Stanford offers $125 million in ‘community benefits’ for hospital expansion

June 16th, 2009

Proposal includes fees for affordable housing, wider bus service, bike improvements

By Gennady Sheyner — Palo Alto Online,

New bike lanes, an expanded shuttle service and a $23.1 million payment for affordable housing are all items the Stanford University Medical Center is offering to Palo Alto in exchange for the city’s permission to expand its hospital facilities.

The latest proposal, outlined by the medical center in a 10-page letter to the city, includes about $124 million in “community benefits” along with the $18 million Stanford would have to pay in development and mitigation fees.

The university hopes the offer will be enough to get Palo Alto’s approval for a $3.5 billion expansion of Stanford Hospital and Clinics and the Lucile Packard Children’s Hospital.

But Stanford’s proposal is just as notable for the items that aren’t listed. The Palo Alto City Council has consistently called for Stanford to build housing for the thousands of new workers the expanded facilities are expected to attract.

In March, council members indicated that they want Stanford University to build 594 units to house new workers at both the medical center and Stanford Shopping Center, which was planning its own expansion. But Stanford pulled the plug on the shopping center expansion in April to speed up the planned renovation of its hospital facilities.

Stanford’s new proposal doesn’t offer a specific number of units, but it includes a $23.1 million contribution to Palo Alto’s affordable-housing program.

Mike Peterson, Stanford’s vice president for special projects, said the amount is equivalent to what a for-profit developer would have to pay. Peterson noted that the hospital is exempt from the housing fee, but is willing to pay it anyway to help mitigate the project’s impacts.

He also said the hospitals aren’t offering to build the houses because they don’t own the land where these houses would have to stand.

“We believe that the formula we used does provide room for a fair amount of housing to be provided, depending upon the approach taken for subsidization,” Peterson said. “We just don’t have the land in our control to do it ourselves.

“We are pretty much restricted to the footprint of the medical center.”

Stanford is also offering $5.8 million in “community facility fees” for parks, community centers and libraries, and $2 million in “citywide transportation fees” for traffic mitigation measures, which include an expanded shuttle service, bike improvements and transportation management and information systems.

The medical center also plans to buy GO Passes — which allow unlimited rides on Caltrain — for all existing and new hospital employees who work more than 20 hours a week. The program will cost the hospitals about $1.3 million, the letter states. Another $2.25 million would be contributed to improve pedestrian and bike connections from Palo Alto’s Intermodal Transit Center to the intersection of El Camino Real and Quarry Road.

But the proposal says nothing about the San Francisquito Creek, a volatile creek that flows through Stanford-owned land upstream and, during heavy storms, surges downstream and floods sections of Palo Alto and East Palo Alto. The City Council had hoped Stanford would allow the San Francisquito Creek Joint Powers Authority — an agency charged with improving flood control around the creek — to build a detention basin on university-owned land to reduce the flooding downstream.

Peterson said Stanford University is already involved in the process of improving flood control around the creek. The creek wasn’t mentioned in the proposal, he said, because it bears no relation to the medical center and its impacts on Palo Alto.

“We have tried to stay away from issues not directly related to the project itself,” Peterson said.

Peterson also emphasized that the biggest benefit of the project is the project itself. The hospitals served more than two-thirds of the Palo Alto residents who needed medical treatment in 2007, he said.

“This is something that needs to be emphasized — the hospitals themselves are important to the community,” he said.

The City Council has consistently acknowledged that the expanded hospitals would bring major benefits to the city. But council members have also maintained that because Stanford would be building at much higher level of density than Palo Alto’s zoning regulations allow, it needs to help mitigate the project’s housing and traffic impacts.

City Manager James Keene said Stanford’s proposal “lays a foundation for productive conversations between the city and the university.”

“The proposal is an excellent beginning to our Development Agreement negotiations and shows that Stanford has been listening to concerns raised by the City Council and the community,” Keene said in a news release Tuesday.

City planner Steven Turner, who is leading Palo Alto’s environmental review of the proposed Stanford expansions, said staff is still reviewing the medical center’s offer and has not yet formulated a response.

The Environmental Impact Report on the medical center’s expansion, which would outline the project’s estimated impacts, is scheduled to be released in the fall, Turner said.

Stanford plans to add 144 beds to its main hospital — bringing the bed count to 600 — and to expand the facility by 824,000 square feet. The medical center also plans to add 104 beds to the Children’s Hospital (for a total of 361 beds) and add space in patients’ rooms for families.

The two projects are expected to attract about 2,200 new workers to the city by 2025.