HomeMy WebLinkAboutStaff Report 197-10TO: HONORABLE CITY COUNCIL
ATTN: FINANCE COMMITTEE
FROM: CITY MANAGER DEPARTMENT: CITY MANAGER
DATE: APRIL 6, 2010 CMR: 197:10
SUBJECT: Review of tbe Stanford University Medical Center Facilities Renewal
and Replacement Project Development Agreement Proposal and
City's Preliminary Counter Offer
RECOMMENDATION
Staff recommends that the City Council review and comment on the Stanford University Medical
Center (SUMC) proposed Development Agreement Proposal and the City's preliminary counter
offer.
BACKGROUND
The Stanford University Medical Center (SUMC) comprises the general area between Sand Hill
Road, Vineyard Lane, Quarry Road, Pasteur Drive, and including Welch Road and Blake Wilbur
Drive. '1be Project applicant is proposing the demolition of the existing Stanford Hospital and
Clinics (SHC) at 300 Pasteur Drive, construction of a new hospital building, renovation and
expansion of the Lucile Packard Children's Hospital (LPCH), reconstruction of the School of
Medicine (SoM) facilities, and construction of a new medical office building near Hoover
Pavilion to meet State mandated seismic safety standards (SB 1953) and to address capacity
issues, changing patient needs and modernization requirements. SB 1953 requires hospitals to
retrofit or replace noncompliant facilities by January 1,2013, but Stanford has requested a two
year extension pursuant to SB 1661 from the Office of Statewide Planning and Health
(OSHPOD), the California State agency that has jurisdiction over hospitals.
The renovation and expansion project, which would be constructed over a IS-year horizon,
would result in a new increase of approximately 1.3 million square feet of hospital, clinic, and
office space. The following entitlements are anticipated:
• Certification of an Environmental Impact Report
• Comprehensive Plan amendments to:
o Change 701 and 703 Welch Road and a small portion of Santa Clara County land
on Welch Road proposed to be annexed "Major Institutional/Special Facilities"
land use designation.
o Amend Program L-3 to revise the citywide 50-foot height limit to allow
exceptions for taller buildings within the proposed "Hospital District."
o Amend Policy L-8 to clarify that the hospital and treatment uses are exempt from
the development cap.
• Zoning Code and Map amendments to:
o Create a new "Hospital Zone."
CMR: 197:10 Page I of5
o Permit limited heritage tree removals
o Pre-zone the site to be annexed to the City to the new "Hospital Zone."
• Annex the small parcel described above.
• ARB review of the Stanford Hospital Clinics (SHC), LPCH, Foundations in Medicine
(FIMl), medical office building at Hoover Pavilion, and Design Guidelines.
• Conditional Use Permit
• Development Agreement
The Project applicant has submitted eight substantive project amendments with the most recent
amendment submitted on March 8, 2010. Since the Project was first submitted to the City,
SUMC has made changes based upon Staff analysis and ARB, Planning and Transportation
Commission and City Council input. 'These changes include modifications to site planning and
building massing; revisions to the location of parking garages and site access for automobiles;
refinements to the pedestrian and bicycle network to promote stronger linkages and connections;
and changes to building placement and design to protect significant oak tree specimens. As pru.1
of the entitlement process for the project the City and SUMC have agreed to complete a Fiscal
Impact Analysis. A companion staff report (CMR: 196: 1 0) details the fiscal findings.
A Draft Environmental Impact Report is expected to be released in early May for public
comments. A summary of the major impacts and mitigations is contained in CMR 453:09.
(Attachment C.)
DISCUSSION
Development Agreement Negotiations
Stanford is seeking a Development Agreement which will lock in the proposed zoning
regulations for a specified period. of time. Development Agreements are negotiated contracts
between the applicant and City. Developers typically apply for a Development Agreement to
ensure that local regulations will not change over time and to help secure financing for large
scale projects. In exchange, local governments negotiate an acceptable "community benefit
package." Since they are the product of voluntary negotiations rather than a unilateral imposition
by the local govemment, community benefits under a Development Agreement are typically
broader than EIR mitigation measures and project conditions of approval. As such, community
benefits arc not legally required to have the same rigorous nexus as mitigation measures or
development conditions. A Development Agreement is a legislative action and may be subject to
referendum. See Attachment D for more detail on these different entitlements.
On June 15, 2009, the City received a Development Agreement proposal from Stanford
(Attachment A). Stanford proposed a 30-year Development Agreement with some terms
extending to 51 years. The proposed agreement focuses on thc following major categories of
community benefits: (1) health care, (2) fiscal benefits, (3) reduced vehicle trips, (4) bicycle
linkages, and (5) housing. Thc proposal noted that the most important community benefit would
be the applicants' investment in seismically safe, state of the art facilitics that would enable the
hospitals to continue to provide high quality patient care. In addition, Stanford also offered some
additional community benefits, including the following significant proposals:
CMR: 197:10 Page 2 of5
1. Establislunent of two new programs for the exclusive benefit of residents: a $3 million
fund to assist qualified low-income residents and a $4 million fund to subsidize
community health programs within Palo Alto.
2. Construction spending and associated use taxes of $8.3 million and provisions to obtain a
use tax direct payment permit that will generate approximately $26,000 annually.
3. Purchase of Caltrain Go Passes for all SUMC employees at an estimated annual cost of
$1.3 million. (Currently only Stanford University employees are entitled to this benefit.)
4. Expansion of the Marguerite service by purchasing additional shuttles in the amount of
$2 million and by funding additional annual operating costs of $450,000.
5. Funding a range of improvements to encourage use of traasit and enhance pedestrian and
bicycle connections between the hospitals and downtown: $2.25 million for pedestrian
and bicycle connections around the lntermodal Transit Center; $400,000 for right of way
improvements along Quarry Road; and $700,000 for a pedestrian connection between the
Medical Center and Shopping Center (Stanford Barn area).
6. Payment of housing in-lieu fees in the amount of $23.1 million which is equivalent to
what a commercial project would pay.
Staff believes Stanford's proposal is substantive and responsive to many projcct impacts. The
proposal focuses on the kcy areas of concern raised by the Planning and Traasportation
Commission, the City Council, and the commtmity. However, it is also important to note that
with a project of this magnitude many of their proposed community benefits would typically be
imposed as conditions of approval or EIR mitigation measures.
Staff has had ongoing negotiation sessions with Stanford representatives and as part of the
preliminary negotiations staff has developed the following guiding principles for discussions:
1. Minimize fiscal impacts to the City. Ensure that the projeet does not have a negative
fiscal impact on the City through focusing, among other things, on revenue guarantees
and robust analysis of long term project expenses.
2. Require project mitigation. Ensure that zoning ordinance and Conditions of Approval
adequately address all project mitigations. Ensure that the General Fund is not unfairly
burdened with long term impacts of project.
3. Preserve community health care. Ensure that local benefit~ of hospital and clinics will be
retained, despite transition towards world class hospital status.
4. Enhance City infrastructure. Recognize mutual interest in preserving high standard of
economic and community vitality. Partner with Stanford to fund the long-telm
infrastructure needs of the community (capital programs, housing, transportation,
broadband).
Based on these guiding principles, staff recommends that Stanford's June 15,2009 Development
Agreement offer be supplemented with the Development Agreement Terms listed below. Note
that these iterns are staff recommendations and any final Term Sheet is subject to Council
approval. The purpose of developing prelinlinary deal terms at this stage of the process is to
assure adequate coverage, where applicable, by the DEIR and Final ElK Development
CMR: 197:10 Page 5
Agreement temlS will be developed and negotiated following release of the DElR review process
and Council and the public will be provided additional opportunities to comment in detail on
both the high level community benefit priorities as well as the specific deal terms.
Supplemental Development Agreement Terms
A. Health Care
. B. Fiscal
• Extend financial assistance subsidy to qualifying residents ($3 Million) from
10 years to life of Development Agreement
• Extend community health prograllls payment ($4 Million) from 10 years to
life of Development Agreement
• Continue appropriate hospital privileges for community practitioners
• Continue SUMC's current community healthlwellness/disease prevention
programs
• Capital funds co-located Emergency Operations Center (EOC) facility in new
buildings within Palo Alto
• Explore innovative health care initiative/partnership in area of broadband/fiber
to the premises
• Ensure project is at least cost neutral by guaranteeing revenue projections to
offset expenditures, funding extra publie safety FTE's and fully funding
mitigations
• Payment in lieu of property tax
C. Transportation
• Explore re-defining TDM progralll (GO Pass) and re-directing fimds toward
expanded shuttle program and other citywide infrastructure improvements.
See Ghelow.
D. Pedestrian and Bicycle Linkages Benefit
• Note: These items will be covered as project mitiglltions.
