secondary school sites. SJSUD staff should lead the plan in coordination with principals. This recommendation should be implemented by December 31, 2024.

F7: SJUSD does not have a well-qualified, local, district-wide leader who is accountable for all safety planning, preparedness, and emergency response efforts.

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R7: SJUSD should create a dedicated staff position to lead and coordinate all safety planning and emergency response activities across SJUSD. This role can be modeled after similar positions in other Santa Clara County districts. Responsibilities should include, but not be limited to: • Act as the on-site leader for emergency response teams, including emergency communications. • Update safety protocols based on accepted best practices. • Train staff on safety drills. • Ensure implementation of the most current best practices for school safety plans. • Assist school site teams to improve their plans. • Manage community engagement to increase involvement in safety plans. This recommendation should be implemented by September 30, 2024.

F8: SJUSD does not stock Narcan or an alternative naloxone medication at its schools. SJUSD does not provide training for all staff on how to administer Narcan, creating an unnecessary risk of on- campus opioid overdose deaths and placing students and staff in jeopardy.

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R8: SJUSD should ensure that Narcan is widely available at all secondary school sites and train all school site and SJUSD district office staff on how it is administered. This recommendation should be implemented by September 30, 2024.

F9: SJUSD does not offer any livestream or video recordings of its Board meetings. Some materials presented at the meetings are not available to the public. The meetings are among the least accessible of any district in Santa Clara County, thus reducing the transparency of its actions and engagement with SJUSD constituents.

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R9: SJUSD should implement hybrid-style Board meetings that include: • Online viewing of meetings. • Remote comments during meetings. • Video recording of meetings. • Online access to all Board presentations. This recommendation should be implemented by December 31, 2024.

June 10, 2024 — Flawed Information, Flawed Decisions:

52 páginas 6 hallazgos 7 recomendaciones

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Hallazgos & Recomendaciones 6 hallazgos

F1: SCCHA executive management pr esented incomplete and financially incorrect analytical documents about the Property to the Board, omitting viable options for occupying, using, or selling the Property.

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R1: The Board should establish a standard operating procedure requiring executive management to use either internal or external experts to validate that financial analytical documents prepared for Board review, are accurate, complete, and present an unbiased evaluation of the matter under consideration. This recommendation should be implemented by December 31, 2024.

F2: SCCHA’s current five-year plan does not establish measurable objectives, goals, or accomplishments that would enable a comprehensive review of its programs and progress.

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R2: SCCHA should amend its current five-year plan to include actionable performance targets and measurable objectives. These performance targets should be incorporated into annual reviews for the SCCHA Executive Director and staff. This recommendation should be implemented by December 31, 2024.

F3: SCCHA’s existing five-year term plan does not identify specific SCCHA space needs and a funding plan to support them.

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R3: SCCHA should include an assessment of space needs and the associated funding requirements as part of their five-year plans. The assessment should include the financial impact of expected program growth, staffing, services, accessibility, and operating performance requirements on future office space needs. This recommendation should be implemented by December 31, 2024.

F4: The BOS does not have established qualifications for selecting SCCHA Board of Commissioners.

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R4a: The BOS should use established HUD guidelines to develop County-specific guidelines for the selection and appointment of SCCHA Board members. This recommendation should be implemented by December 31, 2024.

R4b: The BOS should develop a collaborative process that ensures the SCCHA Board, in total, contains a balance of skills, knowledge, and experience required to perform their assigned roles and responsibilities. This recommendation should be implemented by December 31, 2024.

F5: The BOS does not have an established training program for its SCCHA Board appointees specific to the roles and responsibilities of a housing Commissioner.

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R5: The BOS should use established HUD guidelines to develop County-specific training programs for its housing Commissioners. This recommendation should be implemented by December 31, 2024 .

F6: The BOS has multiple deficiencies in its SCCHA Commissioner appointment process, including long vacancies and incomplete documentation.

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R6: The BOS should develop processes to ensure that the appointment process and related documentation requirements are completed in a timely manner. This recommendation should be implemented by December 31, 2024.

June 07, 2024 — No Single Source of Truth:

64 páginas 11 hallazgos 15 recomendaciones

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Hallazgos & Recomendaciones 11 hallazgos

F1: The County cannot find accurate contract information in a timely manner. This hinders the County Executive’s Office in decision making, prevents procurement cooperation that could save money, and unnecessarily wastes many hours of effort.

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R1a: The County should investigate other counties or similar organizations to find out if and how they solved the problem of finding up-to-date contract information in a timely manner. This recommendation should be implemented by December 31, 2024.

R1b: The County should develop a plan for a countywide contract-search system. This plan should include estimated annual cost savings from using the system as well as the estimated implementation cost. This recommendation should be implemented by March 31, 2025.

R1c: The County should evaluate the cost and benefits of using outside expert resources to plan, select components for, and develop a countywide contract-search system. This recommendation should be implemented by June 30, 2025.

F2: The County saves multiple, sometimes inconsistent, copies of contract information on department storage devices and multiple procurement systems. This makes it difficult for the County to find accurate, up-to-date, information.

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R2a: The County should define where the most up-to-date contract information is located so that a countywide contract-search system can find that information. This recommendation should be implemented by December 31, 2024.

R2b: The County should create a plan to eliminate inconsistent contract information. This recommendation should be implemented by March 31, 2025.

F3: Due to the absence of a uniform contract search system, County departments are not able to learn if other departments already have contracts that are relevant to their needs and, thus, are not able to take advantage of cooperative procurement opportunities. Further, if the County had a publicly accessible contract-search system, other government entities could use that resource to partner with the County on cooperative procurement opportunities to the benefit of the County.

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R3: The County should discuss cooperative procurement methods, such as contract piggybacking, with potential government partners and ask the potential government partners to provide their requirements for a countywide contract-search system accessible to them. This recommendation should be implemented by December 31, 2024.

F4: Multiple departments in the County do not have a department policy for contractor evaluations and do not evaluate contractor performance. This violates the Policy Manual guidelines and could lead to departments making a poor choice of contractor.

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R4: The County should provide employees with a contractor evaluation template that includes criteria such as overall satisfaction, quality, cost-effectiveness, and timeliness. The County should provide guidelines for County employees that explain when and how to evaluate a contractor and how to use the contractor evaluation template. This recommendation should be implemented by December 31, 2014.

F5: The County does not have a countywide mechanism to store and share contractor evaluations making it impossible for departments to view other departments’ evaluations.

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R5a: The County should develop a short-term plan for a simple countywide system for storing and sharing contractor evaluations. This recommendation should be implemented by December 31, 2024.

R5b: The County should develop a long-term plan for an integrated procurement and evaluation system that requires employees to enter an evaluation for appropriate contracts. This recommendation should be implemented by March 31, 2025.

F6: Multiple County departments with professional service contracts manage their procurement process using custom spreadsheets instead of using a procurement system. This leads to the County having multiple inconsistent copies of contract data and makes it difficult to measure county-wide procurement performance.

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R6: The County should develop a plan for the implementation of one or more procurement systems that departments must use instead of custom spreadsheets. The procurement system(s) should improve efficiency, help automate the procurement of professional service contracts, and allow integration with existing procurement and financial systems. This recommendation should be implemented by December 31, 2024.

F7: County departments cannot practically measure procurement contract lead times. The County has no way of determining if a department performing its own procurement consistently fails to establish contracts in a timely manner.

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R7: The County should establish contract lead time targets and require all departments with procurement employees to use a procurement system that makes it practical to track contract lead times. This recommendation should be implemented by December 31, 2024.

F8: Most employees engaged in procurement do not know about the County’s procurement performance goals.

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R8: The County needs to inform all County employees involved in procurement of the procurement performance goals and make it clear how their individual performance connects to department and countywide goals. This recommendation should be implemented by October 31, 2024.

F9: The County does not track procurement performance measures of individual departments involved in procurement. The County cannot evaluate the performance of those individual departments.

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R9: The County needs to monitor individual department performance using procurement measures such as contract lead time, competitiveness of solicitations, and cost savings. This recommendation should be implemented by December 31, 2024.

F10: The County does not have a countywide strategic procurement plan to address the long-standing issues of finding contracts in a timely manner, eliminating data consistency issues, measuring performance, evaluating contractors, and the choice of procurement systems.

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R10: The County should develop a countywide strategic procurement plan with objective performance measures that encompass all County departments, offices, and agencies. The countywide strategic procurement plan should address the long-standing issues of finding contracts in a timely manner, eliminating data consistency issues, evaluating contractors, and the choice of procurement systems. This recommendation should be implemented by March 31, 2025.

F11: The County has made minimal progress in implementing procurement technology over the last decade because the County has failed to make this a priority.

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R11: The County should evaluate if it has the appropriate talent and resources to develop and implement a countywide technology plan to address the procurement shortfalls. This recommendation should be implemented by December 31, 2024.

March 07, 2023 — (endorsed) Office of the Clerk of the Board of Supervisors County Government Center, East Wing Mar 1 0 2023

7 páginas 4 hallazgos 15 recomendaciones

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Hallazgos & Recomendaciones 4 hallazgos

F1: The County has not addressed the known inaccuracies of public contract data; neither the public nor the Board of Supervisors can determine, with accuracy, the total value or expiration dates of contracts. The County disagrees with this Finding. Public contract data reports are not inaccurate. Public access to Active Contract reports, which are made available via the Procurement public website, involves contract data that is updated monthly. As active contracts are dynamic (i.e., revised via amendments, corrections, etc.), contract data does change from month-to-month. The Active Contracts list, which is made available monthly to the public, is a report of active contracts only and the data is accurate as of the report date posted. The County does not utilize the "Term Contracts list," the Grand Jury Report references such a list, which should be correctly titled "Purchasing Agent Actions Relating to New FY#### Term Contracts" (Purchasing Actions Report). This annual report to the Finance and Government Operations Committee (FGOC) lists purchasing actions executed by the County's purchasing agents on new contracts established within the previous fiscal year. This report is not intended to provide the total contract value, only the portion of which that was executed by the County's purchasing agents in the reported time frame. Both the Active Contracts list and the Purchasing Actions Report serve separate and distinct purposes. Data between the two reports is not intended to match. Separate and individual contracts can be accessed via a California Public Records Act (CPRA) request and would reflect contract data for the requested time frame. Board of Supervisors: Sylvia Arenas, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian County Executive: Jeffrey V. Smith 2-006 DocuSign Envelope ID: C7E39CBF-9813-43F8-8668-3FC3835C36C5

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R1a: The County should mandate (1) contract data accuracy protocols, (2) employee contract management training, and (3) implementation and use of contract management modules in SAP. This recommendation should be implemented by March 15, 2023. (1) This Recommendation has been implemented. Additionally, the County has hired a Compliance Manager to assist and facilitate contract data accuracy protocols. (2) This Recommendation will be implemented by September 1, 2023, providing time to prepare the implementation plan, develop the curriculum, assign the trainers, and roll the training out countywide. (3) This Recommendation has not yet been implemented but is expected to be implemented at a future date. The County is currently assessing new Enterprise Resource Planning (ERP) tools to replace existing technologies, the business requirements for which would include a new contracts management module. As with any enterprise software implementation, this would be a multi-year endeavor requiring considerable County staff and financial resources. Such complex efforts will require extensive fit-gap and interface analysis, data conversation, change management and implementation timelines.

R1b: The County should designate and hold one person (akin to San Francisco's Chief Data Officer) responsible for contract data accuracy. This recommendation should be implemented by March 15, 2023. The Recommendation will not be implemented because it is not warranted or is not reasonable. Given the County's position that the data is not inaccurate, there is no need to designate a singular person responsible for data accuracy. Contract accuracy and data integrity are the responsibility of all contract administrators throughout the County, both in centralized and de-centralized contracting activities. Additionally, the County disagrees with the Grand Jury's assessment and example of San Francisco's Chief Data Officer roles and responsibilities for contract data accuracy.

R1c: The County should fully audit (as opposed to a "spot plan audit") and correct the contract database to provide accurate data in the current Active Contracts list. This recommendation should be implemented by March 15, 2023. This Recommendation will not be implemented because it is not warranted or is not reasonable. Given the County's position that the data is not inaccurate, there is no need to conduct a full audit. Consistent with the County Administration's response to the 2021 Harvey Rose Management Audit Recommendations for Procurement, the County will develop a quarterly spot audit plan to ensure data accuracy following the onboarding of the new Compliance Manager. Accordingly, the County anticipates completing this audit plan by September 1, 2023.

R1d: Board of Supervisors: Sylvia Arenas, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian County Executive: Jeffrey V. Smith 2-006 DocuSigri Envelope ID: C7E39CBF-9813-43F8-8668-3FC3835C36C5 The County should continue quarterly accuracy audits on the contract database, documenting statistical evidence or error reduction, until all decentralized department employees are trained on contract management. This should be implemented following the March 15, 2023, date of Recommendation 1c. This Recommendation will be implemented by September 1, 2023. Refer to the response to

F2: The Civil Grand Jury (consistent with the findings from the Harvey M. Rose Associates, LLC 2021 Management Audit of the County of Santa Clara Procurement Department report) finds that there is a lack of standardized processes to effectively input and validate contract data; the SAP and Ariba databases contain many errors and omissions, thereby rendering the Active Contracts list unreliable. The County partially disagrees with this Finding. The County's eProcurement team deployed numerous enhancements to SAP ERP Central Component (SAP ECC) to improve contract compliance with County policy and administrative guidelines. These include: System-generated reminder of expiring contracts; . System-generated restrictions for inappropriate signature authority; . Sourcing method to capture and report on procurement methods used to award contracts; and, . Maximum financial obligation field to report contract values rather than aggregated purchase . order values. While the County intends to purchase and implement a new ERP system to succeed the current SAP and Ariba systems, this will be a multi-year endeavor requiring considerable resources. The intent is to fully utilize Ariba in the near term while the County develops specifications and sources toward implementing a new ERP solution. In the interim, the continued use and enhancement of the Ariba system will provide benefits to the County, including but not limited to additional controls and compliance in professional services contracting, increased accuracy of County spend data, and more comprehensive reporting on Countywide contracts and spend.

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R2a: The County should reconcile the Term Contracts list with the Active Contracts list to ensure accuracy and consistency in contract purpose descriptions, before it is distributed and made public. This recommendation should be implemented by March 15, 2023. This Recommendation will not be implemented because it is not warranted or is not reasonable. The County does not have or generate a Term Contracts list. Refer to the County's response to Finding 1.

R2b: The County should centralize the initial input of contract data as much as possible in each department or in one centralized department to mitigate input errors and inconsistencies. Once the contract terms are in the database, the decentralized departments should continue to manage their own contracts. There Board of Supervisors: Sylvia Arenas, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian in County Executive: Jeffrey V. Smith 2-006 DocuSign Envelope ID: C7E39CBF-9813-43F8-8668-3FC3835C36C5 should be one quality assurance function in the Procurement Department that is responsible for the accuracy of all contract data. This recommendation should be implemented by March 15, 2023. This Recommendation will not be implemented because it is not warranted or is not reasonable. The County has no current plans to centralize the input of contract data with its current procurement technologies and staffing resources. Instead, the County will consider assessing the idea of centralizing initial contracts data entry and contract administration processes as part of the future ERP implementation.

R2c: The County should establish protocols that ensure that data related to amended contracts, including the value, expiration date, or terms of the contract, are accurately inputted into the ERP system with the addition of a data field to be used for version control. This recommendation should be implemented by March 15, 2023. The Recommendation has not yet been implemented but will be implemented in the future. It should be noted that the County does not have a complete ERP system. Relevant controls and data fields have already been configured in the Ariba system for use in professional services contracting. As departments are integrated into Ariba, these controls will be used in more of the County's contracts portfolio. The County anticipates integrating a large portion of its contracts portfolio into Ariba by June 30, 2025. Further, such controls and data fields will be included as business requirements in any future ERP system implemented by the County.

R2d: The County should add new fields to the contract databases, including a field showing an identifier for the person tasked with verifying the accuracy of public contract data. This recommendation should be implemented by March 15, 2023. The Recommendation has been implemented. Current SAP and Ariba system configurations already capture the name of the contract administrator.

R2e: The County should require that all active contracts are contained on the Active Contracts list and none are hidden from public view. This recommendation should be implemented by March 15, 2023. This Recommendation has been implemented. The Active Contracts report provides a listing of all active contracts, except those that are removed or redacted to comply with County ordinance, policy, or other legal requirements.

R2f: The County should post an electronic copy of the actual contracts for public view, ensuring transparency and mitigating human input error. This recommendation should be implemented by June 15, 2023. Board of Supervisors: Sylvia Arenas, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian S County Executive: Jeffrey V. Smith 2-006 DocuSign Envelope ID: C7E39CBF-9813-43F8-8668-3FC3835C36C5 This Recommendation will not be implemented because it is not warranted or is not reasonable. Due to the size and scope of Countywide contracting, a sizable percentage of the contracting portfolio includes proprietary content or information that requires redaction; to proactively review each contract for redactable information and conduct such redaction would consume an exorbitant amount of legal resources. If the public is interested in viewing a specific contract, they may submit a CPRA request.

R2g: To facilitate Public Records Act inquiries, the County should include both the computer-generated number as well as the County's original contract number on the Active Contracts list. This recommendation should be implemented by June 15, 2023. This Recommendation has been implemented. The Purchase Order or Contract Number is already included in the Active Contracts report posted on the Procurement public website.

R2h: The County should include new data fields (BOS Approval Data and ID, Authorizing Agency, Revised Expiration Data, Version, Total Contract Value after Change Orders or Amendments, and Detailed Contract Descriptions), as indicated in this report, so that vendors and members of the public may trace the contracting authority and date of action. This recommendation should be implemented by June 15, 2023. This recommendation will not be implemented because it is unwarranted or is not reasonable. While most of this data is already available on the Active Contracts report, the continued creation of new data fields to capture additional contract information is not practical. Additional contract information may be provided as requested through a CPRA request.

F3: The Civil Grand Jury finds that, although the Procurement Department produced training materials, the County does not mandate that employees participate in the training before entering contract data into ERP systems. The County agrees with this Finding. The County currently requires employees complete a formal training curriculum to attain access is procurement systems. Further, the County will mandate contracts management and data entry training for all users starting no later than September 1, 2023.

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R3: The County should require mandatory contract management training for County employees and ensure that satisfactory completion of the training is documented before the employee is allowed to enter contract data into the ERP systems. This recommendation should be implemented by February 28, 2023. The Recommendation will be implemented no later than September 1, 2023.

F4: Board of Supervisors: Sylvia Arenas, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian 5 County Executive: Jeffrey V. Smith 2-006 DocuSign Envelope ID: C7E39CBF-9813-43F8-8668-3FC3835C36C5 The County failed to fully implement the contract management module of the SAP system purchased a decade ago for millions of dollars. This lapse has prevented the timely integration of contract data from the Ariba and SAP systems, creating incompatibility issues. The County partially disagrees with this Finding. The County did not acquire and implement the SAP contracts management module with its initial SAP deployment in 2002. The County acquired Ariba as a full procure-to-pay suite of tools in 2014, including the contracts management module. This module is currently in use by the Procurement Department for centralized contracts and a phased implementation plan for use by other departments across the County is in progress. Further, the County anticipates acquiring a new ERP system at an undetermined future date, whose business requirements will include a new contracts management module for use by all County departments.

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R4a: The County should insist that the current pilot program regarding contract data at the Social Services Agency (SSA) contain all the necessary elements to ensure a quality evaluation of the material management module before the process is rolled out to other departments. This recommendation should be implemented by June 15, 2023. The Recommendation has been implemented. SSA does not require materials management functionality. Relevant fields have been configured in the professional services contracting templates and workflows of Ariba for use by SSA and other departments. Enhancements to the relevant templates and workflows will continue as the contracts management module is further deployed across the County. It is important to note that the Pathways Material Management (PMM) system is separate from both SAP and Ariba and is the only materials management system for use in the County. It is used exclusively by the County of Santa Clara Health System. SAP and Ariba materials management functionality have not been implemented.

R4b: To fully implement and integrate the contract management ERPs, the County should implement the contract management module within SAP for all departments and agencies. This recommendation should be implemented by June 15, 2023. The Recommendation will not be implemented because it is not warranted or is not reasonable. As stated previously, the County does not have multiple procurement ERP systems, nor does it have an SAP-specific contracts management module in place. Aside from the phased deployment of the Ariba contracts management module, the implementation of any other specific contracts management will be assessed during a future ERP implementation. Board of Supervisors: Sylvia Arenas, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian in. County Executive: Jeffrey V. Smith 2-006

Conservatorships:

33 páginas 9 hallazgos 15 recomendaciones

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Hallazgos & Recomendaciones 9 hallazgos

F1: The PDO found it difficult to compile conservatorship data that was requested by the Civil Grand Jury because of the limited tracking of outcomes and other limitations in the case management software used by the PDO. Their system does not track post-adjudication conservatorship cases, which makes it impossible to collect and analyze data, track outcomes, and efficiently monitor the status of older cases.

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R1: The Legislature hereby declares that, except as otherwise specifically provided by law, each proposed ward has the right to have an attorney before a guardianship is imposed to ask the court for relief, and each ward has the right to: a. Have an attorney at any time during a guardianship to ask the court for relief. b. Receive notice of all guardianship proceedings and all proceedings relating to a determination of capacity unless the court determines that the ward lacks the capacity to comprehend such a notice. c. Receive a copy of all documents filed in a guardianship proceeding. d. Have a family member, an interested party, a person of natural affection, an advocate for the ward or a medical provider speak or raise any issues of concern on behalf of the ward during a court hearing; either orally or in writing, including, without limitation, issues relating to a conflict with a guardian. As used in this paragraph, “person of natural affection” means a person who is not a family member of the ward but who shares a relationship with the ward that is similar to the relationship between family members. e. Be educated about guardianships and ask questions and express concerns and complaints about a guardian and the actions of a guardian, either orally or in writing. f. Participate in developing a plan for his or her care, including, without limitation, managing his or her assets and personal property and determining his or her residence and the manner in which he or she will receive services. g. Have due consideration given to his or her current and previously stated personal desires, p

R1a: The PDO should develop a tracking system that is capable of accurate, detailed, and timely data collection. This recommendation should be implemented by March 30, 2023.

R1b: The PDO should develop data analytics that establish metrics in conservatorship cases and track data on subjects like conservatorships denied or avoided, proceedings that result in protecting the conservator, and cases that are terminated. This recommendation should be implemented by June 30, 2023.

F2: The PDO indicated that they are the attorney of record for more than 3000 probate conservatees.

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R2: The PDO should ascertain which of their conservatorship cases should be terminated due to the conservatee’s death. This recommendation should be implemented by June 30, 2023.

F3: The PDO does not actively monitor post-adjudicated probate conservatorship cases in the County where an estate is not involved.

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R3a: The PDO should review all probate conservatorship cases where they are attorney of record to determine what case management and case monitoring responsibilities are owed to these clients based on changes to various California laws that expressly require zealous advocacy and new standards for establishing and maintaining a probate conservatorship. To be implemented by June 30, 2023.

R3b: The PDO should adopt a proactive case management model for all cases for which it is attorney of record. This recommendation should be implemented by June 30, 2023.

F4: The PDO currently has one attorney assigned to handle probate conservatorships. The number of proposed conservatees that will need representation from the PDO is likely to grow because of the mandatory appointment and the gaining population in the County. Under the new legislative guidelines that have recently been enacted (e.g., zealous advocacy, changes to conservatorship standards), it seems infeasible that one attorney can provide sufficient representation for the number of conservatees in the County that will need representation from the PDO.

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R4a: The PDO should research and determine the ideal caseload per attorney and the staffing needed to accommodate a proactive style of case management that accounts for recent legislative changes. This recommendation should be implemented by June 30, 2023.

R4b: The PDO should evaluate its resource needs to best serve the growing needs of conservatees in the County and request appropriate funding from the County. This recommendation should be implemented by June 30, 2023.

F5: The current PDO attorney is compliant in the required probate conservatorship training. The Civil Grand Jury’s concern is that there is currently just one lawyer in the PDO that is handling probate conservatorships. This leaves little opportunity for cross-training and peer-to-peer collaboration. Further, the supervisor of this division is not required to have probate conservatorship expertise.

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R5: The PDO should cross train staff specific to conservatorship law and develop written materials to ensure that institutional knowledge is maintained despite attorney turnover. This recommendation should be implemented by June 30, 2023.

F6: A cognitively impaired client may struggle to challenge or complain about the quality of their legal representation. The PDO does not have formal performance standards or probate case reviews, and the direct supervisor is not required to have expertise in probate law.

Recomendaciones relacionadas (3)

R6a: The PDO should establish detailed performance standards and quality management standards for conservatorship attorneys. These standards should be monitored by a supervisor knowledgeable in conservatorship law and advocacy. This recommendation should be implemented by March 30, 2023.

R6b: The PDO should randomly select a percentage of cases for quality review for each attorney annually. New attorneys should submit for review all written pleadings to the supervisor in the first year. This recommendation should be implemented by June 30, 2023.

R6c: The PDO should have regular staff meetings for all staff handling probate conservatorships to discuss policies and cases to ensure uniformity in service and goals. This recommendation should be implemented by March 30, 2023.

F7: The Nevada Model has a standing order with the court to establish access to clients' records. This saves a significant amount of time and resources.

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R7: The PDO should explore streamlined ways for attorneys to get needed information in preparation for probate conservatorship cases. For example: • Hospital records • Doctors’ office records • Bank records • Family records • Guardian records • Regional center records This recommendation should be implemented by June 30, 2023.

F8: The GAP achieved success by developing a plan that tracked conservatorship-related data, created a training program, and implemented best practices for case management, which were all designed to effectuate client-directed services that embodied the ideal of zealous advocacy.

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R8: The PDO should consult with a third party to evaluate its current policies and processes for conservatorship defense and develop a strategic plan for best practices. This should include detailed data collection and analysis, caseloads, outcomes, training, staffing, and quality assurance controls. The strategic plan should be re-evaluated regularly. This recommendation should be implemented by June 30, 2023.

F9: The Civil Grand Jury found the PDO’s staff to be very helpful and committed to improving the performance of conservatee representation. The dedication of the attorney was evident and appreciated.

Recomendaciones relacionadas (1)

R9: No recommendation.

A House Divided:

52 páginas 4 hallazgos 8 recomendaciones

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Hallazgos & Recomendaciones 4 hallazgos

F1: The City has a culture of distrust between the councilmembers and City staff that is creating dysfunction.

Recomendaciones relacionadas (1)

R1: The City should develop or acquire a good governance training and development program for both existing and newly elected councilmembers and existing and new staff members to address: (i) their role, responsibilities, and the relevant laws that specify and/or limit their function; (ii) the division of responsibilities between councilmembers and staff as directed by the Cupertino Municipal Code; and (iii) the necessity of morale building to create a stronger, more effective, and respectful relationship between City staff and councilmembers. Recommendation 1 should be implemented by March 31, 2023.

F2: The dysfunction prevalent between the City Council and City staff has negatively impacted City operations, including the continuing loss of skilled and experienced personnel. The City has a reputation of having a difficult work environment, making recruiting of highly qualified applicants difficult.

Recomendaciones relacionadas (1)

R2: The City should hire a consultant to study staff morale and make recommendations to improve retention of employees and quality of the working environment. To the extent legally permissible, the study and recommendations should be published for public review. Recommendation 2 should be implemented by July 31, 2023.

F3: The City has not taken sufficient steps to improve the City’s financial risk profile as recommended by its retained Internal Auditor.

Recomendaciones relacionadas (2)

R3a: The City should implement the work plan identified in the May 2022 Fiscal Policy Inventory and Gap Analysis Report developed by the City’s internal audit firm, Moss Adams LLP, to address policy and procedural gaps and weaknesses. Recommendation 3a should be implemented by July 31, 2023.

R3b: The City should employ the use of continuing annual internal audits to assess progress in the development and implementation of new or modified policies and procedures to comply with internal audit risk reduction and mitigation recommendations. Recommendation 3b should be implemented by July 31, 2023.

F4: A comprehensive Code of Ethics not only provides guidance and baseline standards for ethical behavior, it includes sanctions and consequences for deviations from the standard. The City’s Ethics Policy is generic and lacks enforcement provisions and therefore fails to provide a framework to address ramifications for policy violations.

