Editorial: Palo Alto should reconsider its Stanford stance

March 20th, 2009

Silicon Valley/San Jose Business Journal,

There are a lot of Silicon Valley communities that would like to have the “problems” that Palo Alto is grappling with these days.

Stanford University’s plans for a $3.5 billion expansion of its medical facilities, along with a major expansion of its shopping center and construction of a new hotel, are the kind of headaches that some would view as a welcome set of developments.

But Palo Alto officials have prepared a wish list of 58 projects they want Stanford to pay for in exchange for their approval of the university and hospital’s grand design.

Among these are a new transit hub, an upstream water-detention basin for San Francisquito Creek, 594 housing units and free psychiatric services.

Stanford estimates that its expansion projects will bring Palo Alto about $18 million in one-time benefits from sales-and-use taxes, as well as impact fees for housing, transportation and community facilities. Palo Alto Unified School District would receive just over $616,000 in fees.

Palo Alto will further get an estimated $639,000 in revenue for the city’s general fund, which would offset an estimated $635,000 in increased costs for police, fire and other municipal services the expansion will bring.

Then there are the intangibles that are hard to place a dollar figure on – quality-of-life improvements that expanding world-class medical facilities will bring.

Instead, city officials are focused on increased traffic and a worsening lack of affordable housing in Palo Alto that they say will accompany Stanford’s expansion.

These are the kinds of problems that are shared by many communities in Silicon Valley, and it is certainly proper to have private interests included when it comes to finding a solution that benefits both city and developer. But the list of demands being prepared by Palo Alto officials tips the scales beyond reasonable.

Given a chance, surrounding cities would probably love to see Palo Alto stick to its guns. These cities would jump at the chance to lure away the retail and medical facilities that Stanford wants to build in the valley.

So while it is tempting to shoot for the sky, Palo Alto officials need to be reasonable about what they ask for. Otherwise they risk losing some of the university assets that make their city one of the world’s most sought-after communities.