HomeMy WebLinkAboutStaff Report 2603-6108CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, May 04, 2026
Council Chambers & Hybrid
5:30 PM
Agenda Item
8.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.
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://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82889&dbid=0&repo=PaloAlto
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
FISCAL/RESOURCE IMPACT
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
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
SUPPLEMENT NO. 2
To MASTER FUNDING AGREEMENT
Between METROPOLITAN TRANSPORTATION COMMISSION
And CITY OF PALO ALTO
For PALO ALTO TRANSIT CENTER QUARRY ROAD CONNECTION
This Supplement No. 2 to Master Funding Agreement (“Supplement or “Agreement”) is entered
into this September 1, 2025, by and between the METROPOLITAN TRANSPORTATION
COMMISSION (hereafter “MTC”) and CITY OF PALO ALTO (hereafter “AGENCY”) and
supplements the Master Funding Agreement, dated February 17, 2022, by and between MTC and
AGENCY.
Pursuant to this Supplement, MTC agrees to reimburse an amount not to exceed one million
dollars ($1,000,000) in Regional Measure 2 (RM2) funds to AGENCY to fund the Palo Alto Transit
Center Quarry Road Connection (as more fully described in Annex I hereto, the “Supplement Project”).
The estimated budget and payment milestones for the Supplement Project scope of work is attached as
Annex II hereto.
The Supplement Project work will commence September 1, 2025, and be completed no later
than December 31, 2029.
The clauses selected below and attached as exhibits to the Master Funding Agreement shall
apply to AGENCY’s performance of the applicable Supplement Project scope of work hereunder:
☒ Exhibit B-1, Additional Terms and Conditions (General), Paragraph A
☒ Exhibit B-1, Additional Terms and Conditions (General), Paragraph B
☐ Exhibit B-2, Additional Terms and Conditions (Federally Required Clauses)*
☐ Exhibit B-3, Additional Terms and Conditions (State Required Clauses)
☐ Exhibit B-4, Additional Terms and Conditions (Prevailing Wage Rates, Apprenticeships,
and Payroll Records, Non-Federally-Funded Agreements)
☐ Exhibit B-5, Additional Terms and Conditions (Prevailing Wage Rates, Apprenticeships,
and Payroll Records, Federally-Funded Agreements)
☒ Exhibit B-6, Additional Terms and Conditions (Regional Toll Funds including RM1,
RM2, and AB1171)
☐ Exhibit B-7, Additional Terms and Conditions (Regional Discretionary Federal Funds
including STP and CMAQ)
The terms and conditions of this Supplement include the following and each is incorporated by
reference herein as if fully set forth herein.
Attachment A – MTC Resolution No. 4271 Approving Project Request(s)
Attachment B – MTC Resolution No. 3636, Revised
The MTC Project Manager for the Supplement Project is Michelle Go, (415) 778-6649,
mgo@bayareametro.gov. The AGENCY Project Manager for the Supplement Project is Sylvia Star-
Lack, (650) 329-2546, Sylvia.Star-Lack@paloalto.gov.
This Supplement is supplemental to the Master Funding Agreement; all terms and conditions of
the Master Funding Agreement, as may be amended, remain unchanged hereby.
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 2
Capitalized terms used but not defined herein shall have the respective meanings assigned to
them in the Master Funding Agreement.
METROPOLITAN TRANSPORTATION
COMMISSION
CITY OF PALO ALTO
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 3
ANNEX I
Project Description and Scope of Work
Palo Alto Transit Center Quarry Road Connection
Project Description:
As envisioned in the Palo Alto Comprehensive Plan as Program T3.10.4 (2017), the proposed Quarry
Road Connection Project will create a direct transit connection between the transit center bus bays and
El Camino Real at the Quarry Road traffic signal, through an underused, passive portion of El Camino
Park. The proposed project would allow buses that use the bus terminal to exit via Quarry Road to El
Camino Real rather than to circle back through University Avenue. The bus operators have estimated
savings of approximately 5-8 minutes per trip could be achieved by avoiding University Circle and
directly connecting with Quarry Road at El Camino Real.
The bus route reorganization would have secondary benefits to the University Avenue and University
Circle area by eliminating the need for some buses to make constrained turning movements in the
corridor. Articulated buses require additional turning radii to access the transit center from University
Avenue which regularly causes congestion and delays for vehicular traffic and creates additional conflict
points for bicycles and pedestrians at the gateway to Downtown Palo Alto.
The project will also include multiple pedestrian and bicycle improvements within El Camino Park
adjacent to or near the proposed transit connection and at the intersection of Quarry Road and El
Camino Real.
