City banks on Stanford cash for major projects

Palo Alto City Council hopes to use $40 million in Stanford money on 'meaningful,' 'transformative' projects

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."

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Like this comment
Posted by Sam
a resident of Evergreen Park
on Jul 26, 2011 at 2:21 pm

How about a new public safety building?

Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 26, 2011 at 2:28 pm

If the City uses these funds to fund big, ambitious projects with visible, long-term impacts where will the money come from to operate and maintain such projects?

Like this comment
Posted by project
a resident of Monroe Park
on Jul 26, 2011 at 2:48 pm

pa is a place with great diversity,it can build a new modern place to show all the cultures around the world plus inviting other countries' companies or governments to use it to display their art work and we can set up commence around those unique occations,such as sell the foreign foods or foreign art work or toys.The point is to make it interesting and unique and constantly changing,i am sure it will sustain itself in the long run.If it does not go as planned we can sell property to any new google or facebook anytime,in pa property will only go up.

Like this comment
Posted by neighbor
a resident of another community
on Jul 26, 2011 at 3:31 pm

You opposed the SU Hospital because you said your limited transportation infrastructure couldn't handle any increase in traffic.

Will the PA projects you build/create also generate traffic? Of course.

Use the loot to fix your inadequate the transportation/circulation system.

Like this comment
Posted by center
a resident of Meadow Park
on Jul 26, 2011 at 3:44 pm

Art and music center in pa plus affordable child care center operated by city,building can be built on the outskirts of pa.

Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 26, 2011 at 3:52 pm

",building can be built on the outskirts of pa."
Sure, just like the hospital so that the burden of the traffic falls elsewhere but PA gets the benefits. I never cease to be amazed at the shear gall of some PA residents.

Like this comment
Posted by pat
a resident of Midtown
on Jul 26, 2011 at 8:57 pm

project: I can’t tell if you’re serious. Please tell me you’re not.

Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 26, 2011 at 9:05 pm

If Palo Alto spends a penny of these funds for anything not covered by their agreement with Stanford then I hope that Stanford will sue the City for the entire amount.

Like this comment
Posted by project
a resident of Monroe Park
on Jul 26, 2011 at 9:15 pm

What did the city sign?It just agreed to help standford to deal with the traffic,help them,nothing else.

Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 26, 2011 at 9:22 pm

"What did the city sign?"
The City signed a very specific agreement that detailed how much Stanford would pay for the 'privilege' of building the new hospital (in other countries this is called a bribe) and exactly what the City would do with those funds.

Like this comment
Posted by Mayfield Child
a resident of Green Acres
on Jul 27, 2011 at 2:00 am

OOOOOOOOO I can hardly wait to see what other folks are thinking...
I myself would like to see it go to investing in education and help for our Seniors..but that is not going to happen according to one prior poster on this feedback forum ~ as most Seniors will be dead within twenty years~ Poof, there goes the "investment".
Everyone has a pet idea~ " Let it roll " Post now.
The Brainstorming has begun.......................................!!!

Like this comment
Posted by Crescent Park Dad
a resident of Crescent Park
on Jul 27, 2011 at 3:48 am

Create an endowment and use the proceeds to mitigate the traffic and infrastructure costs of the new center. No pet projects, special interests, etc.

Like this comment
Posted by Fredric Lomack
a resident of Greenmeadow
on Jul 27, 2011 at 8:03 am

A priority of the city is emergency preparedness. A deficiency has already been identified with both the Emergency Operations Center and the public safety building.

With the goal of combining the administration of the police and fire departments, I vote for a new public safety building that would house the new EOC.

The population in this city has grown considerably over the last five years, how many additional officers were added to the streets in response? My neighborhood is getting slaughtered with burglaries.

Like this comment
Posted by 30-year resident
a resident of Greenmeadow
on Jul 27, 2011 at 11:19 am

Two possibilities: funds for putting CalTrain/HSR tracks below surface, which will considerably ease a number of train and traffic congestion problems; and help the school district create a great, state-of-the-art high school/middle school at Cubberley. Our community has always been known for its great education and our property values are in part a result of that.

Like this comment
Posted by neighbor
a resident of another community
on Jul 27, 2011 at 11:30 am

The money is not for a Palo Alto shopping/bldg. spree.

Stanford paid Palo Alto's ransom so that they could update the Hospital's facility to serve more patients in an up-to-date and seismically-safe medical environment.

They gave PA $$$ specifically to mitigate the potential traffic impacts that Palo Alto vociferously claimed.

Any other use would be fraudulent.

