HomeMy WebLinkAboutStaff Report 2602-5926CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, May 11, 2026
Council Chambers & Hybrid
4:30 PM
Agenda Item
6.Approval of Contract Amendment No. 4 to Contract C19174648A with VERTEXONE
SOFTWARE, LLC for the WaterSmart Utilities Customer Portal, to Extend the Term for
Three Additional Years ending August 12, 2029 and Increase Compensation by $140,000,
for a Revised Total Not to Exceed of $677,763; CEQA Status – Exempt under CEQA
Guidelines Section 15308.
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: May 11, 2026
Report #:2602-5926
TITLE
Approval of Contract Amendment No. 4 to Contract C19174648A with VERTEXONE SOFTWARE,
LLC for the WaterSmart Utilities Customer Portal, to Extend the Term for Three Additional Years
ending August 12, 2029 and Increase Compensation by $140,000, for a Revised Total Not to
Exceed of $677,763; CEQA Status – Exempt under CEQA Guidelines Section 15308.
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager, or their
designee, to execute Amendment Number 4 to Contract C19174648A with VERTEXONE
SOFTWARE, LLC (Attachment A) for the existing WaterSmart Utilities customer portal to: (1)
extend the contract term by three (3) years, through August 12, 2029; and (2) increase the
contract not-to-exceed (NTE) amount by $140,000 for a revised total contract not-to-exceed
amount of $677,763 over the 10-year term.
EXECUTIVE SUMMARY
The current contract with the Utilities water customer portal vendor, VERTEXONE SOFTWARE,
LLC (VertexOne), is set to expire on August 12, 2026. Staff is seeking Council approval to extend
the City’s contract for the WaterSmart portal by three (3) additional years to allow customers to
continue to access WaterSmart and to support planned improvements necessary for evolving
state reporting requirements.
The WaterSmart customer portal provides customers with a convenient and secure way to
access water consumption information and provides personalized water conservation
recommendations, including monthly home water reports, leak alerts, and high-usage
notifications supported by Advanced Metering Infrastructure (AMI) data, helping customers
make informed decisions about water use in support of the City’s conservation goals.
Extending the VertexOne contract also aligns with the Smart Energy Water (SEW) extension for
MyCPAU (Staff Report #2601-
58491https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=57638433-bec8-
4ca2-b8cc-6864be2c1d46), allowing both customer-facing portals that are connected through
Single Sign-On (SSO) to conclude at similar times, reducing administrative complexity and
supporting coordinated planning for future procurements and upgrades.
2).
BACKGROUND
ANALYSIS
1 Staff Report 2601-5849, March 23, 2026:
2 Staff Report 2304-1380, June 19, 2023:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82408&dbid=0&repo=PaloAlto&searchid=a8c392d4
-c7d5-4363-b6b2-43d3204d9e98&cr=1
Integration and Operational Considerations: The WaterSmart portal is integrated with the
City’s critical business systems and workflows, including MyCPAU via Single Sign-On (SSO), and
the City’s billing system. These integrations provide customers with a seamless experience and
reduce operational risk associated with platform changes.
Summary Of Proposed Contract Terms
Staff recommends extending the current VertexOne contract by three years, increasing the
contract not-to-exceed amount by $140,000, and updating Exhibit C Compensation. This
amendment results in a revised total contract not-to-exceed amount of $677,763. Since
$169,301 remains under the current contract, only $140,000 is needed for the extension
period.
5.