Specifically, the proposed project will:
• Upgrade the crossing of El Camino Real to accommodate pedestrians and cyclists on both sides
of Quarry Road, which would reduce crossing time; and
• Add safety and accessibility measures at the intersection of Quarry Road and El Camino Real
(e.g., curb extensions and tighter turning radii, new pedestrian/bicycle ramps, pedestrian and
bicycle refuge islands, and high visibility bicycle markings are currently being considered).
Through the above improvements, there would be enhanced visibility of the existing multi-modal path to
the transit center and its connections to the existing Class 1 multi-modal path that connects to El Camino
Park and into Menlo Park, through the PATC to the Embarcadero Bike Path, and to the Stanford
Perimeter Trail.
These connectivity improvements will also make the active park facilities in El Camino Park more
accessible for bikes, pedestrians and transit riders.
Designs for the transit connection are in the early stages, but all feasible options are under consideration,
ranging from a new connection providing full access to buses between the transit center and El Camino
Real to an outbound-only transit lane.
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 4
The preliminary concept design includes 12.5 foot wide inbound and outbound transit travel lanes (188
feet and 163 feet in length, respectively), with six-inch curbs, separated by a landscaped median that
ranges in width between 18-33 feet that would house existing utilities.
Other modifications and improvements could include, but are not limited to, wayfinding signs,
additional striping and green bike lanes to help identify buffered lanes and highlight any potential
conflict areas between buses, transit and bicyclists in the corridor, crosswalk striping, and refuge islands.
Scope
The services to be performed by Palo Alto staff, in partnership with Stanford University, shall consist of
managing consultants/contractors to perform the services requested by the MTC Project Manager or a
designated representative including, but not limited to, the following tasks:
• Preliminary Engineering and Design
o Task 1: Project Management
o Task 2: Preliminary Engineering
o Task 3: Transit Service and Operations Study
o Task 4: Traffic Operations Analysis
o Task 5: Environmental Engineering and Clearance
o Task 6: Design Engineering Evaluation Report (DEER)
o Task 7: Plans, Specifications, and Estimates (PS&E)
o Optional Tasks
Task 4.3: Transit Signal Priority Technical Memorandum
Task 5.2 Preliminary Environmental Analysis Report (PEAR)
Task 8: Advertising and Bid Support (fee not included)
Task 9: Contingency and Other Supporting Tasks
• Construction
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 5
ANNEX II
Project Schedule, Budget and Payment
COST REIMBURSEMENT
MTC will reimburse AGENCY for all expenses deemed reasonable and necessary by MTC incurred by
AGENCY in the performance of this Agreement. MTC will reimburse AGENCY at a rate not to exceed
50% of costs up to a maximum of one million dollars ($1,000,000) in Regional Measure 2 (RM2) funds.
AGENCY and Stanford University will match the funds with a 25% contribution each. Excess costs
beyond approved RM2 allocations will be resolved by AGENCY or Stanford University contributions,
or other sources identified by AGENCY. Reimbursement is subject to funding allocations approved in
Attachment A, MTC Resolution No. 4721 and future allocation approvals. Attachment A also includes
the project schedule which serves as an estimated schedule by which allocations would be made.
Reimbursement shall include travel and personal expenses incurred by employees or agents of
AGENCY in accordance with 48 Code of Federal Regulations Part 31 or 2 CFR Part 200, as applicable.
The estimated budget and RM2 cost share by Task for the Preliminary Engineering and Final Design
and the Construction phases are described below.
# Task Estimated
Budget Cost Share
Preliminary Engineering and Final Design Phase
Preliminary Engineering and Final Design Subtotal
Construction Phase Subtotal
Total
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 6
AGENCY shall submit invoices for services rendered on a monthly basis covering fees and expenses for
a single calendar month, identifying the work for which payment is requested; the hours worked; any
authorized expenses, together with receipts for such expenses; the amount requested; and the cumulative
amount billed and paid under this Agreement. AGENCY shall also submit invoices through June 30th
by July 31st to align with fiscal year-end processing.
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 7
ANNEX III
Insurance Requirements
1. INSURANCE
A. Minimum Coverages. The insurance requirements specified in this section shall cover
AGENCY’s own liability and the liability arising out of work or services performed under this
Agreement by any subconsultants, subcontractors, suppliers, temporary workers, independent
contractors, leased employees, or any other persons, firms or corporations that AGENCY authorizes to
work under this Agreement (hereinafter referred to as “Agents.”) AGENCY shall, at its own expense,
obtain and maintain in effect at all times during the life of this Agreement the following types of
insurance against claims, damages and losses due to injuries to persons or damage to property or other
losses that may arise in connection with the performance of work under this Agreement.