E. Housing Benefit
• Note: Hospital zone will include additional measures to address jobslhousing
impact identified in the ElR
1)'. School Fees Benefit (P A USD)
• Work with School District and City to minimize impacts to schooL~
H. Economic and Community Vitality
• Contribute $30 Million to help fund needed Citywide Infrastructure such as
Public Safety Building, EOC, roadways and expanded shuttle programs
A complete copy of the Preliminary Counter Proposal Term Sheet is attached as Attachment B.
CMR: 197:10 Page 4 of5
The City's Counter Proposal seeks to distinguish between those elements in the proposal which
can be imposed as mitigation measures and those which are more properly characterized as
community benefits. Also, the City's preliminary counter proposal increases and spreads the
health care benefits through the entire time horizon of the Development Agreement. In addition,
. the City's preliminary counter proposal focuses on a one time contribution to improving citywide
infrastructure. As the hospital project is largely exempt from property taxes and has a nominal
retail component, a sizable contribution to the General Fund earmarked for infrastructure will
enhance the economic vitality of the project. An investment in citywide infrastructure not only
benefits both parties to the Development Agreement, but also benefits the school district, the
University and the Research Park. It should be noted that staff is amenable to shifting some of
the funds Stanford has already proposed in their community benefit package (such as the Go
Pass) towards other infrastructure programs that have more citywide benefit. However, Stanford
will still be expected to mitigate project identified impacts albeit in a more cost effective mauneI'.
NEXT STEPS
Given the significance of this project, staff will present this report to the Policy and Services on
April 13, 2010 for further feedback and will submit it to the full Council for additional
discussion and possible action on May 10,2010.
SCHEDULE
A project schedule flow chart is contained in Attachment E.
ENVIRONMENTAL REVIEW
The City is preparing an Environmental Impact Report for this project.
PREPARED BY:
CITY MANAGER APPROVAL:
ATTACHMENTS
STEV
Deputy City Manager
JAMES KEENE
City Manager
Attachment A: Draft Development Agreement Proposal from Stanford University
Attachment B: Preliminary City Development Agreement Counter Proposal
Attachment C: CMR 453:09
Attachment D: Comparison of Land Use Entitlements
Attachment E: Project Schedule Flow Chart
CMR: 197:10
June 15,2009
City Manager James Keerie
City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 94301
Dear City M!\!IlIger Keene:
Lucile Packard
Children's Hospital
AT STANFORD
ATTACHMENT A
Stanford Hospital and Clinics, Lucile Packard Children's Hospital and Stanford University
submit the following proposal for a Development Agreement to vest entitlements for the
Stanford UniverSity Medical Center Renewal and Replacement Project.
In arriving at this proposal, we considered not only our discussions with City staff over the
past two years, but also the substantial input received from members of tile public, the
PJaiming and Transportation Commission and the City Council during sessions dedicated
to discussions of community benefits. We considered carefully the expected impacts,
including positive impacts, of the, Project on local residents, City services, and City
revenues, and we considered the economic constraints facing'the hospitals' funding of
Project construction. Finally, and most importantly, we considered the role that .the
medical center plays' in the community and the ways in which we feel we are particularly
suited and situated to provide benefits that are within our expertise.
Based on all of these considerations, our proposal below foclIses on many ofthe benefits.
suggested and described previously by the City, including the inherent direct and indirect
community benefits provided by the hospitals today and into the future. In addition, the
proposal emphasizes benefits that we. are best suited to provide to the community and are
tied to the impacts that the Project could have on the community. We cannot agree to and·
are not proposing items unrelated to medical center services and impacts.
, ,
In addition to the principles that guided our selection. of community benefits, the items and
aSsociated dollar amounts identified in this proposal are based upon our best estimates of
the cost of Project constrocti(ln and'Project initigation. These are difficult economic times
and the hospitals have a limited amount of money they can commit to providing benefits to
the City, over ,and above what is a reasonable mitigation of impacts. We do not yet know
precisely what will be required by the City as a "mitigation" nor whether the City will
change its existing regulations to increase the cost oftbe hospitals' project.
This proposal is based on the Development Agreement Conditions and Understandings set
out below in the last part of this letter, as well as upon the following essential assumptions:
300 P."", Drive -1I320ll. /IIIC ~l30, S1ftnford C,H4:ro5, Telephon.6S().721·2676
, City MrulagerJam •• Keene
Page 2
• The Project is approved by the City substantially as described in the current version,
of the Project application and as presented to the Architectural Review Board, '
including the applicants' proposed Comprehensive Plan amendments, zoning,
jurisdictional boundary change, and architectural review approvals.
• The City does not enact new regulations or modify existing regulations that would
apply to the Project prior to approval of the Development Agreement.
• The City does not impose, through the zoning ordinance, conditions of approval or
other meatlB, requirements other than those currently requiied by the City's
Mll1Iicipai Code or those that constitute feasible mitigation measures that will
reduce the Project~s significant environmental impacts.
• The term of the Development Agreement will be fot 30 years. Obligations in the
Development Agreement that are for "the life of the Project" are for 51 years.
The following deal poipts are presented for consideration by City staff as the conceptual
basis for a negotiated Development Agreement. Of course, these deals points can be
changed at any time up and until the Development Agreement is final and signed by the
parties. .
HeaUbCare
Health Care: ongoing Direct and Indirect Hospitals Community Benefit.
The Agreement will recognize that the mO,st important oommunity benefit
will be the applicants' investment in seismically safe, state-of-the-art
facilities that wiU enable the hospitals to continue to provide high-quality
patient care and the School of Medicine to perfonn research leading to
ground brealdng technologies and treatments.
Advancements in medicine that have taken place at the Stanford University
Medical Center Include pioneering achievements In transplantation
medicine, advancements in cancer care through the Introduction of the
linear accelerator and the cyberknife, leadership in prenatal diagnosis and
treatment, discovery of the protein that appears to be the root cure of type I
diabetes, and discOvery of the link between exercise and increased "good"
cholesterolleve1s.
In addition to World-renowned medical breakthroughs, in 2007 the benefits
provided by the hospitals equate\l to the following:
• 37,138 Inpatientsadmitted
• 44,073 emergency department visits
• 5.432 babies delivered
300 P'fI,(tur Driv'C -H3100· MJC 5230, StAnford CA ~"'30!j, TeltphOM 650·711<l873
It is important to emphasize that the hospitals served more than two-thirds
of the Palo Alto residents who required hospitalization in 2007. The
addition ofm6re beds fur adults and children will alleviate overcrowding and allow the two hospitals to serve patients who currently must be turned
away. Iri 2008, 924 patients could not be admitted to the hospitals because
of a shortage of availabl~ beds. .
3
The hospitals Iilso provide the only Level I Trauma Center between San
Francisco and San Jose. The Trauma Center and the Emergency
Department ensure critical emergency preparedness and response resources
fur the cominilnity in the event of an earthquake, pandemic, or other 1lll\ior
disaster. The expansion of the Emergency Department and the .associated
iiWilities needed to support the ED services will solve the critical problem
ofa wOefully undersized facility fot the volume of people seeking care. In
the last year, the Emergency Department had to be closed numerous times
due to 1ack of facilities. .
Health Care: Adgitioml Qf(ered gommunity Benefits. The hospitals
propose to fund the following new programs specifically to benefit residents
of Palo Alto. Each of these :funding obli8lltions will commence at issuance
of the first grading permit for the Project.
• $3 million for in-patient and out-patient services at Stsnford
. Hospital and Clinics and Lucile Packard Children's Hospital for
residents of Palo Alto who have a self-payment responsibility
beyond their fill8!lcial means. This program is additional to the
hospi~s' charity policies. The hospitals will maintain and
distdbute this fund, with reporting to the City of Palo Alto when the
fund is depleted. The reporting will be in a form that complies with
all applicable privacy laws and policies.
• $4 million for community health programs within the City of Palo
Alto, paid in equal annual amounts over 10 years to selected
programs. The hospitals will work with a community advisory
board to select the specific community health programs to receive
:funding. Bxamples of potentially eligible health programs and
groups include the Mayview Health Clinic, health programs in the
public schools, seniors health services provide4 by Avenidas and
Lytton ,Gardens, paychiatric services at the Opportunity Center,
programs for child and adolescent suicide prevention, Breast Cancer
Connections, and health programs provided by Taube Koret Campus
fur Jewish Life, Abilities United, Palo. Alto YMCA, and Children's
Health Council. .
30t) Pasteur llrlv" .... "3%00 -rille 5:2.36, ShmflH'd CA 94305, Telephone 6SO~ 7Z 1-2178
4
Palo Alto Fiscal Benefits
Palo Alto Fiscal Benefits: Direct and Indirect Hospitals Community
Ben!!fits. The hospitals provide a positive economic benefit to Palo Alto
and tlWsurrounding area. Project constluction will provide additional jobs,
increase spending, and bring immediate added revenues to the City of Palo
Alto . .The Fiscal Impact Report prepared by CBRB Consulting estimates
that constluction spending and associated use taxes will bring $8.3 million
to the City's general fund as the Project is built out.