Table 1: Amendment No. 4 Exhibit C Compensation
Annual Costs NTEs
Module/Functionality Year 8 Year 9 Year 10
VertexOne Digital Base $24,750 $25,492 $26,257
VXsmart $23,100 $23,793 $24,507
Home Water Reports Base $1,200 $1,236 $1,273
Home Water Reports Variable $274 $282 $291
SSO for End Customer Base $1,800 $1,854 $1,910
SSO for End Customer Variable $1,040 $1,071 $1,103
Transactional Fees - Estimated cost of all
transactional fees, plus contingency $22,000 $23,000 $24,072
Year 8 Sub Total $74,164
Year 9 Sub Total $76,728
Year 10 Sub Total $79,412
Total Cost - Year 8 – Year 10 NTE $230,304
5 Staff Report 2407-3199, February 10, 2025:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83238&dbid=0&repo=PaloAlto&searchid=de1bfff4-
9eb3-4679-b40e-8c28315f4e96
FISCAL/RESOURCE IMPACT
Approval of this amendment would increase the contract’s NTE by $140,000 to support the
three-year extension. Through the City’s cost-sharing agreement with Valley Water, Contract
S23185976, Valley Water will reimburse the City up to $200,000 per year for AMI-related
programs and home water reports. This reimbursement will fully fund the WaterSmart portal
through the cost-sharing agreement.
Funding for the first year of the extended term is available in the proposed FY 2027 Utilities
Department Water Fund budget. Funding for subsequent years is contingent upon Council
appropriation and approval of funds through the annual budget process.
STAKEHOLDER ENGAGEMENT
Palo Alto markets the WaterSmart program through the City’s websites, at community events,
via bill inserts, other social media, and newsletters.
ENVIRONMENTAL REVIEW
Council’s approval of the attached agreement described in this staff report does not meet the
definition of a project under the California Environmental Quality Act (CEQA), pursuant to the
California Public Resources Code Section 21065, because it is not an activity that will cause a
direct physical change in the environment. In the alternative, Council’s approval of this
agreement is exempt from review under CEQA Guidelines Section 15308, as an action taken for
the protection of the environment.
ATTACHMENTS
Attachment A: Contract C19174648A Amendment Number 4 with VERTEXONE SOFTWARE, LLC.
APPROVED BY:
Alan Kurotori, Director of Utilities
Staff: Linda Grand, Sustainability Programs Administrator
Vers.: Aug. 5, 2019
Page 1 of 10
AMENDMENT NO. 4 TO CONTRACT NO. C19174648A
BETWEEN THE CITY OF PALO ALTO AND
VERTEXONE SOFTWARE, LLC (FKA WATERSMART SOFTWARE, INC.)
This Amendment No. 4 (this “Amendment”) to Contract No. C19174648A (the “Contract”
as defined below) is entered into as of March 11, 2026, by and between the CITY OF PALO ALTO,
a California chartered municipal corporation (“CITY”), and VERTEXONE SOFTWARE, LLC, a
Delaware limited liability company, located at 1321 Upland Drive, Suite 8389, Houston, TX 77043
(“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this
Amendment.
R E C I T A L S
A. The Contract (as defined below) was entered into by and between the Parties
hereto for the provision of providing hosted software services, program administration, and
support, for an online water efficiency platform, as detailed therein.
B. The Parties entered into Amendment No. 1 on March 1, 2022, to update the
effective launch date, revise Task 1.2 of the Scope of Services, and clarify compensation.
C. The Parties entered into Amendment No. 2 on August 12, 2024, to extend the
contract term by six months, from August 12, 2024, to February 12, 2025.
D. The Parties entered into Amendment 3 on February 10, 2025, to extend the term
by one year and six months, from February 12, 2025, to August 12, 2026, update the Scope of
Services, and amend compensation terms without increasing the total Not-to-Exceed
Compensation.
E. The Parties now wish to amend the Contract in order to increase compensation
by One Hundred Forty Thousand Dollars ($140,000) from Five Hundred Thirty-Seven Thousand
Seven Hundred Sixty-Three dollars ($537,763) to a new total not to exceed Six Hundred Seventy-
Seven Thousand Seven Hundred Sixty-Three Dollars ($677,763), and to extend the term until
August 12, 2029, as detailed herein.
NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions
of this Amendment, the Parties agree:
SECTION 1. Definitions. The following definitions shall apply to this Amendment:
a. Contract. The term “Contract” shall mean Contract No. C19174648A
between CONSULTANT and CITY, dated August 12, 2019, as amended by:
Amendment No. 1, dated March 1, 2022
Vers.: Aug. 5, 2019
Page 2 of 10
Amendment No. 2, dated August 12, 2024
Amendment No. 3, dated February 10, 2025
b. Other Terms. Capitalized terms used and not defined in this Amendment
shall have the meanings assigned to such terms in the Contract.
