MINUTES OF THE CITY COUNCIL

San José, california tuesday, January 14, 2003

The Council of the City of San José convened in Regular Session at 9:30 a.m. in Council Chambers at City Hall

Present: Council Members - Chirco, Reed, Campos, Williams, Cortese, Gonzales,

Chavez, Yeager, LeZotte, Gregory.

Absent: Council Members - Dando (Excused)

Upon motion unanimously adopted, the City Council recessed to Closed Session at 9:35 a.m. in Room 600 to (A) Confer with Legal Counsel to discuss anticipated litigation pursuant to subsection (b) of Section 54956.9 of the Government Code in one matter involving significant exposure to litigation; and (B) Public employment/public employee appointment pursuant to Government Code Section 54957; Title: Director of Employee Services

By unanimous consent, Council reconvened from Closed Session and recessed at 11:00 a.m. and reconvened at 1:37 p.m. in Council Chambers, City Hall.

Present: Council Members - Chirco, Reed, Campos, Williams, Cortese, Gonzales,

Dando, Chavez, Yeager, LeZotte, Gregory.

Absent: Council Members - None.

Invocation

Pastor Steve Steele, Immanuel Presbyterian Church, delivered the Invocation. (District 1)

Pledge of Allegiance

Mayor Gonzales led the Pledge of Allegiance.

Mayor Gonzales introduced newly elected Council Members: Judy Chirco, representing District 9, and Terry Gregory, representing District 7, and welcomed them to the City Council.

Orders of the Day

Upon motion by Vice Mayor Dando, seconded by Council Member Chavez, and unanimously carried, the Orders of the Day and the Amended Agenda were approved. Vote: 11-0-0-0.

City Manager Del D. Borgsdorf introduced Mark Danaj, the new Director of Employee Services and welcomed him to the City, and thanked Deputy City Manager Kay Winer for her outstanding service as Acting Director of the Department. Mr. Danaj thanked the Mayor and Council for the opportunity to serve the employees and departments of the City.

CEREMONIAL ITEMS

1.1 Presentation of plaques to Youth Commission members: Melvin Cabebe for 1 year 1 month service, to Jen Hernandez for 2 years 10 months service, to Justin Imamura for 2 years 10 months service, to Albert Leung for 1 year 1 month service, to Rachel Stone for 2 years 10 months service, and to Stephanie Tsai for 2 years 4 months service. (Mayor)

(Deferred from 12/17/02 – Item 1.2)

Documents Filed: None.

Discussion/Action: Mayor Gonzales presented plaques to Youth Commission Members Jen Hernandez and Justin Imamura, and thanked them for their services to the community. Plaques will be sent to Melvin Cabebe, Albert Leung, Rachel Stone and Stephanie Tsai, who were unable to be present.

1.2 Presentation of plaque to Melinda Hoppe for 1 year 6 months service on the Library Commission. (Mayor)

Documents Filed: None.

Discussion/Action: Mayor Gonzales presented a plaque to Melinda Hoppe for her service on the Library Commission.

1.3 Presentation of a commendation to the California State Automobile Association for their donation to the City's Street Smarts programs. (Campos)

(Rules in Lieu referral 1/8/03)

Documents Filed: None.

Discussion/Action: Mayor Gonzales was joined by Council Member Campos for presentation of a commendation to Merry Banks, Traffic Safety Senior Manager, of the San Francisco headquarters of the AAA and to Geraldine Hall, Manager of San José District Office of the Northern California Offices of AAA in appreciation of their generous donation to the City’s “StreetSmart” program. Ms. Hall presented a check for $10,000 to Mayor Gonzales and commended the City for its leadership in pedestrian safety education.

1.4 Presentation of plaques to James Crownover, Jr. for 8 years service on the Council Salary Setting Commission, to Anna Liza Navarro for 4 years service on the Disadvantaged Business Development Commission, to Raj Budwal for 1 year 2 months service on the Disadvantaged Business Development Commission, and to Dominador Valdez for 5 years service on the Mobile Home Advisory Commission. (Mayor)

(Rules in Lieu referral 1/8/03)

Documents Filed: None.

Discussion/Action: Mayor Gonzales presented plaques to James Crownover, Jr. for service on the Council Salary Setting Commission, Anna Liza Navarro for service on the Disadvantaged Business Development Commission, and Dominador Valdez for service on the Mobile Home Advisory Commission. A plaque will be sent to Raj Budwal who was unable to attend.

1.5 Presentation of a check from the SBC Pacific Bell Golf Classic 2002 to Eagles at Rancho del Pueblo, youth golf program. (Mayor)

(Rules in Lieu referral 1/8/03)

Documents Filed: None.

Discussion/Action: Mayor Gonzales called to the podium Victor Arranaga, Jr., Director of External Affairs, and Nathan Pascucci, Alexia Cox-Harris, Alesha Cox-Harris, for SBC. Victor Arranaga presented Mayor Gonzales with a ceremonial check for $53,000 on behalf of the San José Sports Authority, for the Eagles at Rancho del PuebloYouth Golf Program. Mayor Gonzales accepted the donation and thanked SBC for their generous support of youth sports.

1.6 Presentation of a commendation to Tom Bradley and Firstwave Events for their continuing excellence in producing an annual three-day celebration of fitness in San José, which culminates with the running of the Silicon Valley Marathon. (Yeager)

(Rules in Lieu referral 1/8/03)

Documents Filed: None.

Discussion/Action: Council Member Yeager joined Mayor Gonzales at the podium for presentation of a commendation to Tom Bradley, Executive Director of Firstwave Events for their efforts in supporting fitness in the Silicon Valley Marathon. Mr. Bradley thanked the Mayor and City Council for their recognition.