Ih addition, the hospitals will pay Community Facilities and Citywide
TranSportation Impact Fees as follows:
• $5.8 million in eommunity Facilities Fees for parks, community
centers and libraries. .
• $2.0 million in Citywide Transportation Impact Fees for public
facilities and services that P:llieve citywide traffic congestion caused
by new developmant projects, including advanced transportation
mlUlIigement and infonnation systems, expanded shuttle transit
services; and bicycle and pedestrian improvements. The applicants
. will not seek credit against this fee for fonding the improvements to
11'ansit, pedes11'ian and bicycle linkages described below.
Palo AltO Fisca! Betiefitsj Additional Offered Community Benefits. The
hospitals propose to obtain a use tax direct payment permit from the State of
California in order to increase, on an ongoing bll!lis, the local tax allocation
for the hospitals' purchases. The hospitals will maintain the use tax.direct
payment permit for the life oftbe Project, assuming the State continues to
administer the usc'tax direct payment pennit progrsm or a substantisUy
equivalent program.
Reduced Vebicle Trips
Reduced Vehicle Trips: Direct pad Indirect Hospitals Communitv Benefit.
The hospitals provide a robust program to minimize commuting by way of
drive-alone vehicles, which includes the following components:
• Incentives to remnn from driving or to participate in carpools,
including payments to employees who agree not to drive to work of
$282 in "Clean Air Cash" or other CP:Idit for participating in a
carpool program, complimentary parking for carpools, reserved
parking spaces for caIpools and .vimpools, online ride matching,
pretax payroll deduction for transit passes, emergency rides home,
free car rental vouchers, Zipcar car sharing credits, and other gifts
and rewards.
300 'PaIJteuto Drive -K3100 ~ J\II/C 5230, Stttnfm'd CA 94305. Telephone 650-72 1-2878
5
• .stl\nford University runs; a free comprehensive Marguerite Shuttle
system, supported by payments from the hospitals, that connects the
hospitals to local transit, Caltrain, shopping and dining.
• The hospltsls provide an Bco Pass to their employees, which allows
free usc'ofVTA buses and light rail, the Dumbarton Express, and
, the Highway 17 Express, and the Monterey-San Jose Express.
• The hospitsls provide free use of the U-Line Stanford Express that
connects BART and the ACE train, and the Ardenwood Park & Ride
, to Stanford.
• Stanford also provides an extensive transportation website, transit
pass sales, alternative transportation information at neW employee
orientation, regular e-mail updates to cOmmute Club members and
, parking permit holders, one-on-one commute planning assiatance,
and a connnute cOst and carbon emissions calculator.
• ' The hospitals also provide services to bicyclists; including maps,
clothes lockers and showers, bike lockers, safety education, and
commute planning ,
As described above, in connection with this ~roject, the hospitals also will
be paying $2 million In Citywide Transportation Impact Fees for public
facilities and services that relieve citywide traffic congestion caused by new
development projects, including advanced transportation management and
information systems, expanded shuttle transit services, and bicycle and
pedestrian improvements
Reduced Yel!icle Trips: Additional Offered Community Benefits. To
further minimize commute trips in drive-alone vehicles, the hospitals
propose to provide the following benefits.for the life of 1lie Project:
• The hospitals will purchase annual Caltrain Go PasseS (free train
passes) for all existing and new hospital employees who work more
than 20 hours per week at a cost ofupto $1.3 million per year,
, asSuming Caltrain continues to offer the Go Pass program at its
current cost (plus cost of living adjustments) or Caltrain offers a
substantially equivalent program at approximately the same cost.
WhIle the hospita1s cannot guarantee a specific level of Caltrain
ridership, if Caltrain ridership by hospitsl employees reaches the
sinne level as is being achieved currently by University employees,
this program would result in offsetting all peak hour trips from the
Project's new employment.
300 P ..... , DI'IY<-H3200 -MIC 5230, s ... r.,'d CA. 94395, Telephone 651)·121-2878
6
• The hospitals will fund expansion of Marguerite service by
purchasing additional shuttles at a total capital cost of up to $2.0
million, and by funding ann\ll1l operating QOSts of providing
increased shuttle service in an amount of up to $450,000 per year in
order to acoommodate the increase in demand for sh\lttle services
resJJlting from increased Caltrain ridership by hospital employees.
• . The hospitals will provide an onsite Transportation Demand
· Management Coordinator.
• The. total.value of these benefits over the life of the Project is $90.4
million.
Linkages
Linkijgesi' Additional Offered Community Reriefjts. To further encourage
use of, <;altrain, bus and. other transit services, and to enhance pedestrian and
bicycle cormections between the boapitals and downtown Palo Alto, 'the
hospitals propose to fund the following improvements:
• $2.25 million for improvements to enhance the pedestrian and
bicycle cOnnection from the Palo Alto Intermodal Transit Center to
the existing intersection at El Camino Real and Quarry Road, with
'up to $2.0 million of that amount going to the development of an
· atInIctive, landscaped passive park/green space with a clearly
nuUked and lighted pedestrian pathway, benches, and flower
borders. This amount will be paid to the City QfPalo Alto upon
. . issuance of the first gniding permit for the Project, and the City wili
be responsible for constructing these improvements.
• $400,000 for improvements to the public right-of-way to enhance
the pedestrian and bicycle connection from HI Camino Real to
Welch Road along QUarry Road, including urban design elements
and way fmding, wider bicycle lanes, as necessary, on Quarry Road,
enhanced transit nodes for bus and/or sputtle stops, and prominent
bicycle facilities. This amount will be paid to the City of Palo Alto
· upon issuance of the first grading permit for. the Project, and the City
will be responsible for constructing these improvements.
• Up to $700,000 for improvements to enhance the pedestrian
cormection between the Medical Center and the Stanford Shopping
Center going from Welch Road to Vineyard Lane, in the ares
adjacent to the Stanford Bam. The hospitals will be responsible for
constructing these improvements prior to Project completion.
3410 P8.1e\w Drive -1l310& .. MIC 52301 Stflnrord CA 94305. Telephune '50~111-2818
. , ,
7
Housing
Housing; Additional Offered Community Benefits, The Hospitals are
exempt from the City's housing impact requirements under Section 16.47 of
the Palo Alto Municipal Code. Like other exempt entities (churches,
· schools and City facilities), hospitals provide needed services to the
conununity, and therefore are not expected to also provide community
services in the funn of affordable housing, Nevertheless, in rec9gnitiOl) of
the relatively large number of jobs created by the Project, the need for City
subsidies to entice affordable housing development, and the City's stated
desire to increase its affordable housing supply in Palo Alto, the hospitals
propose to provide payment to the city's housing fund in the amount of
$23.1 million. . .
· This amount is the same amount that a for-profit developer would pay under
· Municipal Code section 16.47, based on the City's current in-lieu housing
· fee, The Agreement will provide that the portion of the fee that cOm!sponds
to each new structure will be due and payable prior to the issuance of the
building permit by the City Or OSHPD for that structure, and the amount of
the fee will be calculated at the fee rate in effect on June 1,2009.
City Services
City Services; Direct and Indirect Hospitals Communitv Benefits, The
Fiscal Impact Report prepared by CBRE Consulting concludes that
revenues generated by the Project will more than offset the City's on-going
cost of providing services,
City Services: Additional Offered Community Benefits. To further support
the provision of City services, the hospitals propose to provide $70,000 in
funding for a jurisdiction-Wide Standard of Service Fire Study, This '
funding will be proVided to the Palo Alto Fire Department prior to issuance
of the fIrSt grading permit for the Project.
SehoolFees
Schoo! Fees: Direct and Indirect HOI'PilAls Cgmmunity Benefits. The
hospitaJs will pay School Fees to the Palo Alto Unified School District in
the amount of$616,413, based upon the cUm!ntly applicable School Fee.
