City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: Transportation
Meeting Date: March 2, 2026
Report #:2511-5431
TITLE
Palo Alto Link Program & Transit Futures Review; CEQA status – not a project.
RECOMMENDATION
Review service performance and transit funding options as Palo Alto Link services conclude June 30, 2026.
EXECUTIVE SUMMARY
Palo Alto Link began as an 18-month pilot program funded by a Valley Transportation Authority (VTA) Measure B Innovative Service grant on March 7, 2023. The service has provided on- demand weekday micro-transit services throughout most of Palo Alto. The service currently operates on weekdays from 7 a.m. to 7 p.m., with school exclusion zones. Additional grant and partner funding, and City Council approvals, have extended the pilot term to June 30, 2026.
With committed grant funding winding down, City Council directed staff in June 2025 to review options for (1) winding down the service; (2) continuing Palo Alto Link with less reliance upon the City General Fund; (3) focusing the service to prioritize vulnerable riders; or (4) supplanting the program with a shuttle or fixed routes services.
Staff reviewed current operating model and considered possible fare and service changes to reduce costs and prioritize vulnerable populations, such as senior and disabled riders. Staff also considered options to resume fixed route shuttle services or replace the Link with TNC or taxi vouchers.
No options were found that completely eliminate costs to the City.
BACKGROUND
In 1998, City Council adopted the City’s Comprehensive Plan, which included Goal T-2: A Convenient, Efficient Public Transit System that Provides a Viable Alternative to Driving.
Palo Alto Shuttle Program, 1999 – 2020
Based on this goal, the City began a Shuttle Program in December 1999 with two fare-free services: 1) Crosstown shuttle between Crescent Park, Midtown and Charleston Road, which
was funded by the City and operated via a turnkey arrangement with MV Transportation1; and 2) Embarcadero shuttle between Palo Alto Transit Center and East Embarcadero Road, which was initially managed by Caltrain with a partial subsidy from the City of Palo Alto that increased as Caltrain funding diminished over time. These shuttle services operated Monday through Friday, with a special school commute service on both routes on school days.
Between July 2014 and September 2016, the
City of Palo Alto operated a third route
between Palo Alto Transit Center and East
Palo Alto, with funding support from the City
of East Palo Alto. After this route was
discontinued, SamTrans Route 280 was
modified to fill the gap.
By 2019, the Crosstown and Embarcadero
shuttles served 550 riders per day or 140,000 riders per year, including vulnerable and transit- dependent populations such as seniors and students.
On August 14, 2017, City Council approved the Palo Alto Transit Vision, which outlined a plan to expand the Palo Alto Shuttle program to three routes with expanded Crosstown and Embarcadero routes, and a new South Palo Alto route serving California Avenue station and VA Hospital. In total, these three services were estimated to cost between $2.35 million and $4.30 million (escalated to 2026 dollars) annually. As part of their review, Council directed staff to also consider “fixed-flex” models and to pursue Measure B funds2 to advance local transit options.
Table 1: Shuttle Alternatives Presented in the 2017 Palo Alto Transit Vision Route Variant Service Hours and Headways
Annual
Service
Hours
Escalated
Annual Cost
($2026))3
A
Weekdays: 7am–7pm @ 30-min day, 40-min
evenings
Weekends: No service
11,985 $1,089,000
A2
Weekdays: 7am–9pm @ 15-min peak, 30-min
midday, 40-min evenings
Weekends: 8am–8pm @ 40-min
21,705 $1,972,000
Cross-
town
B Weekdays: 6am–10pm @ 30-min 14,640 $1,330,000
1 SR 10281, June 24, 2019 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas- minutesreports/reports/city-manager-reports-cmrs/year-archive/2019/id-10282.pdf 2 See summary of Transit Vision alternatives in the table above; approved by City Council in March 2017:
https://www.cityofpaloalto.org/files/assets/public/v/1/transportation/misctransportation/ palo-alto-shuttle/palo-alto-transit-vision.pdf
3 Since 2019, transit service costs have increased considerably as a result of inflation, supply chain issues, operate shortages in the Bay Area and other factors.
