HomeMy WebLinkAboutStaff Report 8249
City of Palo Alto (ID # 8249)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 8/21/2017
City of Palo Alto Page 1
Summary Title: SUMC Annual Report 2015-2016
Title: Accept the Stanford University Medical Center (SUMC) Annual Report
for Fiscal Year 2015-2016 and Find the SUMC Parties in Compliance With the
Development Agreement
From: City Manager
Lead Department: Planning and Community Environment
Recommendation
Staff recommends that the City Council:
1. Review the Stanford University Medical Center (SUMC) Annual Report for Fiscal Year
2015-2016 and find that the Parties (Stanford Hospitals & Clinics, Lucile Packard
Children’s Hospital, and Stanford University) have complied in good faith with the terms
and conditions of the Development Agreement ; and
2. Find that the SUMC Parties are not in default with the terms and conditions of the
Agreement.
3. Accept the City of Palo Alto’s (City) Annual Report Supplement regarding the funds
received by the SUMC Parties as required under Section 12(d) of the Development
Agreement. (Attachment C.)
Executive Summary
The City Council is required to review the Development Agreement between the SUMC Parties
and the City of Palo Alto on an annual basis to ascertain compliance with the terms of the
agreement. The SUMC Parties have submitted the annual report for the FY 2015-2016 period
summarizing construction activities and other actions taken to fulfill the obligations of the
Agreement. Of particular note, the SUMC has achieved a 31.9% alternative transportation
mode split which exceeds the Alternative Mode Share target of 30.0% for 2018. Also, as
described in the supplement to the annual report, which is prepared by City staff, the SUMC
Parties have paid approximately $32.5 million in public benefit fees to the City since June 6,
2011, although there were no required payments from Stanford during this reporting period.
During the FY 2015-2016 reporting period, the City Council reviewed and approved use of
funding for the Quarry Road Improvements discussed in Development Agreement Section
City of Palo Alto Page 2
5(d)(ii), the New Public Safety Building, additional capital projects, and Project Safety Net
operations.
Background
On June 6, 2011, the City Council approved Comprehensive Plan amendments, zoning changes,
a conditional use permit, annexation and design applications for the Stanford University
Medical Center Facilities Renewal and Replacement Project (the “Projects”). The Projects
include the construction of a new Stanford Hospital and clinics buildings, an expansion of the
Lucile Packard Children’s Hospital, construction of new School of Medicine buildings,
renovation of the existing Hoover Pavilion, construction of a new medical office building and
parking garage at Hoover Pavilion, roadway improvements along Welch Road and Durand Way,
and SUMC design guidelines. A Development Agreement (the “Agreement”) vesting these
approvals was entered into between the SUMC Parties and the City and was deemed effective
on June 6, 2011 and continues for thirty (30) years from the effective date. The Agreement
requires annual City Council review of the SUMC Parties compliance.
This report covers the SUMC Parties activities during FY 2015-2016, the fifth year of the
Agreement. Previous SUMC Annual Reports and compliance documentation can be found in the
following documents:
Fiscal Year 2011-2012
http://www.cityofpaloalto.org/civicax/filebank/documents/31976
Fiscal Year 2012-2013
https://www.cityofpaloalto.org/civicax/filebank/documents/39991
Fiscal Year 2013-2014
http://www.cityofpaloalto.org/civicax/filebank/documents/45631
Fiscal Year 2014-2015
http://www.cityofpaloalto.org/civicax/filebank/documents/51645
The SUMC Parties recently submitted the FY 2016-2017 Alternative Mode Share Report, the
2016-2017 Construction Tax and Sales Report, and the 2016-2017 Annual Report. All of these
reports are currently under review by staff and will be brought to City Council after the review
and audits are completed.
To obtain the latest information regarding the Stanford University Medical Center project
construction, members of the public may wish to visit the Stanford-hosted website
(http://www.sumcrenewal.org/) and sign up for the 10-day Look Ahead weekly email
notifications (http://www.sumcrenewal.org/contact-us/?signup=1).
Discussion
As described in Development Agreement Section 12, “Periodic Review of Compliance,” the City
Council is to review the Agreement annually to ascertain the SUMC Parties’ compliance with
the terms of the Agreement. Section 12 also includes the reporting requirement for the SUMC
Parties and the City to demonstrate good faith compliance with the Agreement. The attached
2015-2016 Annual Report (Annual Report) dated July 6, 2016 (Attachment A) from SUMC
City of Palo Alto Page 3
describes the SUMC Parties’ activities related to implementation of the Agreement and is
summarized below along with notable activities from prior reporting periods.