AGENCY is also required to assess the risks associated with work to be performed by Agents
under subcontract and to include in every subcontract the requirement that the Agent maintain adequate
insurance coverage with appropriate limits and endorsements to cover such risks. To the extent that an
Agent does not procure and maintain such insurance coverage, AGENCY shall be responsible for said
coverage and assume any and all costs and expenses that may be incurred in securing said coverage or in
fulfilling AGENCY’s indemnity obligation as to itself or any of its Agents in the absence of coverage.
In the event AGENCY or its Agents procure excess or umbrella coverage to maintain certain
requirements outlined below, these policies shall also satisfy all specified endorsements and stipulations,
including provisions that AGENCY’s insurance be primary without right of contribution from MTC.
Prior to beginning work under this contract, AGENCY shall provide MTC with satisfactory evidence of
compliance with the insurance requirements of this section.
The insurance listed hereunder shall be considered minimum requirements and any and all
insurance proceeds in excess of the requirements shall be made available to MTC. If the AGENCY
maintains broader coverage and/or higher limits than the minimum limits shown hereunder, MTC shall
be entitled to the broader coverage and/or higher limits maintained by the AGENCY.
1. Workers' Compensation Insurance with Statutory limits, and Employer’s Liability
Insurance with a limit of not less than $1,000,000 per employee and $1,000,000 per accident, and any
and all other coverage of AGENCY’s employees as may be required by applicable law. Such policy
shall contain a Waiver of Subrogation in favor of MTC. Such Workers’ Compensation & Employer’s
Liability may be waived, if and only for as long as AGENCY is a sole proprietor or a corporation with
stock 100% owned by officers with no employees.
2. Commercial General Liability Insurance for Bodily Injury and Property Damage
liability, covering the premises and operations, and products and completed operations of AGENCY and
AGENCY’s officers, agents, and employees and with limits of liability which shall not be less than
$1,000,000 per occurrence with a general aggregate liability of not less than $2,000,000, a
products/completed operations aggregate liability limit of not less than $2,000,000 and Personal &
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 8
Advertising Injury liability with a limit of not less than $1,000,000. Such policy shall contain a Waiver
of Subrogation or “Waiver of Transfer of Rights of Recovery Against Others to Us” provision included
in the policy language or by endorsement in favor of MTC.
Products and completed operations insurance shall be maintained for three (3) years following
termination of this Agreement.
MTC and those entities listed in Part 3 of this Attachment E (if any), and their
commissioners, directors, officers, representatives, and employees are to be named as additional
insureds for ongoing and completed operations. The additional insured endorsements shall be at least
as broad as Insurance Service Office (ISO) Form Number CG 20 38 04 13 for ongoing operations and
Insurance Service Office (ISO) Form Number CG 20 37 04 13 for completed operations. Such insurance
shall be primary and non-contributory, and contain a Separation of Insureds Clause as respects any
claims, losses or liability arising directly or indirectly from AGENCY’s operations.
3. Business Automobile Insurance for all automobiles owned (if any), used or
maintained by AGENCY and AGENCY’s officers, and employees, including but not limited to owned
(if any), leased (if any), non-owned and hired automobiles, with limits of liability which shall not be less
than $1,000,000 combined single limit per accident.
4. Excess or Umbrella Insurance in the amount of $9,000,000 providing excess limits
over Employer’s Liability, Automobile Liability, and Commercial General Liability Insurance. Such
umbrella coverage shall be following form to underlying coverage including all endorsements and
additional insured requirements.
5. Errors and Omissions Professional Liability Insurance for errors and omissions and
the resulting damages, including, but not limited to, economic loss to MTC and having minimum limits
of $5,000,000 per claim. The policy shall provide coverage for all work performed by AGENCY and
any work performed or conducted by any subcontractor/consultant working for or performing services
on behalf of AGENCY. No contract or agreement between AGENCY and any subcontractor/consultant
shall relieve AGENCY of the responsibility for providing this Errors & Omissions or Professional
Liability coverage for all work performed by AGENCY and any subcontractor/consultant working on
behalf of AGENCY on the project.
6. Property Insurance. Property Insurance covering AGENCY'S own business personal
property and equipment to be used in performance of this Agreement, materials or property to be
purchased and/or installed on behalf of MTC (if any), and builders risk for property in the course of
construction (if applicable). Coverage shall be written on a "Special Form" policy that includes theft, but
excludes earthquakes, with limits at least equal to the replacement cost of the property. Such policy shall
contain a Waiver of Subrogation or “Transfer of Rights of Recovery Against Others to Us” provision
included in the policy language or by endorsement in favor of MTC.
