HomeMy WebLinkAboutStaff Report 9516
CITY OF PALO ALTO OFFICE OF THE CITY ATTORNEY
August 20, 2018
The Honorable City Council
Palo Alto, California
Approval of Amendment Number Five to the Palo Alto-Stanford Fire
Protection Agreement With the Board of Trustees of the Leland
Stanford Junior University Extending the Term to June 30, 2018 for an
Additional Fee of $6,773,624
Recommendation
Staff recommends the City Council approve the attached Fifth Amendment to the Palo Alto-
Stanford Fire Protection Agreement with the Board of Trustees of the Leland Stanford Junior
University (“Stanford”) in the amount of $6,773,624 for the extended term of twelve (12)
months through June 30, 2018.
Background
The City of Palo Alto has provided fire protection services to Stanford University since 1976,
when the City’s fire department and Stanford’s private fire protection company were
consolidated. The City and Stanford entered into a fire services Agreement for a term of 50
years, providing however that either party could terminate the Agreement by providing written
notice to the other party. The Agreement was amended in 1981 and restated in 2006 related to
services provided to the Stanford Linear Accelerator (SLAC). In 2012, fire protection services to
SLAC were transitioned from the City of Palo Alto to the Menlo Park Fire Protection District.
On October 8, 2013, Stanford notified the City that it was exercising its option to terminate the
Agreement effective at least one year, and no more than two years, from the date of notice.
Stanford subsequently solicited proposals from other fire protection service providers, but did
not select an alternative provider.
In January 2016, Stanford and Palo Alto agreed that Palo Alto would continue to provide fire
services to Stanford through October 8, 2016 through a Third Amendment, and would continue
to negotiate for a new long term agreement to be effective thereafter. In December 2016, the
parties once again continued negotiations and approved a Fourth Amendment to continue
services through June 30, 2017. The parties have continued these negotiations through FY 2018
despite the term of the fourth amendment lapsing; however, eventually City and Stanford were
able to reach an agreement for prospective fire protection services and the agreement will be
considered by Council on August 20, 2018.
Discussion
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The City and Stanford have met periodically to discuss alternative service and cost allocation
models for current and future service requirements. While progress was made, the parties did
not reach agreement on a full set of terms and the proposed alternative service and cost
models were not implemented during the term of the Fourth Amendment ending June 30,
2017. However, over the course of June 30, 2017 and June 30, 2018, the City and Stanford have
reached agreement on both a full set of terms for fire services moving forward and a
settlement to terminate the original agreement from 1976. The two agreements recommended
to be approved will maintain the partnership between the City and Stanford however, update
for new terms based on current staffing, deployment models, and revised costing models.
The Palo Alto Fire Department continued to provide fire services to Stanford University during
these ongoing negotiations. The recommended Fifth Amendment (Exhibit A) will ensure full
continuity of agreements for fire services rendered by the City up to the start of the
recommended new Agreement for Service beginning on July 1, 2018 through 2023. The
amount of $6.8 million recommended for this extension is based on the fire staffing models in
place over the course of FY 2018. The new staffing model and revised cost allocation
methodology was not implemented until January 2018. This amendment recognizes this
timeframe and level of services through the quarterly invoice levels. Lastly, this amendment
identifies two capital improvement projects and additional fees for these projects – Self-
Contained Breathing Apparatus (SCBA) and a Ringdown System (an audible alert and
dispatching system). Both of these capital improvement projects were scheduled for
implementation during FY 2018. In this amendment and the Agreement for Services in the
future, capital investments will be invoiced based on actual costs.
Resource Impact
City and Stanford negotiators agree that the City continued to provide fire protection services
during the twelve month extension period for the fee of $6,773,624 and will be accounted for
in the City’s FY 2018 financials to be reported in the Comprehensive Annual Financial Reports.
Policy Implications
The recommended Fifth Amendment provides the contract bridge for the time that was
necessary for the City and Stanford to reach mutually agreeable terms for the continued
provision of fire protection services into the future as outlined in the separate staff report for
the new Agreement for Services.
ATTACHMENTS:
• Attachment A: Fifth Amendment to Fire Services Contract (1976 agreement) (PDF)
Department Head: Molly Stump, City Attorney
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FIFTH AMENDMENT TO PALO ALTO-STANFORD
FIRE PROTECTION AGREEMENT
This Fifth Amendment to the Palo Alto-Stanford Fire Protection Agreement is made effective as of July 1, 2017, between the BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY ("Stanford"), a body having corporate powers under the laws of the State of California, and the CITY OF PALO ALTO ("Palo Alto"),
a municipal corporation duly organized and existing under and by virtue of the laws of the State
of California.
R E C I T A L S
A.Stanford and Palo Alto agreed for Palo Alto to provide fire protection services
for the Stanford Campus for a term of fifty years and entered into the "Palo Alto-Stanford
Fire Protection Agreement" dated October 1, 1976, as amended on September 1, 1980 and
June 26, 2006 ("Agreement").
