City Council - Regular Meeting

Good evening, it is 6.47 and I call this September 15th regular meeting of the Cupertino City Council to order. If you're able to, please rise for the Pledge of Allegiance.

I pledge allegiance to the flag of the United States of America and to the Republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.

All right. Thank you. Madam City Clerk, will you please call the roll?

Council Member Ferran. Here.

Here.

Council Member Mohan. Here. Council Member Wong.

Present.

Vice Mayor Chau. Here. Mayor Moore.

Here. Thank you. Madam City Attorney, do we have a closed session report?

We do. This evening, Council met in closed session and Council discussed both items on the closed session agenda and no reportable action was taken. Thank you.

All right, thank you. Before we move on, I wanna make a quick announcement that the Move More initiative is in its second week and Cupertino participants have collectively logged 10,948 minutes of activity and that's about 433 miles in the very first week. So congratulations, keep signing up on the city's Move More page, log your minutes. You can estimate last week's if you missed it. It can be walking, cycling, stretching, dancing, whatever gets you moving, and you'll earn a great reward at the October 10th celebration with a really great lunch, get moving more, and great job, Cupertino. So next we have a ceremonial item and I am pleased to recognize the Cupertino High School FBLA students for their leadership, dedication and achievements. This past June, nine Cupertino students placed among the top competitors in their events including a fifth place finish in the nation for event planning where they organized the multicultural E Pluribus Unum event at the Quinlan Community Center. Congratulations to this group of students. We're incredibly proud of you and we would like to now present the certificates and take a photo with the award recipients and the Cupertino High School Principal Salazar, I believe is also here. So come on.

Thank you. Thank you.

Thank you in our next item is a postponements in orders of the day we have one item item for which is an ordinance to amend Cupertino municipal code 19.08 which is proposed to be continued to October 6 is there a motion to continue item for to October 6 so moved. Second any public comment on the postponement.

No mayor don't have any requests in person and I don't. I don't see any hands raised virtually under postponements.

Okay, with that, Madam City Clerk, will you please set the vote panel and we will vote.

The motion carries unanimously.

All right, thank you. Our next item is oral communications. How many speaker cards do we have, Madam City Clerk?

Mayor, I have five plus a group of two. So 15, 19 minutes plus I currently have one hand raised virtually.

All right. Madam City Clerk, will you please provide instructions for oral communications and conduct this item?

Certainly. This portion of the meeting is reserved for persons wishing to address the council on any matter within the jurisdiction of the council and not on the agenda for discussion. Oral communication shall be limited to 30 minutes. Additional speakers wishing to comment on non-agenda items may be given time to speak at the end of the agenda after the city manager's report. Individual speakers are limited to three minutes. As necessary, the mayor may further limit the time allowed to individual speakers or reschedule remaining comments at the end of the meeting on a first-come, first-served basis with priority given to students. In most cases, state law will prohibit the council from discussing or making any decisions with respect to a matter not listed on the agenda. A council member may, however, freely respond to statements made or questions posed by speakers. A council member may also ask a question for clarification, provide a reference for factual information, request staff to report back concerning a matter, or request that an item be added to a future city council agenda in response to public comment. As a reminder, members of the public wishing to speak regarding an item shall submit a request to speak or raise their hand virtually within the first nine minutes of the start of public comment or before the public comment period is closed, whichever comes first. So at this time, we will welcome O. Pepper, followed by Edward Hirschfield, followed by Mark Fantazzi. Please welcome O. Pepper.

Yes.

So you're going to speak here? Is that your thing?

Madam City Clerk, would it be okay if you ask the next speakers to be lined up, ready to go, so that it goes a little bit faster?

Sure. If the next speakers could line up in the aisle. We have Edward Hirshfield, followed by Mark Fantazzi, followed by Minna's group. and then Steven Sharf and Rhoda Frye, but yes, so.

Shall I start? Yes, please. Okay, good evening ladies and gentlemen. I'm here because I was here last Friday and very briefly I found out that you have this wonderful BMR program. but I also understood later that last Friday was the deadline. In between I talked to some friends and I also made some reading on the program and actually the deadline In my interpretation, it is tomorrow. And I'm here for another chance. I know the benefits of the BMR program, and I'm asking you, if the deadline was Friday, would there be a chance that I can still apply? Thank you.

Thank you. El Pepper? Yes. Thank you. Next, we will welcome Edward Hirschfield.

Hello, I'm Edward Hirschfield. I've owned my house in Cupertino for 64 years. This is my presentation. Before 1994, Cupertino was the hub of cultural activity in the South Bay because we hosted the De Anza Flint Center for Performing Arts at De Anza College. In that year, the center was closed because the building was condemned because it was judged to be seismically unsound. In its heyday, the center hosted the San Francisco Symphony Orchestra, SF Opera, Broadway shows, intellectually leading speakers, performing arts like Brezhnev were performed there on a regular basis. A few years later, Sandhill Properties announced world-class plans for the Valco Center. It included outstanding architecture, housing for 220 families, park space on a portion of the roof, commercial space, and a possible performing arts center. The know-nothing organization, Better Cupertino, ended all that by doing everything he could to kill the project. They slow rolled the project for more than 20 years until the state of California prevented complete destruction by mandating that the housing portion of the project continue. So now we are left with a plain vanilla housing project that may be built by a yet to be named third party. The cultural enhancements we once had lost and hoped are all gone. We have the city council poisoned by Better Cupertino to thank for this. Better Cupertino has deprived the city and its citizens of the cultural benefits it might otherwise have enjoyed worth millions of dollars. We now are in the center of a cultural desert. all may not be lost if the new city council is willing to take the cultural enrichment now scuttled by stupid and unlawful management for the past 25 years for example the eastern portion of the valco property has not yet been planned it is owned by sandhill properties but they may be willing to relinquish it for the right price and this is not the only possibility Cupertino could be an outstanding cultural hub with the right management. After all, San Francisco lost most of its cultural facilities in 1906 earthquake. Since that time, it built an opera house, symphony hall, jazz center, art museums, natural history museum.

Thank you, Edward Hirschfield. Thank you. Thank you, Edward. That is your time.

Thank you. Your time is up. I'm sorry you're disrupting the meeting.

I'm sorry.

You've had your three minutes, Mr. Hirschfield. Thank you.

The timer did go off, Mr. Hirschfield.

Thank you, Mr. Hirschfield. Your time is up.

Thank you. Next, we will welcome Mark Fantazzi, followed by Menez Group, followed by Stephen Scharf, followed by Rhoda Frye. Welcome, Mark.

Thank you. I'm Mark Fantazzi. I'm sure most of you know me by now. I'm coming here to refute a claim by Muni Matapalta, a member of the Bicycle and Pedestrian Commission. He came before you at the last council meeting and made a claim that I suggested his neighbors that I had his support. That is an absolute fabrication. He admits that he was not present at these conversations, and it's simply relying on hearsay. I can tell you for certain that I never suggested anything to people I spoke to asking if I could put a sign up. I find it reprehensible that a representative of the city makes a public statement disparaging someone based on hearsay. He could have easily contacted me by my website or email and said he took the cowardly way route and comes here before the council to campaigning for his candidates. I'm thankful the council acted professionally and asked him to refrain from campaigning. I think that the city does not need people of his character representing the city. Thank you.

Thank you, Mark. Next, we will welcome Mina and Shannon. The group. So since you guys are representing a group of two, you guys will have four minutes to speak. Welcome.

Hello, my name is Mina. I'm a Cupertino resident.

Yeah, my name is Shannon B. I'm Cupertino season two.

And in last council meeting on September 1st, I asked a question on some unauthorized political science and the science For council's quick reaction on Friday, I saw the city email clarify rules on campaign signs. And thank you so much for listening to residents and respond to the community needs. However, after September 1st, several incidents happened either at my neighborhood or related to my neighborhood. And now I have some questions regarding public safety in Cupertino. Actually, I asked the same questions in my email to mayor and the vice mayor with sheriff and the city attorney in CC list. I also asked the same question to public safety commission and with sheriff in CC list. However, after more than one week, I didn't get any answer. So my question is very simple. That's for the tracking devices and the cameras put on other people's land without homeowners' permission or even their knowledge. And I just want to know if it's legal or is it everyone's public right or way to do so on other people's private property to install those tracking or even monitoring devices. I also want to know if either situation violate the law, who may report it? Is it must be reported by the property owner or any other residents? They observe the activities or they feel their safety and privacy, they have some concern, so they can contact the police. But because there are so many neighbors, they walk their dog and jog at night, especially for the female joggers. They think, yeah, it's very dangerous to see such activities. And I just mentioned these questions were raised by several community members, not only me, but they were ignored in the email. I don't know if it's because the question is very hard to answer or because there's some other reason, but after reading the article on San Jose Spotlight, I have a very worse feeling. So I always support law and order, and I always support our sheriff's hard work to protect our community. But now after reading that article, I have a feeling that at the same time when community members have a concern on these things, but the sheriff assist who installed those tracking devices, without homeowner's permission and use the tracking device to trace some other community members, but at the same time ignore the public safety question from community member. And there's another question regarding the police dispatch and response. I want to know what type of or level of incident would result in multiple police cars being dispatched around midnight, especially within about one hour after the initial call. And I also heard another community member, she said she went to Santa Clara County Sheriff's Office and go there several times, have several phone calls and was told only two policemen dispatched. But actually in a photo from the security camera, we saw three. So we really want all these things can be clarified, especially just for some political science. We don't think the value would be so big to trigger such action.

