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Palo Alto, Stanford split over hospital expansion 'revenue guarantee'

Stanford offers upfront payment; city wants explicit guarantee that project won't hurt its finances

Palo Alto and Stanford University remain at odds over whether Stanford should guarantee that its massive hospital expansion doesn't hurt the city's bottom line.

The question of "revenue guarantee" is the lone obstacle standing in the way of a development agreement that would pave the way for Stanford's proposal to add 1.3 million square feet of development space to the city. Because the project far exceeds the city's zoning regulations, Stanford is expected to provide a variety of community benefits to get the green light. The university has already agreed to provide $4 million for community health programs, $12 million for programs relating to sustainability and $11 million for various transportation improvements.

The university also agreed to buy Caltrain Go Passes for all hospital employees -- an offer that Stanford says raises its "community benefits" package to $173 million. Some city officials see the Go Pass benefit as a mitigation Stanford is required to provide to get the environmental clearance for the project rather than a benefit that needs to be included in the development agreement.

At Tuesday night's (March 15) discussion of the City Council's Finance Committee, both sides said that they have reached an agreement on everything but revenue guarantee. Stanford has offered a $1.7 million upfront payment to cover the operating deficit projected by the city's economic consultant, ADE.

The school had previously offered a $1.1 million payment. Mike Peterson, Stanford's vice president for special projects, said the university will also make sure that the permits, use-tax direct payments and sales-tax payments "maximize to the city the tax revenues that it needs."

The Finance Committee also heard from several city residents who urged city officials to green-light the project, which includes a new Stanford Hospital & Clinics building, an expansion of the Lucile Packard Children's Hospital and renovations to several Stanford School of Medicine buildings.

Environmentalist Walt Hays, co-chair of the group Friends of Stanford Hospital and Clinics, argued that Stanford has offered more than enough benefits to merit approval for the project.

"Here's Stanford now offering to pay upfront the worst case, even though the worst case may never occur," Hays said. "It seems to me they're being generous."

Developer Charles "Chop" Keenen went a step further and said the city is trying to "shake down the university for guaranteeing this theoretical deficit."

Palo Alto City Manager James Keene stressed that the city isn't looking to make money but merely to recover the potential costs of the project. He said staff remains open to exploring other models for guaranteeing these costs.

"The city staff has absolutely no interest in profiting through the fiscal-impact analysis," Keene said. "We just need to ensure that if there's a cost generated by the project on the city that they're offset by revenues, however it is we're calculating them, over the life of the project."

Committee members agreed that the development agreement should include provisions for guaranteeing the project's potential costs. Vice Mayor Yiaway Yeh said he is open to considering various alternatives to achieving cost neutrality. Chair Greg Scharff said Stanford should at least offer to "share the risk" of these costs with the city and asked university and city officials to go back to the negotiating table.

"I would look forward to you coming up with something together that you can recommend to us, where you're all on the same page," Scharff said. "I'm sure you guys can do it."

Comments

Like this comment
Posted by Scam-Scam-Scam
a resident of Another Palo Alto neighborhood
on Mar 17, 2011 at 9:54 am

> its "community benefits" package to $173 million. Some city
> officials see the Go Pass benefit as

About $92M of this "community benefits" package is tied up in GO Caltrain passes. This is guaranteed over about 50 years. There is no requirement that any Stanford personnel who currently drive, or who might drive in the future, will be required to use Caltrain. The impacts of this "benefit" can not be easily estimated, since all participation in this program is "voluntary".

This part of the "package" is just ONE BIG SCAM!!!



Like this comment
Posted by svatoid
a resident of Charleston Gardens
on Mar 17, 2011 at 10:21 am

Let another round of Stanford bashing begin

Scam-scam-scam:
I think if you look at the percentage of Stanford employees that carpool, vanpool, use public transportation and other means to getto work you will see that the percentage is far greater than any entity in the area.
If Palo Alto has a problem with traffic, then maybe they need to go after the other employers in town (Stanford Shopping Center, California Avenue businesses, University avenue business, Fry's etc) to do something about the large number of people that drive to work.
I agree with Mr Keenan that this another "shake down" attempt by the council--this continues the tradition of Stanford bashing and attempts to milk Stanford for money that started with Kishimoto, Drekmeier and Morton.
Considering the earthquake in Japan, I am shocked that the city is against a state of the art hospital that is earthquake sound that will be essential when the big one hits us.