Recomendaciones relacionadas (4)

R4a: The City should establish an independent Public Ethics Commission with guidance from experts in applied ethics, such as the Markkula Center for Applied Ethics at Santa Clara University, to: (i) develop and implement a robust government ethics training program for all councilmembers; and (ii) evaluate a best practices enforceable Code of Ethics and Conduct Policy that governs all councilmembers and appointed officials for consideration by the City Council. This recommendation should be implemented by March 31, 2023.

R4b: The City should reinstate enforcement procedures to enable the City Council and the public to file complaints and testify at public hearings to help remediate ethics violations. This revision should include a procedure for public admonishment, revocation of special privileges, or censure. This recommendation should be implemented by March 31, 2023.

R4c: The City Council should engage a conflict resolution professional to help enhance mutual understanding and respect amongst all stakeholders. This recommendation should be implemented by January 31, 2023, and should be repeated at least once per year.

R4d: The City should publish its current Ethics Policy on the City website by January 31, 2023.

Garbage In, Garbage Out:

26 páginas 4 hallazgos 15 recomendaciones

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Hallazgos & Recomendaciones 4 hallazgos

F1: The County has not addressed the known inaccuracies of public contract data; neither the public nor the Board of Supervisors can determine, with accuracy, the total value or expiration dates of contracts.

Recomendaciones relacionadas (4)

R1a: The County should mandate (1) contract data accuracy protocols, (2) employee contract management training, and (3) implementation and use of contract management modules in SAP. This recommendation should be implemented by March 15, 2023.

R1b: The County should designate and hold one person (akin to San Francisco’s Chief Data Officer) responsible for contract data accuracy. This recommendation should be implemented by March 15, 2023.

R1c: The County should fully audit (as opposed to a “spot plan audit”) and correct the contract database to provide accurate data in the current Active Contracts list. This recommendation should be implemented by March 15, 2023.

R1d: The County should continue quarterly accuracy audits on the contract database, documenting statistical evidence of error reduction, until all decentralized department employees are trained on contract management. This should be implemented following the March 15, 2023, date of

F2: The Civil Grand Jury (consistent with the findings from the Harvey M. Rose Associates, LLC 2021 Management Audit of the County of Santa Clara Procurement Department report) finds that there is a lack of standardized processes to effectively input and validate contract data; the SAP and Ariba databases contain many errors and omissions, thereby rendering the Active Contracts list unreliable.

Recomendaciones relacionadas (8)

R2a: The County should reconcile the Term Contracts list with the Active Contracts list to ensure accuracy and consistency in contract purpose descriptions, before it is distributed and made public. This recommendation should be implemented by March 15, 2023.

R2b: The County should centralize the initial input of contract data as much as possible in each department or in one centralized department to mitigate input errors and inconsistencies. Once the contract terms are in the database, the decentralized departments should continue to manage their own contracts. There should be one quality assurance function in the Procurement Department that is responsible for the accuracy of all contract data. This recommendation should be implemented by March 15, 2023.

R2c: The County should establish protocols that ensure that data related to amended contracts, including the value, expiration date, or terms of the contract, are accurately inputted into the ERP system with the addition of a data field to be used for version control. This recommendation should be implemented by March 15, 2023.

R2d: The County should add new fields to the contract databases, including a field showing an identifier for the person tasked with verifying the accuracy of public contract data. This recommendation should be implemented by March 15 2023.

R2e: The County should require that all active contracts are contained on the Active Contracts list and none are hidden from public view. This recommendation should be implemented by March 15, 2023.

R2f: The County should post an electronic copy of the actual contracts for public view, ensuring transparency and mitigating human input error. This recommendation should be implemented by June 15, 2023.

R2g: To facilitate Public Records Act inquiries, the County should include both the computer-generated number as well as the County’s original contract number on the Active Contracts list. This recommendation should be implemented by June 15, 2023.

R2h: The County should include new data fields (BOS Approval Date and ID, Authorizing Agency, Revised Expiration Date, Version, Total Contract Value after Change Orders or Amendments, and Detailed Contract Description), as indicated in this report, so that vendors and members of the public may trace the contracting authority and date of action. This recommendation should be implemented by June 15, 2023.

F3: The Civil Grand Jury finds that, although the Procurement Department produced training materials, the County does not mandate that employees participate in the training before entering contract data into ERP systems.

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R3: The County should require mandatory contract management training for County employees and ensure that satisfactory completion of the training is documented before the employee is allowed to enter contract data into the ERP systems. This recommendation should be implemented by February 28, 2023.

F4: The County failed to fully implement the contract management module of the SAP system purchased a decade ago for millions of dollars. This lapse has prevented the timely integration of contract data from the Ariba and SAP systems, creating incompatibility issues.

Recomendaciones relacionadas (2)

R4a: The County should insist that the current pilot program regarding contract data at the Social Services Agency contain all the necessary elements to ensure a quality evaluation of the material management module before the process is rolled out to other departments. This recommendation should be implemented by June 15, 2023.

R4b: To fully implement and integrate the contract management ERPs, the County should implement the contract management module within SAP for all departments and agencies. This recommendation should be implemented by June 15, 2023.

Show Me the Money:

23 páginas 10 hallazgos 9 recomendaciones

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Hallazgos & Recomendaciones 10 hallazgos

F1: The City of Los Altos is not submitting monthly treasurer’s reports in compliance with California Government Code section 41004.

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R1: The City of Los Altos should comply with Government Code section 41004 by submitting monthly treasurer’s reports that include monthly disbursements, receipts, and fund balances and by filing those reports with the city. This recommendation should be implemented by March 15, 2023.

F2: The City of Los Altos does not produce treasurer’s reports in compliance with California Government Code section 41004. The reason provided for non-compliance was that the City of Los Altos’ financial policy does not require the preparation and submission of treasurer’s reports. It is an erroneous belief that internal policies excuse compliance with Government Code section 41004.

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R2: The City of Los Altos should amend its financial policy to require that monthly treasurer’s reports be prepared and submitted in accordance with California Government Code section 41004 by March 15, 2023.

F3: The Town of Los Altos Hills produces monthly treasurer’s reports but the content of those reports lacks monthly disbursements, receipts, and fund balances required by California Government Code section 41004.

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R3: The Town of Los Altos Hills should update their existing monthly reports to include monthly disbursements, receipts, and fund balances by March 15, 2023.

F4: The Town of Los Gatos produced reports that contain the required content but does not produce the treasurer’s reports on a monthly basis as required by California Government Code section 41004.

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R4: The Town of Los Gatos should produce its reports on a monthly basis to comply with California Government Code section 41004 by March 15, 2023.

F5: The City of Milpitas does not produce monthly treasurer’s reports as required by California Government Code section 41004.

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R5: The Civil Grand Jury recommends that the City of Milpitas comply with California Government Code section 41004 by producing monthly treasurer’s reports that include monthly disbursements, receipts, and fund balances by March 15, 2023.

F6: The City of Campbell does not produce monthly treasurer’s reports as required by California Government Code section 41004.

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R6: The City of Campbell should comply with California Government Code section 41004 by producing monthly treasurer’s reports that include monthly disbursements, receipts, and fund balances by March 15, 2023.

F7: The City of Monte Sereno does not produce monthly treasurer’s reports as required by California Government Code section 41004.

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R7: The City of Monte Sereno should comply with California Government Code section 41004 by producing monthly treasurer’s reports that include monthly disbursements, receipts, and fund balances by March 15, 2023.

F8: When the Civil Grand Jury began this investigation, the City of Cupertino was not in compliance with California Government Code section 41004. However, starting in March 2022, the City of Cupertino began producing treasurer’s reports compliant with Section 41004.

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R8: The City of Cupertino should maintain compliance with California Government Code section 41004. Continued compliance is recommended.

F9: The Civil Grand Jury commends the City of Saratoga for producing monthly treasurer’s reports that include disbursements, receipts, and fund balances. The City of Saratoga is in full compliance with California Government Code section 41004.

F10: The Civil Grand Jury commends the elected city treasurer for producing monthly treasurer’s reports that include monthly disbursements, receipts, and fund balances. The City of Morgan Hill is in full compliance with California Government Code section 41004.

Recomendaciones relacionadas (1)

R10: No recommendation.

Continuity Report

27 páginas 9 hallazgos 15 recomendaciones

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Hallazgos & Recomendaciones 9 hallazgos

F3: Partially agree/partially disagree. The City of Palo Alto disagrees that the Palo Alto City Council has not taken a leadership role in developing support for AH planning initiatives and projects once they are identified. Specifically, each of the last two years, the Palo Alto City Council adopted “Housing for Social and Economic Balance” as one of its four city “Priorities.” The City of Palo Alto agrees that there can be more Palo Alto City Council advocacy to initiate and solicit AH projects.

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R3: The recommendation has not yet been implemented but will be implemented before the end of the 2022 calendar year.

F4: The Palo Alto City Council disagrees with this finding in that the Palo Alto City Council does play an active role in engaging the community on AH policies and projects, and data shows there is already widespread community support and acceptance of below market rate housing.

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R4: This recommendation will be implemented upon completion of the North Ventura Coordinated Area Plan (NVCAP) process; however, the recommended timeline of June 2022 is premature.

F6: Partially agree/partially disagree. The City of Palo Alto agrees that it does have a multiplicity of planning processes, which may benefit from further rationalization. It is not, clear, however, if those plans are a primary planning tool to achieve more below market rate housing.

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R6a: This recommendation has been implemented.

R6b: This recommendation will not be implemented because it is not warranted.

F8: Partially agree/partially disagree. Combining reports places all relevant information in one place and provides clarity to residents and decision makers, as the Housing Element is a component of the General Plan. The reports are consistent with state reporting requirements. However, it is agreed that the reports can be made more readable and summarize pertinent information to support broader public understanding of the City of Palo Alto’s progress.

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R8: The recommendation has been implemented with respect to publishing the latest two years of the City of Palo Alto’s Housing Element Annual Update on the City of Palo Alto’s website; however, the City of Palo Alto will not be separating out the Comprehensive Plan and Housing Element annual reports.

F9: Partially agree/partially disagree. The City of Palo Alto’s review processing times are not anticipated to be significantly greater than other jurisdictions and typically only require review by the City of Palo Alto’s Architectural Review Board.

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R9a: The recommendation will not be implemented because it is not warranted.

R9b: The recommendation requires further analysis.

F10: The City of Palo Alto agrees a designated individual coordinating all AH-related activities would be helpful.

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R10a: The District posted to the Measure X website the required updated Financial and Performance Audits to the Oversight Committee by April 30, 2022.

R10b: The District posted the independent financial audits and milestones by April 30, 2022. Milestones include expected dates for delivery of timely financial data to the Oversight committee posted to the Measure X website. MEASURE A EARNS AN A: GOOD MANAGEMENT AND OVERSIGHT SUPPORTS PROGRESS Summary of 2021 Report In 2016, voters of Santa Clara County (County) passed Measure A, which allowed the County to borrow up to $950 million by issuing general obligation bonds. Bond proceeds can only be used to acquire or improve real property to provide Affordable Housing (AH) and related support and services for vulnerable populations. Less than five years into the Measure’s 11-year cycle, 289 units were built. Acting on a public complaint, the 2021 Civil Grand Jury began an investigation into the pace of AH construction being developed using Measure A funds. The investigation aimed to understand the County’s performance on Measure A, including why the number of units completed to date was low. After a thorough review, the slow pace of additional AH units was evident. The County utilizes the bond proceeds to partner with cities and others to address the AH needs of the target population. The County’s Office of Supportive Housing (OSH) is mainly responsible for administering the funding available from the bond proceeds for these AH projects. OSH is only one player. Developing AH is a complex and lengthy process from project inception to construction units ready to be leased by qualified occupants. That process includes land acquisition, project design, zoning and permit approval, financing, construction, and leasing. Multiple entities are involved, and all project stages take time. The funding purpose specified in Measure A was addressed – the County is funding the proper categories of AH in a timely manner. Many factors in the AH development process are beyond the control of OSH and the County. The 2021 Civil Grand Jury commends the County Board of Supervisors and the members of the Measure A Independent Citizens’ Oversight Committee for providing robust and transparent oversight to Measure A implementation. Key Findings 1. To date, the review indicates that the expenditures and activity of Measure A’s stated responsibility to fund the development of multi-family rental housing for the community’s most vulnerable populations are on target. 2. Measure A funding of Affordable Housing projects is at pace with the eleven-year cycle specified in the Program Guidelines. 3. The Rapid Re-Housing target population needs may not be met because unit completion is lagging in that Category. 4. Measure A required a Measure A Independent Citizens’ Bond Oversight Committee (Oversight Committee). The County Board of Supervisors selected several knowledgeable members to serve on this committee. 5. The mix of relevant skills of the Measure A Oversight Committee members has enabled the committee to play an effective oversight role. Key Recommendations 3a. To address this Rapid Re-Housing lag, the County should aggressively pursue Homekey funding where consistent with Measure A Goals and Guidelines. The County should develop a plan to address this recommendation by June 30, 2022. 3b. If Rapid Re-Housing development continues to lag, the County should consider redistributing unit goals to support the core homeless and disabled vulnerable populations. The County should develop a plan to address this recommendation by June 30, 2022. 5. The 2021 Civil Grand Jury recommends that the County evaluate whether this selection model can be extended to other advisory boards and commissions. This evaluation should be completed by June 30, 2022. Response - Santa Clara County Board of Supervisors 3a. The County agrees with the recommendation. The County is aggressively pursuing Homekey Program funding either directly or by partnering with local jurisdictions also seeking these funds. For example, on January 3, 2022, the County received a Homekey Program Round 2 award notification for $22,143,341 to support the acquisition and operation of an interim housing program at Bella Villa Inn in Santa Clara. Through this award, the County can utilize state grant funds to acquire the property and further leverage Housing Bonds proceeds. The County has also submitted a second application for the conversion of the Crestview Hotel in Mountain View, which will include a certain number of Rapid Re-Housing units. Furthermore, on February 8, 2022, the County Board of Supervisors approved providing up to $5,000,000 for the Residence Inn acquisition and conversion by the Santa Clara County Housing Authority as part of an application Homekey Program Round 2 funding. 3b. The County partially disagrees with the recommendation. The County believes that more time is needed to realize and analyze the impact of program changes before modifications to goals should be made. Specifically, on November 16, 2021 (Item No. 22), the County Board of Supervisors approved a recommendation to update the County’s development guidelines to further incentivize the production of Rapid Re-Housing Units. Furthermore, on February 8, 2022 (Item No. 46), the County Administration updated the County’s Housing Development pipeline accommodating the remaining supportive housing units. The County will analyze the impact of the recent program change noted above before considering any other changes to unit goals. The County anticipates this to be completed in June 2022. 5. The County generally agrees with Finding 5. The County will consider whether this selection model can extend to other advisory boards and commissions. Follow-up The 2022 Civil Grand Jury reached out to the County on September 6, 2022, requesting follow-up on Recommendations 3b and 5 (both with a completion date of June 30, 2022). To date, no response has been submitted. PROPERTY TAX BILLS: MORE THAN MEETS THE EYE Summary of 2021 Report Acting on a public complaint, the 2021 Civil Grand Jury began an investigation into whether there was sufficient detail in secured property tax bills. The issue was not that the taxes were incorrect but that the property tax bill gave too little information about how dollar amounts were derived and represented. After a thorough review of the 2020 property tax bills in the County, the following was identified: dollar amounts for bonds and levy line items were not shown; insufficient details were provided regarding line items that group multiple bonds; and on the WhereDoTaxesGo website, the secured property value was not stated and the calculated tax amounts were not shown. Some field values were truncated with no explanation, bills included a rounding adjustment without clarifying its use, and the Santa Clara County Department of Tax and Collections (DTAC) survey focused on website interaction rather than obtaining substantive feedback. Key Findings 1. The Annual Property Tax Bill and the Supplemental Property Tax Bill did not show the computed amounts of the tax bonds and levies. It did not show the value for the “TOTAL ASSESSED VALUE TAXES” and “TOTAL LAND & IMPROVEMENT TAXES” in the “DETAIL OF TAXES” section. A taxpayer wanting to verify these calculations was faced with a lack of transparency. 2. In the “DETAIL OF TAXES” section of the Annual Property Tax Bill and the Supplemental Property Tax Bill, line items ending in “S” show a tax rate for a group of bonds, not individual bond tax rates. 3. The WhereDoTaxesGo.org website does not provide details of calculated values so that the taxpayer can understand the dollar amounts that correspond to percentages in the One-percent Tax Distribution Table or the Debt Levy Rate Table. 4. The Annual Property Tax Bill and the Supplemental Property Tax Bill do not explain that cents are truncated and do not explain the rounding adjustment. 5. DTAC collects customer feedback via an online survey available only in English that addresses website interaction but gives little opportunity for customer input regarding other concerns. Key Recommendations 1. No recommendation. 2. DTAC should provide the taxpayer with a solution that explains the expanded detail of taxes calculated for each item in a group of bonds, including the assessed property value, tax rate, and computed amount. To be implemented by June 30, 2022. 3. DTAC should include on their Tax Distribution website the ability to show the secured property’s net assessed dollar value and the calculated dollar amount of each tax represented in the One-percent Tax Distribution Table and Debt Levy Rate Table. 4. DTAC should provide the taxpayer with an explanation for the truncation and rounding adjustment. This should be implemented in the next annual property tax bill. 5. The County should create a way to capture concerns from taxpayers in multiple languages, independent of an online communication channel, such as surveys included with the paper property tax bill, focus groups, and advisory boards. Response - Santa Clara County Board of Supervisors The County agrees with findings 1-4. 5. The County partially agrees with this finding, specifically where it states that the customer has little opportunity to provide input regarding other concerns. Follow-up Beginning this tax year FY 2022-2023, the County will modify all relevant tax bills to include a message informing the taxpayer how the bill detail can be accessed online or obtained in hard copy upon request. The Detail of Taxes section will include language stating: "Taxpayers can request a copy of the full details of each bond on their bill by calling (408) 808-7900 or visiting our website to view or print a copy at https://payments.sccgov.org/propertytax.” Additionally, the payment portal will make a convenient one-stop hub for taxpayers looking for information about tax charges and distributions for their bills and add two explanatory statements to the Detail of Taxes section of the tax bill. This change will explain the rounding adjustment for property owners. The online survey will be translated and offered in Spanish, Vietnamese, and Chinese, and a link for the survey will be provided on the property tax bill. These changes will be effective for tax year FY 2022-2023. The County will conduct market research for feasibility and cost implications surrounding a telephone survey, available in multiple languages, for taxpayers to provide feedback. This effort will begin during tax year FY 2023-2024. TECHNOLOGY SERVICES AND SOLUTIONS: HAVE LESSONS BEEN LEARNED? Summary of 2021 Report In 2018, after almost two years of planning and development, the County launched a customized electronic health record (EHR) system for clinics in the Behavioral Health Services Department (Behavioral Health). Development of this system was overseen by Technology Services and Solution (TSS), the County’s information technology department, which is responsible for managing the County’s computer hardware, software, and network infrastructure. The EHR system was intended to modernize clinical record-keeping, patient billing, and reporting for State and County oversight. However, once the system became operational, the County detected numerous errors in the pending behavioral health Medi-Cal claims. The County had to halt the billing component of the new system and faced the crisis of potentially losing millions in reimbursements. By late 2018, the County decided to redesign the EHR system. The 2021 Civil Grand Jury investigated the history of this multiyear project and identified several areas as the root causes of the troubles encountered. Key Findings 1. TSS failed to recognize warning signs, from staff and CalEQRO reports, when linking two systems from separate vendors. That hindered the processing of Medi-Cal claims, caused billing delays and unanticipated additional work for County staff, and required an ultimate redesign of the system. 2. TSS did not follow project management best practices. There was no requirement that project managers need project management experience. Multiple managers were used, none of whom had overall responsibility, which complicated coordination and decision making. 3. TSS lacked a process to prove the new (EHR) system would work prior to its deployment. TSS did not adequately test the integration of the HealthLink and Netsmart system before releasing it to Behavioral Health clinics. Emphasis was on meeting the schedule, rather than on having a gradual system rollout. This led to halting the submission of Medi-Cal claims, which threatened the loss of tens of millions of dollars. 4. TSS and Behavioral Health were insufficiently engaged in contract negotiations with Netsmart for a May 2019 agreement, as they lacked detailed input on resources and scheduling for analysis and training, which contributed to delays and required the subsequent negotiation of three additional agreements to address shortcomings. 5. TSS underestimates the amount of future work to integrate contract providers’ EHRs with the County’s Netsmart system. Inadequate staffing will cause further delays and work disruptions. Key Recommendations 1. When undertaking a new project, the County should add a requirement for a high-level feasibility analysis during the initial planning phase. 2a. The County should develop a plan to require anyone serving in a project management role to have sufficient experience and/or certification for the nature of the project. 2b. The County should develop a plan to require that each project have a single overall manager, who is experienced and/or certified. 2c. If a project requires additional managers, the County should require a clear organizational structure that facilitates coordination and decision making. 2d. The County should verify that project managers follow best practices defined by the Project Management Center for Excellence, then monitor and verify that required items listed in the Governance Gates Checklist are completed and approved by the responsible executive. 3a. The County should develop a plan to require documenting user acceptance testing criteria at the start of a project. 3b. The County should develop a plan for situations where the user acceptance testing cannot be done in the user’s work environment. 4a. To assure Procurement is prepared to negotiate with vendors, the County should develop a plan to require analysis of the technical staff needed to complete and deploy the project. Escalation procedures should be included when Procurement is not provided the data it needs. 4b. When the County intends to train its staff and colleagues for using any new system, the staff should be made available for such training. 4c. The County should investigate the feasibility of negotiating vendor contracts that include a bonus for on-time and successful completion of IT projects. 5a. The County should conduct a risk assessment to identify threats to the objectives of ongoing projects. Potential responses to those risks should be captured in a risk management plan for this project. 5b. The County should develop a plan to ensure that vendors are informed as decisions are made about what work needs to be done by vendors, or by the County, who will pay for it and when will the work be scheduled. Response - Santa Clara County Board of Supervisors 1. The County agreed with this finding and this recommendation has been implemented. 2. The County partially disagrees with this finding. 2a. This recommendation is in place. TSS requires that Project Managers meet the requirements outlined in the IT Project Manager job specifications. 2b. This recommendation is in place. TSS projects are staffed with a single project manager. 2c. This recommendation has been implemented. 2d. This recommendation will be implemented by June 30, 2022. 3a. The County agrees with the finding, and this recommendation has been implemented. 3b. The County agrees with the finding, and this recommendation has been implemented. 4a. The County agrees with the finding, and this recommendation will be implemented by June 30, 2022. The Procurement Director will coordinate this collaboration. 4b. The County agrees with the finding, and this recommendation will be implemented by June 30, 2022. 4c. The County agrees with the finding and will investigate the feasibility of negotiating vendor contracts that include a bonus for on-time and successful completion of all parts of an IT project. 5a. The County agrees with the finding, and this recommendation has been implemented. 5b. The County agrees with the finding, and this recommendation has been implemented. Follow-up All of the above recommendations have an implementation date of June 30, 2022. Many of the recommendations that the County agreed with were implemented within the 90-day response requirement. The 2022 Civil Grand Jury followed up with the County and received confirmation that the three items still outstanding in March 2022 were addressed by June 30, 2022. CONTINUITY REPORT APPENDIX A – SUMMARY OF RESPONSES TO THE 2021 REPORTS Clara Clara CONTINUITY REPORT This report was ADOPTED by the Santa Clara County 2022 Civil Grand Jury on this 17th day of November, 2022. Ms. Karen Enzensperger Foreperson

F12: Disagree. The City of Palo Alto alleges the 2021 Civil Grand Jury was simply mistaken here; the City of Palo Alto has had such an Affordable Housing Fund for many years.

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R12a: This recommendation has been implemented and is scheduled to receive further refinement later this year with a possible business tax ballot initiative.

R12b: This recommendation requires further analysis.

F13: Partially agree/partially disagree. In general, the City of Palo Alto will support as many 100% AH projects as can be funded.

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R13: This recommendation has been and is being implemented.

F14: Agree. Using the American Community Survey 5-year jobs data and the Adjusted Keyser- Marston model, the cities of Palo Alto and Mountain View together created demand for 4,000 AH units from 2015-2019 --- 3,400 more than the 596 units the City of Mountain View and the City of Palo Alto actually permitted.