Thank you. Thank you. Next, we will welcome Stephen Scharf, followed by Rhoda Fry. Welcome, Stephen.

I have something to put on the overhead here. Can you put that up?

Video, can you display the document camera?

Sorry, what?

It's on now.

Okay. Thank you. We're pretty fortunate in Cupertino that violent crime is pretty low, but there's other crime. I urge the city council, the city manager, code enforcement, county agencies, and the sheriff to take action against illegal activities happening during this campaign season. Residents deserve a clean election. Specifically what's occurred, the theft of signs from residential property, the placement without permission of campaign signs on both residential and public property. In fact, walking here tonight, I just passed two signs illegally attached to the Santa Clara Water District property. And most incredibly, a former Cupertino mayor put Apple Air tags into campaign signs that were then placed without permission on a Cupertino resident's lawn. When the resident removed the signs the second time, signs were placed again without permission. Multiple police cars were dispatched at midnight to a resident's home in Santa Clara where the Cupertino resident had had a friend put the signs in their garbage bin because her bin was already full of illegally placed signs. I don't know if campaigns are paying people to commit crimes or if it's overzealous residents engaging in this activity. One resident on Silverado Avenue had signs stolen from his property three times in one week. When he went on Nextdoor to complain, he was kicked off by a moderator who was also a candidate since the signs on his property were for the opposition. Another resident on Randy Lane had signs placed on her property without permission. When she complained on Nextdoor, her posts were removed in minutes. Cameras are everywhere. Don't touch campaign signs. Don't place signs on someone's property without permission. And if you're going to put air tags in signs, make sure you actually have permission to place those signs on the resident's property. I've never seen anything like what happened with the air tags before. Somebody spent all that money to buy air tags, to put them in signs that were not placed on the property with the resident's permission. This kind of thing should stop. Thank you.

Thank you, Steven. Next, we will welcome Rhoda Frey.

Hi, good evening, council members. This Saturday, September 19, at 3 p.m., there will be a Cupertino City Council candidate forum where I guess they could talk about these signs. It's going to be in the Cupertino room at Quinlan Center, moderated by Robbie Kapoor of Dia TV. This is a wonderful opportunity to attend a live in-person event and... probably talk with the candidates after the afterwards the other thing is i'd like to set the record straight regarding a news story that was further amplified by ms jean bedard's newsletter last week i went to the planning commission in my frustration about hearing of theft of political signs and the placement of signs without permission including my own property In frustration, I suggested banning them. I'm grateful that Planning Commissioner Santosh Rao suggested that a study session occur on this topic, and it was seconded by Planning Commissioner Stephen Scharf. Planning Commissioner David Fung asked the attorney whether it would be a conflict of interest because Mr. Rao is running for City Council, and the attorney said no. It would not. The city attorney agreed to doing a study session. Some people believe that banning these signs could be a public speech issue. However, not allowing political signs in that right of way that's not owned by the property owner but is owned by the city but in front of the property owner's land It could be could be banned And it could be done. So legally it is done in other places It would not prohibit its free speech having signs on the actual private property alone Would hopefully quell some of these shenanigans. I see mr. Wrong nodding. So I appreciate that you're listening so i want you to know it you know there's no there's not an issue with free speech for uh banning signs and the idea came from the floor okay by the uh city attorney so i hope that these stories get corrected um the other thing is i want to refer to somebody something that uh another speaker said regarding the loss of flint center that our city had nothing to do with that We all lobbied to keep it. We wish we could have. There's actually two other theaters on campus at De Anza College, and also right up the road, Saratoga High School has a wonderful theater. It's pretty big, and they have a lot of events there, which was privately funded. It would be wonderful if we could have some private funding for a new entertainment sitter in Cupertino. So that's my statement for tonight, and I wish you a good evening. Thank you. Thank you, Rhoda.

And we will move to the request to speak virtually. We have two hands raised. We will welcome Jennifer Griffin, followed by caller 2297. So welcome, Jennifer.

Thank you. Good evening, everyone. Can you hear me okay? We can hear you. Thank you. I appreciate that. Yes. Good evening everyone. On September 8th at the Planning Commission meeting we had another project that was proposing to build townhouses. This is on the property the coach house. I think it's a coach house shopping center at Prospect and South De Anza Boulevard. We've seen this project before. It has a new iteration. The previous iteration was going to have housing and retail. This new project is all housing. But there were two things. I hope that this project could have some help for the retailer that is currently there on the property. There isn't a lot. but it is an active shopping center. My husband grew up near that area and there had always been retail there. I think it's important that the city reach out to the retail that is there to make sure that they have options for potentially staying in Cupertino. There is a lot of available retail space in the city and i'm hoping that we can make sure that this existing retail on this site has the potential option of staying in the city if they wish to do so a lot of times there's mom and pop stores that are smaller but they're beloved in the city because we encourage and patronize smaller retail they're just as important as larger retail and i realized as the evening drew to a close and this project had gone through the planning commission i realized later that we hadn't even discussed the retention of the retail at that site it there was not enough time or no one thought about it and i felt really badly about it that no one had um spoken up to support the retail like we had had on one of the sites on Stevens Creek Boulevard where there'd been an active attempt to try to help the retail there. So I'm suggesting in the future that when we have a retail to housing conversion on any project that we have something on the agenda at that meeting or in that project to address the retail portion and how the city or the chamber, et cetera, could try to help and reach out to keep the retail in town. Thank you very much.

Thank you, Jennifer. Next, we will welcome caller 2297.

Can you hear me?

We can hear you.

All right. So my name is Michael Wang. Thank you for Mayor Moore and the rest of the council for this opportunity to speak. I'm going to speak on the so-called sign wars. I think a lot of the problem with the sign wars is that campaigns only track when a person gives permission to put a sign on their property. but they don't really keep track of if the homeowner revokes that permission for that sign. But of course, when an opposing campaign canvases that house, sometimes they convince the homeowner that they should switch sides and put another sign down. And then the homeowner revokes permission for that sign that was originally there. So I think a lot of the confusion is that campaigns will keep on putting signs that have been replaced down, thinking that, oh, the homeowner has given us permission. But there's like a communication disconnect between the homeowner and then the campaigns. So I think in the future, maybe we should implement something like a QR code on the sign so a homeowner can scan it maybe and and say, oh, I don't want this sign on my property anymore. And that information can flow to campaigns. And then the campaigns can know, oh, we shouldn't put a sign here anymore. So we don't have this like running around or both campaigns or pulling off signs left and right because they think, oh, I can put a sign here, but these guys can't put a sign here. And it's kind of a whole bunch of chaos. So I think maybe like something like a centralized database of all the signs that the city could maintain. Maybe that money can come out of the registration for getting, being a candidate for city council. Yeah, so that's just a suggestion. Hopefully something like that can be put into place and it would solve a whole bunch of chaos. So thanks.

Thank you, Michael. Mayor, that concludes the request to speak under oral communications.

Okay, I see one request to speak, Council Member Wong.

Yeah, thanks. I just wanted to ask some questions because I know the city did a great job with an FAQ with what you know about what signs are possible or not. And then we just got some new information here. So I want to ask some questions to the city attorney. Once signs are installed on homeowner property, do these signs belong to the homeowner? And can they dispose them any way they like? Is that I just want to make sure that's clear.

You know, I would have to do deeper research into that. But my sense is when the homeowner takes possession of the sign, the sign becomes the property of the homeowner. That would be my expectation. But I haven't researched the question specifically.

Okay. And then are campaign teams, including former mayors, allowed to install surveillance on homeowners' land using air tags on their signs?

I don't know what the surveillance laws are in this country. The ability to surveil property with new technology is expanding all the time. I would also have to look into that, but it does seem to be a difficult situation for homeowners to have their homes surveilled.

And the city knows the person who installed the air tags on the signs that were on the homeowner's land. Basically, they're performing surveillance on the homeowner land. Is there anything we can do about that? Or is that goes to the county?

That really would be something that the county sheriff's organization would respond to.

They just left.

You know, suggesting that we know that's an interesting question of fact.

There's video. There's video. There's video, and you can see the pictures. I mean, a lot of the neighbors have seen that. But I'm going to ask a more important question, a different one. We have a contract with Nextdoor. Is that correct? Do we know that for sure? Do we have a contract with Nextdoor? Do we work with them?

This is veering from you responding to some of the questions here. Could you perhaps wrap it up and take it offline?

I will, but the reason I'm asking is because there's an abuse of next door, and if we have a contract there, I'd love that in a future agenda item. That's all.

Okay, thank you. I see Vice Mayor, your hand's raised as well. We don't want to veer off into having this be a non-agendized item.

I think we received many questions along the same line, and I have sent in my questions, so I would like to request the staff to provide response with factual information in a timely manner to resolve all this confusion if possible. Thank you.

I just want to say thank you, Vice Mayor. I have your question, and I believe the Sheriff's Office is attempting to respond to it. I'll follow up if there's any additional questions, and same for any other council members. If you have questions, please send them to me.

By the way, the FAQ issued by the staff was really helpful. You have very good question and short answer. Make things very clear. Thank you.

All right. Thank you. Next item is the consent calendar. Madam City Clerk, have any items been pulled from consent or do members of the council wish to pull any items from the consent calendar?

No request, Mayor.

Thank you. And do we have any members of the public who would like to comment on the consent calendar?

I'm not seeing any requests in person. I do not see any hands raised virtually, Mayor.

Okay. Do any members of the council wish to comment on the consent calendar? I see, Vice Mayor, your hand is raised. Okay. Do we have a motion to move the consent calendar and a second?