B.In 2012, the parties agreed that Palo Alto would no longer provide fire protection
service to the Stanford Linear Accelerator Center (“SLAC”).
C.In 2013, Stanford notified Palo Alto that it intended to terminate the Agreement.
Under the terms of the Agreement and the notice of termination, the effective termination date
was October 8, 2015.
D.In January 2016, Stanford and Palo Alto further amended the Agreement to
provide that Palo Alto would continue to provide fire services to Stanford continuously through
and including October 8, 2016, for a fixed fee (“Third Amendment”).
E.In October 2016, the parties further amended the Agreement (“Fourth
Agreement”) to provide for an additional temporary extension of services under terms
described in the amendment.
F.The parties now wish to further amend the Agreement through this Fifth
Amendment to provide for an additional temporary extension of services under terms
described herein. During the extension period, it is the parties’ intention to negotiate the
terms of a long-term agreement to provide fire services.
NOW, THEREFORE, in consideration of the covenants, terms, conditions, and
provisions of this Fifth Amendment, the parties agree to amend the Agreement, as modified by
the Third and Fourth Amendments, as follows. Except as amended, the Agreement, as
modified by the Third and Fourth Amendments, shall remain in full force and effect.
SECTION 1. Article 1 is amended by adding Section 1.2.3 to read as follows:
Attachment A
“Article 1: Operative Date and Termination
1.2.3 July 1, 2017 through June 30, 2018 Notwithstanding any notices of termination issued under the Agreement, the parties
agree that the Agreement shall remain in force and effect through and including June 30,
2018.Unless extended by mutual agreement of the parties, the Agreement shall terminate at the
close of business on June 30, 2018.
SECTION 2. Article 3 is amended by adding Section 3.14 to read as follows:
“Article 3: Funding
3.14 Fees for Fire Services from July 1, 2017 through June 30, 2018:
(a) Notwithstanding the terms of any other Section of this Article, including but
not limited to Sections 3.2, 3.3, 3.4, 3.5, 3.6, and 3.8, the parties agree that Stanford will pay
Palo Alto a fixed fee in the amounts described in Section 3.14(c) below for the services
described in this Agreement for the period July 1, 2017 through June 30, 2018, less revenue
received for medical transport generated from calls for service on the Stanford campus for
this period. This fee includes all costs and revenues for the identified period, including but
not limited to personnel, vehicles, IT and revenue credits.
(b) Additional Fees for Capital Projects. In addition to the fees in subsection
(a) above, the parties agree that Stanford will pay Palo Alto the following fees for two
capital improvement projects:
(1) Self-Contained Breathing Apparatus (SCBA). Stanford shall pay 23% of the
cost of replacing SCBA equipment for fire protection personnel. The total cost of the project
is estimated at $800,000. Palo Alto will invoice Stanford based on actual expenditures with
each installment billing.
(2) Ringdown System. Stanford shall pay 16.7%, or one sixth of the total
system costs of replacing the Ringdown System, an audible alert and dispatching system, to
be installed in the six fire stations. The total cost of the project is estimated at $400,000. Palo
Alto will invoice Stanford based on actual expenditures with each installment billing.
(c) For the extension period beginning July 1, 2017 and ending June 30,
2018, Stanford shall pay Palo Alto the fee for fire service in the amounts set forth
below, to be paid by the 10th day following the payment date below or by the
10th day following Stanford's receipt of an invoice for the payment, whichever is later.
Invoices (Service Period) Expected Invoice Date Amount
First Payment (July 1-Sept 30, 17) September 30, 2017 $1,818,534
Second Payment (Oct 1-
December 31, 2017)
December 31, 2017 $1,818,534
Third Payment (Jan 1-March 31, 2018) March 31, 2018 $1,568,278
Fourth Payment (April 1-
June 30, 2018)
June 30, 2018 $1,568,278
Payments shall be delivered to: Administrative Services Director 250 Hamilton Avenue
Palo Alto, California 94301
(d) If Stanford shall fail to pay any sum to Palo Alto when due, then such
late payment shall accrue interest on a daily basis at the rate equal to the current annualized
yield earned by the City's investment Portfolio for the prior fiscal quarter, until fully paid. The
City acknowledges the receipt of the first two payments described above and hereby waives the
late fees for such payments, if any.
SECTION 3. Except as herein modified, all other provisions of the Agreement, including
any exhibits and the Third and Fourth Amendments, shall remain in full force and effect.
IN WITNESS WHEREOF, IN WITNESS WHEREOF, the parties have by their duly
authorized representatives executed this Amendment on the date first above written.
CITY OF PALO ALTO
James R. Keene, Jr. City Manager
THE BOARD OF TRUSTEES OF THE
LELAND STANFORD JR. UNIVERSITY
By: Debra Zumwalt Vice President and General Counsel
Eric Nickel Palo Alto Fire Chief
APPROVED AS TO FORM: Molly S. Stump City Attorney