Palo Alto Weekly

News - April 9, 2010

Palo Alto, Med Center negotiations revving up

Council committee pleased with negotiations over Stanford's hospital expansion

by Gennady Sheyner

After starting out on a rancorous note, Palo Alto and Stanford University are now nearing an agreement over the types of benefits Stanford would have to provide to earn the city's permission to expand its hospital facilities by 1.3 million square feet.

The city, expecting the new development to increase the demand for housing, transportation and city services, is likely to ask the university to provide $30 million over five years for infrastructure improvements such as a new public-safety building and road fixes.

Members of the City Council Finance Committee said Tuesday night they are pleased with the way negotiations are going over Stanford's ambitious expansion. The redevelopment is driven in part by a state mandate that all hospital facilities upgrade to become seismically safe by 2013 (Stanford has requested a two-year extension).

Last year, the two sides were far apart, with some council members calling for Stanford to build a "village" to house its workers, help improve flood control at San Francisquito Creek and help the city build new police headquarters. Stanford has consistently maintained that the project itself, by providing quality health care, is a major community benefit. University officials have repeatedly insisted that any benefits be directly related to the hospital.

Since then, Palo Alto has withdrawn some of its most extreme requests, while Stanford has agreed to fund transportation improvements and pay the city millions of dollars in fees that would support city services.

"I like the direction this is going," Vice Mayor Sid Espinosa said Tuesday night. "I think we're having the right conversation.

"I'm glad to see we're not talking about delays and that we're not miles apart."

The change in tone is driven partly by Stanford's deadlines and partly by turnover on the City Council. The council lost Yoriko Kishimoto, one of the leading proponents of the "village concept"; Peter Drekmeier, chief advocate for the creek improvement project; and Jack Morton, who repeatedly accused Stanford of "fighting dirty."

Earlier this year, in his State of the City speech, Mayor Pat Burt said he was determined to move the Stanford project forward "expeditiously this year through review by our relevant boards and commissions and finally the City Council."

But some disagreements remain. Last June, Stanford submitted a $125 million proposal to Palo Alto including $23.1 million for affordable housing; $5.8 million in community fees; $7 million in health care programs for low-income families; and $2.25 million for pedestrian and bicycle connections between the hospitals and downtown Palo Alto.

In a new staff report, Deputy City Manager Steve Emslie called Stanford's proposal for a 30-year development agreement "substantive and responsive to many project impacts," but proposed adding other requirements to the development agreement.

Emslie told the Finance Committee the city's counterproposal to Stanford would seek to minimize the project's fiscal impacts to the city, ease the impacts of the project, preserve community health care and enhance the city's infrastructure.

The city is expected to ask Stanford to extend its proposed health-care programs for low-income residents for the life of the negotiated development agreement, rather than the 10-year term Stanford proposed. The city is also proposing that Stanford contribute $30 million to fund needed infrastructure, including an Emergency Operations Center, a new police building and road projects.

The city is facing an estimated $500 million infrastructure backlog. City Manager James Keene said Tuesday he's not sure whether $30 million is the right figure or not. But he said it provides "a vehicle for frank discussion" about Palo Alto's infrastructure, from which Stanford would also benefit.

"We don't want to look at a world-class hospital expansion in a city that moves towards a second-class status as a city," Keene told the committee.

Committee Chair Greg Schmid said the most important item for him is making sure the city has enough housing and school space to accommodate the additional workforce Stanford's projects would bring.

"I do not want to be left at the end of the day with a development agreement and all of a sudden be told we have to be building more houses," Schmid said. "That would be in the long run the most serious and biggest impact of what's taking place."

The negotiations are scheduled to accelerate next month, when Palo Alto releases a long-awaited Environmental Impact Report analyzing how the Stanford projects will affect the city and proposing ways to ease the negative impacts.

Michael Peterson, vice president for special projects at Stanford Hospital and Clinics, said Tuesday that Stanford would wait until the document comes out before considering all the details of the city's proposal. In the past, Stanford has been reluctant to commit to projects that don't directly relate to the hospitals.

The $3.5 billion project includes demolition and replacement of Stanford Hospital and Clinics and major renovation of Lucile Packard Children's Hospital. Stanford also plans to renovate its School of Medicine and build a new medical building near Hoover Pavilion.

Staff Writer Gennady Sheyner can be e-mailed at gsheyner@paweekly.com.

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