Motion to move consent calendar. Second.

Okay. We have a main motion and a second. Madam City Clerk, will you please set the vote panel and council will vote.

I don't know if we're working.

The motion carries unanimously.

All right. Thank you. Next, public hearings. We do not have any this time. Next, we move on to our action calendar. That's item 14. It is the Law Enforcement Services Agreement with the County of Santa Clara. Madam City Manager, do we have a report or presentation?

Thank you, Mayor and Council Members. This is a substantial item before you tonight, and I would like to make a brief statement before I turn it over to staff for the presentation. As you know, for many months, the city has worked in good faith to reach a reasonable and sustainable agreement with the county. These efforts did not result in an agreement. The city remains concerned about the county's proposed cost methodology, and I want to be clear that my recommendation tonight does not mean that those concerns have changed. What has changed is the circumstance we face. The Sheriff has now informed us that without a new agreement beginning October 1, the Sheriff's Office will provide only very limited level of service in Cupertino. The Sheriff's Office is here tonight, or they were here, and I just want to say that we deeply appreciate their service. We have also been informed that the county will not agree to another extension. As the city manager, my responsibility is to protect the safety of our residents and ensure continuity of essential city services. At this time, there is no immediate alternative capable of providing comparable coverage. As a result, tonight, I am asking Council to authorize an agreement so that our residents continue to receive the level of law enforcement service they expect and deserve while the City continues its effort to achieve a more transparent, reasonable, and sustainable approach to the cost of those services. I'm not making this recommendation because we believe the county's terms are the outcome we sought. I make it because maintaining uninterrupted law enforcement services for our community must take precedent at this time. Thank you for your consideration. And with that, I will now turn it over to Jonathan Orozco, Director of Finance Department, and Michael Vu, Senior Assistant City Attorney, who will provide the presentation and will be available to answer questions.

Thank you, Tina. Good evening, honorable Mayor Moore and council members. Tonight, I'll provide a brief update on the status of the city's law enforcement services agreement with the county of Santa Clara. As council is aware, this process began with a significant increase in the county's proposed cost for law enforcement services, and more importantly, a new methodology for allocating costs to the contract cities. For context, the city's fiscal year 25-26 contract was approximately $19 million. The county's latest proposal is approximately $25.4 million, an increase of approximately $6.4 million. Since then, the contract cities and county have engaged in ongoing discussions regarding both the financial methodology and the broader terms of this successor agreement. Throughout the process, the city's goal has remained the same, to reach a contract that is fair, transparent, and consistent with government code 51-350, while maintaining high quality law enforcement services to our community. The current three month extension expires on September 30th. During this extension, the city has been paying counties newly proposed rates, including that approximate 34% increase described in the previous slide. The city has repeatedly requested short term extensions in order to work through the contract terms. With September 30th approaching, however, we are now at an important decision point regarding how the city proceeds beyond the current agreement. A central purpose of the three-month extension was to provide time for an independent review of the county's proposed cost methodology. Vasquez and company completed the work and issued a final report on August 26th. Importantly, before finalizing the report, the county was provided a draft and an opportunity to comment. Vasquez evaluated the feedback and either incorporated where appropriate or addressed it separately in writing. The final report has been provided to the county administration and board of supervisors and is publicly available. At this time, we are still awaiting the county's formal response. One of the most significant findings related to the county's proposed overhead and cost support cost of approximately 11.9 million reviewed by Vasquez, approximately 10.7 million of costs the county would continue. Sorry. 11.9 million of the proposed overhead countywide costs is being called into question, of which 10.7 was designated by the auditors as non-allocable. Importantly, that does not mean that the entire 10.7 million should be automatically excluded. Some of those costs may still directly support services provided by the contract cities. BASC has therefore recommended further analysis to determine that portion is actually attributed to providing those services and what portion represents the cost the county would otherwise. This is one of the primary areas staff believe still needs to be worked through with the county. This brings us to September 30th. The current agreement expires at the end of the month. The county has indicated that without an executed successor agreement, law enforcement services in Cupertino will significantly be reduced. Staff has repeatedly requested additional information regarding what service levels would look like after September 30th, including the staffing and services that would remain available to Cupertino. To date, the city has not received a detailed description of what reduced service levels looks like. That uncertainty is particularly important as council considers its options this evening. Tonight, this item is intended as an opportunity for council to discuss the path forward. Staff is seeking council's discussion and direction regarding the proposed agreement and how you would like the city manager and negotiating team to proceed. With that, Michael and I are available to answer questions and walk through any portions of the agreement or Vasquez report that council would like us to discuss. Thank you.

Thank you Director Roscoe for the report and I want to thank City Manager Kapoor, City Attorney Andrews, Assistant City Attorney Wu and Vasquez for all of your help and to our surrounding cities Saratoga and Los Altos Hills for their collaboration thus far in this matter. At this time do we have any clarifying questions from the council? Council Member Fruin.

Just a very quick question to Assistant Attorney Wu. Does the county have any affirmative duty under California law to contract with the city of Cupertino for law enforcement services?

While the county doesn't have affirmative duty to contract for services, they do have a duty under state law to provide law enforcement services.

to enforce state law, correct?

The county has an obligation and a requirement under state law to provide law enforcement services.

Yes, but for things like the nature of patrols and so forth?

I think the language that's precisely used is public offenses, which is a broad category, which includes both felonies and misdemeanors.

Got it. But it doesn't prescribe a specific level of service other than that. That's correct. Okay.

Vice mayor.

I think for the benefit of the public, could you explain why we are looking at the proposed overhead and why it's allocatable or non-allocatable important in this discussion?

So what's important here, the city's not contesting the cost of the individual sheriffs or direct cost to the city. What's the challenge is and how it's how we would interpret Government Code 51-350 as overhead costs the county would incur, but for the contract cities. And so as part of Vasquez's report or analysis, they were able to identify of the $11.9 million of overhead, general overhead the county is allocating to the contract cities, 10.7 is potentially non-allocable. This would require additional reconciliation review to identify what that exact dollar amount, which would require additional time by both the county and the cities to determine.

So non-allocatable means that it might be an overall cost for the county, but not specifically attributed to Cupertino, but somehow now it's being attributed to to our overhead. That is correct. OK. And so has so has the county given any indication that they. My do we consider how this calculation is done.

They have providing support on how they reached the $11.9 million. However, it is based off a full cost recovery model, which is different than what 50, government code 51-350 states. And so there is a competing in methodologies when the proposal was developed.

Thank you.

Okay, I'm not seeing any further questions from the council at this time. Madam City Clerk, do we have members of the public who would like to comment on this item?

Mayor, I don't see any requests to speak here in community hall, and at this time, I do not see any hands raised virtually. Okay.

So I would like to make a comment. Cupertino has enjoyed decades of excellent law enforcement services provided by the Santa Clara County sheriffs. This is not a dispute about the service. This is an issue with addressing the Gonsalves Act and whether the new contract is compliant with California Government Code 51-350. When we had our prior contract, the general law enforcement services had an hourly rate, which included overhead baked into that rate, so it was about $305 per hour. And so the new contract we received at the end of last year And it had a new methodology, and our staff researched these contracts and found that it needed to comply with the Gonzales Act, which is a law which has been on the books for decades, but it really didn't get flagged here. UNTIL WE GOT THE NEW CONTRACT WHICH HAD A 36% INCREASE AND NO ANNUAL CAP LIKE WE HAD BEFORE. SO THAT MAKES IT VERY DIFFICULT FOR US TO TRY TO BUDGET FOR OUR NEXT YEAR WHEN WE HAVE THIS UNKNOWN THAT WE'RE LOOKING AT. So we did have a desk item come in, which is a resolution, which is in our desk items. And I don't believe we have a printout of it here, but it is online. So it is a resolution discussing Government Code 51-350. and perhaps either the city clerk or the city manager could pull that up so that we could share screen on that.

Lauren, are you able to pull that up? Yes, yes, I'm pulling it up now.

Let me just get that.

for I could just start right now and for purposes of deliberation make a motion that the city manager is authorized to negotiate and execute a long-term agreement for law enforcement services with terms that reserve the city's rights under California government code to ensure appropriate costs to the city and that we approve the desk item resolution to that same effect. And maybe the city attorney could help me on this next part, but I would also like if we allow the city manager provide her authorization to make an effort to resolve the service gap between October 1st and a potential Board of Supervisors contract signing October 6th. Is that? I think that's permissible, yes. Okay, so that is my motion. Do I have a second?

Second.

Thank you. And Madam City Clerk, have you... You got the resolution up. Okay, so this resolution, essentially the important parts as you scroll through is that we're mentioning government code section 51350. And we can move on to the next page. Provide a little bit of history here. And then again, we're basically asking that it complies with the government code section 51350. Okay. And again, when you look at the contract, this last part on showing page, I believe it's page 83, but section three, without limiting the foregoing, the city expressly reserves its rights under government code section 51-350 as set forth in section 3A of the agreement. So the agreement itself references 51-350. So we're simply reiterating what's already in the agreement. I don't know if the city attorney or assistant city attorney, if you want to comment on this resolution.

In my opinion, this resolution tees up the agreement for signature by the county, and I think it covers all the bases for the city, and it's well written, and I suggest the council pass it.

All right. Thank you. Look to see if there's any hands raised. I see the vice mayor followed by always that a relic or is that are you there. Vice mayor your hands raised. OK.

