Palo Alto mulls ending its lease of downtown transit center

City Council committee to consider Stanford's proposal to end long-standing agreement

A long-standing agreement between Palo Alto, Stanford University and the Santa Clara Valley Transportation Agency for the site around the downtown Caltrain station may soon come to an end, as all three agencies weigh new plans for the critical hub at the gateway between the city and the university.

The 2.8-acre site, which includes the depot building, is owned by Stanford and leased by Palo Alto under an agreement the two agencies reached in 1981 and is set to expire in 2033. The city, for its part, had subleased the site to the VTA, which has been managing the bus-transit center under an agreement that expired June 30, 2013, and that has continued on a month-to-month basis ever since. Renewing the lease would trigger a new appraisal of the property, which is expected to more than triple the rent for the depot site from the current rate of $160,000 per year to more than $400,000, according to a new report from the city's Administrative Services Department.

Now, all three agencies are considering a new arrangement. Stanford and the VTA have proposed cutting out the middle-man, Palo Alto, and signing a direct agreement. Under this proposal, VTA would use the depot without paying any rent while Stanford would assume all responsibility for maintaining and enhancing the site, which is currently VTA's domain. The city's involvement would be far less clear. Though Palo Alto would continue to wield power over the site's zoning (and thus would be able to veto any major new developments that don't comply with zoning regulations), it may see its already restricted influence over the site significantly diminish.

In the new staff report, which the City Council's Policy and Services Committee is set to discuss Tuesday night, March 25, city officials voice concerns that removing Palo Alto from the lease "might diminish our voice and leverage in issues related to the depot." This includes any consideration of a proposed "Arts and Innovation District," a concept that was first proposed by developer John Arrillaga in 2012. That plan, which initially proposed building four office towers and a performing arts theater at the current site of the MacArthur Park Restaurant, ran into a wall of public criticism and ultimately fizzled. Since then, city officials have been talking about putting together a new master plan for the site based on community input, but that effort has yet to take off.

Stanford, for its part, had supported Arrillaga's proposal for 27 University Ave. A frequent donor to Stanford, Arrillaga offered the development as a philanthropic venture, with his alma mater getting the revenues from office leases.

Given the uncertainty over the depot's future, the city's transportation staff had been reluctant to lose control of the central site, arguing that doing so would give Palo Alto less say on "planning decisions that may need to be made to advance improvements at the site related to transit," according to the report states.

"The work done on the Arts and Innovation District concept had heavily concentrated on improvements to the transit center, potential new road alignments, etc.," the report states. "Transportation staff initially had concerns that loss of 'control' of the site through our lease position might affect any grants we might pursue."

The report notes that the VTA "expressed understanding of the City's concern and did not press the matter," though the three stakeholders have continued to talk.

Now, city staff is recommending going along with Stanford and VTA's proposal and terminating both the lease and sublease agreements. In addition to bowing out of the arrangement, the city proposes signing a "memorandum of understanding" with Stanford and the VTA "regarding the city's participation and involvement for the planning for and future use of the Deport Transit Center, including potential use of passenger drop off areas for the Palo Alto shuttle services."

Simplifying the lease arrangement could help bring improvements to the site, according to the report, which calls the depot "one of the most frequently used on the San Francisco Peninsula."

"It is a major gateway to both Palo Alto and Stanford University, and therefore a significant local and regional transportation resource," the report states. "It is also a gateway to our community. Although the City and Stanford have a shared interest in improving and maintaining the facilities, the multiple agencies involved with various property controls have complicated the situation."

The report advocated making sure that "any savings created by simplifying the arrangement between Stanford and the VTA is used for maintenance and to promote a welcoming experience for users."

The proposed memorandum of understanding between the city, Stanford and the VTA would aim to further this goal. Staff is proposing entering into the agreement once the city finishes upgrading its Comprehensive Plan (under the current schedule, this would be the end of 2015) and "all parties are informed as how the transit mall and University loop are to be expanded to serve the current and future needs of the VTA, Marguerite and SamTrans."

Another alternative that Stanford has proposed and that the city's committee will discuss Tuesday is extending the existing rent for two more years, thus protecting the VTA from rising property values. The city's report states that Stanford had proposed this option "to allow some time for the City and its partners to continue to plan for improved transit use at the site and potential future improvements."

Palo Alto officials also noted that while there may be some concern about the city losing control over the site, the city's rights are based on a lease and are already "limited and narrow." They also stressed that even without a lease, the city can "exert influence" over the site through a memorandum of understanding between the three parties.


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Posted by Resident
a resident of Another Palo Alto neighborhood
on Mar 21, 2014 at 5:51 pm

How about using it for private shuttles.

What about a high speed bus service once an hour for SFO and SJC, it would be much easier dropping someone off here rather than driving them to the airport, or picking them up from here.

What about some high speed luxury buses for other smaller companies up and down the Peninsula.

What about some innovation in public transport.

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Posted by Jay Park
a resident of Mountain View
on Mar 21, 2014 at 8:03 pm

The problem with using the Palo Alto transit site for private shuttles is that there are few places for the shuttles to go. Facebook moved to Menlo Park, Google & Intuit are in Mountain View. As it stands now, the Palo Alto transit site probably has enough capacity for existing private shuttle needs.

