Palo Alto Weekly

News - May 28, 2010

Palo Alto seeks 'revenue guarantee' from hospitals

Consultants disagree on whether projects would cost city $1.1 million a year or generate $7.6 million in extra funds

by Gennady Sheyner

Palo Alto could require Stanford University to provide an explicit guarantee that Stanford's proposed expansions of its hospital facilities would not burden the cash-strapped city with any ongoing costs, members of the City Council said Monday night.

The city and the university are in the midst of negotiations over a development agreement that would allow Stanford to rebuild Stanford Hospital and Clinics and the Lucile Packard Children's Hospital, bringing 1.3 million square feet of new development to Palo Alto.

The project hit a milestone last week when the city released a Draft Environmental Impact Report for the project, which lists how the project would affect traffic, housing, pollution and numerous other quality-of-life factors. It also recommends how those consequences could be limited or prevented.

But as Monday's discussion of "Project Renewal" indicated, the two sides still don't see eye-to-eye on the expansions' potential impacts, including fiscal impacts. An analysis by the city's consultant, Applied Development Economics, found that the project would cost the city about $1.1 million in annual ongoing expenses. Stanford's consultant, CBRE Consulting, concluded that the taxes and fees generated by the project would exceed the costs of municipal services by about $7.6 million.

Council members Greg Schmid and Nancy Shepherd both said making sure the project is "revenue neutral" should be a major focus of the ongoing negotiations. The city is facing a projected deficit of $7.3 million in fiscal year 2011 and is in the midst of cutting programs and renegotiating employee contracts.

"My top priority is to make sure we don't end up subsidizing the project over time," Schmid said Monday night.

The two sides took a major step toward a development agreement in June, when Stanford offered a menu of "community benefits" to Palo Alto, including a $23.1 million payment to the city's housing fund, subsidized health-care programs for low-income residents and Caltrain Go Passes for all hospital employees.

On Monday night, Vice Mayor Sid Espinosa said the city has "really turned a corner in having entered into a much more collaborative process with Stanford."

But some council members argued the city should demand more benefits from Stanford. Councilwoman Karen Holman said the city should ask Stanford to allow the San Francisquito Creek Joint Powers Authority to build a detention basin on Stanford land.

Len Materman, executive director of the creek authority, said a detention basin west of Highway 280 would protect about 3,200 Palo Alto homes from floods and save millions of dollars in flood insurance. The authority is charged with protecting Palo Alto and neighboring communities from the flood-prone San Francisquito Creek.

Norman Beamer, president of the Crescent Park Neighborhood Association, agreed.

"It doesn't cost Stanford any money," Beamer said. "It seems to me to be a natural candidate for offsetting the costs of the tremendously large developments in a way that doesn't hurt either side and would greatly benefit Palo Alto."

The university had consistently maintained that the medical facilities are themselves a major community benefit and has opposed benefits that don't relate to the hospitals.

In the next two months, the council and the Planning and Transportation Commission plan to delve into each chapter of the massive Draft Environmental Impact report over a series of 11 meetings.

One impact that the report states cannot be mitigated is increased traffic at three Menlo Park intersections: Middlefield and Willow roads; Bayfront Expressway and Willow; and University Avenue and Bayfront. Menlo Park City Councilman Heyward Robinson told the Palo Alto council Monday that he hopes Stanford's mitigation measures would include "very, very aggressive trip reductions."

"We certainly recognize benefits of having a world-class medical facility in our midst and having it expand and be even better than it is, but we have to figure out how to manage this flow of folks," Robinson said.

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

Comments

Posted by Maureen, a resident of Menlo Park
on May 25, 2010 at 8:09 am

Councilman Robinson has it right.

The challenge is how to 'manage the flow of folks' generated by the expanded hospital complex which will employ 2,200 more staff and host thousands more daily trips to a greatly expanded emergency room, among many other departments which will grow substantially.

Thank you, Palo Alto Council, for being vigilant and reasonable in your pursuit of the best set of solutions for all.

I am dismayed that the three intersections where traffic jams are predicted are all in Menlo Park, essentially centered on Willow Road. Ouch.


