Stanford: Hospital expansion would add $18M to coffers

March 11th, 2009

City of Palo Alto, university officials are scheduled to discuss community benefits of Stanford projects Saturday

By Gennady Sheyner — Palo Alto Online,

Stanford University’s ambitious plan to upgrade and expand its medical facilities would bring Palo Alto about $18 million in revenues, a new study commissioned by Stanford states.

The study, which analyzes the fiscal impact of the university’s proposed hospital expansions, estimates that Stanford would pay the city $8.2 million in taxes on construction activity and another $10 million in impact fees for housing and transportation. The university would also pay the Palo Alto Unified School District just over $616,000 in fees, according to the study.

The report was released three days before the City Council’s scheduled meeting to discuss potential impacts and benefits of Stanford’s $3.5 billion plan to upgrade Stanford Hospital & Clinics and the Lucile Packard Children’s Hospital. The meeting, which will also evaluate the impacts of a proposed Stanford Shopping Center expansion, will be held at 8:30 a.m. Saturday in the Council Chambers at City Hall.

The report is coming out at a time when the city is particularly strapped for cash, with a projected $5.8 million budget shortfall this year and an estimated $8 million deficit next year. But for city officials, money is just one of many factors that would likely be considered as the projects crawl through the city’s approval process.

In recent months, the council and the city’s Planning and Transportation Commission have been poring over the two proposed expansion projects and analyzing their potential impacts on traffic and housing. A recent traffic study commissioned by the city indicates that some of the busiest intersections in the city would be operating at “failing” levels by 2025 even if neither the medical center nor the shopping center were to expand. The two projects would only exacerbate the congestion, the report concluded.

On March 2, council members discussed the traffic study and argued that Stanford should be asked to mitigate as many of its impacts as possible. Council member Greg Schmid questioned the underlying assumptions of the model used in the traffic study, but urged staff to be creative in coming up with its list of benefits Stanford should be asked to provide.

“The ultimate goal is that we really should have Stanford bear the bulk of any worsening (situation) that comes from Stanford,” Schmid argued. “I want staff to be inventive, to be sort of enthusiastic about the things we should have on the table, because Stanford arm-wrestles with all its power.”

Councilwoman Yoriko Kishimoto called the two Stanford projects “transformational” and said the city should strive to make “no new net (vehicle) trips” one of its goals. One of the mitigation measures she proposed is enhancing the bicycle and pedestrian crossings at busy intersections around Stanford, including along El Camino Real.

She also suggested that it might be time for the shopping center expansion to be scaled back. Stanford plans to add 240,000 square feet of space and a new 120-room hotel to the shopping center.

“Seeing both the housing and traffic impact data, I’m giving more and more consideration to reducing the scope of the shopping center,” Kishimoto said. “We want to acknowledge that the medical center is the more important project to the university.”

The new Stanford-commissioned fiscal study deals only with the medical center expansion. It estimates that the hospital project will generate $639,000 in annual revenue for the city, including $297,000 in utility user taxes and $236,000 in sales and use taxes. The expansion would also cost the city about $635,000, with 63 percent of the amount going to police and fire services. The report projects a $4,000 annual surplus for the city’s general fund.

Stanford has also long argued that having a world-class hospital in Palo Alto is an important community benefit in itself.

“One of the things we really want to emphasize is that the provision of health care to Palo Alto is the major community benefit of the project,” Michael Peterson, the medical center’s vice president for special projects, said in a news release. “The children’s hospital and Stanford Hospital & Clinics provide a wide array of services, particularly emergency and trauma services, along with participation with the city in disaster planning and management.

“All of that creates a health and safety net for the city,” Peterson added.

The hospital expansions would add 104 beds to the Children’s Hospital, raising its total to 361, and add space for families in patients’ rooms. Stanford Hospital would add 144 beds, raising its total to 600, and add 824,000 square feet of new space. Stanford also estimates the medical center will have 2,243 new workers by 2025.