Construction Activities
Construction activities in past reporting periods included:
Hoover Pavilion Renovation- Site work and renovation of the exterior and interior features
of the building have been completed and in December 2012, Hoover Pavilion re-opened,
providing a modern medical office and clinics to the SUMC community. The renovation
project is considered to be complete.
Hoover Pavilion Parking Garage- Site work and construction for the new 1,084-stall parking
garage was completed in the Fall of 2013. It is now open for use by patients and staff.
Welch Road Utilities Project- This project involves the replacement and installation of
utilities to support the New Stanford Hospital and the Lucille Packard Children’s Hospital
expansion. The construction portion of this project was considered to be largely complete in
2013 and two-way automobile traffic currently operates on Welch Road. The SUMC Parties
and the City are currently in the process of finalizing easements and maintenance
agreements.
Construction activities during this period included:
Hoover Medical Office Building “Neuroscience Health Center” – Site work and construction
for the building was completed in October 2015 and the Neuroscience Health Center
opened for patient care in January 2016.
Lucile Packard Children’s Hospital (LPCH) - Construction of the hospital expansion remained
underway during the FY 2015-2016 reporting period and LPCH anticipates opening for
patient care in 2017-2018.
New Stanford Hospital (NSH) - Substantial construction progress continued during the FY
2015-2016 reporting period. NSH is anticipated to complete construction in 2018.
School of Medicine Buildings- This project involves the replacement of the Stanford
University School of Medicine (SOM) buildings with new state-of-the-art facilities. The
School of Medicine project did not commence in the FY 2015-2016 reporting period.
A total of 120,800 square feet of floor area was demolished at the Stanford Hospital and Lucile
Packard Children’s Hospital sites thus far and buildings under construction at these sites have
not yet received occupancy. The 91,605 square foot Hoover Neuroscience Health Center
completed construction and received a certificate of occupancy during the FY 2015-2016
reporting period. Taking into account the previously demolished 13,831 square feet of floor
area at the Hoover Pavilion site, the occupancy of the Neuroscience Health Center represents
77,774 square feet of net new square footage.
Compliance with Development Agreement Obligations
In addition to the construction summary and the summary of net new square footage added
within the past year, the Annual Report also summarizes the SUMC Parties’ progress in meeting
City of Palo Alto Page 4
the terms described in Section 5 of the Agreement, “SUMC Parties’ Promises.” This section of
the Annual Report describes the SUMC Parties’ obligations with respect to the following items:
Health Care Benefits;
Fiscal Benefits;
Traffic Mitigation and Reduced Vehicle Trips;
Linkages (Pedestrian, Bicycle, and Transit);
Infrastructure, Sustainable Neighborhoods & Communities, Affordable Housing, and
Climate Change.
The Annual Report summarizes the activities within the reporting year. The obligations are
further summarized in Table 1: Development Agreement, Section 5 – SUMC Parties’ Promises
(Attachment B). City staff has reviewed the information within the Annual Report and has
determined that it is complete and correct.
Traffic Mitigation and Reduced Vehicle Trips
The SUMC Parties have made substantial progress in meeting the traffic and alternative
transportation obligations of the Agreement. Specifically, they have accomplished the
following:
Purchased CalTrain Go Passes annually for all eligible employees as of January 1, 2012, three
years ahead of the September 1, 2015 requirement as stated in the Agreement. Annual
passes were purchased again for all eligible existing and new employees for 2015;
Purchased additional shuttle buses for the Marguerite Shuttle service which now includes
five renewable diesel-electric hybrid buses and three all-electric buses, along with plans to
add up to 20 additional all electric buses over the next two years;
Hired a Transportation Demand Management (TDM) coordinator on March 13, 2012, three
years ahead of the September 1, 2015 requirement as stated in the Agreement, and
Achieved a 31.9% alternative transportation mode split during this reporting year for the
hospital employees, meaning 31.9% of employees are using alternative modes to get to
work rather than driving alone. This figure employs a further refined calculation
methodology that utilizes additional weights to account for response biases associated with
work shift (day / evening / night), work hours (full-time /part-time), and employer (Stanford
Health Care / Lucile Packard Children’s Hospital). The goal for any refinement in
methodology is to derive increasingly accurate alternative mode share estimates.
Please see the table below for a comparison of the mode splits for each year by
methodology.
