City Council Study Session

MINUTES CITY OF HALF MOON BAY CITY COUNCIL STUDY SESSION TUESDAY, OCTOBER 5, 2021 VIRTUAL VIA ZOOM MEETING (COVID-19 PROTOCOLS) CONVENE STUDY SESSION / ROLL CALL Mayor Brownstone called the meeting to order at 5:00 p.m. ROLL CALL PRESENT: Councilmembers Penrose, Rarback and Jimenez, Vice Mayor Ruddock, and Mayor Brownstone STUDY SESSION 1.A. BUILDING ELECTRIFICATION ORDINANCE STUDY SESSION (CONTINUED) Public Works Director Doughty and Sustainability Analyst Vostinak presented the staff report. The Council asked questions of staff and provided direction on Tables 1 and 2. The following individuals addressed the Council: • Judy Taylor • Tim Pond • Monnett • Bruce Naegel • Karen Wang The Council asked questions of staff and provided direction on Tables 3 and 4. The Council continued the item to the October 5, 2021 Regular City Council meeting. ADJOURNMENT Mayor Brownstone adjourned the meeting at 7:00 p.m.

OCTOBER 5, 2021 City Council Study Session Minutes Page 2 of 2 Respectfully Submitted: Approved: Jessica Blair, City Clerk Robert Brownstone, Mayor

CITY COUNCIL AGENDA SPECIAL MEETING CITY OF HALF MOON BAY TUESDAY, OCTOBER 5, 2021 REMOTE PARTICIPATION (SEE NEXT PAGE) Robert Brownstone, Mayor Debbie Ruddock, Vice Mayor Joaquin Jimenez, Councilmember Deborah Penrose, Councilmember Harvey Rarback, Councilmember 5:00 PM This agenda contains a brief description of each item to be considered. Those wishing to address the City Council on any matter not listed on the Agenda, but within the jurisdiction of the City Council to resolve, may come forward to the podium during the Public Forum portion of the Agenda and will have a maximum of three minutes to discuss their item. Those wishing to speak on a Public Hearing matter will be called forward at the appropriate time during the Public Hearing consideration. Please Note: Anyone wishing to present materials to the City Council, please submit seven copies to the City Clerk. Copies of written documentation relating to each item of business on the Agenda are on file in the Office of the City Clerk at City Hall and the Half Moon Bay Library where they are available for public inspection. If requested, the agenda shall be available in appropriate alternative formats to persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132.) Information may be obtained by calling 650-726- 8271. In compliance with the Americans with Disabilities Act, special assistance for participation in this meeting can be obtained by contacting the City Clerk’s Office at 650-726-8271. A 48-hour notification will enable the City to make reasonable accommodations to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II). http://hmbcity.com/

SPECIAL REMOTE PARTICIPATION PROTOCOLS This meeting will be held entirely by teleconference. All Councilmembers and staff will only participate via the Zoom platform using the process described below. The meeting is being conducted pursuant to recent amendments to the teleconference rules required by the Ralph M. Brown Act allowing teleconferencing during a proclaimed state of emergency when local officials have recommended social distancing (AB 361). The purpose of AB 361 is to provide the safest environment for the public, elected officials, and staff while allowing for continued operation of the government and public participation during the COVID‐19 pandemic. This meeting will be conducted via Zoom Webinar and live Spanish interpretation will be available within the Zoom platform. Members of the public are welcome to login into the webinar as Attendees. During any public comment portions, attendees may use the “raise your hand” feature and will be called upon and unmuted when it is their turn to speak. The meeting will also be streamed on Channel 27, on pacificcoast.tv, and on Facebook at www.facebook.com/cityofhalfmoonbay. Please click to join the webinar: https://us06web.zoom.us/j/99588947925 or join by phone at 669-900-9128, using Webinar ID 995-8894-7925. CALL TO ORDER / ROLL CALL 1. STUDY SESSION 1.A BUILDING ELECTRIFICATION ORDINANCE STUDY SESSION (CONTINUED) Staff Recommendation: Conduct follow-up study session on the Draft Building Electrification Ordinance and provide policy direction to staff regarding potential revisions to the April Draft Building Electrification Ordinance. STAFF REPORT ATTACHMENT 1 ATTACHMENT 2 ADJOURNMENT

