Title
Recommendation to Authorize the Interim City Manager to Execute a Third Amendment to the Agreement with the Friends of the Alameda Animal Shelter to Increase Fiscal Year 2025-26 Expenditures by $175,000, for a Total of $1,390,165 in Fiscal Year 2025-26 and a Total 10-Year Agreement Not-to-Exceed $12,203,331. (City Manager 10021030)
Body
To: Honorable Mayor and Members of the City Council
From: Adam W. Politzer, Interim City Manager
EXECUTIVE SUMMARY
Due to an increasing need for service and an increase in the cost of living and doing business, costs for core state-mandated animal control services have exceeded the amount the City of Alameda (City) budgeted to reimburse the Friends of the Alameda Animal Shelter (FAAS). This staff report and a memo from FAAS (Exhibit 1) detail these cost increases along with the cost saving measures that have been enacted.
FAAS is requesting a third amendment to the Agreement with the City to increase the current year budget by $175,000, for a total compensation for Fiscal Year (FY) 2025-26 of $1,390,165. This increase will be funded by vacancy savings from the Finance Department available for FY 2025-26.
BACKGROUND
Since 2012, the City has maintained a strong public-private partnership with FAAS to provide animal control services in the City.
In July 2021, the City entered into an Animal Shelter Operator Agreement with FAAS for animal shelter and related operations. The term of the agreement was for two years with up to four two-year extensions, and a total two-year compensation not to exceed $2,047,523.
In June 2024, City Council approved the First Amendment to the Agreement with FAAS for an additional amount of $186,000, such that for FY 2023-24, the total amount of compensation would not exceed $1,288,190.
In June 2025, City Council approved the Second Amendment to the Agreement with FAAS for an additional amount of $267,692, such that for FY 2024-25, the total amount of compensation would not exceed $1,424,992.
The City’s Agreement with FAAS identifies core state-mandated animal control services that the City is responsible for funding, such as sheltering, necessary medical care, adoption, spay and neuter, licensing and animal care. Additional services are funded by FAAS through their fundraising efforts. FAAS is responsible for funding salaries including a half-time (0.5 FTE) Executive Director, a Medical Director, South Shore adoption center staff, Healthy Pets/Healthy People program staff, and marketing, development and administrative positions.
DISCUSSION
The City’s Agreement with FAAS is on a reimbursement basis, whereby FAAS bills the City monthly for its expenses to conduct core services. FAAS invoices are thoroughly reviewed by the Finance Department to ensure the expenses correspond with the services outlined in the Agreement.
According to the Bureau of Labor Statistics, the cumulative cost of living in the United States has increased by roughly 23% since 2021, when the last agreement with FAAS was initiated. Due to increasing costs and an increasing need for services, FAAS’ monthly reimbursement requests to cover core services will outpace the agreement before the end of the fiscal year.
The attached funding request memo (Exhibit 1) from FAAS explains the cost saving measures they have taken, including a workforce reduction with an annualized savings of $160,000; reducing shelter operating expenses with an annualized savings of $180,000; and other cost reductions. Per this exhibit, near the beginning of the FY, costs were projected to be roughly $299,000 above the contracted amount. After these cost saving measures that were implemented about half-way through the year, that overage was reduced to $175,000. Staff reviewed, and confirmed, that this additional cost is directly funding the state mandates that the City is required to fund for animal shelter services.
FAAS has the core responsibility to maintain public safety, meet community standards for outcomes, and provide hands-on care seven days/week, 365 days/year, and even with these cost saving measures, more is needed to operate Alameda’s Animal Shelter.
Nevertheless, as set forth in Exhibit 1, FAAS has requested, and staff recommends, that Council approve the Third Amendment to the Agreement with FAAS for an additional amount of $175,000, such that for FY 2025-26, the total amount of compensation would not exceed $1,390,165.
Staff will work with FAAS at the beginning of FY 2026-27 to identify these structural budget issues and create a plan to address the ongoing shortfalls that could include a new long-term agreement that better reflects the current cost of state mandated services and identifies additional revenue opportunities. Both staff and FAAS are committed to return to City Council during FY 2026-27 with recommendations.
ALTERNATIVES
• Authorize the Interim City Manager to execute the Third Amendment to the Agreement with FAAS to increase the FY 2025-26 budget by $175,000, funded from vacancy savings from the Finance Department.
• Provide alternative direction to staff.
FINANCIAL IMPACT
This Third Amendment would increase the FY 2025-26 compensation by $175,000, to an amount not-to-exceed $1,390,165 in Fiscal Year 2025-26. The overall compensation to FAAS is a total not-to-exceed $12,203,331.
Vacancy savings from the Finance Department will be used to cover the entire amount of $175,000.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Authorize the Interim City Manager to execute a Third Amendment to the Agreement with the Friends of the Alameda Animal Shelter to increase fiscal year 2025-2026 expenditures by $175,000, for a total not to exceed compensation of $1,390,165 in fiscal year 2025-26 and a total 10-year compensation not-to-exceed $12,203,331.
Respectfully submitted,
Ross McCarthy, Finance Director
Exhibits:
1. FAAS Funding Request Memo
2. FAAS Third Amendment
3. FAAS Agreement
4. FAAS First Amendment
5. FAAS Second Amendment