Like this comment
Posted by Scam-Scam-Scam
a resident of Another Palo Alto neighborhood
on Mar 17, 2011 at 10:51 am

> I think if you look at the percentage of Stanford employees that
> carpool, vanpool, use public transportation and other means to getto
> work you will see that the percentage is far greater than any entity
> in the area.

So what? Care to provide an actual number? And what does this car pooling have to do with future payments to Caltrain by Stanford--all the while calling these payments a "public benefit"?

Are you claiming that if you had free Caltrain passes you'd use Caltrain instead of your car? If not--what are you saying?

(Of course, Stanford could buy you folks cars and gasoline .. and they could call that a "public benefit" also.)


Like this comment
Posted by svatoid
a resident of Charleston Gardens
on Mar 17, 2011 at 11:03 am

Scam-scam-scam:
"So what? Care to provide an actual number?"
Web Link
"Stanford University maintains a purchasing policy that encourages procurement of green products. Over half of Stanford’s off-campus employees carpool, use public transit, bicycle, or walk to work. And forty percent of Stanford’s food service uses organic or regionally grown produce. "

"And what does this car pooling have to do with future payments to Caltrain by Stanford--all the while calling these payments a "public benefit"?"
Sorry that you do not get the big picture. If you do not think helping keeping Caltrain in business is a public benefit, then......


"If not--what are you saying?"
it is pretty clear what I am saying---Stanford does more than any local employer to cut down on traffic (which is one of the major concerns from Palo Alto), Stanford is providing big bucks to help mitigate the construction of the hospital. Stanford has been a victim of extortion by city officials who seem to think that it is a money machine that can be used to correct the financial incompetence of city officials. Stanford has also been a leader in green technology (which is another big issue in Palo Alto). That is what I am saying. That fact that PA will have a world class hospital in it's backyard is a major "public benefit".
This constant complaining about Stanford being the "evil empire" has gotten stale.
That is what I am saying


Like this comment
Posted by Sally
a resident of Duveneck/St. Francis
on Mar 17, 2011 at 11:10 am

Hey, share some of that revenue with me. I'm wasting all that gas waiting for a break in traffic to be able to back out of my drive-way now!

Maybe Stanford could entertain all the backed-up traffic jams with some educational video billboards.


Like this comment
Posted by svatoid
a resident of Charleston Gardens
on Mar 17, 2011 at 11:18 am

"Hey, share some of that revenue with me. I'm wasting all that gas waiting for a break in traffic to be able to back out of my drive-way now!"
Where exactly is this area where you cannot back out of your driveway???


"Maybe Stanford could entertain all the backed-up traffic jams with some educational video billboards."
Why do you blame Stanford for traffic jams? Don't people come into Palo Alto for other purposes other than Stanford--after all we have the Destination Palo Alto promotion ongoing.


Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Mar 17, 2011 at 11:34 am

Stanford is the goose that laid the golden egg.
Palo Alto without Stanford would be just another peninsula community with very little commercial property (no Research Park that is for sure).

Having the Stanford Hospital in your backyard is something that most communities would pay for - not try to extort money from.

Imagine Palo Alto without Stanford (and all the very positive and important things it has brought to PA) and the Stanford Hospital (how far to Sequoia or El Camino when your having a heart attack?) and then count your blessings.


Like this comment
Posted by Casey
a resident of Midtown
on Mar 17, 2011 at 12:04 pm

After seeing the tragedy unfold in Japan, we should all realize the benefits--yes benefits--that we all share by having a world-class hospital right in our own backyard. While I'm sure that Stanford prefers that a new hospital be located on campus, it doesn't necessarily have to be that way if Palo Alto continues to overplay its hand. The community benefits of a local hospital is the lives of our friends and family members that have been saved, not Caltrain passes.


Like this comment
Posted by Scam-Scam-Scam
a resident of Another Palo Alto neighborhood
on Mar 17, 2011 at 12:11 pm

> it is pretty clear what I am saying---Stanford does more than
> any local employer to cut down on traffic

1) That's because it is the largest employer, and traffic magnet, in the this end of Santa Clara County.

2) If it did not do as much as as it does, there might be a "revolution" on its hands by people living around the U.

3) It has not modeled its traffic impact, so that we can fully understand the impact, or the mitigation efforts.

BTW--you have managed to make a couple of claims about traffic mitigation that require a lot of data. Care to cite your sources?

But back to the issue at hand. What does this have to do with the $92M "gift" to the financially mismanaged, and otherwise almost useless, Caltrain being a "public benefit" to Palo Alto?