CITY COUNCIL AGENDA SPECIAL MEETING CITY OF HALF MOON BAY TUESDAY, OCTOBER 5, 2021 REMOTE PARTICIPATION (SEE NEXT PAGE) Robert Brownstone, Mayor Debbie Ruddock, Vice Mayor Joaquin Jimenez, Councilmember Deborah Penrose, Councilmember Harvey Rarback, Councilmember 5:00 PM This agenda contains a brief description of each item to be considered. Those wishing to address the City Council on any matter not listed on the Agenda, but within the jurisdiction of the City Council to resolve, may come forward to the podium during the Public Forum portion of the Agenda and will have a maximum of three minutes to discuss their item. Those wishing to speak on a Public Hearing matter will be called forward at the appropriate time during the Public Hearing consideration. Please Note: Anyone wishing to present materials to the City Council, please submit seven copies to the City Clerk. Copies of written documentation relating to each item of business on the Agenda are on file in the Office of the City Clerk at City Hall and the Half Moon Bay Library where they are available for public inspection. If requested, the agenda shall be available in appropriate alternative formats to persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132.) Information may be obtained by calling 650-726- 8271. In compliance with the Americans with Disabilities Act, special assistance for participation in this meeting can be obtained by contacting the City Clerk’s Office at 650-726-8271. A 48-hour notification will enable the City to make reasonable accommodations to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II). http://hmbcity.com/ 1

SPECIAL REMOTE PARTICIPATION PROTOCOLS This meeting will be held entirely by teleconference. All Councilmembers and staff will only participate via the Zoom platform using the process described below. The meeting is being conducted pursuant to recent amendments to the teleconference rules required by the Ralph M. Brown Act allowing teleconferencing during a proclaimed state of emergency when local officials have recommended social distancing (AB 361). The purpose of AB 361 is to provide the safest environment for the public, elected officials, and staff while allowing for continued operation of the government and public participation during the COVID‐19 pandemic. This meeting will be conducted via Zoom Webinar and live Spanish interpretation will be available within the Zoom platform. Members of the public are welcome to login into the webinar as Attendees. During any public comment portions, attendees may use the “raise your hand” feature and will be called upon and unmuted when it is their turn to speak. The meeting will also be streamed on Channel 27, on pacificcoast.tv, and on Facebook at www.facebook.com/cityofhalfmoonbay. Please click to join the webinar: https://us06web.zoom.us/j/99588947925 or join by phone at 669-900-9128, using Webinar ID 995-8894-7925. CALL TO ORDER / ROLL CALL 1. STUDY SESSION 1.A BUILDING ELECTRIFICATION ORDINANCE STUDY SESSION (CONTINUED) Staff Recommendation: Conduct follow-up study session on the Draft Building Electrification Ordinance and provide policy direction to staff regarding potential revisions to the April Draft Building Electrification Ordinance. STAFF REPORT ATTACHMENT 1 ATTACHMENT 2 ADJOURNMENT 2

