Can you show the toolbox inputs and location. Your paths look circumspect and the Alter Fields usage is strange.
It is from this blog https://community.esri.com/people/GTaylor-esristaff/blog/2018/03/09/3d-gridded-terrain-tiles-from-dem-rasters
I assume, so I would check requirements if they provided any documentation as well
apparently, it has been identified in an issue in the blog by the author.
check the blog for suggestions.
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