Year Past
Methodology
New
Methodology
(2014-2015)
Refined
Methodology
(2015-2016)
2012 39% 32.5% 32.5%
City of Palo Alto Page 5
2013 40.9% 33.4% 33.4%
2014 N/A 34.4% 31.8%
2015 N/A 36.3% 32.7%
2016 N/A N/A 31.9%
The 31.9% mode split exceeds the alternative mode share target for 2018 of 30.0%. It is
anticipated that the SUMC Parties will continue to meet or exceed the alternative mode share
targets for 2021 (33.0%) and 2025 (35.1%), especially with the implementation of Development
Agreement-required pedestrian, bicycle, and transit linkage improvements that are planned for
completion in 2017 and 2018.
The SUMC Parties and City staff will continue to monitor the TDM program throughout the
term of the Agreement and will report annually to City Council.
Supplement to the Annual Report
In addition to the SUMC Parties’ submittal of the Annual Report, City staff is to prepare a
supplement to the Annual Report (the “Supplement”), as described in Development Agreement
Section 12(d). The Supplement is to include an accounting of the funds received from the SUMC
Parties to satisfy the obligation outlined in Section 5 of the Agreement, a description of the
account balances, and a summary and description of expenditures from the funds. The
Supplement is contained in Attachment C.
In summary, the SUMC Parties have contributed $32,533,666 in public benefit funds as of June
30, 2015. Interest income during the reporting period was $851,222. The SUMC Parties will pay
an additional $11.7M upon issuance of the first hospital occupancy permit, expected in late
2017 or early 2018 in association with the Lucile Packard Children’s Hospital (LPCH) opening for
patient care.
During the reporting period, the City expended funds for the following:
$92,004 under the “Quarry Road Improvements” cost center for the first
implementation phase of the Public Right-of-Way Improvements to Enhance Pedestrian
and Bicycle Connection on Quarry Road, consistent with Development Agreement
Section 5(d)(ii).
$1,100,000 under the “Infrastructure and Affordable Housing” cost center for the New
Public Safety Building (transferred to Capital Project Fund).
$1,074,011.98 under the “Community Health & Safety” cost center for the Project
Safety Net Program.
$1,200,000 under the “Climate Change & Sustainability” cost center for the
implementation of the Bicycle & Pedestrian Transportation Plan.
City of Palo Alto Page 6
General Fund Sales and Use Tax revenues in calendar year 2015 resulting from construction-
related activities totaled approximately $884,649, based on the City Auditor’s review of the
Construction Sales & Use Tax Monitoring Report submitted by SUMC on June 30, 2016. The
City Auditor submitted a letter to SUMC noting a discrepancy of $74,084 in the Construction
Sales & Use Tax Monitoring report, meaning SUMC reported $1,943,572 in General Fund Sales
and Tax revenues in calendar year 2015 resulting from construction related activities. The
discrepancy mainly stems from the absence of attribution of the City tax area code on the tax
returns. The City Auditor suggested filing amended tax returns to resolve the discrepancy. Total
General Fund Sales and Use Tax revenues from 2011 to 2015 now total $2,017,656.
Future Use of Development Agreement Funds
On June 15, 2015 (CMR #5864) City Council approved the Fiscal Year 2016 Budget, which
outlined total SUMC Capital Improvement funding of $31.2 million over the course of 2016 -
2020 to support a variety of projects including the Bicycle and Pedestrian Transportation Plan
(PL-04010), the New Public Safety Building (PE-15011), the reconstruction of Fire Station 3 (PE-
15003) and Fire Station 4 (PE-18004), the New Downtown Garage (PE-15007), and the
Charleston Arastradero Corridor Improvements Project (PE-13011). Additionally, as part of
ongoing efforts to develop and implement a mental health plan for Palo Alto youth, a total
allocation of $568,000 was included in the Fiscal Year 2016 Operating Budget for Project Safety
Net (PSN) administrative staffing and contract security services at Palo Alto rail crossings.
For additional information about the development agreement projects and funding allocations,
please refer to the following:
Fiscal Year 2016 Operating Budget document, Special Revenue Funds section:
http://www.cityofpaloalto.org/civicax/filebank/documents/54358; and
Fiscal Year 2016 Capital Improvement Budget document:
http://www.cityofpaloalto.org/civicax/filebank/documents/54357.
Resource Impact
There are no negative impacts from the Agreement that affect the City’s General Fund. As
summarized above, the SUMC Parties have paid approximately $32.5 million in public benefit
fees to the City since June 6, 2011.
