The Alma Plaza decision as a window into Palo Alto politics Palo Alto Issues, posted by Douglas Moran, a resident of the Barron Park neighborhood, on Jun 13, 2007 at 2:16 am Douglas Moran is a member (registered user) of Palo Alto Online
The City Council is scheduled to finalize their decision on Alma Plaza this Monday (June 18). I wrote an opinion piece using Alma Plaza as an example of some of what is wrong with our decision process, focusing on the City Council.
This piece was accepted and targeted to appear this week the Palo Alto Weekly but it now likely to appear next week. With their agreement, I am posting this as a preview.
"Alma Plaza is a $12 million giveaway by our City Council" (Web Link)
The term "giveaway" has proven to be more controversial than I anticipated. Multiple reviewers were uncomfortable with using the term "giveaway" for anything that wasn't direct and minutely traceable, which this is not. I viewed this as excessive and unrealistic in our current world - a financial equivalent of "There is no proof that cigarette smoking causes cancer."
However, since this concern came up repeatedly and I was unable to find an appropriate replacement word or phrase, I quickly drafted an explanation of my view point on this word:
"(A rough introduction to) The Economics of Giveaways" (Web Link)
Posted by Common Sense, a resident of the Midtown neighborhood, on Jun 13, 2007 at 6:48 am
I read your article, and don't follow the logic.
The history of the plaza was that Albertson tried to expand the retail, but was stopped by neighborhood activists. The tried with plan after plan, and then gave up, and sold the property.
Your arguements are "the developer is making alot of money, so what he did was wrong". I don't begrudge anyone making money, especially when others could have bought the property - Albertson put it up for sale, and if there were other buyers who wanted to make a go of it, they would have bought it. The developer when he bought the property was taking risk - risk of getting the project approved, risk that the real estate market might go down (and there still is that risk by the time the project is finished), risk in the actual construction. You & I don't work for our employers for free, and I don't expect the developer to either.
Given that Albertson's shut down their store, your "$12 million give away costs" based on increased driving doesn't make sense. The residents need to make the longer drive anyway.
That being said, the city could have negotiated with a broader view in mind: how about the developer helping out with the costs of the new police station, public library, or school facilities? I personally think that instead of focusing of only on BMR units, and instead being able to trade off more BMR housing against some of the city's infrastructure needs would be a much better choice (although may not be popular with some housing activists)>
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Jun 13, 2007 at 7:01 am
Mr Moran points out:
"One of the developer's basic tactics is to create delays so that they can portray themselves as victims of "the Process""
Well, Alma Plaza has been a victim of the process--first it was too much retail (a historical point that Mr Moran chooses to ignore--Alma Plaza could have been maintained as all retail a few years ago) or so the neighbors claimed, then it was caught up in the Charleston Road traffic study debacle, , then it was the too little retail arguments--all the while our weak-kneed city council refused to make timely decision for fear of upsetting "neighborhood activists" like the author of the op-ed above.
Secondly Mr Moran states:
"I 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)."
There is a difference between "building" retail and that retail being "supported"--only time will tell.
Posted by J.L., a resident of the Ventura neighborhood, on Jun 13, 2007 at 8:30 am
Douglas Moran wasted taxpayer revenue, development progress, and City Council time as one of the primary progenitors of delay around the Alma Plaza issue. [Portion removed by Palo Alto Online staff.]
Now [portion removed by Palo Alto Online staff] he wants to create a hypothetical model of "loss"; he wants to gloat about "zero sum" (which he fails to prove with anything but opinion); he wants a theoretical stab at "see, we were run over by our politicians and developers" [portion removed by Palo Alto Online staff.]
I certainly hope that Mr. Moran's penchant for failing to provide quantification for his economic theorizing is noted by all those who stood around to listen (for years) to all the quantifiable reasons why Alma Plaza progress should have been delayed.
If there was ever a "giveaway", it was the "giveaway" of time and opportunity that was lost by our citizens, who will now pay more for inflated housing casued by Mr. Moran's sucess in delaying the project).
Perhaps Mr. Moran should reflect on what non-growth means to an urban area (which is what we are) in the long run. It means virtual economic death and stagnation.
Palo Alto HAS to grow in order to survive. Our city, over time, will change.
We must deploy those changes with insight, instead of attempting to stall them with process. We must understand that change isn't necessarily bad, and that change is really an opportunity to renew ourselves and our inventiveness. We must understand that we're able to get beyond the pettyness of attacking policy-makers as "in bed" with developers when things don't go our way.
Posted by R Wray, a resident of the Palo Verde neighborhood, on Jun 13, 2007 at 10:07 am
When the City Council has the power to micromanage private property, the development planning is political rather than economic. Don't complain about the politics--it's in the nature of the process when private property rights are given up.
Posted by J.L., a resident of the Ventura neighborhood, on Jun 13, 2007 at 1:11 pm
Forum Reader, You've got this one all wrong...
In addition to land value increasing, so do construction and administration costs. Currently, construction inflation is moving at a hefty 12-15% per year. You might be interested to know that that figure far outpaces the increase in the annual cost of real estate (housing) valuation increases enjoyed by residents who _already_ own a home.
Can you guess who pays the cost of that construction inflation? Answer: the buyer of the new home, and/or the lessee of space rented for retail.
Jim Baer is a hard-working developer; he has taken time to learn how to negotiate the morass of detail required by the city for new development.
In fact, the "Land of Oz" delays that have been caused by the anti-growth contingent in Palo Alto has led to the evolution of _smarter and more savvy_ developers who find a way to get things done.
After a while, policy makers get tired of hearing every development proposal nitpicked to death. [Portion removed by Palo Alto Online staff.]
