SunnyvaleRTC

December 2, 2003

SUBJECT: PALO ALTO ANIMAL SHELTER SERVICES CONTRACT

The purpose of this report is to request City Council approval for the City Manager to enter a long-term agreement with the City of Palo Alto for animal shelter services. The attached draft (attachment “A”) of a 20-year agreement between the City of Palo Alto and the City of Sunnyvale fulfills this objective.

The proposed agreement becomes effective January 1, 2004 and continues for a period of twenty and one-half years through June 30, 2024. The contract has two separate provisions: a capital cost component that allows for the expansion and upgrade of the Palo Alto Animal Shelter and a shelter services component that covers the operation of the shelter. The portion of the contract that covers the capital costs begins January 1, 2004. The portion of the contract that covers animal shelter services begins July 1, 2005 or on a mutually agreed upon date after completion of the shelter expansion.

Authority to pursue this contract was granted by the Sunnyvale City Council on March 18, 2003. (RTC 03-096 Attachment “B”) Council directed the City Manager to “authorize staff to complete negotiations and enter a long-term contract with the City of Palo Alto and a short-term contract with the Humane Society.” The short-term obligation was satisfied and presented to Council for their approval on June 10, 2003. This Report to Council addresses the long-term contract.

Staff recommends that the City Council authorize the City Manager to enter into this proposed long-term animal shelter agreement with the City of Palo Alto.

BACKGROUND

On July 20, 2000, the City of Sunnyvale entered a Joint Powers Agreement (JPA) with six other cities to form the Silicon Valley Animal Control Authority ("SVACA"). The goal of SVACA was to provide animal field, shelter and related services for the participating cities. SVACA completed its first full year of field operations during FY 2001-2002, and as a result, several concerns were identified.

Increased Projected Animal Shelter Construction Costs

A major concern with SVACA developed due to a shelter construction plan that was larger and more expensive than originally approved by the participating cities. This change in plan required participants to appropriate additional capital funding for the expanded facility. Challenges regarding public transportation easements and mitigating contamination at the proposed shelter site were also encountered. This led to uncertainties regarding the feasibility of using the site and, if usable, the final shelter configuration and cost.

Increased Actual Operating Costs

Sunnyvale’s animal sheltering costs increased dramatically after joining SVACA. Since SVACA does not have a facility, shelter services were provided to the City by the Humane Society through SVACA. Under this arrangement budgeted operating costs doubled between FY 2000-2001 and FY 2001-2002. The City was also concerned about certain additional cost increases after shelter construction, particularly the additional costs for shelter staff.

Costs of SVACA Compared to Other Similar Operations a Concern

A third concern emerged as a result of a cost comparison study. Following the completion of SVACA’s second year of operation the participating cities had an actual cost history, which allowed them to compare SVACA to other similar Bay Area shelters. The City of Cupertino initiated this study. The study concluded that SVACA’s costs per animal were higher than other alternatives.

Council Action to Actively Pursue Shelter Alternatives

After extensive discussion regarding the comparison study and the related cost escalation issues, the Council authorized staff to pursue alternative shelter contracts. This decision triggered the City’s withdrawal from SVACA. Council authorized the City Manager to secure a short-term contract with the Humane Society of Silicon Valley and a long-term contract with Palo Alto Animal Services.

SVACA Update

Since the withdrawal of Sunnyvale from SVACA in June of 2003, SVACA has continued to evolve. The Cities of Cupertino and Los Gatos have stated their intent to withdraw from SVACA and to obtain animal services from the City of San Jose. The City of Saratoga has indicated that it would like to explore other options for animal service as well.

Palo Alto Animal Services (PAAS)

The City of Palo Alto operates an animal shelter within the City of Palo Alto, located at 3281 East Bayshore Road. The City of Palo Alto currently provides animal shelter and field services for the cities of Palo Alto, Mountain View, Los Altos, and Los Altos Hills. The City of Palo Alto has agreed to provide animal shelter services for the City of Sunnyvale. Sunnyvale will continue to provide field service through Department of Public Safety personnel. The operation of the animal shelter in Palo Alto is based on a shared cost. Agencies are charged based upon their percentage of use compared to the total operation cost.

With the addition of Sunnyvale to the Palo Alto animal shelter, the Palo Alto animal shelter has to be expanded to allow for the needed room to accommodate the animals that the City of Sunnyvale would add to the shelter. In conjunction with the shelter expansion, the Palo Alto shelter will receive needed upgrades. Sunnyvale will be responsible for the cost of the shelter expansion, while the other contracting agencies and the City of Palo Alto will share the costs associated with the shelter upgrades.

EXISTING POLICY

Program Outcome Statement: Control animal disease and vicious animals, minimize animal nuisances, and promote the humane treatment of animals.

SDP 45301: Contribute to public health and safety as related to animal control issues concerning vicious, injured, and stray animals.

SDP 45302: Enhance public awareness and safety on animal control issues, decrease animal control calls for service and ensure that City, State and Federal animal control guidelines are met.

DISCUSSION

After discussions with the City of Palo Alto, an agreement was reached and a contract was developed. The agreement is substantially the same concept that was presented to Council on March 18, 2003 with the addition of a host fee. After careful review, the City of Palo Alto needed to add a host fee to ensure that all indirect costs were captured. This host fee is similar in concept to the host fee charged by the City of Sunnyvale in conjunction with the SMART Station contract.

