A long-standing agreement between Palo Alto, Stanford University and the Santa Clara Valley Transportation Agency for the site around the downtown Caltrain station may soon come to an end, as all three agencies weigh new plans for the critical hub at the gateway between the city and the university.
The 2.8-acre site, which includes the depot building, is owned by Stanford and leased by Palo Alto under an agreement the two agencies reached in 1981 and is set to expire in 2033. The city, for its part, had subleased the site to the VTA, which has been managing the bus-transit center under an agreement that expired June 30, 2013, and that has continued on a month-to-month basis ever since. Renewing the lease would trigger a new appraisal of the property, which is expected to more than triple the rent for the depot site from the current rate of $160,000 per year to more than $400,000, according to a new report from the city's Administrative Services Department.
Now, all three agencies are considering a new arrangement. Stanford and the VTA have proposed cutting out the middle-man, Palo Alto, and signing a direct agreement. Under this proposal, VTA would use the depot without paying any rent while Stanford would assume all responsibility for maintaining and enhancing the site, which is currently VTA's domain. The city's involvement would be far less clear. Though Palo Alto would continue to wield power over the site's zoning (and thus would be able to veto any major new developments that don't comply with zoning regulations), it may see its already restricted influence over the site significantly diminish.
In the new staff report, which the City Council's Policy and Services Committee is set to discuss Tuesday night, March 25, city officials voice concerns that removing Palo Alto from the lease "might diminish our voice and leverage in issues related to the depot." This includes any consideration of a proposed "Arts and Innovation District," a concept that was first proposed by developer John Arrillaga in 2012. That plan, which initially proposed building four office towers and a performing arts theater at the current site of the MacArthur Park Restaurant, ran into a wall of public criticism and ultimately fizzled. Since then, city officials have been talking about putting together a new master plan for the site based on community input, but that effort has yet to take off.
Stanford, for its part, had supported Arrillaga's proposal for 27 University Ave. A frequent donor to Stanford, Arrillaga offered the development as a philanthropic venture, with his alma mater getting the revenues from office leases.
Given the uncertainty over the depot's future, the city's transportation staff had been reluctant to lose control of the central site, arguing that doing so would give Palo Alto less say on "planning decisions that may need to be made to advance improvements at the site related to transit," according to the report states.
"The work done on the Arts and Innovation District concept had heavily concentrated on improvements to the transit center, potential new road alignments, etc.," the report states. "Transportation staff initially had concerns that loss of 'control' of the site through our lease position might affect any grants we might pursue."
The report notes that the VTA "expressed understanding of the City's concern and did not press the matter," though the three stakeholders have continued to talk.
Now, city staff is recommending going along with Stanford and VTA's proposal and terminating both the lease and sublease agreements. In addition to bowing out of the arrangement, the city proposes signing a "memorandum of understanding" with Stanford and the VTA "regarding the city's participation and involvement for the planning for and future use of the Deport Transit Center, including potential use of passenger drop off areas for the Palo Alto shuttle services."
Simplifying the lease arrangement could help bring improvements to the site, according to the report, which calls the depot "one of the most frequently used on the San Francisco Peninsula."
"It is a major gateway to both Palo Alto and Stanford University, and therefore a significant local and regional transportation resource," the report states. "It is also a gateway to our community. Although the City and Stanford have a shared interest in improving and maintaining the facilities, the multiple agencies involved with various property controls have complicated the situation."
The report advocated making sure that "any savings created by simplifying the arrangement between Stanford and the VTA is used for maintenance and to promote a welcoming experience for users."
The proposed memorandum of understanding between the city, Stanford and the VTA would aim to further this goal. Staff is proposing entering into the agreement once the city finishes upgrading its Comprehensive Plan (under the current schedule, this would be the end of 2015) and "all parties are informed as how the transit mall and University loop are to be expanded to serve the current and future needs of the VTA, Marguerite and SamTrans."
Another alternative that Stanford has proposed and that the city's committee will discuss Tuesday is extending the existing rent for two more years, thus protecting the VTA from rising property values. The city's report states that Stanford had proposed this option "to allow some time for the City and its partners to continue to plan for improved transit use at the site and potential future improvements."
Palo Alto officials also noted that while there may be some concern about the city losing control over the site, the city's rights are based on a lease and are already "limited and narrow." They also stressed that even without a lease, the city can "exert influence" over the site through a memorandum of understanding between the three parties.