News

Palo Alto eyes reforms after transparency gaffes

City looks to revise rules on closed sessions, sales of city property

A week after Palo Alto officials offered public apologies for their secret and ultimately ill-fated negotiations with developer John Arrillaga, they took a step toward making sure similar blunders won't happen in the future.

By a unanimous vote, the City Council on Monday night directed its Policy and Services Committee to vet a series of possible reforms to the way the Council conducts closed sessions, deals with donated land and considers major development applications that require zone changes. The committee, which is composed of council members Gail Price, Greg Scharff, Greg Schmid and Larry Klein, will discuss these changes and then return to the full council for formal adoption.

The changes are the prime component in the city's response to a scathing audit that the Santa Clara County Grand Jury released in June. The audit found that the city disregarded several of its own policies and "failed to meet expectations of transparency" with respect to its negotiations with Arrillaga in 2012.

The negotiations focused on two subjects: Arrillaga's plan to build an innovation and arts district composed of a theater and four high-risers near the downtown Caltrain stations and his offer to buy a 7.7-acre parcel of undeveloped, city-owned land next to Foothills Park. Though both offers ultimately fell through, the Council continues to face a community backlash for its behind-the-scenes dealings with the billionaire developer. As the Weekly learned through a public-records request, negotiations over the downtown development included private meetings between Arrillaga, city staff and individual council members.

Equally unpopular was the Council's decision to discuss the sale of the 7.7-acre parcel in a closed session, with no public involvement. The parcel, which the Lee Family Trust donated to the city in 1981, is required by deed to be used for "conservation, including park and recreation purposes." Last month, the Council voted to officially annex it to Foothills Park.

The Council on Monday acknowledged for the second time in as many weeks its numerous mistakes in the 2012 negotiations with Arrillaga. It also approved a letter of response to the Grand Jury document -- a revised version of the draft penned by staff a week ago. Over the past week, a committee composed of council members Pat Burt and Greg Schmid has been revising the response letter and finalizing a list of reforms that the Council's committee will consider.

"I don't think there's a dispute that we had a significant failure in our process," said Burt, who last week led off the Council's procession of public apologies.

The revised letter notes that the city "should obtain early input from its constituency about significant development proposals before allocating city funds to the proposals." It calls early input "critically important" and states that the city has made "substantial efforts" in the past year to involve the public in planning matters in "more vigorous ways." It also notes that the council has directed its committee to consider a policy that "any major zone change must come to Council for a public pre-screening."

The committee will also consider revising the city's policies on unsolicited offers to purchase city-owned land, including additional guidance and clarity for dealing with such offers.

"It does show clearly the Council's responsibility for doing something on its procedures and policies that would deal with some of the issues brought up," Schmid said of the letter to the Grand Jury.

During the Monday discussion, council members proposed two more reforms for the committee to consider. Councilman Greg Scharff recommended another policy for the committee to consider, one that would require the Council to take a public vote before agreeing to discuss an item in a closed session. The closed-door discussions, which are currently set by the city manager and which frequently pertain to litigation, property negotiations and labor contracts, currently don't require a vote. Scharff said changing that would make the closed sessions "a conscious decision" and give the public a better understanding of why the Council needs to hold the closed-doors discussions.

"There's a lot of stuff we talk about that can be open to the public," Scharff said.

Mayor Nancy Shepherd agreed and said she feels there are times "when we need to bring the community along."

Councilwoman Karen Holman, meanwhile, suggested taking a fresh look at an existing policy that gives the city manager the authority to lease city-owned land. Council agreed to add this possible reform to the list that will be considered.

While the Council wholeheartedly endorsed the response letter edited by Burt and Schmid, several members of the public argued that the city fell short in parts of its response. Land-use watchdog Bob Moss, a vehement critic of the Arrillaga proposal, told the Council that it hadn't fully accounted for the $250,000 the city had spent for design work around the transit center. The money was allocated by the Stanford University Medical Center as part of a development agreement that allowed Stanford to expand its hospital facilities. It was designated specifically for transit improvements, though Moss suggested that the city acted inappropriately by designing these improvements around the Arrillaga proposal.

Moss argued that in its response to the Grand Jury, the City Council didn't "describe what actually happened" in the city's negotiations with Arrillaga over the project known as 27 University Ave.

"That alignment was set up specifically to accommodate the Arrillaga project," Moss said. "The city was using $250,000 it could have been spending on other things."

Wayne Douglass, who is running for Council in November, was more blunt and outspoken. He accused the Council of "rushing blindly" into secret meetings with Arrillaga and called the its excuses "pathetic."