CONSENT CALENDAR

2.2 Final adoption of ordinances:

(a) ORD. NO. 26800 – Rezones certain real property situated on the east side of S. First Street, approximately 210 feet north of E. Virginia Street to CP Pedestrian Commercial Zoning District. C 02-070

Documents Filed: Proof of Publication of the title of Ordinance No. 26800, dated December 27, 2002, submitted by the City Clerk.

Discussion/Action: William J. Garbett spoke against the proposed action. Ordinance No. 26800 was adopted. Vote: 11-0-0-0.

(b) ORD. NO. 26801 - Rezones certain real property situated on the south side of Tully Road, approximately 50 feet west of Senter Road, to A (PD) Planned Development Zoning District. PDC 02-040

Documents Filed: Proof of Publication of the title of Ordinance No. 26801, dated December 27, 2002, submitted by the City Clerk.

Discussion/Action: Ordinance No. 26801 was adopted. Vote: 11-0-0-0.

(c) ORD. NO. 26802 - Rezones certain real property situated on the east side of Bonita Avenue, approximately 150 feet northerly of Herald Avenue, to A (PD) Planned Development Zoning District. PDC 02-056

Ordinance No. 26802 adopted.

Documents Filed: Proof of Publication of the title of Ordinance No. 26802, dated December 27, 2002, submitted by the City Clerk.

Discussion/Action: Ordinance No. 26802 was adopted. Vote: 11-0-0-0.

(d) ORD. NO. 26803 - Rezones certain real property situated on the northeasterly corner of Remillard Court and Story Road, to IP(PD) Planned Development District. PDC 02-090

Documents Filed: Proof of Publication of the title of Ordinance No. 26803, dated December 27, 2002, submitted by the City Clerk.

Discussion/Action: Ordinance No. 26803 was adopted. Vote: 11-0-0-0.

(e) ORD. NO. 26804 - Prezones certain real property situated northerly of the intersection of Springbrook Avenue and Canyon Ridge Drive to A(PD) Planned Development Zoning District. PDC 01-12-102

Documents Filed: Proof of Publication of the title of Ordinance No. 26804, dated December 27, 2002, submitted by the City Clerk.

Discussion/Action: Ordinance No. 26804 was adopted. Vote: 11-0-0-0.

(f) ORD. NO. 26805 - Rezones certain real property situated on the northwest corner of Bassett Street and North First Street to A(PD) Planned Development Zoning District. PDC 02-084

Documents Filed: Proof of Publication of the title of Ordinance No. 26805, dated December 27, 2002, submitted by the City Clerk.

Discussion/Action: Ordinance No. 26805 was adopted. Vote: 10-0-0-1. Disqualified: Gonzales.

(g) ORD. NO. 26806 - Rezones certain real property situated on the northeasterly corner of The Alameda and Morrison Avenue to A(PD) Planned Development Zoning District. PDC 01-060

Documents Filed: Proof of Publication of the title of Ordinance No. 26806, dated December 27, 2002, submitted by the City Clerk.

Discussion/Action: Ordinance No. 26806 was adopted. Vote: 11-0-0-0.

(h) ORD. NO. 26807 - Rezones certain real property situated on the easterly side of US 101, northerly of Metcalf Road to A(PD) Planned Development Zoning District. PDC 01-10-098

Documents Filed: Proof of Publication of the title of Ordinance No. 26807, dated December 27, 2002, submitted by the City Clerk.

Discussion/Action: Ordinance No. 26807 was adopted. Vote: 11-0-0-0.

2.3 Report on bids and award of contract for the Norman Y. Mineta San José International Airport - Modular Parking Office Project to the low bidder, Design Space Modular Buildings, Inc. in the amount of $122,082, and approval of a contingency in the amount of $12,000. CEQA: Resolution No. 67380, PP02-05-106. (Public Works)

(Deferred from 12/17/02 – Item 2.17)

Documents Filed: None.

Discussion/Action: This item was deferred to January 21, 2003.

2.4 (a) It is recommended that Council take the following actions:

Report on bids and award of contract for the Southside Community Center Tot Lot Renovation Rebid Project to the lowest responsive bidder, HRB Construction, Inc., for the base bid only in the amount of $183,688, and approval of a contingency in the amount of $9,000.CEQA: Exempt, PP02-02-028.

(b) Adoption of the following appropriation ordinance amendments in Council District 2 Construction & Conveyance Tax Fund (Fund 378):

(1) Increase the Southside Community Center Tot Lot Renovation Rebid Project by $420,000; and

(2) Decrease the Ending Fund Balance by $420,000.

CEQA: Exempt, PP02-02-028. Council District 2. (Public Works)

(Deferred from 12/17/02 – Item 2.18)

Documents Filed: (1) Memorandum from Public Works Director Katy Allen and Budget Director Larry D. Lisenbee, dated January 8, 2003, recommending award of said contract, with related contingency, to the low responsive bidder, HRB Construction, Inc., and adoption of said appropriation ordinance amendments. (2) Memorandum from Public Works Director Katy Allen, dated November 25, 2002 recommending Southside Community Center Tot Lot Renovation Rebid project to the low bidder, and approval of a 5 percent contingency.

Discussion/Action: The award of said contract with related contingencies to the lowest responsive bidder, HRB Construction, Inc., was approved and Ordinance No. 26811, entitled: “An Ordinance of the City of San José Amending Ordinance No. 26674 to Appropriate Moneys in the District 2 Construction and Conveyance Tax Fund for the Southside Community Center Tot Lot Renovation Project; and Providing That This Ordinance Shall Become Effective Immediately Upon Adoption”, was adopted. Vote: 11-0-0-0.

