HomeMy WebLinkAboutStaff Report 6502
City of Palo Alto (ID # 6502)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 1/25/2016
City of Palo Alto Page 1
Summary Title: Stanford Fire Agreement 3rd Amendment
Title: Approval of Amendment Number Three to the Palo Alto-Stanford Fire
Protection Agreement With the Board of Trustees of the Leland Stanford
Junior University Extending the Term for One Year for a Total Fee of $6.5
Million, and Amendment of the FY 2016 Budget to Reduce the General Fund
Budget Stabilization Reserve by $675,000 to Offset a Reduction in FY 2016
Fire Department Revenues (CONTINUED FROM DECEMBER 7 14, 2015)
From: City Manager
Lead Department: City Manager
Recommendation
Staff recommends the City Council:
1) Approve the Third 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 $6.5 million for the extended term of one year
through October 8, 2016 (Attachment A); and
2) Amend the FY 2016 Budget by:
a. Reducing the Fire Department revenue estimate for providing fire services
to Stanford by $675,000; and
b. Decreasing the Budget Stabilization Reserve by $675,000.
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. Under the fire services agreement between the City and Stanford,
either party may terminate the Agreement by providing written notice to the other
party. The Agreement was amended in 1981 and restated in 2006 related to services
City of Palo Alto Page 2
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 to date has not selected an alternative provider.
Discussion
Representatives from the City and Stanford have met periodically to discuss alternative
service and cost allocation models for current and future service requirements, but were
unable to reach agreement on terms prior to termination of the Agreement. The
recommended Third Amendment (attached) will provide for continuation of fire services
for one year at a fixed fee of $6.5 million, while allowing the time needed to facilitate
negotiation of financial terms for a new long term agreement.
Resource Impact
City and Stanford negotiators have agreed that the City will continue to provide fire
protection services during the one-year extension for the fee of $6.5 million. In
agreeing to this fee, the parties have acknowledged that a new long term agreement
could result in a different prospective annual cost allocation to Stanford, and that the
parties may discuss adjustment of payments made by Stanford under the Third
Amendment.
The current fiscal year 2016 budget anticipates a higher revenue from Stanford equal to
$7.4 million. Since the contract extension is effective Oct. 9, 2015, the revenue loss for
Fiscal Year 2016 is approximately $675,000. In order to reflect the lower revenues
during the one-year Amendment, the Fire Department is developing an alternative
staffing strategy intended to maintain response performance while reducing expenses.
Implementation of alternative staffing will involve meeting and conferring with the
International Association of Fire Fighters, Local 1319.
Staff anticipates bringing forward for City Council consideration staffing reductions to
offset the revenue loss as part of the Fiscal Year 2016 Midyear Budget Review report.
In the meantime, the Fire Department will continue to keep six positions vacant. To
address the revenue loss for Fiscal Year 2016, staff recommends amendment of the
2016 General Fund Budget to reduce revenues by $675,000 with a corresponding
reduction to the Budget Stabilization Reserve.
Policy Implications
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The recommended Amendment will provide for continuation of fire services to Stanford
while allowing time for the City and Stanford to reach mutually agreeable terms for the
continued provision of fire protection services into the future. The current Agreement
has demonstrated the efficiency and mutual benefit to both agencies gained by
integrated services on campus and throughout the City; therefore, approval of the
Amendment is in the City’s best interest to complete negotiations and establish a new
agreement.
Attachments:
Attachment A: Third Amendment to the Palo Alto-Stanford Fire Protection Agreement
with the Board of Trustees of the Leland Stanford Junior University (PDF)
THIRD AMENDMENT TO PALO ALTO-STANFORD FERE
PROTECTION AGREEMENT
This Third Amendment to the Palo Alto-Stanford Fire Protection Agreement is
entered into this ,2016,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 organizedandexistingunder andby virtueof the laws of the Stateof
California.
RECITALS
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
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. Stanford and Palo Alto now agree that Palo Alto will continue to provide
fire services to Stanford continuously through and including October 8, 2016, for a fixed fee
described here. The parties have retained a mediator and intend to continue negotiating towards a
new agreement for fire services that will begin on October 9, 2016 and continue thereafter,if the
parties reach an agreement.
