City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: June 15, 2026
Report #:2602-5982
TITLE
Approval of Construction Contract Number C26197272 with O’Grady Paving, Inc. in the Amount of $3,802,573 for the Fiscal Year 2026 Street Resurfacing Project, Capital Improvement Program Projects PE-86070, PO-12001, PG-06001, PO-11001, and OS-09001; and Authorization for the City Manager or Their Designee to Execute Change Orders in an Amount Not-to-Exceed $910,258 for Related, Additional but Unforeseen Work Which May Develop During the Project; CEQA Status – Exempt under CEQA Guidelines Section 15301(c)
RECOMMENDATION
Staff recommends that the City Council:
1. Approve and authorize the City Manager or their designee to execute construction contract C26197272 with O’Grady Paving, Inc. in the amount of $3,802,573 for the Palo Alto Fiscal Year 2026 Street Resurfacing Project (Capital Improvement Program Projects PE-86070, PO-12001, PG-06001, PO-11001, and OS-09001); and
2. Authorize the City Manager or their designee to negotiate and execute change orders for related, additional, and unforeseen work that may develop during the project, the total value of which shall not exceed $910,258.
BACKGROUND
The Public Works Engineering Services Division manages construction contracts for concrete repair, preventive maintenance, resurfacing, and reconstruction of various City streets annually.
In more recent years, additional Capital Improvement Program (CIP) projects are being built through annualized resurfacing contracts due to the complexity of construction and benefit of being included in a larger project. The City uses StreetSaver, The Metropolitan Transportation Commission’s (MTC) pavement management system which is used by almost all Bay Area jurisdictions. The Pavement Condition Index (PCI) is calculated by evaluating a sample pavement section on each block for different rating variables from mild to severe – including raveling, potholes, amount of trenches, and base failures. These factors are entered into the StreetSaver program and a PCI is calculated. All staff who evaluate street conditions and pavement distresses have multiple years of experience and have been trained by MTC.
While staff uses the PCI scores to prioritize streets, staff also takes into consideration additional information including coordination with Utilities projects and Office of Transportation planned striping improvements, and whether the street has bike lanes or is a bicycle boulevard. Staff also tries to group multiple streets in a neighborhood whenever possible, so that construction is not occurring over multiple years if it can be avoided. Additionally, each block has its own estimated repair cost, which impacts how many streets can be in each project given the annual funding amounts. The streets included in this year’s resurfacing contract were selected previously with the Senate Bill 1 Resolution approved by Council in June 2025.1
ANALYSIS
Staff recommends approval of Contract No. C26197272 as part of the program to maintain and improve the condition of Palo Alto’s streets.2 The $3,802,573 expenditure for this contract will be used to repave 6.92 lane-miles of arterial and residential streets with PCI scores averaging
48. This will help maintain and improve the City’s Pavement Condition Index (PCI) beyond its average of 83 and will address many streets whose PCI scores fall below the City’s minimum goal of 60.
The scope of work includes the replacement of approximately 2,966 linear feet (0.56 miles) of curbs and gutters, 2,852 square feet of driveways, and 7,654 square feet of sidewalks.
Additionally, 33 new curb ramps will be installed to conform to the Americans with Disabilities Act (ADA). The add alternate scope of work includes the repaving and restriping of 58,170 square feet of pavement along the Adobe Creek Trail Loop. The streets being resurfaced in this contract are shown in Attachment A.
On June 1, 2026, the City Council directed staff to proceed with California Avenue Outdoor Activation Standards and associated encroachment permit requirements, approved the Pre- approved Parklet Plans with standardized parklet designs, approved an Ordinance amending the Sign Code (PAMC section 16.20.160; first reading), and directed staff to return to the City Council with an amendment to modify a conceptual design for a bike-free environment on the closed portion of the street.3 At the meeting, questions were raised about the potential of utilizing the estimated $300,000 for repaving the car-free portion of California Avenue for other improvements and whether the repaving project is required at this time. Staff shared that the street was last repaved in 2015. Typically, streets have preventive maintenance done 1 City Council, June 2, 2025, Agenda Item #11; SR #2503-4447 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83430&dbid=0&repo=PaloAlto&searchid=ad530f3e -e21c-4667-9161-bcd9e546c2df
2 O’Grady Paving, Inc. Construction Contract for FY 2026 Resurfacing Project C26197272 https://www.paloalto.gov/files/assets/public/v/1/public-works/engineering-services/cip-contracts/c26197272- ogrady-paving-fy26-street-resurfacing-project-final.pdf 3 City Council, June 1, 2026, Agenda Item #16; SR #2602-6010 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887022&dbid=0&repo=PaloAlto approximately every 10-15 years to extend the life of the pavement. Public Works estimated the costs for slurry sealing and for repaving the car-free portion of California Avenue. It was determined that the repaving option was more economical compared to slurry sealing. In order to effectively remove the existing street markings, grinding and paving the road would be necessary. This resurfacing work does not implement the bike/pedestrian conceptual drawing that was presented, it is only repaving of the street on which future outdoor activations will be built.