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R14: This recommendation has been and is being implemented as it relates to the City of Palo Alto’s Planned Home Zone application process. GAVILAN COLLEGE MEASURE X BOND PROGRAM: OVERSIGHT SHORTCHANGED Summary of 2021 Report The 2021 Civil Grand Jury studied the creation, management, and execution of voter-approved educational construction bond measures. Educational bonds are an essential mechanism that community college districts use to improve aging infrastructure or expand their campuses to support students. Bonds finance major construction projects that last for generations but would be nearly impossible for the institution to afford with operating funds. In return for voters passing an educational bond, the Gavilan Joint Community College District (District) commits to provide the public with assurances, oversight, and deliverables written into the ballot measure and prescribed by California law. An Independent Citizens’ Bond Oversight Committee (Oversight Committee) is a fundamental accountability mechanism. While each member brings expertise and life experience, they may lack relevant skills that would be valuable and could be developed or augmented with additional training. More importantly, when Oversight Committee membership falls below the minimum requirement, it is the taxpayer who may not be represented by an essential and independent voice. It is also in the best interest of the district to ensure the Oversight Committee is equipped with the technical and administrative support required for it to be effective and maintain the public’s trust. Key Findings 1. The District did not fulfill its responsibility to provide technical support to the Oversight Committee regarding conflict of interest requirements. Although the bylaws reference the Oversight Committee’s ethical responsibilities, the requirements are written in legal terminology. The District did not adopt a Conflict of Interest Policy for the Oversight Committee as suggested by referencing Attachment A in the adopted bylaws, and Attachment A is not included in the link to the bylaws on the Measure X website: https://gavilanmeasurex.org/committee-bylaws, linked here. 2. Current Oversight Committee membership falls below the minimum required by law. Failing to maintain members in the necessary affiliation category can create vacancies where vital constituencies’ voices may not be heard or adequately represented. 3. The District-approved Oversight Committee bylaws contain inconsistent and incomplete term limit provisions specified in the California Education Code. The District included a bylaw authorizing members to serve beyond the expiration of their third term while waiting for a replacement to be appointed. The District did not comply with the additional term limit provisions associated with the member serving in the student affiliation category. The student member may only serve six months after graduation with the specific approval of the Board of Trustees. 4. There are areas in which the Oversight Committee might be perceived as having its independence questioned or compromised about the administrative and technical support it receives through the District’s contractor. 5. The “Measure X Bond Newsletter” has been dormant despite the District inviting members of the public to sign up for program updates. The newsletter service is identified in a contract agreement but has not been posted since the September 2019 issue reflected on the Measure X website. 6. The District does not provide Oversight Committee members with a clear, direct, or transparent way of receiving electronic communications from the public. There is a standing agenda item for this type of direct communication, but an effective accompanying tool still does not exist for Oversight Committee members to receive and respond to this type of communication. 7. The District did not follow established norms and protocols for posting meeting notifications and announcements associated with canceled meetings. Additionally, the District has inhibited the public’s ability to access agendas and meeting materials because the link to the agenda is unclear and the multiple steps required to navigate to the meeting materials are unduly complicated. 8. District orientation provided to the Oversight Committee does not adequately prepare members to carry out their roles and responsibilities effectively. The District offers a general overview using reference materials. More in-depth and specialized training is needed to ensure committee members are equipped to fulfill their oversight responsibilities. 9. The District did not provide the Oversight Committee with any information about initiatives to maximize bond revenues through cost-saving measures such as joint-use facilities. As a result, the Oversight Committee could not communicate those initiatives to the public, which led to the mistaken impression that none were considered. 10. The District did not provide the Oversight Committee with timely, certified final financial and performance audits to review. The District’s 10-month drawn-out process put the Oversight Committee in the position of issuing an annual report with a constitutionally mandated compliance statement using draft audits. Those draft audit reports remain on the Measure X website. The draft audits lack a date and auditor’s signature and therefore are not certified, despite final versions being provided to the Board of Trustees Budget and Audit Planning Committee. Key Recommendations 1a. The District should create a plan to provide a conflict of interest policy to Oversight Committee members and incorporate the subject matter into the Oversight Committee’s training and orientation. This recommendation should be implemented no later than April 30, 2022. 1b. The District should create a process for Oversight Committee members to evaluate and disclose conflicts of interests and incompatible activities. This recommendation should be implemented no later than April 30, 2022. 2. The Board of Trustees should appoint sufficient Oversight Committee members to meet or exceed the minimum number required by law. This recommendation should be implemented no later than April 30, 2022. 3a. The District should develop a plan to update the Oversight Committee bylaws to rescope the term limit bylaw addressing replacement holdovers as well as incorporate the additional student term limit provisions outlined in the Education Code. This recommendation should be implemented by April 30, 2022. 3b. The District should develop a plan to ensure that it abides by the term limit provisions required by law for its student affiliation category. The program should also address the student’s term limit provision on the Committee Member Term Chart provided by the District. This recommendation should be implemented by April 30, 2022. 4. The District should identify and communicate to both the Oversight Committee and the public the relationship the District’s contractor has with the Oversight Committee regarding the Measure X program. The District should clarify the level of authority and independence the Oversight Committee has to request services from its contractor, AKG. This recommendation should be implemented by April 30, 2022. 5. The District should develop a plan to provide the necessary resources to revive the “Measure X Bond Newsletter.” This recommendation should be implemented no later than April 30, 2022. 6. The District should develop a plan to institute an electronic communication tool to contact the Oversight Committee directly. The District needs to provide an appropriate communication tool to foster public engagement, correspondence, and feedback. This recommendation should be implemented no later than April 30, 2022. 7a. The District should create a plan to update meeting announcements published on the Measure X homepage to identify the webpage links to access the meeting agenda. This recommendation should be implemented no later than April 30, 2022. 7b. The District should review the structure and navigation of meeting agendas and create a plan that addresses the public’s need for efficient access to agendas and meeting materials. This recommendation should be implemented no later than April 30, 2022. 8. The District should provide detailed and targeted training to members of the Oversight Committee. A training plan should be developed with input from the Oversight Committee. This recommendation should be implemented no later than June 30, 2022. 9. The District should develop a plan to communicate how the District has identified or enacted cost-saving measures to the Oversight Committee. This recommendation should be implemented no later than April 30, 2022. 10a. The District should provide the dated and certified 2020 Financial and Performance Audits to the Oversight Committee. The audits should also be posted to the Measure X website for public disclosure. This recommendation should be implemented no later than April 30, 2022. 10b. The District should create a plan with appropriate milestones to ensure the timely completion of annual, independent financial and performance audits. Milestones should include when audits are expected to be available for the Oversight Committee to receive and review, the District’s responses to the audits for Oversight Committee review, and when the final signed and dated audits are to be posted to the Measure X website. This recommendation should be implemented no later than April 30, 2022. Response - Gavilan Joint Community College District 1. The District disagrees with this finding. 1a. The District will implement part of the recommendation. The District agrees that as membership changes on the Oversight Committee, periodic training sessions summarizing the roles and responsibilities of Oversight Committee members should be conducted. The District disagrees that there is a need for a conflict of interest policy. 1b. The District will not implement this recommendation. 2. The District disagrees with this finding and will not implement this recommendation. 3. The District disagrees with this finding. 3a. The District will implement part of the recommendation. For clarification, the District agrees that the application form for membership on the Oversight Committee can be amended to include a specific reference to Section 15282(a)(4) of the Education Code. 3b. The District will implement part of the recommendation. The District agrees to update the Committee Membership Term Chart to clarify that once a student member of the Committee has no longer been a student at Gavilan College for six months, the student will resign, and the remaining period of the student's term will be filled by another student. 4. The District disagrees with this finding. The District will not implement this recommendation. 5. The District will not implement this recommendation. 6. The District will not implement this recommendation. 7. The District will implement this recommendation. 7a. The District will implement this recommendation. 7b. The District will not implement this recommendation. 8. The District disagrees with this finding. The District will not implement this recommendation. 9. The District will not implement this recommendation. 10a. The District will implement this recommendation. 10b. The District will implement this recommendation. Follow-up

If You Only Read the Ballot, You’re Being Duped

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F1: The Civil Grand Jury finds that in the current environment, which is unregulated at the local level, it is easy for the author of a ballot measure question to write the question in a way that is confusing or misleading to voters.

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R1a: The Board of Supervisors should ask the County Counsel to review all ballot questions submitted to it pursuant to Recommendation 1b.

R1b: Governing entities2 within Santa Clara County should voluntarily submit their ballot questions to the County Counsel for review prior to submission to the Registrar of Voters, unless and until

R1c: Governing entities3 within Santa Clara County should, by March 31, 2023, adopt their own resolution or ordinance to require submission of their ballot questions to the County Counsel for review prior to submission to the Registrar of Voters, unless and until Recommendations 1d and 1e are implemented.

R1d: The County should create an independent, citizen-led oversight commission like the recommended Good Governance in Ballots Commission as described in the “Solutions” section of this report. The Commission should be implemented by August 1, 2024. There are approximately 50 governing entities within Santa Clara County. The Civil Grand Jury has elected to address these recommendations to the County, cities, and a select number of special districts and school districts that have historically the most measures on the ballot for response. The Civil Grand Jury encourages all governing entities to adopt these recommendations. Id.

R1e: Governing entities4 within Santa Clara County should submit their ballot questions for review by the Good Governance in Ballots Commission pursuant to Recommendation 1d.

R1f: The County should, by March 31, 2023, take appropriate action to request that the state legislature consider amending current law to require the County Counsel to review and approve local ballot measure questions before they are voted on. Id.

(endorsed) March 10, 2022 The Honorable Theodore C. Zayner MAR 1 5 2022 Presiding Judge Clerk of the Court Santa Clara*

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F3: The needs of the Rapid Re-Housing target population may not be met because unit completion is lagging in that Category. Response to Finding 3: The County of Santa Clara (County) agrees with this finding and efforts are underway within the Office of Supportive Housing to address Recommendations 3a and 3b below.

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R3a: To address this Rapid Re-Housing lag, the County should aggressively pursue Homekey funding where consistent with Measure A Goals and Guidelines. The County should develop a plan to address this recommendation by June 30, 2022. Response to Recommendation 3a: The County agrees with Recommendation 3a. The County is aggressively pursuing Homekey Program funding either directly or by partnering with local jurisdictions who are also pursuing these funds. On January 3, 2022, for example, the County received a Homekey Program Round 2 award notification for $22,143,341 to support the acquisition and operation of an interim housing program at Bella Vista Inn located at 3550 El Camino Real, Santa Clara. Through this award, the County is able to utilize state grants funds to acquire the property and further leverage Housing Bond proceeds. The County has also submitted a second application for the conversion of the Crestview Hotel in the City of Mountain View which will include a certain number of Rapid Re-Housing units. And on February 8, 2022, the Board of Supervisors approved providing up to $5,000,000 for the acquisition and conversion of the Residence Inn Hotel by the Santa Clara County Housing Authority as part of an application for Homekey Program Round 2 funding. Board of Supervisors: Mike Wasserman, Cindy Chavez, Otto Lee, Susan Ellenberg, S. Joseph Simitian County Executive: Jeffrey V. Smith

R3b: If Rapid-Rehousing development continues to lag, the County should consider redistributing unit goals in a way which still supports the core homeless and disabled vulnerable populations. The County should develop a plan to address this recommendation by June 30, 2022. Response to Recommendation 3b: The County partially disagrees with Recommendation 3b. The County believes more time is needed to realize and analyze the impact of program changes before modifications to goals should be made. Specifically, on November 16, 2021 (Item No.22), the Board of Supervisors approved a recommendation to update the County's development guidelines to further incentivize the production of Rapid Re-Housing Units. Furthermore, on February 8, 2022 (Item No. 46), County Administration provided an update on the County's Housing Development pipeline which should accommodate the remaining supportive housing units. The County will analyze the impact of the recent program change noted above before considering any other changes to unit goals. The County anticipates this to be done in June 2022.

F5: The mix of relevant skills of the Measure A Independent Citizens' Oversight Committee members has enabled the Committee to play an effective oversight role. Response to Finding 5: The County agrees with this finding.

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R5: The Civil Grand Jury recommends that the County evaluate whether this selection model can be extended to other advisory boards and commissions. This evaluation should be completed June 30, 2022. Response to Recommendation 5: The County generally agrees with Finding 5. The County will consider whether this selection model could extend to other advisory boards and commissions.

(endorsed) March 10, 2022 The Honorable Theodore C. Zayner MAR 1 5 2022 Presiding Judge Clerk of the Court Santa Clara*

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F1: TSS failed to recognize significant warning signs from staff and CalEQRO reports in its effort to link two systems from separate vendors. As a result, the system was not able to process Medi-Cal claims. Furthermore, the system did not satisfy federal privacy and state reporting requirements. This led to delays in billing, unanticipated additional work for County staff, and finally, a redesign of the system. Response: The County agrees with this finding.

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R1: When undertaking a new project, the County should add a requirement for a high-level feasibility analysis during the initial planning phase. In most cases, the analysis should include a survey of how other counties and organizations, with an emphasis on counties and organizations of a similar size solved the problem. If no organization has used the approach being considered, explicit risk mitigation steps should be added to the project plan, and schedules and budgets should be adjusted accordingly. Resources such as CalEQRO and other state or independent auditors should be fully utilized to assess these risks. The County should develop a plan to establish these practices by June 30, 2022. Response: This recommendation has been implemented. New and improved processes as well as organizational structures have been put into place by TSS, and all projects that have started since January 2022 have been following the new process. All TSS projects go through a Conceptual/Requirements Review and a Design Review performed by the Technical Architecture Team. The objectives of the review are to ensure the following: • Feasibility of design considering technological, financial, and organizational constraints

F2: TSS did not follow project management best practices. There was no requirement that the project managers need project management experience. TSS used multiple project managers, none of whom had responsibility for the overall project. This complicated coordination and decision making. Response: The County disagrees partially with this finding. The TSS project managers were selected for their project management experience, so it is incorrect to say that there was no requirement that the project managers need project management experience.

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R2a: The County should develop a plan to require anyone serving in a project management role to have sufficient project management experience and/or certification for the nature of the project. The County should develop this plan by June 30, 2022. Response: This recommendation is already in place. TSS has always required that Project Managers meet the requirements outlined in the IT Project Manager job specification, which specifically requires a relevant Bachelor's degree and "Five (5) years of IT project management experience" or training and experience equivalent to the possession of a Bachelor's degree and "Seven (7) years of IT project management experience, including experience with Microsoft Office Suite of products." The IT Project Manager job specification can be found at: https://www.governmentjobs.com/careers/santaclara/classspecs/1292485

R2b: The County should develop a plan to require that each project have a single overall project manager who has relevant project management experience or certification. The plan should be established by June 30, 2022. Response: This recommendation is already in place. All TSS projects are staffed with a single project manager who possesses the necessary qualifications.

R2c: If a project requires additional project managers, then the County should require a clear organizational structure that facilitates coordination and decision-making. The County should develop a plan to establish these requirements by June 30, 2022. Response: This recommendation has been implemented. Netsmart was a complex program that involved a collection of multiple, interrelated projects each with its own assigned project manager. Going forward, for all such programs, TSS will assign an IT Program Manager (or equivalent) for overall program oversight. The program charter will include the team members and the organizational structure along with their roles and responsibilities to better facilitate coordination, decision-making and escalation paths. This is already in effect for new programs such as the Public Health Grant program, and the Netsmart Contract Provider Rollout with Netsmart.

R2d: The County should verify that project managers follow the best practices defined by the County's own Project Management Center of Excellence. The County should monitor all projects and verify that all required items listed in the Governance Gates Checklist are completed by the project manager and approved by the executive responsible for the project. The County should verify the completion of required items for existing projects and should develop a plan to monitor compliance with the County's own Project Management Center for Excellence criteria for current and future projects by June 30, 2022. Response: This recommendation will be implemented by June 30, 2022. The TSS Project Management Center of Excellence was established in August 2020. Since then, the County has put in place additional project management policies, processes, and tools. For all new projects, project managers are following the processes established by the Project Management Center of Excellence, and completing the required items listed in the Governance Gates Checklist

F3: TSS did not have a process in place to prove that the new EHR system would work prior to deployment. TSS did not adequately test the integration of the HealthLink and Netsmart system before releasing it to Behavioral Health clinics. Management placed primary emphasis on meeting the project schedule rather than supporting a gradual system rollout. This led to halting the submission of Medi-Cal claims, which threatened the loss of tens of millions of dollars. Response: The County agrees with this finding.

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R3a: The County should develop a plan to require documenting user acceptance testing criteria at the start of a project. The testing should involve applicable clerical staff, with testing done in their work environment when possible. The schedule for this testing should account for staff availability. The County should develop this plan by June 30, 2022. Response: This recommendation has been implemented. A user acceptance testing plan was created and executed during the project execution phase for all new projects that have started since January 2022.

R3b: The County should develop a plan for situations where the user acceptance testing cannot be done in the users' work environment. This can, for example, call for releasing the system to a subset of a department's staff before releasing it to an entire department. The County should develop this plan by June 30, 2022. Response: This recommendation has been implemented. New projects will go through a Conceptual/Requirements Review and a Design Review performed by the Architecture Team. This includes the steps taken to address testing and organizational change management. The Architecture Team will provide advice on necessary testing to reduce risks. The Project Management Office, through the Transition Stage Gate, will ensure that prescribed tests have been conducted. Please see the response to Recommendation 1 above for more details.

F4: TSS and Behavioral Health were not sufficiently engaged in the contract negotiations with Netsmart for the May 2019 agreement. Lacking detailed input from project management on resources and scheduling for the analysis and training work, Procurement eliminated these tasks from the agreement. This elimination contributed to delays and required the subsequent negotiation of three additional agreements to address these shortcomings. Response: The County agrees with this finding.

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R4a: To ensure that Procurement is prepared to negotiate with vendors, the County should develop a plan that requires an analysis of technical staff needed to complete and deploy the project. This plan should include escalation procedures to be followed when Procurement is not provided the information it needs. The County should develop this plan by June 30, 2022. Response: This recommendation will be implemented by June 30, 2022. The Procurement Director will prepare a negotiation plan in collaboration with project sponsors and other relevant departments. This will include analysis of technical staff needed to complete and deploy the project, where appropriate. Senior management of the County will be consulted if the Procurement Department is not initially provided the information it needs to prepare an effective and complete negotiation plan.

R4b: When the County intends to have County staff train their colleagues on how to use a new system, the County should first determine if staff is available to do the training. If staffing is not available, either additional consultant support must be included in the agreement negotiated with the vendor or the project schedule should be revised. The County should develop a plan for this scenario by June 30, 2022. Response: This recommendation will be implemented by June 30, 2022.

R4c: The County should investigate the feasibility of negotiating vendor contracts that include a bonus for on-time and successful completion of all parts of an IT project, even if the vendor is not responsible for them. This would incentivize outside vendors to provide TSS project management with complete information about what is needed from all parties to bring projects to successful conclusions. The County should report on its investigation of this approach by June 30, 2022. Response: The County will investigate the feasibility of negotiating vendor contracts that include a bonus for on-time and successful completion of all parts of an IT project.

F5: TSS underestimates the amount of future work necessary to support integrating the contract providers' EHRs with the County's Netsmart system. There is a risk that if the transition team is not properly staffed, there will be further delays and the work done by contract provider clinics will be disrupted. Response: The County agrees with this finding.

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R5a: The County should conduct a risk assessment to identify threats to the objectives of the ongoing project. Potential responses to those risks should be captured in a risk management plan for this project. The County should develop a plan that evaluates the future risks of this project by June 30, 2022. Response: This recommendation has been implemented. For all new TSS projects that have started since January 2022, project managers are following the processes established by the Project Management Center of Excellence, and this includes a risk management plan. For the Netsmart rollout to the contract providers, the County is engaging an external management consultant to do a risk assessment looking at staffing, schedule, rollout plan, training, etc.

R5b: The County should develop a plan to ensure that contract providers are informed as decisions are made about what work needs to be done by the contract providers, what work will be done by the County, who will pay for the work, and when the work will be scheduled. The County should develop the plan by June 30, 2022. Response: This recommendation has been implemented. TSS met with the Business Department to develop a communication plan that addresses these concerns. The communication plan includes a RACI Chart (Responsible, Accountable, Consulted, Informed), to define roles and responsibilities, along with timelines specifying who is responsible for each task and when. The Project Manager is the single point of contact responsible for developing and managing this communications plan as well as sharing and communicating it to all relevant stakeholders. . .

Vilan College*

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Hallazgos & Recomendaciones 10 hallazgos

F1: "The District did not fulfill its responsibility to provide technical support to the Oversight Committee relating to conflict of interest requirements. Although the bylaws reference the Oversight Committee's ethical responsibilities, the requirements are written in legal terminology. The District did not adopt a Conflict of Interest Policy for the Oversight Committee as suggested by referencing Attachment A in the adopted bylaws." Response to Finding 1: The District disagrees with Finding 1. The District provided an in-person training session to all of the current members of the Oversight Committee which included a discussion of the members' ethical responsibilities. Section 5.3 of the Oversight Committee Bylaws, and the laws incorporated thereby; include all of the content which might be found in a Conflict of Interest Policy.

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R1a: "The District should create a plan to provide a conflict of interest policy to Oversight Committee members and incorporate the subject matter into the Oversight Committee's training and orientation. This recommendation should be implemented no later than April 30, 2022." WILL BE IMPLEMENTED IN PART. The District agrees that as membership changes on the Oversight Committee periodic training sessions summarizing the roles and responsibilities of Oversight Committee members should be conducted. The District disagrees that there is a need for a conflict of interest policy, inasmuch as the Bylaws adequately describe the rules governing conflicts, and inasmuch as past and future training sessions have and will continue to provide guidance on conflicts of interest.

R1b: "The District should create a process for Oversight Committee members to evaluate and disclose conflicts of interests and incompatible activities. This recommendation should be implemented no later than April 30, 2022." WILL NOT BE IMPLEMENTED. The District already has a process by which it screens applicants who desire to serve on the Oversight Committee which reveals whether the applicant is a District employee or has financial interests associated with the expenditure of bond funds.

F2: "Current Oversight Committee membership falls below the minimum required by law. Failing to maintain members in the required affiliation category can create crucial vacancies where vital constituencies' voices may not be heard or adequately represented." Response to Finding 2: The District disagrees with Finding 2. The Oversight Committee membership meets the legal requirements established by the Education Code. From time to time vacancies occur and the Bylaws direct that such vacancies seek to be filled within 90 days. Inasmuch as the Oversight Committee meets quarterly, the District does not believe that designated groups' voices are not heard or are inadequately represented.

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R2: "The Board of Trustees should appoint sufficient Oversight Committee members to meet or exceed the minimum number required by law. This recommendation should be implemented no later than April 30, 2022." WILL NOT BE IMPLEMENTED. Membership on the Oversight Committee currently satisfies the legal requirements set forth in the Education Code.

F3: "The District-approved Oversight Committee bylaws contain inconsistent and incomplete term limit provisions as specified in the Education Code. The District included a bylaw authorizing members to serve beyond the expiration of their third term while waiting for a replacement to be appointed. The District did not comply with the additional term limit provisions associated with the member serving in the student affiliation category. The student member may only serve six months after graduation with the specific approval of the Board of Trustees." Response to Finding 3: The District disagrees with Finding 3. The current Bylaws comply with the requirements of the Education Code in all respects. Temporary service beyond a member's third term does not constitute an inappropriate fourth term, but rather, serves the public purpose temporarily assuring that while a vacancy is being filled, there is a person present and participating in the deliberations of the Oversight Committee. Student members are appointed to a term, which they may or may not complete depending on their enrollment status. The most recent student member of the Oversight Committee had not served past her term limit or past her status as a student at Gavilan College. "The District should develop a plan to update the Oversight

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R3a: Committee bylaws to rescope the term limit bylaw addressing replacement holdovers as well as incorporate the additional student term limit provisions outlined in the Education Code. This recommendation should be implemented by April 30, 2022." WILL BE IMPLEMENTED IN PART. Membership on the Oversight Committee is governed by the Education Code and the Bylaws implement the Education Code. The Bylaws currently satisfy all legal requirements. However, for clarification of the limits of service of a student member on the Oversight Committee, the District agrees that the application form for membership on the Committee can be amended to include a specific reference to Section 15282(a)(4) of the Education Code.

R3b: "The District should develop a plan to ensure that it abides by the term limit provisions required by law for its student affiliation category. The plan should also address the student's term limit provision on the Committee Member Term Chart provided by the District. This recommendation should be implemented by April 30, 2022." WILL BE IMPLEMENTED IN PART. The Bylaws properly describe the legal term limits on Oversight Committee membership, and the District has been in full compliance with those requirements. The District does not need to develop a plan to assure continued compliance. The District agrees to update the Committee Membership Term Chart to clarify that once a student member of the Committee has no longer been a student at Gavilan College for six months, that the student will resign, and the remaining period of the student's term will be filled by such member's successor.

F4: "There are areas in which the Oversight Committee might be perceived as having its independence questioned or compromised in relation to the administrative and technical support it receives through the District's contractor." Response to Finding 4: The District disagrees with Finding 4. Since the Oversight Committee is a statutory committee (created by action of the State of California Legislature) "independent" means (i) members not having a conflict caused by being a District employee or vendor to the District and (ii) members being free to exercise members' responsibilities without interference by the elected Board which appointed them to the Oversight Committee. The independence of the Oversight Committee cannot be compromised by the form of administrative or technical support it receives from the District.

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R4: "The District should identify and communicate to both the Oversight Committee and the public, the relationship the District's contractor has to the Oversight Committee regarding the Measure X program. The District should clarify the level of authority and independence the Oversight Committee has to request services from its contractor, AKG. This recommendation should be implemented by April 30, 2022." WILL NOT BE IMPLEMENTED. The Oversight Committee has no authority to request services from a District contractor. Such requests can only be made to the District who has the responsibility to determine if such services are required to assist the Oversight Committee perform its statutory functions. As appropriate, the District may choose to provide such additional services through a particular contractor, or provide them by some other means.

F5: "The "Measure X Bond Newsletter" has been dormant despite the District inviting members of the public to sign up for program updates. The newsletter service is identified in a contract agreement but has not been posted since the September 2019 issue as reflected on the Measure X website." Response to Finding 5: The District disagrees with Finding 5. The "Measure X Bond Newsletter" has not been dormant since September 2019, and in fact five additional newsletters have been issued between September 2019 and August 2020. The Newsletter Archive webpage had not been kept up- to-date to reflect the more recent issues. The Newsletter Archive webpage has been updated to include copies of all the Measure X Bond Newsletters.

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R5: "The District should develop a plan to provide the necessary resources to revive the "Measure X Bond Newsletter". This recommendation should be implemented no later than April 30, 2022." . . WILL NOT BE IMPLEMENTED. The District presently commits the necessary resources to prepare and distribute the Measure X Bond Newsletter. The Newsletter will continue to be published as new developments regarding Measure X are approved by the Board of Trustees. The District will, however, implement a plan to better maintain the record of Newsletter distributions on the Newsletter Archive webpage.

F6: "The District does not provide Oversight Committee members with a clear, direct, or transparent way of receiving electronic communications from the public. There is a standing agenda item for this type of direct communication, but an effective accompanying tool does not exist for Oversight Committee members to receive and respond to this type of communication." Response to Finding 6: The District disagrees with Finding 6. The Oversight Committee is subject to the public meeting requirements of the Brown Act. Communications from the public to the Oversight Committee and from the Oversight Committee to the public should occur at a properly noticed public meeting. Nonetheless, members of the public can communicate to the Oversight Committee by using the existing "Contact" link of the Measure X website. The "Contact" link is a clear and direct way for the Oversight Committee to receive electronic communications from the public. Notices of meetings of the Oversight Committee are provided in accordance with the requirements of the Brown Act. Violations of the Brown Act might likely occur in the event members the Oversight Committee had the ability to electronically respond to members of the public outside of the context of a properly noticed public meeting of the Oversight Committee.

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R6: "The District should develop a plan to institute an electronic communication tool to contact the Oversight Committee directly. The District needs to provide an appropriate communication tool to foster public engagement, correspondence, and feedback. This recommendation should be implemented no later than April 30, 2022." WILL NOT BE IMPLEMENTED. The District currently has a tool by which the Oversight Committee can be contacted by members of the public, described above. To avoid a violation of the Brown Act all communications and public engagement should occur at a properly noticed public meeting.

F7: "The District did not follow established norms and protocols for posting meeting notifications and announcements specifically associated with cancelled meetings. Additionally, the District has inhibited the public's ability to access agendas and meeting materials because the link to the agenda is not clear and the multiple steps required to navigate to the meeting materials is unduly complicated." Response to Finding 7: The District disagrees with Finding 7. Notices of all meetings of the Oversight Committee are provided in accordance with the requirements of the Brown Act. 4

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R7a: "The District should create a plan to update meeting announcements published on the Measure X homepage to prominently identify the webpage links to access the meeting agenda. This recommendation should be implemented no later than April 30, 2022." WILL BE IMPLEMENTED. The District agrees to post a link to the agenda on the Measure X homepage for additional ease of access.

R7b: "The District should review the structure and navigation to meeting agendas and create a plan that addresses the public's need for efficient access to agendas and meeting materials. This recommendation should be implemented no later than April 30, 2022." WILL NOT BE IMPLEMENTED. The District already utilizes BoardDocs, a standard agenda and meeting management tool, commonly used by K-14 educational institutions, that provides efficient access to agendas and meeting materials.

F8: "The orientation the District provides to the Oversight Committee does not adequately prepare members to effectively carry out their roles and responsibilities. The District provides a general overview using reference materials. More in-depth and specialized training is needed to ensure committee members are equipped to fulfill their oversight responsibilities." Response to Finding 8: The District disagrees with Finding 8. The District has provided in- depth and specialized training regarding their role and responsibilities to all current members of the Oversight Committee, including a one-on-one training session for the member of the Oversight Committee who missed the orientation meeting when such group training was conducted. Training has been conducted by a knowledgeable attorney, expert in the field.

Recomendaciones relacionadas (1)

R8: "The District should provide detailed and targeted training to members of the Oversight Committee. A training plan should be developed with input from the Oversight Committee. This recommendation should be implemented no later than June 30, 2022." WILL NOT BE IMPLEMENTED. The District current provides detailed and targeted training to members of the Oversight Committee. The District agrees that as new members join the Oversight Committee it will arrange for a knowledgeable attorney to provide follow-up trainings as to the roles and responsibilities of the Oversight Committee. Input from the Oversight Committee regarding topics for discussion during training sessions has been and will continue to be welcome.

F9: "The District did not provide the Oversight Committee with any information about initiatives to maximize bond revenues through the use of cost-saving measures such as joint-use facilities. As a result, the Oversight Committee was not able to communicate those initiatives to the public, which led to the mistaken impression that none were considered." . . ... Response to Finding 9: Education Code Section 15278(b)(5) outlines examples of cost saving measures that the Oversight Committee might address. During the training session members of the Oversight Committee were informed of their duty to ask questions designed to inform them of such cost-saving measures. Because the State Constitution restricts the use of bond proceeds exclusively for "school facilities," joint use facilities are very difficult arrangements. The District will, however, be more cognizant of informing the Oversight Committee of project delivery mechanisms which are designed to reduce construction costs.

Recomendaciones relacionadas (1)

R9: "The District should develop a plan to communicate the ways in which the District has identified or enacted cost-saving measures to the Oversight Committee. This recommendation should be implemented no later than April 30, 2022." WILL NOT BE IMPLEMENTED. An independent plan is not required in order for the Oversight Committee to request relevant information regard cost-savings measures, if any, which have been implemented with respect to a particular bond funded project. The District, nonetheless, can identify such measures, if any, and bring them to the attention of the Oversight Committee.