Palo Alto is now taking baby steps toward becoming a 'grown-up' city, as a result
Posted by Douglas Moran, a resident of the Barron Park neighborhood, on Jun 13, 2007 at 2:17 pm Douglas Moran is a member (registered user) of Palo Alto Online
Warning to newbies: The preceding responses show the sad state of Town Square Forums:
Walter_E_Wallis: The developer tripled his money in two years (stated in my article). He would have you believe that he has clients who cannot figure out how to finance such a lucrative investment and that they pay him (as their advisor) for not being able to figure out something this basic.
"JL, a resident of Ventura": He states I (Douglas Moran) am "one of the primary progenitors of the delay ..." This is unequivocally false. I wrote a Guest Opinion ("Alma Plaza represents a larger issue in Palo Alto - strip mall or neighborhood shops" Web Link) published in the PA Weekly (07-June-2006) about the importance of, and philosophy behind, neighborhood centers and I testified to such at Planning Commission and Council meetings (I was on the Mayor's ad hoc Committee on Retail and I participated in the workshops leading up to the Comprehensive Plan that confirms Alma Plaza as a neighborhood center). I attend a few of the meetings by the group advocating for retaining Alma Plaza as predominantly retail, but I was too heavily committed elsewhere (eg, in the City's emergency and disaster preparedness efforts) to be a regular attendee, much less a significant contributor.
[Portion removed by Palo Alto Online staff.]
Rhetorical trick warning: Many of these posters use the phrase "neighborhood activists" to mean "more than one resident." It should not be interpreted to mean a consensus of neighborhood leaders, or even a majority. The most egregious examples are the statements about the Charleston-Arastradero Corridor Moratorium. Although two *residents* argued for including Alma Plaza in the moratorium, the *consensus* of City Staff and of the leaders of the neighborhoods along this corridor was that Alma Plaza did not belong - it was too far away. But near the very end of the public testimony to Council on the moratorium, these two residents spoke for including Alma Plaza and Council member Bern Beecham - who describes himself as pro-business - added it.
"Common Sense" - The giveaway was financed by multiple components, but "Common Sense" picks one - pretending the rest don't exist - and say that it doesn't add up to the total.
"Common Sense" - [Portion removed by Palo Alto Online staff.] Nowhere did I say anything that could be reasonably interpreted as "The developer is making alot (sic) of money, so what he did was wrong." I criticized the Council, not the developer. The developer hired the top coach, developed and executed a good game plan, playing within the rules established by Council. Not surprisingly, he came away with a victory worth over $12 million. My criticism was directed at the Council.
That I was targeting only profits made from the exercise of political influence should be made doubly clear from the paragraph in the second "The $12 million I cited in my Guest Opinion is the difference between what the developer paid for the property (public records) and the *lowest* estimate of what he could sell the property for immediately after it was rezoned. I did *not* include any profits that could reasonably be expected from normal business activity such as the development of the property. The $12 million is the calculated return on the exercise of political clout, not business acumen, hard work, or risk-taking."
[Portion removed by Palo Alto Online staff.]
"Common Sense" - Your notion of risks confronting the developer runs contrary to experience. [Portion removed by Palo Alto Online staff.]
"Not so fast" - Adequate responses have been given to previous postings on various threads by multiple people. [Post removed by Palo Alto Online staff.]
Posted by common sense, a resident of the Midtown neighborhood, on Jun 13, 2007 at 5:15 pm
I watched the council meetings with John McNellis, and watching each council member's body language, tone of voice, etc. I would not say he had any "political clout". I think John McNellis's logic on retail's viability was very believable, and if you have hard facts to the contrary, please present them.
The example you gave in your article was the extra driving distance neighbors need to make to go shopping. What you omitted was that Albertsons was closing the store, and so those neighbors need to drive the extra distance anyway.
You claim to have 15 years of involvement with Palo Alto politics, so you must have known of Albertsons attempts to expand the retail at the Alma Plaza site, only to turned down multiple times. I think that this very relevant and I can only guess why you left this out of your article.
You don't provide any hard facts behind your $12 million dollar figure; also your closing sentence implies that the builder by gaining profits is doing something against the community. What profits the developer is making shouldn't make what's being done to the property good or bad.
Posted by J.L., a resident of the Ventura neighborhood, on Jun 13, 2007 at 6:10 pm
Just so everyone understands the nature of the "Mayor's ad hoc committee on retail" that Mr. Moran served on. There was not even ONE retailer on the final committee group for that commission; the whole thing was a like a bad joke to any retailer of substance.
The first ad hoc retail working group had ONE retailer of significance on it. The primary finding of that first group? That "better signage" is necessary for downtown parking lots. Is _that_ all they could come up with?! This is what happens when "s
Just ask any retailer in town about that "ad hoc" working group. They'll mostly say "huh, what was that, and when did it happen?", or "what a waste of time!".
The fact is that there is a tone in almost all of Mr. Moran's Op-Ed's and public statements that places developers in the position of having to defend themselves as anything but greedy persons. In addition, Mr. Moran constantly paints a picture of City Council policy makers as nearly bordering on conspiratorial, or incompetent, as with this most recent Op-Ed, claiming that the Council participated in a giveaway.
How does that paint policy-makers and developers, in Mr. Moran's world? Are those representations worthy of serious consideration? I think not.
I would caution anyone who reads Mr. Moran's Op-Eds and various analysis to consider that he is neither a retailer, nor a developer. [Portion removed by Palo Alto Online staff.]
I hope Mr. Moran does not run for City Council this autumn. Palo Alto is in need of policy makers who are balanced in their perspective about development.
We need to move FAR beyond the politics of delay that a small coterie of people in Palo Alto have used to keep our city from growing in its most natural direction.
