City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: February 9, 2026
Report #:2509-5246
TITLE
Adoption of a Resolution Authorizing the City Manager to Negotiate and Execute Purchase Orders with To-Be-Determined Vendor(s) to Procure Nine Vehicle/Equipment Purchases for a Total Not-to-Exceed Amount of $1,430,000; Approval of a Fourth Amended and Restated Purchase Order Number 4521000199 with Altec Industries, Inc., to Increase the Purchase Order Amount by $94,911 to a New Not-to Exceed Amount of $1,167,986 for Two Vehicle/Equipment Purchases; and Amend the FY 2026 Budget in the Vehicle Replacement and Maintenance Fund and Electric Funds; CEQA Status – Not a Project
RECOMMENDATION
Staff recommends that the City Council:
1. Adopt a resolution to authorize the City Manager or their designee to:
a. Negotiate and execute a purchase order in an amount not to exceed $300,000 with a to-be-determined vendor for the purchase of One Cable Handling Trailer; b. Negotiate and execute a purchase order in an amount not to exceed $430,000 with a to-be-determined vendor for the purchase of One CAT Wheel Loader; c. Negotiate and execute a purchase order(s) in an amount not to exceed $700,000 with a to-be-determined vendor(s) for the purchase of 7 patrol vehicles; and
2. Approve and authorize the City Manager or their designee to amend Purchase Order No. 451000199 with Altec Industries, Inc., to increase the previously approved Purchase Order amount by $94,911, for a new total not-to-exceed amount of $1,167,986, which includes a 5% contingency in the amount of $55,618 for unforeseen cost increases, for the purchase of two 2025 Peterbilt 548 Hydraulic Digger Derricks, utilizing a cooperative purchase agreement via Sourcewell, a cooperative purchasing agency serving government and not-for-profit organizations; and
3. Amend the Fiscal Year 2026 Budget Appropriation (by a 2/3 vote) for
a. The Utilities Electric Fund by:
i. Increasing the transfer to the Vehicle Replacement and Maintenance Fund in the amount of $94,911; and
ii. Decreasing the Electric Distribution Reserve in the amount of $94,911; and
b. The Vehicle Replacement and Maintenance Fund by:
i. Increasing the transfer from the Utilities Electric Fund by $94,911; and ii. Increasing the expense appropriation for the Scheduled Vehicle and Equipment Replacement Fiscal Year 2020 project (VR-20000) by $94,911.
EXECUTIVE SUMMARY
This report seeks City Council authorization for the purchase of essential fleet equipment previously approved as part of the Fiscal Year 2026 Capital Budget, including one cable reel trailer, one Caterpillar wheel loader, and seven police patrol vehicles. Delegating purchase authority to the City Manager will enable staff to secure these units within rapidly changing and often narrow industry ordering windows, ensuring timely replacement and continued operational reliability. The report also requests approval of a fourth amended and restated purchase order with Altec Industries, Inc., to increase funding by $94,911 for two hydraulic digger derricks, correcting a sales tax omission identified from the prior Council action in Staff Report #2504-45671. Budget amendments are included to align appropriations with updated costs. Together, these actions support continuity of critical City services, maintain compliance with the fleet replacement policy, and advance the City Council’s long-term sustainability and fleet electrification goals where feasible.
BACKGROUND
The Vehicle and Equipment Use, Maintenance, and Replacement Policy section 4-1 provides for the on-going replacement of City fleet vehicles and equipment. Replacements are scheduled using guidelines based on age, mileage accumulation, and obsolescence. Policy 4-1 prescribes a replacement interval of 5 years or 100,000 miles for full-size police patrol vehicles and 5-15 years or 5,000 hours for trailers and miscellaneous construction equipment.
Over the last several years, the City has experienced limited vehicle availability, rising costs, and very narrow ordering windows due to ongoing supply chain challenges in the automotive and equipment industries. These constraints have made it increasingly difficult to complete fleet replacements in a timely manner, as ordering windows often close before staff can complete 1 City Council, September 15, 2025; Agenda Item #7; SR #2509-4567, https://portal.laserfiche.com/Portal/DocView.aspx?id=225740&repo=r-704298fc&searchid=cd6a53fb-c52b-40ae- 819a-afdfa2b3f9e0
the standard procurement and Council approval process. These replacements were previously reviewed and approved by City Council as part of the adopted Fiscal Year 2026 Capital Budget.
