Palo Alto stormwater oversight panel signs off on FY26 budget memo, hears progress on pump stations and Hamilton Avenue upgrades

The Palo Alto Stormwater Oversight Committee on Wednesday approved a memorandum attesting that the city's proposed fiscal year 2026 stormwater budget aligns with the ballot measure that funds 13 capital improvement projects, and reviewed progress on multiple CIP projects including East Bay Shore/West Bayshore pump station upgrades and the Hamilton Avenue storm drain project.

Committee members and staff emphasized that the fee-funded program remains on track for FY26 even as some construction estimates rose. Staff reported a proposed annual fee increase of 2.4 percent under the ballot measure's CPI-or-6-percent rule, which the presentation quantified as roughly a $210,984 increase in fee revenue for FY26. The committee approved a minor edit to the memorandum inserting language that, based on staff analysis, there is no indication present fee revenue will be insufficient to complete the projects listed in the ballot measure.

Why it matters: the stormwater fee underwrites both ongoing maintenance and a time-limited set of capital projects intended to reduce flooding in known problem areas. Changes in construction costs, easements and permitting can affect project schedules and estimates; the committee said it will continue to monitor bids and reserves and bring any emerging funding shortfalls back to the council.

Most important details

- CIP status and near-term work: Staff said three of the 13 ballot-measure projects are complete and that, once the currently active projects are finished, the city expects to have completed seven of the 13 projects. Hamilton Avenue was advanced earlier and remains a high priority because it carries flows that otherwise pond in neighborhood streets after significant storms.

- Pump-station and pipeline work: The East Bay Shore pump-station and pipeline upgrades were presented as a major contract on the near-term schedule. Staff described upsizing existing pipe runs (examples discussed ranged from 12/15/18-inch pipes to new 30- or 48-inch sections in chokepoints) to increase conveyance capacity and reduce creek overtopping. Staff described a wet well roughly 12 feet by 50 feet with 15-to-19-foot depth for the East Bay Shore pump-station site and said the design includes a new discharge box to Adobe Creek to get water into the local detention basin.

- Contract award and schedule: Staff reported the construction contract for the pump-station project was awarded to Anderson Pacific Engineering Construction with the low bid reported at $9,900,000. Construction documents were in process and staff said they expect to issue a notice to proceed in mid-May with an estimated 12-month construction schedule, barring extensions.

- Hamilton Avenue: Staff said the Hamilton Avenue project was advanced ahead of others because of flooding observed after a New Year's storm. The estimated construction cost for Hamilton increased by $1,500,000, which staff attributed to utility-connection work and broader cost escalation in recent bids. Staff said the schedule for Hamilton did not change when the estimate was increased.

- Budget mechanics and reappropriations: Staff described reappropriations of capital funding into FY26 (capital reappropriations on the order of $2 million were noted) and a roughly $1.2 million federal EPA grant that will be reappropriated into the next fiscal year because project work timing pushed the expenditure into FY26. Staff also explained an administrative change for FY26 that centralizes salary and benefit budgeting for CIP staff in a new administrative CIP, then redistributes actual costs to projects at year end; staff said this is an accounting/presentation change with no net effect on fund expenses.

Committee actions and votes

- Approval of minutes: The committee approved the minutes from the previous meeting (mover: Blake; second: not specified in the transcript). Outcome: approved (voice vote).

- Memorandum certifying the FY26 proposed budget: After discussion, the committee approved the draft memorandum to council with one insertion clarifying that, based on current staff analysis, there is no indication that present fee revenue will be insufficient to complete the 13 ballot-measure projects. Outcome: approved (voice vote).

- Work plan: The committee approved the draft annual work plan with one change: removal of Project Goal 4 (the item was removed by motion and the committee approved the amended work plan). Outcome: approved (voice vote).

- Adjournment: Motion to adjourn carried. Outcome: meeting adjourned.

Discussion highlights and caveats

Committee members pressed staff on technical and schedule details: how upsizing pipe diameter affects conveyance (staff noted capacity is not a simple linear function of diameter because of hydraulic factors including roughness and whether pipes flow full), clarifications about which pipe segments are pressurized vs. gravity conveyance, and that some published graphic lengths had a typographic error that staff will correct.

Staff cautioned that bids can come in higher than engineer estimates; when that occurs, contracts and over-budget decisions are brought to the City Council for approval. Staff reported that they have run multi-year fund-balance and cost-escalation projections and do not currently expect a fundability problem for the ballot-measure projects, though they will continue to refine projections as bids and contracts are awarded.

Green stormwater infrastructure (GSI) and monitoring

Committee members asked about GSI performance and monitoring. Staff described that some GSI features in lower-lying areas are lined (detention and treatment only) while other locations with deeper groundwater permit infiltration-based designs. Staff noted regional partners perform broader monitoring and that some local monitoring and maintenance is handled through city operations and community partners; a GSI-specific presentation was scheduled for a future committee meeting.

What's next

Staff said the pump-station contract documents were in signature routing and construction start was expected mid-May pending final signatures. The committee requested ongoing updates on bid results, contract awards and any projections that might indicate a future funding gap. The next committee meeting will include a GSI presentation and continued budget/CIP updates.

Attributions: statements by Michelle Nelson are attributed to Michelle Nelson, Senior Management Analyst, as identified in the meeting. Other technical and project descriptions are attributed to city engineering and operations staff identified in the transcript and listed in the speakers section below.

Ending: The committee concluded with approvals to send the revised memorandum to council with the added sentence about staff analysis and asked staff to circulate the final memorandum to committee members for a brief fact-check before submission.