Change is a difficult thing for everyone. Palo Alto is changing; we need leaders who welcome change, and look for ways to help residents adapt, rather than repeating old saws about the evils of development and growth, and demonizing all those who disagree with the inevitable future that will make Palo Alto a _different_ great city than it currently is.
Palo Alto is growing, and changing. Mr. Moran is one of those who seems dead set against that happening.
We have not heard one word from Mr. Moran about the fine job this current City Council has done in forging a focused approach to solving crucial infrastructure needs. [Portion removed by Palo Alto Online staff.]
That tack will not sell any longer in Palo Alto, Mr. Moran. Palo Alto is going to grow, and prosper - while remaining a great place to live - with or without the support of the few reamaining residents who insist that developers are evil, and City Council is a conspiratorial body ignorant of the fantastical future fiction that Mr. Moran imagines for our fair city.
Posted by Not so fast, a resident of the Duveneck/St. Francis neighborhood, on Jun 13, 2007 at 7:35 pm
I am not sure why this happens but anytime there is disagreement with the writings of certain people on this forum, others try to make it sound like the disagreement is coming from one person, posting under different names.
For the record I am not JL and I have no idea who this Sanford is that Forum Reader is referring to.
Furthermore because I have disagreed with Mr moran recently on two threads dealing with Alma plaza, does not mean that I have a "personal vendetta" against Mr Moran. I am not sure why forum reader translates my disagreements with Mr. Moran as a "persoanl vendetta".
unfortunately this is the tone that is taken by many people who believe in the "my way or the highway" approach to the way things are done in palo alto--criticsm of certain people or trying to discuss with them their statements makes you "evil"/"greedy"/"A PR person"/"or having a perosnal vendetta against the person".
For those of you familiar with this forum I have posted often about alma plaza, stanford, our mayor and city council. I have my opinion on these issuesm but I am always willing to listen to what other's have to say. It is therefore unfortunate that things have gotten to the point where criticism is frowned upon.
Let me ask you this, Forum reader, isn;t this forum a perfect site to discuss different views on this city as long as it is done in a respectful manner? Perhpas some of the ugliness stems from Mr. moran's responses to those that criticize him.
BTW, Mr Moran thanks for posting the link to your unedited post. I certainly hope that the editors do not remove it. i hope that everyone has the opportunity to visit your site,so they can read your unedited posts and more importantly your "Personal philosophy from many years of experience leading groups". it should be very enlightening for everyone to read your blanket response to those that air views that differ from yours and your feelings the efforts made by the editors of this forum to keep things civil. thank you Mr Moran.
Posted by Fred, a resident of the Barron Park neighborhood, on Jun 13, 2007 at 9:10 pm
Doug, I am not in a great position to evaluate the facts in your editorial. But the main, and most disturbing, claim is that those we elect to evaluate the situation, our City Council members, either do not have the best interest of the City at heart or are just not sharp or attentive enough to know the truth when it is presented.
It may be that you are right, but I'm always a little suspicious when the answer to the problem is "get rid of these rascals and bring me some others." Why do you think we have wound up with a council like the one we have? Why do they "go along"? Are they lazy? Dumb? Conflicted? How will identify councilors who will do better?
Posted by OD, a resident of the Barron Park neighborhood, on Jun 13, 2007 at 10:49 pm
JL, Common Sense, et al, either wish to employ the developers tactics or are clueless with respect to public policy and the economics of real estate.
I know people who work full time completely focused on taking advantage of these failures in our system - buy land, get it rezoned, make a big buck. Just another example of freakonomics. It has been going on forever. The sad part is it happens in Palo Alto, where you would expect more of our city council.
The council consists of lawyers, architects, CPAs, marketers, etc. How many understand the economics of public policy? Based on their positions, not many. Such is the plight of city government.
Please! Either take your tongue out of your cheek or wake up. You live in Silicon Valley - no bankers necessary for this stuff.
Posted by Watched the PTC, a resident of the Midtown neighborhood, on Jun 14, 2007 at 12:14 am
Example of developers tactics just this very night!
At the Planning Commission, the developer of 195 Page Mill Road changed his 84 rental apartments to condominiums! AFTER the city council had approved the project with rentals, because rentals are in short supply. He just changed it today, in effect saying tough, I'll do what I damn please.
Posted by Fred, a resident of the Barron Park neighborhood, on Jun 14, 2007 at 12:45 am
It sounds like YOU understand the economics of development, etc. So why can't the council? And doesn't the council have a city staff of land development experts/professionals to explain it for them?
It seems like Doug and OD/OpEd see the situation differently and think the council isn't smart enough to understand the "economics of public policy" even when explained to them. Not sure why the voters themselves would be any smarter - we are all duped then and not much to do about it.
An alternative explanation is the council of smart, civic-minded people, supported by their paid advisers, reached a different conclusion. That doesn't mean they are right (I personally still don't see what right is here), but there is no basis for thinking that a new crop of pols would do anything different.
Posted by Douglas Moran, a resident of the Barron Park neighborhood, on Jun 14, 2007 at 2:43 am
Fred et al,
Being smart and civic-minded is not the same as being a good Council member. Many such people have no interest in, nor aptitude for, the basic issues confronting the City. Many candidates run because of narrow interest in a peripheral issues, such as improving the energy efficiency of the municipally-owned buildings or improving the playing fields for organized youth athletics. Some eventually get up to speed on the critical issues of the City's revenue and the City's basic costs; some don't. We have had at least one "serious" candidate who had never even watched a City Council public hearing on any topic - even on TV from the comfort of their living room - before becoming a candidate.