Page 1 of 3 BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY AGENDA REPORT For meeting of: October 5, 2021 TO: Honorable Mayor and City Council VIA: Bob Nisbet, City Manager FROM: John Doughty, Public Works Director Veronika Vostinak, Sustainability Analyst TITLE: BUILDING ELECTRIFICATION ORDINANCE STUDY SESSION (CONTINUED) ______________________________________________________________________________ RECOMMENDATION: Conduct follow-up study session on the Draft Building Electrification Ordinance and provide policy direction to staff regarding potential revisions to the April Draft Building Electrification Ordinance. FISCAL IMPACT: There is no fiscal impact associated with this study session. Implementation of an Ordinance will result in direct and indirect costs to property owners and tenants which are discussed in more detail within Attachment No. 1 (September 21, 2021 Staff Report). Costs will vary depending upon the policy direction, availability of funding assistance, individual properties, and implementation timing. STRATEGIC ELEMENT: This action supports the Infrastructure and Environment and Healthy Communities and Public Safety Elements of the Strategic Plan. BACKGROUND: The City Council conducted a community study session on building electrification policy opportunities on February 2, 2021. Following community input, the City Council directed staff to prepare a draft ordinance that addressed the following policy areas: 1. No new Fuel Gas hookups; all new construction (residential and commercial) must be built all-electric 2. Any appliance that is replaced within an existing building must be replaced with an electric alternative 3. All Fuel Gas lines must be capped and/or decommissioned by January 1, 2045 3

Page 2 of 3 4. Increased requirements for photovoltaic (PV) systems, back up batteries and electric vehicle (EV) charging A draft ordinance was prepared and released on April 22, 2021 (Attachment 2). Consistent with Council direction, the City initiated a robust public outreach effort between its release and September 15, 2021. On September 21, 2021, the City Council conducted a community study session to receive a report on community feedback on the draft ordinance. At the study session, more than 20 speakers expressed their opinion on the proposed Ordinance, demonstrating a wide range of opinions and concerns. Due to time constraints, the City Council had limited time to discuss policy issues and formulate recommended changes to the draft ordinance. City Council directed staff to return on October 5, 2021 for continuation of the study session and policy discussion. Staff is including the September 21st staff report and background material as Attachment 1 to this report. DISCUSSION: The September 21st study session provided valuable insight into the issue and the diversity of opinion among residents, business owners and the general public. Unfortunately, time constraints significantly limited discussion by the City Council. Our hope is to utilize this study session as a means to reach Council consensus on policy issues. We are suggesting a staff facilitated process in which we walk the community and City Council through major policy decision points necessary to update the draft ordinance and ready the document for introduction. Staff is recommending we begin with a guided conversation on broad policy options and proceed to more focused policy options based upon response to the broad policy issues. For example, if the City Council indicates a desire to not address retrofit of existing commercial uses, there is no need to discuss details of how the ordinance would address implementation. Broad policy questions will focus on three primary policy questions: a) Should the ordinance continue to require electrification of all new residential and non- residential buildings/tenant spaces? b) Should ordinance include provisions to phase out gas service and installation of new gas meters? c) Should the ordinance include provisions for retrofit of residential and/or non-residential buildings? Once clear direction on these broad policies has been established, staff will then proceed to help guide the Council through a discussion on more detailed policy questions based on that direction. Staff will track City Council direction live, through screen sharing, so each Councilmember and the public will be able to easily track consensus among the City Council. At the end of the study session staff will ask the City Council to affirm direction or request the 4

Page 3 of 3 issue be continued to a future meeting for further deliberation. If staff receives affirmation on policy issues, we anticipate being able to return to City Council with a revised Draft Building Electrification Ordinance on November 16, 2021. As with any ordinance, the City Council can choose to make additional revisions at that time. Depending on the nature of revisions, the ordinance may need to return to a future agenda for introduction. ATTACHMENTS: 1. Staff Report from Building Electrification Study Session (September 21, 2021) 2. Draft Building Electrification Ordinance (April 22, 2021) 5

