City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Transportation
Meeting Date: May 4, 2026
Report #:2603-6108
TITLE
Approve Supplement No. 2 to Master Funding Agreement with the Metropolitan Transportation Commission for the City to receive an Amount Not to Exceed $1 Million for the Palo Alto Transit Center Quarry Road Connection; CEQA status - statutorily exempt.
RECOMMENDATION
Staff recommends that City Council:
1. Approve and authorize the City Manager or designee to execute Supplement No. 2 to the Master Funding Agreement between the Metropolitan Transportation Commission (MTC) and the City of Palo Alto for the City to receive an amount not to exceed $1,000,000 for the Quarry Road Improvements and Transit Center Access project (PL- 16000); and
2. Amend the Fiscal Year 2026 Budget Appropriation for the Capital Improvement Fund by (requires 2/3 approval):
i. Increasing the estimate for revenue from the State of California by $1,000,000; and
ii. Increasing the expense appropriation for the Quarry Road Improvements and Transit Center Access project (PL-16000) in the amount of $1,000,000.
EXECUTIVE SUMMARY
City Council action is recommended to authorize execution of Supplement No. 2 to the Master Funding Agreement with the Metropolitan Transportation Commission (MTC) to accept a not to exceed amount of $1,000,000 in 2004 Regional Measure 2 (RM2) funds and transfer and appropriate these funds to Quarry Road Improvements and Transit Center Access project (PL- 16000). The project will allow buses serving PATC to exit directly to El Camino Real at Quarry Road (rather than circulating via University Avenue), reducing bus travel times and improving reliability, while also delivering bicycle and pedestrian safety improvements at the Quarry Road/El Camino Real intersection.
The project cost is currently estimated at $5 million (subject to refinement as design advances) and will be funded through a mix of sources including MTC RM2 bridge toll revenues, Stanford University, and City funds from the Stanford University Medical Center (SUMC) Development Agreement. MTC will provide up to $1.0 million in RM2 funds with required matching funds of $500,000 from the City and $500,000 from Stanford. City match funds, in turn, would be provided from SUMC Development Agreement fund. The project was the subject of Measure D, which undedicated a portion of El Camino Park for this project, which passed in November 2024 with 74% voter approval.
BACKGROUND
On November 13, 2017, Council adopted the City’s Comprehensive Plan which included Policy T-3.10 to “participate in the design and implementation of comprehensive solutions to traffic problems near Stanford Shopping Center and Stanford Medical Center” and Program T3.10.4 to “pursue extension of Quarry Road for transit, pedestrians and bicyclists to access the Palo Alto Transit Center from El Camino Real.”
On April 22, 2024, Council reviewed a concept plan for a proposed project to implement Program T3.10.4 and adopted a resolution of intention to undedicated a portion of El Camino Park needed for the project. The project would allow buses that use the Palo Alto Transit Center (PATC) to exit directly to El Camino Real at Quarry Road, rather than circling back via University Avenue, thereby reducing bus travel times and enhancing bicycle and pedestrian safety at the intersection of Quarry Road and El Camino Real.
On June 10, 2024, Council approved a Letter of Intent (LOI) with Stanford University to support this project.1 The LOI outlined responsibilities and actions of each party, including:
Design and construction by the City, with funding to come from the SUMC Development Agreement fund and Stanford University contributing up to $4 million for completion of the project, as well as maintenance funding;
Extension of the Stanford lease to the City for the playing fields at El Camino Park for an additional ten years through 2052; and,·
A commitment by Stanford and the City to work in collaboration with transit partners on a longer-term visioning process for the Palo Alto Transit Center that addresses dynamic public spaces, multi-modal transit needs, and community engagement.
In November 2024, Palo Alto voters passed Measure D, approving the use of a 0.33-acre portion of El Camino Park to create a new transit roadway linking the Palo Alto Transit Center with El Camino Real.