A Council member without background and experience can easily be overwhelmed by the reports produced by the City Manager that are both massive and poorly organized. Council member Bern Beecham has repeated bemoaned how many Council members now arrive with little or no experience on many of the basic issues. Watch any major public hearing and you will likely see one or two Council members who wind up being meaningfully confused on basic facts.
Council is effectively an unpaid full-time job. They don't have any staff. Palo Alto has a strong City Manager system, which means that the Council is restricted to dealing with staff through the City Manager (or the three other CAOs) who are hired by the Council. This insulates the professional staff from politics, but also has the side-effect that it gives the City Manager considerable latitude to ignore Council (either individuals or the full body) because the Council has only two real disciplinary measures: annual pay reviews and outright firing.
On one hand, it seems inappropriate to criticize a Council member whose priorities are consistent with those they campaigned on. On the other hand, they knew the duties of the job they were running for and cannot ignore the ones that don't interest them.
Posted by Fred, a resident of the Barron Park neighborhood, on Jun 14, 2007 at 8:12 am
Thank you Doug, that's a helpful analysis.
So what should we do? Again, just turning the rascals out seems like it won't necessarily improve the situation. Your critique seems to go more at the structure - strong City Manager form of government, unpaid City Council. I've argued elsewhere for consideration of a full-time "strong" elected Mayor; others have argued for a smaller council (maybe paid, who knows). You seem like a serious student of what we have - do you have a view on this?
Posted by Watched the PTC, a resident of the Midtown neighborhood, on Jun 14, 2007 at 9:18 am
Fred, it's great that you are learning about how things work here, so it may be premature to advocate for a strong mayor or anything else, until you "get it."
One difficulty with a strong mayor is that that person may represent the corporate/big development interests that win most political battles now.
In fact, the town is about evenly divided as many elections show. But the real money for campaigns and professional PR is not on the residents side. The elections often come out 49:51% and the votes on the council come out 5:4.
Fred, do you watch any city meetings on tv? Very informative! Last night was a full year's education in one evening.
Posted by Walter_E_Wallis, a resident of the Midtown neighborhood, on Jun 14, 2007 at 9:39 am
Anticipation of future gain don't shuck no oysters. In fact it raises the cost of whatever is ultimately constructed to the consumer. Land laying fallow does not, like farmland, gain value. Obviously someone is going to try to make back the investment. I had thought the last century showed the folly of trying to eliminate profit and substitute "Public Benefit." When someone sneers at profit I have this image of handing back his paycheck because he already has enough money.
Posted by Fred, a resident of the Barron Park neighborhood, on Jun 14, 2007 at 10:56 am
Bill, if those were really the odds and returns, wouldn't the price get bid up until the returns were more sensible? My experience with investments is that there aren't many sure things. Maybe there are risks or costs you don't perceive.
Posted by Fred, a resident of the Barron Park neighborhood, on Jun 14, 2007 at 11:03 am
WPTC - I've been here a couple years and I think I'm starting to "get it." Coming from a place with strong Mayor government, I was quite surprised to see strong City Manager here, which I think of as a form well-suited for smaller towns than Palo Alto.
You raise the objection that "maybe we'd elect the wrong guy" and you may be right - but of course, then we can vote him/her out. If we elect the wrong person over and over - hmm, maybe s/he is the right person after all.
If the town is divided - well, that's one of the reasons to HAVE a mayor in my view, since otherwise we get the familiar gridlock. If you have an executive with a mandate to lead, presumably something gets done - if we don't like it, we can turn it over to the other person and try him/her.
Posted by J.L., a resident of the Ventura neighborhood, on Jun 14, 2007 at 12:17 pm
Fred, You have it right.
Notice that Moran and the others won't address your desire for an elected mayor.
In fact, what most of the other posters on this thread represent (save a few) is the very strong anti-development contingent that has held up Palo Alto's growth.
The real irony here is that many of the people here are the very people that have managed to keep the City Council (in past) handcuffed) with attempts to stall movement on development.
The poster named "Watching the PTC" claims to "understand" the economics of real estate. Really? How is it that s/he doesn't mention opportunity costs, and other cost burdens that come as a result of delay - those costs finding their way back to local residential buyers and retail lessees. Methinks there is a lot of lip-flapping going on here, with people claiming to "understand" this and that - even what a "perfect" City Council member's makeup should be.
The agenda behind Mr. Moran's [portion removed by Palo Alto Online staff] analyses of local government have to do with nothing more than an effort to stop Palo Alto from growing.
Go look at his web pages, and his various Op-Eds. [Portion removed by Palo Alto Online staff.] There is a certain quaity of municipal "utopia" in Mr. Moran's prose. That alone should make any thinking person suspicious. [Portion removed by Palo Alto Online staff.]
Palo Alto is going through a very interesting time. We are no longer the cat's meow - so various interest groups that were able to wrangle the attention of past (relatively unchallenged) City Councils are now rather dumbfounded that the current Council has begun to focus, and _adapt_. (everything was hunky-dory in the 60's through 90's - it was a fantastic municipal party, that didn't require much diligence, and as a result, didn't get it - look at the state of current infrastructure if you have any doubts - why weren't past City Council's husbanding the future? Why should they have? Heck, it's human nature to think that the good times will last forever. No black swans here, no-sir-ee! :) )
Mr. Moran and those who agree with him are hopping mad about this development; they want things to return to the past days of small interest groups holding up development, etc. They had their day. That's why we don't have big box retail; that's why we're hurting for revenue.
So, for you, Fred - stay with your instincts. "The way things work around here" is a phrase that the old insiders want to keep you at bay with.
If anything, we do need a different structure to government here, a nine-person council simply isn't fast enough, no matter how well intended and focused (and this current Council is _very_ focused).
Do we have the guts to change the structure of governance? It's not likely, but there is a chance.