Page 1 of 8 BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY AGENDA REPORT For meeting of: September 21, 2021 TO: Honorable Mayor and City Council VIA: Bob Nisbet, City Manager FROM: John Doughty, Public Works Director Veronika Vostinak, Sustainability Analyst TITLE: BUILDING ELECTRIFICATION ORDINANCE STUDY SESSION ______________________________________________________________________________ RECOMMENDATION: Conduct a study session on the Draft Building Electrification Ordinance, and based upon the report and community feedback, provide staff direction regarding any revisions to the Building Electrification Ordinance in advance of ordinance introduction. FISCAL IMPACT: There is no fiscal impact associated with this study session. Implementation of an Ordinance will result in direct and indirect costs to property owners and tenants which are discussed in more detail within the report. Costs will vary depending upon the policy direction, availability of funding assistance, individual properties, and timing. STRATEGIC ELEMENT: This action supports the Infrastructure and Environment and Healthy Communities and Public Safety Elements of the Strategic Plan. BACKGROUND: California continues to lead the fight against climate change. The State has established two goals to drastically reduce Greenhouse Gas (GHG) emissions throughout the State: 1) reduce GHG by 40-percent of 1990 levels by 2030; and 2) reach carbon neutrality by 2045. The effort to fight climate change is delegated to State agencies, regional planning/transportation agencies and local governments like Half Moon Bay and San Mateo County. In 2017, building energy accounted for 48% of GHG emissions generated within the City limits of Half Moon Bay. Eighty (80) percent of these emissions are due to the combustion of Fuel Gas (namely natural gas) in buildings. The elimination of Fuel Gas usage within buildings will encourage the strategic decommissioning of natural gas infrastructure and reduce the associated methane leakage. Although methane leakage is not currently accounted for in Half Moon Bay’s GHG emission inventory, it is nevertheless a significant contributor to climate 6

Page 2 of 8 change because methane is the most potent GHG, trapping 28-36 times more heat that carbon dioxide over a 100-year period.1 Based upon the most recent GHG inventory and historic development trends, Half Moon Bay will not likely achieve its GHG emission reduction goals by 2030 solely by addressing Fuel Gas in new construction. Because 97% of electricity customers in Half Moon Bay receive GHG-free electricity from Peninsula Clean Energy, replacing Fuel Gas appliances with efficient electric alternatives in existing buildings provides an opportunity to drastically reduce GHG emissions in Half Moon Bay. As such, staff is continuing to recommend Fuel Gas reductions in existing buildings as well as in new construction. Based upon community input, the City Council may wish to consider alternative or additional actions to meet 2030 GHG goals. Building electrification efforts are also linked to improved indoor air quality and public health for the community. With Californians spending up to 87% of time indoors2, indoor air pollution can be an important determinant of human health, especially for children. A meta-analysis found children in homes with gas stoves have a 42% increased risk of experiencing asthma symptoms and a 24% increased risk of being diagnosed with asthma.3 Additionally, Gas pipelines are vulnerable to over-pressurization, earthquakes, and fires. Gas appliances and associated infrastructure increase the risk of explosion and/or fire in the event of a seismic event. California is one of the most seismically active areas in the United States. For these reasons and others, drafting Reach Codes for City Council consideration was listed as a key policy action for FY 20-21 in the City’s Sustainability Implementation Plan adopted in September 2020. To that end, staff held a study session with the City Council on February 2, 2021. A draft ordinance based on Council direction from the study session was published on April 22, 2021 (Attachment 1). As currently written, the draft Ordinance would require: 1. No new Fuel Gas hookups; all new construction (residential and commercial) must be built all-electric 2. Any appliance that is replaced within an existing building must be replaced with an electric alternative (e.g., heat pump water heater, induction stove, etc.) 3. All Fuel Gas lines must be capped and/or decommissioned by January 1, 2045 4. Increased requirements for photovoltaic (PV) systems, back up batteries and electric vehicle (EV) charging Following the publication of the draft Ordinance, staff launched an outreach effort beginning in June that has culminated in tonight’s study session. Staff has performed the following activities to collect stakeholder feedback and increase awareness of the proposed Ordinance: 1 https://www.epa.gov/ghgemissions/understanding-global-warming-potentials 2 https://pubmed.ncbi.nlm.nih.gov/11477521/ 3 https://academic.oup.com/ije/article/42/6/1724/737113 7

