1 0
3 0
4 City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: August 24, 2026
Report #:2607-6550
TITLE
Approval of Amendment No. 2 to Contract No. C22182372 with CSWST2 to Add $170,450, Increasing the Not-to-Exceed Amount to $360,302 and Extending the Contract Term to December 31, 2028 for Preliminary Design Services to Support Assessment District Planning and Stakeholder Engagement for the University Avenue Streetscape Capital Improvement Program Project, PE-21004; CEQA Status – Not a Project
RECOMMENDATION
Staff recommends that the City Council:
1. Approve and authorize the City Manager or their designee to execute Amendment No. 2 to Contract No. C22182372 with CSWST2 for the University Avenue Streetscape Capital Improvement Program Project (PE-21004);
2. Increase the total not-to-exceed amount by $170,450, consisting of $154,955 for basic services and $15,495 for additional services, establishing a revised total not-to-exceed amount of $360,302; and
3. Extend the contract term to December 31, 2028.
EXECUTIVE SUMMARY
Council approval of the proposed amendment will enable the next phase of the University Avenue Streetscape project, which includes developing the preliminary design to an extent required to provide necessary technical information for an assessment district feasibility analysis and to gather feedback from the stakeholders for a refined concept.
The preferred concept plan presented to Council in December 2024 established a broad conceptual framework for sidewalks and travel lanes configuration, and integrated street amenities, lighting, landscaping, and signage elements. The plan had a total estimated project cost of approximately $40 million in 2029 dollars. Some stakeholders expressed concerns regarding the overall cost and level of support for the project. In response, staff performed a
1 0
3 0
4 value engineering analysis to identify alternatives to reduce the project costs by incorporating additional field data and further refining the design concepts while upholding the vision and goals of the preferred concept plan. The total project costs for three feasible alternatives were estimated to be in the range of $30-$32 million in 2029 dollars. Staff has since conducted additional outreach, and stakeholders have expressed support for the project proceeding with the next phase.
Based on prior discussions with Council, the project will likely be funded through an assessment district or similar public financing mechanism. Through separate procurement, staff will be retaining a financial professional services firm to conduct a feasibility analysis to form and implement a Property-Based Assessment District to fund University Avenue Streetscape Improvements.
BACKGROUND
University Avenue is a regional and local public destination for shopping, dining, and entertainment. It is a two-travel lane street that provides access from Highway 101 through the downtown area and continues to Stanford University. Covid-19 had significant economic implications on downtown environments throughout the country, including University Avenue. To support residents and local businesses and to create a vibrant and inclusive space, Council directed staff in 2021 to study transforming the University Avenue streetscape. On March 1, 2021, Council approved the University Avenue Streetscape project (PE-21004)1 as part of the workplan for Community and Economic Recovery2, allocating $150,000 for this study. On September 13, 2021, Council directed staff to proceed with the University Avenue Streetscape Design Request for Proposals (RFP)3 and on February 28, 2022, Council approved a contract4 with CSWST2 for design services for the project. The project consists of four phases:
1. Phase 1 – Conceptual design and preferred concept plan development
2. Phase 2 – Preliminary design, environmental assessment, and engineering support for the assessment district feasibility
3. Phase 3 – Final design, construction documents, and bid support
4. Phase 4 – Construction administration
1 City Council, March 1, 2021; Agenda Item #8; SR #11872 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=81428&dbid=0&repo=PaloAlto&searchid=31dc28d2 -0135-4476-8586-46dff1612b0c
2 City Council, January 19, 2021; Agenda Item #4; SR #11877 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=81429&dbid=0&repo=PaloAlto&searchid=ff36507a- ddcb-403a-ba5e-010bb91e2495
3 City Council, September 13, 2021; Agenda Item # 8; SR #13540 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=81601&dbid=0&repo=PaloAlto&searchid=837e5cdd -ba7c-4f83-a109-7b2795abd0cf
4 City Council, February 28, 2022; Agenda Item # 10; SR #13609 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=81689&dbid=0&repo=PaloAlto&searchid=501821e 2-7340-451e-b88a-5b2f27f7ea16
1 0
3 0
4 At the time of contract award to CSWST2, Council approved the scope and funding for Phase 1 services only. On December 18, 2023, Staff presented a streetscape feasibility study to Council providing concept plans developed based on the community and stakeholder input.9,10 On June 3, 2024, staff presented an update to Council regarding the project vision, design elements, and stakeholder engagement strategy.11 On December 2, 2024, Council approved Contract Amendment No. 112 with CSWST2 in the amount of $25,000 for additional analysis, concepts refinements, and outreach to address the Council-directed items in the December 2023 and June 2024 meetings. Contract Amendment No. 1 also extended the contract term through December 31, 2027.