Okay, so just try to understand the 51350 and I think for the benefit of the public, basically it means the county is supposed to provide some basic services to all the cities, whether we contract with the county or not. And then this is saying the county shouldn't charge us for services they are supposed to provide anyway, which means they will become double charging us. Is that what it mean?

Interesting question, Council Member Chau. Let me frame it this way. State law independently has the requirement for a county to provide law enforcement services. a baseline level of law enforcement services. Separate from that, government code section 51-350 provides that a county may contract for services with a city. And if it were to do so, it may pass on only those overhead costs that arise because of those contracts. So to frame it a different way, let's assume that the county has not contracted with the city to provide law enforcement services. City approaches the county and says, hey, county, we're interested in contracting for law enforcement services from you. At that point, the county should be able to review their books and identify what are their additional costs they would incur because of that new contract. And it's only those costs that the government code allows the county to pass through to the cities.

Yeah, thank you. So basically, the county has the responsibility to prove that the overhead charge they are attributing to Cupertino are actually those extra as part of the contract. But then we don't think they have proven that with the information they are providing us, right?

So use the term proof. I mean, if it was in court, it would be either preponderance or evidence, potentially. That's not what we're viewing here. What we're viewing here is we've had an independent assessment performed by Vasquez and Company that identified out of the $11.9 million overhead costs, they identified 10.7 that does not seem like it should be allocated to these contracts the west side cities and so we're we're in the position where we're where we have sought the county's uh... response to that finding and we're still in the process of doing so uh... putting that aside you know we do have a contract before you tonight uh... to approve uh... with with uh... as i understand it with reservations regarding 51-350 that I think both parties acknowledge governs this contract. We may differ on what methodology relates to the cost as put to pass through, but we both recognize that the law here clearly governs it, and this contract that we're asked to sign simply reserves the city's right to continue to pursue that.

Okay, thank you. So another thing I would like to clarify is for the county to provide the basic level of law enforcement. They already get funding from a portion of our property tax so my understanding is Cupertino as a city we only get 7% it used to be 5 and now it's a little bit more 7% of our property tax But some other city gets 10% of their property tax meal Peters gets maybe 15% so It's then what then the result is is the city Cupertino actually paid more of our property tax percentage to the county then other cities For to get the same basic amount of service. Are we overpaying are we getting a amount we actually deserve based on the amount we are saying paying so have we looked I think this you guys have looked into that I wonder if there is you have any insight to share those are important

However, they may not be entirely related to what's at hand, right? That is an issue on its own whether the city is receiving its equitable services. However, I think this is, we're starting to deviate a little bit from the conversation on hand, but we are in the process of reviewing what those services look like and how the city can retain or get a greater share of those services in the future.

I think it's relevant because for the basic amount of service every city you This county provide to every city We might be paying more than other city That means we are already being overcharged for the basic service and now we are being overcharged again for the overhead provided away the contract so we are being overcharged the in both places. I think that's something we have to understand are we being overcharged.

I understand you're referencing is what would be considered mutual aid. Right. And so this is a basic service that one would receive from the county whether it is incorporated and has its own police department or not. And so there there may be an opportunity there to receive some sort of credit as part of in the future contract. However that's still part of the negotiations.

Thank you. Council Member Wong followed by Council Member Mohan.

Thank you, Mayor. I just want to make a few comments. Our sheriffs play an important part of our public safety, and we really thank them for our service. So thank you, gentlemen out there. You should not be put in this awkward position of dealing with funding shortfalls. due to the county's federal cost allocation methodology to CFR and not complying with the Gonsalves Act 51350, which is state law. I do want to clear up what the Gonsalves Act is. This or 51350 was designed so that citizens would not be double taxed on services provided by the county. You pay taxes once to the county and they have the overhead and then you pay again for that same overhead. That is the crux of the issue. An independent report commissioned by Vasquez, which was important, showed the amount of overhead that was passed on to the city. $51,350 does not allow for this. The amount of this overhead paid for over previous years has also not been calculated as well. This is why we engaged in an objective study, a data-driven study that would provide a starting point to work with the county. You as a taxpayer are already paying more because of the Measure A, which passed, which added a tax that's .625 cents more, taking many cities in the county to almost 10% in sales tax. This was the result of the county taking over three hospitals, losing up to $600 million. This Measure A money was promised to the sheriffs. And this is why we are here because it's not been available. So with the county struggling to pay its bills due to the shortfall, we need to make sure you are aware of why we are here. And as citizens, we should let our board of supervisors know this. Fiscal responsibility is important as we all face challenges with affordability. Now this agreement is not ideal, but we have to protect our citizens, even in protest. We appreciate having our police services contracted with the county for all these years. It's been a great partnership and hopefully we continue this great partnership going forward. All we seek is to be treated fairly and equitably as we protect our residents. This is fiduciary responsibility and we hope the county understands that we seek nothing more than compliance with the applicable laws and an opportunity to have this conversation in good faith.

Council Member Mohan.

Yeah, I had a question about Section 51-350 as well. And you did sort of allude to what I was looking for, Attorney Wu. So the point of contention is the amount of overhead that the county charges us. And since we have... since we are likely to not making that a sticking point for future negotiations. I'm assuming that in the course of negotiations that you will continue with the county, you and city manager, that this is something that you will both, that the city and the county will come to some agreement, because we can't be doing this year after year. you know, contesting and disagreeing about the overhead charges. So I'm assuming that there is one methodology that Vasquez prepared and that's that's not the only way and in my hope is that once and for all we decide what the appropriate methodology is for section 51 350 and then so we don't have to deal with this year after year is that something you had envisioned city manager

Thank you, Council Member Mohan. The agreement in front of Council is a long-term agreement. It's a five-year term. We were hopeful that we could have come to terms with some of the expenses and costs and methodology before we sign. BUT WE DID RUN OUT OF TIME AS WE ALL KNOW. SO NOW OUR HOPE IS THAT WE, AFTER COUNCIL, IF COUNCIL AUTHORIZES ME TO ENTER INTO A LONG-TERM AGREEMENT WITH THE COUNTY, THAT SOME OF THOSE DISCUSSIONS AND NEGOTIATIONS CAN AND SHOULD CONTINUE. BUT I'M HOPING WE DON'T DO THIS EXERCISE EVERY YEAR. BUT, YOU KNOW, CERTAINLY THERE'S STILL ROOM FOR NEGOTIATION AND DISCUSSION FOR SURE. THANK YOU.

ALL RIGHT.

I'll try to keep my comments brief. I've broadly aligned them with Council Member Mohan and to the city manager. I know that passions are really high and it's certainly understandable that we want to ensure that this contract is fair and the state has attempted to create a framework that affords that. That said, as I noted earlier, the county doesn't have to have a contract with us and so I just want to ask that we take as conciliatory an approach as we can given the situation. It's incredibly important that we continue to have good law enforcement services in the city and that we do what we can in order to not be taken advantage of. Thank you.

Okay, thank you, I appreciate all the comments. We are in a very difficult position. We wanted to have the contract issues resolved prior to signing. We could not negotiate an extension to do so, but we must provide a public safety. It's one of our core duties. So we already have a motion and a second on this item. I want to send our city manager off to the board with inspiration to have good faith negotiations. And with that, I want to quote Ted Lasso. You know what the happiest animal on earth is? It's a goldfish. You know why? Got a 10 second memory. Be a goldfish. And I'm hoping both parties can come to the table with good faith and be inspired to have good negotiations. I do see a hand raised from Vice Mayor.

Um, yeah, I'd like to also thank the sheriff's office for the excellent, excellent service that you guys have provided the Cupertino and the many people come move to Cupertino because it's safe. So we really appreciate all your service and your response, prompt response to a lot of residents. Thank you. Um, here's a question for a city manager or city attorney. I guess with the contract in front of us, there is room for us to continue to discuss, refine the overhead count going forward within the five years, hopefully more quickly that city and the county can continue this dialogue to define what exactly is overhead or not, right?

Yes, I view this as a first step. I mean, we're certainly always open to having friendly, amicable discussions with our partner of over 70 years. And while we, you know, recommending execution this contract with appropriate reservations of rights to the to respect to the law I'm hopeful that you know as our partnership continues that you know we can have a meaningful discussion as to which which costs are appropriate and complying with the law thank you

And with that we wish our city manager good luck be the goldfish and Madam City Clerk will you please set the vote panel and we will vote.

The motion carries unanimously.

Great, do we need a five minute break at this time? Okay, so we'll be taking a five minute break. Actually, we'll come back at eight o'clock straight up. Thank you.

Thank you. I'm gonna mute you. You're muted now.

Okay, our next item is item 15. It's receipt of the city council policy review final report and internal auditor recommendations for council policy update. Madam city manager, do we have a presentation?

Thank you, Mayor. We have a brief presentation. So this item presents the results of the city council policy review completed by the city's internal auditor, Baker Tilly, as part of the city work program. The review evaluated existing council policies and identified opportunities to improve clarity and consistency. STAFF IS SEEKING COUNCIL DIRECTION ON THE RECOMMENDATIONS AND WHICH ITEM COUNCIL WOULD LIKE TO BRING FORWARD FOR FUTURE CONSIDERATION. WITH THAT, I WILL TURN IT OVER TO CHELSEA RITCHIE, DIRECTOR AT BAKER TILLEY AND JONATHAN AROSCO, DIRECTOR OF FINANCE DEPARTMENT. DID I SAY YOUR NAME WRONG? I'M SORRY.

Sorry, it's actually Colleen.

You guys swapped people on me, sorry.