Posted by Another Observer, a resident of Another Palo Alto neighborhood, on Jun 14, 2007 at 12:30 pm
The sad fact is that a community shopping center was lost. While maybe two dozen neighbors protested a bigger Albertsons there is a petition for about 900 neighbors for a large,competative grocery store at the site. This could easily be increased to 2000.
The developer essentially told the council what he wanted, housing, and the council essentially said OK. Deal done! If anyone dosen't think this was all negociated long before Albertsons left they are neive.
Another big loss to the city was the rezoning of the SUN corp site on SanAntionia RD. from what could have been a AUTO ROW type of development with many millions of tax revenue to a housing and other private and probably tax free development.
There was another private property land on Asteradero Rd that would have been much more suitable for housing and the other center included. This site would have to be rezoned, but I doubt if anyone would object to the rezoning except people outside of Palo Alto in neighboring cities. This could have retained the SanAntiono site for auto sales and it is near Hwy 101.
Can Alma Plaza still be saved by an election? I would expect most of S. Palo Alto to vote for it except for the developers backers and investors. We need competative shopping in S Palo Alto and small stores (grocery) can not and will not be price competative.
Posted by Bill, a resident of the Palo Verde neighborhood, on Jun 14, 2007 at 1:43 pm
Fred, in an open market, yes. The price would have been bid up at AP, when Albertson's
sold it to Mr. McNellis. They were frustrated. He had been their site-manager for 8-10 years. He was available. Albertson's never dreamed PA would go for a zone-change and housing. He was sited in PA and knew better, but didn't tell. So he got the land for a song,
and that's fine. ........ But then he and colleagues pushed for the re-zoning to the
detriment, and that's not so good. And finally the C. Council bought his arguement, and
Posted by J.L., a resident of the Ventura neighborhood, on Jun 14, 2007 at 2:07 pm
Another Observer, What will a large super market do to Piazza's, and what will you say if the effect (long-term) was to seriously compromise Piazza's business?
You ask: "Can Alma be saved by an election?" This is EXACTLY the kiind of thing that Doug Moran wants to happen. We have far bigger fish to fry than satisfying those who want to mozy over to the supermarket, instead of taking a short drive or bike ride to Piazza's.
Bill, your statements show very little understanding of the reality of retail in Palo Alto. YOu are interested in a personal vision for Alma, without considering the big picture.
Posted by Norm, a resident of the Midtown neighborhood, on Jun 14, 2007 at 2:39 pm
Personally, as someone who lives among the mass of apartments with families within 10 minutes or less walking distance - how about a regular old community serving grocery store run by someone (corp entity or private party) that serves the needs of the "walkable" neighborhood. Diapers and baby food should be staples of a nieghborhood store, not organic praws from New Zealand and bottles of Two Buck Chuck.
A 7-11 is more of a neighborhood market than Trader Joes. Why not go for the gust to draw shopper from all over and find something that make Dreager's look down-scale.
Posted by Bill, a resident of the Palo Verde neighborhood, on Jun 14, 2007 at 4:51 pm
Wallis, maybe not yet quite right. Consider a Real Estate purchase you had made, paying
6 Mil for something the City Staff estimated would bring a much bigger value, as I bet you
already know, because you're something of a historian. But first you have to get the place rezoned. Then tens of millions, if only the booming housing market continues. Would you
not delay, plead, bemoan retail projections, expel tenants, let the place become such an eyesore that one Councilman would then say he can hardly stand to drive by the place twice a day, so let's get something done that the owner will agree to. So, you don't wait for "never,"
but you sure can wait 10-15 years if need be. 10 years to turn 6 Mil into 20 or so. Does that
not sound pretty good? Then, by hiring the city's most adroit developer attorney, you shave
Posted by J.L., a resident of the Ventura neighborhood, on Jun 14, 2007 at 6:22 pm
Bill, What does construction inflation at 12-15% (and climbing) per year turn costs into.
Also, you're making 9 City Council out to be pawns [portion removed by Palo Alto Online staff.]
"Watched the PTC" said - - "I never said I "understand the economics of real estate” "...
You're correct, and I apologize for attributing that statement to you; it was instead uttered by "Oped".
Please understand, there is so much back-and-forth from non-economists and non-developers on this thread, who claim to know all about how much profit developers make; how manipulative developers are; and, how City Council lets itself be passively duped by developers. [Portion removed by Palo Alto Online staff.]
What I find fascinating is that Mr. Moran and a few others on this thread, "Watched the PTC" among them, _never_ mention the unbelievable manipulations and stall tactics visited on developers (and by default, the rest of our community, with resultant increased housing and retail rent prices) when _they_ testify in front of the PTC, or City Council.
One really has to follow one of these projects all the way through to get the full flavor of what I'm talking about. The fiasco that en ensues every time a developer wants to do business here is almost beyond rational description. To hear "Watched the PTC" describe what happened at 195 Page Mill is to hear the pot, calling the kettle black.
(About 195 Page Mill - - we have a few citizens suing our city on 195 Page Mill, which will eventually be built anyway. Those citizens are _costing_ Palo Alto taxpayers and future residents _money_ - i.e. taxpayer dollars, as they pursue thier very own brand of municipal utopia to the very bitter end.
Mr. Moran and a few (far from all) neighborhood leaders have been _most_ determined to have their way with the way Palo Alto grows. They essentially see housing development as a zero sum game, and approach most developoment in just that way.
As pointed out earlier, the great irony is that Mr. Moran's and other efforts have spawned a more clever, faster to the finish kine breeed of developer, one who has figured in the delay and obfuscation that has become the norm in Palo Alto development circles.
Thus, in a very real way, Mr. Moran and those that agree with him have brought about their very own private nightmare.