The applicable fee for each new or expanded building will be due and
payable prior to receiving a building permit from the City afPalo Alto. The
hospitals propose that, for buildings subject to OSHPD jurisdiction, school
fees will be due within five days of issuance of a building permit from
OSHPD,
300 Pluttur Drtve -"31:00· M/C 5130. Shlnford CA 9430S. Telephone 650~721~1878
Development Agreement
Conditions and Understandings
, The proposal is based on ,our understanding that the Development Agreement will apply
only to development of the Project, and not to any other property owned by Stanford or
any other project proposed 1>Y the hospitals or Stanford. In addition, we have base our
proposal on the following anticipated benefits of entering into a Development Agreement:
Project Approvals, City :RegulatioJU
The Agreement will vest the applicants' right to construct, use and occupy
the Project in accordance with (a) approvals for the Project granted by the
City. specified in the Agreemellt and acceptable to the hospitals and
. stanford, including amendmenta to the Comprehensive Plan and mning
. ordinance, a jurisdictional boundary change, and architectural review
appJOval (collectively" Project Approvals"); (b) the ordinances, rules,
regulations, and official policies of the City in force and effect on June I,
2009 as modified by the Pioject Approvals ("City Regulations") and such
8
, other ministerial and discretionary approvals ,that are necessary or desirable
for the economic and efficient fOnstruction. use and occupancy of the
Pr9jeCt that may be granted subsequent to the execution of Ibis Agreement
("Subsequent Approvals"). Through incorporation of the Project
Approvals. th~ Agreement will specify the permitted uses of the property,
the, density or intensity of use. the maximum height and size of proposed
buildings, and provisiona (if any) for reservation or dedication of land for
public purposes.
The City will agree to grant all Subsequent Approvals, whether ministerial
or dlacretionary, subject only to its reasonable detenninstion that the
application for the requested Subsequent Approval is complete and
. consistent with the PrOject Approvals, City Regulations, and any new City
rules, regulations, and .policies which do not confJict with the Project
Approvals and City Regulations. The City will agree not to impose any
requirement or condition on Subsequent Approvals or development or
operation of the Project other than those required by the Project Approvals,
City Regulations, anq any new City rules, regulations, and policies which do
not c911tlict with the Project Approvals and City Regulations. The
Agreement will provide that the parties will cooperate and diligently work
to implement all P;roject Approvals and to expeditiou~ly review and act
. upon all requests for Subsequent Approvals. From and after approval, each
, Su'bse4uent Approval shall be vested under tl)is Agreement to the same
extent as.the Project Approvals.
300 Pasteur Dr(ve -H.3100 ~ M/C S130. Stl!nrord CA 9430S. Telephonl' 6SU·711-1S'lS
'" , .
9
Project Design
The Agreement will include the Design Guidelines for the Project as an
attachment, For those portions of the Project that hlive not yet received
architectural review approval by the time fue City approves the
Development Agreement, the Design Guidelines will be the exclusive
design criteria applicable to the Project components, and the exercise. of the
City'sarcbitectural review discretion will be limited to detennining Whether
a proposal Is substantially consistent with the Design Guidelines, If
8rebitectural review approval or any other type of site or design apptOval is
needed for Subsequent Approvals, the decisions shall be made by the
Director of Planning and Co~unity Environment, after recommendation
. by the Architectural Review Board, subject only to appeal to the City
Council (pursuaht to Section 18.77.070 ofthe Municipal Code).
Publle Improvements, Fees and Exaction.
The Agreement will describe the public improvements (if any), fees,
dedications and exactions required by the Project Approvals or otherwise
required under the Development Agreement, and the Agreement will
provide that no other public improvements, fees, dedications or exactions
will be required.
Inspections
The Agreement will describe protocols and procedures for Subsequent
Approvals and inspections, i~luding agreed upon tum around times.
Phasing Schedule
Phasing Schedule: The Agreement will confirm that the applicants are not
required to initiate or complete development of the Project, or anypomon
thereof, or to initiate or complete the Project components within any period
of time or in any particular order. The Agreement will acknowledge that
the applicants may develop the Project components in such order and at
such mte and times as they deem appropriate within the exercise of their
sole and sul:!jective busineS$ judgment. The applicants also may choose, in
their discretion, to phase the Project.
Project Modll1eation
The Agreement will provide a process and standard of review for future
City considemtion of applicant-proposed modifications to the Project,
including to Project phasing if the applicants so choose, with the objective
3flO Pasteur Ol'Ivt' -fi320J) -!\tIC 5230. StAnford CA 94305. Tt'!It'!phont 650-"I'21w2878
10
of expedited review of project modifications and City approval of such
moclifications if no new or substantially more severe environmental impacts
would result.
No Moratorium
The Agreement will provide that neither the right to develOp nor the timing
of developinent will be affected or limited by a phasing schedule, growth
control ordinanCe, rnorstorium or suspension of rights, whether adopted by
the City COuilcil or a vote of the clti~ through the ini~ve pf0Qe8S
eXm as required by supervening federal or state law , order; rule &r .
regu13tion. Ifa moratorium negatively affects twing of the Project, the
applicants llIliy elect to extend the term of the Development Agreement for
the duration of the moratorium plus ten years.
Term of Agreement
The term of the Agreement will commenCe as of the Effective Date and
contin~ 30 years ftom the Effective Date, or until earlier terminated by
mutual consent of the parties, except as to those obligations that expressly
extend for the life of the Project, which is defined to be si years.
Other
The Agreement will include provisions addressing annual review,
amendment, dispute resolution, remedies and notices . .
Thank you for considering our proposal. We look forward to discussing these terms with
you during the next few weeks •
•
~,p·~~n~~
Vice President, Special Projects .
Stanford Hospital & Clinics
300 rasteUI" DriVE--H3200 ... we 5230. Sluoford CA 94305. TelepluHle 6SO· 721 ·2878
'f, ,
Stanford University Medical Center
Development Agreement Negotiations
Preliminary Counter Proposal Term Sheet
Updated March 29, 2010
Attachment B
Introduction: Staff recommends that Stanford's June 15, 2009 Development
Agreement offer be supplemented with the Development Agreement Terms listed
below. Note that the below items are staff recommendations and any final Term
Sheet is subject to Council approval. Approval of a Development Agreement is a
legislative action subject to CEQA review. The purpose of now developing deal
terms is to assure adequate coverage, where applicable, by the DEIR and Final
EIR.
Guiding Principles: Staff has developed the following guiding principles in
approaching the preliminary negotiations:
1. Minimize fiscal impacts to City. Ensure that the project does not have a
negative fiscal impact on the City through focusing, among other things,
on revenue guarantees and robust analysis of long term project expenses.
2. Require project mitigation. Ensure that zoning ordinance and Conditions of
Approval adequately address all project mitigations. Ensure that General
Fund is not unfairly burdened with long term impacts of project.
3. Preserve community health care. Ensure that local benefits of hospital and
clinics will be retained, despite transition towards world class hospital
status.
4. Enhance City infrastructure. Recognize mutual interest in preserving high
standard of economic and community vitality. Partner with Stanford to fund
long term infrastructure needs of community (capital programs, housing,
transportation, broadband).
Supplemental Development Agreement Terms
A. Health Care
• Extend financial assistance subsidy to qualifying residents ($3
Million) from 10 years to life of DA
• Extend community health programs payment ($4 Million) from
10 years to life of DA
• Continue appropriate hospital privileges for community
practitioners
• Continue SUMC's current community health/wellnessldlsease
prevention programs
• Fund co-located EOC facility in new buildings within Palo Alto
1
B. Fiscal
Attachment B
• Explore innovative health care initiative/partnership in area of
broadband/fiber to the premises
• Ensure project is at least cost neutral by guaranteeing revenue
projections to offset expenditures, funding extra public safety
FTE's and fully funding mitigations
• Payment in lieu of property tax
C. Transportation Mitigation
• Explore re-defining TOM program (GO Pass) and re·directing
funds toward expanded shuttle program and other citywide
infrastructure improvements. See G below.
D. Pedestrian and Bicycle Linkages Benefit
• Note: These items will be covered as project mitigations.
E. Housing Benefit
• Note: Hospital zone will include additional measures to address
jobs/housing impact identified in the EIR
F. School Fees Benefit (PAUSD)
• Work with School District and City to minimize impacts to
schools
G. Economic and Community Vitality
• Contribute $30 Million to fund needed Citywide Infrastructure
such as Public Safety Building, EOC, and expanded shuttle
programs
2
ATTACHMENT C
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER
DATE: DECEMBER 7, 2009
REPORT TYPE: STUDY SESSION
DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
CMR: 453:09
11
SUBJECT: Review of the Stanford University Medical Center Facilities Renewal
and Replacement Project
EXECUTIVE SUMMARY
Staff will provide an update to the City Council of progress regarding the Stanford University
Medical Center (SUMC) project, particularly the Environmental Impact Report (EIR)
preparation and the Development Agreement discussions, The City contracted with the
environmental consulting firm PBS&J to prepare a joint EIR for the SUMC Facilities Renewal
and Replacement Project (Project) and Simon Properties -Stanford Shopping Center Expansion
Project, In April of 2009, Simon Properties formally withdrew their request for the Stanford
Shopping Center Expansion Project.
Over the past several months, staff has been working with the environmental consultant to
extract the Shopping Center Project from the environmental analysis. This involved updating
most sections of the EIR and updating the City'S traffic model.
In June 2009 Stanford provided the City with a Development Agreement proposal.
Representatives from Stanford and the City have initiated discussions about the draft business
terms of the Development Agreement.
