The developer bought the 4.2-acre site for $6 million in 2005 and is about to see its raw market value triple because he has the political clout to get the zoning changed -- a change for which there is no rational justification.
The designation of Alma Plaza as a neighborhood retail center had been a long-standing policy based upon extensive experience. The council itself has repeatedly reaffirmed the need to retain retail in Palo Alto, both for revenue to support city services and as a quality-of-life issue for residents.
The new zoning is predominantly housing, ignoring that the city is already 80 percent over its target for housing growth, with the consequent impact on schools, traffic and other services.
Residents seeing the process for the first time came away shaking their heads: They saw that the developer's claim that Alma Plaza is not suitable for retail did not stand up under even modest analysis. But that was irrelevant to a majority of council members.
The council has taken the dictate to treat speakers with respect to an illogical and counter-productive extreme: The larger the incentive a speaker has to mislead, misrepresent and misstate facts the more important it is to avoid even the slightest display of skepticism.
In the case of Alma Plaza, despite the developer's demonstrated desire and substantial financial incentive to minimize retail, the majority of the council looked to him as their expert on how much retail the site could support.
I've lost track of how many times he testified that the site could not possibly support any more retail only to increase it when strong opposition by residents threatened his chance for approval (initial plans had only a small convenience store).
The process has evolved into highly choreographed dance. The politically connected developer starts with a proposal that he knows has no chance of being accepted: It contains demands for massive concessions, including de facto public subsidies. Since the current process makes fact-based decision-making by the council difficult, the council routinely falls back on "split the difference."
The developer then feigns reluctant acceptance of the result, disguising the fact that his proposal has only been pruned from the obscene to the extravagant. Or, if there has been exceptional public opposition, he may have to settle for the merely excessive.
One of the developer's basic tactics is to create delays so that they can portray themselves as victims of "the Process." They submit incomplete proposals, resubmit them without correcting errors, and miss deadlines, giving inadequate (if any) notice of significant changes. They withhold critical documents, distributing them directly to council members after the submission deadline, thereby avoiding meaningful scrutiny by either city staff or residents.
Council members are well aware that the developer is attempting to stampede them, but they also know that they will be accused of indecisiveness if they take the time to exercise properly their fiduciary responsibility to the citizens.
The developers and their allies, including several council members, have an extremely effective public relations machine that the full council has not been able to counter effectively.
The $12 million giveaway does not involve the city actually writing a check. Rather it is structured using a range of back-door transfers, the beauty of which being that most residents won't realize what has happened until it is much too late. The biggest losers are nearby homeowners who are having some of their investment stealthily given away to the developer.
The proximity of the neighborhood center was one of the amenities they paid for when they bought their homes, but that won't be there when they sell. Some of the costs are related to forcing residents to drive further for shopping -- the cost of each trip is relatively small (remember, time is money), but the cumulative effect over the years and the number of people affected is huge.
Economics tells us that back-door transactions -- as the antithesis of transparency and efficiency -- typically cost far more than they deliver.
Notice that this giveaway is almost 10 percent of the city's annual budget, and that it is but one of a long string of such giveaways. Ever wonder why the city can't afford to maintain its basic infrastructure, such as streets and storm drains? Or to update its police station to meet current standards? Or to update its libraries? In San Jose, a developer proposed a similar zoning change, but with the gains going into a public facility (soccer stadium) rather than into his own pocket.
It is long past time to end the go-along-to-get-along city councils. Council members who have the courage to tell politically connected developers that their desires to maximize profits do not preempt sound public policy are currently a minority and need to be turned into a majority in this November's election.