SECTION 2. Section 2. “TERM" of the Contract is hereby amended to read as follows:
“SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution
through, August 12, 2029, unless terminated earlier pursuant to Section 19 of this Agreement.”
SECTION 3. Section 4. “NOT TO EXCEED COMPENSATION” of the Contract is hereby
amended to read as follows:
“SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to
CONSULTANT for performance of the Services shall be based on the compensation structure
detailed in Exhibit C, entitled “COMPENSATION,” including any reimbursable expenses
specified therein, and the maximum total compensation shall not exceed Six Hundred Seventy-
Seven Thousand Seven Hundred Sixty-Three Dollars ($677,763). The hourly schedule of rates, if
applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed or
expenses incurred for which payment would result in a total exceeding the maximum
compensation set forth in this Section 4 shall be at no cost
to the CITY.”
SECTION 4. The following exhibit(s) to the Contract is/are hereby amended or added, as
indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are
hereby incorporated in full into this Amendment and into the Contract by this reference:
a. Exhibit “C” entitled “COMPENSATION, AMENDMENT NO. 4”, AMENDED
REPLACES PREVIOUS.
SECTION 5. Legal Effect. Except as modified by this Amendment, all other provisions of
the Contract, including any exhibits thereto, shall remain in full force and effect.
SECTION 6. Incorporation of Recitals. The recitals set forth above are terms of this
Amendment and are fully incorporated herein by this reference.
(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)
Vers.: Aug. 5, 2019
Page 3 of 10
SIGNATURES OF THE PARTIES
IN WITNESS WHEREOF, the Parties have by their duly authorized representatives
executed this Amendment effective as of the date first above written.
CITY OF PALO ALTO
_____________________________
City Manager
APPROVED AS TO FORM:
_____________________________
City Attorney or Designee
VERTEXONE SOFTWARE, LLC
By:_______________________________
Name:___ _________
Title:_____________________________
By:________________________________
Name:____ ________
Title:______________________________
Attachments:
EXHIBIT “C” entitled “COMPENSATION, AMENDMENT NO. 4” (AMENDED, REPLACES
PREVIOUS)
Vers.: Aug. 5, 2019
Page 4 of 10
EXHIBIT “C” COMPENSATION,
AMENDMENT NO. 4
(AMENDED, REPLACES PREVIOUS)
The CITY agrees to compensate the CONSULTANT for professional services performed in
accordance with the terms and conditions of this Agreement, and as set forth in the budget
schedule below. Compensation shall be calculated based on the task-based rate schedule
shown below in Table C-1 up to the not to exceed budget amount for each task set forth
below.
CONSULTANT shall perform the tasks and categories of work as outlined and budgeted
below. The CITY’s Project Manager may approve in writing the transfer of budget amounts
between any of the tasks or categories listed below provided the total compensation for
Basic Services, and the total compensation for Additional Services do not exceed the
amounts set forth in Section 4 of this Agreement.
REIMBURSABLE EXPENSES
There are no reimbursable expenses under this Agreement.
ADDITIONAL SERVICES
The CONSULTANT shall provide additional services only by advanced, written authorization
from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a
detailed written proposal including a description of the scope of services, schedule, level of
effort, and CONSULTANT’s proposed maximum compensation, , for such services. The
additional services scope, schedule and maximum compensation shall be negotiated and
agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to
commencement of the services. Payment for additional services is subject to all
requirements and restrictions in this Agreement.
Table C-1: Anticipated Quarterly Cost Structure*
*CONSULTANT will invoice CITY upon completion of each task at the close of each quarter
for all costs with exception of the Initialization fee, which is billable upon contract execution.
No payment shall be due until each task is completed, or, in the case of reports, until the
report is delivered.