Posted by RT, a resident of Barron Park
on May 25, 2010 at 8:24 am

Holman's demand for a detention basin is....(trying to avoid censorship here)...misguided. The detention basin has NOTHING to with the mitigation of the effects of the hospital project. Except "let's try to gouge Stanford for everything we can while they are asking for something". THIS is why I did not vote for the honorable Ms. Holman.
Palo Alto should be doing everything it can to encourage business and reasonable development......we need the $.....demanding an irrelevant-to-this-project detention basin is not reasonable.


Posted by Too Much Traffic, a resident of Another Palo Alto neighborhood
on May 25, 2010 at 8:41 am

Looks like Ms Holman is filling the shoes vacated by Kishimoto/Drekmeier/Morton---i.e.let's try to milk Stanford for money etc. since we are incapable of managing our own finances.
Ms Holman has no respect for private property rights--remember her role in the failed "historic home rights grab" from about a decade ago. This should come as no surprise.


Posted by Previously Flooded, a resident of Duveneck/St. Francis
on May 25, 2010 at 8:57 am

Thank you, Karen Holman, for looking out for the long-term interests of the community, and for your ability to understand the difference between a mitigation of impacts and a community benefit. I wish the people who feel sorry for poor Stanford could educate themselves on this topic.
More Palo Alto residents would benefit from an upstream detention site than visited Stanford hospital and Packard hospital combined last year.


Posted by Too Much Traffic, a resident of Another Palo Alto neighborhood
on May 25, 2010 at 9:03 am

"More Palo Alto residents would benefit from an upstream detention site than visited Stanford hospital and Packard hospital combined last year."

If this is an issue of such vital importance and will positively impact so many Palo Alto residents, then why hasn't the city council brought this issue before Stanford years ago. Obviously, to me, that the city never considered it much of a priority until now. Maybe the council was too busy with the Color of Palo Alto, Destination Palo Alto, Senior Games, Tour of California, while ignoring the PACT and utilities scandals and being clueless about our budget problems.


Posted by Norman Beamer, a resident of Crescent Park
on May 25, 2010 at 9:18 am

Re "Holman's demand for a detention basin is....(trying to avoid censorship here)...misguided. The detention basin has NOTHING to with the mitigation of the effects of the hospital project."

You and others who are making similar comments are misinformed about how the process works. A development agreement is entered into via a process of negotiation. By definition, the negotiated benefits have NOTHING TO DO with the project being developed. Instead, they are simply benfeits to the city that offset the unmitigated costs of the project. The flood retention basis is an ideal and very suitable candidate for such a benefit.

Remember-- the admittedly large array of benefits that the hospital brings are to a wide region, not just Palo Alto. But Palo Alto will incur significant costs that no other community will have. That's why a development agreement is necessary and appropriate.


Posted by Too Much Traffic, a resident of Another Palo Alto neighborhood
on May 25, 2010 at 9:24 am

Perhaps then, Palo Alto should get their act together and put together a comprehensive list of what they want for the development agreement. It seems to me that this is the first time this issue has come up.
this matter has been lost in the Palo Alto Process pipeline for far too long.


Posted by RT, a resident of Barron Park
on May 25, 2010 at 9:38 am

It appears to me that the unmitigated costs are to Menlo Park traffic.
So Palo Alto should be asking Stanford for a detention basin to offset the Menlo Park traffic issue? Is that what Menlo Park wants? Are we even ASKING Menlo Park what they want? It seems they want "very, very aggressive trip reductions" - are we working toward that on their behalf? Or are we just looking to satisfy a particular constituency at expense of Menlo Park on Stanford's dollar.
Sorry - still seems unreasonable to me.


Posted by Poor Menlo, a resident of another community
on May 25, 2010 at 10:54 am


Who the heck cares how Menlo Park is affected? Maybe they should worry about their own problems instead of nosing into other town's affairs - not only the hospital expansion but the Cargill development plan in Redwood City as well. Stay out of what is clearly none of your business.


Posted by resident, a resident of Charleston Gardens
on May 25, 2010 at 11:28 am

Stanford expansion, High Speed Rail will make Palo Alto very desierebel place to live? before that, city should build anther city for Palo Alto residents to live peacefully .


Posted by nat, a resident of Midtown
on May 25, 2010 at 11:29 am

The City has asked Stanford for a retention basin for many years and the University always said NO.

If a community benefit is appropriate, such a basin would be the biggest benefit imagined, saving many residents from paying flood insurance and removing the anxiety about flooding which people suffer each winter.