2.7 Approval of the following re-appointments to the Board of Directors of The Silicon Valley Pollution Prevention Center:

(a) Business/Industrial Representative: Robin Brack, Director, Pollution Prevention Initiatives, IBM Corporation, City of San José, for a term from January 1, 2003 to December 31, 2005; and

(b) Government Representative: Robin G. Saunders, Director of Water and Sewer Utilities, City of Santa Clara, for a term from January 1, 2003 to December 31, 2005.

CEQA: Not a Project. (Environmental Services)

Documents Filed: Memorandum from Environmental Services Director, Carl W. Mosher, dated December 4, 2002, recommending approval of reappointments to the Board of Directors of The Silicon Valley Pollution Prevention Center.

Discussion/Action: The reappointments of Robin Brack and Robin G. Saunders to the Board of Directors of The Silicon Valley Pollution Prevention Center were approved. Vote: 11-0-0-0.

2.8 Approval of a first amendment to the agreement with Camp Dresser & McKee (CDM) for the Fiscal Year 2000-2001 Capital Improvement Program engineering design support services, modifying the scope of services and increasing compensation by $141,000, from $849,000 to a total agreement amount not to exceed $990,000. CEQA: Not a Project. (Environmental Services)

Documents Filed: (1) Memorandum from Environmental Services Director, Carl W. Mosher, dated December 4, 2002, recommending approval of a first amendment to said agreement with Camp Dresser & McKee. (2) Letter from the Treatment Plant Advisory Committee dated January 9, 2003, recommending City Council approval of a first amendment to said agreement.

Discussion/Action: The first amendment to said agreement with Camp Dresser & McKee was approved and its execution authorized. Vote: 11-0-0-0.

2.9 Approval of award of open purchase orders for supplies, materials, equipment, and services for FY 2002-2003 #20, and authorization for the Director of General Services to execute the purchase orders. CEQA: Not a Project. (General Services)

Documents Filed: Memorandum from General Services Department Director, Jose Obregon, dated December 4, 2002, recommending approval of said purchase order list #20.

Discussion/Action: The award of open purchase orders FY 2002-2003 List #20 was approved and authorization for the Director of General Services to execute the purchase orders was approved. Vote: 11-0-0-0.

2.10 Approval to reject all proposals for a fully integrated safety and medical record management system. CEQA: Not a Project. (General Services)

Documents Filed: None.

Discussion/Action: This Item was dropped from the agenda.

2.11 Report on bids and award of contract for the Mise Park Restroom Replacement Project to the low bidder, Beacon Construction, Inc., in the amount of $184,250, and approval of a contingency in the amount of $9,750. CEQA: Exempt, PP02-10-297. Council District 1. (Public Works)

Documents Filed: Memoranda from Director of Public Works Director Katy Allen, dated January 7, 2003 and December 4, 2002, recommending award of said contract, with related contingency, to the lowest bidder, Beacon Construction, Inc.

Discussion/Action: The award of said contract, with related contingency, to the lowest bidder, Beacon Construction, Inc., was approved and its execution authorized. Vote: 11-0-0-0.

2.12 Adoption of a resolution authorizing the City Manager to execute an agreement with Shapell Industries, Inc. for the exchange of real properties located within the Evergreen Specific Plan Area in connection with Fowler Creek Park, with a deed recordation date no later than January 31, 2003. CEQA: Resolution No. 63179. (City Attorney’s Office)

(Rules in Lieu referral 1/8/03)

Documents Filed: Memorandum from City Attorney Richard Doyle, dated January 9, 2003, recommending adoption of said resolution.

Discussion/Action: Resolution No. 71379, entitled: “A Resolution of the Council of the City of San José Authorizing the City Manager to Execute an Agreement With Shapell Industries, Inc. for the Exchange of Real Properties Located Within the Evergreen Specific Plan Area in Connection With Fowler Creek Park With a Deed Recordation Date No Later Than January 31, 2003”, was adopted. Vote: 11-0-0-0.

END OF CONSENT CALENDAR

2.5 Approval of the Mayor's (CLEO) re-appointment of current members to the Workforce Investment Board of Directors for a second two-year term. (Mayor)

(Deferred from 12/10/02 – Item 2.6 and 12/17/02 – Item 2.27)

Documents Filed: Memorandum from Mayor Gonzales, dated January 10, 2003, recommending Council approval of reappointment of current members to a second two-year term on the Workforce Investment Board of Directors: Rose Amador, Center for Training and Careers, Leslye Corsiglia, City of San José Housing Department, Barry Cristina, San José Distribution Services, Cres Ebarle, Job Corps, Phaedra Ellis-Lamkins, South Bay Labor Council, Jack Estill, Appian Engineering, Geraldine Evans, San José Evergreen Community College District, Marchelle Fox, West Valley College, Elizabeth Freeman, IBM, Richard Friberg, Metropolitan Adult Education, Peter R. Herschberger, San José Mercury News, Cyril Isnard, Fairmont San José, Arjun Israni, National Semiconductor, Paul Krutko, City of San José Office of Economic Development, Sue LaForge, National Council on Aging, Arthur M. Lopez, State of California Department of Rehabilitation, D.K. Lu, Lu Realty, Frank Martin, Valley Transportation Authority, Brenda Moore, Macy’s Inc., Richard J. Nadzam, Nadzam & Associates, Mark Novak, San José State University, Cliff O’Connor, Santa Clara County Social Services Agency, Joseph Parisi, Therma Corporation, Sergio Perez, Advantest America, Inc, Steve Preminger, South Bay Labor Council, Paul Robichaux, NewEra Software, Inc, Karen Rudolph, Rudolph & Sletton, Rashad Said, Career Dynamics International, Consuelo Santos-Killins, Silicon Valley Economic Development Corp, Hermalinda Sapien, Center for Employment & Training, Chuck Steligo, Employment Development Department, Neil Struthers, Building and Construction Trades Union, Tom Suchevits, FedEx Freight, Inc., Dave Thornton, Metropolitan YMCA, Tina Tovar, Recruiter Edge Staffing, and Tom Tran, Citation Press.