On December 9, 2024, Council received another update from staff addressing previous Council direction and providing a preferred streetscape concept plan13 which completed the scope of services under Phase 1. Council provided the following direction:
1. Confirmed the preferred concept plan for the University Avenue Streetscape Project;
2. Directed staff to return with a design-related services amendment for Council approval to advance the project; and
3. Directed staff to explore additional medium-term measures, including short-term measures, for loading zones on side streets, provisions of tree wells on side streets and University Avenue, and support for historic promotion of the street.
The total estimated project cost for the preferred concept plan presented to Council was approximately $40 million (in 2029 dollars) including design, construction management, permit fees, formation of an assessment district, and construction, with a 25% contingency built in for design and construction, and a 4-5% annual cost escalation factors. This has been subsequently revised down.
The City has not established a funding source for construction of streetscape improvements.
Per previous Council discussions, the project construction is anticipated to be at least partially 9 University Avenue Streetscape Feasibility Report, December 2023 https://www.cityofpaloalto.org/files/assets/public/v/1/public-works/engineering-services/cip-contracts/2023-12- 6-palo-alto_university-avenue-streetscape-feasibility-report-final.pdf 10 City Council, December 18, 2023; Agenda Item # 21; SR #2310-2189 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82601&dbid=0&repo=PaloAlto&searchid=72339ec3 -701c-47c9-a6cb-3799486b7056
11 City Council, June 3, 2024; Agenda Item # 16; SR # 2404-2904 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82865&dbid=0&repo=PaloAlto&searchid=ebd04c10 -7679-485f-906e-208f5bfdefaf
12 City Council, December 2, 2024; Agenda Item #10; SR #2410-3623 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83116&dbid=0&repo=PaloAlto&searchid=81d951ae -eb5b-4fcb-a767-8b9c82708fee
13 City Council, December 9, 2024; Agenda Item # 16; SR # 2408-3338 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83128&dbid=0&repo=PaloAlto&searchid=c6912562 -5bac-40c4-9644-cbaeb81fdf1d
1 0
3 0
4 funded through a public financing mechanism such as an assessment district (i.e. proportionate share of project costs attributable to special benefits to be paid by property owners versus costs attributable to general benefits to be paid by the City).
ANALYSIS
Preferred Concept Plan
The preferred concept plan established a broad vision for University Avenue and defined the basic street configuration and potential use of the public right-of-way. Key elements of the plan are listed below:
17.5-foot-wide sidewalks with extended curbs at crosswalks along University Avenue between High and Cowper streets, while retaining the existing curb alignment between Cowper and Webster streets. This expanded space would allow uses like outdoor dining, retail displays, landscaping, street furnishings, and a generous pedestrian walkway. Decorative paving on sidewalks along University Avenue between High to Webster Streets and in key gathering spaces.
Gathering spaces within the public right-of-way (e.g., Lytton Plaza, Centennial Alley). Pavement between High and Webster streets.
Two-lane vehicular traffic with shared bike lane.
Re-location of utilities and storm water improvements. New landscaping while maintaining existing street trees. New streetlights, traffic signals, and wayfinding signage. New street amenities
Collaboration with Public Art program to install artwork at focal gathering spaces.
Engineering Evaluation
The downtown stakeholders expressed concerns regarding the overall cost and level of support for the project. Because the project is anticipated to be funded through an assessment district, the stakeholders’ support is essential to advancing the project. Therefore, staff completed a value engineering evaluation to identify ways to reduce costs while staying aligned with the overall vision and goals of the 2024 preferred concept plan. The value engineering efforts included completing a topographic survey of the corridor, incorporating available utilities and geotechnical information, completing conceptual design of all blocks along University Avenue within the project limits, and refining key design elements and major cost drivers to identify opportunities of cost reduction. Three design alternatives were evaluated for the corridor: a standard curb, a variable curb, and a curbless design.
