Council looks to scale back rideshare program

After more than a year of providing subsidized rides to local residents and employees, Palo Alto’s rideshare program, Palo Alto Link, is facing an uncertain future as city leaders prepare to raise fares and restrict its routes in the coming months.

Funded by a $2 million grant from the Santa Clara Valley Transportation Authority, Palo Alto Link functioned much like Uber Pool but with limited hours and a geographic area confined to city limits. Most users can catch a ride for $3.50. For seniors, low-income individuals and youths, the fare is $1. Employees of Stanford Research Park get free rides thanks to the business park’s $372,000 annual contribution to the program.

Just last month, city officials were considering extending hours to capture more commuters and to give local kids more options for getting around town. But with grant funding drying up, the Palo Alto council is confronting a stark reality that the service, while popular, is financially draining.

The council’s Finance Committee, which this week concluded its review of the proposed budget for fiscal year 2025, included Palo Alto Link on its list of budget cuts. While it has no plans to shut down the service entirely, committee members agreed that it should be more limited in scope and focused on residents who truly need the shuttle service rather than those who simply really like cheap rides.

The budget recommendation from the Finance Committee reduces the budget for Palo Alto Link from $900,000, as proposed by City Manager Ed Shikada, to $400,000. While the city has not yet determined what exactly the next iteration of the service will look like, Chief Transportation Official Philip Kamhi suggested that it could include removing school service during school hours, further limiting the program’s service area and raising fares.

Kamhi said during the May 21 review that meeting the council’s budget goals would entail higher fares and a 25% to 45% reduction in services.

The program has seen some signs of success in terms of ridership. According to the Office of Transportation, it had 3,011 riders in its first month and 5,348 in August, its busiest month to date.

The Finance Committee broadly agreed that Palo Alto Link, while valued, is unsustainable. Earlier this month, as the committee reviewed the budget for the Office of Transportation, there was a general consensus that Palo Alto Link needs to change to remain viable.

Kamhi said at that time that the city is looking to improve the service by expanding hours to accommodate more Caltrain riders. His office is also looking for additional grant funds as well as other partners who could contribute to the service.

But with VTA funding set to expire in October, the city doesn’t have much time to find fresh revenue streams. The Finance Committee acknowledged that stark reality when it recommended the program cuts, which the full City Council will consider next month when it adopts the city budget.

Council member Pat Burt, who chairs the committee and who also sits on the VTA board of directors, made the case for limiting the service.

“We certainly want to prioritize serving those who really need it versus those who just love the fact that we’re subsidizing their Uber rides,” Burt said during the May 21 discussion. “And we have both right now.”

Money, however, wasn’t the only concern. By opening the program to students for regular school trips, the city is undermining its broader goal of getting more people to bike and take transit, Burt said. In that sense, it is not progressive, Burt said.

“We’re subsidizing chauffeured rides to school instead of riding bikes,” Burt said during the May 8 review of the department budget.

His committee colleagues generally agreed. Vice Mayor Ed Lauing suggested that the current fares are too low and that the city should not be offering $1 rides. Council member Vicki Veenker also supported changing Palo Alto Link, though she encouraged the city to make exceptions for students with disabilities and those carrying large objects like dioramas.

Burt suggested that the Palo Alto Link isn’t the only transit program at financial crossroads. The VTA “microtransit” grants over the past few years for programs that seemed like a great idea but proved to be financially unsustainable. He said the agency will be reexamining its experiences with the various pilot programs that it had helped fund.

Palo Alto Link should focus on seniors who don’t have other alternatives for getting around town and on teens who may need better mobility options at night, Burt said during the May 8 review. But the city’s higher priority should be making streets safer for bicycling.

“Frankly, making our streets easy and safe to ride at night is really the better approach,” Burt said.