E.The parties acknowledge that "Section 2:Services"and Exhibit B of the
Agreement contain terms that may be inconsistent with the parties'interpretation and
performance of the contract, including but not limited to: Palo Alto does not operate and
Stanford does not maintain a fire station at SLAC;staffing,equipment configurations,response
times and response resources have been updated consistent with service levels provided within
the City of Palo Alto;and fire prevention services are no longer provided.The parties are
negotiating for a new agreement to be effective beginning October 9,2016,and intend to update
these and other terms as part ofthat process.Between October 9,2015 and October 8,2016,it is
the parties'intention to maintain the status quo of services at Stanford that are substantially
equivalent to those provided within the City ofPalo Alto.
NOW,THEREFORE,in consideration of the covenants,terms,conditions,and
provisions of this Amendment,the parties agree to amend the Agreement as follows.Except as
amended,the Agreement shall remain in full force and effect:
SECTION 1.Article 1is amended by adding Section 1.2.1 to read as follows:
"Article 1:Operative Date and Termination
1.2.1 October 9,2015 through October 8,2016.
Notwithstanding any notices of termination issued under the Agreement,the
parties agree that the Agreement shall remain in force and effect through and including October
8,2016.Unless extended by mutual agreement of the parties,the Agreement shall terminate at
theclose ofbusinesson October 8,2016."
SECTION 2.Article 3is amended by adding Section 3.12 toread as follows:
"Article 3:Funding
3.12 Fees for Fire Services from October 9,2015 through October 8,2016.
(a)Notwithstanding the terms ofany other Section ofthis Article,includingbutnotlimitedtoSections3.2,3.3,3.4,3.5,3.6,and 3.8,the parties agree that Stanford will pay
Palo Alto afixed fee of $6.5 million for the services described in this Agreement for the period
October 9,2015 through October 8,2016.This fee includes all costs and revenues for the
identified period,including but not limited to personnel,vehicles,capital costs,IT and revenue
credits.
(b)For the one year beginning October 9,2015 and ended October 8,2016
Stanford shall pay Palo Alto the fee for fire service in equal quarterly installments,eachmstallmenttobepaidbythe10thdayfoUowingthequarterlypaymentdateorbythe10thday
following Stanford's receipt of an invoice for the quarterly payment,whichever is later The
payment dates for each quarter shall be as follows,unless revised in writing by Palo Alto and
Stanford:
First payment February 1,2016
Second payment March 31,2016
Thirdpayment June 30,2016
Fourth payment September 30,2016
Payments shall be delivered to:
Administrative Services Director
250 Hamilton Avenue
Palo Alto,California 94301
(c)If Stanford shall fail to pay any sum to Palo Alto when due,then such latepaymentshallaccrueinterestonadailybasisattherateequaltothecurrentannualizedyieldearnedbytheCity's investment Portfolio for the prior fiscal quarter,until fully paid
(d)
disagreement ahou
Stanford campus.Tl
compromise in ordei
the parties reach agl
the parties'intention
the extent permitted
Section 3.12(a)."
At the lime of this Third Amendment,the parties have a good faith
the appropriate amount of the fees for fire protection services for the
le parties have agreed to the fixed fee in Section 3.12(a)for one year as a
rto secure continuation of services pending further negotiation over fees.If
eement on fees for continuation of fire services after October 9,2016,it is
to revisit the fee in Section 3.12(a)in light ofthat agreement.Otherwise,to
under the Agreement or by applicable law,a party may challenge the fee in
SECTION 3.Except as herein modified,all other provisions of the Agreement,
including any exhibits and subsequent amendments thereto,shall remain in full force and effect.'
IN WITNESS WHEREOF,the parties have by their duly authorized
representatives executedthis Amendment on thedate first above written.
CITY OF PALO ALTO
Fire Chief
APPROVED AS TO FORM:
City Attorney
THE BOARD OF TRUSTEES OF THE
LELAND STANFORD JR.UNIVERSITY
By:
Vice Presidenyapd/General Counsel
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