Discussion/Action: Council Member Reed expressed concerns due to complaints that he has received that the City has somehow left behind the hard to serve, the Spanish speaking, and the farm workers, and suggested that both Council and the Workforce Investment Board be sensitive of that issue. Council Member Chavez expressed the same concerns about how services will be provided to the community. Director of Economic Development Paul Krutko responded that the Office of Economic Development’s (OED) prime focus is to provide core services that quickly help people obtain employment and the main thrust of the program is to respond to a significant increase in needs for a variety of services within the community. He stated the program has a series of elements that are mandated basic levels of service and that employment assistance is provided to clients classified as Hard-To-Serve through a supplemental program called Intensive Services, which addresses employment barrier issues. Upon motion by Council Member Reed, seconded by Council Member Cortese, and unanimously carried, the Mayor’s recommendations for re-appointment of current members to the Workforce Investment Board of Directors for a second two-year term was approved. Vote 11-0-0-0.

2.6 Adoption of a resolution authorizing the City Manager to negotiate and execute a continuation agreement with Zucker Systems, in an amount not to exceed $7,500, for the study of the City’s development services, increasing the total maximum amount of the agreement from $215,050 to $222,550, and extending the term of the agreement from August 31, 2002 to March 31, 2003. CEQA: Not a Project. (City Manager's Office)

Documents Filed: Memorandum from Director of Planning, Building and Code Enforcement Stephen M. Haase, dated December 12, 2002, recommending adoption of said resolution.

Discussion/Action: Council Member Reed asked whether the Redevelopment Agency is included in the work that Zucker Systems would do or if this is only the City side of the report. Director, Planning, Building, and Code Enforcement Stephen M. Haase replied that City Staff is working to coordinate efforts with the Redevelopment Agency, and Zucker will work with stakeholders and review high priority implementation items. Council Member Reed recommended that the incoming chair of the new “Making Government Work Better Committee” include this item on its work plan for follow-up. Upon motion by Council Member Reed, seconded by Council Member Cortese, Resolution No. 71378, entitled: “A Resolution of the Council of the City of San José Authorizing the City Manager to Negotiate and Execute a Continuation Agreement with Zucker Systems for the Study of the City’s Development Services, Extending the Term Through March 31, 2003, and Increasing Compensation by $7,500 for a Total Amount not to Exceed $222,550”, was adopted. Vote 11-0-0-0.

STRATEGIC SUPPORT

3.3 Report of the Finance and Infrastructure Committee – December 11, 2002

Council Member Dando, Chair

Documents Filed: Finance and Infrastructure Committee Report dated December 11, 2002.

(a) Consent Items

(1) Monthly Investment Report for October 2002. Attachment: Memorandum from Director of Finance Director Scott P. Johnson dated November 21, 2002, submitting said report.

(2) Sales and Business Tax for Quarter Ending September 2002. Attachment: Memorandum from City Auditor Gerald A. Silva, dated November 15, 2002, dated November15, 2002, transmitting said report.

(3) October Monthly Report. Attachment: Memorandum from City Auditor Gerald A. Silva, dated November 29, 2002, transmitting said report.

The Committee accepted the Consent Items.

(b) Monthly Financial Report for October 2002. Attachment: Memorandum from Budget Director Larry D. Lisenbee, dated December 3, 2002, transmitting said report.

The Committee accepted the Staff report.

(c) Quarterly Report on the Directors of Housing and Finance’s Delegation of Authority. Attachment: Memorandum from Housing Director Leslye Corsiglia and Finance Director Scott P. Johnson, dated December 2, 2002, transmitting said report.

The Committee accepted the Staff report.

(d) Annual Debt Report. Attachment: (1) Memorandum from Finance Director Scott P. Johnson, dated December 4, 2002, transmitting said report. (2) Report entitled: City of San José Annual Dept Report, Fiscal Year Ended June 30, 2002.

The Committee accepted the Staff report.

Discussion/Action: See Item 3.6 for Council action taken.

(e) Debt Service Reserve Fund Options. Attachment: Memorandum from Redevelopment Director, of Finance and Administration David Baum, dated December 11, 2002, transmitting said report.

The Committee accepted the Staff report.

(f) Oral petitions

William J. Garbett spoke on California’s Debt Allocation, Bonding and Tax Exemption disclosures and the City of San José’s Debt Service Report.

(g) Adjournment

The Committee adjourned at 4:10 p.m.

Discussion/Action: Upon motion by Vice Mayor Dando, seconded by Council Member Chavez, and unanimously carried, the Finance and Infrastructure Committee report and actions of December 11, 2002 were accepted, with Item 3.3(d) heard as Item 3.6. Vote 11-0-0-0.

3.4 (a) Authorize the City Manager to develop an agreement with San José Water Company focusing on hydrant maintenance and consulting services; and

(b) Authorize the City Manager to conduct a study of San José Municipal Water System rates and forward rate recommendations to the 2003-04 budget process.