"I'm here to express outrage," Douglass said. "I'm at a loss to explain any of it."

Related content:

Palo Alto officials vow to improve transparency

Palo Alto slammed for lack of transparency on Arrillaga proposals

Undisclosed meetings, private funds cloud downtown debate

Palo Alto admits mistakes in negotiations with developer

Palo Alto nixes election on Arrillaga's downtown proposal

Comments

13 people like this
Posted by Silly
a resident of Embarcadero Oaks/Leland
on Sep 16, 2014 at 10:02 am

Translation: We're sorry we got caught and there's an election coming up.

Really, what's the problem in wasting $250,000 of our money after promising to sell 7.7 acres to a buddy for $125,00 total when Palo Alto acres cost more than $1,000,000 each?

That's only $7,000,000+++.


9 people like this
Posted by Old Man of Palo Alto
a resident of Old Palo Alto
on Sep 16, 2014 at 10:11 am

Whoops. Sorry. Won't do it again.
Just like teenagers.

The problem is that they're not teenagers. They're professional politicians.
They've been caught. They need to face up to the consequences.
Vote for new members.


9 people like this
Posted by Clean House at City Hall!
a resident of another community
on Sep 16, 2014 at 10:22 am

True reform will only take place if and when the current set of Council members and top-level City staff are removed from office. Leadership at the upper levels of management and in the ranks of elected officials at Palo Alto City Hall has been abysmal for years. Some of the key players in this most recent development scandal, including the prior Deputy City Manager, got out of Dodge just in the nick of time. The remaining folks need to be advised to board the next stage coach out of town.


9 people like this
Posted by I
a resident of Downtown North
on Sep 16, 2014 at 10:29 am

Ridiculous, all members involved should get 4-10 years prison time and obviously removed from office. Then we should push that policy up the ladder all the way to the top.


9 people like this
Posted by Jon Parsons
a resident of Duveneck/St. Francis
on Sep 16, 2014 at 10:39 am

The constant dissembling contributes to public distrust. The Council now pretends that the problem arose from good-hearted civil servants being confused by unclear policies. The new policy should be:

1. Know and obey the Brown Act.
2. Don't give public property away to developers in sweetheart deals.
3. Try harder to be more honest with yourself and others.

Where was the City Attorney while all this was going on?


7 people like this
Posted by Longtime Resident
a resident of Leland Manor/Garland Drive
on Sep 16, 2014 at 10:44 am

New policy should have been put in place, immediately after the California Avenue tree clear-cut back in the fall of '09.

No staff member in the upper levels of city hall, or even council, knew what was happening then, each feigning surprise & apologizing for the project that was in the planning stages with the merchant development group, since '05. Nine years ago.

The street work part of the Streetscape was delayed four years, with lawsuits and bad feelings, due to the pathetic process.

So have these leaders learned nothing? It takes a grand jury to point out flaws?


8 people like this
Posted by Crescent park dad
a resident of Crescent Park
on Sep 16, 2014 at 10:54 am

I can't imagine being a current Council member and not being completely ashamed of myself. I think I would have a hard time walking around town with my head held high. The arrogance to think we would re-elect any one of the incumbants is amazing. If this deal had gone down the way it is being reported, it seems like there was actually criminal behavior involved.


4 people like this
Posted by Glad Handing
a resident of another community
on Sep 16, 2014 at 10:55 am

Arrillaga is only the tip of the iceberg. The melting glaciers cometh.


8 people like this
Posted by Eyes wide open
a resident of Professorville
on Sep 16, 2014 at 10:57 am

I agree with others who have commented, for I am also fed up with council excuses. They thought they could get away with all this. Too bad we cannot rid ourselves of the city manager as well with his lame comments about the grand jury decision.
I say vote them out. Corrupted by power and only serving themselves, not the public.


2 people like this
Posted by If it looks like and sounds like....
a resident of Another Palo Alto neighborhood
on Sep 16, 2014 at 11:01 am

[Post removed.]


1 person likes this
Posted by Oath-of-Office-Means-Nothing-To-Me
a resident of Another Palo Alto neighborhood
on Sep 16, 2014 at 11:06 am

[Post removed.]


2 people like this
Posted by Annette
a resident of College Terrace
on Sep 16, 2014 at 11:09 am

Annette is a registered user.

"Councilman Greg Scharff recommended another policy for the committee to consider, one that would require the Council to take a public vote before agreeing to discuss an item in a closed session."

Huh? How would a public vote be accomplished? I favor the idea of curtailing the CM's power regarding closed sessions, but this proposal by Scharff could seriously impede effectiveness and efficiency. And it could be costly. If anyone on this forum was there and can explain more about what he meant by this, please provide that information. It seems to me that it would be much easier if all responsible parties simply and fully understood the Brown Act - and then comported themselves accordingly.