RECOMMENDATION
The purpose of this Study Session is to provide the City Council with an overview of the EIR
and the status of the Development Agreement negotiations and allow for Council comment. The
current City Council has provided substantial input and direction to Staff and the applicants
throughout the review period of the project. This session is an opportunity for this City Council
to provide their additional Project comments before the new City Council is seated in January.
BACKGROUND
The Stanford University Medical Center comprises the general area between Sand Hill Road,
Vineyard Lane, Quarry Road, Pasteur Drive, and including Welch Road and Blake Wilbur Drive.
The Project applicant is proposing the demolition of the existing Stanford Hospital and Clinics
(SHC) .at 300 Pasteur Drive, construction of a new hospital building, renovation and expansion
1
of the Lucile Packard Children's Hospital (LPCH), recoristruction, of the School of Medicine
(SoM) facilities, and construction of a new medical office building near Hoover Pavilion to meet
State mandated seismic safety standards (SB 1953) and to address capacity issues, changing
patient needs and modernization requirements. SB 1953 requires hospitals to retrofit or replace
noncompliant facilities by january 1,2013. There have been some legislative attempts to extend
this deadline and Stanford has received a partial concession from OSHPD to receive early plan
review.
The renovation and expansion project, which would be constructed over a IS-year horizon,
would result in a new increase of approximately 1.3 million square of hospital, clinic, and office
space. The Project includes a request for the following entitlements: '
• Comprehensive Plan amendments to:
o Change 701,703 Welch Road and a small portion of Santa Clara County land on
Welch Road proposed to be annexed "Major Institutional/Special Facilities" land
use designation.
o Amend Program L-3 to revise the Citywide 50-foot height limit to allow
exceptionS for taller buildings within the proposed "Hospital District."
o Amend Policy L-8 to clariiy that the hospital and treatment uses ate exempt from
the development cap.
• Zoning Code and Map amendments to:
o Create a new "Hospital Zone."
o Rezone 701 and 703 Welch Road from MOR to the new "Hospital Zone."
" 0' Prezone the site to be annexed to the City to the new "Hospital Zone."
• ~ex the small parcel described above.
• ARB review of the SHC, LPCH, FIMI, medical office building at Hoover Pavilion, and
Design Guidelines.
• Development Agreement
• Certification of an Environmental Impact Report
The Project applicant has submitted seven substantive project amendments with the most recent
amendment submitted on June 2, 2009. Since the Project was first submitted to the City, SUMC
has made changes based upon Staff analysis and ARB, Planuing and Transportation Commission
and City Council input. These changes include significant modifications to site planning and
building massing, revisions to the location of parking garages and site access for automobiles,
refinements to the pedestrian and bicycle network to promote stronger linkages and connections,
and changes to building placement and design to protect significant oak tree specimens.
DISCUSSION
Environmental Impact Report
The EIR will address the potential environmental effects of the construction and operation of the
Stanford University Medical Center Facilities Renewal and Replacement Project. The Project
would demolish and replace on-site structures, .adding approximately 1.3 million square feet of
net new floor area.
2
The following is a summa;:y of the key EIR sections and possible mitigation measures.
Land Use .
EIR analyses of land use and planning generally consider the compatibility of a project with
neighboring areas, change to or displacement of existing uses, and consistency of a project with
. relevant local land use policies that have been adopted with the intent to mitigate or avoid an
environmental effect. With respect to land use conflicts or compatibility issues, the magnitude of
these impacts depends on how a project affects the existing development pattern, development
intensity, traffic circulation, noise, and visual setting in the immediately surrounding area ..
Comprehensive Plan Policy (L-8) addresses growth in non-residential square footage for nine
planning areas evaluated in the 1989 Citywide Land Use and Transportation Study. The City has
initiated a Comprehensive Plan amendment to provide clarification of this policy. City staffwill·
recommend that the policy should not limit growth of hospital and treatment center uses. If
. adopted by the City Council, the amendment will modify the text of the Policy to clarify that
such uses are exempt under this policy. Text modifications to the Comprehensive Plan are also
proposed to clarify proposed building height exceptious within the proposed hospital zone
district (discussed below). Following adoption of the proposed amendments, the Project would
not conflict with any Comprehensive Plan policies.
To address zoning issues, the Project sponsors propose creation of a new zoning district that
could be applied by the City to land used specifically for hospitals and clinics, associated
medical research, medical office, and support uses. The new "Hospital Zone" would include
development standards that accommodate the Project.
Visual Quality
This section of the EIR will discuss how development of the Project would affect the existing
visual quality in the Project Area and its vicinity. Visual quality pertains to howpeople see and
exparience the environment, particularly its visual character. Visual character consists of spatial
and scale relationships, and the line, form, color, and texture of an area's natural features and
man-made elements. Natural features include landforms, street trees, rock outcrops, vegetation,
and water bodies. Man-made elements include buildings, structures, parking areas, roads,
roadway interchanges and overpasses, above ground utilities, signs, and lighting fixtures. Full
buildout conditions will be depicted through visual simulations prepared by William Kanemoto
and Associates.
The Project may degrade the existing visUal character and quality of the SUMC Sites during
construction. Possible mitigation measures could be to aesthetically improve portions of the
project site that would remain unimproved for an extended period and screen the construction
zone from view by passersby along the public streets and sidewalks, conCeal staging areas with
fencing and remove construction debris and refuse would reduce visual impacts during
construction to less than significant.
The analysis also considers if the Project would substantially degrade the existing visual
character or quality of the SUMC Site and its surroundings, and alter public viewsheds, view
corridors or scenic resources. Given the size and scope of the Project it is likely that there would
3
be visual character or quality impacts. Architectural Review of the Project would consider
among other factors, whether the Project has a coherent composition, and whether its bulk and
mass are harmonious with surrounding development. Architectural Review approval cannot be
granted unless the Project meets stringent criteria, including a finding of consistency with the
sixteen Architectural Review Board (ARB) findings. Compliance with the ARB findings and
Comprehensive Plan visual quality policies would typically reduce impacts to a less than
significant level.
Transportation
This section of the· EIR will evaluate the potential transportation impacts resulting from
construction and operation of the Project. Potential impacts include the addition of project
related pedestrian, bicycle, transit, and auto trips to the surrounding transportation system,
resulting in an increase in traffic which is substantial in relation to the existing traffic load and
capacity of the street system; exceed either individually or cumulatively a level of service
standard established by the c!~ngestion management agency for designated roads or
highways; result in a change in r traffi pattems; substantially increase hazards due to a design
feature or incompatible uses; res III madequate emergency access; result in inadequate parking
capacity; or conflict with adopted policies, plans, or programs supporting alternative
transportati on.
The basis for the traffic analysis will be the revised citywide transportation model that was
originally developed in 1996 and last updated in 2008. The purpose of the model is to accurately
forecast demand for travel by vehicles, and conforms to upgraded modeling metbodologies
adopted regionally. The citywide transportation model has been updated to account for changes
in Palo Alto demography, street network, transit services, and land use patterns.
The Santa Clara Valley Transportation Authority (VTA) travel demand model formed the basis
for the City's model, using 2005 Association of Bay Area Goverrnnent (ABAG) projections for
growth. The traffic conditions of the ClCAG (City/County Association of Goverornents of San
Mateo County) were investigated for the study area and reviewed by the City and the project
team. The Santa Clara Valley Transportation Authority (VTA) travel demand model growth
estimates were modified to an average 1.6% annual traffic growth through 2025. The City model
was initially developed without constrained volumes in the Palo Alto area. The City model was
then constrained at four identified locations (Sand Hillfl-280, El Camino Real/San Antonio, EI
Camino Real/Sand Hill, .MiddlefteldlSan Antonio) based on those roadway capacities and VT A
travel demand growth rates. The traffic volumes at the freeways were constrained to their
capacities. The model results were reviewed and refined several times by the City to calibrate
intersection turning movement counts for both A.M. and P.M. peak hour, link and intersection
turning movement volumes of years 2006, 2015, and 2025 for both A.M. and P.M. peak hour,
and 66 study intersections with turning movement volumes.
Recent updates to the Palo Alto model have resulted in a more accurate tool to analyze traffic
within Palo Alto as compared with other adjacent and nearby cities. The limitations of the Palo
Alto model are evident as when the analysis reflects traffic volumes entering Palo Alto from
other jurisdictions. The result is that more traffic would enter Palo Alto through the roadway
gateways than what would be expected due to intersection capacity constraints. Concerns have
4
been. raised with the traffic model's regional growth assumptions. To address this, the model has
been modified to constrain additional gateways in addition to the four gateways mentioned above
(for a total of 11 constrained intersections), to limit traffic entering the. City during peak hours.
Post-processing the model will also look at the trips and spread some trips beyond the peak hour
. and/or be transferred to other roadways. The process of constraining gateways is commonly
practiced to more precisely addJ;ess these variables. The VTA has previously accepted these
adjustments to address model limitations. . .
