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100+ room hotel at Stanford Shopping Center?

Shopping-center owner mum about expansion plans; additional 250,000 square feet could increase Palo Alto revenues, traffic

A 100-plus room hotel -- most likely situated along El Camino Real near Quarry Road -- is part of a major expansion plan for the Stanford Shopping Center.

The hotel would be part of a 250,000-square-foot expansion of the 50-year-old center, which has had several large expansions over the years.

But the Simon Property Group, Inc., which owns the center under a long-term lease from Stanford University, will not reveal any information prior to a Dec. 11 study session with the Palo Alto City Council -- even to Stanford.

"We don't actually have any involvement in what they're doing," Stanford spokesperson Jean McCown said Monday. "We don't have any information about what they're presenting that night. It's not a Stanford proposal."

Simon has been talking with City Manager Frank Benest since the beginning of the year about adding a hotel and more shops to the center, but McCown said the university has not been a part of those discussions.

"They want to give it to everyone at the same time at the meeting," McCown said.

A staff report on Simon's upcoming presentation will be released late Thursday afternoon. But neither Simon nor city staff would reveal details of expansion plans early this week.

"We just prefer to do it in a public forum and we respect the process of that public procedure," Spokesman Les Morris said Monday from Simon's headquarters in Indianapolis.

"It's their prerogative to keep it under wraps until they present it to the council," Curtis Williams, assistant planning director, said of the secrecy.

The expansion will most likely include a hotel and 250,000 square feet of small retail shops, according to Councilman Bern Beecham. This would add to the center's current 1.4 million square feet. Beecham chaired a "retail attraction committee" under Mayor Jim Burch, a mix of business and neighborhood leaders who agreed the city must act to save its revenue base, which funds services and facilities maintenance.

Benest said the retail expansion would most likely be smaller shops and stores and not another large department store. He would not initially say how large a hotel Simon is proposing, but later when pressed said it would exceed 100 rooms.

Benest said the goal of the expansion is both to bring in more retail (sales tax) revenue to the city and to enhance the overall well-being of the shopping center, in light of the ever-expanding Valley Fair and relatively new Santana Row shopping centers in San Jose.

"For them to remain competitive, they need to expand and enhance that center," Benest said.

The growth would fit with the city's 18-month-old retail attraction plan, Benest said. According to a July 31 study session, the city staff targeted a $2 million increase in shopping-center tax revenue, along with $250,000 from the hotel.

"This is the culmination of years of consideration," Beecham said. He hopes the new development can increase the center's revenue by 30 percent, and that the hotel would be able to compete against the expanding Stanford Park Hotel in Menlo Park and the new Rosewood Hotel planned for Sand Hill Road near I-280.

"We cannot sit idly by and watch our tax dollars walk away to other communities," Beecham said.

Adding a significant amount of square footage to the center will require an amendment to the center's development agreement, which currently allows "a very teeny expansion," Benest said.

"They're basically at build-out right now," he said. The center's most recent redevelopment took place in 1999.

Simon's presentation next Monday night is coming two weeks after Stanford presented a massive medical-center redevelopment plans Nov. 20. Stanford intends to tear down and rebuild its main hospital, as well as add square footage to Lucile Packard Children's Hospital and make other improvements.

Expansion at the shopping center would most likely require putting shops and the hotel on the main front parking lot, and adding parking structures to make up for lost parking.

Benest said the city was particularly interested in the "sea of parking lots on El Camino Real," which he called "underutilized," as potential sites for expansion and especially for the hotel.

"Good urban design suggests that you should not have a sea of parking," he said. Benest said meeting and conference rooms also are likely to be part of the hotel.

Mayor Judy Kleinberg, who participated in early talks with Simon, said she was strongly in favor of adding a hotel to the shopping center, but did not know what size hotel the developer would bring forward.

"We desperately need more hotel space," she said. "I have no idea whether they will or won't be able to put it on Stanford Shopping Center land."

Adding more stores and a hotel has the potential to bring increased traffic to Palo Alto, along with the increased revenue.

"Obviously, we'll be weighing the potential for revenue against whatever impacts would be from the expansion," she added.

The week after the Dec. 11 study session, the council will consider authorizing Benest to negotiate with both Stanford and Simon regarding the medical center and shopping center projects.

(Staff Writer Molly Tanenbaum can be e-mailed at mtanenbaum@paweekly.com.)

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