Or maybe Scharff was just making a campaign-season suggestion, not worrying much that it isn't viable since it sounds good and "pro-accountability".


11 people like this
Posted by JM
a resident of Evergreen Park
on Sep 16, 2014 at 11:49 am

If the city is serious about transparency, fire the city manager, Mr. Keene.

Our city manager, Jim Keene, was orchestrating the whole Arrillaga proposal behind the scenes, advocating and greasing the wheels. Instructing the city staff to quietly spend an enormous amount of time time on this plan. How much did that cost us citizens I wonder? And who was Mr. Arrillaga negotiating with when the city paid for an appraisal of the 7 acres of property Mr. Arrillaga was offering to quietly buy from the city for less than $200,000? The assistant city manager may have got out of dodge just in time, but who was he getting his instructions from? His boss Mr. Keene of course.

The Arrillaga proposal was so huge it had to come to light, but you have to wonder what are all the other things Mr. Keene influences but slips under the radar?


6 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Sep 16, 2014 at 11:57 am

We need a new CC made up of people who are not career politicians and are willing to look at the way of life in Palo Alto, not making money.

Where is Tim Gray, are we still planning to have a write in campaign for him?


4 people like this
Posted by Silly
a resident of Embarcadero Oaks/Leland
on Sep 16, 2014 at 12:05 pm

Remember to vote down Scharff's proposal to reduce the number of City Council members since it's a blatant attempt to solidify control.


7 people like this
Posted by 37 year resident
a resident of Old Palo Alto
on Sep 16, 2014 at 12:05 pm

Vote out ALL incumbents and then get rid of city manager Keene. They ALL need to go.


7 people like this
Posted by RV
a resident of Green Acres
on Sep 16, 2014 at 12:25 pm

I agree with Crescent Park Dad. This council should be ashamed of themselves and the list is numerous! They have no morals, feel no responsibility to the PA citizens, and are in there for themselves! No way should ANY of them be Re-elected!


11 people like this
Posted by What did not happen
a resident of Old Palo Alto
on Sep 16, 2014 at 12:38 pm

Unusual that the City Manager was absent. He limits his reports to Boy Scout events and awards for the city, and such. It seems he didn't want to face the criticism of his culpability for the secret negotiations with Arrillaga and Stanford.
Nancy Shepherd just remembered that she had had meetings with Arrillaga.
Mark Berman had nothing to say, as usual. He just agreed with Klein. As usual. [Portion removed.]


5 people like this
Posted by resident 1
a resident of Adobe-Meadow
on Sep 16, 2014 at 1:24 pm

Other than voting people out where do we go from here on:
1. El Camino Park - this is both a soccer field and baseball field. It is fenced in now. If 27 University is off the table then put the fields back into play. Even if the city wants to use it later on it should be available for play now. It is a city resource designated for a specific purpose so fix it up and use it.
2. Soccer field in baylands - a mound of dirt unfinished because the 27 university plan fell through. Who is in charge of that? Finish it up and use it.

Bottom line is that the city starts projects but can't manage them through completion. Stop now - look at what needs to be fixed and fix it before any new projects are started. Assume any proposal on a new project is not correctly projecting the schedule and cost - those are the basic program management 101 you are suppose to learn if that is the job you are in. Do we hire the right people to manage projects through completion? No


9 people like this
Posted by 40 year resident
a resident of Crescent Park
on Sep 16, 2014 at 1:44 pm

Shame on all of the CC. I have not noticed any apology from Liz Kniss. Is she sorry? Or just sorry about getting caught. Enough is enough - shame on all of the council.


6 people like this
Posted by Silly
a resident of Embarcadero Oaks/Leland
on Sep 16, 2014 at 1:55 pm

[Post removed.]


5 people like this
Posted by Nora Charles
a resident of Stanford
on Sep 16, 2014 at 2:05 pm

Nora Charles is a registered user.

Absolutely shameful.


8 people like this
Posted by Mike
a resident of Mountain View
on Sep 16, 2014 at 2:25 pm

No one has taken responsibility. "Failure of transparency" is whitewash/smoke cover for the group of human agents who actually did it. Only after the people who did it are identified specifically, can the real question be asked, "Why?" and then, what to do about it can be decided by people other than the people who did it.

As it stands now, it seems as though the people who did it are creating some 'see no evil" task force/committee that won't report for a couple of years and then they won't name names or stop it from happening again. And by then the people who perpetrated this mess will have a new angle. Rinse and repeat.