Some possible mitigation measures include: Participation in region-wide conunute incentive
programs, construction/improvement of bicycle lanes and pedestrian crossings, expansion of the
City shuttle program, adjustment of traffic lanes, and signal timing adjustments. The EIR is also
evaluating the potential for Cal Train Go Pass use and remote parking as a potential mitigation.
The City Council has historically not approved physical widening of traffic lanes or physical.
increases to intersections to accommodate increased traffic. These types of mitigations are not
expected to be recommended in the EIR.
A revised Traffic Impact Analysis is tentatively scheduled to be reviewed by the Planning and
Transportation Commission (Conunission) and City Council prior to the release of the Draft EIR. ,
Air Quality
This section of the EIR will evaluate the potential impacts on air quality resulting from
construction and operation of the proposed Project. Possible air quality impacts could result from
construction activities, emergency generator testing and operation, increased vehicular traffic to
the hospital, and other stationary source emis~ions.
'\ Possible mitigations include the development and approval of a construction management plan to
limit the operation or machinery and control on-site dust, limits on the testing on generators, and
similar practices.
Climate Change
It is recognized that anthropogenic (human caused) emissions of greenhouse gases and aerosols
are contributing to changes in the global climate, and that such changes are having and will have
adverse effects on the environment, the economy, and public health. These are cumulative
effects of past, present, and future actions worldwide.
Pursuant to SB 97, the State Secretary for Natural Resources is in the process of promulgating
thresholds of significance for assessing greenhouse ·gases. The Governor's office of Planning
and Research (OPR) has recommended guidelines for assessing the significance of the project's
impact on greenhouse gases; and it is expected thai the Secretary will formally adopt such
guidelines by January 2010. While OPR's suggested guidelines have not been formally adopted,
in anticipation of their adoption the ErR applies the guidelines for assessing the greenhouse gas
impacts of the project. The OPR recommended guidelines provide that a lead agency should
make a good-faith effort, based on available information, to describe, calculate or estimate the
amount of greenhonse gas emissions. resulting from a project. In making this assessment the
agency may consider "[tJhe extent to which the project complies with regulations or
requirements adopted to implement a statewide, regional, or local plan for the reduction or
5
mitigation of greenhouse gas emissions." In accordance With thl;lse draft guidelines, the EIR will
assess how the Project complies with the City adopted Climate Protection Plan.
During buildout and operation of the Project, greenhouse gases would be emitted as the result of
construction activities and deliveries; new direct operational sources, such as operation of
emergency generators, natural gas usage, medical nitrous oxide usage, and operation of fleet
vehicles and helicopters; and indirect operational sources, such as production of electricity,
steam and chilled water, transport of water, and decomposition of project-related wastes. The
ElR will discuss how the development proposed under the Project would contribute to emissions
of greenhouse gases. .
For the EIR, emissions from sources such as construction, vehicles, energy consumption, and
solid waste generation will be inventoried and discussed quantitatively and qualitatively.
Emissions associated with the water supply and wastewater treatment will also be discussed. The
Project could result in a cumulatively considerable contribution to significant climate change
effects if they would fail to further the goals and policies established in the City's Climate
Protection Plan.
The City's Climate Protection Plan provides a roadmap that the City of Palo Alto will follow in
complying with (or exceeding) the State of California's greenhouse gas emissions goals. While
the City has not mandated specific measures for individual private projects, its goals and policies
are a useful tool for evaluating whether an individual project would do' its part to minimize its
contributio.n to emissions of greenhouse gases. The City recognizes that meeting the State's
goals will require both substantial reductions in emissions from existing sources, and reductions
in emissions from new sources compared to a "business as usual" standard. A project that
furthers the City's Climate Protection Plan policies would be a project that minimizes its
emissions of greenhouse gases by including design features and commitments that implement the
relevant policies of the Climate Protection Plan and which mitigate wherever possible, increased
emissions.
Project design features may be considered to mitigate greenhouse gases. Mitigation may also
include participation or compliance with a plan or mitigation program that would reduce
greenhouse gas emissions. A series of conservation measures are being explored, including:
energy efficient building designs, preferential purchasing of recycled content material and
extensive recycling programs, consideration of the GO Pass for all eligible hospital employees,
expansion of the Marguerite Shuttle service, green building practices to optimize shading,
day lighting and natural ventilation and the use of sustainable building materials.
Noise.
This section of the EIR will evaluate the potential for noise and ground-borne vibration impacts
resulting from implementation of the Project. Projected increases in noise levels in the Project
Area can be expected from additional traffic, increased medical helicopter flights associated with
the Project, new mechanical systems installed at the new facilities, and construction activities.
These noise sources are evaluated to determine whether they would cause a substantial
temporary andlor permanent increase in ambient noise levels in the vicinity of the Project Area;
exposure of people to excessive noise levels or ground-bomevibration; and/or exceedances of
6
"
standards established in the City of Palo Alto Comprehensive Plan, or any other applicable
standards.
Implementation of Best Management practices to reduce construction noise would help reduce
construction related noise impacts. Special demolition and construction requirements would help
reduce vibration impacts on Hoover Pavilion.
Cultural Resources
This section ofthe ErR will assess the Project's potential impacts on cultural and paleontological
resources. Cultural resources are .commonly classified in three categories: (I) prehistoric
resources, (2) historical resources, and (3) Native American resources. Historical resources can
include buildings, structures, objects, or sites.
The Project could have a significant impact on two identified historical resources •• the Hoover
Pavilion and the Main Medical Center Complex designed by Edward Durell Stone with
landscaping designed by Thomas Church. Implementation of mitigation measures such as
establishing a protective zone around the Hoover Pavilion during construction and demolition.
would reduce potential vibration and construction-related impacts to the Hoover Pavilion.
The Stone Building (Main Hospital), the location of the first North American heart transplant, is
proposed to be demolished. Mitigation measures that could reduce this impact include
preparation of documentation using the National Park Services' Historic American Building
Surveys Level III Guidelines for each of the buildings in the Stone Building complex prior to
demolition of each building that comprises this historic resource (East, West, Core, Boswell,
Edwards, Lane, Always, and Grant). In addition, site-specific history and appropriate contextual
information regarding the Stone Building complex to focus on the reasons for the buildings'
significance: the ground breaking heart transplantation program and the role of E.D. Stone in the
design of the complex. This would include: architectural descriptions of the major exterior
features and public rooms within the Stone Building complex as well as descriptions of tyPical
patient, office, laboratory and operating rooms; photographic documentation of the interior and
exterior of the Stone Building complex and Thomas Church designed landscape features; and
distribution of written and photographic documentation to agencies and the preparation of
permanent interpretive displayslsignage/plaques. Because none of these mitigation measures
would completely mitigate this impact an Historic Preservation alternative is also analyzed (see
Alternatives section below). .
Biological Resources
This section addresses potential effects on existing biological resources, which are special-status
plant and animal species within the Project Area. Biological characteristics, such as habitat types
and plant and animal species present, will be described in the EIR based on federal, State and
local regulations using site-specific information developed for the Project from published
technical information, consultant analyses and on-site surveys.
The Project could have a significant.impact on protected oak and redwood tree species within the
Project area. Potential mitigation measures would require avoidance of tree removal, design
mQ'lifications to allow adequate soil and solar access during construction, and site-specific
7
preservation measures. If avoidance measures cannot be achieved, and protected trees are'
removed, not retained, or relocated, then the Project could result in a significant and unavoidable
impact. Because it is unlikely that avoidance measures can be fully implemented to the extent
that all protected trees to be removed would be replaced or relocated, impacts would be
conservatively assumed to be significant and unavoidable. In response, Stanford has prepared an
Alternative to be studied in the EIR that shifts the SHe and one of the SoM building (FIMl)
footprints around to avoid significant oak trees. (See Alternative section below.)
Geology, Soils, and Seismicity
Geology, soils, and seismicity conditions are important aspects of all development projects in the
San Francisco Bay Area. Although most projects have little or no effecton geology, any project
involving construction would have some effect on soils and topography, and all projects may be
affected by certain geologic events, such as earthquakes or landslides. Protection from the
effectS of geologic events is provided through existing building codes and construction
standards, land use policies, and State and local regulations.
Because one of the major effects of loss of topsoil is sedimentation in receiving waters, erosion
control' standards are set by the State Water Quality Control Board through administration of the
NPDES pennit process for storm drainage discharge. Erosion and sedimentation issues are
addressed in Hydrology because they are they are primarily related to turbidity and other
depositional effects in local and regional water bodies.
Hydrology
This section describes the hydrology and water quality conditions present at the Project Area
including surfuce and groUIldwater resources. This section evaluates whether the Project could
affect storm drainage and streams, as well as local groundwater resources in the area. Potential
impacts expanded upon in this EIR section are groUIld and surface water quality degradation
during constroction and operation, flooding and drainage, and loss of groUIldwater recharge ..