CEQA: Not a Project. (City Manager's Office)

(Deferred from 12/17/02 – Item 3.6)

Documents Filed: (1) Memorandum from Council Members Cortese and Chavez, dated January 14, 2003, recommending the City Council [1] Defer action on the Municipal Water System (MWS) until March 4, 2003, and direct the City Auditor to perform the following tasks for City Council’s review on March 4, 2003: (a) Review the attached letter from San José Water Company (SJWC) and verify the costs indicated by SJWC for providing MWS water billing services and fire hydrant services, as compared to the costs MWS would incur to obtain the same level of services as proposed by SJWC; and (b) Provide to the MWS Negotiating Team a written report on Item 1-(a) no later than January 21, 2003. [2] If the City Auditor has verified, in his opinion, that SJWC could provide water billing and fire hydrant services as rates both competitive and cost effective to the City of San José, direct the City Manager to perform the following tasks: (a) In conjunction with the Environmental Services Department, the City Auditor’s Office, and other members of the Negotiating Team, as appropriate, conduct two or more sessions with the City’s AFSCME Local 101 and Local 3 relating to the scope of services proposed by SJWC and encourage Local 101 and Local 3 to provide information as appropriate relating to SJWC’s proposed scope of service, and/or at their option respond to the current MWS cost estimate for the same scope of services; and (b) Rebid a request for these services to MWS in compliance with the City’s Managed Competition Policy; and (c) Provide to the City Council and the MWS Negotiating Team a report on these sessions no later than February 27, 2003; and (d) Defer any contract discussions or actions with outside consultants for purposes of rate studies until the City Council takes final action on the MWS in four weeks. (2) Memorandum from Assistant City Manager Mark Linder, dated January 7, 2003, recommending the City Council (a) Authorize the City Manager to develop an agreement with San José Water Company focusing on hydrant maintenance and consulting services; and (b) Authorize the City Manager to conduct a study of San José Municipal Water System rates and forward rate recommendations to the 2003-04 budget process. (3) Letter from AFSCME Local 101 President, Deborah A. Powell, dated December 1, 2002, opposing the contracting out of any city jobs. (4) Letter from Association of Engineers and Architects President, Patrick C. Crowley, dated December 16, 2002, opposing the contracting out of city jobs.

Discussion/Action: Council Member Cortese moved approval of the memorandum dated January 14, 2003, by Council Member Chavez and himself recommending deferral of the item, until the City Auditor reports back to Council on the above referenced items for Council consideration on March 4, 2003. Council Member Chavez seconded the motion. Council Member Cortese stated there has been a long process since the Council took up this issue and authorized seven months of negotiations and as a final outcome of those negotiations, San José Water Company has a proposal on the table for a very specific set of services and, although the City Manager’s Office and management of the Municipal Water System were involved in those negotiations, the rank and file employees were not and the Competition Policy of the City of San José dictates that rank and file employees be involved before this kind of contracting occurs. Council Member Cortese stated a timeline was created for the City Auditor to verify that there is a competitive proposal on the table, and the original negotiating team, along with Environmental Services and the Auditor’s Office should meet with the two unions involved and respond to the proposal, including information provided by the Municipal Water System for comparison purposes. He stated the motion calls for these sessions to be concluded in a timely manner so Council will receive the report from the negotiating team no later than February 27, 2003, which is a week before action is taken, and the City Auditor is being asked to respond in writing in one week with a verification as to the competitiveness of the proposal. Mayor Gonzales asked the City Auditor whether his Staff is capable of meeting these deadlines. City Auditor Gerald Silva requested an extra week to make sure the report is completed. Council Member Cortese replied that due to the extra week Staff will have to add an extra week to every other date in the memorandum and amended the motion to include the date changes. Council Member Chavez accepted the amendment and suggested everyone involved do their absolute best to move this forward as quickly as possible.

Council Member LeZotte expressed concern that comparisons are inconsistent, specifically that the Department of Transportation (DOT) cost estimate includes hydrant maintenance and repair, whereas the San José Water Company’s was only for hydrant maintenance with repair costs to come later and stated she would support the motion if a true cost comparison can be provided. Council Member Cortese clarified that the motion does not call for a formal Request for Proposal (RFP) process because most of the questions about scope are relatively nominal and can be spelled out in the first week of the negotiations and once all parties involved have an opportunity to look at a clear-cut statement of the scope they can respond and although there is no formal RFP involved, the statement of scope will have to be as clear as an RFP. City Attorney Richard Doyle clarified that water billing is not to be included in the RFP until the issue comes back to Council in March. Council Member Cortese clarified that he wanted to defer any action on the Staff recommendation whatsoever including other issues that were brought up about rate studies, etc, and take those issues up when the item returns to Council. He stated that if there is no reason to do a legal RFP and if the parties can operate within this timeframe between now and March 11, 2003, the process could be concluded then.

The Mayor called for public testimony and Deputy Executive Officer of South Bay Labor Council Phaedra Ellis Lamkin stated the Labor Council and local labor unions remain committed to partnering with the City to make fiscally sound decisions during these troubling budget times. William J. Garbett spoke on the proposed action. On a call for the question, the motion carried unanimously, and the memorandum dated January 14, 2003 by Council Members Cortese and Chavez, as amended to defer the item to March 11, 2003, was approved. Vote: 11-0-0-0.

3.5 Adoption of a resolution amending the 2002-03 Schedule of Fees and Charges to increase the Underground Utility Fee to $224 per linear foot, from $112 per linear foot. CEQA: Not a Project. (Public Works)

(Deferred from 12/17/02 – Item 3.7)

Documents Filed: Memorandum from Public Works Director Katy Allen, dated January 3, 2003, recommending adoption of said resolution.