Given that, the only solution for the taxpayers seems to be to wash out the stables and begin again.


11 people like this
Posted by boscoli
a resident of Old Palo Alto
on Sep 16, 2014 at 2:58 pm

It is shameful and a real chutzpah that any current council member is running for reelection. If they were truly sorry, none of them would try to get reelected. What they are sorry is that they got caught.


5 people like this
Posted by 6Djockey
a resident of Green Acres
on Sep 16, 2014 at 4:26 pm

In an election year we get plenty of apologies and promises to do things better. Scharff's proposal is particularly hollow because it is such an obvious ploy to show accountability while being completely impractical. [Portion removed.]


3 people like this
Posted by Rupert of henzau
a resident of Midtown
on Sep 16, 2014 at 4:42 pm

[Post removed.]


9 people like this
Posted by Neighbor
a resident of Old Palo Alto
on Sep 16, 2014 at 7:24 pm


I believe Councilman Greg Scharff when he stated that he was never going to sell the 7.7 acres to Arrillaga for $175,000. I also believe he was ready to trade the construction of playing fields for the 7.7 acres.

Without our consent.

@ Joe Simitian

Since you are endorsing Gregg Scharff, we will not be endorsing you.


1 person likes this
Posted by Neighbor
a resident of Old Palo Alto
on Sep 16, 2014 at 7:36 pm

[Post removed.]


4 people like this
Posted by Anonymous
a resident of Another Palo Alto neighborhood
on Sep 16, 2014 at 8:41 pm

The city council needs to specify how it spent the $250,000 on the Arrillaga proposal when there was never a formal proposal or application submitted. What process does the city follow on its expenditures?


8 people like this
Posted by Stewart
a resident of Crescent Park
on Sep 16, 2014 at 9:29 pm

By 'reform', I hope that means City Manager Keene is fired, the city staff that helped with his secret negotiations are fired, the city council members who eagerly participated in this likely illegal scheme to defraud the City of Palo Alto, resign, and the City Attorney can either explain why this fraud was allowed to happen, or resign too. Council members Klein and Scharff both claim to be lawyers, how could they not know that they were facilitating would be slammed by a grand jury?!

Unfortunately, 'reform' means, we're distressed that we were caught, next time we'll be more careful to cover our tracks.

Time to elect a clean slate since that appears to be the only way to get rid of them.


5 people like this
Posted by Ahem
a resident of Another Palo Alto neighborhood
on Sep 16, 2014 at 9:59 pm

[Post removed.]


6 people like this
Posted by Clean House at City Hall!
a resident of another community
on Sep 17, 2014 at 9:10 am

The cure in democratic societies for the arrogance of power virus that sometimes infects public officials, both elected and appointed? An informed, aroused electorate! Palo Alto citizens will need more than one electoral cycle to clean out the Augean Stables at Palo Alto City Hall, but clean them out they will.

Among luckiest Palo Altans this fall? Those six current Palo Alto City Council members who are NOT up for re-election!


3 people like this
Posted by Resident 2
a resident of Barron Park
on Sep 17, 2014 at 11:49 am

[Post removed.]


8 people like this
Posted by clarity
a resident of Another Palo Alto neighborhood
on Sep 17, 2014 at 1:32 pm

This just scratches the surface. People, just complaining on TS isn't enough. I can look back at comments about the Fry's site from years ago, and no one did anything until Measure D.

But look at what happened at Maybell. While all of that public debate was happening over whether to rezone or not, one of the City employees was just quietly pushing the application for the project through the state funding process, as if the public debate were beside the point. Said City employee provided documentation stating the property was rezoned (it never was, not even one day), all CEQA appeals had expired (when there was an active lawsuit), and other misrepresentations of adjacent amenities. Few people realize that PAHC was awarded $5million based on the application being misrepresented by the City, which they had to give back.

[Portion removed.]

Why wasn't there an ethics investigation about that? Instead, this same City Council stands poised to approve the Housing Element this same employee was in charge of producing. This is has a far greater potential to damage Palo Alto for decades to come, while we're all tsking about a piece of ground in the Foothills.


5 people like this
Posted by AlexDeLarge
a resident of Midtown
on Sep 17, 2014 at 1:42 pm

Transparency gaffes? More like bribery, chicanery and graft.


3 people like this
Posted by Resident 2
a resident of Barron Park
on Sep 17, 2014 at 3:37 pm

In my previous message [portion removed] I summarized the findings of the Santa Clara County Civil Grand Jury's list of objectionable actions by the City Council as "unscupulous" which is not a particularly strong statement since I have seen much stronger statements used by others.
The other statement indicated an expectation of good "ethical judgement" by an elected offic holder.


