The problem is with:
gem 'bootstrap-sass', github: 'thomas-mcdonald/bootstrap-sass', branch: '3'
If you check the link below:
https://github.com/thomas-mcdonald/bootstrap-sass/branches
The branch seems to be deleted, maybe it was merged into the master branch, based on feedback from the OP, anyone using it subsequently should add the below to their Gemfile:
gem 'sass-rails', '>= 3.2' # sass-rails needs to be higher than 3.2
gem 'bootstrap-sass', '~> 3.0.3.0'