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Undisclosed meetings, private funds cloud downtown debate
Original post made
on Nov 30, 2012
In July 2011, just weeks after Palo Alto approved the mammoth expansion of the Stanford University Medical Center -- the largest development in the city's history -- city officials learned about another giant project, this one nearby in downtown Palo Alto.
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posted Friday, November 30, 2012, 8:47 AM
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Posted by Richard Placone
a resident of Barron Park
on Nov 30, 2012 at 4:30 pm
I have been following the 27 University Avenue Project with keen interest. So far I have said nothing about it. I sent a letter to the city council and staff on November 29 and another letter on the same date to Steve Emslie, Assistant City Manager. The letter to Emslie ( an edited version is reprinted below) referenced an article on the project on page one of the Daily Post, Wednesday, November 28, 2012, in which Emslie is extensively quoted.
Frankly, I am extremely disappointed in staff and council reaction to this project. The Palo Alto Weekly said it best in a recent editorial when they charged the staff of acting more like project advocates than the analysts they were hired to be. [And again in the Editorial in the Weekly's November 30 edition.] We do not need city staff playing rah,rah people to the millionaire and billionaire developers in this town. They do a very good job for themselves, which is, of course, their right. But we the people, in case staff and council have all forgotten, have rights too, and we both hire and elect these individuals to be our spokespersons before all those who present claims to the city for our money, our roads, and our town's environment. In this all have failed insofar as this project is concerned, in my opinion, and that of many to whom I have spoken.
Specifically, Emslie claims in the Post article:
1. The project has a three level underground garage next to the Caltrain station that "would effectively eliminate any parking or traffic problems." What?? People using Caltrain will not be driving, so how is that relevant? Traffic problems are not caused once cars are in the garage, but getting to the garage, from all the streets that lead to the garage. In a recent analysis in activist Bob Moss's letter to council, data presented estimates that the office complex will house at least hundreds of workers, most of whom will no doubt drive to the site along with clients of building tenants. That is what will cause the traffic problems. What are staff's plans to manage up to 3000 additional cars per day on already crowded roadways? That should be part of the analytical job staff should be doing before virtually give Mr. Arrillago the green light. I would like to know if such a study is underway?
2. "Keeping at the height limit [currently 50 feet] for this project is a missed opportunity", Emslie is quoted as saying. Really? For whom? For Mr. Arrillago for sure, maybe for Stanford for all the high rents it expects to receive, probably. But for the city and its RESIDENTS - how is this a benefit? I would like staff to list two or three benefits derived from the additional height to the city. Do not say this will bring shoppers to the University Avenue retail. These people are office workers, who come to work in the morning and leave to go home at night. Surely staff doesn't expect to fill the building with Palo Alto residents, or do they? Even at lunch time the buildings will no doubt have a few restaurants to serve the workers, since to walk downtown and back will consume most of their lunch time. Similarly, clients coming to the building are likely to conduct their business and then go on their way rather than spend the rest of the day shopping downtown. So now, what is left to benefit the city and its residents? Perhaps there will be tax benefits. What is staff's estimate of the increase in retail sales tax? What will be the city's share of property taxes? This latter may be complicated: the land is owned by Stanford and so by itself may be property tax exempt. But if used for commercial purposes not directly related to the university's business, which is education, then property taxes may apply. If so who pays these? My experience when I owned my own business in a high rise luxury building, my company paid our share of the building's taxes prorated on the square footage leased. We paid the building owner who then paid the taxing entity. What is staff's estimate of property taxes that will accrue to the city?
3. In regards to the proposed theater: How does the city benefit directly? Granted theater goers may now go to a new TheatreWorks theater and granted this may result in increased restaurant business, but will the city get a percentage of the ticket sales? Will the city have to provide public safety service and if so who will pay for these? Will the theater pay property taxes to the city? Since TheatreWorks is a "non-profit" organization, will it be exempt from paying property taxes of any kind? If that is so, then the city is stuck with providing services but getting no return thereby. Has staff analyzed these issues and if not, why not? In addition, what the city/TheatreWorks actually gets is a building shell. Who will pay the millions to complete the interior? TheatreWorks barely keeps itself afloat, if one is to believe the fund raising requests I get several times a month in the mail and in my e-mail as well as when I purchase season tickets. Will the city guarantee that we the residents will not have to pick up the tab for building completion? Finally has anyone given any thought to the noise of Caltrain and HSR trains speeding past the proposed theater site? Imagine that during the middle of the performances! Adequate soundproofing could cause build-out costs to soar.
