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."