Hampered by sky-high housing costs and a tight labor market, Palo Alto is struggling to fill critical positions in the Utilities Department, a challenge that city leaders expect will get steeper after an expected wave of December retirements.

The challenge is particularly pronounced in the city's electric operation, where 18 of the 68 positions are currently vacant, according to Utilities Department staff. This includes all three electrical assistant positions, according to a Utilities Department organizational chart that staff presented earlier this month to the Utilities Advisory Commission. Of the department's 15 electrical lineperson positions, which are critical to maintaining the city's transmission system, five are currently vacant.

The city is now recruiting for 32 utility positions, eight of which have proven to be particularly difficult to fill, David Yuan, strategic business manager at the Utilities Department, told the Utilities Advisory Commission during the commission's Feb. 6 discussion of the recruiting challenges. For positions like a lineworker or system operator, which require a very unique skill set, the recruitment process has stretched for more than six months and, at times, for several years, he said.

"There are vacancies throughout (the organization), but I think we are reaching a critical point in electric operations where it may impact our daily operations and our emergency response," Yuan said.

The city's recruitment challenges aren't unique to the Utilities Department. Palo Alto still has vacancies in key leadership positions, including chief transportation officer, chief financial officer, city auditor, community services director and fire chief (these positions are either open or occupied on an interim basis). And despite vigorous recruiting, the Police Department has had more than a dozen vacancies for well over a year — a situation that Chief Robert Jonsen has described as the new normal.

Yet these problems are particularly acute in utilities, where the competition for talent is particularly fierce and where certain positions require up to 10 years of training, apprenticeships and close supervision before the employee can master the duties, according to Tomm Marshall, assistant director of utilities. The challenge is compounded by the expected retirement of several managers in the months to come, including an electrical supervisor, the manager of electric operations and Marshall's own position.

"We're likely to see a large number of people leaving the city at the end of the year," Marshall said.

While Marshall plans to retire, others in the organization are leaving for familiar reasons: higher pay, lower costs of living and shorter commutes. With Palo Alto having the highest housing costs in the nation, many employees have to commute from far outside Santa Clara County. At least one lives in a car throughout the week, Marshall told the commission.

"We have people who come in every day from Lodi and other places," Marshall said. "After a while, they look for closer jobs so that they don't have to make the two-to-three-hour commute each way to get here."

Palo Alto's situation is not unique, said Sandra Blanch, the city's assistant director for Human Resources. Other cities that run their own utilities — including Roseville, Santa Clara and Alameda — all have openings in utility positions, she said. The fierce competition compounds the city's staffing challenge, she said, particularly when Santa Clara is offering higher salaries for the same position.

"It's difficult to keep up with the market," Blanch told the commission. "As soon as we negotiate a new salary, our competitors do the same. We're fighting to recruit and retain the same candidates."

The topic of utility salaries has been an increasingly thorny one in Palo Alto, where dozens of utility managers formed a union in 2009 to improve their negotiation position — a move that the city unsuccessfully challenged in court. Last December, after five years of tense negotiations and litigation, the city approved a 12 percent raise for all utility managers, as well as additional raises for critical positions that had salaries below the market median.

A similar discussion is now taking place in regard to the Service Employees International Union, Local 521, which represents the bulk of the Utilities Department workforce and which is currently in negotiations with the city over a new contract. On Monday, as the City Council was discussing its status of negotiations with the SEIU, the union released a statement highlighting the growing number of vacancies, a trend that it said has "put unfair and unsustainable burdens on our staff, many of whom are working overtime without adequate rest to continue to deliver city services."

The union pointed to the department's loss last December of two veteran compliance technicians, which left one technician to perform the work of three.

"Not only do the retention issues strain our workforce and affect services, but these issues increase the city's costs of attracting new employees, including recruitment, hiring and training," the union asserted in the statement. "Many SEIU workers currently commute from great distances due to the extremely high cost of living in and around Palo Alto. Our public services are at risk as we continue to lose experienced workers."

In his presentation to the Utilities Advisory Commission, Marshall voiced a similar concern. If a disaster strikes, it could take three hours for some of the critical employees to get to Palo Alto, he said.

"Luckily, we have a few people now who are relatively close — three to four people who can get here in relatively short period of time — but for the large majority, it would take a significant amount of time to get there," Marshall told the commission.

Palo Alto has taken some measures to deal with the employee shortage. It had expanded its recruiting efforts (Blanch said the department has recently recruited employees from Long Beach and Hawaii) and it has hired more contractors to fulfill functions traditionally performed by in-house staff. Marshall said the city has a $4.5 million, three-year contract in place with a contractor to do the work that formerly required a crew of three to four city employees.

Commissioners offered a few other ideas for recruiting. Vice Chair Judith Schwartz suggested that staff recruit at "lineman rodeos" and take a closer look at PG&E, which has recently filed for bankruptcy and which may have employees looking for a more stable environment.

She also suggested that the council consider ways to provide housing to workers filling some of the most critical utilities positions. Having them close by, she said, would benefit the entire city.

"A few salary increases or signing bonuses are not going to solve this," Schwartz said. "I think it needs to be more systemic in the way we look at this."

At a certain point, Schwartz said, the city may reach a "go or no-go" situation for municipal utilities.

"At what point can we not operate a utility?" Schwartz asked.

She also pointed to the various new utilities initiatives that the city is pursuing, including the proposed extension of the municipal fiber-optic system to all residences.

"If we can't staff what we're doing, how can we staff a new function that could be labor intensive?" Schwartz asked.

Others shared her concern. Commission Chair Michael Danaher said it's important for the City Council to recognize the problem and ensure that the city doesn't have "overly strict financial restrictions" when it comes to addressing it.

"If we're not in an emergency situation, we're one or two steps away from being in an emergency situation from staffing," Danaher said.