4. I understand from several sources that staff has been aware of this project and indeed has been working with the developer since at least June, and maybe since last February, while we the public who should be having the most say in this, only learned of it at most two months ago. [See Editorial in the Weekly November 30 edition.] Meanwhile, the city has spent and committed hundreds of thousands of public money to assist a billionaire private developer with no apparent payback for the money spent. Since Bob Moss points this out in his letter, I want to know on what legal grounds has the city spent and committed funds for a private development that has not yet been submitted to city as an official project? My guess is that this is illegal, though I would guess that Ms. Stump has found some legal loophole to justify this. While it may be legal, I declare that it is unethical and a gross conflict of interest all around. How? Let me count the ways: Stanford gave millions to the city in return for approval of its medical center expansion, with the understanding that this money was to be used in ways that directly benefitted the city and its residents. But the success of this project directly benefits Stanford big time since it is on Stanford owned land; Stanford will be given the buildings as a gift; Stanford will realize huge rents from the tenants; the developer is likely to realize huge tax deductions as a result of the gift to Stanford. So far I have not listed a single benefit to the city, yet the city is spending and committed hundreds of thousands of dollars from which all these non city players benefit - and we whose money it really is, weren't even given the courtesy of being in on the ground floor. Oh yes, we will be asked to vote on the project, in an election we will pay for, and the results will only be considered "advisory".
5. Finally, Mr. Emslie engages in the most remarkable bit of hypocrisy that I have recently witnessed from a public official- almost as good as one expects from most politicians. It is this: all the while extolling the incredible benefits, claiming "a missed opportunity", gushing over the possibility of the theater and the transit center improvements that "we couldn't otherwise afford", has the temerity to state that "the city manager's report given to the council explaining the project are [sic] supposed to be objective." And "it's not intended to pitch the project." Which is it Steve? Not even the city of Palo Alto can have it both ways.
Here is an example of what I would expect from a clean unbiased analysis of the project:
1. Reduce the scope considerably.
2. Arrillago and/or Stanford will pay all development costs, including any that might be incurred by the city.
3. The theater as proposed is out. We do not un-dedicate park-land which is precious enough in this city. Instead, as a real benefit to the city, the developer will bring the already existing Lucy Stern Theater center up to current theater standards, providing as part of this an underground garage for the use of theater patrons, improved landscaping and lighting and a coffee shop for the enjoyment of patrons in between acts.
4. A complete cost/benefit analysis to be undertaken by the city, using an unbiased outside consultant whose fees will be paid by the developer.
5. After these studies and agreements are completed, the project will be submitted to the voters, with the developer paying the cost of the election, and with the decision of the voters binding on the city re approval of the project. It will then be up to the developer to attempt to persuade the voters of the merits of the project in a one or two month run up to the election. Clearly, with all this work to be done, the earliest the election could occur would be November of 2013, or better yet, April of 2014.
As a result of council and staff's handling of the Arrillago project, I have lost all faith and trust in the planning department and the managerial staff, to act faithfully and transparently on behalf of the city's residents. I fully understand that the city cannot stand still, as some may wish, but on the other hand, I also believe that growth can be done in a way that respects the city's history, its general environment and ambiance. With the recent trend toward the "New Urbanization", all of this is gradually being lost. The 27 University Avenue project as currently proposed and planned and as likely to be approved by an enthusiastic staff and gushing council will be, in my mind, the final nail in the coffin of Palo Alto's demise as a unique place to live. There is no need, nor do I detect a desire amongst residents, that Palo Alto become the third major metropolitan center on the peninsula - San Francisco - Palo Alto - San Jose.
And while I am at it, Palo Alto was not the start of, nor is it the soul of Silicon Valley. That distinction belongs to Stanford University, without which Palo Alto would be just another peninsula town. With THAT relationship, Palo Alto is already on the map.
Richard C. Placone
Palo Alto, 94306
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Posted by Bob Moss
a resident of Barron Park
on Dec 1, 2012 at 4:19 pm
This letter was sent to the City Council last Wednesday. I have gotten several favorable comments about it and some people have taken a few of my points and expanded upon them.
Mayor Yeh and Councilmembers; November 27, 2012
The bizarre progression of the massive Arrillaga project at 27 University is scheduled to continue December 3. You will be asked to discuss TheaterWorks proposal for a new theater and the massing and concept of the development, plus approving a measure for public ballot next June. Presumably public funds will continue to pay for these studies, preparing ballot language, and paying about $200,000 for a special election. All of this is being pushed by staff for something that legally does not exist. There was no formal application for a project. Papers have not been filed identifying exactly what is proposed and what the supposed offsetting public benefits will be. Amy French verified that there was no formal project or proposal yet. The public, ARB and Planning and Transportation Commission were asked to comment on something that could not be acted on, approved or rejected formally because there is nothing that can officially be approved or rejected.