Posted by Crescent Park Dad, a resident of Crescent Park
on May 25, 2010 at 12:46 pm

We would personally benefit from flood a flood basin.

But there is no way that a flood basin should even be a bargaining chip in the hospital replacement/expansion. These type of "earmarks" gets me PO'd every time I read about it.

Stick to the issue of the hospital and it's impact on traffic, community, budget, infrastructure, schools, etc. Direct and measurable impacts.

It is chicken-you-know-what for any city council member to impose such barriers to an honest debate and negotiation. Before you know it, Stanford will say "stick it" and just build the hospital somewhere else. Some of you may want that. Fine. But all the conveniences and any revenues will go to the neighboring town or county. I can see Stanford looking at the Sun site on Bayfront, Moffett Field, Shoreline...Stanford has already moved some medical operations and out patient services to Broadway in Redwood City.

And when Stanford finally realizes that it's easier to move than stay in Palo Alto, the city council will once again be totally taken by surprise - just like with the shopping center/hotel concept.

City Council: Stick to the issues that are central to the hospital, not some personal wish list.


Posted by Crescent Park supporter, a resident of Crescent Park
on May 25, 2010 at 1:37 pm

Councilwoman Karen Holman said the city should ask Stanford to allow the San Francisquito Creek Joint Powers Authority to build a detention basin on Stanford land.

Karen is thinking out of the box and in ways that concretely help city and families in Palo Alto. Way to go Karen! I hope other council members, join her and find win/win ways for Stanford and Palo Alto to move forward with this project. City is on hook for millions of liability cost if they do not solve creek issue, this would be big.


Posted by PJ, a resident of Another Palo Alto neighborhood
on May 25, 2010 at 2:33 pm

Menlo Park is complaining about possible added traffic in their City. Several years ago it was Menlo Park that killed the idea of linking up the two ends of Willow Road so traffic could go from Hwy 101 directly into the Stanford Shopping Center.

The fact that vehicles may use Menlo Parks side streets to get from Hwy 101 to the proposed new hospital and clinic is their problem. Lets rethink combining the two ends of Willow Road (now called Stanford Avenue on the Stanford side of El Camino Real).


Posted by Gary Ruppel, a resident of Midtown
on May 25, 2010 at 2:35 pm

My advice is to stick to the issues directly related to the development and the impact on Palo Alto as well as Menlo Park.<those wishing other mitigations (Karen Holman and others) and others are confusing the issue and making the negotiations much more difficult.


Posted by Jennifer, a resident of Esther Clark Park
on May 25, 2010 at 2:37 pm

It seems completely reasonable to me to ask Stanford, which has a budget about 10 times larger than Palo Alto and it about to flood Palo Alto and Menlo Park streets with traffic from a greatly expanded $3.5 billion hospital complex, all of which requires Palo Alto approval, to be a good neighbor to find ways to help contiguous communities.

What creative can be brought to the table that could make it better for everyone? That seems to be all Palo Alto is asking.

If Stanford chooses to hardball this issue and compartmentalize it, essentially taking the position that it's 'Stanford's way or the highway,' that would prove massively counter-productive.

This is a great opportunity for all to put their good neighbor hats on to work out a win-win-win.


Posted by Marvin, a resident of Midtown
on May 25, 2010 at 3:46 pm

Stanford is the 800 lb gorilla in our area, no question about it.

Here's hoping Stanford doesn't act like a big monkey on this hospital issue.

At first glance, $135 million in mitigations seems like a big number. But the benefits are spread over the 50-year estimated useful life of the new medical center.

Over that same period, Stanford's combined operating budgets will total over $200 billion. So Stanford is offering 0.06% of its total budget...6 basis points. This is your well-known rounding error, and laughable.

I like the idea of soft dollar benefits that don't cost Stanford much cash out of pocket, but rather things that Stanford could do to benefit its neighbors that are of great value to surrounding communities.

Palo Alto has offered a list to Stanford. Now, let's see how Stanford responds.


Posted by chris, a resident of University South
on May 25, 2010 at 4:26 pm

Jennifer,

Doesn't Stanford have the option of moving the hospital to Redwood City?

About 10,000 fewer people work in Palo Alto now compared to 2000.
How is bringing back 2,000 jobs a big deal?


