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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Transportation
Meeting Date: June 16, 2025
Report #:2506-4761
TITLE
Approval of Amendment No. 3 to Contract Number C23184827 with Nomad Transit, LLC (Via) in the Amount of $1,100,000 for a total not to exceed $4,901,550 over a Four-Year Term to Continue the City of Palo Alto On-Demand Transit Service through June 30, 2026; CEQA status - not a project.
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their designee to execute Amendment No. 3 to Contract C23184827 with Nomad Transit, LLC (Via) (Attachment A) to provide Palo Alto Link Services, extending the contract term to June 30, 2026, in an amount not to exceed of $1,100,000. This amendment results in revised not-to- exceed amount of $4,901,550.
BACKGROUND
Palo Alto Link provides on-demand transit service Monday-Friday for a 12-hour service span 7:00 am-7:00 pm. The service operates within most of the City, with exceptions only to the east and west ends that primarily house large open spaces and conservation lands. PAL is utilizing a ten (10) vehicle fleet to provide virtually positioned pick-up and drop-off locations within an acceptable walking distance with the help of a web application. Door-to-door service is available for riders who may require extra assistance. The service addresses first-/last-mile challenges in Palo Alto and provides a convenient and affordable transportation option for residents, employees, and vulnerable/transit-dependent populations.
Finding and securing funding partners such as Stanford Research Park (SRP) is an integral strategy to establish a long-term path forward for funding PAL transit services. The City Council approved the contract for this service December 12, 20221 and further discussed service levels 1 City Council meeting 12/12/2022, Item#8:
https://cityofpaloalto.primegov.com/portal/item/?meetingItemId=20f80994-de00-4d1a-aa0b-9e37365ba583
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and funding in April 2023 and as part of the FY 2025 budget process in May 2024. For the FY 2026 Budget process in May 2025, a reduction in service and contract funding to $1.1 million was recommended to mitigate the potential nonrenewal of grant sources. Staff will bring forward subsequent budget adjustments as needed if grant renewals are awarded. Notification is expected in the next several weeks.
The contract with Nomad Transit LLC (Via) provided on-demand transit services in the amount of $2,043,000 for up two years, which the City conducted a formal solicitation for and was primarily funded through the 2016 Measure B Innovative Transit Grant ($2,000,000). On April 10, 2023, the Council approved contract Amendment No. 12, adding a cost sharing agreement with Stanford Research Park. On November 4, 2024, the Council approved contract Amendment No. 2, making some service and fee adjustments, and updating the revenue sharing approach with SRP3. The City continues to work in conjunction with SRP to increase the service area of PAL to also serve SRP, with SRP contributing per month to the City to cover the increased cost of providing the expanded service area.
ANALYSIS
A study session was held with the City Council in FY 20244 to discuss the service levels of this program in light of the sunset of the Innovative Transit Grant. This discussion reviewed the funding necessary to support different levels of services in preparation for the FY 2025 budget process. During the FY 2025 budget process, the Finance Committee and City Council adopted a revised level of service and funding plan including changes to ride fares, partnerships with other agencies, and grant funding to lower the net financial impact on the City’s General Fund. The FY 2025 Adopted Budget reflected gross program expenses of $1.2. million, reflecting a reduction in service level from FY 2024.
The service level included in the second amendment and recommended in this third amendment maintains Palo Alto Link on-demand transit service Monday—Friday for a 12-hour service span 7:00 am-7:00 pm, with increased wait times compared to the previous fiscal year.
FY 2025 was the first of $4 standard fares and $2 fares for the discounted categories—senior, disabled, low-income, and youth. While the first six months of service saw wait times in the 13- to 15-minute ranges, wait times in FY 2025, and particularly in the last six months, have approached 20 minutes (Figure 1).
2 City Council meeting 4/10/2023, Item#7 SR#2303-1128:
https://cityofpaloalto.primegov.com/meeting/document/1875.pdf?name=Item%207%20Staff%20Report 3 City Council meeting 11/4/2023, Item#AA1 SR#2410-3699:
https://cityofpaloalto.primegov.com/viewer/preview?id=13626&type=3#%5B%7B%22num%22%3A1097%2C%22g en%22%3A0%7D%2C%7B%22name%22%3A%22Fit%22%7D%5D
4 City Council meeting 4/1/2024, Item#3 SR#:
https://cityofpaloalto.primegov.com/portal/item/?meetingItemId=5b78bb81-6e97-4ba6-8d46-559b1f4c45f8 7 4
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Figure 1: Average Pickup ETA for On Demand Rides
Ridership began with steady growth throughout the first year of the service, but the increased wait times and a slightly increased walking distance to aggregated ride routes have likely helped to modulate growth over the last six months.
Figure 2: Average Pickup Walking Distance
Figure 3: Met Demand (Ride Requests Fulfilled)
Prior to the fare increase, fare recovery ranged from $0.60 to $0.75 per fare. Since the fare increase, fare recovery has ranged from $0.75 to $1.00 per fare. Similarly, total operations cost per trip decreased from a $27 to $35 range per month to a $23 to $30 per month average cost.
In the first four months of 2025, the main factor in services cost, driver hours, has been kept below 1000 hours, increasing ride pooling efficiency and helping to keep per trip costs down.
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Figure 4. Driver Hours.
The recommended service level for FY 2026 will be responsive to funding available for the program: $1.1 million, currently provided, will be a baseline level provided by the City and SRP, with an expanded service level should grant funding be awarded.
FISCAL/RESOURCE IMPACT
In line with the plan outlined in Amendment 2, staff will closely monitor PAL activity and bring forward budgetary adjustments to Council as needed with the expectation that the City’s General Fund funding for the program of $500,000 will not be increased in FY 2026. The remaining $600,000 is funded mostly by Stanford University to offset the cost of PAL services to the University and Research Park ($520,000). Fare revenues from riders using PAL are estimated to provide an additional $80,000 to offset the cost of the program.
STAKEHOLDER ENGAGEMENT
Public engagement is ongoing since the program launched on March 7, 2023. Community engagement and marketing activities include tabling at community events and destinations and social media campaigns.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA under CEQA regulation 15061 (b)(3).
ATTACHMENTS
Attachment A: Nomad Transit LLC (Via) Contract, C23184827 Amendment #3 APPROVED BY:
Ria Hutabarat Lo, Chief Transportation Official