Payment for quarterly license shall commence in the quarter that the Launch Effective Date
occurs. CONSULTANT and CITY agree that CONSULTANT will apply a $9,375 credit to each of
the first and second quarterly license payments. All other payments will be made in
accordance with Exhibit C. No further compensation will be made for services provided prior
to this Amendment.
Cost Structure - Years 1-5:
Vers.: Aug. 5, 2019
Page 5 of 10
Component Q1 Q2 Q3 Q4 Totals
Year 1
Integration $5,500
Initialization $20,000
Welcome Letters $16,875
Training $1,500
Reports $12,500 $12,500 $12,500
License $9,375 $9,375 $9,375 $9,375 $138,875
Year 2
Reports $12,500 $12,500 $12,500 $12,500
License $9,375 $9,375 $9,375 $9,375 $87,500
Year 3
Reports $12,500 $12,500 $12,500 $12,500
License $9,375 $9,375 $9,375 $9,375 $87,500
Year 4
Reports $12,500 $12,500 $12,500 $12,500
License $9,375 $9,375 $9,375 $9,375 $87,500
Year 5
Reports $12,500 $12,500 $12,500 $12,500
License $9,375 $9,375 $9,375 $9,375 $87,500
Sub-Total $488,875
Addition
al
Service
$48,888
Vers.: Aug. 5, 2019
Page 6 of 10
s
Total
$537,763
Services Billed in Years 1-6:
Years Total Amount Spent
Year 1 $58,750
Year 2 $28,125
Year 3 $0
Year 4 $63,500
Year 5 $87,500
Year 6 (Q1-Q2) $43,750
Total $281,625
Cost Structure - Years 6-7:
Module/Functionality Q1 Q2 Q3 Q4 Estimated Total Annual
Cost Years 6-7
VertexOne Digital Base $4,500 $4,500 $4,500 $4,500 $18,000
VXsmart - $0.80 x 21,000
(total # of accounts
$4,200 $4,200 $4,200 $4,200 $16,800
Home Water Reports Base $240 $240 $240 $240 $960
Home Water Reports
Variable - $0.01280 for
each account receiving
reports (est. 15,625)
$50 $50 $50 $50 $200
SSO for End Customer Base $3,250 $3,250 $3,250 $3,250 $13,000
SSO for End Customer
Variable - $0.03207 for
each account (est. 21,000)
$169 $169 $169 $169 $674
Transactional Fees - $11,779 $11,799 $11,799 $11,799 $47,116
Vers.: Aug. 5, 2019
Page 7 of 10
Estimated cost of all
transactional fees, plus a
buffer
Year 6 Q3 and Q4 Sub Total (Estimated annual cost minus services
billed Q1 and Q2)
$53,000
Year 7 Sub Total $96,750
Additional Services Budget Remaining $42,888
Estimated Total Cost - Year 6, Q3 – Year 7, Q4 $192,638
Total Billed during Contract Years 1-6,Q2 $281,625
Total Contract Not to Exceed (Amend No. 3) $537,763
Services Billed from Year 6, Q3 through Year 7, Q3:
Years Total Amount Spent
Year 6 (Q3 and Q4) $40,333
Year 7 (Q1-Q3) $46,504
Total $86,837
Cost Structure - Years 8-10:
Module/Functionality Annual Cost Year 8
NTE
Annual Cost Year 9
NTE
Annual Cost Year
10 NTE
VertexOne Digital Base $24,750 $25,492 $26,257
VXsmart $23,100 $23,793 $24,507
Home Water Reports
Base
$1,200 $1,236 $1,273
Home Water Reports
Variable – (est. 15,578
accounts receiving
reports)
$274
$282 $291
SSO for End Customer
Base
$1,800 $1,854 $1,910
Vers.: Aug. 5, 2019
Page 8 of 10
SSO for End Customer
Variable
$1,040 $1,071 $1,103
Transactional Fees -
Estimated cost of all
transactional fees, plus a
buffer
$22,000 $23,000 $24,072
Total Annual Costs Year 8 – Year 10
Year 8 Sub Total $74,164
Year 9 Sub Total $76,728
Year 10 Sub Total $79,412
Total Cost - Year 8 – Year 10 NTE $230,304
Total Billed during Contract Years 1-7,Q3 $386,462
Cost Year 7, Q4 NTE Sub Total $23,109
Cost Year 8 – 10 NTE Sub Total $230,304
Total Contract Not to Exceed $677,763
Transactional Fees Pricing
Transactional fees include the following: outbound message composition fee, document archival
fee, pass through & management fees.