Figure 1: Palo Alto Shuttle (Photo: City of Palo Alto)
Weekends: 8am–8pm @ 45-min
B2 Weekdays: 6am–10pm @ 30-min
Weekends: 8am–8pm @ 45-min 14,640 $1,330,000
A
Weekdays: 6:50am–7pm @ 20-min peak, no
midday, 40-min evenings
Weekends: No service
5,228 $475,000 Embarc-
adero
Route
B
Weekdays: 7am–9pm @ 15-min peak, 30-min
midday & evenings
Weekends: 8am–8pm @ 60-min
11,400 $1,036,000
A
Weekdays 7am–7pm @ 30-min daytime, 60-min
evenings
Weekends: No service
8,670 $788,000 South
Palo
Alto B
Weekdays: 7am–9pm @ 15-min peak, 30-min
midday, 60-min evening
Weekends: 8am–8pm @ 60-min
14,240 $1,294,000
Following the pandemic shutdown that abruptly reduced transit ridership and City financial resources, Palo Alto Shuttle services were discontinued on July 1, 2020.
Palo Alto Link, 2023 – 2026
To fill the resulting gap in transit access, City staff submitted a successful application for $2,000,000 in VTA Measure B Innovative Transit program funds for an On-Demand Transit Service, with a $500,000 local match. The City subsequently selected Nomad Transit, LLC, (aka Via) to operate “Palo Alto Link” with an initial $2,043,550 contract for an 18-month term beginning on March 7, 2023. The City also executed a $744,000 cost sharing agreement with Stanford University to recoup cost of trips originating or ending in Stanford Research Park (SRP).
Palo Alto Link employed hybrid and electric vehicles (EVs) to provide on-demand rides booked via mobile app or phone with initial service hours from 8am to 6pm, Monday-Friday. The initial fare for single rides was $3.50, with a discounted price of $1 for disabled, low-income, senior, and youth riders. The cost of this service to the City is dependent upon allocated driver hours and is not necessarily correlated with trips
provided.
On October 21, 2024, Council authorized
an amendment to extend services through
June 2025, with an additional $1,200,000
(bringing the total Via contract to
$3,801,000) and an additional $600,000
cost-sharing amount from Stanford
for trips to and from SRP. Based on
Figure 2: Palo Alto Link (Photo: City of Palo Alto)
Council discussion, staff also sought out additional grant funding from the Air District’s Transportation Fund for Clean Air (TFCA) program, which resulted in a grant award of $441,000.
On June 17, 2025, Council approved an additional 12-month extension to Palo Alto Link service and directed staff to consider and present termination implications, alternative service options, and opportunities if two requested grants were awarded7. Since June 2025, staff confirmed a second TFCA award of $456,500, and received information that the service would not receive a second Measure B Innovative Transit grant.
Table 2: Palo Alto Link Funding Milestones
Date Milestones Non-Fare Revenues (Grants &
Partnership Funding)
Cumulative
Service Cost
12/12/2023 Council Accepts VTA Measure B
Innovative Transit for 18
months8
+$2,000,000
(till 6/30/2024)
4/10/2023 Vendor Contract Amendment
#1 adds Stanford Cost Share9
+$558,500
($31k monthly till 8/30/2024)
Through June 30, 2023 $595,393
10/21/2024 Vendor Contract Amendment
#2 extends service through
6/30/2025 & augments
Stanford Cost Share10
+$744,000
(Stanford to provide on
percentage use)
Fall 2024 Transportation Fund for Clean
Air (TFCA) award
+$441,000
(through 6/30/2025)
Through June 30, 2024 $2,018,254
6/17/2025 Vendor Contract Amendment
#3 extends service through
6/30/202611
Through June 30, 2026 $3,545,344
11/17/2025 Stanford Cost Share extension + up to $600,000 (through 6/30/2026)
11/17/2025 2nd Transportation Fund for
Clean Air (TFCA) award
+ $456,500
(available through 6/30/2027)
Estimated through June 30, 2026 $4,800,000 $4,745,344
7 SR 2506-4761, June 16, 2025 https://cityofpaloalto.primegov.com/viewer/preview?id=8427&uid=b976b160- b836-4718-8270-36f25c823c8d&type=2
Item recommending Nomad Contract Extension is pushed to the following day. 8 SR 14959, December 12, 2022 https://cityofpaloalto.primegov.com/portal/item/?meetingItemId=20f80994-de00- 4d1a-aa0b-9e37365ba583
9 SR 2303-1128, April 10, 2023 https://cityofpaloalto.primegov.com/portal/item/?meetingItemId=5a61ff58-8c43- 48a2-ac4d-8b6814a65816
10 SR 2408-3387, October 21, 2024 https://cityofpaloalto.primegov.com/portal/item/?meetingItemId=2a1814e2- 47ed-4386-9b5a-26d412807895
11 Council motion on June 16, 2025 item https://cityofpaloalto.primegov.com/viewer/preview?id=16856&type=3 Palo Alto Link Performance
Today, Palo Alto Link services include on-demand transit service Monday-Friday for a 12-hour service span 7am-7pm, with school exclusion zones and slightly increased fare prices ($4 standard and $2 discounted for seniors, disabled, low-income, and youth riders). Weekly and monthly passes are also available.