Discussion/Action: William J. Garbett spoke on the proposed action. Council Member Cortese acknowledged the work of Public Works Director Katy Allen for getting the report back to Council and not waiting until the next budget cycle. Upon motion by Vice Mayor Dando, seconded by Council Member Chavez, and unanimously carried, Resolution No. 71380, entitled: “A Resolution of the Council of the City of San José Amending Section 5.020 of Resolution No. 71036 to Revise the Underground Utility Base Fee”, was adopted. Vote: 11-0-0-0.

3.6 Presentation of the 11^th Annual Debt Report. (Finance)

[Finance & Infrastructure Committee referral 12/11/02 – Item 3.3(d)]

Documents Filed: (1) See Item 3.3(d) for documents filed. (2) Hard copy of slide presentation of FY 2001-02 Annual Dept Report.

Discussion/Action: Mayor Gonzales recognized Finance Director Scott P. Johnson to make the Staff Presentation, assisted by Deputy Director of Debt and Risk Management Julia Cooper. Using slides Director Johnson, reported on the City’s Debt Program for Fiscal Year 2001-2002, including a ten-year history and noted that 2001-2002 was the most active year for debt issuance in the City’s history. He stated the active debt program supports the City’s investment effort with the 2003-2007 Five-Year Capital Improvement Program (CIP) and the Finance Department works in partnership with the Housing Department in issuing multi-family revenue bonds to support the Council’s commitment to provide 6,000 units of affordable housing over the next five years. Deputy Director Cooper reported on the City’s outstanding bonds, and noted that with the City’s issuance of bonds there is a lifetime commitment to investors and the credit community to provide a host of services and ensure the City maintains strong credit ratings. Director Johnson spoke on the City of San José’s credit ratings and municipal bond ratings emphasizing the fiscal, economic, and administrative factors which were instrumental in the City receiving the second highest rating in the general obligation bond category, ranking higher than either the State or the County, and being the highest rated large city in the State of California. Stating these ratings demonstrate the City’s strong fiscal strength, enabling the City to save millions of dollars in taxes, Director Johnson recommended Council accept the 2001-2002 Annual Debt Report in accordance with the City’s Debt Management Policy. Vice Mayor Dando thanked Director Johnson and Finance Department Staff for their good work. Upon motion by Vice Mayor Dando, seconded by Council Member Chavez, and unanimously carried, the 11^th Annual Debt Report was accepted. Vote: 11-0-0-0.

3.7 Direction to the Administration to explore options and alternatives to the location of the Civic Center Garage that do not require the purchase of any portion of the real properties located at 156 and 160 East Saint John Street or 77 North Fifth Street. CEQA: Resolution No. 68905, PP98-03-072. (City Attorney’s Office)

(Rules in Lieu referral 1/8/03)

Documents Filed: Memorandum from City Attorney Richard Doyle, dated January 9, 2003, stating the Administration will report back to Council various options related to the location or configuration of the Civic Center Garage with a recommended course of action no later than June of 2003.

Discussion/Action: William J. Garbett and Keith Allen Watt spoke on the proposed action. Council Member Chavez requested Staff send letters to affected businesses and organizations confirming the actions Council has taken today, and that the Redevelopment Agency Board and Council receive copies. Upon motion by Council Member Chavez, seconded by Vice Mayor Dando, and carried unanimously, the City Attorney’s report, dated January 9, 2003, was approved. Vote: 11-0-0-0.

ECONOMIC & NEIGHBORHOOD DEVELOPMENT

4.2 Adoption of a resolution authorizing the issuance and sale of special tax bonds related to the formation of Community Facilities District No. 9 (Bailey/Highway 101) in an aggregate principal amount not to exceed $15,000,000, to be sold at a negotiated sale, approving the form and authorizing the execution of the Fiscal

Agent Agreement, and approving the use of the Official Statement in connection with the sale of the Bonds and directing and authorizing certain other related actions.

CEQA: Resolution No. 68705. Council District 2. (Finance/Public Works)

[Deferred from 12/17/03 – Item 4.3(f)]

Documents Filed: (1) Memorandum from Finance Director Scott P. Johnson and Public Works Director Katy Allen, dated January 7, 2003, recommending adoption of said resolution. (2) Updated draft of Preliminary Official Statement for the Community Facilities District 9 Special Tax Bonds.

Discussion/Action: William J. Garbett and Pete Campbell spoke on the proposed action. Upon motion by Council Member Williams, seconded by Vice Mayor Dando, and unanimously carried, Resolution No. 71381, entitled: “A Resolution of the City Council of the City of San José Authorizing the Issuance and Sale of Special Tax Bonds in an Aggregate Principal Amount Not to Exceed $15,000,000 to be Sold at a Negotiated Sale, Approving the Form and Authorizing the Execution of the Fiscal Agent Agreement and Approving the Use of the Official Statement in Connection With the Sale of the Bonds, and Directing and Authorizing Certain Other Related Documents and Actions”, was adopted. Vote 11-0-0-0.

4.3 Adoption of a resolution:

(a) Rescinding the current Council Policy 9-3 prohibiting the installation of community identification signs other than those of a historical nature; and

(b) Adopting a replacement policy based on the proposed guidelines and criteria for allowing community identification signs and architectural/gateway monuments within the public right-of-ways outside the Greater Downtown Area.

(Planning, Building and Code Enforcement)

[Economic Development & Environment Committee referral 12/2/02 – Item 4.1(b)]

(Deferred from 12/17/03 – Item 4.6)

Documents Filed: None.

Discussion/Action: This item was deferred to January 21, 2003.