F10: "The District did not provide the Oversight Committee with timely, certified final financial and performance audits to review. The District's 10-month drawn-out process put the Oversight Committee in the position of issuing an annual report with a constitutionally mandated compliance statement using draft audits. Those draft audit reports remain on the Measure X website. The draft audits lack a date and auditor's signature and therefore are not certified, despite final versions being provided to the Board of Trustees Budget and Audit Planning Committee." Response to Finding 10: Due to the pandemic and other internal accounting concerns, the District's comprehensive financial audit, as well as subsidiary financial and performance audits for 2020 were delayed. There is no constitutional imperative for the Oversight Committee to have received the bond financial and performance audits prior to the submission of their Annual Report. The District agrees that when the audits have been completed they should be signed, dated and posted on the Measure X website. The District further agrees that the bond audits should be provided to the Oversight Committee concurrently with being provided to the Board of Trustees,

Recomendaciones relacionadas (2)

R10a: "The District should provide the dated and certified 2020 Financial and Performance Audits to the Oversight Committee. The audits should also be posted to the Measure X website for public disclosure. This recommendation should be implemented no later than April 30, 2022." WILL BE IMPLEMENTED.

R10b: "The District should create a plan with appropriate milestones to ensure the timely completion of annual, independent financial and performance audits. Milestones should include when audits are expected to be available for the Oversight Committee to receive and review, the District's responses to the audits for Oversight Committee review, and when the final signed and dated audits are to be posted to the . . . . . . . . . . . . . . . . . . . . Measure X website. This recommendation should be implemented no later than April 30, 2022.” WILL BE IMPLEMENTED. . .

Affordable Housing:

59 páginas 14 hallazgos 15 recomendaciones

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Hallazgos & Recomendaciones 14 hallazgos

F1: The Civil Grand Jury commends the City of Mountain View for prioritizing and exhibiting strong, visible support for affordable housing and progress towards Regional Housing Needs Allocation targets. No recommendation.

F2: The Civil Grand Jury commends the City of Mountain View for creating a multi-tiered communication plan that both communicates the value of affordable housing to all stakeholders and addresses their issues. This has engendered strong community support for affordable housing leading to many successful projects. No recommendation.

F3: The Palo Alto City Council has not taken a leadership role in developing community support for affordable housing planning and projects.

Recomendaciones relacionadas (1)

R3: The City of Palo Alto should research how other cities foster support for affordable housing and develop a communication plan focused on increasing community support for affordable housing. The plan should be developed and made available to the public by June 30, 2022.

F4: Palo Alto City councilmembers do not play a strong enough leadership role in personally engaging in community education and discussion to aid in resident acceptance of affordable housing.

Recomendaciones relacionadas (1)

R4: The City of Palo Alto should conduct a “lessons learned” analysis from the 4-year unsuccessful North Ventura Coordinated Area Plan planning process. The City of Palo Alto should create an improved process to bring residents to a shared understanding of the needs and complexities of affordable housing development. This process should include direct involvement of Palo Alto City elected leaders in community outreach. These recommendations should be completed by June 30, 2022.

F5: The Housing Element Plan and land-use changes are foundational to supporting affordable housing, but they are not enough. Affordable housing also needs cities to create area-specific land- use and zoning plans like the City of Mountain View’s Precise Plans. Mountain View has also prioritized affordable housing development by using its planning processes to specifically identify a set of projects and actions within a concrete time frame. The City of Mountain View is to be commended for both its use of Precise Plans and its short-term City Strategic Planning process. No recommendation.

F6: The City of Palo Alto’s multiplicity of planning policies and documents creates lengthy processes and can lead to frustration for all parties, including neighborhoods as well as developers. The City of Palo Alto does not have a comprehensive set of plans organized by area or neighborhood that include all zoning elements and regulations that could support AH. Current plans do not clearly and concisely identify where affordable housing could be built with design and density acceptable to the City of Palo Alto and the community.

Recomendaciones relacionadas (2)

R6a: The City of Palo Alto should identify, by March 31, 2022, three or four areas where significant affordable housing can be built.

R6b: The City of Palo Alto should agree, by June 30, 2022, to task its planners to create realistic plans for each identified area in consultation with residents and developers.

F7: Mountain View Planning Division’s summary memo to the Mountain View City Council provides a clear, concise update on progress toward Housing Element goals. The City of Mountain View is commended for the clarity and conciseness of its Annual Housing Element Progress Update to the Mountain View City Council. However, the Annual Housing Element Progress Updates with cover memos to the Mountain View City Council cannot be found easily by the public on the city’s website.

Recomendaciones relacionadas (1)

R7: The City of Mountain View should publish its Annual Housing Element Updates and the summaries (in an appropriate form) on the city’s website by June 30, 2022.

F8: Combining the City of Palo Alto’s Housing Element Annual Update and the Comprehensive Plan Update with one cover memo does not communicate city progress in either area clearly.

Recomendaciones relacionadas (1)

R8: The City of Palo Alto should publish the latest two years of its Housing Element Annual Updates and cover memos summarizing annual progress to the city’s website by June 30, 2022. To better communicate to the public, the Housing Element Annual Updates and the Comprehensive Plan Updates should be separated.

F9: The length of time it takes developers to get their plans approved is significantly higher in the City of Palo Alto compared to the City of Mountain View. This discourages developers from proposing residential development in Palo Alto.

Recomendaciones relacionadas (2)

R9a: Once the guidelines for developments are clearly defined in area plans, the Palo Alto City Council preliminary review could be eliminated. The City of Palo Alto should establish a schedule by June 30, 2022, for defining and accepting the area plans identified in Recommendation 6a.

R9b: The City of Palo Alto should explore combining the Planning and Transportation Commission and Architectural Review Board reviews into a single review, as is done in Mountain View. Palo Alto City staff should also consult with Mountain View planners to investigate ways to further streamline the approval process. Recommendations for changes to the planning review process should be proposed by June 30, 2022.

F10: Developers (both for-profit and non-profit) find it very useful to work with a designated individual who is responsible for the affordable housing target and coordinates all activities across developers, funding sources, city council, planning departments, and other stakeholders to enable progress on projects.

Recomendaciones relacionadas (2)

R10a: The City of Palo Alto should identify an Affordable Housing Manager who can be responsible for the affordable housing target and ensure coordination among stakeholders by June 30, 2022. This role should be the primary focus of this individual and should have the support of Palo Alto’s City Council.

R10b: The City of Mountain View should identify an Affordable Housing Manager who can be responsible for the affordable housing target and ensure coordination among stakeholders by June 30, 2022. This role should be the primary focus of this individual and should have the support of Mountain View’s City Council.

F11: In the past decade, the City of Mountain View has created substantial affordable housing funding derived both from City revenues (fees, charges to developers, etc.) and from external funding. However, the City of Mountain View’s fund is diminishing and needs to be built up.

Recomendaciones relacionadas (1)

R11: The City of Mountain View should develop a specific affordable housing funding plan to cover its needs for the next five years by July 30, 2022.

F12: The City of Palo Alto does not have a multi-faceted affordable housing funding strategy (including creating a fund for affordable housing as well as proactively leveraging all potential external funding sources) that would encourage it to build more below market housing.

Recomendaciones relacionadas (2)

R12a: The City of Palo Alto should create a plan with specific goals and timelines by July 30, 2022, to build up the affordable housing fund considering tools such as business tax, document tax, bond measure, and property tax.

R12b: The City of Palo Alto should create a Memorandum of Understanding with Santa Clara County by July 30, 2022, to establish goals and actions to leverage Measure A bond funding and advance identified affordable housing projects.

F13: One hundred percent affordable housing projects are more reliant on scarce city funds and other resources compared to mixed-use projects that combine housing with commercial space. Having a city-wide portfolio of both 100% affordable housing projects and mixed-use projects will yield the greatest number of units and best utilize available funds.

Recomendaciones relacionadas (1)

R13: The City of Palo Alto should include both mixed-use and 100% affordable funding opportunities in its affordable housing plan referred to in Recommendation 12a by July 30, 2022.