It's okay. We also have Annie Rose who will be presenting remotely. And again, this is part of the fiscal year 25-26 internal audit work program. So you'll be seeing the current year's 26-27 in the next item. And so again, Annie Rose will be presenting and I'll turn it over to her.

Wonderful. Thank you so much. And I'm actually going to share my screen before we get to the internal audit program to give you a sense of the scope for this project, if that works for you all. But thank you so much for having me here this evening. I'm Annie Rose Faber. I'm a director with the Baker Tilly team. So with that, I'm going to go ahead and share my screen. Can you see the report? Okay.

Yes, we see it.

Wonderful. Thank you so much.

So as mentioned, this project was really initiated to look at council related policies, the policies that govern the operations of council, thinking through the lens of knowing that these are very important tools for all of the council members and wanting to do a review to really understand how well are these meeting the needs? Are there any significant policy gaps? And the really good news as we were going through this review was that we did not identify any really significant full gap areas. So there was not a single policy that you were fully missing in this space, but we did identify some opportunities to strengthen some of your current policies. Before I get into some of the recommendations, a little bit of background here. The policies that we reviewed as part of this work included the Council Procedures Manual, so a lot of that detailed work that kind of dictate the operations of Council. We looked at the Code of Ethics and Conduct, the policies and guidelines on sister cities, friendship cities, and international delegation, the social media policy, and the technology use policy. I'm going to go through each one of those, but to give you a sense of some of the background work that went into this project, we began by initiating the project, confirming the scope, In terms of our fact finding, we conducted interviews with several council members, city leadership, and staff. We reviewed, obviously, all of your current documentation. And we also conducted peer research into similarly situated cities or cities that have council policy manuals or similar policies that we thought would be relevant for comparison purposes. So you'll see some of that peer information included in this report as well. In terms of our observations and recommendations, we started with the most broad observation where we're looking at your full policy environment. So what are all the pieces that you have in place to ensure that the policies are regularly reviewed, that they're up to date, that they are meaningful and useful and understood by everyone who is needing to use these policies? And what we noticed there were there were a couple opportunities to improve some of the overarching framework. First and foremost, making sure that there's a formalized policy review process. Typically, we recommend that all policies are reviewed at least every three to five years. The great news here is that all the policies that we looked at have been reviewed within the past five years in alignment with best practice. But what we noticed is a lot of times those reviews are happening in pretty organic ways where a single issue is brought up and then the policy is reviewed in relation to that rather than having a more proactive practice of just having a set standard of here's when we are reviewing these policies so that we can ensure that they are kept up to date. We also have some observations and recommendations here around making sure there is standardized training so that all members of Council and staff that interact with these policies have a good understanding of how to use these policies, as well as reviewing the policies holistically for enforcement procedures to make sure that when we say if this is important to accomplish, what happens if there is a policy violation. So these are overarching pieces that really inform the kind of infrastructure around these policies. Moving forward, most of the rest of the recommendations in this report are really focused on the specific policies themselves. So the second area that we looked at was the council policy manual. And this is a very robust document. There's been a lot of work that has been put into this tool in the last several years, which is fantastic to see. We did do a gap analysis against the peer city manuals to identify if there were areas that could be either made different. or areas that could be added. So you will see that there are some, we have a table in here that looks at some, we're calling them partial gaps and full gaps. And those are areas that might be missing from the current procedures manual, or might be there in part, but could be further strengthened. And so we have that in this table here. I will not go through each one of these, but we have included all of these as potential future additions for the next time that the policy manual is reviewed and updated. So you'll see a long list here of some of the areas that could be added, expanded, or clarified the next time this document is updated. The next policy area that we looked at was the code of ethics and conduct. And this is a very comprehensive policy. But again, there are a few areas that could really improve the clarity and administration of this policy. One of these items has to come back to the topic I raised earlier about the lack of enforcement mechanism or clarity around how some of these items may be enforced. So we have a recommendation on that front, as well as some things like anonymous reporting and making sure that it's clear how frequently training should be offered in this space. The sister city policy was a really interesting one as well. And I would say of all the policy areas that we looked at, this is our top priority for you all in terms of the one that we think would be most meaningful to have a review and update on sooner rather than later. Many of our other recommendations in this report are things like the council policy manual, where the next time you go to update it, we would recommend making these adjustments, but there isn't anything that is highly, highly urgent that we as soon as possible. The sister city policy is a little bit different because this is the area where we heard the most degree of confusion and the most degree of questions that came up around how should this policy be applied? What are some of the specifics within this policy? So we do think that on our recommendation here is to review and update this policy to improve that clarity, both for council members, but also most importantly for staff who are helping to support this policy and administer it. So here you will see in our recommendation, we have some of the very specific areas where we would recommend clearer definitions or guidance. So for example, who would qualify as a dignitary for the purpose of dignitary gifts? We mentioned dignitary gifts within the policy, but we don't clarify how we would determine whether somebody is or is not a dignitary. So that is just one example of some of the type of clarity that we would be hoping to see in this space. And then the last two policy areas are very similar to each other. The first is the social media policy. And what we found here is that the city has a broad social media policy that is in place and that has a lot of excellent information in it. However, it's primarily set up to provide staff level guidance. So it really does not address council member use or elected official member use of social media in a comprehensive manner. So our recommendation here would be to develop a standalone social media policy that really applies to elected and appointed officials specifically because there are different challenges, issues, and concerns that can come up in that space. very similarly to that in terms of the technology use policy the city has again a robust technology use policy but it is primarily focused at the staff level and again does not necessarily address those council members specific scenarios or needs here So similar to the social media policy, our recommendation here is to develop a standalone technology use policy to provide that guidance and make sure that there's clear and useful information that can be shared with elected and appointed officials in this space. So with that, that is the conclusion of my overview of some of the topics and recommendations from this report. And I will open it back up if there are any questions on any of the items that I just shared.

All right, thank you, Annie, and thank you also to Colleen and Director Orozco for the presentation and information. Are there any council clarifying questions at this time? I think I see a hand raised by Council Member Fruin, followed by Vice Mayor, followed by Council Member Mohan.

In the staff report, there was also reference to the audit committee's treatment of this document. And I was just curious if you could give us a synopsis of their recommendations and whence they came.

I can begin that conversation. Colleen or others, feel free to continue that as well. We did present this to the Audit Committee for their review, and we had good conversation, but most of that conversation was just clarifying some of the primary points within this report.

Vice Mayor? Hi, thank you for the report. So you mentioned that you have researched a few cities, Fremont and other cities. However, besides mentioning the list of cities you have researched, I didn't see comparison table, for example, social media policy, which cities have it, which cities don't have it, what's the content. I didn't see any kind of comparative analysis on these policies, so you are recommending a lot of gaps to add, but then I do wonder about all these cities that you have researched, do they have or have not those policies? Can you provide those information later?

Yes, absolutely. So just to clarify there, the primary place that you will see that gap analysis from the peer cities showing up is in that comparison of the city council, the policy manual itself. So that section has a lot of that comparative data, but we would absolutely be happy to follow up on the social media and technology policies as well. It is fairly common practice to have separate dedicated policies or sections of those policies that are specific to elected officials. That's a fairly common industry standard in the public sector space as well.

My question is not specific to social media. I would like to know if there is a table for each of the recommendations, whether any one of the cities have them, or the extent, the depth of their policy, because it takes a lot of staff time to create those and a lot of staff time also to follow them. So I do wonder the size of the city, how detailed they are for different type of cities. So if you can provide that information, that would be great. So can you provide that later? More information about what each city has?

Yes, we collected all of the sample policies from each of the peer cities so we could absolutely pass that along to staff so they can see all of what we gathered there.

Great, thank you. And then the report also mentioned the industry best practices. It's mentioned multiple times. But I do wonder, do you have a reference for what's considered the best practice? Or is best practices like one in 100 city has this policy X, then therefore everyone should have X. So I don't know, how do you determine what's best practice? Where do you draw that best practice from?

Some of our best practice sources are things like ICMA or other associations within the public sector that have specific recommendations in these areas. But many of these items are a little bit even broader than that. So for example, it's considered best practice across the industry to have a code of ethics and conduct. We wouldn't necessarily have a specific citation for that, but we'd be happy to share some of those other sources of information that we use for best practice benchmarking.

Yeah, that would be great if you can include the sources where you derive the best practice and how it's determined a certain practice is best. What's the assessment for best? How do you determine is something best because of what? What's the assessment criteria used to evaluate

Yes, we would be happy to follow up with those sources.

Because just reading the report, I guess I'm not getting full picture. I get a sense, seems like if someone has that, we should have it. But is that best practice? I am wondering about that. Yeah. Thank you.

Yes. Thank you so much. And just to clarify on that, just because we saw practice being used in a peer city, that does not necessarily mean that's part of our recommendations. When we're looking across at peers in particular, we're looking to see thematically, are there certain topics that are coming up in almost all peers? that's it might be an indicator point of this is something we should look at but always it's done within the context of the city of cupertino as well so we need to understand do you think that this is going to be something that's going to be useful for you as well so thank you for that clarification and you'll be sure to follow up with some of this i have time for one more question or you can come back to me you've got a couple seconds okay so one more question is i do wonder are there other

policies that other cities do have, and it's not on your recommendation list. I'm curious, those that you are not recommending, why are they? Yeah, thank you. If you can get back to us. If you can answer that right now, give some example, that would be helpful.