1 person likes this
Posted by Neighbor
a resident of Old Palo Alto
on Sep 17, 2014 at 3:50 pm

@ clarity

Thank you for making this issue crystal clear.


5 people like this
Posted by clarity
a resident of Another Palo Alto neighborhood
on Sep 17, 2014 at 7:25 pm

@Neighbor,

"But look at what happened at Maybell. While all of that public debate was happening over whether to rezone or not, one of the City employees was just quietly pushing the application for the project through the state funding process, as if the public debate were beside the point. Said City employee provided documentation stating the property was rezoned (it never was, not even one day), all CEQA appeals had expired (when there was an active lawsuit), and other misrepresentations of adjacent amenities. Few people realize that PAHC was awarded $5million based on the application being misrepresented by the City, which they had to give back."

I do not know why the rest of what I said was deleted, but I will restate it to be completely factually accurate. This should not be deleted, this is what the 4th estate is for:

Citizens brought documentation of the misrepresentations to City Hall during the debates and were criticized for it in coverage. Those funding applications have a signature line that says the application is made under penalty of perjury.

The same City employee who signed all of those documents in PAHC's funding application with the misrepresentations, is the one whose name is on all correspondence to residents regarding our Housing Element revision. How do we citizens have any reassurance that the City isn't engaged in exactly the same kind of subversion of the public process that happened at Maybell? Why was this just overlooked? It seems to me it is a much more serious issue even than the matters the grand jury reviewed, and stands to do far more damage to Palo Alto in the future through a potentially untrustworthy revision of the Comp Plan.


4 people like this
Posted by Ben
a resident of Crescent Park
on Sep 17, 2014 at 7:44 pm

"Palo Alto eyes reforms after transparency gaffes" may be the head line, but it should read

"Palo Alto eyes reforms after potentially illegal activities of the City Manager, City Employees, and City Council Members is exposed"

"transparency gaffes" is too kind, and likely not accurate.


1 person likes this
Posted by senor blogger
a resident of Palo Verde
on Sep 18, 2014 at 11:05 am

These post just about sum it up.
We, the citizens, are Pee Ood.

Time to clean house.


4 people like this
Posted by History Buff
a resident of another community
on Sep 18, 2014 at 4:18 pm

> Where was the City Attorney while all this was going on?

She was in the closed session meetings at which the land sale to Arrillaga was being discussed.

“City Council discussed the sale of the land, specifically the price and terms of payment, in a closed session on Tuesday night, along with Assistant City Manager Steve Emslie, Administrative Services Director Lalo Perez, city Real Estate Manager Hamid Ghaemmaghami and City Attorney Molly Stump. ” September 20, 2012 Palo Alto Daily Post

“… Stump said the city isn't required to disclose the terms of Arrillaga's proposal for the property because of an exception in the Ralph M. Brown Act, ... The act allows city officials to discuss real estate negotiations behind closed doors without publicizing the terms, Stump said. … City officials said the sale is not related to the much more ambitious proposal that Arrillaga pitched last year, …” Web Link

> The city council needs to specify how it spent the $250,000 on the Arrillaga proposal

CMR # 3064 September 24 2012: Approval of Professional Services:
1) Contract with Fukuji Planning and Design in Amount of $139,500 for Preliminary Design Concept Services;

2) Contract with Sandis Civil Engineers Surveyors Planners in the Amount of $16,500 for Traffic Engineering, Civil Engineering and Arborist Report Services; and

3) Contract with Fergus Garber Young Consultants in the Amount of $85,000 for Urban Design and Architectural Services

4) Contact with Metropolitan Planning Group in Amount of $45,000 for Project Management for Real Property at 27 University Avenue

to be Funded By the Stanford Medical Center Intermodal Transit Funds with a Budget Amendment Ordinance totaling $286,000. Web Link

Note that Garber was working as a consultant with Arrillaga’s architect in 2011 – while he was on the Palo Alto Planning and Transportation Commission. He resigned from commission in March 2012, then got the $85,000 contract from the city in September.


1 person likes this
Posted by boscoli
a resident of Old Palo Alto
on Sep 19, 2014 at 11:32 am

This city council has had such close ties to big developers and consultants, the kind of powers whose interest is diametrically opposite to the interests of ordinary residents and to their quality of life, that a vague promise to reform "transparency" is comic, at best. Neither of these people can be trusted anymore to run this town in good faith and must be voted out. Those who aren't up for re-election should do the decent and honorable thing and drop out. This council needs to be completely cleaned out.


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

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