Posted by Bill, a resident of the Palo Verde neighborhood, on Jun 14, 2007 at 6:52 pm
JL, let construction costs increase at whatever. What's at issue is the huge increase in
LAND value, if zoning can be changed. Developer passes on construction costs, keeps
land-value profits for himself. With housing, per site max cost for each town-house
at AP will be 6,000,000 div. by 38. How about that for a bargain. Thanks to re-zoning,
and retail destruction. So, what does the increase in construction costs have to do with anything. If they are up at AP, home retail prices will be rising in all PA. So buyers will absorb more costs at AP. But the re-zoned land value is still there, probably increasing
also. He doesn't even have to build anything. Can now sell it, with a 158K per lot cost-
basis, to another developer. In PA, what would another builder pay for these 38 town-
Posted by J.L., a resident of the Ventura neighborhood, on Jun 14, 2007 at 9:36 pm
Bill, You're missing the point. That being that the cost goes up to the end consumer. Why should housing consumers pay higher prices because a few anti-development residents pull out every stop in the book to hold up development?
Time after time, we've seen anti-development forces take development projects all the way to the polls. These projects modtly get built anyway. It's outrageous; thank goodness it's finally coming to a halt.
Little-by-little, our city officials are adapting to the reality that BALANCE in housing interests is what matters most, with the definition of balance taking into consideration the interests of those who own and want to develop the land.
Sure, every now and then a mistake will be made, but overall Palo Alto will profit from this adaptive approach - a far cry from the non-adaptive mode of stall, delay, and frustration that ends up with everyone losing (developers, home buyers, etc.) _excedpt for the few who take the law to the limit, just because they want their way.
The latter group is into demonizing developers, and pointing fingers at PTC and Council when things don't go their way. That's coming to an end. It will take a while, but new pattterns of behavior are evolving. Palo Alto is growing up.
Posted by Another Observer, a resident of Another Palo Alto neighborhood, on Jun 15, 2007 at 11:57 am
Piazzas is a fine store and I go there often, but as a retired person on somewhat of a fixed income (we don't have a income of $100,000 to $200,000 a year as most shoppers there must have) we don't do a large part of our shopping there. We must drive to Mt.View as most retired people in S. Palo Alto have and will continue to do. Who can pay $10 to $15/lb for meat and fish? Most things are 1 1/2 to 3 times the cost of competative stores. There are a few things that are ok and their store is nice.
Posted by J.L., a resident of the Ventura neighborhood, on Jun 15, 2007 at 2:37 pm
Bill, Let me make myself a bit more clear.
If a developer comes in and buys a property, and than development is held up on that property for years, there will be increased construction inflation costs (materials, labor, etc.) to the developer that _exceed_ (by quiite a bit) the current rate ofo inflation. Currently, construction inflation is running 3-4x normal inflation.
A developer will NOT absorb the costs associated with delay. Developers are in business to make a profit, like most other people in business. When ncosts increase,, those costs are eiither passed on to consumers, or cheaper materials are utilized to keep the cost of material goods down.
So, the end consumer of housing at Alma will pay a significantly higher price for a home than would have heretofore been nthe case, and/or will also experience a decrease in the quality of materials or layout of the home. This is just plain fact, and reality at ground level.
The same, byw, goes for retailers who rent space at Alma; they are going to pay a higher rent to make up the increased carrying costs that the developer has had to bear due to delay.
IN addition too those costs, there are costs associated with lost opportunity in other areas of Palo Alto, because these delays use city _staff_ time (your taxpayer dollars, and mine).
Also, other opportunities are lost because there are olny so many things that city officials can focus on.
There are many things that I can imagine having immediate acccess to, near my home. Those things don't exist. It's absolutely unrealistic to be thinking that we can insinuate retail all over the place to encourage "walkability", etc.
I am a HUGE fan of walkability, but also aware of the constrints that developers face, and the fast increasing pressurer borne by retailers in a region where costs of doing business climb faster than ordinary inflation. These are things that the anti-development folk seem not to be aware of.
We are wasting time, money, and political capital on things that end up bringing us FAR less gain than if we had spent time on solutions that would decrease the need to drive an automobile, and increase walkability and general access.
Why aren't we getting tough, and insisting that a FAR stronger intra-and extra-municipal mass transport capability be brought to our citizens? Where are the significant incentives to intra-urban light and mass transport initiatives that go BEYOND the everyday?
Where are the innovative efforts to come up with FAR cheaper housing and other dwelling design intiatives?
How about looking at wether PAU continues to give us our money's worth?
No, instead we squabble over this or that design nelement in a housing group, or battle for years to gain 10,000 sq. ft. of retail space, so that, even if we DO get that space, inflation and increased structural costs have in all eliminated any economic advantage that the additional space might have brought in the long run, not including other opportunity costs mentioned above (with many others not mentioned)
Palo Alto has GOT to unlearn the bad habit of hearing out every small interest group. We are making progress in that direction.
We don't need Op-Eds telling us how incompetent our policy-makers are, with aditional analysis showing that we have all the answers. This is what Mr. Moran is up to, and frankly, as a citizen of this city, close to the city in many ways, I'm tired of it.
Nobody challenges these interest groups; they're well meaning people who have essentially learned behaviors that worked in another time, when opportunity was gushing from every corner. We don't have the luxury of listening to, or heeding, the suspicious wonderings of various leaders who have what essentially amounts to a small, parochial vision of our city's future.
We can do better than that.
The mayor speaks of innovation. Moving beyond the politics of accusation and whining, including a refusal to give in to the latter after everyone has been heard (because that's everyone's right), is one of the easist innovations available to us. Believe it or not, see evidence of this happening, and thus am hopeful for our city's future.