The two hydraulic digger derricks are being resubmitted to Council to correct an oversight in Staff Report #2504-4567, approved on the September 15, 2025 Council meeting’s consent calendar, where required sales tax was not included in the previously approved not-to-exceed amount.
ANALYSIS
To address recent supply chain and purchasing challenges, this report recommends that Council adopt a resolution (Attachment B) authorizing the City Manager to negotiate and execute purchase orders for one cable reel trailer, one Caterpillar wheel loader, and seven police patrol vehicles programmed for replacement in Fiscal Year 2026. Delegating final purchase authority will allow staff to act quickly when ordering opportunities arise, ensuring that replacements are secured in line with City policy, fleet needs, and Council’s goals, including the continued transition toward vehicle electrification.
Cable Reel Trailer (1 unit): The City owns and operates a single 2006 Hogg & Davis Cable Reel Trailer (Unit 7681), purchased in 2008, programmed for replacement in Fiscal Year 2026. This specialized utility trailer is employed by the Utilities Department to remove, transport, and install reels of electrical cable across the City’s distribution network. This equipment plays a critical role in the City’s infrastructure maintenance by streamlining cable handling tasks, reducing downtime of utilities services, and supporting efficient system upgrades.
Caterpillar Wheel Loader (1 unit): The City owns a single 2008 Caterpillar 950H Wheel Loader (Unit 4326), purchased in 2008, which meets the City’s replacement criteria and is scheduled for replacement in Fiscal Year 2026. The Utilities Department operates the loader at the Municipal Service Center to handle construction spoils, street sweeping debris, and tree sections for off-hauling. Its large, high-reach design is necessary for loading into tall end-dump trucks and it is the only unit in the fleet capable of moving and operating material screeners.
While primarily used by Utilities, it also supports Public Works with off-loading tasks as needed.
Police Patrol Vehicles (7 units): The City owns and operates a total of 31 patrol vehicles within the Police Department. Seven patrol vehicles meeting or exceeding the City’s replacement criteria are programmed for replacement in Fiscal Year 2026. The vehicles are assigned to patrol operations and are utilized by multiple shifts to provide continuous law enforcement coverage throughout the community. Of these seven units, funding was budgeted for two Rivian R1S models to further vehicle electrification of the Police fleet, and five hybrid units.
Hydraulic Digger Derricks (2 units): The replacement of two hydraulic digger derricks was previously approved by Council. Staff identified a discrepancy related to sales tax that was not reflected in the original not-to-exceed amount. Staff is requesting approval of a fourth amended and restated purchase order, with an increase of $94,911 to correct for this error.
This adjustment will enable the City to proceed with the purchase as intended and maintain operational continuity for utility field operations.
Fleet Electrification Goals
The City continues to advance its fleet electrification and greenhouse gas reduction goals by prioritizing zero-emission and low-emission vehicle technologies where operationally feasible.
Fleet replacement decisions are evaluated on a vehicle-by-vehicle basis, taking into account maintenance schedules, operational requirements, infrastructure readiness, and total cost of ownership. Where fully electric options are not currently viable, hybrid or conventional fuel vehicles are used to maintain essential services while supporting a phased transition toward electrification.
The City currently operates 41 active battery electric vehicles across multiple departments.
Additionally, more than 70 fleet vehicle replacements are planned to transition to electric over the next five fiscal years, reflecting Council’s long-term sustainability objectives. These planned replacements are separate from, and in addition to, the vehicles proposed in this staff report.
The vehicle purchases included in this report support the City’s electrification goals while meeting operational needs.
Police Patrol Vehicles (7 units): Two of the seven vehicles will be fully electric Rivian R1S vehicles, expanding the use of zero-emission vehicles in the Police Department. Five patrol vehicles will be hybrid gasoline-electric models, selected to provide emissions reductions while maintaining the range, refueling flexibility, and reliability required for multi-shift patrol operations. EV charging capacity at the Public Safety Building continues to be evaluated and expanded.
Caterpillar Wheel Loader (1 unit): There is no commercially available electric wheel loader that can reliably meet the City’s operational requirements. The replacement will be diesel-powered and is necessary to ensure continuity of critical Utilities and Public Works operations.
