Stanford's "Project Renewal" would bring about 1.3 million square feet of new development and more than 2,300 new employees to Palo Alto. The project includes the reconstruction of Stanford Hospital & Clinics, the expansion of the Lucile Packard Children's Hospital and renovations to the Stanford University School of Medicine.
Because the project would far exceed the city's zoning restrictions, Stanford is required to provide a series of negotiated "public benefits" in its development agreement with Palo Alto.
Negotiations between Stanford and the city began to accelerate in June, when the hospital offered the city $124 million in benefits, including new bike lanes, an expanded shuttle service, Caltrain Go Passes for all hospital employees and $23.1 million to support the city's affordable-housing programs. City officials are hoping to complete negotiations in the spring.
On Tuesday (Jan. 18), Stanford announced that it has upped its offer by $49 million — to $173 million. The additions include $12 million to support Palo Alto's efforts to combat climate change and encourage renewable energy, an accelerated payment schedule and an offer to pay $1.1 million if Stanford's expanded facilities end up costing the city more money than they generate.
The new offer aims to assuage the city's primary concerns about the hospital proposal — its impact on local traffic. Members of the City Council had consistently pressed Stanford to mitigate its traffic impacts and to address the shortage of local housing for the new employees. At one point, some council members had insisted that Stanford build housing for the new employees next to the hospital to reduce traffic impacts.
Though Palo Alto is no longer insisting that Stanford build hundreds of new homes, city officials and residents remain concerned about traffic impacts. The Draft Environmental Impact Report for the project stated that "there is no single feasible mitigation measure that can reduce the impacts to a less-than-significant level" but recommended a series of mitigation measures, including new undercrossings for bicycles and pedestrians, new traffic signals and programs to encourage workers to use public transportation.
Advanced Planning Manager Steven Turner, who is managing the Stanford Environmental Impact Report (EIR) process, said the bulk of the comments on the Draft EIR relate to potential traffic issues. Staff is now responding to these comments and will include its responses in the Final EIR, which the city plans to release in February.
Stanford's new package includes $126 million for programs relating to traffic reduction, including $91 million to pay for Caltrain Go Passes for all hospital employees. The cost of the Go Passes has increased from $65 million in the previous offer. Stanford is also offering to add four Marguerite shuttles to its fleet, to lease parking spaces in an East Bay lot, to pay for a transportation-demand manager and to support AC Transit and the U-line.
Though Stanford is proposing to include these transportation programs as "community benefits" in its development agreement, council members have characterized them in the past as "mitigation measures" that Stanford would be required to institute to get environmental clearance for the project.
City Manager James Keene said the council plans to evaluate both the mitigations (which will be listed in the project's Final EIR) and Stanford's proposed benefits the next few months before reaching a decision on the project in April. He called Stanford's latest proposal a "good foundation" for the coming discussions.
"We're pleased that we've received the proposed terms for the development agreement," Keene said. "I'm looking forward to us working through both of those (benefits and mitigations) side by side, together."
Stanford's new proposal also includes a $23.2 million payment to Palo Alto to "support affordable housing and sustainable neighborhood and community development" — up from the $23.1 million in its earlier proposal. Stanford is also now offering the city $12 million for projects and programs addressing climate change and investments in renewable energy and energy conservation — benefits that weren't included in its prior proposal.
Mike Peterson, Stanford's vice president for special projects, said Stanford put together its latest proposal after extensive conversations with city staff and community members since last July. He said Stanford decided to offer the city $12 million for renewable energy and conservation as part of its effort to support energy conservation.
Stanford is also offering Palo Alto $1.1 million to compensate the city for any increases in expenditures the city could potentially incur in providing services to the expanded hospital facilities. Though Stanford's economic consultant estimated that the city would realize an $8.4 million surplus over the 30-year development agreement period, the city's consultant said the project could lead to a potential deficit of $1.1 million.
"We basically said that while we don't necessarily agree with that analysis, in order to give you assurance that you'll break even, we'll offer up the $1.1 million," Peterson said.
Peterson said his conversations with Palo Alto officials over the past year have given him confidence about the project's progress. Stanford is facing a state requirement to seismically retrofit its hospital facilities by 2018.
"I think the nature of the work we've had with city staff and the council has been much more positive in the past year," Peterson said. "We definitely see movement in the positive directions — that's the most important thing."
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