The service operates within most of the City, except areas to the east and west that are primarily characterized by large open spaces and conservation lands.
The service uses a nine (9) vehicle fleet to provide virtually positioned pick-up and drop-off locations within an acceptable walking distance. Door-to-door service and a wheelchair accessible vehicle is available for riders who may require extra assistance.
Between March 7, 2023, and September October 30, 2025, Palo Alto Link served 137,450 rides, (3,011 to 6,072 per month), averaging 3.3 miles and 13.3 minutes long. Based on a survey by Via in late 2024, 60% of riders identify as minorities, 57% earn less than $100,000 per year, and 53% are seniors, disabled, or economically challenged. A large proportion of monthly rides (40% to 58%) included multiple bookings, where rider trips are shared with other riders.
Top destinations include the
Palo Alto Transit Center,
Stanford Research Park
destinations, Cubberly
Community Center, Midtown
shopping locations, Rinconada
Park area, Stanford Shopping
Center, the VA Hospital, and
Stanford Health locations,
though trips are also
distributed across the entire
service area, including many
residential locations.
Through the service’s
application or a booking agent,
riders receive a Seat
Unavailable message if there is
no available capacity for a new passenger booking a trip at that specific time or in that particular service area. In the first 12 months of service, the monthly Seats Unavailable service metric ranged from 3.8% to 9.1%. As committed funding has diminished over the last seven months, staff have directed Via to scale down service costs. In response, Seats Unavailable messages have ranged from 15.1% to 19.6% of all rides requested, as the vendor has had to make less Vehicle Driver Hours available to the public. Typical wait times have also increased, Figure 3: Palo Alto Link Mobile Application
from 12-15 minutes when the service began to 18-25 minutes since Fall 2024. Average pickup walking distance has also been increased to pool rider trips more efficiently.
Figure 4: Palo Alto Link Popular Destinations
ANALYSIS
Given the budget conditions noted on June 16 and 17, 2025, Council directed staff to consider termination implications, alternative service options, and opportunities presented by grant funding for Palo Alto Link or other similar services. To provide these estimates, staff engaged Via (which operates both fixed route and on-demand transit) and reached out to potential funding partners including Stanford University, Stanford Health Care, and Caltrain. The options and estimated impacts are summarized in Table 3 and discussed in the following section.
Table 3: Summary of Alternative Service and Funding Options Strategy Type Description Ridership Impact Cost Impact
Continue Palo
Alto Link as a
Use cost savings from current
FY to extend service to June
2027 to provide time to seek
Raise general fare to $10-
$15, add pre-booking for
seniors and disabled
Move current FY
General Funds of
$250,000 to FY 2027
Table 3: Summary of Alternative Service and Funding Options Strategy Type Description Ridership Impact Cost Impact
pilot with
higher fares
funding partners or allow
emerging options to progress
Continue Palo
Alto Link As Is
On-demand rides @ $4/trip ($2
discount) 18-25-minute wait,
15-20% unavailable, school
exclusion
Continue current 3,000-
6,000 trips / month
$1.2 million/year
($26/trip); continue
Stanford partnership
(up to $600k /year)
Increase fares ($10 general, $3
concessions) Decreases ridership Limited decrease in
total cost
Retain fare structure, but
reduce total driver hours Decreases ridership Limited decrease in total cost
Restrict eligibility to disabled,
low-income, seniors, youth 50-80% decrease in trips
No decrease in total
cost unless fewer
driver hours
allocated
Prioritize & allow pre-booking
by disabled, low-income &
seniors; public only travel as
seats available
20-40% decrease in trips
No decrease in
total cost unless
fewer driver hours
allocated
Continue Palo
Alto Link with
Lower
Subsidy
Shift ridership to existing fixed
route bus routes where
available
Only ~6% of trips can be
completed via bus
network
No cost reduction
available
Embarcadero shuttle: 4+
vehicles @ 30-minute headway,
12 hour
Unknown potential
increase in ridership
$1.1 million; No fund
partnerships
currently available
Crosstown shuttle: 4+ vehicles
@ 30-minute headway, 12 hour
Unknown potential
increase in ridership
$0.8 million; Caltrain
no longer offers
funding partnership
Resume Fixed
Route Shuttle
