When Palo Alto officials launched a round of steep budget cuts last year in response to plummeting revenues, the public shuttles were among the first things to depart.

With little debate, the City Council voted in May 2020 to halt the 20-year-old shuttle program, which was designed to serve local students, seniors, Caltrain commuters and others seeking to get around town without an automobile. Though the move saved the city about $500,000 in annual costs, the elimination of the Embarcadero and Crosstown shuttles also took away a key transit option for hundreds of residents — one that has yet to be restored.

Now, the city is getting ready for a new shuttle program that will have little resemblance to the one it left behind. Rather than relying on fixed routes and set schedules, the small shuttles will run on demand and cover all parts of Palo Alto. Pick-up and drop-off locations will be scattered throughout the city and rides will be arranged through a phone app. For those who require assistance, door-to-door service will be provided, according to a report from the city's Office of Transportation.

Fueled by a $2 million grant from the Santa Clara Valley Transportation Authority (VTA), the city is preparing to make a move into the "microtransit" arena next summer, with the goal of having the new shuttles hit the streets before the 2022 school year, Chief Transportation Official Philip Kamhi said last month at a meeting of the council's Finance Committee. Having received funding through Measure B, the 2016 tax measure, Palo Alto's next challenge will be finding a vendor to run the service, which Kamhi suggested could be a challenge given the ongoing constraints in the labor supply.

"Frankly, it's hitting transit hard as well," Kamhi said.

Palo Alto isn't the only Santa Clara County city moving toward on-demand shuttles. Milpitas has recently received a VTA grant to move ahead with an 18-month program called Milpitas OnDemand, which it plans to roll out in partnership with the consulting firm RideCo. According to a report that city staff released last month, the program would charge $2.50 per ride and is expected to see about 120 daily riders within six months of the rollout. The program, according to staff, is expected to "address the first/last-mile challenge in Milpitas and provide a convenient and affordable transportation option for Milpitas' residents, employees, and vulnerable/transit-dependent population." Much like the Palo Alto program, the one in Milpitas is receiving funding from the $6 million pool that Measure B designates for "innovative transit service models."

Cupertino already has an on-demand shuttle program that allows residents and visitors to both get around town and to reach places outside the city, including the Sunnyvale Caltrain station and Rancho San Antonio Preserve. Known as Via-Cupertino, the program charges $4 per ride, or $2 for seniors, students, low-income residents or individuals with disabilities. Much like in the proposed Palo Alto programs, riders use their phones to arrange pickups.

The trend toward microtransit alternatives goes well beyond the Peninsula, with Sacramento and Napa among California cities to recently launch the new services. According to TransLōc, a subsidiary of Ford Mobility that focuses on microtransit solutions, programs that offer on-demand shuttles help improve accessibility, flexibility and safety. An October blog post from TransLōc cites a survey of 1,200 working adults that the company took in July, in which 71% of respondents expressed concerns about vehicle sanitation when riding public transit. A pre-booked seat on a small shuttle, the company maintains, could be a good alternative for riders who are not ready to board a bus full of people.

The company also noted that microtransit systems allow cities to go to "geo-fence" regions that are underserved by public transportation to create an on-demand ride-hailing service specifically for those communities.

"Riders who live more than a mile away from a fixed-route stop could rely on an on-demand microtransit service to pick them up and take them to the nearest stop," the TransLōc article states. "By acting as a feeder to fixed-route services, transit agencies will access a larger percentage of the population. That means more riders, fewer empty buses, and greater community engagement."

Palo Alto's program cleared its first procedural hurdle on Nov. 8, when the council voted to accept the VTA grant, which requires a $500,000 contribution of local funds. Office of Transportation staff believe the program could support about 500 daily riders, which would exceed the usage of the now-defunct Embarcadero and Crosstown shuttles. According to staff, the two shuttle services had a combined daily ridership of 418 and 364 in 2018 and 2019, respectively. In making its ridership projections, city staff also noted that despite a plunge in transit use during the pandemic, Palo Alto's downtown Caltrain station had the highest ridership in September 2020, with an average of 620 weekday riders.

That said, it remains to be seen whether Palo Alto's new project will generate the type of demand that local transportation planners would like to see. To promote the program, the service provider will be required to conduct a citywide launch campaign before the program is deployed, according to staff.

"This first outreach step emphasizes bringing awareness and comfort to potential riders through education and encouragement," staff wrote in response to council member Greg Tanaka's question about potential demand. "Additional outreach will be performed throughout the project lifespan and will focus on adjusting specific parameters to improve service operations (e.g. operating hours, passenger wait time) based on community feedback. In addition, as an incentive to try the service, the awarded contractor will offer free rides for one month at sign-up."

A key goal of the program is to provide a service to seniors and students, as well as residents who choose not to own vehicles. The city estimates that between 2014 and 2018 there were about 25,875 people in the city in an average year who were "transit-dependent." This includes 4,697 individuals with disabilities, 3,954 low-income individuals, 4,557 individuals who live in households without a vehicle and 12,666 youths between the ages of 5 and 18, according to the city.

"Before the pandemic, these populations who are without access to a private vehicle, who choose not to drive or cannot drive, relied on public transit including the City's two shuttle services and Valley Transportation Authority's (VTA) bus services," staff wrote. "According to the City's shuttles' on-board surveys, public transit is essential to performing their daily activities, such as attending school, buying groceries, and visiting family who live in a different neighborhood in the city."

For the council, the program represents the latest attempt to reduce single-occupancy trips, a goal that the city has been pursuing for well over a decade. To further the goal, the city launched in 2015 the Palo Alto Transportation Management Association, a nonprofit tasked with providing alternative modes for transportation to downtown commuters.

The goal is also reflected in the city's Comprehensive Plan, which calls for development of strategies that "make it easier and more convenient not to drive" and that "complement and enhance the transportation options available to help Palo Alto residents and employees make first/last mile connections."