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 9
7. Employee Dishonesty/Crime Insurance. An Employee Dishonesty insurance policy
covering AGENCY’s employees for loss of or damage to money, securities or other property resulting
from theft. The following limits of liability should apply: (a) Employee Dishonesty - $250,000; and (b)
Client Property Blanket Bond - $250,000. AGENCY shall reimburse MTC for any and all losses
within the deductible, for insured losses, the cost to prove the loss, accountants' fees, defense costs
including attorneys’ fees and any other fees associated with a claim. In lieu of a Client Property Blanket
Bond, the policy shall contain a Joint Loss Payee endorsement or other Third Party coverage naming
MTC.
B. Acceptable Insurers. All policies will be issued by insurers, generally with a Best’s Rating
of A- or better with a Financial Size Category of VII or better, or an A rating from a comparable rating
service.
C. Self-Insurance. AGENCY’s obligation hereunder may be satisfied in whole or in part by
adequately funded self-insurance, upon evidence of financial capacity satisfactory to MTC.
D. Deductibles and Retentions. AGENCY shall be responsible for payment of any deductible
or retention on AGENCY’s policies without right of contribution from MTC. Deductible and retention
provisions shall not contain any restrictions as to how or by whom the deductible or retention is paid.
Any deductible or retention provision limiting payment to the Named Insured is unacceptable.
In the event that MTC seeks coverage as an additional insured under any AGENCY insurance
policy that contains a deductible or self-insured retention, AGENCY shall satisfy such deductible or
self-insured retention to the extent of loss covered by such policy, for any lawsuit arising from or
connected with any alleged act of AGENCY, subconsultant, subcontractor, or any of their employees,
officers or directors, even if AGENCY or subconsultant is not a named defendant in the lawsuit.
E. Claims Made Coverage. If any insurance specified above is written on a “Claims-Made”
(rather than an “occurrence”) basis, then in addition to the coverage requirements above, AGENCY
shall:
(1) Ensure that the Retroactive Date is shown on the policy, and such date must be before the date of
this Agreement or the beginning of any work under this Agreement;
(2) Maintain and provide evidence of similar insurance for at least three (3) years following project
completion, including the requirement of adding all additional insureds; and
(3) If insurance is cancelled or non-renewed, and not replaced with another claims-made policy form
with a Retroactive Date prior to the Agreement effective date, AGENCY shall purchase “extended
reporting” coverage for a minimum of three (3) years after completion of the work.
F. Failure to Maintain Insurance. All insurance specified above shall remain in force until all
work or services to be performed are satisfactorily completed, all of AGENCY’s personnel,
subconsultants, subcontractors, and equipment have been removed from MTC’s property, and the work
or services have been formally accepted. AGENCY must notify MTC if any of the above required
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 10
coverages are non-renewed or cancelled. The failure to procure or maintain required insurance and/or
an adequately funded self-insurance program will constitute a material breach of this Agreement.
G. Certificates of Insurance. Prior to commencement of any work hereunder, AGENCY shall
deliver to Ebix, MTC’s authorized insurance consultant, insurance documentation (including Certificates
of Liability Insurance, Evidences of Property Insurance, endorsements, etc.) verifying the
aforementioned coverages. Such evidence of insurance shall make reference to all provisions and
endorsements referred to above and shall be signed by the authorized representative of the Insurance
Company shown on the insurance documentation. The Project name shall be clearly stated on the
face of each Certificate of Liability Insurance and/or Evidence of Property Insurance.
AGENCY shall submit certificates of insurance to:
Metropolitan Transportation Commission
Insurance Compliance
P.O. Box 100085-M8
Duluth, GA 30096
or
Email to MTC@Ebix.com
or
Fax to 1-888-617-2309
MTC reserves the right to require copies of all required policy declarations pages or insurance
policies, including endorsements, required by these specifications, at any time.
3. ADDITIONAL INSUREDS
The following entities are to be named as Additional Insureds under applicable sections of this
Attachment E and as MTC Indemnified Parties, pursuant to Article 9 of the Agreement.
Metropolitan Transportation Commission (MTC)
Bay Area Toll Authority (BATA)
Alameda-Contra Costa Transit District (AC Transit)
Valley Transportation Authority (VTA)
San Mateo County Transit District (SamTrans)
Stanford University
California Department of Transportation
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 11
ATTACHMENT A
MTC Resolution No. 4721
MTC/ City of Palo Alto
Master Funding Agreement
Supplement No. 2 – Palo Alto Transit Center Quarry Road Extension
Page 12
ATTACHMENT B
MTC Resolution No. 3636, Revised