F14: 45 REQUIRED RESPONSES ......................................................................................................... REFERENCES ............................................................................................................................ GLOSSARY AND ABBREVIATIONS ABAG Association of Bay Area Governments: a regional planning agency AH Affordable Housing AMI Area Median Income: The median family income in a metropolitan or nonmetropolitan area ELI Extremely Low-Income: Households with income at or below the Poverty Guideline or 30% of AMI, whichever is higher FAR Floor Area Ratio: the measurement of a building’s floor area in relation to the size of the lot/parcel that the building is located on. GDP Gross Domestic Product: the total value of goods produced, and services provided in a country for one year HCD The California Department of Housing and Community Development: the state agency which produces the RHNA allocations HE Housing Element: a report created by each city in response to the city’s share of RHNA housing goals LI Low-Income: households with incomes between 50% and 80% of AMI MI Moderate-Income: households with income between 80% and 120% of AMI NOFA Notice of Funding Availability: a public notice issued by a governmental entity which announces the availability of funding for a specific purpose and can be requested through an application process. It is typically awarded competitively for proposals that achieve an outcome desired by that organization NVCAP North Ventura Coordinated Area Plan: an area in Palo Alto, located near the old Fry’s store, where multiple proposals from City staff, residents, and property owners have been developed Permitted An official approval that has been issued by a local government agency that allows a builder to proceed with a project. Prop 13 Proposition 13: a June 1978 amendment to the California Constitution that established the concepts of a base year value for property tax assessments, and limitations on the tax rate and assessment increase for real property. This reduced property tax revenue for California municipalities. RHNA Regional Housing Needs Allocation: On an eight-year cycle, the state’s Department of Housing and Community Development gives each regional planning agency a housing planning target for the number of units needed and affordable at various income levels. The regional planning agencies then sub-allocate target numbers to local jurisdictions. VLI Very Low-Income: households with income below 50% of the AMI. This also includes the extremely low-income category. SUMMARY While Charles Dickens’ novel, A Tale of Two Cities, was written over 160 years ago, we can extrapolate some important ideas that continue to be relevant today.1 At its core, the Dickens novel is about the continuing possibility of resurrection and transformation as well as the capacity of humans to change. He believes that discarding the old way of thinking prepares the pathway for transformation. The 2021 Civil Grand Jury of Santa Clara County (Civil Grand Jury) will try to illuminate one city’s new way of thinking about Affordable Housing (AH), while contrasting it with a city still thinking in the old way. The Civil Grand Jury examined the efforts of the City of Palo Alto and the City of Mountain View to implement an AH strategy. While all jurisdictions in Santa Clara County (the County) struggled to meet AH mandates, Mountain View was on a path of meeting its targets (56% of AH goals as of 2019) while Palo Alto was consistently falling short (just over 10% of AH goals as of 2019).2 Why are these northern neighbors performing so differently? What practices have caused one to be more effective than the other in handling this difficult challenge? To answer the question about practices, the Civil Grand Jury identified four broad areas which significantly impact AH success. They are: (i) Political and Community Support, (ii) Proactive Planning and Effective Reporting, (iii) Supportive Practices, and (iv) Affordable Housing Financing. Each area will be discussed in more detail later in the report. The Civil Grand Jury identified important differences between the two cities in these four areas. Mountain View has built up strong community support for AH and has fostered and maintained the political will over several years to advance on its goals and meet its mandates. Palo Alto lacks a cohesive and effective way to communicate with its citizens and as a result, has continually struggled to garner community support for the value of and need for AH. Mountain View has systematically planned to achieve AH targets through well-coordinated regional housing plans and straightforward near-term planning. Once the plans were in place, they were continually monitored and effectively communicated to the citizens. Due to the lack of alignment on AH goals and on the zoning changes AH requires, Palo Alto has a variety of separate plans and policies but few outcomes. Mountain View’s coordinated plans enabled much shorter approval cycles compared to Palo Alto. Given the cost and complexity of AH financing, Mountain View has taken a very targeted approach to building an AH fund and leveraging all available State and County resources. Palo Alto has 1 Charles Dickens, A Tale of Two Cities, (New York: Penguin Books, 2000). City of Mountain View, 2020 Housing Element Progress Report (2015-2023 Housing Element), March 3, 2021, p. 3. struggled to build an AH fund because, in comparison to Mountain View, there has been less commercial or mixed-use development due to its lack of political and community support and slow approval process. Both cities would also benefit from having a dedicated and empowered affordable housing manager to champion this important cause. The Civil Grand Jury believes there are lessons to be learned from this tale of two cities. Other jurisdictions might look to these best practices to improve their own policies and strategies. Due to increasing AH needs and challenging new state mandates exerting greater state control over AH developments, there is more urgency for cities to successfully meet AH targets. The Civil Grand Jury hopes the findings and suggestions in this report will lead to renewed efforts by the cities to successfully meet their AH targets and mandates. While the Civil Grand Jury cannot say this is the best of times yet for AH in these cities, it is through greater commitment and renewed efforts that additional housing opportunities for the residents of Santa Clara County will be created. BACKGROUND The Problem California and the Bay Area are failing to solve one of the most important economic, environmental, and social issues facing the state—affordable housing. California’s housing/job imbalance has been growing. A McKinsey report discovered that since the 1970s, “the state [has] added only 325 homes for every 1,000 additional people.”3 Given the importance of this crisis, it is not surprising that prior civil grand juries (two in Southern California and one in Santa Clara County) have investigated this issue.4 In June 2018, the 2017- 2018 Santa Clara County Civil Grand Jury concluded “The critical need for affordable housing is the issue of the day in Santa Clara County … and our cities are failing.”5 However, the problem persists. The pandemic and the economic slowdown of the past two years have worsened the housing situation in the Bay Area for low-income wage earners and their families. This year in Santa Clara County, there are just 29 homes available for every 100 extremely low-income (ELI) renter households. Homelessness increased 31% between 2017 and 2019.6 The County has the fourth highest rate of homelessness of any community in the country.7 3 Jonathan Woetzel, et al., A Tool Kit to Close California’s Housing Gap, October 2016, p. 2, accessed November 26, 2021, https://www.mckinsey.com/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/closin g%20californias%20housing%20gap/closing-californias-housing-gap-full-report.pdf. 4 2016-2017 Civil Grand Jury of Los Angeles County, “Affordable Housing,” Final Report, pp. 1-18, accessed November 12, 2021, http://grandjury.co.la.ca.us/pdf/LOSANGELESCOUNTY2016- 2017CIVILGRANDJURYFINALREPORT.pdf; 2019-2020 Civil Grand Jury of Santa Barbara County, “Homelessness in Santa Barbara County: Our Everyday Epidemic,” accessed November 12, 2021, http://www.sbcgj.org/2020/homeless.pdf, and “Affordable Housing in Santa Barbara: An Oxymoron?” accessed November 12, 2021, http://www.sbcgj.org/2020/AffordableHousing.pdf. 5 2017-2018 Civil Grand Jury of Santa Clara County, “Affordable Housing Crisis: Density is our Destiny,” p. 2, June 21, 2018, https://www.scscourt.org/court_divisions/civil/cgj/2018/BMRH%20Rpt%202018-06- 19%20REVISED%20FINAL.pdf. 6Andrew Aurand, et al., The GAP: A Shortage of Affordable Homes: Appendix B: Metropolitan Comparisons, March 2021, p. 25, accessed November 13, 2021, https://reports.nlihc.org/sites/default/files/gap/Gap- Report_2021.pdf. Destination Home, Understanding Homelessness in Santa Clara County, accessed September 28, 2021, https://destinationhomesv.org/understanding-homelessness/numbers/. If “adequate housing is universally viewed as one of the most basic human needs,” then Santa Clara County is not meeting a basic need of almost 50% of its residents.8 Affordable Housing Defined The term AH denotes either rental or owned housing which costs less than a region’s average housing cost. AH is generally divided into three categories: Extremely Low-Income (ELI), Very Low-Income (VLI), or Low-Income (LI).9 These low-income levels vary by region because they are determined by an area’s Average Median Income (AMI). Table 1 shows these categories for Santa Clara County. Income Household Household Household Household Household Level 1* 2 3 4 5 Low Income: <80% of $82,450 $94,200 $106,000 $117,750 $127,200 AMI Very Low Income: $58,000 $66,300 $74,600 $82,850 $89,500 <50% of AMI Extremely Low Income: $34,800 $39,800 $44,750 $49,700 $53,700 <30% of AMI *Number of individuals in the Household Table 1. Santa Clara County 2021 Area Median Income (AMI) Chart10 8 Joint Venture Silicon Valley, Institute for Regional Studies, 2021 Index Highlights, 2021, p. 41, https://jointventure.org/publications/silicon-valley-index 9 Many cities are also very concerned about housing affordability for “moderate-income” earners. See The Committee to House the Bay Area, CASA Compact, January 2019, p. 15, https://mtc.ca.gov/sites/default/files/CASA_Compact.pdf. County of Santa Clara, accessed May 1, 2021, https://covid19.sccgov.org/sites/g/files/exjcpb766/files/Documents/santa-clara-county-2021-area-median-income- ami-chart.pdf. The Affordable Housing Gap Thirty-two percent of Silicon Valley households earn $200,000 or more annually.11 This is a larger share of high-income households than the City and County of San Francisco (31%), California (14%), or the United States (9%).12 Income inequality in Silicon Valley is more than double that of the U.S. overall and has increased by 81% since 1990.13 The extreme income disparity between the highest- and lowest-wage earners drives up housing costs because increased demand by high- income households creates competition which drives home prices higher.14 Currently, California’s real estate prices are rising “three times faster than household incomes, [and] more than 50% of the state’s households cannot afford the cost of housing.”15 Nearly half of Bay Area renters are rent-burdened—they spend more than 30% of their household income on rent.16 In 2021, Santa Clara County renters need to earn 2.8 times the minimum wage, or $46.21 per hour, to afford the County’s average rent.17 11 Joint Venture Silicon Valley, 2021 Silicon Valley Index, p. 41, https://jointventure.org/publications/silicon-valley-index. Ibid, p. 41. Ibid, p. 40. 14 “The less equal the distribution, the higher income inequality is.” from Carol M. Kopp, “Income Inequality,” Investopedia November 2, 2021, https://www.investopedia.com/terms/i/income-inequality.asp; Thomas Goda, et al., Absolute Income Inequality and Rising House Prices, December 1, 2016, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2886481; Andrew Aurand, Dan Emmanuel, Daniel Threet, Ikra Rafi, and Diane Yentel, The GAP: A Shortage of Affordable Homes: Appendix B: Metropolitan, March 2021, p. 5; https://reports.nlihc.org/sites/default/files/gap/Gap-Report_2021.pdf; Joint Venture Silicon Valley, p. 40. Woetzel, et al., A Tool Kit, p. vi. Wikipedia, “San Francisco Bay Area,” “is defined by the Association of Bay Area Governments to include the nine counties … Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, Sonoma, and San Francisco,” https://en.wikipedia.org/wiki/San_Francisco_Bay_Area; Bay Area Equity Atlas, “Housing Burden: Nine-County Bay Area vs. California,” accessed November 27, 2021, https://bayareaequityatlas.org/indicators/housing-burden#/; Joint Venture Silicon Valley, p. 102. California Housing Partnership, Santa Clara County 2021 Affordable Housing Needs Report, p.1, accessed November 13, 2021, https://1p08d91kd0c03rlxhmhtydpr-wpengine.netdna-ssl.com/wp- content/uploads/2021/05/Santa-Clara_Housing_Report.pdf. % of Monthly Income Mean Needed to Afford Occupation Annual Average Market Rent Wage for a 2-Bedroom Unit Dishwashers $30,160 127% Hairdressers $33,384 115% Receptionists and $39,239 98% Information Clerks Retail Salespersons $39,987 96% Security Guards $41,512 93% Preschool Teachers $41,563 92% Medical Assistants $47,846 80% Daycare & Preschool Administrators $55,020 70% Police Officers $130,911 29% Table 2. Santa Clara County Wage/Housing Gap18 Since the 1970s, jobs in the region have increased faster than available housing units.19 A study by the Bay Area Council Economic Institute shows that one high-tech sector job is associated with the creation of 4.3 additional jobs in the local goods and services economy.20 The number of AH units needed has severely lagged job creation for the past five decades. Consequences of the Affordable Housing Crisis According to the McKinsey Global Institute study, nearly 100% of California’s ELI, VLI, and LI households cannot afford the cost of local housing. This disparity negatively affects every aspect of a community’s well-being, forcing lower-income workers to commute long distances, increasing their stress, reducing family time, and impacting the environment. Lack of decent affordable housing increases crowded, multi-family households, housing instability, and 18 City of Gilroy, What is Affordable Housing in Santa Clara County? p. 2, accessed November 13, 2021, https://www.cityofgilroy.org/DocumentCenter/View/11636/Affordable-Housing-101-and-FAQs. City of Gilroy, What is Affordable Housing in Santa Clara County? p. 2. Bay Area Council Economic Institute, Technology Works: High-Tech Employment and Wages in the United States, December 2012, p. 5, accessed November 13, 2021, http://www.bayareaeconomy.org/files/pdf/TechReport.pdf. homelessness.21 Diversity is diminished because “Black people, Native Americans and Latinos are more likely to experience homelessness and overcrowded housing than white people.”22 The McKinsey Global Institute calculates that “in dollar terms, California loses $140 billion per year in output or 6 percent of state Gross Domestic Product due to the housing shortage.”23 They divide these annual losses into approximately $90 billion in missed construction investment and more than a $50 billion loss in consumer spending on food, health, and education.24 The AH crisis also impacts the social fabric of the community. Homelessness was increasing in the County before the pandemic and the current economic uncertainty has made it worse.25 Many low-income wage earners are one paycheck away from eviction. Although moving to lower-cost housing areas avoids the threat of homelessness, it creates other negative consequences. About 120,000 Silicon Valley workers live long distances from their jobs.26 Silicon Valley “super commuters” drive 3 hours one way to work, resulting in traffic gridlock, air pollution, and degraded health and quality of life.27 Other negative consequences are more subtle. Low-income workers and families with long commutes are disproportionately from non-White, non-Asian backgrounds.28 The communities they work in—but cannot live in—suffer a loss of diversity. Because of this loss of workers, the civic, political, cultural, and human engagement of the region narrows. In addition, the region loses 21 Andrew Aurand, “The GAP,” p.1. Ibid. Woetzel, et al., A Tool Kit: In Brief, p. vi. Ibid. Marisa Kendall, “How Can We Solve the Bay Area Housing Crisis? Build 160,000 Affordable Homes,” Mercury News, March 18, 2021, https://www.mercurynews.com/2021/03/18/how-can-we-solve-the-bay-area- housing-crisis-build-160000-affordable-homes/. Sophia Harrison, Ethics Study: Silicon Valley Housing Crisis, March 19, 2021, https://sevenpillarsinstitute.org/ethics-study-silicon-valley-housing-crisis/. Annette Schaefer, “Commuting Takes Its Toll,” Scientific American Mind, v. 16 no. 3, pp. 14-15, October 1, 2005, accessed December 2, 2021, https://www.scientificamerican.com/article/commuting-takes-its-toll/; Deanna Pai, “5 Ways Your Commute Affects Your Health,” Keck Medicine of USC, accessed June 7, 2021, https://www.keckmedicine.org/commuting-and-your-health/. Sophia Harrison, Ethics Study. Bay Area Equity Atlas, “Extreme Community: Drivers of Inequity,” accessed November 27, 2021, https://bayareaequityatlas.org/indicators/extreme- commuting#/?geo=05000000000000017. needed workers. In 2019-2020, more people left the state than moved here, resulting in a net migration loss of 135,600.29 State-Driven Planning Solutions The California Department of Housing and Community Development (HCD) drives statewide housing planning efforts through the Regional Housing Needs Allocation (RHNA). Every eight years, the HCD works with regional councils of government to estimate the number and type of jobs that are expected. With this job estimate, RHNA then projects the number of housing units needed at a variety of affordability levels. HCD allocates the appropriate number of new housing units to each region. The County is part of the Association of Bay Area Governments (ABAG) region which is responsible for allocating the housing need among the cities and counties in the Bay Area.30 Once ABAG has sub-allocated housing quotas, each city must produce a planning document, titled the Housing Element Report.31 This plan identifies potential sites where housing may be built over the next eight years and the policies and strategies that are needed to help cities meet the housing goals. The sites identified typically include property the city does not own or control. Although most cities in the County are meeting their ABAG quotas for higher-income level housing, few are meeting their AH allocations (see Table 3). In response to the AH crisis, the California Governor signed on September 16, 2021, three bills that address the state’s housing crisis. Senate Bill 8 accelerates housing project approval processes and limits fee increases and a city’s ability to downzone (i.e., reduce the density of housing development in an area). Senate Bill 9 requires cities and counties to approve development proposals that meet specified size and design standards. It also allows property owners to split a single-family lot into two lots and place up to two units on each newly created lot. Assembly Bill 1174 amends an existing measure that streamlines approval processes for housing in cities and 29 Eric Escalante, “California’s Growth Rate at Record Low as More People Leave,” ABC10 News, December 16, 2020, https://www.abc10.com/article/news/local/california/californias-growth-rate-at-record-low-as- more-people-leave/103-3f814e19-ffe1-44af-90c0-a49168be4a60. California Department of Housing and Community Development, Regional Housing Needs Allocation: 5th Cycle, accessed July 17, 2021, https://www.hcd.ca.gov/community-development/rhna/index.shtml. California Department of Housing and Community Development, Housing Elements, accessed November 7, 2021, https://www.hcd.ca.gov/community-development/housing-element/index.shtml. counties that have not yet made sufficient progress in meeting their RHNA goals.32 The impact of these statewide reforms is yet to be felt.33 Permits Jurisdiction Affordability Level RHNA % Progress approved as of Goals 2019 Palo Alto Very Low Income (VLI) 1123 80 7% & Low Income (LI) Moderate Income (MI) 865 426 49% and Above Moderate Income (AMI) Mountain LI & VLI 1306 326 25% View MI & AMI 1620 2557 158% San José LI & VLI 14661 854 6% MI & AMI 20419 11748 58% City of Santa LI & VLI 1745 145 8% Clara MI & AMI 2348 3980 170% 34 Table 3. Percent Achievement Compared to RHNA Goals Cities in the Middle Creating affordable housing is a complex local interaction among a variety of players – city officials and staff, non-profit and for-profit developers, landowners, residents, banks, and a variety of advocacy organizations. Cities by themselves rarely have the full resources needed to build AH. Whitney Hodges and Talya Gulezyan, ”California Enacts New Legislation to Combat Growing Housing Crisis, But Not Without Controversy,” National Law Review, September 20, 2021, https://www.natlawreview.com/article/california-enacts-new-legislation-to-combat-growing-housing-crisis-not- without. George Skelton, “Don’t Be Fooled, California’s New Housing Laws Are Game-Changers,” Mercury News, September 24, 2021, https://www.mercurynews.com/2021/09/24/skelton-dont-be-fooled-californias-new- housing-laws-are-significant/?utm_source=ourcommunitynow&utm_medium=web. Association of Bay Area Governments, “2015-2019 Bay Area Building Permit Activity Report,” February 2021, https://abag.ca.gov/sites/default/files/documents/2021-02/2015-2019_Permit_Activity_Report.pdf. They often lack sufficient financial resources to completely fund an AH project. They also may not have appropriate public land on which to build their RHNA quota of AH units. Despite many challenges, some cities in the County have come closer to meeting their affordable housing RHNA quotas than other cities. The Civil Grand Jury investigated this discrepancy by examining the efforts of two cities in the County that share a border, Mountain View and Palo Alto, which have very different achievement levels, as shown in Table 4. Income % of Palo Permits % of RHNA Mountain Permits % of RHNA Group County Alto approved Accomplished View approved Accomplished AMI RHNA Palo Alto RHNA Mountain View Very Low 0-50% 691 101 15% 814 218 27% Low 51-81% 432 65 15% 492 212 43% Moderate 81- 278 26 9% 527 18 3% 120% Above 120%+ 587 540 92% 1093 3771 345%35 Moderate Total 1988 732 37% 2926 4219 52% ---- Table 4. Regional Housing Needs Allocation (RHNA) 2015-2023: Palo Alto & Mountain View Progress36 The table above shows the current achievement of each city. The future outlook for these two cities is also very different. By 2023, Mountain View (MV) Planning Division anticipates reaching 45.6% of its RHNA goal for VLI housing and 75.6% of its RHNA goal for LI housing.37 In contrast, the Palo Alto (PA) Planning Department warned the City Council in January 2021 that progress building AH continues to be slow and that “near-term housing production is not anticipated to reach” the 2023 RHNA goals.38 35 In Mountain View, the number of permitted units exceeding the RHNA Above Moderate category allocation (an “excess” of 2,678) are not counted in the calculation of the total percentage accomplished. Data drawn from Mountain View and Palo Alto 2021 Housing Element reports covering progress through 2020. City of Mountain View, Community Development, 2020 Housing Element Annual Progress Report, March 23, 2021; City of Palo Alto, City Council Staff Report ID#11838, 2020 Comprehensive Plan and Housing Element Annual Progress Reports, March 15, 2021, https://www.cityofpaloalto.org/files/assets/public/agendas- minutes-reports/reports/city-manager-reports-cmrs/2021/id-11838.pdf. City of Mountain View, 2020 Housing Element Annual Progress Report, March 23, 2021, p.4. City of Palo Alto, City Council Staff Report ID#10950, Housing Work Plan Update, January 21, 2020, pp. 2, 17, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2020/id-10950.pdf. METHODOLOGY The Civil Grand Jury’s interest in this issue started with a review of the 2017-18 Civil Grand Jury of Santa Clara County’s report, Affordable Housing Crisis: Density is our Destiny.39 The Civil Grand Jury also reviewed other county civil grand jury reports: the 2016-2017 Civil Grand Jury of Los Angeles County’s report on affordable housing needs and progress, as well as the two Civil Grand Jury of Santa Barbara County reports, one on county homelessness and one on the City of Santa Barbara’s lack of affordable housing.40 The Civil Grand Jury interviewed twenty people for this report, some of them more than once. Interviewees also answered follow-up emails, suggested additional individuals to interview, and supplied the Civil Grand Jury with documents and data. People interviewed represented a broad spectrum of interests and organizations involved in AH: city and county elected and appointed officials, city and county staff, leaders of regional and local non-profit organizations, non-profit and for-profit developers, and representatives of residential/neighborhood advocacy organizations. The Civil Grand Jury read the Regional Housing Needs Assessment (RHNA) for Mountain View and Palo Alto for the current RHNA cycle, 2015-2023 as well as the two Cities’ corresponding Housing Element planning documents and annual Housing Element updates to their respective city councils. The Civil Grand Jury also researched over a hundred city-produced staff reports, land- use documents, plans and proposals, consultants’ findings, city council agendas, minutes, and memoranda. Local and regional news outlets were particularly helpful in identifying key city council actions and studies. To better understand the actions and outcomes of these two Cities’ affordable housing efforts, the Civil Grand Jury also examined online resources and housing studies identifying best practices in AH development. A bibliography of key best practices appears in a separate section of this report’s References. 39 2017-2018 Civil Grand Jury of Santa Clara County, “Affordable Housing Crisis,” https://www.scscourt.org/court_divisions/civil/cgj/2018/BMRH%20Rpt%202018-06- 19%20REVISED%20FINAL.pdf. 40 2016-2017 Civil Grand Jury of Los Angeles County, “Affordable Housing,” Final Report, pp. 1-18, http://grandjury.co.la.ca.us/pdf/LOSANGELESCOUNTY2016-2017CIVILGRANDJURYFINALREPORT.pdf; 2019-2020 Civil Grand Jury of Santa Barbara County, “Homelessness in Santa Barbara County: Our Everyday Epidemic,” accessed November 12, 2021, http://www.sbcgj.org/2020/homeless.pdf, and “Affordable Housing in Santa Barbara: An Oxymoron?” accessed November 12, 2021, http://www.sbcgj.org/2020/AffordableHousing.pdf. DISCUSSION Santa Clara County cities struggle to create AH. Yet Mountain View and Palo Alto have made radically different progress in building LI and VLI units during the first six years of the current RHNA cycle as shown in Table 4 above. There is no easy solution that will solve the AH crisis. However, advocacy groups, researchers, and innovative municipalities have identified a set of best practices. These best practices fall into four areas: • Political Commitment and Community Support • Proactive Planning and Effective Reporting • Supportive Practices • Affordable Housing Financing In each area, there are tools and strategies that can be used to assist cities in building affordable housing. The Civil Grand Jury investigated how Mountain View and Palo Alto use these tools. Political Commitment and Community Support The housing crisis can only be solved at the local level.41 The solution requires city leadership, residents, property owners, and developers collaborating to achieve AH goals. In their study of housing affordability best practices, James Wood and colleagues acknowledge that: as city councils and planners respond to their constituents, zoning ordinances come to embody, in part, resident concerns, interests, and preferences. And a facet of land use regulation familiar to every developer is the opportunity for neighbors to express their views, in front of the city council and planning commission, on proposed new residential and commercial developments.42 How do city leaders create the conditions that support AH? How do they align all stakeholders behind a local strategy and then successfully execute that strategy? AH success requires long-term 41 Woetzel, et al., A Tool Kit: In Brief, p. vi. James Wood, Dejan Esikic, D.J. Benway, and Kathryn Macdonald-Poelman, Housing Affordability: What Are Best Practices and Why Are They Important? (University of Utah: Kem C. Gardner Policy Institute, November 2020), p. 1, https://gardner.utah.edu/wp-content/uploads/Best-Practices-Dec2020.pdf. commitment of city leaders and city residents. Commitment requires leadership, education, and persistence. Mountain View: political commitment Cities develop each Housing Element eight-year plan through a formal process that includes substantial community input. Both the MV City government and the residents of MV support the goal of socioeconomic and cultural diversity and support building AH as a way to reach that goal. The Mountain View 2015 - 2023 Housing Element’s two top goals are: • Support the production of new housing units serving a broad range of household types and incomes • Provide assistance to households at different income levels to address their housing needs43 These goals build on several of the City’s core values, including: • Promote a community for all with a focus on strategies to protect vulnerable populations • Improve the quantity, diversity and affordability of housing • Preserve Mountain View’s socioeconomic and cultural diversity44 The MV City Council uses these values to drive the City’s priorities. Every two-to-five years the City Council develops a Strategic Action Plan. These plans establish an achievable set of priorities, direct funding, and identify project completion dates. They remain relatively stable across City Council election turnover and reflect MV’s stated values. In the past five years, the Strategic Action Plan goals have prioritized affordable housing.45 The Civil Grand Jury learned that MV city leaders take pride in MV’s positive and stable support of AH. This support, reflected in their strategic plans, is a key component of Mountain View’s AH successes. For example, in the City’s 43 City of Mountain View, 2015-2023 Housing Element, October 14, 2014, pp. 18, 26, https://www.mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=15284. City of Mountain View, City Council Major Goals for Fiscal Years 2019-20 and 2020-2021, accessed August 23, 2021, https://www.mountainview.gov/council/goals.asp; City of Mountain View, Strategic Roadmap Action Plan for Fiscal Years 2021-22 and 2022-23, April 23, 2021, https://www.mountainview.gov/council/strategic_planning_and_visioning.asp. City of Mountain View, Previous City Council Major Goals Fiscal Years 2017-19 and 2018-19, accessed November 12, 2021, https://www.mountainview.gov/council/goals.asp#previousgoals; City of Mountain View, FY 2019-20 through FY 2020-21 City Council Major Goals Work Plan, April 25, 2019, https://www.mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=29232. 2021-2022 and 2022-2023 action plans, two of the seven strategic priorities are “Community for All” and “Intentional Development & Housing Options.”46 (Finding 1) Mountain View: community support The Mountain View City government could not champion AH without the support of its residents. Many MV residents are renters, who have been politically active, and have aligned in the past with AH advocates.47 For example, in 2016 MV voters passed the Community Stabilization and Fair Rent Act (CSFRA) which tied annual rent increases to the Bay Area Consumer Price Index.48 This charter amendment was in direct response to AH scarcity and large multi-year rent increases.49 However, an active population of renters is not sufficient to explain MV’s sustained AH achievements. As in other cities, AH does not have total community support. To overcome resistance and ensure community concerns are heard and resolved, the MV City Council and staff have built a strong communication process that systematically reaches MV residents in every neighborhood. The goal of this ongoing dialog is to educate residents about the need for AH, the costs and trade-offs required, and the areas that are zoned for AH development. With this proactive communication, specific projects may be modified by resident input but are rarely derailed. The MV City government organizes this communication around twenty-five published Precise Plans—defined city areas where development and zoning options are identified in detail. Some of these Precise Plans include affordable housing zoning. The City uses these as both planning and communication tools “for coordinating future public and private improvements on specific properties where special conditions of size, shape, land ownership, or existing or desired development require particular attention.”50 Each plan is reviewed every three years on a rotating schedule. As part of each plan’s review, a team comprised of a City councilmember, staff, developers, and public safety representatives meet with neighborhood residents to talk about the 46 City of Mountain View, Strategic Priorities, https://www.mountainview.gov/council/strategic_planning_and_visioning.asp. 47 58% of Mountain View residents are renters. See: TownCharts.com, Figure 32: Number of Owners vs. Renters in Mountain View, CA and Area, accessed August 16, 2021, https://www.towncharts.com/California/Housing/Mountain-View-city-CA-Housing-data.html. Ballotpedia, “Mountain View, California, Rent Control City Charter Amendment, Measure V November 2016,” accessed November 7, 2021, https://ballotpedia.org/Mountain_View,_California,_Rent_Control_City_Charter_Amendment,_Measure_V_(Nove mber_2016). Tenants Together, July 2019, https://www.tenantstogether.org/resources/mountain-view-tenants- coalition-mvtc. City of Mountain View, Precise Plans, accessed August 18, 2021, https://www.mountainview.gov/depts/comdev/planning/regulations/precise.asp. plan, allay fears, and understand and mitigate concerns. One of the communication goals is to make sure no one is surprised when AH is built. The Civil Grand Jury found it compelling to hear that when visitors toured a Mountain View AH project, they could not differentiate it from a middle-income project. City staff and councilmembers take pride and satisfaction in creating attractive housing for all. (Finding 2) Palo Alto: political commitment In PA, the City Council, staff, and the residents have also expressed support for Affordable Housing. AH is a top priority in many of the PA City Council policy and planning documents. For example, the second and third goals in the PA 2015-2023 Housing Element address and establish policies to support AH: • H2 GOAL: Support the Construction of Housing Near Schools, Transit, Parks, Shopping, Employment, and Cultural institutions  H2.1 POLICY: Identify and implement strategies to increase housing density and diversity…. Emphasize and encourage the development of affordable and mixed-income housing to support the City’s fair share of regional housing needs and to ensure that the City’s population remains economically diverse. • H3 GOAL: Meet Underserved Housing Needs and Provide Community Resources to Support Our Neighborhoods  H3.1 POLICY: Encourage, foster, and preserve diverse housing opportunities for very low-, low-, and moderate-income households.51 This emphasis on policies that support AH is reflected in other City documents and City Council actions. The Palo Alto Comprehensive Plan includes Policy L-1.4 which commits the City to: creating an inventory of below market rate housing for purchase and rental. Work with neighbors, neighborhood associations, property owners and developers to identify barriers to infill development of below market rate and more affordable market rate housing and to remove these barriers, as appropriate. Work with these same stakeholders to identify sites and facilitate opportunities for below market rate housing and housing that is affordable.52 51 City of Palo Alto, 2015-2023 Housing Element City of Palo Alto, 2014, pp. 131, 136, accessed November 7, 2021, https://www.cityofpaloalto.org/files/assets/public/planning-amp-development-services/housing- element/housingelement_2015_2023/complete-public-hearing-draft-09-17-14.pdf. City of Palo Alto, City of Palo Alto Comprehensive Plan, November 13, 2017, p. 36, https://www.cityofpaloalto.org/Departments/Planning-Development-Services/Long-Range-Planning/2030- Comprehensive-Plan. Through Council Colleagues’ Memos and a variety of other actions, PA City councilmembers continue to acknowledge and support the need to create more AH.53 Despite this public support, the actions have not matched policies. The City has permitted far fewer AH units in this RHNA cycle, and in the previous one, than it achieved two RHNA cycles ago:54 • 166 AH units or 15% of RHNA by 2020 • 165 AH units or 13% of RHNA by 2014 • 344 AH units or 90% of RHNA by 2006 Palo Alto has a strong tradition of community consultation. A potentially contentious issue such as where to build AH can be resolved if consultation and conversation is productive. The PA City Council has charged the Planning and Development Services Department with the responsibility to “maintain an ongoing conversation with the community regarding the need for affordable housing, the financial realities of acquiring land and building affordable housing, and the reasons that affordable housing projects need higher densities to be feasible.”55 However, the PA City Council should not expect staff to manage such a contentious issue. Councilmembers should be taking a leadership role in these conversations. Several of the current City leaders ran on platforms that included support for AH. Campaign websites state this commitment: 53 City of Palo Alto, Ordinance No. 5460: Housing Crisis Zoning Changes, accessed September 1, 2021, https://www.cityofpaloalto.org/files/assets/public/city-clerk/ordinances/ordinances-1909-to-present/ordinances-by- number/ord-5460.pdf?t=67468.69; City of Palo Alto, Colleagues’ Memo, No. 63027, November 6, 2019, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports-cmrs/year- archive/2017/id-8630-colleagues-memo.pdf; City of Palo Alto, Colleagues’ Memo, No. 73361, September 23, 2019, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports-cmrs/year- archive/2019/id-10548-colleagues-memo.pdf. Association of Bay Area Governments, San Francisco Bay Area Progress in Meeting 2007-2014 Regional Housing Need Allocation (RHNA), p. 6, accessed June 15, 2021, https://abag.ca.gov/sites/default/files/rhnaprogress2007_2014_082815.pdf; City of Palo Alto, City Council Staff Report ID#11838, 2020 Comprehensive Plan and Housing Element Annual Progress Reports, March 15, 2021, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports- cmrs/2021/id-11838.pdf; City of Palo Alto, 2015-2023 Housing Element City of Palo Alto, p. 127; City of Palo Alto, Housing Work Plan, February 2018 Draft, p. 10, accessed November 12, 2021, https://www.cityofpaloalto.org/files/assets/public/planning-amp-development- services/2018_01_26_housing_work_plan_final.pdf. City of Palo Alto, City Council Staff Report ID#10950, Housing Work Plan 2018-2019: Summary Status Update, January 21, 2020, pp. 5. 7, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/year-archive/2020/id-10950.pdf. • funding for moderate and low-income housing56 • Prioritize housing by focusing on leveraging government programs, developer fees, and implementing our Comprehensive Plan to increase our affordable (below market rate) housing57 • a vision for Palo Alto that is inclusive and diverse … provides new affordable housing opportunities58 Rather than relying on staff to educate PA residents about the complexities involved in building AH and hear resident concerns, PA councilmembers should be the point-persons in working with and listening to residents. (Finding 3) Palo Alto: community support Palo Alto conducts an annual community survey that is reported to the City Council and helps shape their annual plan. Over the past four years, resident concern about the lack of affordable housing has become more prominent.59 In the 2021 Community Survey, nine in ten PA residents rated the quality of their city and neighborhoods as excellent or good. The unique qualities of PA’s 35 neighborhoods are highly valued, and residents wish to preserve their tree-lined streets, many parks, and historic homes and neighborhoods. A desire to maintain these qualities motivates some residents to resist the changes AH might bring. In that same survey, the responses to the question “What should the city change?” give a flavor of the tensions surrounding the AH issue for Palo Altans: • Build more housing! Affordable housing will give us a more diverse and vibrant city. The idea that it will ruin what we have is just silly. • Limit developers from adding more residences because it makes traffic a nightmare. • More affordable housing for all – teachers, firemen, police, secretaries, etc. Patrick Burt, “My Top 3 Priorities,” Voters’ Edge California, November 3, 2020, https://votersedge.org/ca/en/election/2020-11-03/santa-clara-county/city-council-city-of-palo-alto/patrick-burt. Tom DuBois, “Re-Elect Tom DuBois for Palo Alto City Council,” accessed September 21, 2021, https://www.votedubois.com. Greer Stone, “Greer Stone Palo Alto City Council,” accessed September 21, 2021, http://www.greerstone.com/GStone2020/home.asp. City of Palo Alto, City Council Staff Report ID#12270, Presentation of the Annual Community Survey Results, May 17, 2021, p. 14, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/2021/id-12270.pdf. • Stop increasing population density of the city by allowing more housing that is not single family. I bought into Palo Alto because it is primarily single-family zoning.60 Unfortunately, several promising AH projects have been derailed in this RHNA cycle and the last cycle because of negative input from residents.61 Resident objections to AH proposals stem from a variety of reasons, including lack of agreement on goals, failure to feel consulted, and worry that AH will compromise the beauty and safety of a neighborhood. One example of a lack of agreement on goals is the controversial North Ventura Coordinated Area Plan (NVCAP) project near the former Fry’s location. A fourteen-person panel worked with staff from the PA Planning Department, developers, and consultants to create alternative plans for the NVCAP area. After four years, the panel has not reached a consensus on goals, let alone ways to reach those goals. The City of Palo Alto and pro-AH groups see the North Ventura area as an opportunity to build needed AH. Many residents support AH but do not want their neighborhood to become the vanguard for tall, dense buildings and parking scarcity. Some residents also do not accept the City’s model of mixed-use development as a trade-off for AH units. The Civil Grand Jury learned that some members of the working group and residents felt the project’s goals were changed by staff and the consultants during the planning process. Residents felt the changes no longer aligned with what the neighborhood wanted. The PA Planning Department based its work in part on financial data from a study done in 2020 that identified what percentage of AH units were financially feasible for a for-profit developer to include in the project.62 The staff and consultants also “engaged in a tremendous amount of 60 City of Palo Alto, City Council Staff Report ID#12270, pp. 65-68, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports- cmrs/2021/id-12270.pdf. Louis Hansen, “Fierce, 7-Year NIMBY Battle in Palo Alto Reaches a Conclusion: Big $5 Million Homes Rise on Site Once Eyed for Affordable Senior Units,” Mercury News, June 23, 2020, https://www.mercurynews.com/2020/06/23/fierce-7-year-nimby-battle-in-palo-alto-reaches-a-luxury-conclusion/; Gennady Sheyner, “Facing Concerns from College Terrace, City Looks to Reassert Commitment to Single-Family Housing Zones,” Palo Alto Weekly, April 7, 2021, https://www.paloaltoonline.com/news/2021/04/07/facing- concerns-from-college-terrace-city-looks-to-reassert-commitment-to-single-family-housing-zones; Gennady Sheyner, “With No Consensus in Sight, Palo Alto’s Vision for Ventura Gets Murky,” Palo Alto Weekly, June 10, 2021, https://www.paloaltoonline.com/news/2021/06/10/with-no-consensus-in-sight-palo-altos-vision-for-ventura- gets-murky. community outreach, providing numerous opportunities for public engagement and meaningful input.”63 Few people were satisfied by the three alternatives presented to the PA City Council. They were “deemed unfeasible by the city’s consultants and unappealing by the property owners and residents.”64 North Ventura residents felt that the City’s staff and consultants controlled the process and did not listen to community concerns.65 The outcome of this four-year planning process has been characterized as “a terrible, disappointing, and unfortunate failure.”66 An example of another failed project occurred in 2012. The non-profit Palo Alto Housing Corporation purchased a 2.5-acre site on Arastradero Road with plans to build 60 units of AH for seniors and 15 single-family homes. In September 2012, the non-profit held a poorly attended community meeting to introduce nearby residents to the project.67 Another community meeting was held in January 2013. With few residents in attendance, the PA Planning and Transportation Commission approved a plan to change the zoning, and the PA City Council approved loaning funds to the non-profit in March of that year. A final neighborhood meeting was held in April to discuss the project’s modified plans and its impact on traffic. In contrast to the poorly attended neighborhood and City meetings, a large group of residents attended the May 2013 PA City Council meeting to protest the development. They expressed the feeling that their issues had not been adequately listened to by PA City Council and the non-profit developer.68 After signatures were gathered, a measure was placed on the November 2013 ballot to halt the development. Once the measure passed, Palo Alto Housing Corporation was unable to build the project. City of Palo Alto, City Council Staff Report ID#11472, “Inclusionary Below Market Rate Feasibility Study,” September 21, 2020, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city- manager-reports-cmrs/year-archive/2020-2/id-11472.pdf. City of Palo Alto, City Council Staff Report ID#11930, “NVCAP – Review Plan Alternatives,”, June 14, 2021, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports- cmrs/2021/id-11930.pdf. Sheyner, “With No Consensus.” 