Page 3 of 8 • One-on-one meetings, phone calls, and emails with stakeholders • Survey cards sent to all Half Moon Bay hotels and restaurants • Online survey for residents and businesses (English and Spanish) • Presentations to special interest groups such as the San Mateo County Association of Realtors and the Half Moon Bay Chamber of Commerce • In-person/Zoom hybrid workshop with Senior Coastsiders (July 14th, 6pm with 6 attendees), recording sent to Evergreen Coastsiders listserv • Zoom Workshop with Half Moon Bay Chamber of Commerce and Peninsula Clean Energy (August 12th, 2pm with 60+ attendees), recording published on City website • Tabling at Make it Main Street Festival (August 5, 2021) • Social media posts (Twitter, Facebook, Instagram, NextDoor) • City eNews (1,359 subscribers), Sustainability Source Newsletter (116 subscribers), Building Electrification listserv (1,875 subscribers) All written comments and survey responses received through September 15, 2021 are included as Attachment 2 to this staff report. DISCUSSION: While many jurisdictions in California and throughout the United States are considering policies to reduce and/or eliminate Fuel Gas use in buildings, staff is not aware of any adopted policies that require electrification retrofits for existing buildings. A matrix outlining building electrification policies that have been adopted or are being seriously discussed in California is provided as Attachment 3 to this staff report. While building electrification measures can have a significant positive impact on the City’s GHG emissions and the health and safety of the Half Moon Bay community, there are some potential impacts that should be considered and/or mitigated. A summary of comments and requested exemptions have been outlined below. Stakeholder Comments In general, comments received from both residents and businesses regarding the proposed requirements for all-electric new construction and expanded EV/PV requirements were supportive. As such, this report will focus on feedback received regarding provisions addressing electrification of existing buildings, along with staff responses Reliability of Electricity/Impact to Electrical Grid Many stakeholders expressed concern about switching to all-electric buildings due to the lack of power-reliability on the coast and questioned if PCE/PG&E would be able to accommodate the added load of full building electrification and EV charging. Some have referenced past PSPS events as an example. 8

Page 4 of 8 Staff Response: Staff has had multiple conversations with PG&E and PCE representatives regarding the proposed Building Electrification Ordinance and neither entity has expressed concern in meeting the anticipated demand that would result from electrifying new and existing buildings pursuant to the Ordinance. PCE and PG&E are eager to partner with Half Moon Bay to ensure planning for building electrification efforts is as equitable and efficient as possible. Further, staff does not believe Fuel Gas will provide significant resilience during prospective power outages, as many new Fuel Gas appliances require electricity to start. Those concerned about power reliability may choose to invest in emergency power generation such as gas- powered generators and PV with back-up batteries. Both options would still be allowed under the proposed Ordinance. Increase of Unpermitted Work There are concerns that the proposed building electrification ordinance would not be effective and/or may have a negative effect on the rate of permit compliance. There is concern that fewer individuals would seek permits for appliance replacements, and that individuals would have gas appliances installed despite the Ordinance. Without permits, these replacements may not meet Code requirements and represent a potential safety hazard. Staff Response: Staff shares this concern. Currently, permits are only required to replace water heaters and HVAC systems and permit compliance for these replacements is generally low, about 10% of actual installations. Changes to the local building code and/or permit compliance programs could be made to help increase permit compliance. This is a policy consideration for City Council. Possible opportunities to mitigate this concern are outlined in the “Policy Considerations” section of this staff report. Home Energy Score Some residents have suggested adding a requirement to include a Home Energy Score or Energy Efficiency Audit at the time of building sale or transfer, similar to requirements seen in Piedmont and Berkeley. These Home Energy Scores or Energy Efficiency Audits have been compared to MPG ratings for vehicles and are a tool that may help transition the market to placing appropriate value on climate-friendly homes and buildings. Staff Response: Policies that require home energy scores or audits are very new and it’s unclear if or how these programs have stimulated voluntary energy efficiency upgrades to date. Due to the current housing market conditions and low availability of housing in Half Moon Bay, Staff does not believe requiring these programs would increase the City’s ability to achieve GHG emission reduction goals for 2030 and/or 2045. The program would only increase costs without any tangible benefit. 9