Any chance you can actually participate in this discussion without throwing a lot of smoke in our direction?

Stanford has recently been quoted about its possibly opening a "campus" in NYC. Hopefully Stanford will begin to see that growth needs to be elsewhere than in Palo Alto. It could also begin to think about building access road(s) on its lands, that would connect to Highway 280, thereby reducing the actual traffic on our public roads.
Stanford might consider building a remote parking lot over near the Dumbarton Bridge, and run shuttles back/forth during the peak traffic hours to help take some of the load off the bridge, and local streets, too.

There are many things that $92M could do that would reduce the load on our roads/streets from this hospital expansion, and other growth-related activities being planned on the Stanford lands.


Like this comment
Posted by svatoid
a resident of Charleston Gardens
on Mar 17, 2011 at 12:24 pm

"Stanford might consider building a remote parking lot over near the Dumbarton Bridge, and run shuttles back/forth during the peak traffic hours to help take some of the load off the bridge, and local streets, too."

STANFORD already runs a series of shuttle buses during the day that go to the east bay.Another example of Stanford doing more than it's share to deal with traffic issues.

"BTW--you have managed to make a couple of claims about traffic mitigation that require a lot of data."
As I am sure you know SC county monitors Stanford traffic a number of times a year, since is limited to the number of car trips it can have.

"1) That's because it is the largest employer, and traffic magnet, in the this end of Santa Clara County."
When Sun and HP had a very large presence in PA, where they required to mitigate traffic like Stanford does?

"But back to the issue at hand. What does this have to do with the $92M "gift" to the financially mismanaged, and otherwise almost useless, Caltrain being a "public benefit" to Palo Alto?"
Well, this issue you need to take up with the city officials, since the article clearly states:
"The university also agreed to buy Caltrain Go Passes for all hospital employees -- an offer that Stanford says raises its "community benefits" package to $173 million. Some city officials see the Go Pass benefit as a mitigation Stanford is required to provide to get the environmental clearance for the project rather than a benefit that needs to be included in the development agreement."
If you do not believe it is a real benefit, then let the councilmembers know.


"Any chance you can actually participate in this discussion without throwing a lot of smoke in our direction?"
Feel free to disagree with my comments. Obviously your belief that I am "blowing smoke" precludes having a discussion with you


Like this comment
Posted by Scam-Scam-Scam
a resident of Another Palo Alto neighborhood
on Mar 17, 2011 at 12:25 pm

> After seeing the tragedy unfold in Japan

What's going on in Japan at the moment is both instructive, and possibly misleading. In a couple of the videos, the local hospital was the only building that survived the tsunami, and provided a place of safety on its roof for people who were not otherwise able to leave the area. However, with the power, and telephones, and general support system of the local community gone, these hospitals ended up being just "tall buildings" after the tsunami's water returned to the sea.

What about locally? Will Stanford's new hospital be able to withstand a San Andreas-sized Tsunami (maybe 100 feet high)? Well, only the disaster planners know for certain. Or will the Hospital survive a 100MT bomb? Or what about a biological attack--say from a well-crafted weaponized Anthrax attack? Well .. we'd all like to hope so .. but what are the realities?

The reality is that short of a 9-10M (Magnitude) quake, there really are not a lot of natural disasters to which we (as a community) are likely to be subjected. So .. to what extent will Stanford's hospital ever be used in a man-made "catastrophe"? Will it be able to serve say 10,000 people in a day? In a week?

The disaster in Japan should be forcing us to ask about whether or not we (as a region) are prepared for this sort of thing. Hospitals will not feed us, nor will they provide much in the way of shelter, fuel, or power. Wouldn't it be better to not genuflect to this new hospital as "our savior" and begin to plan in earnest for what kinds of needs we (as a region) will have if a "Japan-style" catastrophe befalls us?


Like this comment
Posted by Scam-Scam-Scam
a resident of Another Palo Alto neighborhood
on Mar 17, 2011 at 12:34 pm

> As I am sure you know SC county monitors Stanford traffic a
> number of times a year, since is limited to the number of car
> trips it can have.

It's not clear that SCC really does what you claim. And even if they did, where is the data? On a publicly-accessible WEB-site? Regardless, Stanford is not keeping track of its own traffic. This could easily be done with some inexpensive microwave traffic counters.

> since the article clearly states ..

What the article does not clearly state is: "whose idea was it?"

> Well, this issue you need to take up with the city official

Been there, done that.