65 Rebecca Sanders, “PAN’s Outreach to the Community Regarding the NVCAP2 Survey,” April 16, 2020, https://www.cityofpaloalto.org/files/assets/public/planning-amp-development-services/north-ventura-cap/survey- emails-only.pdf?t=42004.46. Sheyner, “With No Consensus.” 67 Gennady Sheyner, “What’s Measure D Really About?” Palo Alto Online, October 11, 2013, https://www.paloaltoonline.com/news/2013/10/11/whats-measure-d-really-about. Joseph Hirsch, “Guest Opinion: A Neighborhood Perspective of Maybell Avenue Development,” Palo Alto Weekly, July 16, 2016, https://www.paloaltoonline.com/news/2016/07/16/guest-opinion-a-neighborhood- perspective-of-maybell-avenue-development. Resident commenting on a variety of AH proposed projects indicate that they want to be engaged in PA’s AH planning and are willing to negotiate and compromise: • Residents need to be actively and genuinely consulted with regard to significant developments proposed to take place in their immediate neighborhood69 • The Working Group met for two years, and they [City staff] didn’t respect their time, commitment, and dedication to even take their ideas under consideration”70 • Despite initial misgivings…residents of the Ventura neighborhood on Monday rallied behind the project. Many credited the development team for listening and constructively responding to their concerns.71 Building AH is neither simple nor inexpensive. Palo Altans need to understand the possible locations, design requirements, and financing required for AH. Responding to residential apprehensiveness that an AH project will lead to crime and increased traffic, the City can lead discussions that explain to residents how an AH project will allow teachers, city workers, and service employees to live in the city where they work. City leaders can also lead discussions to combat the idea that AH developers are motivated by profit when, in fact, they are often non-profit organizations. The City can also explain the perspective of for-profit developers who expect a fair rate of return on the time and money they must invest, and the risk they take when developing a mixed-use project that combines AH with commercial space or market-rate housing. An urban economics consulting firm analyzed the feasibility of including below-market rate housing in different types of developments.72 Their analysis assumed that if a rental project provided a return of 5% or more, the project was “highly likely” to be built; if the return was less than 4.75 %, the project was unlikely to be built. Many residents believe that developers make excessive profits and are unaware that many AH projects struggle to reach viability. Residents are less likely to make financially 69 Hirsch, “Guest Opinion.” 70 Suzanne Keehn, Letter to City Council, “Fw: NVCAP,” June 14, 2021, https://www.cityofpaloalto.org/files/assets/public/planning-amp-development-services/north-ventura-cap/all-public- comments_1.pdf. Gennady Sheyner, “First Affordable-Housing Project in Seven Years Wins Approval: City Council Supports 59-Unit Development on El Camino Real,” Palo Alto Weekly, January 14, 2019, https://www.paloaltoonline.com/news/2019/01/14/affordable-housing-project-wins-approval-in-palo-alto. City of Palo Alto, Inclusionary Below Market Rate Feasibility Study, p. 5. untenable proposals or objections to a project if they understand the issues and tradeoffs and feel their concerns have been respected.73 According to many researchers, building resident and stakeholder support for AH is an effective best practice.74 City staff do not have the same stature as elected leaders. Therefore, PA City councilmembers cannot expect staff alone to lead community conversations that enable PA residents to understand AH needs and cost requirements and to build community support. City councilmembers--PA's community leaders--can play a critical role in publicly supporting and discussing AH. Since many current PA City councilmembers ran on platforms that included AH, they are well-positioned to take a leadership role in discussing this issue with residents. To be more successful in building AH, the PA City Council should continue its tradition of strong resident input but engage with residents to create a series of defined area plans with clear zoning rules, including for AH zoning. One example of the City’s success in doing this is the South of Forest Area Coordinated Area Plan (SOFACAP).75 Palo Alto should employ the process used for SOFACAP to work with residents in other areas where AH is appropriate to build. Direct, transparent, and committed dialog, particularly when crafting plans and projects, can be effective. Palo Alto City councilmembers should develop a communication plan that they can use to engage residents and stakeholders in proactive, detailed, and fact-based conversation to allay resident concerns, focus on the benefits of AH, and build resident support.76 (Finding 4) Proactive Planning and Effective Reporting The RHNA-mandated Housing Element reports written by cities are planning documents as opposed to approved projects. The Housing Element lists potential sites where AH might be built as well as policies and actions cities might undertake to help build AH. To be effective, these 73 Allison Levitsky, “Palo Alto Council Unanimously Approves Affordable Housing Project,” Daily Post, January 15, 2019, https://padailypost.com/2019/01/15/palo-alto-council-unanimously-approves-affordable-housing- project/. Woetzel, et al., Toolkit, p. iv; James Wood, et al., Housing Affordability, 75 City of Palo Alto, South of Forest Area Coordinated Plan, December 2003, accessed November 13, 2021, https://www.cityofpaloalto.org/files/assets/public/planning-amp-development-services/file-migration/current- planning/forms-and-guidelines/south-of-forest-coordinated-area-plan-phase-2.pdf. See “Mountain View: Political Commitment” section above; Hee-Jung Jun, “The Link Between Local Comprehensive Plans and Housing Affordability,” Journal of the American Planning Association v. 83, no. 3 (Summer 2017), pp. 249-261, https://www.tandfonline.com/doi/full/10.1080/01944363.2017.1321496; City of Morgan Hill, 2021 Housing Conversation, accessed July 8, 2021, https://www.morgan-hill.ca.gov/2162/2021- Housing-Conversation. general plans must be turned into action-oriented outcomes supported by local leadership, developers, and residents.77 To develop resident support, cities must not only create specific plans with resident input but also communicate those plans effectively to the community. Creating community engagement by including community members in the advance planning processes and communicating the value of AH are best practices.78 Successful AH projects require “that local governments should restore direct reliance on adopted plans and create transparency, predictability, reliability and timeliness to the housing approvals process.”79 So how effective are MV and PA in creating proactive plans that are realistic for all stakeholders (residents, developers) and result in real housing being built? Are these plans well-tailored to each area or a mix of options that require time-consuming negotiations or approvals? Who leads the planning effort and engages stakeholders? Finally, how well are the two Cities making progress on these plans and their AH goals? Mountain View: proactive planning Mountain View has 25 Precise Plans covering 24 neighborhoods. The City uses these plans as “a tool for coordinating future public and private improvements on specific properties where special conditions of size, shape, land ownership, or existing or desired development require particular attention.”80 The visions, principles, and goals in these plans are coordinated with MV’s General Plan and Housing Element Plan. But the Precise Plans live up to their titles—they are concrete, spelling out where and how AH will be included.81 Not only does MV leadership take a proactive role in creating precise plans, but when property owners struggle to resolve development conflicts, MV has actively stepped in to offer a 77 Hee-Jung Jun, “The Link Between Local Comprehensive Plans and Housing Affordability,” p. 258,, https://www.tandfonline.com/doi/full/10.1080/01944363.2017.1321496; Charles Hoch, “How Plan Mandates Work: Affordable Housing in Illinois,” Journal of the American Planning Association v. 73, no. 1 (Winter 2007), pp. 87, 94-95, https://www.tandfonline.com/doi/abs/10.1080/01944360708976138. Wood, et al., Housing Affordability, p. 5. Committee to House the Bay Area, CASA Compact, p. 12. City of Mountain View, Precise Plans. See for example: City of Mountain View, El Camino Real Precise Plan, p. 3, accessed August 21, 2021, https://www.mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=29701; North Bayshore Precise Plan: North Bayshore Affordable Housing Administrative Guidelines, accessed August 21, 2021, https://www.mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=22584; East Whisman Precise Plan: Guiding Principles, p. 17, accessed August 17, 2021, https://www.mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=32005. resolution.82 Within MV’s North Bayshore Precise Plan area, two property owners with adjacent land (Google and SyWest) could not agree on a coordinated approach to developing the sites. In response, the MV City Council created a new set of development standards for a 30-acre section. This proposed Gateway Master Plan “will help implement the goals and objectives of the [broader] Precise Plan.”83 Google likes the proposed plan, but SyWest says it doesn’t work financially for them. City officials are working proactively with the developers to resolve their concerns over this proposed solution.84 In addition to the Precise Plans, the MV City Council uses its planning process to focus City work on AH outcomes. The Council periodically adopts and updates a 2-to–5-year Strategic Roadmap Action Plan in which AH is prioritized. The current plan lists specific affordable housing actions to be completed in the next two years of the five-year plan.85 (Finding 5) Palo Alto: multiple plans, few outcomes Unlike MV, PA does not have a comprehensive, well-organized set of planning documents that clearly identify regions where the City is planning AH development that the Civil Grand Jury could find. Instead, AH is addressed in a confusing combination of general and specific approaches. The Comprehensive Plan defines allowable land uses for residential, mixed-use, and commercial areas within PA. Some areas include options for affordable housing.86 The Comprehensive Plan was used extensively in creating PA’s 2015-2023 Housing Element. Palo Alto strengthened its current Housing Element with specific AH-enabling zoning changes in 2019 when the PA City Council passed the Housing Work Plan Implementation Ordinance. Martin Alkire, North Bayshore Gateway Master Plan: Public Draft – August 2021, accessed November 13, 2021, https://www.mv-voice.com/news/reports/1629396384.pdf. City of Mountain View, Gateway Master Plan, accessed August 21, 2021, https://www.mountainview.gov/depts/comdev/planning/activeprojects/gateway_master_plan.asp. Wesley Severson, “Mountain View Pushes Ambitious Development Plans, Developer Calls them Unrealistic,” Hoodline, August 25, 2021, https://hoodline.com/2021/08/mountain-view-pushes-ambitious- development-plans-developer-calls-them-unrealistic/. City of Mountain View, Strategic Roadmap Action Plan. City of Palo Alto, 2030 Comprehensive Plan, Land Use and Community Design Element, pp. 31-33, accessed August 21, 2021, https://www.cityofpaloalto.org/files/assets/public/planning-amp-development- services/3.-comprehensive-plan/comprehensive-plan/2030-comp-plan-2-land-use-june-21.pdf. Prompted by a 2018 Council Colleagues’ Memo calling for more AH, this ordinance amended the Municipal Code to “remove barriers and disincentives to housing development at higher densities where appropriate near transit, jobs and services, and that is affordable for a range of income levels [sic].”87 By approving these zoning changes, PA acknowledged that the housing shortage, particularly for AH, “threatens the city’s prosperity, diversity, stability, environment, quality of life, and community character.”88 The PA City Council has created many documents that address affordable housing, including the Comprehensive Plan, the Housing Element, Title 18 of the Municipal Code, and numerous ordinances, zoning maps, reports, studies, and design and development guidelines: • Housing Work Plan • Coordinated Area Plans (CAP) • Planned Home Zones (PHZ) • Priority Development Areas (PDA) • Affordable Housing Overlays • Workforce Housing Overlays • Housing Incentive Programs There has been some AH success in the current RHNA cycle. For example, a 2019 Palo Alto Weekly article announced, “First Affordable-Housing Project in Seven Years Wins Approval.”89 Yet, as the headline demonstrates, PA is not making rapid progress in meeting the community’s AH needs. In January 2020, the PA Planning and Development Services Department updated City Council on housing progress. Staff was not optimistic about the City’s ability to meet its RHNA goals. The update warned that “many of the conditions that precipitated the [2018 Council] Colleagues’ Memo … continue” and that “the lack of affordable housing at all income levels contributes to” many other problems PA is experiencing, such as “traffic congestion, increased motorist travel time, … greater greenhouse gas emissions,” and the difficulty hiring and retaining low-wage workers.90 87 City of Palo Alto, Municipal Code Ordinance No. 5460, April 1, 2019, p. 2, https://www.cityofpaloalto.org/civicax/filebank/documents/71494. Ibid. Gennady Sheyner, “First Affordable-Housing Project in Seven Years Wins Approval: City Council Supports 59-Unit Development on El Camino Real,” Palo Alto Weekly, January 14, 2019, https://www.paloaltoonline.com/news/2019/01/14/affordable-housing-project-wins-approval-in-palo-alto. These planning documents offer different levers to help AH projects, but there have been few results. To match AH outcomes with their policy goals and campaign platforms, PA leaders need to employ best planning practices such as creating specific planned areas with identified densities, setbacks, height limits, etc., that support AH development. The PA City Council should identify specific regions where zoning will allow AH to be feasible and clarify and simplify zoning requirements. This should be done with wide community input and education. Compact, comprehensive, and clear plans coupled with 1-to-2-year strategic plans with specific outcomes would give the PA City Council a powerful tool to help make AH development viable. (Finding 6) Mountain View: effective reporting Mountain View reports on its plans in a variety of ways. As discussed above in the Community Support section, MV City councilmembers conduct annual conversations with residents. The MV Planning Division’s website has the precise plans, often with supporting documentation and details.91 In addition, the MV Planning Division annually presents a Housing Element Annual Progress Report to the City Council (and RHNA). This report is accompanied by a cover memo that summarizes the specific actions and achievements made during the year, which makes the City’s accomplishments easy to identify and quantify.92 The MV 2015-2023 Housing Element text is available on the City’s website.93 However, a search of the City’s website does not easily reveal any 2015-2023 annual updates. The most prominent search result is a link to the 2023-2031 Housing Element Update on the Community Development website.94 A version of the 2020 Housing Element Annual Update is provided as an attachment to the March 3, 2021 agenda of the MV Environmental Planning Commission as a staff report.95 90 City of Palo Alto, City Council Staff Report ID#10950, Housing Work Plan Update, January 21, 2020, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports-cmrs/year- archive/2020/id-10950.pdf. City of Mountain View, Precise Plans. City of Mountain View, 2020 Housing Element Annual Progress Report, March 23, 2021. City of Mountain View, 2015-2023 Housing Element, October 14, 2014, https://www.mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=15284. City of Mountain View, General Plan and Housing Element, accessed August 24, 2021, https://www.mountainview.gov/depts/comdev/planning/regulations/general.asp. Mountain View should update its website to include all the annual Housing Element Progress Reports. (Finding 7) Palo Alto: reporting confusion The Civil Grand Jury found that there are so many plans—with documents, specific rules, and details—that it is difficult for PA residents to understand where AH is planned, what specific design elements zoning would permit (density, height, setbacks, etc.), and what public benefits might accompany each project. Since there is often no linked text, the myriad of plans, overlays, and other documents are also difficult to find when mentioned on a website.96 Annual reports are an excellent way to communicate AH progress. This past year, PA’s Planning Department submitted a memo with its 2020 Comprehensive Plan and Housing Element Annual Progress Report to the City Council.97 The Comprehensive Plan’s progress and the Housing Element’s Update are discussed together. The annual Housing Element Update tables identifying progress are difficult to understand and are buried as an accompanying attachment. Palo Alto should more clearly communicate its annual AH progress. The City’s website can be a powerful tool to aid in communicating AH plans and achievements to the community. Palo Alto is to be commended on the fact that the full text of its 2015-2023 Housing Element is linked from the Planning & Development website and that it has Annual Housing Element Progress Reports from 2015 through 2018.98 It should update this annual list with the missing most recent years. (Finding 8) 95 City of Mountain View, Environmental Planning Commission, “Staff Report, 2020 Housing Element Progress Report,” March 3, 2021, https://mountainview.legistar.com/LegislationDetail.aspx?ID=4811887&GUID=31D36D2F-EA70-4326-BE48- 2026143531E0&Options=&Search=. See City of Palo Alto, Area Plans and Studies: Ongoing Area Plans and Studies, “Priority Development Areas (PDAs) and Priority Conservation Areas (PCAs),” December 12, 2019. This website has two paragraphs announcing the adoption of a PDA for University Avenue/Downtown but there are no linked documents, https://www.cityofpaloalto.org/News-articles/Planning-and-Development-Services/Priority-Development-Areas- PDAs-and-Priority-Conservation-Areas-PCAs. City of Palo Alto, City Council Staff Report ID#11838, 2020 Comprehensive Plan and Housing Element Annual Progress Reports, March 15, 2021, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/2021/id-11838.pdf. City of Palo Alto, Housing Element (2015-2023), accessed August 24, 2021, https://www.cityofpaloalto.org/Departments/Planning-and-Development-Services/Long-Range-Planning/Housing- Policies-and-Programs/Housing-Element-2015-2023. Supportive Practices Defining and communicating neighborhood plans is an essential best practice in the creation of AH. But, after plans are adopted, cities must create an environment that supports developers as they consider the construction of housing. One supportive practice is “streamlining and standardizing the uncertain and time-consuming approval process.”99 The Civil Grand Jury learned that a second supportive practice is to identify a member of the city planning staff who takes the lead on AH development, and who can guide developers through the approval process. Efficient city review and approval In Mountain View, the City review and approval process, beginning with the submission of an initial proposal and ending with formal approval by the City Council, averages less than twelve months. Two Mountain View projects with AH units reflect this efficient process: • 535-555 Walker Dr., with 58 townhouse units, took eleven months. This involved two meetings with the Development Review Committee followed by the MV City Council approval.100 • 394 Ortega Ave., a 144-unit project (including five AH units), took ten months. This involved two meetings with the Development Review Committee, a meeting with the Environmental Planning Commission, and the MV City Council approval.101 The length of time it takes developers in PA to move from proposal to entitlement is significantly longer. Two projects with sizes comparable to MV’s examples are: • 2755 El Camino Ave., a 57-unit project, took two years and one month from the preliminary screening before the PA City Council to the final City 99 Wood, et al., Housing Affordability, p. 5. City of Mountain View, “Council Report,” June 12, 2018, https://mountainview.legistar.com/LegislationDetail.aspx?ID=3523778&GUID=57E1911A-07B7-4D74-87F5- 0185E491F20A. City of Mountain View, “Council Report,” September 20, 2016, https://mountainview.legistar.com/LegislationDetail.aspx?ID=2838231&GUID=74838AC8-BB92-49DC-8CC1- 2F0D4B52B705&Options=&Search=. Council approval. The approval process involved a preliminary review by the PA City Council, reviews by the Planning Commission and the Architectural Review Board, and a final City Council hearing. This project was complicated by a requirement to amend the zoning code and because architectural plans had to be resubmitted six times.102 • 788-796 San Antonio Rd., ground-level retail with 102 units (including 16 below market rate units), took one year and eleven months. The approval process included rezoning, an architectural review, an Environmental Impact Report, and the PA City Council approval.103 The Civil Grand Jury found that PA’s lengthy approval process discourages developers from working with the City. If the PA wants to encourage the development of AH, it needs to find ways to streamline the approval process. (Finding 9) Palo Alto uses Planned Home Zoning to offer developers greater density, higher building height, and less required parking—provided the project includes Below Market Rate (BMR) housing. This type of development requires a preliminary review by the PA City Council, which adds about four months to the time it takes to obtain final approval. This is an additional risk for developers, who not only must extend the project schedule by four months, but after investing in the project, may subsequently discover that the City Council dislikes the proposed development. Palo Alto should take the time to define specific area development plans with the attendant neighborhood involvement, similar to the Precise Plan process in Mountain View.104 If Palo Alto develops area plans that clearly specify the designs that would be acceptable to the City and the community, not only could preliminary reviews be eliminated, but the developer could invest in the project with more confidence that final approval would be obtained. Another possibility is to combine public meetings. Currently, after the preliminary review by the PA City Council, the project is reviewed in a public meeting with the PA Planning and 102 City of Palo Alto, “2755 El Camino, Attachments,” accessed December 3, 2021, https://aca- prod.accela.com/paloalto/Cap/CapDetail.aspx?Module=Planning&TabName=Planning&capID1=16PLN&capID2= 00000&capID3=00234&agencyCode=PALOALTO&IsToShowInspection=no; https://aca- prod.accela.com/paloalto/Cap/CapDetail.aspx?Module=Planning&TabName=Planning&capID1=16PLN&capID2= 00000&capID3=00464&agencyCode=PALOALTO&IsToShowInspection=no. City of Palo Alto, “788-796 San Antonio Road, Attachments,” accessed December 3, 2021, https://aca- prod.accela.com/paloalto/Cap/CapDetail.aspx?Module=Planning&TabName=Planning&capID1=19PLN&capID2= 00000&capID3=00084&agencyCode=PALOALTO&IsToShowInspection=no. The City of Palo Alto uses the phrase “Precise Plans” in the Palo Alto Municipal Code: Title 20 Precise Plans to “provide for the systematic execution of the circulation element of the general plan … by [among other regulations] designating the precise location of planned rights-of-way” and prevent encroachments. Accessed December 10, 2010, https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-82433. Transportation Commission, and in a separate public meeting with the Architectural Review Board. In contrast, MV combines the two meetings with its Design Review Committee, which is chaired by a planning administrator and two consulting architects. Combining the public review meetings would reduce the time it takes for a project to obtain final approval. This would take away an opportunity for public comment, but this drawback could be effectively neutralized by encouraging public feedback when specific area development plans are defined. Palo Alto planners should explore whether a combined process would speed up its approval timeline. There may be other ways to reduce the time it takes for developers to get their plans approved by the City. Palo Alto planning staff should consult with Mountain View staff to explore additional ways to streamline their approval process. Single role to manage and advocate for affordable housing A classic organizational best practice involves “assigning responsibility for outcomes along with the authority to do what is needed to produce the desired results.”105 A dedicated AH manager would be responsible for outcomes and drive progress toward the city’s AH target. Cities such as Morgan Hill have created a similar affordable housing position leading to strong results. The Civil Grand Jury learned that the Morgan Hill Housing Manager is responsible for achieving the City of Morgan Hill’s AH numbers and coordinates projects, funding sources, and organizations to achieve AH outcomes. Top city leader support is critical to the success of position. With that support, a knowledgeable and dedicated AH manager can be responsible for the AH targets, solve problems, and provide stakeholders with expert advice. The Civil Grand Jury learned that both non-profit and for-profit developers prefer to work with a city expert, a single point-of-contact, particularly when negotiating about residential and affordable units. According to the Newport Beach Community Development Director, “establishing a dialogue with developers on the front end of projects is important.”106 By consulting with developers, a city’s AH manager can understand what they need to make a project feasible. This manager can eliminate lengthy negotiations and prevent avoidable delays. With a clear understanding of both sides’ priorities, the AH manager is in a strong negotiation position when working with for-profit developers. (Finding 10) 105 Sam Lloyd, “Managers Must Delegate Effectively to Develop Employees: Planning Can Minimize Poor Performance,” accessed August 15, 2021, https://www.shrm.org/resourcesandtools/hr-topics/organizational-and- employee-development/pages/delegateeffectively.aspx; Alexandra Kalev, Frank Dobbin, and Erin Kelly, “Best Practices or Best Guesses? Assessing the Efficacy of Corporate Affirmative Action and Diversity Practices,” American Sociological Review v. 71, no. 4 (2006), pp. 589-617. Nikie Johnson, and Jeff Collins, “Report Card: California Cities, Counties Failing Again on Affordable Housing Goals,” Orange County Register, January 31, 2021, https://www.ocregister.com/2021/01/31/report-card- california-cities-counties-failing-again-on-affordable-housing-goals/. AH Financing: City Funding and Financial Participation Affordable housing is expensive In June of this year, MV announced its Montecito Proposal for 84 affordable units and 147 bedrooms.107 The planned project development cost totals $88,702,160, or $1,055,978 per unit and $591,348 per bedroom. In December 2020, MV announced its similarly scaled La Avenida project.108 The total development cost was listed as $78,573,646 for 100 units ($785,736 per unit) and 119 bedrooms ($603,416 per bedroom). In Santa Clara County, 29 projects - totaling 2,969 units and 3,989 bedrooms - have received Measure A funding approval over a three-year span. The average cost per unit of AH for those projects is $678,365. The average cost per bedroom for these same projects is $504,905. Affordable housing financing is complex One public official close to this issue noted that the projects require anywhere from 8-15 sources of financing. As an example of this complexity, the funding plan for the Montecito project is shown in Table 5 below. In addition to the Measure A and MV funds, the project required seven additional sources: Permanent Sources Dollar Amounts Tax Credit Equity $31,085,934 City of Mountain View 18,000,000 County of Santa Clara Measure A 16,000,000 Federal Home Loan Bank-Affordable Housing Program 820,000 Conventional Loan 9,507,000 Contributed Developer Fee 5,478,000 Deferred Developer Fee 877,655 Fee Waivers 5,473,911 Deferred Interest from City and County 1,459,660 TOTAL $88,702,160 Table 5. Charities Housing Funding Proposal – 1265 Montecito Avenue 107 Kevin Forestieri, “Mountain View City Council Earmarks $16M for Costly New 84-Unit Affordable Housing Project,” Mountain View Voice, June 28, 2021, https://www.mv-voice.com/news/2021/06/28/mountain- view-city-council-earmarks-16m-for-costly-new-84-unit-affordable-housing-project. Kevin Forestieri, “Mountain View Pours $15M into North Bayshore’s First Affordable Housing Project, Mountain View Voice, December 14, 2020, https://dmv-voice.com/news/2020/12/14/mountain-view-pours-15m- into-north-bayshores-first-affordable-housing-project. The largest source, the Tax Credit Equity, is from a Low-Income Housing Tax Credit Program.109 When the Charities Housing Funding Proposal to build AH at 1265 Montecito Avenue in MV was later announced, the funding mix changed. Santa Clara County took the lead on the project, committing $18M, and MV committed $16M. Multi-faceted funding strategies build more affordable housing Despite the scale of resources required and the complexity of project financing, AH does get built. However, it is difficult to fully understand the financing and what deals are made because real estate negotiations are done behind closed doors. Real estate negotiations, like those that involve personnel decisions, are not subject to the Ralph M. Brown Act’s public meeting requirements.110 In addition, residential and commercial development projects add costs to local infrastructure and services. When offices and housing are built, more people will live in the community. More classrooms and teachers will be needed. Parks need to be built. Demands for police, fire and utilities providers will increase. The need for other service workers in restaurants and delivery services will increase and those individuals will need places to live. In a post-Prop 13 world, cities must find ways to fund these services. Often that means charging fees on commercial development projects. Multiple public funding sources are available to achieve AH goals. Federal and state programs play a central role. A prime example is the federal tax credit program in the Montecito project. Both the federal government and the State are committing funding through Homekey (as described below). The federal government is the primary funding source for AH, supplying all the Low- Income Housing Tax Credit money and most of the funding for Homekey. Unfortunately, the State of California is not providing a substantial amount of funding to help cities with this difficult problem. The Low-Income Housing Tax Credit is a federal resource, administered by the states, available to support affordable housing. Developers receiving an award use the tax credits to raise equity capital from investors. The tax credit gives investors a dollar-for-dollar reduction in their federal tax liability in exchange for equity. The tax credits are claimed over a ten-year period. California Government Code § 54956.8, accessed November 7, 2021, https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=2.&title=5.&part=1.&ch apter=9.&article=. Santa Clara County plays an important fiscal role as well. Measure A, a bond approved by voters in 2016, provides $950M to build AH.111 Santa Clara County is commended for its support of the County’s AH needs. Private organizations such as the Housing Trust Silicon Valley also play a role. Their Tech Fund enables private individuals and Bay Area employers to invest in AH projects.112 City Affordable Housing funding challenges and opportunities The task at the city level is twofold. First, it must leverage all possible external funding from federal, state, and county sources. The Montecito and La Avenida projects are good examples of leveraging from city and county funds, including funds from Measure A. Second, cities must contribute directly. An excellent recent example of this occurred when MV contributed $15M to the La Avenida Project and $16M to the Montecito Project. It is critical for cities to contribute funding since city funds are often the first—and most necessary—step to acquiring other external funding sources. Cities can contribute directly by: 1. Developing local pools of funding. For example, until recently, MV had a fund of $69M to finance AH and support the cost of new infrastructure. (Finding 11) Mountain View built its AH fund through linkage or impact fees (fees imposed on property developers by municipalities for the new infrastructure required to accommodate new development). These fees are paid by office space developers. Palo Alto, with its annual cap on office space development, has severely restricted this source of funding.113 2. Waiving or deferring fees where AH is provided. The Montecito project is an example. 3. Negotiating other benefits to have developers include AH units. For example, allowing additional height, less required parking, or increased Floor Area Ratio (FAR), which is the size of a building’s floor area in relation to the parcel size on which the building is located. For example, a market rate housing project can be transformed by trading increased density 111 Santa Clara County, “Complete Text of Measure A,” accessed August 1, 2021, https://www.sccgov.org/sites/scc/Documents/Complete-Text-of-Measure-A-20.pdf. Donna Kimura, “Silicon Valley Firms Invest in Affordable Housing,” Affordable Housing Finance, February 13, 2019, https://www.housingfinance.com/finance/silicon-valley-firms-invest-in-affordable-housing_o. Gennady Sheyner, “Palo Alto Approves Permanent Office Cap,” Palo Alto Online, May 1, 2018, https://www.paloaltoonline.com/news/2018/05/01/palo-alto-approves-permanent-office-cap. for more affordable units, or by obligating the developer to build or buy AH elsewhere. Both MV and PA have used these methods to incentivize housing development. Mountain View has had a greater degree of success, in part because it has been much more aggressive with office development. 4. Contributing city-owned land. The inventory of available city land can have a significant impact on the cost and risk of building AH. 5. Using tax increment financing. As property taxes rise above a base year, the added amount, or the “increment,” could be used to finance AH and/or needed infrastructure. To do this, some of the increase in property tax revenue that has traditionally supported operations like the police and fire departments would be redirected to AH. No new taxes would be required because this is a diversion of property taxes from other services. This approach has long been in use in the United States and elsewhere but has many legal complications that would need to be addressed. 6. Establishing new ongoing sources of revenue by relying on a broader base of payors rather than an individual project developer. Revenue could include new business taxes, fees on real estate activity such as transfer taxes and recording fees, or parcel taxes. Both PA and MV are exploring these opportunities. Mountain View changed its business licensing tax in 2018 and currently raises about $6M per year. At this time, MV intends to spend these funds on capital projects related to commuting activity instead of AH. The increased AH housing targets in the next RHNA cycle may cause MV and PA to consider asking voters to consider increasing local property taxes as part of their funding solution.114 (Finding 12) Mountain View’s success in developing a local housing fund enabled the City to issue several Notices of Funding Availability (NOFAs).115 These substantial NOFAs, 2014 ($12.5M), 2016 ($36M), and 2018 ($22M), encouraged developers to come forward with AH proposals.116 Mountain View’s commitment to AH funding set the stage for leveraging other sources of financing to build affordable housing projects. Kevin Forestieri, “Facing a Requirement to Allow 11K New Homes, Mountain View Looks to Update its Housing Plans,” Mountain View Voice, August 16, 2021, https://mv-voice.com/news/2021/08/16/mountain-view- seeks-to-update-housing-plans-following-new-requirement-to-allow-11k-new-homes; Gennady Sheyner, “New Numbers, Same Concerns as Palo Alto Challenges Housing Mandate,” Palo Alto Weekly, January 13, 2021, https://www.paloaltoonline.com/news/2021/01/13/new-numbers-same-concerns-as-palo-alto-challenges-housing- mandate. Notice of Funding Availability is a public notice issued by a governmental entity which announces the availability of funding for a specific purpose and can be requested through an application process. It is typically awarded competitively for proposals that achieve an outcome desired by that organization. Mark Noack, “Affordable Housing Project Carries Steep Price,” Mountain View Voice, April 20, 2018, https://mv-voice.com/news/2018/04/20/affordable-housing-project-carries-steep-price. 100% affordable housing projects vs. mixed-use projects There are two main types of AH projects. The first is the 100% AH type in which only housing is built, often by a non-profit organization. The second type is a mixed-use project. In mixed-use projects, the developer delivers a combination of occupant units, including some or all of office space, retail space and housing. Mountain View and Palo Alto have differing views on the relative use of these two project types. The Montecito and La Avenida projects are examples of strong public funding for 100% AH projects. Both projects make use of significant County Measure A funds and MV pooled funds. That said, building 184 units and 264 bedrooms required committing $34M, almost 50% of the MV Development Fund. One hundred percent AH projects may be too costly for cities to afford, particularly if cities cap commercial development and the fees or inclusionary units that such development generates.117 An alternative to 100% city-financed AH is the Gateway Master Plan (“Plan”) announced by MV.118 This large mixed-use project located at the Shoreline Boulevard entrance to MV’s North Bayshore neighborhood is a 29-acre project spanning land owned by Google, SyWest and MV. The Plan provides for 500,000 square feet of office space, 300,000 square feet of entertainment/restaurants and retail, and a 200-room hotel. After earlier attempts by Google and SyWest to agree on a plan failed, MV took the initiative and proposed this project. The Gateway Plan provides up to 2,800 residential units. Twenty percent of those units (560) are affordable units. While the publicly accessible plan does not include financing data, the heavy office space and retail space components create a mixed-use blend that likely makes the project profitable for the two property owners. Mountain View contributed land to the deal and offered zoning that increased the FAR as an incentive. At the time of this report, Google likes the Plan, while SyWest has said it doesn’t meet its profitability requirements.119 Mixed-use projects typically involve substantial negotiations between a developer and a city. Developers need zoning concessions (height, parking, density) or other concessions such as reduced city fees. Cities need AH units or other public benefits in return for those concessions. Inclusionary units are affordable housing units that a developer includes in a project—typically at a city- mandated percentage (e.g., 15 or 20%) of the total project units approved. Martin Alkire, North Bayshore Gateway Master Plan. 119Wesley Severson, “Mountain View Pushes Ambitious Development Plans, Developer Calls Them Unrealistic,” Hoodline, August 25, 2021, https://hoodline.com/2021/08/mountain-view-pushes-ambitious- development-plans-developer-calls-them-unrealistic/. Although each project is unique, including profitable office space in the project underpins the developers’ ability to provide AH and other community benefits. Achieving AH goals require that a balance be found between the community’s needs and the developer’s profitability requirements. (Finding 13) Unintended consequences of a commercial project focused funding approach In addition to the benefits of mixed-use projects, the Gateway Project poses an important question: When a city permits more office space to be built, are enough units of AH created to support the service workers needed because of the increased office space? Gateway will generate at least three types of service worker demands: • The new office buildings will require maintenance, landscaping, food service, and security workers. • The project’s restaurants, retail, and hotel operations will require service workers. • There will also be impacts throughout the city - police, fire, teachers, grocery clerks, and others. A very large percentage of the workers in the list above will be low-income employees and will require AH. At the high end of the Gateway Plan, the project will provide 560 affordable units potentially housing approximately 1,100 service workers.120 Is that enough? (Finding 14) Homekey The State of California has created significant housing funding through Homekey, which combines both state and federal funds.121 Cities and the County can use these funds to create affordable housing for the homeless and other vulnerable populations. In one such affordable housing implementation, MV has partnered with the State, the County, and a private builder (LifeMoves) 120 Bay Area Council Economic Institute, Technology Works, p. 24-25; Non Profit Housing Association of Northern California, “Jobs/Housing Fit and the Effects on Bay Area Health, Equity and Environment,” accessed December 10, 2021, https://nonprofithousing.org/wp-content/uploads/2020/02/JH-Fit-Fact-Sheet-FINAL-9.15.pdf. California Department of Housing and Community Development, Homekey: Bringing California Home, accessed September 23, 2021, https://homekey.hcd.ca.gov; H. Blair Kincer, “Homekey Program Provides Additional Subsidy for Affordable Housing Development Across California,” Novogradac, November 19, 2020, https://www.novoco.com/notes-from-novogradac/homekey-program-provides-additional-subsidy-affordable- housing-development-across-california; Wesley Severson, “Mountain View Pushes Ambitious Development Plans.,” Hoodline. to construct 100 units and 124 beds of Homekey housing.122 The Homekey funding for this project is $14.4M. Occupancy began in the spring of 2021. Palo Alto is also considering a similar Homekey project. The Homekey/LifeMoves target population in MV is homeless families, seniors, and disabled individuals. This program is intended to house people for 4-6 months, and they will subsequently need to find permanent AH. City of Mountain View, LifeMoves Mountain View Now Providing a Path to Stability for Individuals and Families Experiencing Homelessness, May 6, 2021, https://www.mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=35478. FINDINGS AND RECOMMENDATIONS