4.4 Approval of an ordinance amending Sections 23.04.320, 23.04.330, 23.04.340, 23.04.350, and 23.04.830 of Chapter 23.04 of Title 23 of the San José Municipal Code to amend signage regulations in residential zoning districts and to provide for an amortization period for certain temporary signs in those districts. CEQA: Exempt. (Planning, Building, and Code Enforcement)

[Economic Development & Environment Committee referral 12/2/02 – Item 4.1(c)]

(Deferred from 12/17/03 – Item 4.7)

Documents Filed: None.

Discussion/Action: This item was deferred to January 28, 2003.

4.5 Adoption of a resolution:

(a) Establishing a City of San José policy to encourage Small Businesses participation in City contracts and programs as part of an overall strategy to foster and promote small businesses; and

(b) Accepting the Administration’s proposed system of process improvements, outreach, education, and performance measures as a new Small Business Opportunity Program to implement the new policy.

CEQA: Not a Project. (Economic Development)

Documents Filed: (1) Memorandum from Office of Economic Development Director Paul Krutko, dated December 4, 2002, recommending adoption of a resolution establishing as a City of San José policy, that [1] The City of San José is committed to the growth and development of its small businesses by working to increase their participation in City contracts and programs as part of an overall strategy to foster and promote small businesses, and [2] Accept the Administration’s proposed system of process improvements, outreach, education and performance measures as a new Small Business Opportunity Program to implement the new policy. (2) Letter from Disadvantaged Business Development Commission Chairperson, Miguel A. Chacon, recommending Council approve the following amendments to the Staff recommendations: [a] Set a goal of awarding at least 1/3 of the total value of contracts by department to small businesses; [b] The program shall be monitored quarterly and progress results will be published in a public medium, and [c] Small businesses under the program must be licensed by the City of San José having a fixed office with a San José street address, and 35 or fewer employees.

Discussion/Action: Council Member Chavez expressed excitement with the direction of the Small Business Program Policy, but expressed concern about the level of participation of the Redevelopment Agency, which has programs related to small business, particularly retail, and to their role in Edenvale pertaining to biotech and incubators, which were not reflected in the Staff report. She recommended as Staff moves forward with the benchmarks, relying strongly on the Economic Development Department, that Staff get that same level of specificity and involvement from the Redevelopment Agency to ensure a team effort between the City and Agency. Council Member Chavez moved approval of the Staff recommendation with those comments included. Vice Mayor Dando seconded the motion. Council Member Chavez asked what role the Small Business Administration (SBA) would play in terms of the proposal. Economic Development Director Paul Krutko responded that the SBA provides technical and financial assistance in terms of loan programs to businesses of particular sizes and purposes. Council Member Chavez noted the City has invested Staff time in supporting the SBA and if there are programs, irrespective of who funds them, that the City can use to increase available resources, Staff should quantify those programs as the City furthers its partnership with the SBA.

Council Member Chavez recommended using the same methodologies for tracking success as Redevelopment or whomever the City is working with on economic development strategies for small businesses, stated there should be a consistent method of record keeping across departments, and suggested Staff obtain feedback from small businesses regarding the City’s website, provide quarterly demonstrations, and use written surveys to determine the response to City’s programs. She expressed concerns about whether there is a strategic agreed-upon plan between departments as to how to preserve and protect industrial lands, which she stated is important as it pertains to overall economic strategy and suggested the Office of Economic Development be involved in discussions with Planning pertaining to industrial lands.

Council Member LeZotte asked about maintaining a database of professional contractors and Director of Public Works Katy Allen stated there is a database and Public Works is in the process of establishing a selection criterion contractors can use to select projects they are interested in, with e-mail notification of projects available for bid. Regarding the City’s Green Building Policy, she stressed the need to incorporate those elements into projects the City supports, questioned how many contractors are aware of those policy requirements and stated she would like to ensure that Environmental Services has a vendor type list for contractors interested in this program. She suggested Staff refer contractors to ESD to access that list of vendors and subcontractors who are most qualified to aid them in incorporating Green Building elements into their projects. Responding to Council Member LeZotte’s question about measurements Staff intends to use to examine existing processes and procedures to measure success, Director Krutko stated Staff will create an interdisciplinary team to collect data about how well the City is doing in providing opportunities for small businesses, will work with stakeholders, interact with key decision makers to understand how their proposals might be improved, and create a forum for them to partner together because small businesses often cannot compete effectively. Council Member LeZotte stated this issue should be placed on the work plan for the Building a Strong Economy Committee to monitor progress.

Council Member Reed stated as liaison to the Disadvantaged Business Development Commission (DBD), his office has worked with members of the Commission and OED Staff, and that he supports the Staff recommendations; however, the original intent was to evaluate a set-aside program and to follow the State of California’s lead to set aside a percentage of projects for small businesses; and this is not what Staff is recommending. He stated he would like some of the recommendations of the DBD Commission and Chamber of Commerce incorporated into the actions proposed, and asked if the maker of the motion would accept an amendment to add direction for Staff to report back quarterly to the DBD Commission, or Small Business Commission as it will be named, and be prepared to report to Council in October with a recommendation on whether a Charter change is needed, which would require a ballot measure in March, He stated the Staff report should include an evaluation of whether a set-aside program is needed and whether there is a need to expand the City’s local preference policy, and if it should be expanded to the Airport, Convention, Arts and Entertainment (CAE), Environmental Services, and Parks, Recreation and Neighborhood Services (PRNS) departments. He stated those elements incorporate most of the recommendations of the DBD and the Chamber of Commerce, but do not incorporate a set-aside percentage because the City lacks the data necessary for such actions at this time.