So as we were going through, there were not any standard policies that we identified as full gaps for the city. So that's great news. There is no policy that we would expect for you to have that you do not yet have in place. As I mentioned within the city council policy manual, that there are some topics in that area that we did flag as potential items that you could add to and that we would recommend adding to fill out and further enhance that manual. So you will see in certain areas, for example, making sure that there's clarity around saying sexual harassment prevention training is just one example where that is very common to have that outlined. within your council policy manual so we have some of those types of topics included there but we do are not recommending any additional new policies for the city okay thank you next council member mohan followed by council member wong

Firstly, one question. I thought we had a standalone policy for technology use.

We do have a tech use policy.

Yes. And there is a standalone policy for it. What we are recommending is a specific policy targeted just to council members or to elected officials or appointed officials. Your current standalone policy is really targeted towards staff. So that's the distinction that we're making there.

And if I may add, I think one of the other recommendations, apart from maybe having a distinct policy, is including maybe the differences, if any, within the existing policy.

Yes, that would certainly work as well.

I'm not sure I understood that you add some things to the existing policy correct if it's appropriate to not have a separate policy that's specific to Council just if it's nominal and change the difference between the Council and staff just highlighted in the existing policy.

Yeah, that would make sense. I'm not sure there should be two different sets of rules for staff and us. My second question. You indicated that the cysticity issue was the most confusing, that there were many questions that you were not able to resolve. So again, it's not so much a question as a comment. When you do these, I think there's some chance that we go into sort of micromanaging these programs. And as we all know, you know, public service, there's no black and white all the time and there's lots of gray areas. So I would just sort of caution you to make sure that we don't. For example, I'll give you an example. One of your questions was, who is a dignitary? And that's, I think, I'm not sure you should put that down in a policy. I think every organization has probably its own definition, and we should be open to some of these differences. That was my only comment. Thank you. Council Member Wong?

Yeah, just a quick question. Are there similar assessments available in other cities to look at, just to compare for the future? I assume these are all public documents. So I know that we're done with our assessment, but I'm kind of curious to see what others look like.

That's a great question. And I'm not thinking of one off the top of my head that I can point you to, but I can certainly find out and see if we can follow up.

Thank you very much. Thank you. Madam City Clerk, do we have members of the public who would like to comment on this item?

Mayor, I don't see any requests to speak in person in community hall, and I do not see any requests to speak virtually.

Okay, thank you. Do any of the council have a motion that they would like to make on this item at this time for deliberation purposes? I see a number of hands still raised. I don't know if those are relics. Vice Mayor? Are you ready to make a motion?

My thought is I would not want to make any motion. I think I agree with Councilmember Mohan. We are a small city. you can spend time to fine tune a lot of things. I think we fine tuned the sister city policy multiple times already and continuing to spend time on that. When you define something too specific, we might spend more time later to try to, yeah, I'm concerned of, the time we will spend to adopt these new policies. So I would want to think about it and get more information about how this kind of best practices and the comparative analysis with other cities. I hope to get more information before we make any motion on this.

All right. Did anyone else want to make a motion on this item? Council Member Fruitt?

I guess the simplest thing to do here, because a lot of the recommendations I think are quite good, would be to, given that we will have the council work program come up early in the new year, commit it to the city manager to suggest to us a table of items that could be added to the city work program. for our consideration in the new year.

Council Member Fruin, is that, are you suggesting from the list?

From the recommendations that are provided here, including the ones from the audit committee.

Sounds good, is that a motion? Yes.

Moore, second. So Council Member Fruin, this essentially will, I would say, more slowly move this project along.

Precisely.

Okay. Vice Mayor?

Vice Mayor, I think your microphone is off. I'm a little confused on I thought all the recommendations are by the consultant. Are they recommendations by? Because the recommendation seems to be by the report. Are there different recommendations from the audit committee?

Through the mayor, if I might? So in the staff report, there you go. You've spotted it.

Okay. So the Audit Committee unanimously accepted the report and identified two points of emphasis for council consideration. Whether additional guidance should be established regarding council member attendance at assigned committees and the regional bodies. That's one of the recommendation? I didn't see that. And whether existing policies should more clearly define procedures for disciplinary actions involving council members including admonishing, censure removal from committee assignments, and the investigation. So the current motion is to include these two for potential future work program item. Is that right?

I think, if I may, just for my own clarification, my understanding is that Council Member Froon is asking staff to take a look at these recommendations and then bring back a recommendation to Council. I THINK IF THAT IS THE MOTION, THEN I WOULD ALSO PERHAPS SUGGEST COUNCILMEMBER FRUEN TO, IF YOU WANTED TO INCLUDE THAT THERE IS NO FOLLOW-UP BY THE INTERNAL AUDITOR NECESSARY AND THAT YOU'RE ASKING STAFF TO LOOK AT THE RECOMMENDATIONS.

THAT'S CORRECT.

So let me try and clarify. I'm sharing the screen. So this part is the audit committee, two points from the audit committee, and that's part of the motion. And then on the next page here are the recommendation in the report, and that's not part of the motion. Is that right?

That is also part of the motion. So all of the recommendations, yeah. There's a whole menu of things here. I'd like to let staff have the opportunity to look at them, see what's implementable through the city work program. And as we go through that process in the new year, we as council can decide which things we want to prioritize and we want to work on depending upon what the time demands are on them.

Okay, so the staff will look at the two from the Audit Committee and six from the reports.

Correct.

Thank you.

I'm not seeing any further hands raised. Madam City Clerk, will you please set the vote panel and we will vote.

And Mayor, just to confirm, it was Fruin's motion and you seconded, correct? Correct. The motion carries unanimously.

All right, thank you. And next we move on to item 16, acceptance of the fiscal year 26-27 internal audit work program, fourth amendment to the agreement with Baker Tilly and if approved, the related budget modification. Madam City Manager, do we have a presentation?

Thank you, Mayor. So this item presents the proposed fiscal year 26-27 internal audit work program following review by the audit committee. Council will consider the recommended audit priorities and determine which projects to include in this year's work program. The item also includes the related agreement amendment and budget action needed to carry out the approved work. and i hope to get this right today for the presenters we have richard wong acting finance manager from the finance department team and then chelsea ritchie director at baker tilley who's going to provide the presentation and then we'll be available to answer questions

Thank you, Tina. Good evening, honorable Mayor Moore and council members. I will be introducing Chelsea Ritchie, director at Baker Tilly, to walk us through the proposed internal audit program. For a quick background, the audit committee annually reviews and makes an internal audit program recommendation for the current fiscal year, which is presented to council for approval. The audit committee reviewed the fiscal year 2026-27 program on July 27th and forwarded the council their recommendation. I will now turn it over to Chelsea to present the internal audit function and recommended projects.

Thank you so much, Richard. I have the audit committee presentation. I think it's important for us to go through this and see what the audit committee saw to help make your decisions. So I will be running through the same PowerPoint that the audit committee also saw. So first, I think it's really important to talk about what is the internal audit function at the city. So currently the city has retained Baker Tilly to serve as a designated internal auditor. And really what we focus on are five different areas for the city. And that's really where our projects are conducted. So looking at risks, internal controls, the efficiency and effectiveness, best practices, as well as compliance. Now it is important to know that all of our work is completed under appropriate industry standards, and we've given you some of those standards right there. So what is the role of an internal audit function? And I think it's really important to see this illustration because it shows that the internal audit function is an independent role outside of the governing body as well as management. We are constantly in collaboration and communication with both management and the governing body. And you'll remember this, when we do enterprise risk assessments, we are interviewing not only management, but we also want to talk to the governing body and get their understanding of current risks and issues that are going on with the city. It's also important to see in this illustration that we are different than your external auditors, your financial auditors, and you'll see them on the far right hand side of this illustration showing that they do not have those collaboration functions that an internal auditor does have. So going into what makes our internal audit program for each fiscal year, this is really put into three different categories. So one is those program inputs. And I just talked to you about one of those just a second ago, the enterprise risk assessment, and that's where we collaborate with many different departments within the city, as well as the governing body, talking about what risks are really prevalent or what issues are seen throughout the city. We also conduct interviews with employees and residents, and we also look at performance metrics. And then going into that second bucket, those opportunities, really looking at the risks, controls, compliance, and performance, that effective and efficiency of the city, as well as the third bucket, which is our tracking and reporting. So part of our function is looking at audit validations. So looking at the findings and recommendations and what the city has done with those. We also look at what types of fraud, waste, and abuse reports are coming in within the hotline. Is there some prevalent issue that needs to be looked at? And making sure that those corrective actions are happening as well as implementation and validation. Another really kind of way to look at this, this is another illustrative way to see how the internal audit program really pans out. So looking at those internal audit components that I just talked to you guys about, as well as the city functions. So what, you know, it's so much more than just accounting and financial functions. We're looking at public safety, risk management, processes, policies, and procedures as Annie Rose brought to you tonight. There's so many different components that make a good internal audit program. I wanted to highlight some of the things that Baker Tilly has done over the years as your internal auditor for the city. As you'll see, we have done multiple enterprise risk assessments. We've also done a citywide internal control review that we're currently finishing up from this past fiscal year. And we've done some very focused internal control projects as well. So thinking about grant management, that sort of thing. We've done five performance projects and we have looked at numerous policies and procedures. So over 147 policies have been reviewed and that's really looking at the city council review as well as the investment cash flow review policy this past fiscal year. But as you all remember, I spoke with you in a couple of fiscal years ago about looking at the city wide department policies and procedures. In our time with the, as the internal auditor, we've also delivered 79 recommendations. We've reviewed 39 ethic hotline reports and we're stat. We started establishing a validation program in fiscal year 26, and we've been able to validate that seven of those recommendations have been completed. This kind of shows you the breadth and depth of the departments that have been touched by the internal audit function. So looking at the different projects and the different departments, this kind of gives you an overview of where our time has been focused over the years. And I also would like to point out that at the bottom of this, you'll see those enterprise projects. So really looking holistically over the entire city and the departments, as well as looking at, you know, the governing body and having conversations with the governing body. So that brings us to what we are talking about today, and that is the potential fiscal year 26, 27 internal audit programs, projects, excuse me. As you'll see, we have eight listed here. I will go really quickly over those project descriptions, and obviously we'll open up the floor for further conversation afterwards. So the first one is over code enforcement 311 response time review. So this would be evaluating the city's code enforcement complaint response process, really focusing on response times, that staff availability and service delivery. The property tax review would be looking at an inventory of property tax revenues and comparing those to relevant legislation, as well as interlocal agreements, helping to identify opportunities for understanding, to improve understanding really of those tax revenue distributions, county service delivery, intergovernmental funding. The investment cash flow review would be going in and having an in-depth look and comparing investment and cash flow processes that the city currently exists in the city's current existing policy and making sure do those really align with the policies that are current under revision. The permitting efficiency study would be evaluating the efficiency and effectiveness of the city's permitting processes, identifying opportunities to help streamline workflows, reduce process times, improve customer service, and overall service delivery. A grant management follow-up audit. So this would be a follow-up on outstanding recommendations from the past grant management internal control review that was on consent agenda tonight, as well as assessing what progress the city has made to address those recommendations. The recruitment and retention study, really assessing the city's recruitment and retention practices and identifying opportunities for hiring efficiency, enhancing the city's ability to attract and retain qualified employees. now the last two on this list are kind of things that we have always recommend to incorporate you know regardless one is those recommendation validations so that's making sure the city is really following through with the recommendations of the internal audit program that you saw this past fiscal year that we had started on and then the last thing here program management that gives us an opportunity to meet with city management you know on a monthly basis as well as attend our audit committees and be with you here tonight lastly i just wanted to offer you some resources if you ever wanted to look at what best practices are out there for you know city internal audit programs public internal audit programs these are really great resources to be used and i'm going to hand it over to robert robert richard sorry richard thank you chelsea