The estimated total project cost for all three alternatives ranges from $30 to $32 million in 2029 dollars including design, construction management, permit fees, formation of an assessment district, and construction, assuming construction and design contingencies of 20% and 10%, respectively and 4-5% annual cost escalation factors.
1 0
3 0
4 The conceptual design of all blocks based on topographic survey and design refinements allowed for better quantification, reduced assumptions and contingencies, and a more accurate estimate. Staff presented the findings of the value engineering evaluation in the downtown stakeholders’ meetings in April and May of 2026 and generally received positive feedback.
Contract Amendment No. 2
Contract Amendment No. 2 with CSWST2 will advance the preferred concept plan into Phase 2 services. Phase 2 – Preliminary design, environmental assessment, and engineering support for the assessment district feasibility. Staff proposes a two-step approach to complete Phase 2 scope of services, consisting of Phase 2A and Phase 2B, as described below.
Phase 2A scope of services included in this contract amendment focuses on developing the preliminary design to the extent required to provide the technical information necessary for a separate financial consultant to complete the assessment district feasibility analysis, confirming subsurface conditions and stormwater treatment strategies, refining concepts design, gathering stakeholders’ feedback, and validating the updated cost estimate resulted from the value engineering analysis. This approach will allow the design consultant to provide essential details for developing a financing strategy for streetscape construction while minimizing expenditures until the City establishes a funding mechanism.
The City will be retaining a financial consultant through a separate contract to develop a financial strategy and conduct the assessment district feasibility analysis.
Staff plans to return to Council for consideration of Phase 2B scope of services through a future contract amendment which would include advancing the preliminary design, additional public outreach including City Boards, Commissions, and Committees, environmental assessment, and preparation of the Engineer's Report to support assessment district planning.
Subsequent contract amendments for Phase 3 (final design, construction documents, and bid support for an estimated one-year duration) and Phase 4 (construction administration for an estimated two-year construction duration) services will be brought forward for Council consideration. Work outlined in this contract amendment is expected to be completed by spring 2027.
FISCAL/RESOURCE IMPACT
Funding for the contract amendment recommended in the amount of $170,450 is available in the Fiscal Year 2027 Adopted Capital Improvement Fund Budget in the University Avenue Streetscape Project (PE-21004) to fund Phase 2 A. The additional financial feasibility analysis, specifically for an assessment district, will be contracted for separately upon selection of a professional service provider.
1 0
3 0
4 STAKEHOLDER ENGAGEMENT
Staff conducted extensive public outreach since summer 2022 to develop the preferred streetscape concept plan, including several meetings with the stakeholders working group, Retail Committee, a community workshop, online surveys, and City Council updates. There has been general agreement in these meetings that investment is needed, however, there have been varying opinions on funding options between property owners and business owners. This will be further explored as part of the assessment district feasibility analysis. Ultimately, approval of an assessment district would require a vote of those assessed demonstrating support for the project and financing.
Staff will continue its outreach strategy to collaborate with the stakeholder working group, communications with the downtown and Palo Alto community at large, and engagement with relevant boards, committees, commissions, and Council at specific milestones. In addition, staff will provide updates on this important project to the business community through the monthly Business Connect newsletter, monthly meetings with downtown stakeholders, and regular check-ins with local storefronts.
ENVIRONMENTAL REVIEW
CSWST2 completed a preliminary environmental assessment including a traffic study and arborist reports under the Phase 1 services. With Council approval of this contract amendment, staff will proceed with the preliminary design of the preferred streetscape plan and an environmental assessment for evaluation under CEQA. The action being considered does not constitute a project pursuant to CEQA Guidelines section 15378(a) in that the feedback does not specifically approve any action which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS
Attachment A: CSWST2; Contract C22182372; Amendment No. 2 APPROVED BY:
Brad Eggleston, Director Public Works/City Engineer