Like this comment
Posted by Bob
a resident of Community Center
on Jul 27, 2011 at 2:24 pm

I agree 100% with the previous comments re: the use of this $40M. This money was negotiated to use for solving the traffic and other problems that the new hospital will cause Palo Alto. It is not a 'sugar daddy' gift to be used for any and everything that Palo Alto high command decides what goodies it now wants to do. Help to solve the traffic problems - like putting in left turn traffic signals and University and Middlefield. Like paving the miserable streets in the north part of the city that feed into University Avenue. LIke getting rid of the Paly crossing on Embarcadero. Build a pedestrian overpass OR force the students to walk their well-sbod feet to El Camino or the RR path. Perhaps it is time to think about changing Embarcadero at the RR tracks from 3-lanes to four. But this $$$ was earmarked for a purpose and to do anything else with it is absolutely DISHONEST.

Like this comment
Posted by chris
a resident of University South
on Jul 27, 2011 at 2:50 pm

Palo Alto should support an internal transit system that integrates with Marguerite.

An integrated system would eliminate a lot of traffic going back and forth between the city, the university, the medical center, and the shopping center.

Is there any reason for a Palo Alto resident to drive to the west side of El Camino and is there any reason for a Stanford resident to drive to Palo Alto?

Like this comment
Posted by maguro_01
a resident of Mountain View
on Jul 27, 2011 at 5:12 pm

We live in very uncertain times. Increasingly companies will not invest money in the US because of its country risk. We have to be quite prudent in our everyday lives and so does Palo Alto (and Mountain View).

It is possible that a solvent Palo Alto will be a big ambitious project at some point. The hospital is not only a likely economic plus for Palo Alto, it may further export cutting edge services. If Stanford itself starts to export students and faculty at some point the hospital and medical education remain separately.

Utilitarianism defines morality as the maximization of net expectable utility for everyone though that need not include everyone. The Palo Alto Process defines morality as the maximization of net expectable real estate values for everyone though that need not include everyone. That is not the best use of Stanford's money.

Like this comment
Posted by pa-lease
a resident of Embarcadero Oaks/Leland
on Jul 28, 2011 at 10:39 am

palo alto senior officials/staff cannot manage money. the fiscal mismanagement has caught up with pa and their current financial desperation proves that. $40 million (donation, bribe, call it what you will) will be mishandled too. they will talk of which big project to do, which one benefits the community (ah-hum, I mean political career), then argue over it for a few years, then once the project is decided on 5 years from then, the $40M project will cost $120M due to increased market material and labor costs. This is not the first time nor will it be the last time since this thought process (or lack thereof) is the Palo Alto Way. You cannot have corporate thinking people run a local government agency. You cannot spend your public funded budget like you are a corporation with unlimited private funds. You MUST live within your means. Shall we address an old and current issue which is part of the problem that pa does not want to fix? What is the current ratio of managers to worker bees? Is it still 1:2.7? pa-lease. you might as well just start Foothills Park campfires with the $40M. At least the public could enjoy the money.

Like this comment
Posted by Charles
a resident of Midtown
on Jul 28, 2011 at 12:31 pm

How about using the money to keep our ever-increasing utilities rates down? A lot of people in Palo Alto actually aren't rich, and it has become a hardship. The utilities are used as a cash cow to make up for poor money management in the city budget. Whether we conserve or not, the rates keep going up. The city utilities were supposed to save money for residents -- not any more. How about giving us a break?

Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 28, 2011 at 12:38 pm

"How about using the money to keep our ever-increasing utilities rates down?"

That would violate the city's agreement with Stanford. These 'bribery' proceeds MUST be used to mitigate the adverse impacts of the hospital project.

Like this comment
Posted by pa parent
a resident of Green Acres
on Jul 28, 2011 at 11:17 pm

I would love to see the city take the money and plant seeds of future community and prosperity.

Palo Alto has been getting increasingly expensive and we're loving so many elements of community. We should try to buy a large warehouse/building/space and rent it out cheap to businesses and community groups that improve quality of life here -- let the bowling alley move there (hopefully the reduced rent would give them an incentive to invest in a new facility), have a community performance space (Palo Alto open mic?), a low-cost small business incubator space, classroom space for groups like Kidizens. It could be handled kind of like our community gardens are, only for indoor space and there would be rent, just lower than market so long as the applicants contribute to community.

The other possibility is to use it to build a facility for energy generation, and use the profit from that to fund efforts like above.

Like this comment
Posted by pa parent
a resident of Green Acres
on Jul 28, 2011 at 11:18 pm

Oops, little hopeful slip there.

I meant: Palo Alto has been getting increasingly expensive and we're LOSING so many elements of community....

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

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