City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Community Services
Meeting Date: January 16, 2024
Report #:2312-2462
TITLE
Approval of Amendment No. 2 with Pets in Need Contract (C19174493) to extend the term through March 2024 and increase the compensation by $342,501 for operations of the Palo Alto Animal Shelter, for a Not-to-Exceed Amount of $4,431,872; CEQA status – not a project.
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager to execute Amendment No. 2 to Contract No. C19174493 with Pets in Need (Attachment A) in the amount of $342,501 to continue operations of the Palo Alto Animal Shelter for an additional three-month term or until a new Agreement is finalized, whichever is sooner.
BACKGROUND
Since 2019, animal sheltering services at the Palo Alto Animal Shelter have been provided by Pets in Need. The current Agreement has a five-year term ending January 17, 2024 (Attachment B).
On November 15, 2021, Pets in Need (PIN) provided formal notification to the City that it would exercise its right to terminate the Agreement without cause in 12 months’ time as allowed in Section 19.2 of the Agreement. PIN has extended the termination date several times while the City and PIN negotiate a new contract Agreement. Staff from the City and PIN have discussed progress with the Council on several occasions1,2,3. On August 14, 2023, the City Council approved a proposed Term Sheet with Pets in Need for continued operations of the Palo Alto Animal Shelter. The Council directed staff to return for approval of a new Agreement reflecting the terms and approved an interim payment to Pets in Need in the amount of $55,535 per month beginning June 2023 and each month until a new Agreement is executed. Amendment No. 1 (Attachment C) to the Agreement was approved by the City Manager and increased the not-to-exceed amount of the contract by $444,280, which reflects the addition of the interim payment for the eight- month period beginning June 1, 2023, through January 31, 2024. 1 City Council, March 27, 2023, Agenda Item #3, SR#2302-0940; https://portal.laserfiche.com/Portal/DocView.aspx?id=65785&repo=r-704298fc 2 City Council, June 12, 2023, Agenda Item #3, SR#2302-1313; https://cityofpaloalto.primegov.com/Portal/viewer?id=2049&type=0 3 City Council, August 14, 2023; Agenda Item #6, SR#2306-1712; https://cityofpaloalto.primegov.com/Portal/viewer?id=2632&type=0
Additional background information on the Pets in Need Agreement and approved Term Sheet can be found in the previous staff reports included as footnotes to this report.
ANALYSIS
Staff from both the City and PIN have been working to finalize a new Agreement and expect to return to Council before March 31, 2024 with a final Agreement. In the interim, the City Council must approve the attached Amendment to continue payment of compensation to PIN and extend the term. This Amendment will bridge the gap between the current termination date by providing PIN with monthly compensation equal to the amount in the Term Sheet that the City Council approved on August 14, 2023. Staff expects to return to Council with a new Agreement in the first quarter of 2024.
PIN and City staff continue to work collaboratively to develop a new Agreement and as partners to deliver high quality animal care and sheltering services to residents of Palo Alto, Los Altos and Los Altos Hills. The delay in finalizing the new Agreement is related to finalizing contract language and is not a result of revisions to the Term Sheet.
FISCAL/RESOURCE IMPACT
Amendment No. 2 to the Agreement increases the total not-to-exceed amount by $342,501 for a total contract amount of $4,431,872. This amount represents monthly compensation of $114,167 for the three-month period of January through March 2024 and is calculated using the annual compensation amount of $1.4 million included in the Term Sheet that the Council approved on August 14, 2023. The Term Sheet will be used to develop key terms in the new Agreement.
The FY 2024 Adopted Operating Budget includes $1.2 million for contract costs to operate the Animal Shelter and there is sufficient funding remaining for this amendment. When staff returns with a new agreement, staff will include any necessary budget amendments to align with the agreement for the remainder of FY24. Staff will also bring forward funding recommendations to adjust the FY 2025 budget as part of the annual budget development process.
STAKEHOLDER ENGAGEMENT
Previous Council discussions related to this topic provided opportunities for public comment.
ENVIRONMENTAL REVIEW
Council action on this item is not considered a Project within the requirements of CEQA.
ATTACHMENTS
Attachment A: Amendment No. 2 to Contract No. C19174493 with Pets in Need Attachment B: Contract No. C19174493 between the City of Palo Alto and Pets in Need Attachment C: Amendment No. 1 to Contract No. C19174493 with Pets in Need APPROVED BY:
Kristen O'Kane, Community Services Director