> Obviously your belief that I am "blowing smoke" precludes
> having a discussion with you

The original point is that there is no evidence that current/future employees would actually use these passes in such numbers that traffic in Palo Alto would be diverted from our streets to the Caltrain tracks. So far, no evidence to support Stanford's claim that this is a "public benefit" has been presented. Hence .. the "smoke", not conversation.



Like this comment
Posted by svatoid
a resident of Charleston Meadows
on Mar 17, 2011 at 12:42 pm

"It's not clear that SCC really does what you claim. And even if they did, where is the data? On a publicly-accessible WEB-site? Regardless, Stanford is not keeping track of its own traffic. This could easily be done with some inexpensive microwave traffic counters."
SCC does indeed monitor traffic. I see them a few times a year when I am leaving work. Please provide a link that Stanford does not keep track of it's own traffic. I think they do.
Where is the data--I do not know. Contact SCC for the info.

"What the article does not clearly state is: "whose idea was it?""
Then you need to contact the city officials/manager and find out.


"So far, no evidence to support Stanford's claim that this is a "public benefit" has been presented. Hence .. the "smoke", not conversation."
As the article states, the city sees it as a public benefit. The city calls it a "public benefit". You need to argue this point with them, not claim that I am blowing smoke because I use the label that the city uses .As previously indicated a large number of employees use public transportation and other means. Stanford is doing a good job mitigating traffic concerns. Unfortunately, nothing satisfies some people in Palo Alto.

As others have stated, having the hospital here is a huge public benefit. too bad some people do not see it that way.


Like this comment
Posted by Agree with svatoid!!
a resident of University South
on Mar 17, 2011 at 12:54 pm


Scam-Scam-Scam looks like he/she has an axe to grind. I agree that Palo Alto without Stanford is nothing. I wish we could actually test that theory. While I actually enjoy living in this area, I get very frustrated with Palo Altans who feel so special and entitled somehow. I don't like the condescending attitude of many people in this community who don't know how things really work - and don't want to.


Like this comment
Posted by Tired of Palo Alto Negatude
a resident of Palo Verde
on Mar 17, 2011 at 1:16 pm

Folks, here we go again.

Stanford Hospital is fabulous, and yes, the city officials are guilty of extortion.

Shame shame shame. Not only do the university and hosptial provide attractive opportunities for jobs, but they provide Palo Alto with a level of worldwide recognition for premiere education and health care that are hard to match. Honestly, put a price oh that!!

God Forbid Stanford actually decide to expand elsewhere, then what would the local real estate agents sell??


Like this comment
Posted by Sheri Furman
a resident of Midtown
on Mar 17, 2011 at 1:50 pm

Some, but not all of Stanford’s providing GO passes may be considered altruistic. However, reducing traffic is also required by its General Use Permit. See Web Link and Web Link.


Like this comment
Posted by Agree with tired
a resident of Downtown North
on Mar 17, 2011 at 4:20 pm

totally agree with "Tired of Palo Alto Negatude" In case you Palo Alto ostriches out there have missed it- Stanford Hospital has been "farming out" offices to Menlo Park and Redwood City (you DO drive on the 101? Or maybe Middlefield road @ Willow?) As for those who seem to feel that Stanford does nothing but inconvenience their daily commute. Stanford has given the world a lot. Anyone in your family ever have radiation therapy? First treatments were at Stanford. Sun microsystems. SUN = Stanford University Network. The list goes on and on. (we'll ignore the Condi rice contribution :-) Good thing you guys weren't around complaining about traffic when Leland Stanford decided to found his University here. We'd all be living in caves.


Like this comment
Posted by Southern resident
a resident of Greendell/Walnut Grove
on Mar 17, 2011 at 4:37 pm

I love how things get twist by both sides here. Stanford has little choice SCC has basically prohibited them from developing on there land because of the impact and failure to remedy past projects. The reason they come to Palo Alto is that part of there land is governed by Palo Alto and not the county so they see this as a way to get around the zero growth policy of the county. If they were being held to zero trip increase as the county wants none of this would happen.

Palo Alto has a bunch of loonies that think you can open a middle schools, an elementary and a private school on a road, while almost double the size of a high school without having any traffic increase. And the insanity of trying to shrink Arastradero and Charleston to 1 lanes line this has happened convinces me that those in control live in an alternate universe.