The audit committee has grouped the recommended projects of the fiscal year 26-27 internal audit program into tiers, with tier one being the higher priority than tier two. The projects within the tiers are not placed in any order of priority. The baseline projects, recommendation validation and program management are required with costs subtotaling $30,000. In tier one, we have code enforcement, 311 response time review, permitting efficiency study, and recruitment and retention study with costs subtotaling 140,000. In tier two, we have property tax review, investment cash flow review, and grant management follow up with costs subtotaling 100,000. Grant total is 270,000. Council has the option to choose the tiers as presented or cherry pick individual projects. Based on the audit committee's unanimous recommendation, staff recommends that council accept the recommended internal audit work program as directed by council and adopt resolution approving budget modification, increasing appropriations necessary for the internal audit work program. This ends our presentation. Staff and Baker Tilly are available to answer any questions.

Right, thank you Richard and Chelsea for the presentation. I would like to ask a couple of questions. So I do serve on the audit committee and we broke the items into the tier one and tier two categories with the required items pretty much needing to pass through. I believe the budget amount is 120,000. So if we exceed that, then that would be the budget modification that we need to do for this project. So we already have 30,000 spoken for so that leaves us with 90,000 in the current budget that we would probably need to increase. So I have one question for Director Orozco regarding investment and cash flow review and probably a second one with regarding the property tax review. How necessary since we've We have a new cash flow policy. Do you feel that this needs to happen at this time?

Currently we we've decreased and as we can all see with the quarterly reports our cash balance within our general check and although it is interest bearing has decreased substantially. So from my perspective there is no need is more of a follow up whether council wants to pursue the the cash flow. However, the formal review that Baker Tilly is conducting will be presented at our next audit committee meeting. And so we can always revisit it, and you can see what the process is currently. And if there's any room for improvement, we can certainly implement it between now and over the course of the next year or so, and we can revisit this. as far as property taxes this is strictly entirely up to council whether you would want to pursue this at this time there are competing priorities both as we know the sheriff's contract from the finance side we are also implementing a new erp system with assistance from it and then yeah there's a number of projects but again at the end of the day council is up to your discretion whether you want to push pursue the property taxes

Okay, thank you, and so from my perspective, that's how it got on to tier two. And the grants management follow up, I don't know if someone would like to make a comment on how necessary you feel that is at this time, because I know with grants, having the grants applied for has been something that we've been working on, and there's been some changes internally with staff about that.

Yeah, I was gonna ask Jonathan if you can provide a little background on how this item got on the work plan for the internal audit, but I can provide context as we, you know, getting a grants review in person was a work program item. We have a new grants analyst in the city. Did I miss something? No, okay. So this is also something that can stay on tier two currently. And if council feels like this needs to become a work plan, it could become in the future, but I don't see an immediate need for this at this moment.

Thank you, city manager. And with regards to looking at tier one, I really appreciate the code enforcement and the permitting efficiency study. I'm wondering about the recruitment and retention study and what your opinion is about that.

This is, you know, this may be a good effort, Mayor. Cities generally are always looking for ideas on what we can do to make our processes stronger for recruitment and retention, although I will say, you know, our vacancy rates are significantly lower compared to last time we looked at. so that's good we're able to you know retain and recruit good smart people but it's uh it may be a worthy effort to just kind of look at if there are practices out there that the city needs to adopt if not now then you know kind of continuing that in the future okay thank you council member wong

Thank you, Mr. Mayor. Thanks for the proposals and the projects. Looking at this, most of the audit projects in Tier 1 are for customer-facing services. Tier 2 seems to be revenue-oriented. Why was that in the delineation?

AS THE AUDIT COMMITTEE WAS REVIEWING THIS, I BELIEVE THE REASON THAT THEY SEPARATED TIER 1 VERSUS TIER 2 WAS THE SENSE OF URGENCY. ALTHOUGH MOST OF THE ITEMS IN TIER 2 ARE REVENUE GENERATING OR THEY'RE EITHER CURRENTLY ADDRESSED OR IT'S NOT A TOP PRIORITY OR THERE'S OTHER COMPETING PRIORITIES THAT THEY WOULD PREFER PUTTING EITHER THE INTERNAL AUDITOR'S EFFORTS TOWARDS RATHER THAN THOSE AT THE TIME.

Thank you. And what's the expected payback per project, and was that factored into the prioritization?

I'm sorry, can you?

ROI, payback.

I don't think that was considered at the time.

Okay. Specifically. And what are the blended rates for the project, and how many hours are on each of these projects?

We did not go into that detail. We looked at it, at least from the audit perspective, at the total cost.

So it's just an estimate? Is it an outcome-based estimate, or is it time materials? Like, how are you guys building this out on the Baker Tilly side?

Yes, I can go into that a little bit. So these would be, you know, the to not exceed amount. So we bill based off of time and materials. You know, obviously, if something was to go under, we wouldn't bill you for that.

And do we publish blended rates? Is that something you talk about publicly? That's in the contract. That's in the contract? Yes. Okay. And do we have access to the contract before we approve those? Have we looked at these?

You all...

Okay. I was just curious. I didn't know what the blended rates are these days. So... And we also have the staff resumes for each project team that's going to be on there as well.

Um, so we provide that within our initial proposal. Um, we do not provide that. I mean, we have, you know, we, we do not provide that at this time.

Okay. No, I'm just asking. I mean, I used to run really big projects. Um, so I'm just kind of curious as to what the methodology was and if we're running the, you know, prioritization, it's a payback. I wasn't sure what the attributes were that were driving prioritization. So thank you.

Vice mayor.

Yeah, thank you. So I see that in, thank you for including the work program for the past few years. That's really helpful. I see that there were about three items each year, except last year there were four. So what was the annual budget approximately for those few years?

So last year, the annual budget was for $120,000. And I believe that in past fiscal years, it's always fluctuated, but it's been around $100,000.

So that was why we budgeted $120,000. I see. And then regarding the permit streamlining, I thought the Planning Commission has been working on permit streamlining. So how would this study be different from what they have been doing?

We can certainly work in tandem with them. This is possibly a different approach from the auditor's perspective. Should there be any findings from the planning or CDD's efforts, we can incorporate it as part of the internal auditors. But this was brought to the internal auditors to pursue.

So was this requested by the planning department?

No, this was not requested by the planning department. This was requested from the city manager's office.

So could the city manager provide some insight?

Yeah, I think the permit efficiency study, it is a work program item to streamline the permitting currently. And there are solutions we're looking at, like certain AI models and other things. With this particular item, with the internal audit, I think the hope was to understand some of the internal processes and really look at the list of our permits, possibly look at the times and what may be causing the perceived delay that we hear often.

So we might be doing an audit of the current, the time it takes for different permit. So this planning commission has been doing some permit streamlining, but there was no study done. to provide them information when they, that's how they have been doing that. So we didn't do study for those?

The Planning Commission, Ben is not here right now, but my understanding is Planning Commission did hear that item once and they directed staff to, or asked staff to go and do a little bit more community outreach. So there's a survey that's being developed that's going to be sent out. This is more of an internal audit work.

So their work was, there has been no data collected to inform Planning Commission where streamlining, how that might be, it might help.

There's going to be some data that's going to be collected. It's going to return to Planning Commission, that item.