Recomendaciones relacionadas (1)

R14: By July 30, 2022, both the City of Palo Alto and the City of Mountain View should require a Housing Impact Study in the approval process for new commercial development, that informs decision-makers about how the proposed project affects the job-to-housing ratio.

Gavilan College Measure X Bond Program:

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Hallazgos & Recomendaciones 10 hallazgos

F1: The District did not fulfill its responsibility to provide technical support to the Oversight Committee relating to conflict of interest requirements. Although the bylaws reference the Oversight Committee’s ethical responsibilities, the requirements are written in legal terminology. The District did not adopt a Conflict of Interest Policy for the Oversight Committee as suggested by referencing Attachment A in the adopted bylaws.

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R1: In tough economic times, community colleges, including Gavilan College, are critically important to re-train people who want to expand their job skills;

R1a: The District should create a plan to provide a conflict of interest policy to Oversight Committee members and incorporate the subject matter into the Oversight Committee’s training and orientation. This recommendation should be implemented no later than April 30, 2022.

R1b: The District should create a process for Oversight Committee members to evaluate and disclose conflicts of interests and incompatible activities. This recommendation should be implemented no later than April 30, 2022.

F2: Current Oversight Committee membership falls below the minimum required by law. Failing to maintain members in the required affiliation category can create crucial vacancies where vital constituencies’ voices may not be heard or adequately represented.

Recomendaciones relacionadas (1)

R2: The Board of Trustees should appoint sufficient Oversight Committee members to meet or exceed the minimum number required by law. This recommendation should be implemented no later than April 30, 2022.

F3: The District-approved Oversight Committee bylaws contain inconsistent and incomplete term limit provisions as specified in the Education Code. The District included a bylaw authorizing members to serve beyond the expiration of their third term while waiting for a replacement to be appointed. The District did not comply with the additional term limit provisions associated with the member serving in the student affiliation category. The student member may only serve six months after graduation with the specific approval of the Board of Trustees.

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R3: Because University of California and California State University systems are becoming more expensive, more people rely on community colleges, therefore Gavilan College must be upgraded so it can provide local students with a high-quality education they might not otherwise receive. The Facilities Master Plan is on file at the District’s Office of the Superintendent/President, and includes the following projects: 90 League of Women Voters of California Education Fund, “Measure E Gavilan College Job Training, Overcrowding, Repair/Safety Measure Gavilan Joint Community College District,” accessed November 3, 2021, http://www.smartvoter.org/2004/03/02/ca/scl/meas/E/. GAVILAN COLLEGE - GILROY CAMPUS • Repair, Upgrade, and/or Replace Aging Obsolete Classrooms, Science Labs, Instructional Facilities, Sites and Utilities: Repair, renovate and/or replace deteriorating roofs, corroding pipes and power lines, plumbing, sewer, drainage, electrical systems, wiring, unsanitary and run down bathrooms, antiquated boiler systems, telecommunications, foundations, classrooms, fields and grounds, science laboratories, pools, lecture halls, performing arts, and other instructional facilities, wire classrooms for computers and technology, increase campus security, installation and repair of fire safety equipment, including alarms, smoke detectors, sprinklers, emergency lighting, fire safety doors, increase energy efficiency, reduce operating costs and improve job training and academic instruction, and meet legal requirements for disabled access. • Safety Improvements: Upgrade existing fire alarms, sprinklers, smoke detectors, intercoms and fire doors; install security systems, exterior lighting, emergency lighting, door locks and fences. • Expand Job Training and Academic Classroom, Library and Facility Capacity: Increase classroom capacity for academic and job training classes, including math, business, english, science labs, library complex, physical and health education facilities; upgrade, repair, equip, and expand student services buildings to include academic and job training and counseling centers, study areas, lecture/meeting/seminar rooms, computer hook-up and other student support, as well as fine and performing arts, labs; expand maintenance building to support facilities, high technology learning resource center, and classrooms for partnering with a 4-year university to allow residents to obtain a bachelor’s degree without commuting. • Energy Efficiency Improvements; Repair, Replace and Upgrade Electrical, Mechanical, Old Boiler and Energy Systems To Reduce Energy Consumption: Replace old boiler and energy systems, heating, ventilation and air conditioning system and related utility systems; energy efficiency projects designed to increase efficiency. • Information Technology Wiring and Equipment: Upgrade electrical systems and wiring for computer technology and Internet access; upgrade and replace outdated technology including computers, laboratory equipment and classroom furnishings. • Refinance Existing Lease Obligations To Lower Interest Rates and Increase Funds Available For Instruction and Ongoing Maintenance of Classrooms and Buildings. • Safety and Security; Sites; Site Accessibility; Improve Emergency Access: Improve pedestrian access routes across campus for safety; improve campus safety and security by adding exterior lighting; implement safety upgrades to relieve gridlock, traffic flow and parking congestion; redesign campus walkways to eliminate unsafe conditions; repair or replace outdated natural gas, water, sewer, storm drain systems; acquire property to expand student capacity, alleviate traffic congestion in neighborhoods adjacent to campus, increase access for emergency vehicles; add parking to accommodate increasing student population. GAVILAN COLLEGE - SAN BENITO CAMPUS • Establish Gavilan College Education Center in San Benito County to Accommodate Growth and Increasing Student Enrollment: Provide permanent classrooms, labs, library, job training and college transfer counseling and partner with a 4-year university to allow residents to obtain a bachelor’s degree without commuting. Improvements in the San Benito County campus will be made with a combination of bond monies and State matching funds. GAVILAN COLLEGE - GREATER MORGAN HILL AREA CAMPUS • Establish Gavilan College Education Center to Accommodate Growth and Increasing Student Enrollment: To provide permanent classrooms, labs, job training and college transfer counseling buildings facilities in the Greater Morgan Hill area, including the acquisition of a site(s) to allow local students greater access to an affordable education. Improvements in the Greater Morgan Hill area campus will be made with a combination of bond monies and State matching funds. Listed repairs, rehabilitation projects and upgrades will be completed as needed. Each project is assumed to include its share of equipment, architectural, engineering, and similar planning costs, construction management, and a customary contingency for unforeseen design and construction costs. The allocation of bond proceeds will be affected by the District’s receipt of State matching funds and the final costs of each project. The budget for each project is an estimate and may be

R3a: The District should develop a plan to update the Oversight Committee bylaws to rescope the term limit bylaw addressing replacement holdovers as well as incorporate the additional student term limit provisions outlined in the Education Code. This recommendation should be implemented by April 30, 2022.

R3b: The District should develop a plan to ensure that it abides by the term limit provisions required by law for its student affiliation category. The plan should also address the student’s term limit provision on the Committee Member Term Chart provided by the District. This recommendation should be implemented by April 30, 2022.

F4: There are areas in which the Oversight Committee might be perceived as having its independence questioned or compromised in relation to the administrative and technical support it receives through the District’s contractor.

Recomendaciones relacionadas (1)

R4: The District should identify and communicate to both the Oversight Committee and the public, the relationship the District’s contractor has to the Oversight Committee regarding the Measure X program. The District should clarify the level of authority and independence the Oversight Committee has to request services from its contractor, AKG. This recommendation should be implemented by April 30, 2022

F5: The “Measure X Bond Newsletter” has been dormant despite the District inviting members of the public to sign up for program updates. The newsletter service is identified in a contract agreement but has not been posted since the September 2019 issue as reflected on the Measure X website.

Recomendaciones relacionadas (1)

R5: The District should develop a plan to provide the necessary resources to revive the “Measure X Bond Newsletter”. This recommendation should be implemented no later than April 30, 2022.

F6: The District does not provide Oversight Committee members with a clear, direct, or transparent way of receiving electronic communications from the public. There is a standing agenda item for this type of direct communication, but an effective accompanying tool does not exist for Oversight Committee members to receive and respond to this type of communication.

Recomendaciones relacionadas (1)

R6: The District should develop a plan to institute an electronic communication tool to contact the Oversight Committee directly. The District needs to provide an appropriate communication tool to foster public engagement, correspondence, and feedback. This recommendation should be implemented no later than April 30, 2022.

F7: The District did not follow established norms and protocols for posting meeting notifications and announcements specifically associated with cancelled meetings. Additionally, the District has inhibited the public’s ability to access agendas and meeting materials because the link to the agenda is not clear and the multiple steps required to navigate to the meeting materials is unduly complicated.

Recomendaciones relacionadas (2)

R7a: The District should create a plan to update meeting announcements published on the Measure X homepage to prominently identify the webpage links to access the meeting agenda. This recommendation should be implemented no later than April 30, 2022.

R7b: The District should review the structure and navigation to meeting agendas and create a plan that addresses the public’s need for efficient access to agendas and meeting materials. This recommendation should be implemented no later than April 30, 2022.

F8: The orientation the District provides to the Oversight Committee does not adequately prepare members to effectively carry out their roles and responsibilities. The District provides a general overview using reference materials. More in-depth and specialized training is needed to ensure committee members are equipped to fulfill their oversight responsibilities.

Recomendaciones relacionadas (1)

R8: The District should provide detailed and targeted training to members of the Oversight Committee. A training plan should be developed with input from the Oversight Committee. This recommendation should be implemented no later than June 30, 2022.

F9: The District did not provide the Oversight Committee with any information about initiatives to maximize bond revenues through the use of cost-saving measures such as joint-use facilities. As a result, the Oversight Committee was not able to communicate those initiatives to the public, which led to the mistaken impression that none were considered.

Recomendaciones relacionadas (1)

R9: The District should develop a plan to communicate the ways in which the District has identified or enacted cost-saving measures to the Oversight Committee. This recommendation should be implemented no later than April 30, 2022.

F10: 47 REQUIRED RESPONSES ........................................................................................................... APPENDIX 1 – Measure E........................................................................................................... APPENDIX 2 – Ethics Policy Statement...................................................................................... APPENDIX 3 – The Brown Act ................................................................................................... APPENDIX 4 – Measure X Oversight Committee Bylaws.......................................................... APPENDIX 5 – Financial and Performance Audits ..................................................................... APPENDIX 6 – Navigating to Meeting Agendas......................................................................... APPENDIX 7 – Area Community College Audit Reports ........................................................... GLOSSARY AND ABBREVIATIONS § A symbol used to abbreviate the term section (§) or sections (§§) in legal documents. The symbol is commonly used to specify the applicable section number within legal documents. AKG A Kennedy Group is a consulting firm providing program management, compliance and accountability, tracking and reporting, and communication and documentation services to educational institutions and public agencies. BoardDocs® A commercially available integrated agenda management platform used by community college districts to manage a committee structure. It serves as a source for the public to obtain agendas, supporting attachments, and meeting minutes. Board of Trustees Elected officials who serve the public interest, establish a climate of learning, and monitor the effectiveness of the institution through the policies they create and approve. Board Resolution A formal, legal document that solidifies in writing important decisions made by a Board of Trustees. Bond List Revision A formal process for managing and tracking changes made throughout a bond construction program. Changes include individual project names, scopes, and budgets, and they must be approved by a governing body. Bond Measure An initiative placed on the ballot to be approved or defeated by the voting public, which permits the use of bonds to borrow money and the levy of taxes to pay the debt service. The bonds can be used by community college districts to finance construction or other capital projects. Brown Act The Ralph M. Brown Act is a California state law ensuring the public’s right to attend, participate, and discuss in meetings of local legislative bodies (including city council, county government, and community college districts). The sections pertaining to the Brown Act are California Government Code §§ 54950 – 54963. See Appendix 3 for a summary of the Brown Act. Bylaws Rules and regulations enacted by a body to provide a framework for its operations and management. CABOC California Association of Bond Oversight Committees is an independent, non-profit organization which supports the State’s Citizens’ Bond Oversight Committees with training materials, classes, conferences, and workshops. CBOC Formed when a bond is passed, the Citizens’ Bond Oversight Committee is an independent body of citizens representing affiliation categories such as a senior citizen group, business community, and taxpayer association. Members have legal authority to examine bond measure expenditures and to oversee the progress of projects tied to the bond. They are mandated to report to and keep the public informed. Education Code A collection of California laws related to public schools, which are created or changed by the Governor and Legislature. Local education boards and county offices of education are responsible for complying with applicable code provisions. The sections pertaining to school bonds include §§ 15100 – 17204 of the California Education Code. Gavilan Joint Community Gavilan Joint Community College District encompasses the College District southern part of Santa Clara County and the northern part of San Benito County. The District is comprised of Gavilan College and the associated learning facilities that are within the district. Measure E A bond measure passed by Gavilan Joint Community College District voters in 2004. Measure E was a facilities improvement bond used to upgrade utilities, renovate classrooms and libraries, provide access for disabled students, improve campus safety, and plan for the future by expanding satellite sites. See Appendix 1 for a summary of the ballot measure. Measure X A bond measure that was passed in 2018 and used to fund improvements and capital projects for the Gavilan Joint Community College District. Proposition 39 A constitutional amendment approved in 2000 to make passing school district bond measures easier. It reduced the threshold required to pass local California school district bond issues from two-thirds to 55%. INTRODUCTION The 2021 Civil Grand Jury of Santa Clara County (Civil Grand Jury) studied the creation, management, and execution of voter approved educational construction bond measures. The Civil Grand Jury focused its initial analysis and research on community college districts located within the County of Santa Clara. However, it became evident that the history of the Measure E bond from 2004 (summary attached as Appendix 1) influenced voter sentiment when Measure X was proposed in 2018 by the Gavilan Joint Community College District (District).1 A lingering mistrust felt by some District residents was revealed in response to a 2017 survey commissioned by the District. Responses to the survey questions included 61.5% who agreed “[The] District can't be trusted, they managed [the] last bond and [they] didn’t build what they promised.”2 Nearly 60% of respondents agreed that there would be, “No guarantee that money will be distributed fairly, some areas will get more than their fair share than others.”3 This mistrust carried over to the November 6, 2018 election. The subject was front and center in a November 14, 2018 news article in the Gilroy Dispatch, “[Santa Clara County] SCC Voters Help Pass Gavilan’s $248M Bond: New trustees look to build trust between college and [San Benito County] SBC residents.”4 A newly elected Trustee was quoted: “That low approval rating (of Measure X) in San Benito County, given the fact that a major focus of the bond is to provide a satellite campus there, that creates a reason for concern,” said Diaz, who has [previously] provided oversight for over $500 million in school bond projects. “Throughout my campaign, I’ve been hearing about some of the discontent with how the last bond was allocated. …Even though (Measure X) passed, for me, we have work to do as a board to reach out to San Benito residents and engage them in a way that improves their level of support for Gavilan.”5 1 Eric He, “Gavilan College President Announces Retirement,” Patch Media, October 11, 2021, https://patch.com/california/gilroy/gavilan-college-president-announces-retirement. True North Research, Bond Measure Feasibility Survey: Summary Report, September 22, 2017, p. 28, https://www.gavilan.edu/administration/board/documents/GavilanCollege_BondFeasibilitySurveyReport.pdf. Ibid. Scott Forstner, “SCC voters help pass Gavilan’s $248M bond,” Gilroy Dispatch, November 14, 2018, https://gilroydispatch.com/scc-voters-help-pass-gavilans-248m-bond/. Ibid. Another recently elected trustee highlighted the challenges from the last bond measure, saying: “With the passage of Measure E and the promises that were broken, it’s going to be a long process in order to get trust back up from our community,” Gonzalez said. “I don’t believe anything was done intentionally. It’s just a lack of trust that we have to build again. …We do have to fulfill promises that were made.”6 With this report, the Civil Grand Jury aims to educate the public about educational bonds, inform residents about the Measure X bond program, and suggest ways to improve bond oversight. The report exposes support and resourcing gaps that should be rectified to ensure that the Gavilan Joint Community College District’s Board of Trustees support the District’s Independent Citizens’ Bond Oversight Committee in effectively carrying out its work. This report includes 14

Recomendaciones relacionadas (2)

R10a: The District should provide the dated and certified 2020 Financial and Performance Audits to the Oversight Committee. The audits should also be posted to the Measure X website for public disclosure. This recommendation should be implemented no later than April 30, 2022.

R10b: The District should create a plan with appropriate milestones to ensure the timely completion of annual, independent financial and performance audits. Milestones should include when audits are expected to be available for the Oversight Committee to receive and review, the District’s responses to the audits for Oversight Committee review, and when the final signed and dated audits are to be posted to the Measure X website. This recommendation should be implemented no later than April 30, 2022.

Measure A Earns an A:

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F1: The Office of Supportive Housing is managing the funding commitments in a manner consistent with Measure A language. The Program Goals and projects are targeted at the vulnerable populations specified in Measure A. No recommendation.

F2: Measure A funding of Affordable Housing projects is at pace with the eleven-year cycle specified in the Program Guidelines No recommendation.

F3: The needs of the Rapid Re-Housing target population may not be met because unit completion is lagging in that Category.

Recomendaciones relacionadas (2)

R3a: To address this Rapid Re-Housing lag, the County should aggressively pursue Homekey funding where consistent with Measure A Goals and Guidelines. The County should develop a plan to address this recommendation by June 30, 2022.

R3b: If Rapid Re-Housing development continues to lag, the County should consider redistributing unit goals in a way which still supports the core homeless and disabled vulnerable populations. The County should develop a plan to address this recommendation by June 30, 2022.

F4: The Civil Grand Jury commends the Board of Supervisors and the members of the Measure A Independent Citizens’ Oversight Committee for providing strong and transparent oversight to Measure A implementation. No recommendation.