Council Member Chavez stated Council Member Reed’ recommendations are good and should be included; however, she expressed concern about presupposing that the end result is a Charter change because there may be other options, and if Staff can include the recommendations without predetermining the end outcome, the amendment to the motion was acceptable. Council Member Reed assured her that it was not his intention to presuppose a Charter change, but he wants information back in time to take that action should Council go in that direction. Council Member Chavez agreed to the amendment. Mayor Gonzales stated his only concern is also about presupposing that the end result is a Charter change and agreed with including those recommendations without predetermining the end outcome, expressed concern about presupposing any of the recommendations as the right actions, and stated he was particularly concerned about the third of the Commission’s recommendations due to legality issues. Council Member Reed clarified that the Mayor’s reference is to the local set-aside issue, noted that the City also has a local preference policy, but stated all he is asking is for Staff to evaluate those issues as progress moves forward and it may not be necessary to take any further actions. Noting that Staff is developing a task force to work on performance measures, Council Member Campos asked who would comprise the task force and what is their time line, and Director Krutko stated the task force would include Economic Development, Redevelopment, Public Works, General Services and Finance, and the first step is to arrive at a common definition and procedure for collecting the data, and Staff would begin immediately to implement the system and deploy it throughout the City’s procurement system. Council Member Campos asked about the 6-9 month time line from General Services, and Director of General Services Jose Obregon stated General Services will take steps internally to improve the City’s standing with the small business community and it is those actions Staff is referring to with the 6-9 months time line. Council Member Dando stated she was anxious to see the report from General Services on the data and performance measurement, and the data collection system, and suggested having access available throughout the community.

Member Yeager asked the legality of having only San José businesses receiving contracts. City Attorney Richard Doyle advised that Council has to have a rationale or basis to support any discrimination between a local business and non-local business; that whenever these programs are established, Council has to make findings to support the basis for the program and have factual data to support those findings. He cited instances where San Francisco made findings that businesses were disadvantaged by higher taxes, insurance and rents, which the courts have upheld, and stressed the collection of data as a rational basis to adopt such a program. Council Member Yeager asked what Staff can do short of direct preferences to encourage San José businesses to apply, and Director Krutko replied that the most effective way to help small business is to provide as much information as possible about opportunities and how to do business with the City, that Staff will make that a primary focus, and options under consideration are quarterly sessions at various locations, creation of an electronic newsletter, and making information available among City departments.

Council Member Reed thanked DBD Commissioner Jones for his work and Commissioner Jones thanked Council for taking leadership to pursue this program and noted the DBD has three recommendations it would like added to the Staff’s Proposal. On a call for the question, the motion carried unanimously, and the Staff recommen- dations, dated December 4, 2002, were approved as amended, and Resolution No. 71382, entitled: “A Resolution of the Council of the City of San José Adopting a Small Business Policy and Accepting the Administration Proposed Small Business Opportunity Program”, was adopted, and Staff directed to: (a) Report quarterly to the Disadvantaged Business Development Commission and the appropriate City Council Committee and be prepared by October 2003 to report to Council with recommendations on the issues of whether a change to the City Charter is needed: (b) Report back to Council with recommendations on the issues of feasibility of establishing set-aside provisions; the feasibility of expanding the City’s local preference policy and expansion of the program to the Airport, CAE, Environmental Services, and PRNS departments; to report back on a small business data collection system in 6-9 months: (c) Refer the program to the Building a Strong Economy Committee for monitoring and (d) Coordinate with the Redevelopment Agency in a team effort to: continue to redefine the City’s partnership with the Small Business Administration; develop tracking and evaluation methods across departments; review the effectiveness of the City’s web site and work with small businesses to identify and make improvements; work with the Planning Department on a strategic approach to preserving and protecting industrial lands, to work on providing referral lists and incentives for businesses to use Green Building concepts; and conduct decentralized outreach. Vote: 11-0-0-0.

4.6 Adoption of a resolution approving a conditional grant of up to $4,804,900 to the Mexican American Community Services Agency, Inc. (MACSA), or an affiliated entity, for the development of Las Golondrinas, a 50-unit senior rental apartments development to be made affordable to extremely low-income households, on a 1.31-acre site located on the southerly terminus of Kentucky Place, southerly of Alum Rock Avenue. CEQA: Negative Declaration, PDC 00-12-129. Council District 5. SNI: Mayfair. (Housing)

Documents Filed: Memorandum from Director of Housing Leslye Corsiglia, dated December 4, 2002, recommending adoption of a resolution approving said conditional grant to the Mexican American Community Services Agency, Inc.

Discussion/Action: Upon motion by Council Member Campos, seconded by Council Member Chavez, and unanimously carried, Resolution No. 71383, entitled: “A Resolution of the Council of the City of San José (i) Approving a Conditional Grant of up to $4,804,900.00 to Mexican American Community Services Agency, Inc., or Their Designated Affiliate Entity for the Development of 50 Unit Rental Housing Project Affordable to Extremely Low Income Persons and Families, and (ii) Authorizing the Director of Housing to Negotiate and Execute All Necessary Documents Evidencing Such Loans on Behalf of the City”, was adopted. Vote: 11-0-0-0.

4.7 (a) Approval of a funding commitment of up to $14,100,000 to JSM Enterprises, or an affiliated entity, for the development of the 175-unit Branham and Monterey Family Apartments; and

(b) Adoption of a resolution authorizing the Director of Housing to execute an option agreement for the purchase of property for $8,140,000 by JSM Enterprises, or an affiliated entity, from the City of San José.

CEQA: PDC 02-033. Council District 2. (Housing)

Documents Filed: (1) Supplemental memorandum from Director of H