Posted by drill baby drill, a resident of another community
on May 25, 2010 at 6:40 pm

Drill baby drill!


Posted by Tom, a resident of another community
on May 25, 2010 at 10:57 pm

Stanford should just tell Palo Alto to pound salt! Stanford knows how to make money, Palo Alto loss that concept a long time ago.


Posted by Fish Guy, a resident of College Terrace
on May 26, 2010 at 12:02 am

Norm B. "Remember-- the admittedly large array of benefits that the hospital brings are to a wide region, not just Palo Alto. But Palo Alto will incur significant costs that no other community will have. That's why a development agreement is necessary and appropriate."

Respectfully, Norm, how is it that Palo Alto has never done a benefits analysis of what Stanford brings to the table - I mean a real benefits analysis? I'm surprised that Stanford hasn't done this already, but then Stanford is playing ball against a pretty weak team (that's PA). Where's the City Manager in all this? One would think that the latter position would be front and center in forward planning, but it's not. It's just a "management" position, literally. And frankly, quite useless. I will bet hard cash, right now, that Palo Alto would do just fine without a City Manager. We really don't require that position - it exists out of habit. It's a foil position for a tradition-bound, rather powerless, leaderless City Council (understanding that all Council members are good, smart, well-intended people). Frankly, I would urge Stanford to take on such an analysis, and make it public. Let's say that the Stanford Univ. Medical Center went away. What would THAT cost?

Look, as usual, the City Council - all good people, with no natural leader (it's designed that way), fishes around for opportunity to pack favors for our City into opportunities that come our way, randomly. It's never been a proactive body; it doesn't lead; it just sits there at the top, watching the fish go by, and every now and then tries to snag a big one. Stanford initiatives always amount to a "big one"; it's easy pickins'. If you look at relative benefits brought to our town gown relationship, with an open mind, you'd probably surprise yourself, and so would all the others that bash Stanford.

That said, Stanford is not an innocent bystander; it's an aggressive machine that is highly entrepreneurial and forward looking/planning, thus the envy from this side of El Camino. Stanford regularly eats our lunch, because we're wimps. Whenever we get a chance to gouge the perceived bully, we do it, crying "we deserve it". Honestly, we come off as whiny and pathetic and SO very "House of Lords" in demeanor. Palo Alto is like "the brother who didn't make it" to Stanford. We're wealthy *because* of Stanford. We have status *because* of Stanford. If you think that's hogwash, try imagining this place without Stanford's presence. Why would anyone come here? Seriously. So I say "get a grip", and stop trying to sound like pro negotiators, when all you're really doing is trying to protect your house form getting flooded, like any old rube would. Go get that fish.


Posted by Fish Guy, a resident of College Terrace
on May 26, 2010 at 12:08 am

Marvin: "Over that same period, Stanford's combined operating budgets will total over $200 billion. So Stanford is offering 0.06% of its total budget...6 basis points. This is your well-known rounding error, and laughable."

Really, Marvin? What's laughable is that you haven't computed the cash equivalent benefit profile that Stanford will bring, over 50 years. Better sharpen your pencil, dude. Do you have any idea how weak arguments like yours sound to people who really understand how to forward a negotiation strategy? Man, what's another word for puny?


Posted by Menlo Parker, a resident of Menlo Park
on May 26, 2010 at 12:16 pm

Any new demands from Palo Alto will just further delay the hospitals' seismic upgrades, or if they continue too long, they will result in closure by state order. Don't the city council members realize that every cent they extort from the hospitals will have to be recouped by charging higher prices for medical care? Why should sick people have to end up paying for the Wish List of people like Ms Holman?


Posted by all fall down?, a resident of Monroe Park
on May 26, 2010 at 9:50 pm

This seismic upgrade "not possible", only rebuilding feasible is the typical Stanford BS to justify their ambitious overdevelopment schemes. Ask any competent structural engineer, how much would it cost to retrofit the existing building? Been done all over the state. Can't be that much with a Fifties vintage building
Me thinks we been had.
Snodfart powers that be don't want to listen, they just want bigger, newer, "better".
Ask PA's in house chief engineer point blank, "how much would it cost to seismic retrofit the Hospital?"
If he/she won't give an unequivocal answer, then ask long time local PA engineer Alan Huntzinger, he'll give you a straight answer


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