Editorial: What to do with $40 million?

Stanford money tied to approval of hospital expansion will require disciplined process by Council and the community

The Palo Alto City Council and administration set the stage Monday for what we hope will be a serious and productive discussion about how to bring the most benefit to the city from the $40 million that will begin flowing from Stanford later this summer.

The task is both exciting and daunting, and judging by the discussion at Monday night's meeting, most council members appeared appropriately circumspect by the responsibility to decide how this money should be invested or spent.

There was no talk of pet projects or other specific ideas, like the funding of a new police station, which was put on hold two years ago due to fiscal constraints. Instead, council members focused on the yet-to-be-defined process for deciding how to utilize the funds.

Although no formal vote was taken, comments suggested that the council will be looking for a project or projects that will bring visible, long-term impacts to the city. And even though the city faces substantial budget-balancing challenges in the coming years, no one was suggesting using the Stanford money as a means of avoiding cuts in services.

City Manager Jim Keene wisely recommended that the council proceed "methodically and cautiously" as they look for ways to leverage the funds into "transformative investments" for the community. The council's Policy and Services Committee and its Finance Committee will be the starting points for the discussion, according to Keene.

The only concrete action taken Monday was to direct Mayor Sid Espinosa to appoint two members to an advisory committee that will include two Stanford officials. The panel will advise the council how to spend $4 million that was specifically allocated for community health programs in the city's development agreement with Stanford, with the expectation that $2 million would be used to support Project Safety Net, the community collaborative formed in response to recent teen suicides.

Stanford's money will come in phases, starting with $15.7 million this year, which includes the $4 million for the community health safety programs, $7.7 million nominally dedicated to infrastructure and affordable housing and $4 million for sustainability programs, although the city is free to use the funds for whatever it chooses.

A second payment of $11.7 million is due next year with the funds allocated to the same categories. The final $11.7 million payment will not be received until January 2018.

During the discussion, several members were eager for details on how the work of the council's two committees would be managed and differentiated. Some potential uses for the funds might lend themselves to the Policy and Services Committee, while others, like infrastructure, might be more appropriate for the Finance Committee. City Manager Keene urged members to be patient as his staff develops more detailed recommendations for how the council should proceed.

We would urge the council to resist the temptations to begin spending these funds until the hospital construction is complete and the traffic and other impacts are fully realized. While not bound to use these funds to mitigate the direct impacts of the expansion of the adult and children's hospitals, the purpose is to make the city "whole" on costs that it will incur when the project is complete. Transportation needs and concerns should be at the top of that list.

Some council members, including Greg Scharff, want to make sure that the funds be used on projects that are "meaningful" and "transformative" and have at least a 20-year lifespan.

Mayor Espinosa said he will be looking for projects that have "real impacts that Palo Altans will notice, whether it is traffic or biking in particular that really have some connection to the (hospital) project and really are noticeable in their lives."

Palo Alto might be wise to take a lesson from Mountain View, which recently received a $30 million advance rent payment from Google and grappled with what to do with it. At first the city toyed with spending a portion of the funds to balance this year's budget, but in the end decided, at least for now, to bank the money and spend only the interest of about $1 million a year.

That would be a wise parameter for the council to impose on itself and the community as this unusual process begins.

What is community worth to you?
Support local journalism.


Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 29, 2011 at 10:18 am

Why no mention of using some of the money to improve public transit. Improve the shuttle service around town, particularly for school children and to interact with Caltrain. Don't make it a free service, but make it comprehensive.

Like this comment
Posted by Judith
a resident of Leland Manor/Garland Drive
on Jul 29, 2011 at 10:38 am

We have a huge infrastructure backlog, including a long-stalled utility undergrounding project. I don't think the money should be spent on high-profile sexy projects, transformative or not. I think we should catch up on the backlog and then think about new things.

Like this comment
Posted by EPA Resident
a resident of East Palo Alto
on Jul 29, 2011 at 10:52 am

Hey Stanford, why not expand into East Palo Alto instead! We could really use $40 million here. That is about twice the entire discretionary budget for the whole city.

Like this comment
Posted by KP
a resident of South of Midtown
on Jul 29, 2011 at 1:22 pm

I still say the city should help finish the Magical Bridge project. They are doing fundraisers to get money, why not just finish it off for the community!

Like this comment
Posted by Bill
a resident of Barron Park
on Jul 29, 2011 at 3:39 pm

Spending money you didn't earn can lead to hasty decisions. I think Mt. View chose the best path in the short run.

After the dust settles in a year or two it will be easier to make meaningful choices to improve our City. There will be too many people clamoring to spend the money on their pet projects.

Like this comment
Posted by Aram James
a resident of Barron Park
on Jul 29, 2011 at 6:39 pm

[Post removed by Palo Alto Online staff.]

Like this comment
Posted by Don
a resident of Duveneck/St. Francis
on Jul 29, 2011 at 9:46 pm

Aw. C'mon. At least leave the gist of Mr. James screed up. He can be very entertaining.

Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Jul 30, 2011 at 5:10 am

Walter_E_Wallis is a registered user.

Give it back!

Like this comment
Posted by Stan
a resident of Downtown North
on Aug 2, 2011 at 7:27 pm

Use it to build a tunnel between Stanford and 101. OK, that will take more than $40 million, but for such a direct benefit Stanford can use their influence with Washington and Sacramento to get fed and state funds.

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

All your news. All in one place. Every day.

DoorDash is opening a shared delivery kitchen in Redwood City. What does that say about the future of the restaurant industry?
By Elena Kadvany | 9 comments | 2,944 views

What did you learn last week?
By Sherry Listgarten | 11 comments | 1,696 views

The holiday season
By Cheryl Bac | 2 comments | 663 views

Bond. Bond Touch.
By Chandrama Anderson | 0 comments | 654 views