Posted by eric, a resident of Mountain View, on Jun 15, 2007 at 3:00 pm
Bill wrote: "10 years to turn 6 Mil into 20 or so. Does that not sound pretty good?"
It does not. A modest investment well managed can double in 7-8 years or so. When investing $6m you expect more then a modest return. Big chunks of land are not generally bought for cash- they are financed (and if they are bought from cash, that cash would be taken from an investment generating income)-- so there is carry cost in the millions for something this big. Markets do NOT go up in a linear fashion, and often go down- oh, and high density housing can be even more volatile. There is huge risk in buying and attempting to develop unentitled land, so a high return is to be expected. I wont repeat JL's accurate comments about construction costs (I think he's actually too conservative on his inflation #'s!)
JL is a bit off on one major point-- the developer cannot really "pass on" the costs associated with this circus. The market dictates the prices paid for the homes and the rent on the shops. He is taking risks-- huge ones-- that the project will be profitable. This risk is what gives him the "right" to expect big potential rewards. Without that, the economy would stop.
Posted by J.L., a resident of the Ventura neighborhood, on Jun 15, 2007 at 4:01 pm
Bill, That's easy to say about someone else's investment. :) How would you like someone to cost whatever investments you make to take longer to mature, or cause to mature for less, just because they didn't like the outcome of your investment? Somehow, I think you might be complaining about that.
Also, Eric is right about my inflation cost numbers, they are on the conservative side. That said, Eric is right about the market dictating cost, but there is a _range_ of acceptable costs in most markets. Housing prices show some elasticity. So, consumers will pay the high end of the range, which is a direct cost from delay. Further, the developer will use less quality materials to keep costs down, in order to make up for delay and legal fees. That means the consumers will have higher maintenance in the future, or that the spaces designed will be not through through as carefully, and so on.
There _is_ a cost to community for _inordinate_ delay. We have had too much of this, and thankfully, it's beginning to stop. We are beginning to put people into office who understand this, but we're not completely there yet.
Doug Moran's opinion piece is probably meant to stir up support for his possible Council run. There is a disaffected anti-development group in twon who wants to reverse our current progressive course. We have to resist these groups, and convince them of the error of their ways. In all, even if they get placement on the Council, there is too much sentiment in the other direction to change the current course. Palo Alto seems to be heading in a good direction, with much work yet to be done. What we don't need are future Council members who enter the fray claiming high moral and economic ground, and creating deep analyses of things that don't hold water.
Doug Moran talks about "giveaways". I'm afraid a vote foro Mr. Moran (if he runs), or anyone he supports on the housing issue, would be tantamount to "giving away" a precious part of our future.
Posted by Douglas Moran, a resident of the Barron Park neighborhood, on Jun 15, 2007 at 4:04 pm
In the discussion of risk: This is not an abstract example. A long history provides many data points to extrapolate from. To my mind, the most significant of these is the developer having Jim Baer on his team. Baer advertises himself has having had a 100% success rate in Palo Alto in obtaining such exceptions (and I have heard no counterexamples).
Recent example: Mr Baer's project near the intersection of Page Mill and El Camino (the former site of the Old Pro) not only received several variances, but overrode the directive that the front portion of this property be reserved for a much need right-turn lane.
Posted by J.L., a resident of the Ventura neighborhood, on Jun 15, 2007 at 5:21 pm
Doug, you're generalizing from the specific, to the universal. Taking your argument at face value, one might begin to believe that developers are just greedy people, who grease the palms and smooth the political paths of those politicans that are most likely to gain them favor - or, find ways to trick policy makers into doing developer bidding. We know this isn't true. Where's the middle ground?
What's fundamentally interesting - as I've pointed out before - about your statements is that they imply that a certain kind of "perfection" can be had around the municipal decision-making that surrounds development efforts.
There is little of "give and take" in your lexicon, as it refers to municipal development. Too much of it is bound up in a kind of "anti-development" fundamentalism.
Posted by J.L., a resident of the Ventura neighborhood, on Jun 15, 2007 at 7:27 pm
Bill, Good question, and you answered it well. That said, what's preferale to anti-development is NOT its opposite (at least in my mind).
Rather, what I would like to see is more proactive cooperation between residents and developers - beginning with a large effort for each to undserstand the other's position.
The two extremes - untrammeled development, and anti-development - are dysfunctional. What's also dysfunctional is to continue with the same anti-development arguments that worked in the past, in Palo Alto's more salad days, when delay was affordable, because opportunity was right in front of everyone - times were as good as they were going to get.
That's all changed. Certainly, there are developers who take advantage, just as there are residents who use the law to do the same. There are no easy solutions, but constantly demonizing City Council, the PTC, and developers will take us nowhere.
My mini-rants against the anti-development crowd have been put out there because we areconstantly hearing what's "wrong" with more housing, at the cost of onot hearing what's "right" about same. Developers are not evil; City Council members are suckers to be duped - that's ssomeone's private fantasy, and one that doesn't deserve serious consideration.
What does deserve serious consideration is a realistic conversation between developers and as many residents who are interested about the constraints and concerns on all sides, with policy makers deciding when enough is enough, compelling timely decisions, and not letting small groups waste everyone else's time and money. Leadership is what we need on this iissue, and I'm happy to report that we have been getting more of that from this City Council on this issue than recent past Councils. That's a good sign. (we still have a way to go, however).
Posted by Norm, a resident of the Midtown neighborhood, on Jun 19, 2007 at 2:51 pm
Things are oozing through the PA PROCESS slower than usual for something EVERYONE says they want-BUT DON'T KNOW WHAT IT IS THEY WANT. Innovatively traditional, or traditionally innovative?
