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 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 lessen.
In the new staff report, which the City Council's Policy and Services Committee is set to discuss April 8, 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.
Given the uncertainty over the depot's future, the city's transportation staff had been reluctant to lose control of the site, arguing that doing so would give Palo Alto less say on future plans, according to the report.
"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. In addition to bowing out of the lease, 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 Depot Transit Center, including potential use of passenger drop off areas for the Palo Alto shuttle services."
Palo Alto officials also noted that the city's rights under the lease are already "limited and narrow."
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."
The report advocated making sure that any financial savings be used for maintenance and creating a more welcoming atmosphere at the center.
City staff is proposing to enter 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 April 8 is extending the existing rent for two more years, thus protecting the VTA from rising property values and also giving all parties time to plan.