Services
(~16 person
vehicle) South Palo Alto (Cal Ave to VA)
shuttle: 4+ vehicles @ 30-
minute headway, 12 hour
Unknown potential
increase in ridership
$0.8 million; No
funding partnerships
currently available
Subsidize TNC
or Taxi Service
Could be prioritized for
vulnerable users and desired
availability
Lack of control over rider
safety & availability of
wheelchair-accessible
vehicles
Releases Stanford
Research Park cost
share
Discontinue
Palo Alto Link
Concludes pilot program on
June 30, 2025
Users will pay more for
alternative TNC or taxi
services and users with
disabilities will need to
book 24 hours in advance
for paratransit
Saves City General
Fund from any
ongoing committed
funds
Continue Palo Alto Link as a Pilot Service
This strategy allows the City to buy time by extending the program offerings for an additional year while other options emerge and staff continue to explore additional potential partnerships. This option would involve re-programming committed FY 2026 General Fund dollars to FY 2027 ($250,000), renewing the Stanford Research Park partnership through FY 2027, and utilizing awarded TFCA funds spread over the remainder of FY 2026 and across FY 2027. This approach could also be paired with service or ridership changes or reprioritizations described.
Continue Palo Alto Link As Is
Maintaining current service design would be the most cost-effective way to sustain transit accessibility to the existing community of predominantly elderly and economically challenged riders. While the total cost would not decrease, a continued focus on efficiency would continue to minimize costs. Based on Via’s survey of similar services in Bay Area cities, Palo Alto Link spends less per trip than other Bay Area on-demand micro-transit services.
Continue Palo Alto Link with Lower Subsidy
Various options were considered as potential opportunities for reducing subsidies for Palo Alto Link. The most promising options were increasing fares or reducing driver hours.
Increasing fares (with need-based discounts) may be expected to reduce general ridership, which may reduce total savings. To test the impacts of fare increases on ridership, If Council wishes to continue the Palo Alto Link service beyond June 2026, the City could potentially pilot a fare increase for the remainder of FY 2025-26. Increased fares would generate additional revenue and would likely not reduce the current funding gap of $250,000 (covered by awarded TFCA funds in the current FY 2026), while also testing the effects of a fare increase on ridership.
Beyond June 2027, however, the funding gap would increase to $700,000 per year if the City is unable to secure additional TFCA or other grants. This increase could be graduated by reduced driver hours.
Other options that were explored as potential mechanisms to lower subsidies included restricting access or prioritizing elderly and economically challenged riders. These options may provide a higher quality of service for a limited rider base, but it would cause a spike in cost per ride and may result in some wasted capacity in the form of empty deadhead trips that would otherwise be occupied. The concept of redirecting ridership to bus routes was not considered to be effective since existing bus route only serve a fraction of the current rider base and the strategy would increase cost per trip.
Resume Fixed Route Shuttle Service
Community members have expressed interest in fixed route shuttles as an alternative to Palo Alto Link; however, this option is financially infeasible. As shown in Table 1, fixed route shuttle services are more expensive than Palo Alto Link. Furthermore, prior shuttle funding partnerships such as Caltrain and Stanford Health Care are no longer available, and a shift from Palo Alto Link to a fixed route shuttle would likely result in the loss of the funding partnership with Stanford since SRP trips are distributed throughout the City and not along shuttle routes.
Subsidize Transportation Network Companies (TNC) or Taxi Services Ridehail or taxi vouchers are a readily available solution that serve eligible high-need riders, and could focus on seniors and disabled riders only, but this strategy would release Stanford Research Park partnership funds, and does not provide wheelchair accessible vehicle (WAV) availability or additional assistance. AV services such as Waymo are unable to provide assistive functions that are currently available, and human operated services such as Uber and Lyft involve a less rigorous onboarding and vetting process for drivers than Palo Alto Link.