The vast majority of Palo Alto's high tech startups are downtown, within walking distance and more quickly accessible by foot than by vehicular shuttle.

Also, the Palo Alto transit hub has no quick access to US-101, a key requirement for quickly reaching SFO or SJC, San Francisco or San Jose.

Mountain View is different as buses can get off US-101 at Shoreline and navigate to the downtown transit hub rather quickly, or head to the North Bayshore area (Googleplex, Intuit, etc.). That's why the private Google coaches from SF work.

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Posted by Anonymous
a resident of Another Palo Alto neighborhood
on Mar 21, 2014 at 11:11 pm

Smart move. Cutting out the "Palo Alto Way" from the management and development of this transit will shave years off any project.

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Posted by Crescent Park Dad
a resident of Crescent Park
on Mar 22, 2014 at 7:17 am

I predict "Measure D, Part II" will quickly surface if the PA CC, ARB or Planning comes remotely close to giving any height waivers for 27 University Ave.

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Posted by resident 1
a resident of Adobe-Meadow
on Mar 22, 2014 at 10:45 am

If PA eventually gets boxed out of the lease for the depot does that mean that our ABAG requirements are mute?

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Posted by OutOfTown
a resident of Menlo Park
on Mar 22, 2014 at 6:08 pm

That's "moot." Mute is what ABAG should be.

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Posted by WeNeedHousing
a resident of Downtown North
on Mar 22, 2014 at 9:36 pm

This site really needs to be zoned for some housing, particularly affordable housing. Our comprehensive plan calls out the transportation centers as the place for higher density developments and affordable housing needs resources, like Caltrain. Currently we have very little housing in our housing element in downtown. Let's meet our ABAG requirements and zone this area for some affordable housing

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Posted by resident 1
a resident of Adobe-Meadow
on Mar 22, 2014 at 9:59 pm

From what I am reading the train station is not going anywhere - they are just arranging a better way of financing it.
Also - I see a lot of housing in the north PA section around the train station. I tried to park there one time for Caltrain ride to the city and got a real appreciation for the number of apartments that are directly in that area. Also the lack of parking on the street for all of the apartments. When people say there is no housing I do not understand why they say that. The place is wall to wall apartments in that area.

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Posted by Wayne Martin
a resident of Fairmeadow
on Mar 23, 2014 at 4:08 pm

The issue of security needs to be brought into this discussion. For the most part, the San Mateo County Sheriff's Office is supposed to have jurisdiction on the Caltrain property, but the local police departments seem to respond to 911 calls. If the City is not being charging Caltrain, then it would seem that the PA taxpayers will get stuck with the cost of policing, or at least providing emergency response services, to this site without any direct compensation.

While the number of 911 calls generally are not very great at this site, they do happen, from time-to-time. There needs to be someway for Palo Alto to charge either Stanford, or Caltrain, for police activities if the City were to be removed from having any financial interests in the site.

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Posted by question about affordable housing
a resident of Another Palo Alto neighborhood
on Mar 23, 2014 at 4:47 pm


"This site really needs to be zoned for some housing, particularly affordable housing."

Maybe stupid question, but is there tax revenue from affordable housing?

How does that work out for the city? Do people buy or rent affordable housing in Palo Alto, and once a unit is built, it's a gift to that resident? understand there is a feel good effect about housing a few people for a price which could help erradicate hunger in a few underdeveloped countries, but anything else?

Instead, I would think it would be preferable to have a golden goose of sorts, like in Monopoly with Park Place. Have really expensive housing turnover on premium real estate (across the Stanford Shopping Center). That would provide revenue for schools and so forth. This could then maybe actually provide money to support the affordable housing which currently nobody can afford anyway.

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Posted by question about affordable housing
a resident of Another Palo Alto neighborhood
on Mar 23, 2014 at 4:51 pm

Actually, if Stanford owns the site, maybe there is no revenue from it anyway?

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Posted by resident 1
a resident of Adobe-Meadow
on Mar 25, 2014 at 8:44 pm

All housing on Stanford property is reserved for either students or employees of Stanford. Stanford is doing a great job on adding housing - all new on Stanford Avenue and Sand Hill Road. They are doing well on their ABAG requirements.
Given what I have seen in North PA along the transit route (Caltrain) there is no available space. You cannot take down the existing apartment houses in that area. Driving around that area I see "for rent" and "for lease" signs. "We Need Housing" needs to go down to the El Camino / Park quadrant which has many older apartment houses with "for rent signs". PA is not going to tear down buildings they do not own when there is available space within the city.

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Posted by resident 1
a resident of Adobe-Meadow
on Mar 26, 2014 at 2:22 pm

What I have found out is the rules for renters vs owners have been changed. In the case of low cost housing if you have an older couple sign up as the renter - they get sick, and children come in to help - if the children are there for a specific period then they become the official renters though their name is not on the original lease. A family could hand down the apartment through attrition of family members.
I think this is what would have happened in the Maybell property for older people.
This happened to my cousin who has some rental properties.
So the next one that is built - low income, older people, there needs to be a clause in the contract that precludes family members assuming ownership of the apartment from the original family tenents.
I have not said this well as I am unclear on the specifics - I just know that my cousin was stuck in a bad situation with bad children occupying a property - a lot of legal action involved.

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

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