Hydraulic Digger Derricks (2 units): The hydraulic digger derricks are diesel-powered; no electric or hybrid alternatives perform the necessary utility line work. Staff will continue to monitor advancements in zero-emission utility truck technologies for future replacements.
Overall, this procurement reflects a balanced and incremental approach to fleet electrification by expanding electric vehicle adoption where feasible, incorporating hybrid technology to provide near-term benefits, and utilizing conventional fuel vehicles only where necessary to maintain safe and reliable City services.
Procurement Process
Staff plans to follow the City’s procurement regulations as outlined in the PAMC. Processes authorized may utilize a cooperative purchasing agreement, such as Sourcewell, in lieu of conducting competitive solicitations, allowed under PAMC section 2.30.360 (j), and/ or may include formal solicitations as would otherwise be required by PAMC section 2.30.310 (b). The procurement method for the vehicles will also be determined at a later date. As the order window is often short, this delegation to the City Manager allows staff to move quickly with the dealer to secure the vehicles whether through bidding or a cooperative purchasing agreement process.
Palo Alto Municipal Code section 2.30.360 (j) allows the use of cooperative purchasing agreements in lieu of conducting a competitive solicitation. Altec was awarded a contract by Sourcewell, a cooperative purchasing agency serving governmental, higher education, K-12 education, not-for-profit, tribal government, and other public agencies. For the Digger Derrick vehicles, Sourcewell conducted a Request for Proposals under which Altec Capital was an awarded vendor. Altec’s contract with Sourcewell was subsequently amended to allow Altec to increase its contract pricing.
Staff recommends that Council approve the amended purchase order with Altec Industries, Inc. (Attachment A) for the purchase of two 2025 Peterbilt 548 Hydraulic Digger Derricks. Staff has considered alternatives and believes this remains the most cost-effective means of procuring the required equipment. If this request is not approved, the City will forfeit the two 2025 Peterbilt 548 chassis that are designated for this build. Staff would then have to request a new specification and quote for a later year model chassis and return to Council for approval. This would further increase the purchase cost and delay the delivery of these new vehicles.
FISCAL/RESOURCE IMPACT
Funding was approved and is available for the purchase of the cable reel trailer, Caterpillar wheel loader, and seven police patrol vehicles in the Vehicle Replacement Fund Scheduled Vehicle and Equipment Replacement – Fiscal Year 2026 project (VR-26000), including funding for the purchase of two Rivian R1S models, supporting the City’s fleet electrification and sustainability goals. Despite recent budget reductions, staff is not recommending deferral of these replacements as the equipment and vehicles support critical operational and public safety functions and are among the high-priority needs identified in the City‘s replacement program.
While other aging vehicles have been deferred, these units have reached the end of their useful life and present increasing maintenance, reliability, and operational continuity risks if not replaced. Replacement recommendations were reviewed through the Fleet Review Committee to ensure purchases are strategic, fiscally responsible, and aligned with operational necessity.
To fund the amended purchase of the two 2025 Peterbilt 548 Hydraulic Digger Derrick trucks, the Fiscal Year 2026 budget will be amended by increasing the transfer from the Electric Fund to the Vehicle Replacement and Maintenance Fund by $94,911 and decreasing the Electric Distribution Reserve by the same amount. Both the expense and revenue Fiscal Year 2026 appropriations in the Scheduled Vehicle and Equipment Fiscal Year 2020 project (VR-20000) will also be increased by $94,911. As a result of the adjustments, the average cost of each truck is now estimated at over $556,000, when originally, they were estimated at $316,933 in 2021.
STAKEHOLDER ENGAGEMENT
Requests for vehicle replacements are presented to the Fleet Review Committee (FRC) for approval during the development of the proposed budget and any deviation from these plans is also reviewed by the Committee. The FRC is comprised of executive leadership representatives from the Public Works and Administrative Services Departments and the City Manager’s Office.
Additionally, Fleet staff review proposed vehicle replacements with the departments using the vehicles.
ENVIRONMENTAL REVIEW
This purchase is exempt from the provisions of the California Environmental Quality Act (CEQA) under sections 10560 and 10561.
ATTACHMENTS
Attachment A: Altec Quote for Digger Derricks
Attachment B: Resolution Authorizing City Manager to Procure Trailer, Wheel Loader, and Police Patrol Vehicles
APPROVED BY:
Brad Eggleston, Director Public Works/City Engineer