1 City Council, June 10, 2024; Agenda Item #12, SR # 2405-3041 https://portal.laserfiche.com/Portal/DocView.aspx?id=73991&repo=r-704298fc&searchid=36b1a674-586a-4542- 984e-b8b20b7c727a
On November 3, 2025, Council approved a cost-sharing agreement with Stanford University and authorized the allocation of $878,200 in SUMC Development Agreement funds for Quarry Road Improvement and Transit Center Access project (PL-16000). This action provided funding for Design and Environmental Review phases.3 Council also approved $35,000 in SUMC Development Agreement funds to partner with the Urban Land Institute, VTA, and Stanford to develop a longer-term vision for the wider transit center area.4
ANALYSIS
With Stanford providing project management services via a contractor until City staff resources are available, work has begun to develop a preliminary engineering package. As part of this work, a transit operator workshop was conducted on February 26, 2026.
The preliminary cost estimate to design and build the Quarry Road Transit Connection is $5 million. These costs will be updated as the design is advanced. The project will be funded by multiple sources, including funding from MTC, Stanford University, and the Stanford University Medical Center (SUMC) Development Agreement for the SUMC Renewal and Replacement Project.
This report seeks authorization to accept $1,000,000 from MTC to support all phases of the project. In July, MTC's Regional Network Management Committee approved negotiating and entering into a Master Funding Agreement Supplement with the City of Palo Alto for the Quarry Road Connection Project in an amount not to exceed $1.0 million dollars. Through this agreement, MTC will provide $1.0 million dollars in RM2 bridge toll revenues, subject to allocations, with matching funds of $500,000, each provided by the City of Palo Alto and Stanford University to support the project through construction.
FISCAL/RESOURCE IMPACT
The City‘s matching funds will be provided via the SUMC Development Agreement funds. As noted in the November 2025 Council action, to cover the cost of the initial $878,200 design phase and contract for the Quarry Road Transit Connection, MTC in July approved the initial RM2 allocation of $250,000 for the environmental/advanced preliminary engineering phase.
The City and Stanford will each provide $125,000 in matching funds (the City’s portion sourced from the SUMC Development Agreement Intermodal Fund). Similarly, the remaining approximately $400,000 will be sourced from the RM2 funds and City and Stanford sources in the same 2:1:1 ratio, with the City’s portion coming from the SUMC Development Agreement 3 City Council, November 3, 2025; Agenda Item #12, SR #2507-4945 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83770&dbid=0&repo=PaloAlto&searchid=41bbb06 a-03c7-4820-99a1-dc7d56d0cfe1
4 See the webpage for the Palo Alto Transit Center for details on the ULI visit:
https://www.paloalto.gov/Departments/Transportation/Transportation-Projects/Palo-Alto-Transit-Center Intermodal Fund. With this commitment, the remaining available balance in the SUMC Development Agreement Intermodal Fund is projected to be approximately $400,000.
STAKEHOLDER ENGAGEMENT
For the Quarry Road connection, while only a simple majority was needed to pass Measure D, the measure garnered 74% voter approval in 2024 to allow use of a portion of El Camino Park for this project. The project concept that was advanced in conjunction with the ballot measure was developed through a collaborative process with the engagement of Stanford University, City staff, the Council’s Stanford Ad Hoc Committee, the Parks and Recreation Commission, the Pedestrian and Bicycle Advisory Committee (PABAC) and PATC transit operators.
Other stakeholder and community engagement for this project has included PABAC’s review of the Complete Streets checklist for RM2 funding in August 2025, a transit operator workshop on February 26, 2026, and an active transportation stakeholder meeting scheduled for May 7, 2026.
ENVIRONMENTAL REVIEW
The Quarry Road Transit Connection project is exempt from the California Environmental Quality Act (CEQA). The proposed project comes within the statutory exemption for “facility extensions not to exceed four miles in length which are required for the transfer of passengers from or to exclusive public mass transit guideway or busway public transit services.” Pub. Res.
Code § 21080(b)(12). Due to its fixed location, Caltrain qualifies as an “exclusive public mass transit guideway” service. The proposed project would extend the existing transit center facility by approximately 210 feet, through the intersection of Quarry Road and El Camino Real, to facilitate the transfer of passengers to Caltrain, among other public transit services.
ATTACHMENTS
Attachment A: MTC Master Funding Agreement, Quarry Road Connection, Supplement No.2 APPROVED BY:
Ria Hutabarat Lo, Chief Transportation Official