Palo Alto could require Stanford University to provide an explicit guarantee that Stanford's proposed expansions of its hospital facilities would not burden the cash-strapped city with any ongoing costs, members of the City Council said Monday night.
The city and the university are in the midst of negotiations over a development agreement that would allow Stanford to rebuild Stanford Hospital and Clinics and the Lucile Packard Children's Hospital, bringing 1.3 million square feet of new development to Palo Alto.
The project hit an important milestone last week, when the city released a Draft Environmental Impact Report for the project, which lists the project's impacts and recommends mitigations.
But as Monday's discussion of "Project Renewal" indicated, the two sides still don't see eye to eye on potential impacts of the new hospitals, including fiscal impacts. An analysis by the city's consultant, Applied Development Economics, found that the project would cost the city about $1.1 million in annual ongoing costs. Stanford's consultant, CBRE Consulting, concluded that the taxes and fees generated by the project would exceed the costs of municipal services by about $7.6 million.
Council members Greg Schmid and Nancy Shepherd both said making sure the project is "revenue neutral" should be a major focus of the ongoing negotiations. The city is facing a projected deficit of $7.3 million in fiscal year 2011 and is in the midst of cutting programs and renegotiating employee contracts to cut costs.
"My top priority is to make sure we don't end up subsidizing the project over time," Schmid said Monday night.
The two sides took a major step toward a development agreement in June, when Stanford offered a menu of "community benefits" to Palo Alto, including a $23.1 million payment to the city's housing fund, subsidized health-care programs for low-income residents and Caltrain Go Passes for all hospital employees.
On Monday night, Vice Mayor Sid Espinosa said the city has "really turned a corner in having entered into a much more collaborative process with Stanford."
But some council members argued that the city should demand more benefits from Stanford. Councilwoman Karen Holman said the city should ask Stanford to allow the San Francisquito Creek Joint Powers Authority to build a detention basin on Stanford land.
Len Materman, executive director of the creek authority, said a detention basin on Stanford's land west of Highway 280 would protect about 3,200 Palo Alto homes from floods and save millions of dollars in flood insurance.
The creek authority is charged with protecting Palo Alto and neighboring communities from the flood-prone San Francisquito Creek.
Norman Beamer, president of the Crescent Park Neighborhood Association, also urged the council to include the detention basin in the city's negotiations with Stanford.
"It doesn't cost Stanford any money," Beamer said. "It seems to me to be a natural candidate for offsetting the costs of the tremendously large developments in a way that doesn't hurt either side and would greatly benefit Palo Alto."
Holman agreed and said an upstream detention basin is an appropriate and "quite important" community benefit for the city to consider in its development agreement with Stanford. The university had consistently maintained that the medical facilities are themselves a major community benefit and has opposed benefits that don't relate to the hospitals.
The council also heard an overview on the Draft Environmental Impact Report for the hospital project. The council and the Planning and Transportation Commission plan to delve into each chapter of the massive report over a series of 11 meetings in the next two months.
The report identifies dozens of impacts, including increased traffic, noise and pollution. It also lists mitigation strategies for many of these impacts, while conceding that some cannot be mitigated or avoided.
One impact that cannot be mitigated is increased traffic at three Menlo Park intersections: Middlefield and Willow roads; Bayfront Expressway and Willow; and University Avenue and Bayfront, the report states. Menlo Park City Councilman Heyward Robinson told the Palo Alto council Monday that he hopes Stanford's mitigation measures would include "very, very aggressive trip reductions."
"We certainly recognize benefits of having a world-class medical facility in our midst and having it expand and be even better than it is, but we have to figure out how to manage this flow of folks," Robinson said.