The Project could have a significant impact on groundwater quality during construction·.
Mitigation measures would be required to prevent construction site run-on and direct infiltration
to reduce this impact to less than significant.
Hazardous Materials
This section provides an . analysis of the potential for the Project to expose persons or the
environment to hazardous materials. Potential environmental impacts can IX: associated with the
potential disturbance of contaminated soils or groundwater, if present in the Project Area, as well
as risk of spills from increased future use disposal, and transport of hazardous materials and
hazardous wastes associated with project construction or operation. Specific topics presented in
this section include the types of hazardous materials that would be handled and hazardous wastes
that would be generated, known on-site contamination from historic uses, the regulatory setting
applicable to such activities, and applicable health and safety policies and procedures.
Population and Housing
This section documents the existing population, housing, and employment conditions in the City
of Palo Alto and estimates changes in current conditions that could result from implementation
8
of the Project. Demographic changes in population and employment that would result from
development of the Project are not intrinsically physical envirorunental impacts. However,
environmental effects associated with increased popUlation or daytime employment, such as
increased traffic, traffic-generated air quality and noise concerns, increased demands on public
services and utilities, and growth inducement could result from population growth. The impacts
associated with population growth are addressed separately in various sections of this ElK The
City's significance criteria treat substantial population growth and increases in the jobs to
housing ratio as significant envirorunental effects in order to ensure the effects of such growth
are analyzed. .
The Project, as proposed, would not directly result in substantial popUlation growth. It would,
however, increase local employment, Which in turn could create demand for additional housing
and result in associated population.
In addition, the Project could have a significant adverse impact on the City's jobs to employed
residents ratio and the related jobs to .housing ratio because it would generate a large number of
new jobs without adding housing to increase the number of employed residents in the City.
Possible mitigation measures include dedicating housing and/or providing a site near the Project
to house Medical Center employees, payment ,of housing fees, and an inclusionary housing'
requirement in the Hospital Zone. .
Public Services
This section addresses the potential environmental effects of the Project on public services,
inpiuding police and fire protection, schools, and parks and recreational services. Increases in
public service demand alone do not constitute a significant environmental effect. Instead, an
increase in demand for public services, such as additional staff or lengthier response times, could
lead to potentially significant enviroumental impacts only if constructing or expanding a new
facility were required and the construction or operation of the facility might adversely affect the
air, water, noise, or other aspects of the physical environment. The current EIR analysis
concludes that while the Project will likely increase demand for public services, such demand
will not result in an enviroumental impact.
For impacts to school, under proposition 1 A, payment of school impact fees by new development
is the exclusive method of considering and mitigating impacts on school facilities that may occur
as a result of approval of development of real property.
Utilities
The Project would result in increased on-site employment, visitors, and developed floor area.
These increases have the potential to create greater demand for utilities, including water supply,
wastewater collection and treatment, storm drainage, solid waste disposal, and energy (which
includes electricity and natural gas). This section assesses whether the potential increase in
demand would overtax, to a significant degree, the capacity of the infrastructure systems serving
the Project Area.
A Water Supply Assessment (WSA) was conducted for this project. In April 2009 the City
Council reviewed the SUMC WSA and directed staff to return to Council with a revised plan for
9
the Project that quantifies significant reductions in water use due to conservation measures. The
WSA has been amended and is tentatively scheduled for Council consideration in early 2010
prior to release of the Draft EIR. The EIR will include analysis and conclusions from the WSA.
Alterna,tives
CEQA and the CEQA Guidelines require that the EIR "describe a range of reasonable
alternatives to the project, or to the location of the project, which would feasibly attain most of
the basic objectives of the project, but would avoid or substantially lessen any of the significant
effects of the project, and evaluate the comparative merits of the alternatives".
Based on the objective of substantially reducing significant impacts, two No Project Alternatives,
two Reduced Intensity Alternatives, a Preservation Alternative, a Tree Preservation Alternative
and a Village Concept Alternative have been developed for the SUMC Project for evaluation in
the EIR.
No Project Alternatives
The !woNo Project Alternatives. include: (A) Retrofitting only those hospital facilities that could
be retrofitted and no new buildings would be constructed; (B) Replace only SB 1953
noncompliant structures with new structures.
Reduced Intensity Alternatives
The two Reduced Intensity Alternatives include: (A) Right-sizing SHC and LPCH. so
construction of new hospital facilities would be limited to the minimum additional square
footage required to right-size the existing LPCH and SHC facilities without adding space for
additional growth; (B) Right-size SHC and LPCH plus add 60-percent of the floor area of the
SUMC Project medical offices and 60 percent of the floor area of the SUMC Project hospital
space above the amounts needed for right-sizing.
Preservation Alternative
The Preservation Alternative would retain the 1959 Hospital Building complex, which includes
SoM buildings (Grant, Alway, Lane, and Edwards), along with the following SHC hospitallclinic
buildings: West Pavilion ("West"), East Pavilion (HEast''), Boswell, and Core. However, these
"buildings have a low seismic rating and do not comply with structural and non-structural criteria
that must be met by the deadlines imposed by Senate Bill (SB) J 953 for retrofit or replacement
of hospital facilities. Accordingly, under the Preservation Alternative, these buildings would not
be used as hospital buildings, as defined by the Office of Statewide Health Planning and
Development (OSHPD).
Tr~ Preservation Alternative
In response to a number of significant trees planned for removal, an Alternative is being prepared
that would preserve protected oak trees located in the portion of the SUMC known as Kaplan
Lawn and near Welch Road. Under the proposed SUMC Project a hospital module is proposed
to be located on the Kaplan Lawn, resulting in removal of nine protected trees. Under this
Alternative, the square footage and programmatic functions planned for this module would be
incorporated into the other hospital modules and the proposed ambulance route would be
reconfigured. In addition, the previously proposed underground SHC parking structure at the
10
WelchlPasteur intersection would instead be constructed as a structure with three levels
underground and four levels above ground along Welch Road. The Emergency Department
entrance/parking would be moved from its proposed location along Welch Road to the Pasteur
Drive side of the new SHC. The SHC patient and visitor drop-off loop would continue to be from
Pasteur Drive; however, the drop-off loop would be located farther down Pasteur Drive. The
Kaplan Lawn would not be developed, and no protected trees would .be removed at that location.
This Alternative would also include a redesign of one of the SoM buildings (FIMl) to save as
many protected trees as possible. Due to the requirements of the program, and the location of the
protected trees on the site, not all ·of the protected trees could be preserved in place with this
. alternative and would need to be relocated.
Village Concept Alternative
The Village Concept Alternative provides opportunities to enhance the SoMc Project to create a
mOTe walkable, bikeable, mixed-use, transit-oriented, and well-connected urban environment. A
key goal of this Alternative is to ensure that the Project contributes to, and does not preclude,
future opportunities to create an urban, transit-oriented village that can capture the potential
travel behavior, air quality protection and greenhouse gas reduction benefits associated with the
performance of well-designed urban villages. To achieve this end, the Village Concept
Alternative proposes features that potentially can attain the basic objectives of the Project,lessen
environmental effects of the Project, and provide benefits of an urban village environment
consistent with the values and character of the City of Palo Alto.
This Alternative includes the SUMC Project, recommendations for housing at the Pasteur
Drive/Sand Hill Road site and the Quarry Road housing sites, pedestrian linkages between the
Project, the Stanford Barn area, Stanford Shopping Center, Stanford University, the Intennodal
Transit Center and downtown, urban design recommendations and potential Development
Agreement components that the City seeks to negotiate with the SOMC Project sponsor. These
enhancements can be implemented through one or more of the following mechanisms: zoning
amendments associated with the Projects, conditions of approval, or Development Agreement
conditions.
City staff and the Stanford project team have collaborated on both the Tree Preservation and
Village Concept Alternatives and through a series of meetings, technical repo~ exchanges and
innovative thinking, have advanced two alternatives that will continue to accommodate advanced
medical space planning while promoting broader land use principles and mitigating impacts in a
way that cannot be addressed through standard mitigations.
Sustainability Program
The Project's unique operation needs require a tailored sustainability program for each project
component. lbe Hospitals have 24-hour, seven days per week operations that differ from those
of the medical office buildings and the School of Medicine (SoM) bUildings.
For conservation and energy efficiency, the Hospitals and Clinic buildings would be designed to
achieve EnergyStar scores of 90 -95, which means they will perfoml better than 90 95 percent
of similar hospitals and use 35 percent less energy than typical hospitals. The SoM buildings
11
would meet Stanford University's 2008 Building Perfonnance Guidelines, which set a target
energy efficiency in new buildings of 30 percent below California Title 24/ASHRAE 90.1
(2004). These buildings would include exterior sunshades, highly insulated building shells and
fenestration, high efficiency building lighting systems and HV AC equipment, use of passive
cooling and smart building technology to coordinate building systems ·operations with occupancy
and use patterns.