I wouldn't blame John (I think we all know his well enough by now) if he sat and waited for people to begm for him to do ANYTHING but let the space get uglier and uglier. Perhaps the bike race could swing down Alma and highlight that block.
Posted by Wondering, a resident of Another Palo Alto neighborhood, on Jun 19, 2007 at 9:12 pm
I drove by the Alma Plaza site on Sunday and maybe I don't have as good taste as some other people but it didn't look blighted, not in the least. It looked neat and the building itself without all the cars in front of it and without the ugly signs looked handsome.
There's a predisposition to call things blighted which means you aren't really looking.
Posted by Paul, a resident of Stanford, on Jun 20, 2007 at 12:46 pm
I don't really have an opinion on Alma Plaza or any of the development proposals under consideration for it. However, it is quite clear to me that Mr. Moran is economically illiterate. Assuming he is correct that the project approved by the city council increased the value of his parcel by $12 million, there is NO justification for characterizing this as loss to the city or its residents of an equal $12 million.
The only item he mentions among darkly hinted-at "backdoor" transactions is a loss in value of neighboring houses. Maybe it's true that the new project's retail mix will mean neighboring houses will lose value. But it's equally likely that they will increase in value since the noise and traffic associated with more retail usually mean a diminution in value of affected residential property. Either way, there is no reason to think any reduced value under any proposal would happen to match the $12 million increase in value that the developer's project entails.
Moreover, for the city itself - as measured by tax revenue, the new project's effect is to increase revenue as the property value increase will increase property assessments and taxes due the city. And whatever retail comes out of the new project surely will generate more sales tax revenues for the city than the vacant buildings there now.
There may be good reason to object to the developer's proposals. There may even be good economic objections to the project. But Mr. Moran hasn't made them.
Posted by eric, a resident of Mountain View, on Jun 20, 2007 at 1:24 pm
Bill wrote: "Eric, I think the bad outcome of getting 20 mil for a 6 mil investment in 10 years is an excellent downside, when the upside is getting it in 2 - 2.5 years"
Missed the point completely-- he didnt put $6M under his pillow and wake up 10 years later w. $20M. He's likely been running up massive carry cost, etc. Actual return a fraction of your simplified version
Posted by Douglas Moran, a resident of the Barron Park neighborhood, on Jun 20, 2007 at 2:04 pm Douglas Moran is a member (registered user) of Palo Alto Online
Normally I stop responding to posts after the first few. However, since the delayed print publication of the Guest Opinion may bring new readers to this thread, I will respond to "Paul of Stanford" claims:
1. Paragraph 2:
1a. "The only item he mentions ...": Refer to the original text and see that this is "the biggest" and that I mention others in the same paragraph.
1b. When he talks about traffic and noise from "more retail" he is referring to more retail than the developer proposed which is much less than what was on the site before and appears to make the assumption that the housing that displaced the retail creates no noise or traffic.
1c. "reduced value ... would happen to match ... the $12": Note that if the reduced value is $12,000,000.01 this statement is true (but of no relevance). Arguments asserting the non-equality of imprecisely values (such as property values) are difficult to falsify.
2. Paragraph 3:
2a. Project increases property tax: His comparable is "no project" rather than the project that the City's long-range planning policy called for.
2b. Sales tax: again his comparison is to "no project."
3. The claim that I haven't made the argument:
3a. "Paul" didn't read the Guest Opinion carefully enough to avoid mistake (1a) and there is no indication that he read the second document linked to in the posting that originated this thread.
3b. Faulty presumption that the details for a complex economic can be made in the very limited space available for Guest Opinion, and are appropriate for the target audience (as defined by the newspaper publishing it).
3c. Burden of proof: He appears to believe that the people objecting to a zoning change - especially one of this magnitude - bear the burden of proving in detail that the economics are bad. The correct standard is that the party requesting the change (the developer) is the one responsible for making the case that the change is not harmful, and that the City is responsible for fact-checking and critiquing that submission (none of this happened).
Posted by Paul, a resident of Stanford, on Jun 20, 2007 at 2:59 pm
I read Mr. Moran's linked piece. He concludes a short version of his Alma giveaway argument with this paragraph:
"I am not going to waste your time (and mine) trying to explain this particular giveaway further because I haven't found a way that works. People who found the airport example interesting told me that my explanation of the Alma Plaza giveaway involved too many boring details."
The linked piece has none of the space limitations that he says the Guest Opinion format has. And yet, he still is unwilling, or unable to make a cogent and complete case that the Alma zoning change is the "giveaway" to the developer that he asserts it is.
I make no claims about whether the city or its residents are better or worse off with the Alma Plaza development. Mr. Moran does make such claims...but (I still maintain) has not backed them up with anything but speculative argumentation and naked invective of the sort that most anti-growth people make against any development they don't like.
The Alma project may be good for Palo Alto, or it may not be...but Mr. Moran's piece (and its linked companion) add virtually nothing to the discussion about the project.
Posted by Jeremy Loski, a resident of the Ventura neighborhood, on Jun 22, 2007 at 3:06 pm
Paul, Well said.
As it turns out, Mr. Moran and those who agree with him have managed to place even more obstacles in the way ot the Alma development.
One thing we know for sure: that development is going to cost MORE to those who use it than it would have if the process for approving it had not been held up by a few dozen neighborhood activists who know exactcly _nothing_ about the realities of retail sustainability, or urban development.
There is a core group fo people here who want to micro-manage development. It used to be a fun hobby in Palo Alto's more salad days, when mistakes were made up with the rocket-like pace of commercial success experienced by the region that we're a part of.
Old habits die hard. Mr Moran and those that agree with him are a part of Palo Alto's old habit of delay. This habit will be shorn soon enough, but not soon enough to cause more real _neggative_ economic impact to future residents and retailers.