City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Community Services
Meeting Date: December 15, 2025
Report #:2510-5331
TITLE
Approval of Amendment #1 for Professional Services Contract No. C26195143 in the Amount of $101,292 with Peninsula Healthcare Connection to continue the Downtown Food Closet Operations for a Revised Total Amount Not-to-Exceed $268,521 including the Provision of Outreach, Mental and Physical healthcare to Unhoused and Low-Income Members of the Community for a Period of Two Years; CEQA status – not a project.
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or his designee to execute Amendment #1 to Contract No. C26195143 with Peninsula Healthcare Connection (Attachment A) in an amount not-to-exceed $101,292 for additional services for the operation of the Downtown Food Closet for unhoused and low-income members of the community for a term of two years. This amendment results in a revised total contract not-to-exceed amount of $268,521.
BACKGROUND
The Human Services Resource Allocation Process (HSRAP) serves as the City’s primary mechanism for soliciting, reviewing, and allocating General Fund dollars to human service organizations. Proposals for the current two-year grant cycle (July 1, 2025 – June 30, 2027) were submitted in January 2025. An ad hoc subcommittee of the Human Relations Commission (HRC) evaluated the proposals in February 2025 and developed funding recommendations, which were subsequently reviewed and approved by the full HRC in March 2025. The Commission’s recommendations were incorporated into the City’s proposed FY 2026 Operating Budget, which the City Council adopted in June 2025. The adopted FY 2026 budget includes a
HSRAP grant to Downtown Streets Team1 that included operational support for the Downtown Food Closet.
ANALYSIS
In early September 2025, Downtown Streets Team (DST) announced it would be ceasing all operations effective October 31, 2025. This closure included the discontinuation of the Downtown Food Closet (Food Closet), a longstanding and vital source of free food for the local community.
Shortly after the DST announcement, Peninsula Healthcare Connection (PHC) notified the City that it had partnered with All Saints Episcopal Church, the long-time host site of the Food Closet, and secured a five-year lease with the Church to assume the responsibility of operating the Food Closet beginning November 1, 2025.
Peninsula Healthcare Connection2 was awarded a HSRAP contract for the period of July 1, 2025, through June 30, 2027 to provide outreach, mental and physical healthcare to unhoused and low-income members of the community. Given the importance of maintaining uninterrupted food services for vulnerable populations, City staff is recommending that the remaining unspent grant funds previously allocated to DST for Food Closet operations be reallocated to PHC to support ongoing and future operational needs at the site. For FY 2026, that amount is $42,930. As PHC will continue to perform this service, it is anticipated that in year two PHC will be allocated the portion of prior DST HSRAP funding dedicated to Food Closet operations. As a standard, HSRAP grantee contracts include additional funding authority in year two of the contract that is subject to City Council appropriation through the annual budget process.
The focus of PHC’s original scope of services centered on providing outreach, mental and physical healthcare to unhoused and low-income members of the community. In the amended scope of services for Contract # C26195143, Food Closet operations including operational continuity for the community, anticipated annual service level, service hours, and staffing have been incorporated. The specific program objectives, tasks and outcome measures are listed in Exhibit “A”: Scope of Program Services: Amendment 1 (Attachment A). 1 Downtown Streets Team, provide outreach services and operate a food closet for unhoused and low-income individuals through HSRAP, Contract #C26195134; https://www.paloalto.gov/files/assets/public/v/1/community- services/human-services/grant-programs/downtown-streets-team-hsrap-contract-c26195134_executed.pdf 2 Peninsula Healthcare Connection, provide outreach and mental/physical healthcare to unhoused and low-income individuals through HSRAP, Contract #C26195143; https://www.paloalto.gov/files/assets/public/v/1/community- services/human-services/grant-programs/peninsula-healthcare-connection-hsrap-contract- c26195143_executed.pdf
An exemption from competitive solicitation per Palo Alto Municipal Code 2.230.360(b2) (impracticality to solicit) was approved by the City Manager.
FISCAL/RESOURCE IMPACT
PHC's original total contract not to exceed amount was $167,229. Per action of this staff report, $101,292 from the contract authority of DST will be added to PHC current contract for a total contract value of $268,521.
All funding required for the current year of this contract amendment is currently available within the FY 2026 Adopted Operating Budget of the Community Services Department, as it involves reallocating funds from one HSRAP grantee to another. No additional funding is required in FY 2026. Funding for future years is subject to City Council appropriation through the annual budget process.
STAKEHOLDER ENGAGEMENT
The City received correspondence from community members and local nonprofit organizations expressing concern about the potential closure of the Food Closet and its impact on low-income and vulnerable residents. City staff provided the outcome of PHC’s agreement to take over Food Closet operations to nonprofit partners.
ENVIRONMENTAL REVIEW
Approval of this contract is not a project under the California Environmental Quality Act (CEQA) per CEQA Guidelines 15061(b)(3).
ATTACHMENTS
Attachment A: Peninsula Healthcare Connection HSRAP Contract C26195143 Amendment 1 APPROVED BY:
Kristen O'Kane, Community Services Director