Discontinue Palo Alto Link (Default Option)
Discontinuing Palo Alto Link as currently planned includes disrupting service for dependent populations without a comparable inexpensive option. Some may be able to use other transit services operating within Palo Alto such as VTA route 522, 22 and 21; SamTrans ECR, 280, 281, 2996 and 397; AC Transit DB; and Stanford Marguerite 1050, C, CAX, HD, MC, OCA, P, RP, S and X. Via analysis suggests that approximately 6% of current Palo Alto Link trips could be replaced with existing transit services. The City could help to support these services by providing more public information and encouragement, promoting widespread implementation of multi-agency transit passes (Baypass) with MTC, and providing transit passes to low-income workers through Palo Alto Transportation Management Association (PATMA).
Since many areas of the City are not covered by these services, many riders would need to discontinue their trips, shift their trips to walking, bicycling or driving, or pay substantially more to TNCs (like Uber, Lyft and Waymo) to be accommodated. People with disabilities may book services 24 hours in advance from VTA Access or utilize community-based services such as Avenidas Door to Door Transportation Program, which utilizes driver volunteers and/or support with various other private and/or non-profit ride share services.
Funding Partnership Opportunities
Stanford University has been an ongoing funding partner for Link services to and from Stanford Research Park. Based on staff conversations, Stanford Health Care (SHC) transportation staff have expressed openness to exploring potential opportunities for partnerships, but no interest in resuming Embarcadero shuttle services. Currently, SHC uses TNC subsidies for employees commuting from Palo Alto Transit Center to Embarcadero Labs as well as limited patient transport from Stanford to the VA Hospital. Caltrain has discontinued shuttle services and funding partnerships for shuttles. Staff were not yet able to connect with transportation staff at VA Hospital.
Planning and Transportation Commission Review
In December 2025, the Planning and Transportation Commission reviewed information on Palo Alto Link.17 Commissioners generally praised the value brought to Palo Alto Link users and expressed a desire for better transit-like services in the City. PTC did not provide a specific recommendation for continuing the service or supplanting it with any other option.
NEXT STEPS
Palo Alto Link services are currently programmed to wind down at the end of the current fiscal year, with the last date of service expected to be June 30, 2026.
FISCAL/RESOURCE IMPACT
The Palo Alto Link program currently operates at a fully burdened cost of approximately $26 per trip, with rider fares recovering less than 5% of total operating expenses.
Since early 2023, staff utilized funds from the Measure B Innovative Transit Program, Stanford Research Park, and TFCA to fund approximately 95% of service costs through December 2025.
Measure B funds totaled $2,000,000 through June 2024. While external grants and the Stanford Research Park (SRP) partnership successfully funded approximately 95% of service costs through 2025, one-time resources such as VTA Measure B funding are now concluding.
The SRP contribution to funding has ranged from 33% to 50% of monthly costs since the funding partnership began in March 2023, totaling approximately $1.2 million through December 2025. Additional funds, including a second award valid through June 2027, from the Bay Area Air Quality Management District's Transportation Fund for Clean Air (TFCA) have decreased the impact on City dedicated funds, allowing an extension of the original pilot term to June 30, 2026. Rider fares have currently contributed less than 5% of program costs.
If Council chooses to winddown service by June 30, 2026, the City will achieve a gross cost saving of approximately $250,000 in Fiscal Year 2026-27 and approximately $700,000 in subsequent years. However, the net fiscal benefit is reduced to approximately $125,000– $275,000 after accounting for the loss of $425,000 to $575,000 in annual Stanford cost-sharing revenue for services that connect to SRP.
This decision must be weighed against the City’s broader fiscal reality, including a $14.9 million structural deficit. This program should align with the City's cost recovery objectives and preserve General Fund stability. Any extension of general on-demand service would require a significant subsidy level which the City Council should consider in context with other General Fund supported services.
17 SR 2510-5293, November 12, 2025
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16610
STAKEHOLDER ENGAGEMENT
Community engagement has been ongoing since the program began. Activities include tabling at community events and destinations and social media campaigns. Feedback from riders indicated support for expanded weekend and extended evening hours for Palo Alto Link as well as support for services for youth access and vulnerable users, including seniors and disabled.
Other engagement has highlighted potential community preference for fixed route options.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA under CEQA regulation 15061(b)(3).
ATTACHMENTS
None.
APPROVED BY:
Ria Hutabarat Lo, Chief Transportation Official