F5: 21 REQUIRED RESPONSES ......................................................................................................... APPENDIX .................................................................................................................................. GLOSSARY AND ABBREVIATIONS AH Affordable Housing AMI Area Median Income B Billion BMR Below Market Rate: a BMR unit is priced to be affordable to households that are moderate income or below CTCAC California Tax Credit Allocation Committee ELI Extremely Low-Income: households with income at or below the Poverty Guideline or 30% of Area Median Income (AMI), whichever is higher Homekey A program providing grants to local public entities to provide housing for the chronically homeless. HUD Housing and Urban Development Leveraging Ratio The amount of funding from Measure A proceeds compared to the amount of non-bond funding sources required by a project LI Low Income: households with incomes between 50% and 80% of the Area Median Income LIHTC Low-Income Housing Tax Credit M Million MGO Macias, Gini & O’Connell: a certified public accounting firm MOU Memorandum of Understanding: a binding document between two organizations that outlines roles, responsibilities, and deliverables OSH County of Santa Clara Office of Supportive Housing Oversight Committee Measure A (2016 Housing Bond) Independent Citizens’ Oversight Committee Pipeline The length of time from building project inception to units being ready-to-lease. Program Goals Measure A Program Goals specify the amount and type of housing that will be funded. Program Guidelines The rules governing the use of Measure A Program funds PSH Permanent Supportive Housing: a Measure A housing category providing housing units and long-term rental assistance, case management, and supportive services for homeless persons with disabling conditions, including the chronically homeless RRH Rapid Re-Housing: these units house clients who have become homeless through a recent adverse life event. RRH provides time- limited rental subsidy, case management, and supportive services. In RRH programs, individuals and families eventually take over the full rent of their leased housing units. VLI Very Low-Income: households with income below 50% of the Area Median Income. This also includes the extremely low- income category. INTRODUCTION In 2016, voters of Santa Clara County (County) passed Measure A, which allows the County to borrow up to $950M (million) by issuing general obligation bonds. Bond proceeds can only be used to acquire or improve real property for the purposes of providing Affordable Housing (AH) and related support and services for vulnerable populations: including veterans, seniors, the disabled, low- and moderate-income individuals or families, foster youth, victims of abuse, the homeless and individuals suffering from mental health or substance abuse illnesses, which housing may include supportive mental health and substance abuse services.1 After Measure A passed, the County Board of Supervisors (Board) took two actions. They first set Measure A Program Goals, which included building, by developing or financing, at least 4,800 housing units for residents within the Measure’s designated categories.2 Second, the Board established the Measure A Independent Citizens’ Bond Oversight Committee (Oversight Committee).3 The nature and complexity of Measure A warrants a strong oversight group tasked with reviewing the expenditures of bond proceeds. Further, as required, an independent, external auditor reviews the County's spending of bond proceeds to ensure accountability. Less than five years into the Measure’s 11-year cycle, 289 units have been built. Recently, several news outlets have noted that the number of Measure A authorized AH units built is low.4 Additionally, the 2021 Civil Grand Jury of Santa Clara County (Civil Grand Jury) received a complaint asking about the slow pace of Measure A construction. The purpose of this investigation 1 County of Santa Clara, “List of Local Measures Presidential General Election November 8, 2016,” accessed October 28, 2021, https://sccvote.sccgov.org/sites/g/files/exjcpb1106/files/E110%20List%20of%20local%20measures.pdf. County of Santa Clara, Office of Supportive Housing, “2016 Measure A Housing Bond Progress,” accessed November 1, 2021, https://osh.sccgov.org/housing-community-development/2016-measure-affordable- housing-bond/2016-measure-housing-bond. County of Santa Clara Code of Ordinances, “Measure A (2016 Housing Bond) Independent Citizens’ Oversight Committee,” October 25, 2021, https://library.municode.com/ca/santa_clara_county/codes/code_of_ordinances?nodeId=TITAGEAD_DIVA6BOCO _CHXXIME2016HOBOINCIOVCO. Barry Holtzclaw and Dan Pulcrano, “Billion-Dollar Boondoggle: Four Years After Measure A, Santa Clara Co. Has Little to Show for It,” sanjoseinside, June 25, 2020, https://www.sanjoseinside.com/news/billion- dollar-boondoggle-four-years-after-measure-a-santa-clara-co-has-little-to-show-for-it/; Madelyn Reese, “Measure A Housing Not Moving Fast Enough, Oversight Committee Says,” San Jose Spotlight, September 21, 2020, https://sanjosespotlight.com/measure-a-housing-not-moving-fast-enough-oversight-committee-says/. is to understand the County’s performance on Measure A, including why the number of units completed to date is so low. BACKGROUND It is important to note that Measure A (See Appendix) accountability safeguards state that “the specific purposes of the bond are to fund [emphasis added] the acquisition or improvement of real property in order to provide affordable housing” for the vulnerable populations defined above.5 The County utilizes the bond proceeds to partner with cities and the affordable and supportive housing community to address the AH needs of the target population. The County’s Office of Supportive Housing (OSH) is largely responsible for administering the funding available from the bond proceeds for these AH projects. But OSH is only one player. When it comes to building AH, other factors and organizations have significant control over the development process. AH Development Is a Lengthy Process Developing AH is a complex and lengthy process from project inception to the construction of units ready to be leased by qualified occupants. That process includes land acquisition, project design, zoning and permit approval, financing, and, finally, construction and leasing. Multiple entities are involved, and all project stages take time. The length of the development pipeline, which is the time from project inception to units being ready-to-lease, is 4-5 years. The process steps noted below are simplified. For example, project financing work begins quite early and often changes as the entitlement steps are finalized and the overall scope and design of the plan is completed. Figure 1: 15 Step Affordable Housing Development Process6 5 County of Santa Clara, “List of Local Measures,” https://sccvote.sccgov.org/sites/g/files/exjcpb1106/files/E110%20List%20of%20local%20measures.pdf. Yun Soo Kim and Lintong Li, Housing on Merit: Stakeholder Mapping of Affordable Housing Development in Los Angeles County, February 2020, p. 5, https://housingonmerit.org/wp- content/uploads/2020/04/HOM-Final-Report-lm-edits-to-HOM-April-2020.pdf. Development Takes Many Players AH development involves a complex mix of organizations which are outside the County’s direct control. Cities, both the city governments and their residents, play an independent role in this process. Cities control entitlement processes, which include land use approvals, the density of housing projects, and design-related issues. Developers negotiate with city councils to obtain AH project approvals. Also, developers and city councils must engage directly with those most impacted by a project, particularly those living near it. These approvals alone can take one to two years. Cities vary widely in their willingness to approve AH projects and in the amount of time it may take to obtain that approval. Similarly, the funding process for an AH project is complex and involves many sources. A general example of the funding complexity and funding sources in California are illustrated in the chart below: Figure 2: Financing Multi-Family Affordable Housing7 How is the County performing? Is OSH going to achieve the voter approved goals specified in Measure A? What is the prognosis for the successful attainment of Measure A goals, both in terms of funding and building 4,800 affordable units for those vulnerable populations? 7 City of Golden, “How Does Affordable Housing Happen?” December 7, 2017, https://www.guidinggolden.com/affordable-housing/news_feed/how-does-affordable-housing-happen. METHODOLOGY During the course of this investigation, the Civil Grand Jury conducted interviews, read reports, and followed public discussion about Measure A. The Civil Grand Jury interviewed County officials charged with implementing Measure A and individuals involved in the oversight effort. The Civil Grand Jury also interviewed public officials involved in AH, who provided information about Measure A progress and effectiveness. Civil Grand Jury members attended the most recent quarterly meeting (September 2021) of the Oversight Committee, and also reviewed earlier Oversight Committee meeting information.8 The Civil Grand Jury reviewed reports from the independent external auditor of bond expenditures, the OSH’s Annual Report, and local media articles. County of Santa Clara Board of Supervisors & Boards and Commissions, “Meeting Calendar,” accessed November 1, 2021, http://sccgov.iqm2.com/Citizens/calendar.aspx. DISCUSSION Measure A Program and Progress Guidelines and goals In 2017, the Board approved Measure A Program Guidelines, which detailed how the Program would be managed and the amount of Measure A funds committed to projects. The Board also established Program Goals, which identified how many units would be assigned to each category of housing. (Finding 1) This was intended to meet the varying needs of the targeted populations. Housing categories, target populations, and the number of units assigned to each are: • Permanent Supportive Housing (PSH) Goal: 1,800 units This housing category provides units with long-term rental assistance, case o management, and supportive services for homeless persons with disabling conditions, including the chronically homeless. • Rapid Re-Housing (RRH) Goal: 1,600 units RRH units house clients who have become homeless through a recent adverse life o event. RRH provides time-limited rental subsidy, case management, and supportive services. In RRH programs, individuals and families eventually take over the full rent of their leased housing units. • Extremely Low-Income (ELI) Goal: 800 ELI units are rented at Below Market Rate (BMR) to households making less than o 30% of a region’s Area Median Income (AMI). • Very Low-Income (VLI) Goals: 600 units VLI units are rented at BMR to households making between 31% and 50% of a o region’s AMI.9 The 2017 Program Guidelines also established a target Leveraging Ratio.10 The County set that target requirement at 3:1, which means that, on average, there needs to be $3 of non-County money for every $1 of Measure A money invested. Success in attracting adequate funding from non- County sources is critical to the success of Measure A Goals. County of Santa Clara, Office of Supportive Housing, “Measure A Affordable Housing Bond Implementation Report #3,” p. 4, August 15, 2017, https://osh.sccgov.org/sites/g/files/exjcpb671/files/Housing%20Bond%20Report_03%208.15.17.pdf. Through the fourth quarter of FY 2020-2021, total project approval costs were $2.3B. Funds from Measure A totaled $511M, leaving $1.8B in funding from non-County sources. The leveraging ratio equals 3.46:1. Measure A funding progress Macias, Gini, and O’Connell (MGO), the independent auditors of Measure A, reported that by the close of the fourth quarter of the 2021 fiscal year (ending 6/30/2021), project funding commitments and expenditures totaled $683.6M, or 72.0% of the $950M allowable bond proceeds. At that time, Measure A was just over 4 years into its 11-year Program cycle. By that same date, OSH had committed $510.9M for 34 development and renovation projects to fund 57.6% of the Measure A Program housing unit goals. An additional $110.0M has been committed to purchasing 16 properties. These acquisitions include County properties and privately owned properties. All these purchases will be converted to or redeveloped as AH. Development plans are not yet in place for these properties, so AH unit numbers are not yet associated with these commitments. The balance of Measure A commitments total $72M and are detailed in the footnote below.11 The expenditures and activity to-date suggest that Measure A’s stated responsibility, to fund development of multi-family rental housing for the community’s most vulnerable populations, is on target. (Finding 2) However, performance by housing category has varied. Housing unit achievement is very strong in three of the four Program Guideline categories. The RRH Category is well behind schedule. This RRH lag will be addressed later in this report. (Finding 3) 11 Program commitments-to-date include a $25.0M bridge loan to developers that will be returned. In addition, the County has committed $25.0M to a first-time homebuyer assistance program and $11.9M to a supportive housing fund. While not building activity per se, both are commitments made consistent with the Measure A Program Guidelines and are targeted to assist the vulnerable populations specified in Measure A. Program Category Goal Units Units Funded % of Goal (as of 6/30/21) Achieved Permanent Supportive Housing 1,800 1,494 83.0% Rapid Re-Housing 1,600 315 19.7% Extremely Low- Income 800 417 52.1% Very Low-Income 600 539 89.8% Total 4,800 2,765 56.7% Table 1: Measure A Housing Unit Funding Commitments by Category12 On August 31, 2021, OSH reported back to the Board of Supervisors on the implementation of Measure A.13 In the OSH’s unaudited report, the housing funding commitments, including building new units, were up another 291 units, raising the housing Program Goal total performance to 64%. The switch from fund to build Measure A’s funding pace appears reasonable, and the money is being committed in a manner that is aligned with the language of Measure A. But construction has been slow. As noted earlier, the pipeline for complete, ready-to-lease units is long. As of June 2021, 289 AH units have been built. In addition, 1,008 units, or 21.0% of the Program Goals, are in construction. Another 1,468 units, 30.6% of the Program Goals, are in pre-construction. Pre-construction includes projects that are still working on one or more of the project elements listed in the first two phases of Table 1, such as design, entitlements, non-County financing, and construction preparation. As noted earlier, these are very challenging and time-consuming processes, which are in the hands of numerous non-County parties. MGO, “County of Santa Clara, Citizens’ Oversight Committee’s Measure A 2016 Affordable Housing Bond Program Independent Advisor’s Annual Report and Fourth Quarter Report for Fiscal Year 2020-21,” September 16, 2021, Agenda Item 4.a, p. 51, http://sccgov.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=12256&Inline=True. County of Santa Clara, Office of Supportive Housing, “Supportive Housing Development Program Update,” August 31, 2021, Agenda Item 59, p. 735, http://sccgov.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=12217&Inline=True. The construction of units is not explicitly in Measure A’s charter. However, the building lag is a topic of discussion for both OSH and the Oversight Committee. Both parties understand that the County can control the funding commitments it makes, and that funding is only part of Measure A’s goals. AH needs to be built, and OSH and the Oversight Committee are discussing how to influence that outcome too. Building Challenges As noted above, the County has provided on average about 20% of the required financing for an AH project. The balance of the funds comes from multiple sources, each with their own requirements. Financing 100% Affordable Housing Mixed use development projects contain enough high margin office space to finance the inclusion of affordable units. However, developments that are comprised solely of 100% AH units require very large amounts of public money and/or subsidies. Not only is a significant amount of money required, but also many funding sources. One example of this complexity is the La Avenida project, which is a 100-unit, 119-bedroom AH development in Mountain View. $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- Figure 3: La Avenida Funding Plan Totaling $74.2M14 14 City of Mountain View, “1100 La Avenida-Affordable Housing Development Appropriation of Funding,” October 12, 2021, Agenda Item 4.3, p. 4, https://mountainview.legistar.com/Calendar.aspx; The California Housing Consortium, “Resources :: Affordable Housing 101 :: How Is It Built?” accessed November 22, 2021, https://calhsng.org/resources/affordable-housing-101/how-is-it-built/; Local Housing Solutions, “How Is Affordable Housing Funded?” accessed November 22, 2021, https://localhousingsolutions.org/housing-101-the- basics/how-is-affordable-housing-funded/. The project’s funding profile illustrates many of the challenges that a 100% AH project faces for both County and City staff implementing Measure A as well as for the developers. The County has committed $19M in Measure A funds, or 25.6% of the total. Mountain View has committed $15M, a large share of its AH development fund. As Figure 3 shows, the Tax Credit and General Partner Equity funding comprise the largest sources ($25M) of AH funding in this and many other AH projects. The challenges of these two funding sources are described below. Leveraging tax credits and general partner equity contributions In the La Avenida project, the Tax Credit funds and the General Partner Equity funds (the developer’s investment) are combined as the first column in Figure 3 above. Together, they are the single largest line item of the project’s financing, totaling $25.4M. The Low-Income Housing Tax Credit (LIHTC) is a primary source of funding for building 100% AH. LIHTC funds come from a program administered by the United States Department of Housing and Urban Development (HUD).15 In California, this HUD program is administered by the California Tax Credit Allocation Committee (CTCAC).16 La Avenida’s success relies heavily on obtaining LIHTC funds. The amounts committed by the County and City of Mountain View are predicated on the project receiving these tax credit funds. However, the State awards these funds on a competitive scoring basis, with preference going to projects in areas of the state where development costs are relatively low. Because the Bay Area has very high land and building costs, the County is at a clear disadvantage under the State’s current scoring criteria. The County’s lack of competitiveness for this critical funding has been an ongoing topic of discussion between the Oversight Committee and OSH. The Oversight Committee recommended that the County lobby the State to change its scoring system. The County has written CTCAC requesting a scoring change. While out of the County’s control, this tax credit money is a critical financing element for many Measure A projects and merits the attention and effort being made. Leveraging ratio As noted above, in the Measure A Program Guidelines, the County set the target leveraging ratio requirement at 3:1. For all 34 projects funded through June 30, 2021, the average amount of non- County funding sources to Measure A money results in a ratio of 3.5:1, exceeding the Guideline. U.S. Housing and Urban Development, “Low-Income Housing Tax Credit (LIHTC),” accessed November 1, 2021, https://www.huduser.gov/portal/datasets/lihtc.html. California Office of the State Treasurer, “Low-Income Housing Tax Credit Programs,” accessed November 1, 2021, https://www.treasurer.ca.gov/ctcac/tax.asp. The fact that Measure A supported AH projects have been able to attract increasing shares of non- County funding bodes well for the coming years of the Measure’s term. Land use and entitlements challenges The public record is replete with examples of local contention about the location, design, and developer concessions involved in building AH. Many issues emerge from these discussions, including density and design concerns, neighborhood preservation, and local control. Community acceptance of and desire to build AH varies significantly. To date, 38 of the 54 committed Measure A development and renovation projects and property acquisitions are in San José. To broaden the geographic distribution of projects, OSH has supplemented its funding commitments with additional outreach and support to other cities. OSH is negotiating loan terms with cities through Memorandums of Understanding (MOUs) and developing grant programs to encourage the cities in the County to commit to AH projects. One example of a creative approach to working through city entitlement issues is the County’s proposal for the La Avenida site. The La Avenida project was first brought to the Mountain View City Council in December of 2020. The County will own the La Avenida property, because they have contributed more funds than the City. Measure A’s financing terms include a 55-year term and affordability covenant.17 Upon expiration of the 55-year term, the County could then repurpose the site for another use and might not be subject to the City’s building code and land use authority.18 The County and Mountain View are currently drafting an MOU that addresses funding commitments to the project and this land use issue. Housing the Homeless Rapid Re-Housing challenges In the case of OSH-managed RRH programs, the unhoused client is a recently homeless individual or family who became homeless due to an event that has upended their life. This event may have been a loss of employment, the loss of a partner or family member, or a serious health problem. In the RRH program, these clients are moved into housing with rent subsidies, case management, and other support services to help them re-stabilize their lives. The expectation is that the rent subsidies will decline over 24 months or less. Then, the clients can transition in place in their AH units. This transition is usually accompanied by a phase out of program service support. To ensure that those 17 City of Mountain View, Agenda Item 4.3, p. 6, https://mountainview.legistar.com/Calendar.aspx. This project is designed so that its purpose and use must remain AH for 55 years. In year 56, that AH restriction lapses. individuals and families can transition in place, units that are set aside for RRH programs will have their rent restricted to a level affordable to households earning nor more than 30% of AMI. All four of the housing categories in the Program Goals (see Table 1) require significant rent subsidies, and both RRH and PSH clients receive supportive services. Rent subsidies and supportive services are an integral part of meeting Measure A’s overall success. While scarce, both the U.S. Department of Housing and Urban Development (HUD) and County funding are currently available to support these subsidies and services. But as more units are built, the subsidies and services required will grow, and the County may have to look to other funding sources to achieve Measure A Program Goals. RRH is an important Program Goal. As noted earlier, OSH has had significant success in funding AH projects in the PSH, ELI, and VLI goal categories. This has not yet been the case in the RRH goal. The Civil Grand Jury learned that OSH and the Oversight Committee are discussing this lag in the RRH progress.19 Chronically homeless challenges The chronically homeless, as defined by HUD, are either: • an unaccompanied homeless individual with a disabling condition who has been continuously homeless for a year or more, or • an unaccompanied individual with a disabling condition who has had at least four episodes of homelessness in the past three years.20 In addition to PSH programs, the chronically homeless are also candidates for transitional housing. The need for transitional housing is caused by the lack of PSH in the County and across the U.S. While they are the most visible homeless population, this group has traditionally been either unserved or underserved, and moved in and out of homeless shelters. Recently, a funding program called Homekey has made significant grant money available to local public entities to specifically target this homeless population. Homekey is funded through a mix of federal funds originating in the CARES Act (83%) and State general fund sources (17%).21 19 “The [Oversight] Committee recognizes that County staff are aware of the Committee’s concerns and are taking steps to address them.” from Attachment “SSC Measure A – BOS transmittal letter annual Q4 FY20-Final,” p. 1, October 20, 2020, http://sccgov.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=&MeetingID=12219&MediaPosition=&ID=103181 &CssClass=. HUD, “Defining Chronic Homelessness,” September 2007, accessed December 1, 2021, https://files.hudexchange.info/resources/documents/DefiningChronicHomeless.pdf. Several Homekey funded approaches to housing this target population have been developed, from lightly engineered units in Mountain View to motel and hotel rooms and other relatively inexpensive property acquisitions throughout the County. The clients in this program benefit from a secure, dry place to live with some level of case management. Homekey projects cost less per bedroom and require less time to complete than traditional AH development. OSH is evaluating this program as an additional and significant non-Measure A funding source. OSH has used Homekey funding in Measure A PSH unit projects and is evaluating its applicability as a RRH solution. While the Homekey program has had some success getting people off the street, its value as part of the solution to chronic homelessness is yet to be determined. When Homekey funded projects are used as transitional housing, and a client’s stay is long enough to enable them to move into PSH, it can be a meaningful housing solution. However, there are different implementations of Homekey. Some organizations running a Homekey project provide sufficient length of stay. There are also cases, such as the Homekey development in Mountain View, where the expected stay is 90-120 days and then the client is back on the streets. When the client has nowhere affordable to go, the program fails. Higher Costs in the Future? OSH and the Oversight Committee have noted concerns about inflation.22 The County’s average contribution per unit has remained relatively stable over the 4.5 years of Measure A. The stability of the County’s contribution does not reflect cost pressures that may develop in the future. More relevant to the concern about inflation is the estimated total cost per unit or bedroom. The challenge in using this metric is the relatively small sample size of 34 development projects over four years, although that sample includes more than 4,000 bedrooms. Additionally, a project’s location complicates the inflation issue because land and other costs are higher in some cities than others. However, if one examines only the San José projects, which are over 80% of the bedrooms built, it is not clear that inflation has yet affected the unit costs. Coronavirus Aid, Relief, and Economic Security Act (CARES Act), H.Res. 748, 116th Cong., 2nd sess., (January 3, 2020), https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf. MGO, “Independent Advisor’s Annual Report and Fourth Quarter Report for Fiscal Year 2020-21,” September 16, 2021, Agenda Item 4.a, p. 23, http://sccgov.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=12256&Inline=True. Overall, Bay Area construction trade groups indicate that building/unit inflation has not yet risen significantly.23 The pandemic reduced construction activity in the County, which would not surprise people who walked by halted construction sites in their communities in 2020. This general slowdown idled many contractors and suppliers. As activity resumes, those contractors and suppliers have been eager to re-build their volume of work and have competitively vied for business. In the 2021 calendar year, the industry expected construction pricing increases in the range of 1-5%.24 While currently uncertain, there is a possibility that inflation in the coming years may become significant. Recognizing those risks, the County has committed $108M of program funds to the acquisition of 16 properties suitable for development of AH. A primary motivation for these acquisitions was to hedge against likely increases in land costs. The Oversight Challenge Measure A’s full text required an Oversight Committee.25 In June of 2017, the Board established the Oversight Committee structure, purpose, and responsibilities.26 (Finding 4) The Committee’s mandatory activities were detailed in a memorandum from the Santa Clara County Office of the County Counsel.27 Those responsibilities include: • To send advisory reports at least quarterly to the Board and each of the cities in the County • To receive reports on bond implementation provided by OSH and other County departments – including a monthly dashboard of metrics with project level detail • To receive an annual financial audit and quarterly report from an independent financial auditor 23 ONESF, “2021 Annual Infrastructure Construction Cost Inflation Estimate,” October 26, 2020, https://www.onesanfrancisco.org/sites/default/files/2020- 10/Agenda%20Item%204_2021%20Proposed%20AICCIE.pdf. Ibid. County of Santa Clara, “Santa Clara County Affordable Housing Bond – Measure A 2016,” accessed November 1, 2021, https://www.sccgov.org/sites/scc/Documents/Complete-Text-of-Measure-A-20.pdf. County of Santa Clara Municipal Code, “Measure A (2016 Housing Bond) Independent Oversight Committee,” accessed November 1, 2021, https://library.municode.com/ca/santa_clara_county/codes/code_of_ordinances?nodeId=TITAGEAD_DIVA6BOCO _CHXXIME2016HOBOINCIOVCO. James R. Williams and Steve Mitra, “Overview of the Measure A (2016 Housing Bond) Independent Citizens’ Oversight Committee,” June 13, 2017, Agenda Item 5a, pp. 6-8, http://sccgov.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=8402&Inline=True. • To receive other financial reports as provided • To provide an annual report with public and wide distribution In this same memorandum, the Office of the County Counsel specified the Committee’s role with respect to the independent auditor: The Board has provided an independent, external auditor who will report directly to the Committee to the extent permitted by law. While the auditor is to be selected by the Board after a competitive selection process, the Committee, or representatives of the Committee, are required to participate in the selection process. Such participation would most logically occur through a subset of the members of the Committee sitting on an evaluation panel, assessing the strengths and weaknesses of the firms or persons bidding to fill the role of the auditor. The Committee is also able to make a recommendation to the Board regarding the selection of the auditor. Once the auditor is selected, the Committee will have direct access to the firm or person selected. The Committee may request "spot check" audits by the auditor in addition to the annual financial audit.28 The memorandum established the Oversight Committee’s roles and independence. In addition, the Board selected a number of knowledgeable members to serve on the Oversight Committee. While it is common to have both geographical and interest group representation on oversight boards, it is far less common to select members with capabilities related to the subject matter of the bond.29 Members of the Oversight Committee have housing policy experience, accounting expertise, and senior level organizational and political leadership experience. (Finding 5). The Oversight Committee has been diligent and has worked effectively to exercise its oversight responsibilities. In addition, the Oversight Committee has worked with OSH and the independent auditors, MGO, to promote transparency and to communicate Measure A’s performance. An example of this is the Measure A activity dashboard.30 This set of metrics and reports supplies information on projects and performance at both a detailed project level and in the aggregate. The dashboard was a collaborative and cooperative effort on the part of a sub-committee of the Oversight Committee, OSH, and the independent auditors, MGO. The Oversight Committee makes recommendations on a quarterly basis. The Civil Grand Jury learned that inquiries, challenges, and concerns are openly shared between the OSH and the 28 Ibid., p. 8. Williams and Mitra, “Overview of Measure A,” p. 14. County of Santa Clara, Office of Supportive Housing, “2016 Measure A Housing Bond Progress,” accessed November 22, 2021, https://osh.sccgov.org/housing-community-development/2016-measure-affordable- housing-bond/2016-measure-housing-bond. Oversight Committee in a manner that is transparent and promotes the public’s understanding of Measure A progress. CONCLUSION The direct response to the question that prompted this investigation is that the funding purpose specified in Measure A is being addressed – the County is funding the right categories of AH in a timely manner. This could change over time, but for now it looks to be on track. Reframing the question to ask, “Are we building at an appropriate pace?” leads to a more subtle answer. It is important to recognize that there are many factors in the AH development process that are beyond the control of OSH and the County. A very capable and assertive Oversight Committee has independently come to the same conclusion. Despite the narrow charter found in Measure A’s language, both OSH and the Oversight Committee have moved the discussion beyond County funding. They are now examining how to ensure the goal of 4,800 units are constructed. The Civil Grand Jury sees value in shining a light on the current state of building progress and the challenges posed in reaching the Measure A Program Goals. While the recommendations to achieve Measure A Program Goals mirror those of the Oversight Committee, the Civil Grand Jury hopes Santa Clara County residents will benefit from this examination of the largest bond measure in County history. The related Findings 4 and 5 point to the effectiveness and value of the oversight function. The Civil Grand Jury has reviewed other bond oversight committees and attended the California Association of Bond Oversight Committees statewide conference.31 All oversight committees have rules for committee representation, most often expressed as geographical or interest group (e.g., seniors, students, taxpayer advocacy groups). None of the reviewed bond oversight committees specify skills or experience relevant to the bond program, such as financial, analytical, political, or legal expertise. In contrast, members of the Oversight Committee bring housing policy and high-level accountancy expertise, as well as senior political and organizational leadership experience. In the Civil Grand Jury’s judgement, this has strongly contributed to the Oversight Committee’s effectiveness and benefited County residents. The Board of Supervisors is to be commended for their selection of this Oversight Committee’s membership. California Association of Bond Oversight Committees, “First Annual Virtual CABOC Statewide Conference 2021,” accessed November 24, 2021, https://www.bondoversight.org/caboc-conference/. FINDINGS AND RECOMMENDATIONS

Recomendaciones relacionadas (1)

R5: The Civil Grand Jury recommends that the County evaluate whether this selection model can be extended to other advisory boards and commissions. This evaluation should be completed June 30, 2022.

Technology Services and Solutions: Have Lessons Been Learned?

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F1: TSS failed to recognize significant warning signs from staff and CalEQRO reports in its effort to link two systems from separate vendors. As a result, the system was not able to process Medi-Cal claims. Furthermore, the system did not satisfy federal privacy and state reporting requirements. This led to delays in billing, unanticipated additional work for County staff, and finally, a redesign of the system.

Recomendaciones relacionadas (1)

R1: When undertaking a new project, the County should add a requirement for a high-level feasibility analysis during the initial planning phase. In most cases, the analysis should include a survey of how other counties and organizations, with an emphasis on counties and organizations of a similar size, solved the problem. If no organization has used the approach being considered, explicit risk mitigation steps should be added to the project plan, and schedules and budgets should be adjusted accordingly. Resources such as CalEQRO and other state or independent auditors should be fully utilized to assess these risks. The County should develop a plan to establish these practices by June 30, 2022.

F2: TSS did not follow project management best practices. There was no requirement that the project managers need project management experience. TSS used multiple project managers, none of whom had responsibility for the overall project. This complicated coordination and decision making.

Recomendaciones relacionadas (4)

R2a: The County should develop a plan to require anyone serving in a project management role to have sufficient project management experience and/or certification for the nature of the project. The County should develop this plan by June 30, 2022.

R2b: The County should develop a plan to require that each project have a single overall project manager who has relevant project management experience or certification. The plan should be established by June 30, 2022.

R2c: If a project requires additional project managers, then the County should require a clear organizational structure that facilitates coordination and decision-making. The County should develop a plan to establish these requirements by June 30, 2022.

R2d: The County should verify that project managers follow the best practices defined by the County’s own Project Management Center of Excellence. The County should monitor all projects and verify that all required items listed in the Governance Gates Checklist are completed by the project manager and approved by the executive responsible for the project. The County should verify the completion of required items for existing projects and should develop a plan to monitor compliance with the County’s own Project Management Center for Excellence criteria for current and future projects by June 30, 2022.

F3: TSS did not have a process in place to prove that the new EHR system would work prior to deployment. TSS did not adequately test the integration of the HealthLink and Netsmart system before releasing it to Behavioral Health clinics. Management placed primary emphasis on meeting the project schedule rather than supporting a gradual system rollout. This led to halting the submission of Medi-Cal claims, which threatened the loss of tens of millions of dollars.

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R3a: The County should develop a plan to require documenting user acceptance testing criteria at the start of a project. The testing should involve applicable clerical staff, with testing done in their work environment when possible. The schedule for this testing should account for staff availability. The County should develop this plan by June 30, 2022.

R3b: The County should develop a plan for situations where the user acceptance testing cannot be done in the users’ work environment. This can, for example, call for releasing the system to a subset of a department’s staff before releasing it to an entire department. The County should develop this plan by June 30, 2022.

F4: TSS and Behavioral Health were not sufficiently engaged in the contract negotiations with Netsmart for the May 2019 agreement. Lacking detailed input from project management on resources and scheduling for the analysis and training work, Procurement eliminated these tasks from the agreement. This elimination contributed to delays and required the subsequent negotiation of three additional agreements to address these shortcomings.

Recomendaciones relacionadas (3)

R4a: To ensure that Procurement is prepared to negotiate with vendors, the County should develop a plan that requires an analysis of technical staff needed to complete and deploy the project. This plan should include escalation procedures to be followed when Procurement is not provided the information it needs. The County should develop this plan by June 30, 2022.

R4b: When the County intends to have County staff train their colleagues on how to use a new system, the County should first determine if staff is available to do the training. If staffing is not available, either additional consultant support must be included in the agreement negotiated with the vendor or the project schedule should be revised. The County should develop a plan for this scenario by June 30, 2022.

R4c: The County should investigate the feasibility of negotiating vendor contracts that include a bonus for on-time and successful completion of all parts of an IT project, even if the vendor is not responsible for them. This would incentivize outside vendors to provide TSS project management with complete information about what is needed from all parties to bring projects to successful conclusions. The County should report on its investigation of this approach by June 30, 2022.

F5: 29 REQUIRED RESPONSES ......................................................................................................... APPENDIX: Project Manager Responsibilities ....................................................................... GLOSSARY AND ABBREVIATIONS 42 CFR Part 2 A section of the Code of Federal Regulations that requires substance use disorder treatment providers to observe privacy and confidentiality restrictions with respect to patient records. Behavioral Health Behavioral Health Services, often referred to as Behavioral Health, is the department within the County of Santa Clara Health System that works with clients experiencing mental health and behavioral issues. CalEQRO California External Quality Review Organization performs an annual evaluation of every county’s behavioral health services department. Contract Provider An organization that contracts with the County to provide behavioral health services CSI Client and Service Information is a system that generates reports required by the State of California for measuring timeliness of mental health care. EHR Electronic Health Record is a digital version of a patient’s paper medical record. Governance Gates Checklist A Technology Services and Solutions project management form that divides a project into distinct stages Health System The County of Santa Clara Health System includes the Behavioral Health Services Department, Public Health Department, Santa Clara Valley Medical Center hospital and clinics, O'Connor Hospital, St. Louise Regional Hospital, Emergency Medical Services Agency, Custody Health Services Department, and Valley Health Plan. HealthLink An electronic health record system, developed by Epic Systems Corporation and used by the County of Santa Clara Health System HL7 A network protocol used to electronically transmit medical information Hospital Finance A department within the Health System that manages patient billing and other financial responsibilities HSR A Health Service Representative is a clerical staff member who registers clients and schedules appointments. Medi-Cal Medi-Cal is California’s Medicaid program, which pays for a variety of medical services for children and adults with limited income and resources. MHSA The Mental Health Services Act was passed by California voters in 2004 to expand services to county mental health systems. Netsmart Netsmart Technologies, Inc. develops electronic health record systems for behavioral health organizations. Procurement The County department responsible for purchasing goods and related services Project Management Center of Excellence A Technology Services and Solutions office that administers the Governance Gates Checklist ProviderConnect A Netsmart module that allows contract providers to securely transmit medical data to the County through a web interface ProviderConnect Enterprise A Netsmart module that allows contract providers to securely transmit medical records to the County through a programmatic interface RFP A Request for Proposals is a document that solicits bids from vendors for County services. Short-Doyle Act The Short-Doyle Act established a county- based, rather than state-based, behavioral health system. It includes requirements that must be followed when submitting claims to Medi-Cal. SUTS Substance Use Treatment Services is the division of the Behavioral Health Services Department that provides alcohol and drug treatment services. TSS Technology Services and Solutions is the County of Santa Clara information technology (IT) department. Uni/Care The software system used by Behavioral Health Services prior to 2018 INTRODUCTION Complex software projects are notorious for encountering delays and cost overruns. However, sophisticated development teams can overcome these challenges by using software engineering best practices, following established project management frameworks, and continually learning lessons from past projects. The 2021 Civil Grand Jury of Santa Clara County (Civil Grand Jury) investigated one troubled project to understand what went wrong. This report looks at one particular example as a case study. In 2018, the County launched a customized electronic health record (EHR) system for clinics in the Behavioral Health Services Department (Behavioral Health). Development of this system was overseen by Technology Services and Solutions (TSS), the County's information technology department, which is responsible for managing the County’s computer hardware, software, and network infrastructure. The EHR system was intended to modernize clinical record-keeping, patient billing, and reporting for State and County oversight. The County Health System operates the County-owned hospitals and clinics. In 2013, most of the Health System departments started using an EHR system named HealthLink (made by Epic Systems Corporation) to keep track of patient healthcare records. However, HealthLink did not fully meet the needs of one Health System department, Behavioral Health. Behavioral Health is the department that works with clients experiencing mental health or substance use issues. Clients experiencing mild or moderate symptoms can receive support from the County’s primary care clinics, but clients with severe issues are seen at clinics that specialize in behavioral health. The 14 Behavioral Health specialty clinics operated by the County serve less than 20% of the demand for services. Consequently, the County contracts with non-profit providers for additional clinics to provide more than 80% of behavioral health services.1 Most behavioral health services are covered by Medi-Cal, which is California’s public health insurance program that provides health care coverage to low-income individuals and families. Medi-Cal contributes $100 million to $120 million in annual revenue to Behavioral Health and has specific claims requirements for behavioral health services. Because these claims requirements were not supported by HealthLink, TSS selected Netsmart, a vendor specializing in behavioral 1 Behavioral Health Concepts (CalEQRO), “FY2020-21 Medi-Cal Specialty Mental Health External Quality Review: Santa Clara MHP Final Report,” p. 46, January 14, 2021, https://www.caleqro.com/data/MH/Reports%20and%20Summaries/Prior%20Years%20Reports%20and%20Summa ries/Fiscal%20Year%202020- 2021%20Reports/MHP%20Reports/Santa%20Clara%20MHP%20EQRO%20Final%20FY20-21%2003.24.21.pdf. health services, to provide the billing software. As discussed later in this report, linking HealthLink with Netsmart complicated the project. After almost two years of planning and development, the new EHR system was launched in February 2018. However, once the system became operational, the County detected numerous errors in the pending behavioral health Medi-Cal claims. The County halted the billing component of the new system and faced the crisis of potentially losing millions in reimbursements. Medi-Cal requires claims to be submitted within one year from the date of service, and it was unclear how long it would take to fix the billing problems. Management formed a billing remediation team to correct the problems and managed to resolve most of the billing issues before the Medi-Cal deadlines expired. Nevertheless, such an intensive effort on individual claims was unsustainable, and by late 2018 the County decided to redesign the EHR system. There are a number of important lessons to be learned from this project. After a more detailed discussion of the history of this multiyear project, several areas are identified as the root causes of the troubles encountered. These include insufficient attention to the initial analysis and feasibility of the project, a failure to follow industry best practices for project management, and the lack of testing necessary to ensure a successful deployment. In addition, miscommunication among County departments led to problems while negotiating amendments to the original Netsmart agreement. Finally, there are concerns that the current phase of the project lacks sufficient planning and project management controls. In this report, the Civil Grand Jury provides 12

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R5a: The County should conduct a risk assessment to identify threats to the objectives of the ongoing project. Potential responses to those risks should be captured in a risk management plan for this project. The County should develop a plan that evaluates the future risks of this project by June 30, 2022.

R5b: The County should develop a plan to ensure that contract providers are informed as decisions are made about what work needs to be done by the contract providers, what work will be done by the County, who will pay for the work, and when the work will be scheduled. The County should develop the plan by June 30, 2022.

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