Palo Alto's ambitious and ever-shifting plans for redesigning its rail corridor are about to get a welcome boost from the Santa Clara Valley Transportation Authority, the agency in charge of distributing funds for rail improvements from the 2016 tax measure.

Palo Alto is one of three cities — along with Mountain View and Sunnyvale — that are eligible for the $700 million that were designated for "grade separations" — the physical separation of the railroad tracks from local roads at intersections using overpasses, underpasses or other structures. The VTA is now coming up with a plan to distribute the funds to the three north county cities.

But while Palo Alto's leaders don't know how much of the $700 million the city will get, they are about to cash in on VTA money from a different program, an annual allotment for street repairs. And because Palo Alto's streets are already deemed to be in relatively good shape, the city will be allowed to use its $1.3 million for other purposes, including planning for grade separations.

Unlike with the grade-separation fund, Palo Alto has plenty of discretion in how to spend the street-repair money. VTA guidelines specify that cities that have a "pavement condition index" of 70 or below — connoting a multitude of streets that need repairs — must spend the money from this program for maintenance and repairs.

But cities with streets in generally good condition can use the money for "other congestion relief projects and programs," according to VTA guidelines. Palo Alto, with its pavement score of 85, could potentially invest in new shuttles, bike lanes and the Palo Alto Transportation Management Association, a nonprofit charged with reducing the number of solo drivers coming to downtown.

Instead of doing any of that, the city is planning to spend the vast majority of the funding — about $1 million annually — to study new designs for the railroad tracks at rail crossings.

The remaining $300,000 will go toward installation of traffic signals and upgrading the signal-communications network, according to a plan developed by City Manager Ed Shikada and approved by the City Council last summer as part of its adoption of the city's capital budget.

The city's decision to devote most of its Local Streets and Roads funding to grade separation, a project that isn't expected to be completed for at least a decade, underscores the huge amount of time and money associated with the planning effort.

The council in June approved an additional $1.2 million for the city's contract with the consulting firm AECOM, raising the total compensation to $2.5 million. It has already recently expanded a citizen committee that was advising staff on grade-separation alternatives and is considering creating another group in December to help come up with the funding for the city's preferred alternative, whenever it's chosen.

The extra $1 million from the VTA is expected to help with the rail-redesign planning, though it does not resolve the bigger question of who will pay for the actual construction of grade separations.

Palo Alto is bracing for the likely scenario that the city's share of the Measure B grade-separation fund will not suffice to implement whatever alternatives the council ultimately decides to pursue. Currently, the city is primarily looking to make changes at Churchill Avenue (including closing Churchill to traffic at the crossing) and at the south Palo Alto crossings of Meadow Drive and Charleston Road (where the city is considering a viaduct, a trench, and a "hybrid" option that combines lowering the road and raising the track).

Mountain View and Sunnyvale, meanwhile, have already narrowed down their preferred options for the two grade crossings in each respective jurisdiction.

To bridge the gap between how much the city will receive and how much grade separations are expected to cost, the council is preparing to place a tax measure on the November 2020 ballot. The measure, which the council will discuss on Sept. 16, will likely take the form of a business tax.

Last Monday, in discussing grade separations, Shikada told the council that Palo Alto will need to come up with new revenue sources to actually achieve grade separations. He also alluded to Palo Alto's potential of getting about $300 million from the Measure B funds (based on the fact that the city has more grade crossings than Mountain View or Sunnyvale), though the VTA has not determined that the number of grade crossings will be a factor in determining each city's allocations.

"We are operating with the assumption that, based on the concepts we've seen today and initial cost estimates, that there will be additional funding required beyond the $300 million that we may envision as Palo Alto's fair share of Measure B grade-separation earmark." Shikada said.