Green building components include the use of sustainable building materials, where feasible,
. such as recycling cm·shed concrete from demolition, renewablelrecye1able materials in flOOring,
paint, constrnction adhesives, cabinet substrates, insulation, ceiling acoustical panels and
fumiture. Permeable asphalt; penneable concrete, and grass pavers will be used. The Hospitals
would include measures such as: occupancy controls for patient rooms, and occupancy sensors
for lighting strategic areas, reduced lighting power densities, use EPA EnergyStar labeled
equipment where available, link to the Stanford University cogeneration/thermal storage system
for generation of chilled water and steam, and implement various water saving features. The
Hospitals and SoM would continue to focus on environmentally preferable purchasing and
extensive recycling programs. .
Transportation pmgrams proposed would inclUde consideration of the GO Pass for all eligible
hospital employees, expansion of the Marguerite Shuttle service between the Palo Alto Transit
Center and the SUMC, and inclusion of hospital employees in the Stanford Cs>mmute Club that
gives subsidies for vanpools and for not driving, guaranteed ride home, Eco Pass for free use of
VTA buses and light rails, Dumbarton Express, Highway 17 Ex.press and U Line Stanford
Express that connt)Cts BART and ACE Train to Stanford.
Development Agreement Negotiations
Stanford is seeking a Development Agreement, which will lock in the zoning regulations for a
negotia~ed period of time. Development Agreements are negotiated contracts between the
applicant and City. Developers typically apply for a Development Agreement to ensure that the
regulations will not change over time and to help secure financing for large-scale projects. In
exchange, the parties negotiate an acceptable community benefit package. Since they are the
product of voluntary negotiations rather than a unilateral imposition by the govemment,
community benefits under a Development Agreement are typically broader than EIR mitigation
measures and pmject conditions of approval. As such, community benefits are not legally
required. to have the same rigorous nexus applicable to other development conditions. A
Development Agreement is a legislative action and is subject to referendum.
On June 15, 2009, the City received a Development Agreement proposal from Stanfoi'd
(Attachment A). Stanford proposed a 30-year Development Agreement with some terms
extending to 51 years. The proposaJ focused on the following major categories of community
benefits: (1) health care, (2) fiscal benefits, (3) reduced vehicle trips, (4) linkages, and (5)
housing. The proposal noted that the most important community benefit would be the
applicants' investment in seismically safe, state of the art facilities that would enable the
hospitals .to continue to provide high quality patient care. In addition, Stanford offered some
additionai'communitybenefits, including the following si&\lificant proposals:
12
• . Establishment of two new programs for the exclusive benefit of residents: a $3 million
fund to assist qualified low-income residents and a $4 million fund to subsidize
comtl1unity health programs within Palo Alto,
• Provide construction spending and associated use taxes of $8,3 million and obtain a use
tax direct payment permit that will generate approximately $26,000 annually.
• Purchase of "CaltrainGo Passes" for all SUMC employees at an estimated annual cost of
$1.3 million. (Currently only Stanford University employees are entitled to this benefit.)
• Expansion of the Marguerite service by purchasing additional shuttles in the amount of
$2 million and by funding additional annual operating costs of $450,000,
• Funding a range of improvements to encourage use of transit and enhance pedestrian and
bicycle connections between the hospitals and dow"ntown: $2.25 million for pedestrian
and bicycle connections around the Intermodal Transit Center, $400,000 for right of way
improvements along Quarry Road and $700,000 for pedestrian connection between the
Medical Center and Shopping Center (Stanford Bam area).
• Payment of housing in lieu fees in the amount of $23.1 million which is equivalent to
what a commercial project would pay.
Staff believes Stanford's proposal is substantive and responsive to many project impacts. The
proposal focuses on the key areas of concern raised by the Planning and Transportation
Commission, the City Council and the community. However, it is also important to note that
with a project of this magnitude many of the proposed community benefits would typically be
imposed as conditions of approval or EIR mitigation measures. Staff has had several meetings
with Stanford to ,discuss areas where the community benefit package can be enhanced. These
discussions to date have focused on health care, fiscal impacts and housing. Staff plans to
continue these discussions and will provide a further progress report in January or February. At
that time, staff will seek input from the Coul)cil on whether the offered package is acceptable and
if not which areas to prioritize.
NEXT STEPS
Substantial progress has been achieved in the preparation of the Project for formal entitlement
reviews, though significant work remains to see the project to completion. Initial staff work
focused on the preparation of the update to the Stanford University Medical Center Land Use
Area Plan (Area Plan), which was presented to City Council in July 2007 for review and
comment. Staff and the applicant have since focused on four generally concurrent tracks: 1)
Preparation of the Draft EIR, 2) Preliminary ARB reviews of project components, 3)
Development Agreement preparation and discussions with the applicants, and 4) Community
outreach and updates with the Planning & Transportation Commission and City Council. Due to
the complexity of the Project and the potential for substantial environmental impacts upon the
community, the timeline for preparation of the Draft EIR has been extended from initial
expectations. In addition, the withdrawal of the SSC Project has resulted in additional delays in
the completion and issuance of the DEIR.
Staff, in cooperation with the SUMC applicants and Stanford University representatives, is
committed to completion of the Draft EIR, the Development Agreement diSCussions,
13
Architectural Review and the other public review processes in a timely manner. The current
schedule anticipates the following milestones during 2010:
• Council review of Water Supply Assessment
• Transportation impact review
• Development Agreement terms review
• Fiscal impacts review
• Release of Draft EIR and fiscal report
• Architectural reviews
• Draft EIR hearings
• Preparation of response to Draft EIR comments
• Planning & Transportation Commission review of entitlements
• City Council review of entitlements
late January
early February
mid February
late February
March
March-June
April
May -JUly
July
early August
The intent is to complete the City Council entitlement review before the August 2010 recess or
immediately thereafter.
PREPARED BY:
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
A IT ACHMENTS
Attachment A: Draft Development Agreement Proposal from Stanford University
14
COMPREHENSIVE
PLAN
Comparison of Land Use Entitlements
Stanford University Medical Center
ATTACHMENT D
Primary tool for guiding future Difficult 10 amend. Does Amendments adopted by
development of the City. not address project level. Resolution.
well as polices to guide day to I
day decisions. I
Establishes long term goals as: specifics. --J
r--H-O-S-P-'-TA-L--AR-EA-r-G-U-id-ance document for the I m~imited g~~~P-hica-l-a-re-a-. i-I-c-on-cep-~a~review and.
PLAN SUMC area Required by Palo i Broad review of a variety i input by Council in July i
REZONING
ENVIORNMENTAL
IMPACT REPORT
(EIR)
CONDITIONS OF
APPROVAL
Df;VELOPMENT
AGREEMENT
Alto Comprehensive Plan of issues. 2008. Final acceptance
Program L48. by resolution at end of the
Establishes allowable uses and
development standards for each
area. Framework for reviewing
project applications.
Required by State law. Analyzes
environmental impects and
proposes mitigation measures for
those impacts. Examines project
i altematives.
project.
Does not Impose Adoption by ordinance. I
conditions of approval or
mitigation measures,
Topics are limited to
environmental issues
associated with project
and the Development
Agreement. Very detailed
review of these Issues.
------.. -
Certification by the City
Council after appropriate
pubic review. Agency
must adopt findings.,
Statement of Overriding !
Considerations needed
for unmitigable impacts.
--------+--------\-------_ ........ -
VehiCle for incorporating feasible
mitigations identified in EIR and
other project related conditions;
typically tied to a discretionary
permit, such as a Conditional Use
Permit (CUP).
Negotiated agreement between
the applicant and the City to
provide development certainty to
applicant in exchange for public
ben efts beyond the conditions of
project approval and mitigation
measures.
Cond~lons involving
dedications of land or
payment of an ad hoc fee
must have a legai nexus \0
the development's impect. :
Terms are negotiated and
are not limited to
conditions or measures
necessary to mitigate the
projects' impacts. Public
benefits provided by the
applicant in exchange for
a development agreement
Director of Planning or
Council (on appeaQ
approves through Record
of Land Use Action.
Adopted by Ordinance
after approval of the
project.
1 __ 1 __
may extend to areas,
outside of the boundaries I I
of the project. . L. ~~~~ ~
Rev. March 29,2010
ClTYCOUNQl,.
i\IlGlllKruIW.
R!~EW BOARD
ory OF
MAnOl0
ENTITlEMENT REVIEW OF SUMC PROJECT
JUlV 201Q
Development
Agre,m,m
Negotiation,
~view (cmp. Plan Amendment,
Rucming, ArmexatlQn
j2-3_ings)
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