So the staff is already collecting some data.

We have some data. We have not actually looked at it and done any of the audit work.

So the intent of this item is to go deeper with the help of Baker and Thiele to analyze those data.

Yes.

And perhaps also look in new technology that may help streamline the process.

Yeah, the work program is streamline the permitting for when residents come in and they're pulling permits and what solutions might be out there that the city can adopt, including AI, which we're already looking into. The internal audit would be more looking at our processes and the exhaustive list of permits that we process and where that is.

Okay, great. I kind of feel that these are all necessary, but my concern is if I look at the items from the past year, they're mostly financial items, except maybe a library construction audit. And the tier one, two of the items would fall on planning department, which is already short-staffed. So my concern would be, with the planning department? Because it's not only the auditing. After each auditing, there will be a whole bunch of recommendation we need to implement. It takes time to absorb those. So do we have the capacity to do two studies under planning commission and then would they be able to absorb that? Or should we maybe do it in two separate years? That's what I'm wondering.

I think we can certainly... I do think they are all needed. All needed, yeah. But we don't have to take everything on this year.

So it could be pick one for this year, one for the following year?

It's up to council.

I don't know. I don't understand the staff capacity, so that's why it's a question for the city manager. If you think the planning department can handle it, all the better. So you think they can do both projects?

For clarification, they do not need to overlap. They can be scheduled staggered. So one could commence, say, tomorrow. Well, I wouldn't say as early as tomorrow, but over the course of the next month or two, right? If it takes a couple months to complete it, shortly afterwards we can commence the second one. So it doesn't need to be essentially overlap where we're burdening staff on both fronts.

I know, but my point is besides the study, they also need to implement the recommendation. So if you are making the recommendation and then they couldn't implement it within a year, after a year maybe that data is outdated. So maybe then probably we should wait on the study. That's what I'm wondering. It's not just the time to audit, the time for planning staff to absorb the work to implement the recommendation.

So the implementation doesn't need to, again, does not need to happen immediately following the end of the report. It then follows, once presented to council, it would, well, first it would be presented to the audit committee and then followed to the council, right? So there's some lead up time there. In addition to that, it then falls into, unless council decides otherwise, it would fall into the validation process. And so over a course of time, the Baker Tilly will review any recommendations and can essentially check that off. Has these recommendations been addressed? So it can take as little as a couple months if it's fairly simple to implement, or a year or two depending on the need, or if it's a new solution that needs to be implemented that takes some time to implement we would then it would essentially that would kind of drag on until it's been completed and so and as you can see was part of one of the work plans and it was the baseline or the requirements is the validation process so that's something that the Baker Tilly conducts every year and so they'll continue to monitor this until closed and those reports are provided to the audit committee on a quarterly basis

If I may add one last thing. I do think if we take on both, you know, one is primarily going to be overseen by the internal auditors, and so it actually might complement nicely with the work program that's been going on, which is streamlined. I think it could work, and we will, of course, I will manage the staff load, but it could complement what we're doing with the work program.

Thank you.

I'm sorry, you're about three minutes negative. So I'm not sure about these requests to speak here. It's a bit out of order. Council Member Wong?

Thanks. I just had some follow-up questions that just got me thinking. And this is to Dr. Asco. The Institute of Auditors recommends a certain percentage of budget to spend on internal audit projects, and the Association of Local Governments recommends somewhere between 0.2 to 0.5 percent. Are we within range? Are we spending enough? Are we not spending enough? Just to get an overall view.

If you give me a quick second, I can run the numbers. However, if you want to move on to your next question.

Yeah, just move on to the next question. Come back when you're ready. I don't have a second question, but I could talk for fun if you want. No, I like the projects, and I think that they're important. I just don't know how to prioritize them in the back of my mind. I don't know how the audit committee prioritized them because I didn't read the minutes from them. And I normally would look at a bunch of contracts and try to understand how we get the right rates, the right staffing level, and where you are. But I'm assuming you guys all did that, so...

Well, in the past, we've had a set of projects already kind of preselected for us. And so this time, we got the full batch. And so our strategy with it was, well, we've got the ones that have to happen, that $30,000, and then we batched them into the Tier 1 and Tier 2. And really, Tier 2, the investment and cash flow review, because we adjust... initiated the cash flow policy so that we didn't have that account growing so much that we automatically would pull the money out and keep about a $5 million balance, but it is interest bearing, and so that we're really making an effort to move the funds into a higher yielding account. With the property tax review, like it was said, with regards to the sheriff's contract, We've got a lot of other things going on.

I do believe it's important to have a strong internal audit program. I just don't know how we are benchmarked compared in terms of what we're spending versus what we should be spending. And we might have an answer already. So I'm just buying you some time. Keep going.

So assuming we move forward with the requirements of the about $30,000 of ongoing internal audit functions as well as the Tier 1, which equates to $170,000, IF YOU FEED THAT INTO THE GENERAL FUNDS, APPROXIMATELY $110 MILLION BUDGET, YOU'RE LOOKING AT .15% OF THE GENERAL FUNDS BUDGET.

OKAY. THANKS.

COUNCILMEMBER MOHAN. AND THEN WE'RE GOING TO GO OUT TO SEE IF THERE'S PUBLIC COMMENT.

I CAN HOLD MY COMMENTS TILL LATER.

MADAM CITY CLERK, DO WE HAVE MEMBERS OF THE PUBLIC WHO WOULD LIKE TO SPEAK ON THIS ITEM?

Mayor, I don't see any requests to speak here in person in community hall, and there are no requests to speak virtually. Okay. Council Member Mohan?

So I wanted to take a stab at these projects. I think it's really helpful to see the tier one and tier two, the projects divided into tier one, tier two. The code enforcement and permitting efficiency studies, I mean, this has sort of become quite a priority for us. We hear lots of... citizen complaints and comments about code enforcement as well as the permitting efficiency. And I think it's well worth our time, effort, and money to be spending on a study of these two issues. I am less convinced about recruitment and retention. City Manager, you said that the percentage, we were at a healthy percentage of what? Vacancy rate. And so I was thinking that we could just probably put that off to next year. Grants management, we just had an item on the consent calendar about grants management and the addition of a grants analyst. So I think we should give that some time to work itself out. And Mayor, you spoke about the investment review as well as the property tax review, both of which we don't need to do right away. So my recommendation would be go with the 30,000, which is sort of like a fixed cost. and the first two items in tier one. If that's your motion, I second it.

And that would include that we would adopt resolution 26099, approving the budget modification, adding $5,000 to the budget. Okay. So that is your motion? That is my motion. And I second it. Vice Mayor?

I was hoping to have a motion that code enforcement and permit efficiency study and the property tax review. But this will mean we have to allocate 40,000 extra than the already budgeted 120,000. The reason is I think the question of are we paying, getting to less property tax? And I think we are one of the four cities with almost the lowest property tax in the state. But then we never can put finger on that. I think with a good study, it's a good investment for the city to understand our position and maybe that will help us strengthen our position to get more revenue or change the current status quo. So I think that's good. information to have and especially with the sheriff contract our negotiation with the county if we have more understanding with the difference in terms of property tax each city pays to the county and how much we are getting back that might help us in our negotiation so That's why I'm thinking maybe that's a, I don't like to allocate extra budget, but then I think it might be a money well spent. I would like to hear what council member thought. But first let me have a question for the city manager. Just want to confirm regarding the recruitment and retention study. So you said the vacancy rate is low now. But in the past one or two years, how has been the experience in terms of recruiting and retention? So has the experience been Manageable, positive?

Vice Mayor, I'll have to kind of think about that question because as you know, with the transition of human resources into the city manager's office, we're still trying to understand how things were a couple years ago as opposed to where we are and where we want to be. I'm still kind of forming that vision. I will say things seem to be in a good place, but this item was on the work plan tentatively at some point, and so I thought just as an organization and like every other organization, there always is more that we could be doing to learn about best practices or to see, from my perspective as city manager, um kind of getting deeper into the organization and learning about this whole recruitment and retention and what the experience is um other than just what i'm seeing from my perspective so um i i don't have all the answers for you but you know that's something that i'm hoping to find um if we don't include this study in the work program you think you might still still be able to continue to

to grow, to have more understanding about this maybe. So it's not urgent, right? Maybe it could be the following year.

It's not time sensitive, if that's what you're asking me, but it's important work. But ultimately, as it's council's decision, if you want to have the internal auditor look into this for the city now as opposed to in the future, but I do believe it's important work. Okay, thank you.

Council Member Wong?

Yeah, I'm happy to support what we have in terms of what was proposed. But if someone in the audience or someone on the staff can tell me that any of the tier two items are revenue neutral or revenue positive, I'm happy to add those into the mix as well as a friendly amendment. But if we don't know that fact right now, then that's fine. Because if you told me grant management follow up would lead to us getting like a million dollars more in grants. Oh, yeah, let's go do that now. And if you told me that property tax review could actually help us drive revenue by 2%, 3%, let's go do that now. And if the investment cash flow review said we're too conservative in our investments, which I know is true, but it's too conservative in our investments, then you could drive another $200,000, $300,000 in revenue. Let's go do it now. But we don't have ROI numbers on the back end is really my point.

Seeing no further hands raised, Madam City Clerk, will you please set the vote panel and we will vote.

The motion carries unanimously. Okay, thank you.

And thank you, Richard and Chelsea. Thank you. So our next items on the agenda are informational, which brings us to our final item that this September 15th, 2026 regular meeting of the Cupertino City Council is adjourned.