One of the essential elements of the agreement is the way in which the total cost paid by the City of Sunnyvale is determined. Sunnyvale’s share is determined by the number of animals brought to the shelter by the City as compared to the other member agencies. If Sunnyvale’s percentage decreases, Sunnyvale’s costs will decrease. If Sunnyvale’s percentage increases, so will the costs. Through an aggressive spay and neuter program and community education, Sunnyvale should be able to lower the costs paid for shelter services.

The City of Palo Alto Animal Services will provide the following services, including shelter facilities, supplies, animal attendants, supervisors and administrative personnel, and any other supplies and personnel reasonably required to perform these services:

Shelter of abandoned, impounded, lost or stray domestic animals brought to the shelter by Sunnyvale residents or personnel.
Quarantine of biting animals.
Rabies testing of suspected animals.
Provision for surrender and reclaim of abandoned, lost or stray domestic animals during established business hours.
Euthanization and disposal of abandoned, lost, impounded, or stray domestic animals unclaimed by their owners that failed to be adopted.

In addition, the City of Palo Alto Animal Services will provide medical services to Sunnyvale animals, including office facilities, supplies, and professional and trained personnel, employed or under contract, necessary to perform the following services:

Veterinarian services to treat and provide veterinary care to stray, injured, or sick dogs, cats, and other impounded animals.
Monitor impounded quarantined biter animals.
Vaccination services and rabies control information.

The services provided by Palo Alto Animal Services are similar to the services that are currently being provided by the Humane Society of Silicon Valley. There will not be a change in service level.

The contract with the City of Palo Alto offers the City of Sunnyvale a cost-effective solution for animal shelter services. The agreement with Palo Alto offers stability with an established partner, the advantage of long-term predictability and the added benefit of control.

FISCAL IMPACT

There are two cost components contained in the contract. The first is a capital cost component that covers the expansion and upgrade of the Palo Alto Animal Shelter to accommodate the addition of Sunnyvale to the Palo Alto animal shelter. The second is the shelter services component that covers the operation of the shelter and the costs associated with the processing and housing of Sunnyvale’s animals.

The first component contained in the contract is the capital cost portion of the contract. With the addition of Sunnyvale to the Palo Alto Animal Shelter, Palo Alto needs to expand the shelter to accommodate the addition of Sunnyvale’s animals. Sunnyvale’s share of the planned expansion project is estimated at $1.1 million. The contract also contains a contingency for cost over runs on the expansion project of no more than 20% of the $1.1 million or $220,000. The City of Sunnyvale currently has budgeted $1.1 million to cover the cost of the shelter expansion. If the cost of the shelter exceeds the $1.1 million estimate additional monies will have to be appropriated. It is noted that the estimate of $1.1 million is an estimate on the high end of the scale and there is a potential that the project could be brought in under the budgeted amount. The City of Palo Alto is planing to include “Green Building” methods and upgrades in the building expansion, thus reducing the over-all cost of construction that had not been previously factored into the expansion project.

The capital expansion costs of $1.1 million are less than the $2.2 million that the City was expecting to pay as part of SVACA.

The second component of the contract is the costs associated with the operation of the animal shelter. This portion of the contract would not take effect until FY 2005/2006. The first year cost for Sunnyvale is projected by the City of Palo Alto to be $ 341,364 with projected second year cost of $ 269,469. Based on an estimated 1,829 animals, the cost per animal is projected to be $187 in the first year and $147 in the second year.

This compares favorably to the FY 2002-2003 Sunnyvale budget for SVACA of $398,708 and the projected actual SVACA fiscal year-end cost of $321,242.

The first year costs are higher because Sunnyvale will pay the cost of new employees in the first year. In the second year, those costs are then prorated amongst the other member cities.

Sunnyvale is currently paying the Humane Society of Silicon Valley $129.00 per animal and in FY04-05 Sunnyvale will pay $138.00 per animal. If there is a delay in the Palo Alto expansion project the cost in FY 05-06 will be $148.00 per animal.

PUBLIC CONTACT

Public contact was made through posting of the Council agenda on the City's official notice bulletin board, posting Council agenda and report on the City's web page, publication of the Council agenda in the San Jose Mercury News, and the availability of the report at the library and the City Clerk’s Office.

ALTERNATIVES

1. Approve the proposed twenty and one-half year agreement with the City of Palo Alto for animal shelter services.

2. Do not approve and seek other alternatives for animal control shelter services.

RECOMMENDATION

Staff recommends Alternative 1: Approve the proposed twenty and one-half year agreement with the City of Palo Alto for animal shelter services.

Prepared by:

Gregory Kevin
Captain, Department of Public Safety

Reviewed by:

Irwin I. Bakin
Director, Department of Public Safety

Reviewed by:

Mary Bradley
Director, Department of Finance

Approved by:

Robert S. LaSala
City Manager

Attachments

A. Animal Services Agreement between the City of Palo Alto and City of Sunnyvale (pdf format)

B. RTC 03-096. Animal Shelter Alternatives from the Silicon Valley Animal Control Authority, Palo Alto Animal services and the Humane Society of Santa Clara Valley