Palo Alto officials are just starting the long process of allocating about $40 million that the city is scheduled to receive from Stanford University Medical Center. But the City Council agreed Monday night the funds should not be used to balance budgets but rather to fund big, ambitious projects with visible, long-term impacts.
The money, which Stanford agreed to provide in order to get the city's permission for a major hospital expansion, is scheduled to come in three installments, with the first, $15.7 million installment due later this summer. The council kicked off what promises to be a long process of allocating the funds when it directed Mayor Sid Espinosa to appoint two council members to an advisory committee. The committee, which will also include two Stanford officials, is charged with determining how to spend $4 million allocated for community health programs.
In addition to this $4 million, Stanford is also slated to provide $23.2 million for "infrastructure, sustainable neighborhood and affordable housing" and $12 million for initiatives relating to climate change.
The city in July approved Stanford's Renewal Project for its hospital facilities, which will exceed the city's zoning code and has been commonly described as the "biggest development project in the city's history" -- a 1.3 million square foot expansion.
Though the city continues to face years of projected budget deficits, council members and City Manager James Keene said Monday night that the Stanford money should not be the answer to Palo Alto's short-term fiscal woes. Instead, Keene advised the council to proceed "methodically and cautiously" in considering how to leverage the funds into "transformative investments" in the community.
Keene said it's too early to discuss what exactly the funds would be spent on, except for the $2 million that the council has already agreed to use to support Project Safety Net, the city's effort to promote youth well-being. This week's discussion focused not on specific items that the money would fund but on the process the city will use for allocation. The council's Policy and Services Committee and its Finance Committee are expected to be heavily involved in this process in the coming years.
"This is a lot of money that needs to be handled in a responsible and thoughtful way," Councilwoman Gail Price said Monday. "I think it will be an incredibly important discussion."
But while the Monday discussion was short on specifics, council members made it clear that they want the funds to be used for ambitious, long-term investments.
Councilman Greg Scharff said the funds should be used on projects that have at least a 20-year horizon. He specified that the money should not be used as a "stop-gap measure" and agreed that the projects should be "meaningful" and "transformative."
"We want to make sure we don't fritter it away on small things that don't have a lot of impact on our community," Scharff said.
Espinosa agreed and said the money should be used for projects that have "real impacts that Palo Altans will notice, whether traffic or biking in particular, that really have some connection to the project and really are noticeable in their lives."
"It's unusual that we get this sort of influx, so it's something we could really see as a benefit to the community," Espinosa said.
The council also agreed that some of the money from Stanford should be sequestered as an endowment and used to accrue interest. This includes the funds Stanford is providing to the city to ensure "cost neutrality" for the hospital project.
Vice Mayor Yiaway Yeh said Monday that he supports a staff recommendation to use some of the funds for an endowment.
"It makes a lot of sense," Yeh said. "It creates additional sources of revenue for additional needs in our community."