Seeking to preserve their relationship after a rancorous split, Palo Alto and its animal services provider, Pets In Need, vowed on Monday to work together on a new deal that would keep the operator in the city beyond this year.

In their first public discussion since the death of seven puppies in Pets In Need's custody last August, members of the City Council and the nonprofit's interim Executive Director Valerie McCarthy began to sketch out the contours of the arrangement, which would likely require additional investment by the city to replace the aged kennels at the East Bayshore Road shelter. McCarthy had also indicated that her organization would likely support extending the current contract to give the two sides ample time to work out the details.

The negotiations followed Pets In Need's notification last November that it plans to terminate its deal with the city. The announcement came after the city's investigation into the death of seven puppies from what is believed to be a heat stroke as they were being transported, an incident that led to arrest of three staff members on charges of animal cruelty. Absent a new contract, the existing deal will expire on Nov. 15.

While the city investigated Pets In Need and the incident last year, the nonprofit's former Executive Director Al Mollica voiced frustration about Palo Alto's failure to make needed investments in the aged shelter. The contract that the two sides signed in 2018 obligated the city to build new classroom space, upgrade the medical suite and replace the shelter's kennels.

Since then, the city has invested $1.8 million in shelter upgrades and completed the upgrades to the medical suite and the new classroom. Community Services Director Kristen O'Kane said Monday that the city was planning to request the council's approval for a contract pertaining to the new kennels but opted not to do that once Pets In Need informed them that it is pulling out of the agreement.

While the need for new kennels remains the most significant outstanding issue, both sides expressed hope Monday that they can work through it. O'Kane said she and McCarthy have had numerous conversations since she took over for Mollica in December about keeping the nonprofit in Palo Alto after this year.

"What we've discovered in those conversations is that city staff and Pets In Need do have an interest in advancing an agreement that would support a long-term partnership built on collaboration and trust and also providing high-quality animal care and accessible animal services to residents of Palo Alto and our partner cities," O'Kane said.

McCarthy also assured the council that the organization had updated its protocols for transporting animals to make sure incidents like the one last August don't happen again.

"That's just a devastating event — very tragic — that should not have happened," McCarthy said Monday. "And just like any other organization, we used that as an opportunity to continually improve our day-to-day operations."

The organization, she said, has looked at every aspect of its operation including transport and put in place what she described as "best-in-class transport protocols."

"I feel like we're actually much better than we were before," McCarthy told the council.

Over the course of the discussions, the organization has identified three issues that it would like to see resolved before the new deal is reached. One is more flexibility when it comes to the database it uses to track shelter animals. Another is a change in the shelter's policy toward feral cats, which are currently shuttled out of the city and released. The proposed policy would allow Pets In Need to trap and neuter feral cats before releasing them within the jurisdiction of Palo Alto and its two partner cities, Los Altos and Los Altos Hills.

Finally, it requested assurances that the city would move ahead with replacing new kennels. McCarthy noted that the shelter makes it impossible for Pets In Need to separate animals that are "ready to go" for adoption from those that are still undergoing tests and vaccinations. The lack of sound control at the existing building also creates a very stressful environment for animals.

"You have one dog barking — it's a cacophony," McCarthy said.

While council members were generally supportive of making further investments in the shelter, they made it clear that they would like the project to be funded at least in part through fundraising undertaken in partnership with Pets In Need. The needed improvements would cost between $3 million and $4 million, according to staff estimates, and the project is not currently included in the city's infrastructure plans.

Council member Alison Cormack said she would like to see the city limit its capital expenditures to the amount that was identified when the two sides reached their 2018 agreement: $3.4 million. Others suggested that they would be open to spending additional city funds, though they all supported looking at other ways to fundraise for the project.

"If we need to make the investment in kennels to keep a viable shelter in the long-run, then we need to do it no matter who is operating it," Filseth said. "So really, the decision seems to me is — do we want to continue to have a shelter in Palo Alto or do we want to do what other cities have done and outsource it? … I think most people want us to continue to have a good shelter."

Most residents, he suggested, would prefer to keep a local shelter. Pets In Need remains the organization most suitable to run the facility, he said.

"Obviously, we had the tragedy last year and so forth but I think most of us continue to have faith that the Pets In Need team are the people we want to partner with. I'm delighted that they want to continue to work with us and I think we have a very good chance to move forward here."

The council also indicated that it would support giving Pets In Need more flexibility on what database it uses. It stopped short, however, of committing to the proposed trap-neuter-release policy after several environmental advocates suggested that this could endanger local wildlife.

Giulianna Pendleton, representing the Silicon Valley Audubon Society, said her agency strongly objects to the proposed policy.

"Feral cats are hazardous to wildlife in the neighborhoods, in open spaces and in the Baylands," Pendleton said. "Trap-neuter-release is especially harmful to wildlife that live and breed on the ground – from baby rabbits to ducklings to burrowing owls, and endangered species such as the salt marsh harvest mouse and the Ridgway's rail."

Others, however, argued that the policy is the most humane way to deal with feral cats and to ensure that their population eventually winnows down. Carole Hyde, director of programming at the Palo Alto Humane Society, said that the policy was implemented on Stanford University land and helped reduce the cat population from 500 to 25 over time. She supported adopting the policy and explicitly excluding environmentally sensitive areas like the Baylands.

McCarthy said that when a city removes cats from an area and transports them somewhere, it creates a "vacuum effect" where other cats step in and fill the void. It's an endless cycle, she said, and it creates great distress for the cats being relocated.

"Whereas if you put back in a sterilized cat, that cat will eventually die off and that's known to be the quickest and most humane way of getting rid of cats in areas," she said. "It doesn't happen overnight but it happens over the generation of a cat."

Given the split of opinions, the council agreed to pursue some sort of a trap-and-neuter program but deferred any decision on where the cats would be released. Council members also requested that Pets In Need extend the termination date by six months to give the two sides more time to negotiate. Mayor Pat Burt, who suggested the extension, said adding more time would benefit both parties, as well as the animals that the shelter serves.

"It sounds like a withdrawal from this agreement would mean significant layoffs for their personnel," Burt said of Pets In Need. "If it was not transitioned smoothly, it would have a very negative impact potentially on the animals themselves."

McCarthy said her organization would be open to that idea.

"We're very excited about the long-term relationship with Palo Alto," McCarthy said. "I understand there have been difficulties in the past. I take responsibility for Pets In Need that the relationship has not been perfect on both sides."