In a sign of reconciliation after last year's dramatic rupture, Pets In Need has notified Palo Alto that it will delay the planned termination of its contract with the city for animal services by six months.

The nonprofit, which since 2019 provided animal services to the city under a contract, faced a maelstrom of criticism last year after seven puppies died in its care in August 2021 as they were being transported from the Central Valley. The Redwood City-based nonprofit also has been in dispute with the city for more than a year about Palo Alto's failure to meet its commitment to construct new kennels, a key condition of their contract.

While the issue of new kennels remains unresolved, the two sides agreed last month to begin negotiations on a new deal that would keep Pets In Need in Palo Alto beyond its planned termination date of Nov. 15. Mayor Pat Burt also asked the nonprofit at the Feb. 14 meeting to delay its exit by six months to provide more time for negotiations.

On March 9, the Pets In Need board of directors voted to approve the six-month extension, according to a letter signed by Valerie McCarthy, who took over as interim executive director of Pets In Need following the abrupt resignation of its prior Executive Director Al Mollica in November. The extension moves the termination date to May 15, 2023.

"This amended termination letter comes after PIN staff and city staff have met and agreed to use the additional time to negotiate whether the city and PIN will remain under contract past May 15, 2023," McCarthy's letter states. "However, nothing in this amended termination letter binds either PIN or the city to any specific process or outcome regarding whether PIN and the city remain under contract past May 15, 2023."

The City Council is expected to approve the extension of the agreement this Monday.

McCarthy told this news organization that the board's vote was unanimous and everyone agrees that having Pets In Need remain in Palo Alto is consistent with the organization's mission of providing all animals with loving homes. She said she also has been encouraged by her recent meetings with city staff, including City Manager Ed Shikada, Community Services Director Kristen O'Kane and the city's animal control officers. Everyone has been receptive and open to collaboration, she said.

"We have business terms to work through and that's a challenge with any municipality and organization, but the pieces are in place to make it happen," McCarthy told this news organization.

In recent months, Pets In Need has informed the city that it wants more flexibility over the database it uses to keep track of animals at the shelter and that it wants the city to reconsider its policy for feral cats, which currently forbids Pets In Need from releasing captured cats on city land. The organization has lobbied for a "trap, neuter and release" approach, and the council signaled on Feb. 14 that it is willing to make this change provided that the policy includes restrictions on releasing feral cats in environmentally sensitive areas.

The most critical priority, however, remains improving the East Bayshore Road shelter. Since Pets In Need took over, the city had spent about $1.8 million to build a medical suite and install modular office space that can function as a classroom. The city has not, however, replaced the shelter's 50-year-old kennels, which McCarthy said lack sound control or "disease control" mechanisms to separate those animals that need to undergo tests and vaccinations from those that are ready for adoption.

McCarthy stressed at the Feb. 14 meeting that it's critical for the city to consider building a new kennel facility rather than settling for incremental improvements to the existing one.

"Putting a Band-Aid on it would be a short-term fix but it's not a long-term solution for the shelter," McCarthy told the council.

A new report from the Community Services Department notes that construction of a kennel building and a renovated animal area for cats and small animals is "a top priority to be able to move forward with the agreement." The city, meanwhile, is looking for "assurances that the shelter and medical clinic are open and available to the public during agreed upon times and that animal care and welfare is of the highest quality."

The biggest question in the negotiations revolves around funding for the new kennels. Staff estimated that the facility improvements would require between $3 million and $4 million in additional capital investment. The council showed little appetite last month for approving the additional expenses, with council member Alison Cormack saying she would want to limit capital investment beyond funding that has already been identified, which is insufficient to build the new kennels. The council ultimately directed staff to work with Pets In Need to create a fundraising program to obtain the needed funds.

But absent a long-term deal for animal services, Pets In Need has little incentive to invest millions of dollars into a facility it does not own. McCarthy told this news organization that the nonprofit's commitment to a fundraising program will hinge on whether the city and Pets In Need will be able to commit to a long-term partnership. That said, the organization recognizes that the kennels are substandard and wants to see the needed enhancements.

"There's no equity that we have in the investment, but we're also committed to this mission of providing the best-in-class care of animals and getting animals into loving homes," McCarthy said. "We feel there's nothing more important than the human-animal bond."

The organization has also been reviewing and modifying its safety protocols and revising its agreements with its partners in light of the August 2021 incident. The seven puppies, who were being transported along with 21 other dogs, died while en route from Central Valley on a hot day, with temperatures in the 90s. The puppies likely died from heat stroke and/or asphyxiation, necrology reports concluded.

"That incident was a tragic event. It was a sad day for the organization," McCarthy said.

McCarthy said that the safety measures that the organization had adopted included enhancing air-conditioning systems in its transport van, which she noted had air conditioning at the time of the incident, and supplementing the existing weather gauge with additional measures to display heat.

While McCarthy has had numerous meetings with city staff since taking over in November, the new report from the Community Services Department suggests that the negotiations between city staff and Pets In Need will accelerate once the amended contract is in place.

"If the Council approves the amended notice, staff and PIN will begin negotiating new agreement terms immediately," the report states.

Despite uncertainty over funding, some council members signaled last month that they are open in committing more city funds to new kennels. Council member Eric Filseth said at the Feb. 14 meeting that if the city wants to keep a viable shelter, it needs to invest in it whether or not Pets In Need is the operator.

"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 shelters have done and outsource (animal services) to SPCA or something like that?" Filseth said.