Lack of a formal proposal means that the developer, John Arrillaga, was not required to fund any studies or reviews of anything yet. Apparently Palo Alto's treasury is swimming in assets because staff requested and you approved spending $536,000 from various City accounts for various studies and reviews of the informal proposal including installation of bike and pedestrian paths and traffic studies. If normal procedures were followed staff would have required a formal proposal along with the fees for this project. Usually staff has all the preliminary reviews of the proposed project done in public with ample opportunity for public and Commissioner comments on every section of the proposal. All studies, comparisons, impact reviews, and proposed mitigations would have been paid for by the developer. Mr. Arrillaga can certainly afford it. Here is some information about his wealth from Forbes:
John Arrillaga Net Worth $1.9 B As of September 2012 Age: 75
Source of Wealth: real estate, self-made Residence: Portola Valley, CA
Country of Citizenship: United States Education: Bachelor of Arts / Science, Stanford University
Marital Status: Widowed, Remarried Children: 2
Forbes Lists #250 Forbes 400 #719 Forbes Billionaires #255 in United States
Apparently one reason for his success in real estate and great wealth can be demonstrated in the proceedings of 27 University. He met privately with staff for a year or more pitching this project. Clearly staff is no match for someone who used his abilities and talents in real estate development to become one of the 800 wealthiest people in the world, the 255th wealthiest in the U. S.
The result of all this off-line dealing are proposals to create a new zone for Arts and Innovation. The fact that Palo Alto has an existing Arts Zone along Middlefield funded by Lucy Stern more than 50 years ago seems to have slipped past staff. As for Innovation Zones, we already have many such Zones already in offices on and adjacent to University Avenue, lofts on High Street, Stanford Research Park, East and West Bayshore, and of course our many garages. There is an interesting one on Addison you could visit. The proposed office towers are much more suited to established companies willing to pay high rents for the space, not for start-ups.
Another weird aspect of the proposal is the way that the long-established 50 foot height limit was totally ignored. The staff report glosses over this violation, arguing that taller buildings are need because floor heights for modern offices need to be 12 or 14 feet. If that really is true there is a simple solution. Office structures will be limited to three, not four or five floors. Recently projects have been allowed to exceed the 50 foot limit, but in almost every case the excess height was for utilities, equipment such as elevator shafts, decoration such as the corner tower of the Gateway building as Alma and Lytton, the minaret for the mosque, or art such as the tower at the Campus for Jewish Life which has not been built. They were rarely occupied. If there is a real need to revisit our height limits it should come from the City Council where policies supposedly are set, or from the residents who are concerned about whether or not existing policies are still valid. Policy such as violating the 50 foot height limit should NEVER be established by developers such as Mr. Arrillaga, Chop Keenan, or Jim Baer. It is fair for them to ask, but not to decide. Serious policy issues such as the height limit ought to be based on proper study and decisions made by the City Council. They should not be made by staff and developers and rubber stamped by the Council.
Commissioners on both the ARB and Planning Commission had problems with many aspects of the proposal, including location of the theater, traffic, heights, appearance and layout of the office towers, viability of the plaza, blocking of views, and incompatibility with existing downtown development, among others. It is very premature for the City Council to be taking any firm actions on a proposal that has so many issues and unresolved problems.
Another concern is the speed with which this project is being pushed through. Asking for Council to approve formulating a ballot measure for a project still in flux and not even a formally submitted project is unprecedented and inappropriate. Speeding a public vote on a project such as this which a) legally does not yet exist, b) violates many existing Comprehensive Plan and Zoning policies, and c) has not justified the urgency of holding a special election is unwarranted. Staff and Council refused to put any bonds or fund raising issues on special election ballots despite the well-established lack of adequate finances to fix our infrastructure funding problems. Now we are asked to have a special election for this massive project that mainly will benefit Stanford which will be granted income from and eventually ownership of the towers, and TheaterWorks which will face the challenge of raising many millions to complete and furbish the theater shell. And just who pays for this special election?
Please defer any further action on this project unless and until it is brought much more into compliance with EXISTING land use and zoning requirements. Comments on how councilmembers believe such compliance can be achieved are valid and useful, but any actions at this time are not.