Repaving the car-free portion of California Avenue prior to the formal outdoor activation begins ensures a safe, accessible, and clean foundation for pedestrians. This timing of paving during transition of the outdoor activation program guidelines also prevents costly disruptions to the business community for many years. In addition, improving the street will help achieve the Economic Development Strategy’s Implementation Action 1.3 of supporting outdoor dining to encourage activation of commercial business districts such as on California Avenue.
Solicitation Process
On March 26, 2026, an Invitation for Bids (IFB) for the Palo Alto FY2026 Street Resurfacing Project PE-86070 was posted on OpenGov, the City’s eProcurement system. The bidding period was 27 calendar days. The City received 5 bids from qualified contractors on April 22, 2026, as listed on the attached Bid Summary (Attachment B).
Table 1: Summary of Invitation for Bids
Project Bid Name/Number Palo Alto FY 2026 Street Resurfacing Project IFB #197272
Proposed Length of Project 120 calendar days
Number of Bid Packages Downloaded by
Contractors
81 Number of Bid Packages Downloaded by
Builder’s Exchanges
7 Total Days to Respond to Bid 27
Number of Bids Received 5
Bid Price Range $3,802,573-$4,162,654
Public Link to Solicitation https://procurement.opengov.com/portal/palo- alto-ca/projects/249487
Bids ranged from $3,802,573 to $4,162,654 and from 3% below to 6% above the engineer’s estimate of $3.9 million. Staff reviewed the bids submitted and recommends acceptance of the base bid submitted by O’Grady Paving, Inc. in the amount of $3,802,573, and that O’Grady Paving, Inc. be declared the lowest responsible bidder. The construction contingency amount of $910,258 which equals approximately 24% of the contract value, is requested for repaving
California Avenue and for related, additional, but unforeseen work which may develop during the project, implemented via City-approved Change Order.
Staff reviewed information and similar projects performed by the lowest bidder, O’Grady Paving, Inc., and found them to be the lowest responsive and responsible bidder. Staff also checked with the Contractor's State License Board and confirmed the contractor has an active license on file.
FISCAL/RESOURCE IMPACT
Funding for this contract is available in the Adopted Fiscal Year 2026 Capital Improvement Program Street Maintenance (PE-86070), Curb & Gutter Repair (PO-12001), Athletic Court Resurfacing (PG-06001), Thermoplastic Striping (PO-11001), and Off-Road Pathway Resurfacing and Repair (OS-09001) projects.
The funding allocation is as follows:
Table 2: Funding Allocation
Funding Source Contract Contingency Total Funding
Street Maintenance PE-86070 $3,256,846 $655,685 $3,912,531 Curb & Gutter Repair PO-12001 $75,270 $7,527 $82,797
Athletic Court Resurfacing PG-06001 $68,150 $6,815 $74,965 Thermoplastic Striping PO-11001 $123,457 $12,346 $135,803 Off-Road Pathway Resurfacing and Repair OS-09001 $278,850 $27,885 $306,735 Unassigned Allowance $200,000 $200,000
Total $3,802,573 $910,258 $4,712,831
The recommended construction contingency amount of $910,258 includes the standard 10% contingency plus additional funding for repaving of California Avenue and an allowance for construction on other capital projects that may arise during the duration of this contract.
Expenses for any change orders using the unassigned allowance will be assigned to the appropriate funding source.
STAKEHOLDER ENGAGEMENT
All streets have been coordinated with the City’s Utilities Department and the Office of Transportation to minimize the cutting of newly resurfaced streets. Additionally, recognizing the importance of bicycle safety as a factor in selecting streets for the annual repaving project, staff reviews the proposed five-year paving plan streets annually with the Pedestrian and Bicycle Advisory Committee (PABAC) Resurfacing Subcommittee, with an emphasis on the streets included in the first year of the plan. Extensive public outreach will be conducted before and during the construction phase to keep the community informed throughout the process, including flyers sent to adjacent residences and businesses, and notices posted online on the City’s website.
Additionally, staff will coordinate with California Avenue businesses over the summer to ensure a coordinated roll-out schedule of the Outdoor Activation standards and associated encroachment permits to coordinate with the anticipated paving work in October.
ENVIRONMENTAL REVIEW
Street resurfacing projects are categorically exempt from the California Environmental Quality Act (CEQA) under Section 15301(c) of the CEQA Guidelines as repair, maintenance and/or minor alteration of the existing facilities and no further environmental review is necessary.
ATTACHMENTS
Attachment A: Project Map
Attachment B: Bid Summary
APPROVED BY:
Brad Eggleston, Director Public Works/City Engineer