Page 5 of 8 Community Requested Exemptions As drafted, exemptions would only be granted in the case of physical or technical infeasibility. Stakeholders identified additional exemptions outlined below. Residential Stoves and Indoor Fireplaces Many individuals strongly believe that the performance of Fuel Gas powered stoves and fireplaces is superior and cannot be compared to electric alternatives. Staff Response: Staff believes allowing this exemption would not impact the City’s ability to meet 2030 goals but would negatively impact 2045 goals. This is a policy consideration for City Council. Possible opportunities to mitigate this concern are outlined in the “Policy Considerations” section of this staff report. Greenhouses Greenhouse horticulture is an important industry to Half Moon Bay. In these applications, Fuel Gas is used to heat greenhouses, and the large boilers used to heat greenhouses are currently very expensive to retrofit. Additionally, the increased cost of electricity may add significant cost burden to these businesses, especially in the short-term. Due to the high energy usage, solar may not be a viable option to decrease the electricity costs for these businesses. Staff Response: Staff believes this exemption would not impact the City’s ability to hit 2030 goals but would negatively impact 2045 goals. This is a policy consideration for City Council, which is outlined in the “Policy Considerations” section of this staff report. Commercial Kitchens Some restaurants have expressed concerns regarding the timing of the proposed transition from Fuel Gas to electricity. They indicate that they are unfamiliar with induction stovetops in a commercial setting and are concerned about food preparation times, staff training, and the possible need to change menu items to accommodate this new cooking method. Many restaurants, however, stated this change would be manageable with added time for planning and to gain familiarity with these appliances. There are some specialty cooking appliances such as bakery/pizza ovens that rely on a flame for texture and/or flavor of the food prepared. It is unclear if these cooking methods would be able to be replicated by an electric alternative—staff has not identified an alternative to-date. If the Ordinance does not include a full exemption (or delay to implementation) for commercial kitchens, stakeholders requested that Council provide a limited exemption where there is a specific business need for cooking with a flame. Staff Response: Staff believes this exemption would not impact the City’s ability to meet 2030 goals but would negatively impact 2045 goals. This is a policy consideration for City Council. Possible options to mitigate this concern are outlined in the “Policy Considerations” section of this staff report. 10

Page 6 of 8 Costs During the outreach period, the implementation cost has been identified as a major concern. As drafted, exemptions would only be granted in the case of physical or technical infeasibility, and financial considerations would not be a sufficient basis for an exemption. Building electrification retrofits will be an added cost for many building owners (including the City) and businesses. Tenants may ultimately bear much of the cost via increased rents. Staff is not aware of any adopted ordinances or policies in the Bay Area or State that imposes electrification measures for existing buildings. As such, the exact costs associated with large scale building retrofits are largely unknown. Without additional programs for funding, building electrification policies focused on existing buildings may disproportionately impact vulnerable populations. Currently, electricity is about three times (3X) more expensive than Fuel Gas. New, efficient electric technology is currently more expensive than gas-powered appliances, and additional expenses may be incurred to retrofit safely. These costs may be even higher in buildings that were not prewired for electric appliances, in older buildings, and in those with deferred maintenance. However, the costs associated with future climate change impacts are also unknown but are anticipated to be significant. In order for California to achieve its bold GHG emission reduction goals, Fuel Gas in existing buildings will need to be addressed, and some level of building electrification retrofits is likely to be inevitable. Additionally, as cities throughout the PG&E territory move away from Fuel Gas in buildings, it is expected that Fuel Gas rates will increase as there will be fewer ratepayers to share the cost of Fuel Gas distribution infrastructure maintenance and upgrades. This increasing cost for Fuel Gas will likely make the transition to electricity more cost-effective. However, lower-income households may bear the majority of the cost burden of this transition, as these families will be less likely to afford retrofits to electric appliances, and may be left using Fuel Gas at a time when it is relatively expensive. Residential Costs Electrifyi