Transactional Fee Pricing
Composition Fee $0.005/communication
Document Archival $0.005/communication
SMS Pass Through $0.032/SMS
Print Pass Through $0.52/Printed Document
The pass through & management fee is only incurred if the outbound communication channel is
Letter, SMS and/or voice channels. Emails do not incur a Pass Through & Management fee.
Letters may not incur the pass through & management fee if the CITY is responsible for print
services.
Vers.: Aug. 5, 2019
Page 9 of 10
The table below provides more clarity around when the various transactional fees are charged.
Transactional Fees by Channel
Channel Composition Fee Document Archival
Fee
Pass Through &
Management Fee1
Email X X
SMS X X X
Print X X X
Voice X X
1Pass through fee from vendor, plus CONSULTANT administration charge
Transactional Fees Scenarios
Item Composition Fee Document
Archival Fee
Pass Through &
Management
Fee
1 Form Submission X
2 Home Water Reports X X X
3 Ad Hoc Utility
Communication (City Staff
Triggered Outbound
Communication)
X X X
4 Welcome Letters, Portal
Nudge Letters, & Survey
Letters
X X X
5 Leak Alerts (AMI & Non-
AMI)
X X X
6 Usage Notifications
(Unplanned Use, High Use)
X X X
7 Bill Notifications (Bill X X X
Vers.: Aug. 5, 2019
Page 10 of 10
Reminder, Bill Ready, Bill
Forecast)1
8 Outage Notifications X X X
*Fee pricing is based on the total number of communications with end customers. CONSULTANT
will provide monthly invoice tracking to ensure spending will not meet the budget threshold
without written approval from the CITY.*
Certificate Of Completion
Envelope Id: 2380BBBC-C952-4F2A-9977-E3BADFE707E5 Status: Completed
Subject: Complete with Docusign: C19174648A Amendment 4 final.pdf, C19174648A Amendment 4 revised final ...
Source Envelope:
Document Pages: 10 Signatures: 2 Envelope Originator:
Certificate Pages: 2 Initials: 0 Ann Marie Romero
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
250 Hamilton Ave
Palo Alto , CA 94301
annmarie.romero@paloalto.gov
IP Address: 170.85.54.117
Record Tracking
Status: Original
4/14/2026 11:22:30 AM
Holder: Ann Marie Romero
annmarie.romero@paloalto.gov
Location: DocuSign
Security Appliance Status: Connected Pool: StateLocal
Signer Events Signature Timestamp
Keith Foerster
Keith.Foerster@vertexone.ai
CFO
Security Level: Email, Account Authentication
(None)Signature Adoption: Uploaded Signature Image
Using IP Address: 24.162.82.191
Sent: 4/17/2026 8:23:50 AM
Viewed: 4/17/2026 2:15:28 PM
Signed: 4/17/2026 2:15:51 PM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Tracey Brown
tracey.brown@vertexone.ai
CEO
Security Level: Email, Account Authentication
(None)Signature Adoption: Pre-selected Style
Using IP Address: 2600:387:15:4e12::5
Signed using mobile
Sent: 4/17/2026 2:15:53 PM
Resent: 4/20/2026 10:42:49 AM
Viewed: 4/20/2026 2:51:38 PM
Signed: 4/20/2026 2:52:09 PM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
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Envelope Updated Security Checked 4/14/2026 11:38:25 AM
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Signing Complete Security Checked 4/20/2026 2:52:09 PM
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Payment Events Status Timestamps