City Council Study Session

MINUTES CITY OF HALF MOON BAY CITY COUNCIL STUDY SESSION TUESDAY, SEPTEMBER 21, 2021 VIRTUAL VIA ZOOM MEETING (COVID-19 PROTOCOLS) CONVENE STUDY SESSION / ROLL CALL Mayor Brownstone called the meeting to order at 5:05 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 Public Works Director Doughty and Sustainability Analyst Vostinak presented the staff report. The Council asked questions of staff. The following individuals addressed the Council: • Judy Taylor • Bruce Naegel • Barbara LaVey • Linda Crose-Anderson • Martha Longhi • Sarah Bueno • Maureen Fleming • Frank Vento • Ed Holmquist • Nick Bavaro • Gina Zari • Robert Whitehair • Adrienne Etherton

SEPTEMBER 21, 2021 City Council Study Session Minutes Page 2 of 2 • Mr. Wonderful • Timothy Pond • Tom Kabat • Diane Bailey • Steve Schmidt • Bryce Cook The Council discussed the item and asked questions of staff. CONSENSUS By consensus, the Council continued the study session to October 5, 2021, at 5:00 p.m. ADJOURNMENT Mayor Brownstone adjourned the meeting at 7:10 p.m. Respectfully Submitted: Approved: Jessica Blair, City Clerk Robert Brownstone, Mayor

CITY COUNCIL AGENDA SPECIAL MEETING CITY OF HALF MOON BAY TUESDAY, SEPTEMBER 21, 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 In accordance with Governor Newsom’s Executive Orders N-29-20 and N-08-21, this will be a teleconference meeting without a physical location to help stop the spread of COVID-19. This meeting will be conducted entirely by remote participation, in compliance with the Governor's Executive Order N-29-20 allowing for deviation of teleconference rules required by the Ralph M. Brown Act. 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/95535614263 or join by phone at 669-900-9128, using Webinar ID 955-3561-4263. CALL TO ORDER / ROLL CALL STUDY SESSION 1.A. BUILDING ELECTRIFICATION ORDINANCE STUDY SESSION Staff 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. STAFF REPORT ATTACHMENT 1 ATTACHMENT 2 ATTACHMENT 3 ATTACHMENT 4 ADJOURNMENT

CITY COUNCIL AGENDA SPECIAL MEETING CITY OF HALF MOON BAY TUESDAY, SEPTEMBER 21, 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 In accordance with Governor Newsom’s Executive Orders N-29-20 and N-08-21, this will be a teleconference meeting without a physical location to help stop the spread of COVID-19. This meeting will be conducted entirely by remote participation, in compliance with the Governor's Executive Order N-29-20 allowing for deviation of teleconference rules required by the Ralph M. Brown Act. 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/95535614263 or join by phone at 669-900-9128, using Webinar ID 955-3561-4263. CALL TO ORDER / ROLL CALL STUDY SESSION 1.A. BUILDING ELECTRIFICATION ORDINANCE STUDY SESSION Staff 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. STAFF REPORT ATTACHMENT 1 ATTACHMENT 2 ATTACHMENT 3 ATTACHMENT 4 ADJOURNMENT 2

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 3

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 4

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. 5

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. 6

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. 7

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 Electrifying existing buildings will require additional expenses for building owners (including the City) and renters. Many stakeholders were concerned about how they might afford the added expense of new appliances and any associated electrical work that may be required to retrofit their homes. Residents have requested expanded exemptions for exceptional circumstances. Staff Response: While the cost will vary widely depending on each individual situation and specific needs, staff has created an estimate of retrofit costs for individual appliances in residential buildings. It is estimated the incremental cost to retrofit water heating, space heating, cooking, and clothes drying combined from gas to electric ranges from around $7,000- $20,000 with an additional $4,000 - $6,000 if an electrical panel needs to be replaced. Regional financial incentives and low/no cost financing options exist today. More information on cost estimates, current incentives, and low/no cost financing options are outlined in Attachment 4. 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. 8

Page 7 of 8 Non-Residential Costs The Chamber of Commerce and many businesses have expressed the need for additional time to plan for retrofit requirements due to the extensive cost and availability of technology, suggesting a delay to the retrofit requirement for commercial buildings by 3-7 years. Additionally, businesses have requested expanded exemptions for exceptional circumstances. Staff Response: Commercial appliances are much more specialized and therefore electric equivalents are more limited. It is expected that commercial electric equivalents will become more accessible with time. Staff believes the City could still reach 2030 and 2045 GHG reduction goals if non-residential buildings are given more time to plan and implement. However, these delays would make it more difficult to hit 2030 GHG reduction goals. If non- residential provisions are delayed, staff recommends that small commercial tank water heater replacements (≤120 Gallon) and any HVAC additions or replacements that involve air conditioning units not be included as exempt activities for non-residential buildings. 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. Public Facilities Costs Staff has estimated the retrofit of all City Facilities would be approximately $90,000. The Ordinance would apply to most utility and public service agencies. An exemption will likely be needed for wastewater treatment facilities as staff is not aware of sufficient electric technology options for this use. Per State law, the Ordinance would not apply to public educational facilities. Potential Policy Considerations Building electrification represents a major step toward GHG reduction and community resilience. While it is expected the State will mandate some of these changes in the future, the timeline for such mandates is unknown and the circulated draft ordinance represents an extremely ambitious policy document. Given these factors and the input of the community, the City Council may wish to consider revisions to the ordinance. Staff has provided a number of the potential policy considerations. Staff will be prepared to provide more detail and recommendations to City Council as part of the Study Session process. As noted, the majority of the potential changes requested or highlighted by stakeholders are policy changes that only City Council can weigh. Note: In order to allow for strategic decommissioning of existing gas lines and to stay on track to hit 2045 GHG emission reduction goals, staff recommends that any new proposed exemptions (like all other exemptions currently proposed in the draft ordinance) expire on January 1, 2045. Potential Changes to New Construction Provisions in the Draft Ordinance No changes recommended. 9

Page 8 of 8 Potential Changes to Existing Residential Provisions in the Draft Ordinance 1. Consider delaying application of electrification requirements to existing residential buildings until 20304 with the exception of water heaters 120 gallons or less in size and additions/replacement of air conditioning 2. Consider adding exemptions for Fuel Gas stoves, ovens, and/or fireplaces through 20304 3. Grandfather existing stoves, ovens and/or fireplaces until 20304 4. Consider additional provisions to ensure compliance a. Amend local building and model codes to require permits for new/replacement appliances b. Consider requiring certification of at the time of sale/change of occupancy of a dwelling unit 5. Consider expanded exemptions for exceptional circumstances Potential Changes to Existing Non-Residential Provisions in the Draft Ordinance 1. Consider delaying application of electrification requirements to existing non-residential buildings until 20254 with the exception of water heaters 120 gallons or less in size and additions/replacements of air conditioning 2. Consider adding exemptions for Fuel Gas stoves/ovens in commercial kitchens a. All until 20304 b. All until 20454 c. Only for those demonstrating specific business need (such as baking and pizza ovens) 3. Consider adding exempt