It is not shaking Stanford down to ask that the cost of their growth not have a negative impact on the community. That is the simple issue here, and I am glad they are insisting on making sure it does happen. Stanford loves to close and fence property so people will not be able to see its growth. It wants to grow regardless on the consequences and will do so as cheaply as it thinks it can get away with. All of the growth in the last 20+ years I have live here has been concentrated in Palo Alto, because the county control of the unincorporated land has blocked them. The county doesn't make deals, it requires zero trip increase. Whether you are concerned about the environment, or quality or life, commute times, or just an advocate for intelligent growth requiring them to cover the cost of their growth is not unfair or shaking them down.


Like this comment
Posted by peter carpenter
a resident of Atherton
on Mar 17, 2011 at 5:08 pm

peter carpenter is a registered user.

If Stanford's land were part of Palo Alto and had been developed to the same density as Palo Alto (1,170.3/mi²)there would be 14,958 additional homes and less than 10% of the open space that currently exists on the Stanford land.

No one other than a single property owner such as Stanford would have been capable of creating either the Research Park or the Shopping Center and the revenue streams which flow from them.

Count your blessings.


Like this comment
Posted by Get religion
a resident of Barron Park
on Mar 17, 2011 at 6:25 pm

Palo Alto would be ZERO without Stanford. Some people are so clueless.


Like this comment
Posted by sigh
a resident of Downtown North
on Mar 18, 2011 at 7:59 am

I think it somewhat humorous to read all your comments and when you are the same batch of people reading the Professorville permit changes and saying that property owners should be able to do what they want with their property. Want to build a MacMansion- go ahead! heck build 2 or three. Are you a home owner with more than 1 car- that's ok- feel free to part them where ever you like and drive them when ever you like. So why is Stanford so different?


Like this comment
Posted by JP
a resident of Midtown
on Mar 18, 2011 at 8:11 am

People, people, people... is it me or has the shallow alto syndrome becoming even more widespread ?

Stanford Hospital is a major benefit, not a drawback to PA. Of all the things to do a NIMBY on for any reason, the expansion of a world renowned hospital should not be the first on my list.

There are so many other communities, that only wished they faced this non-problem and who would rush to welcome this expansion with open arms.
Be thankful for this opportunity to have such a great hospital in your neighborhood !


Like this comment
Posted by B
a resident of Charleston Gardens
on Mar 18, 2011 at 10:17 am


Stanford hospital clinically way underperforms UCSF. They are researchers first and foremost.
Now I am happy some university is doing this. It is important. But I do think that there is a ton of insincerity about the hospital development.

IT IS NOT for the city. IT IS NOT for the local community. Its going to mess up the traffic really badly. It is for research. That is a good, but at least be honest about it.


Like this comment
Posted by Crescent Park Dad
a resident of Crescent Park
on Mar 18, 2011 at 12:27 pm

Folks, it's called "give and take"...aka negotiations.

Both parties are going to try and get more than their fair share with their initial proposals. Then the negotiations start and the two parties find a middle point of agreement.

Take away the emotions and let them figure it out.


Like this comment
Posted by svatoid
a resident of Charleston Gardens
on Mar 18, 2011 at 12:41 pm

"Folks, it's called "give and take"...aka negotiations."

It seems to me that it has been pretty one-sided with Stanford doing all the giving and Palo Alto doing all the taking.
Reminds me of when this was first proposed, a former city councilmember ,who is remembered more for his/her witty one-liners rather than any accomplishments, said that it was like swallowing a bowling ball having to deal with this project--thus the "negotiations" got off to a wrong start.


Like this comment
Posted by Mike
a resident of Crescent Park
on Mar 19, 2011 at 12:23 pm

Not clear on this issue what is right or wrong or fair or not. There may be give and take along the way, but in the end it is almost certainty Stanford will get pretty much what they want.

Time after time over the years Stanford's superior negotiating skills and strategy have won out over Palo Alto's mostly amateur efforts.


Like this comment
Posted by sigh
a resident of Menlo Park
on Mar 19, 2011 at 12:37 pm


Scam-Scam-Scam:
> It's not clear that SCC really does what you claim. And even if they
> did, where is the data? On a publicly-accessible WEB-site?
> Regardless, Stanford is not keeping track of its own traffic.

Oh, come on. It's not that hard to find the data:

Web Link


Like this comment
Posted by repetition
a resident of Crescent Park
on Mar 21, 2011 at 1:25 pm

"$11 million for various transportation improvements."
Does College Terrace really need another $11 million worth of traffic improvements?


Sorry, but further commenting on this topic has been closed.

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