Policy Implications
This report does not represent any changes to existing City policies.
Environmental Review
Finding Stanford University’s compliance with the Terms of the Agreement is not a project
under the California Environmental Quality Act, and no environmental assessment for the
annual compliance review is required. An environmental impact report for the entire SUMC
City of Palo Alto Page 7
project was prepared and certified by the City Council prior to approval of the Development
Agreement.
Attachments:
Attachment A: SUMC Annual Report 2015-2016
Attachment B: Table 1-Development Agreement
Attachment C: (PART 1) SUMC Annual Report Supplement FY2015_16
Attachment C: (PART 2) SUMC Annual Report Supplement FY2015_16
2015-16 ANNUAL REPORT
PREPARED FOR THE CITY OF PALO ALTO | JULY 6, 2016
CONTENTS
EXECUTIVE SUMMARY 1
BACKGROUND AND PURPOSE 2
2015-2016 SUMMARY OF PROGRESS 3
HOOVER PAVILION SITE 3
LUCILE PACKARD CHILDREN’S HOSPITAL 4
NEW STANFORD HOSPITAL 5
SCHOOL OF MEDICINE 6
NET NEW SQUARE FOOTAGE 6
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS 7
HEALTH CARE BENEFITS 7
SECTION 5(a)(ii). FUND FOR HEALTHCARE SERVICES 7
SECTION 5(a)(iii). FUND FOR COMMUNITY HEALTH AND SAFETY PROGRAMS 7
PALO ALTO FISCAL BENEFITS 8
SECTIONS 5(b)(i) AND 5(b)(ii). PAYMENT OF SALES AND USE TAXES 8
SECTION 5(b)(iii). FUNDING OF OPERATING DEFICIT 9
SECTION 5(b)(iv). PAYMENT OF UTILITY USER TAX 9
SECTION 5(b)(v). SCHOOL FEES 9
TRAFFIC MITIGATION AND REDUCED VEHICLE TRIPS 10
SECTION 5(c)(ii). MENLO PARK TRAFFIC MITIGATION 10
SECTION 5(c)(iii). EAST PALO ALTO VOLUNTARY MITIGATION 10
SECTION 5(c)(iv). CONTRIBUTIONS TO AC TRANSIT 10
SECTION 5(c)(v). OPTICOM PAYMENTS 11
SECTION 5(c)(vi). CALTRAIN GO PASSES 11
SECTION 5(c)(vii). MARGUERITE SHUTTLE SERVICE 11
SECTION 5(c)(viii). TRANSPORTATION DEMAND MANAGEMENT COORDINATOR 11
SECTION 5(c)(ix). MONITORING OF TDM PROGRAMS 12
LINKAGES 13
SECTION 5(d)(i). INTERMODAL TRANSIT FUND 13
SECTION 5(d)(ii). QUARRY ROAD FUND 13
SECTION 5(d)(iii). STANFORD BARN CONNECTION 14
INFRASTRUCTURE, SUSTAINABLE NEIGHBORHOODS AND COMMUNITIES, AND AFFORDABLE HOUSING 14
SECTION 5(e). 14
CLIMATE CHANGE 14
SECTION 5(f). CLIMATE CHANGE FUND 14
SATISFACTION OF CONDITIONS OF APPROVAL 15
CONCLUSION 16
ANNUAL REPORT 2015-16 1
On June 6, 2011, the Stanford University Medical Center (now Stanford Medicine)—comprised of
Stanford Hospital and Clinics (now Stanford Health Care), Lucile Packard Children’s Hospital, and Stanford University—entered into a Development Agreement with the City of Palo Alto, committing to
provide a range of community benefits in exchange for vested development rights to develop and use the Project facilities in accordance with the approvals granted by the City, and a streamlined process
for obtaining subsequent project approvals. The Stanford Medicine Renewal and Replacement Project (“Renewal Project”)—driven by a growing demand for healthcare services, state-mandated seismic
safety requirements, and the need to replace outmoded facilities with modern, technologically advanced spaces—holds the potential to transform the way that healthcare is delivered and research is conducted.
Today, five years after the execution of the Development Agreement, Renewal Project activities
continue apace. The New Stanford Hospital and the Lucile Packard Children’s Hospital expansion are moving closer to completion, with the exterior enclosures on both buildings nearly complete and
interior construction underway. Meanwhile, on the Hoover Pavilion site, construction of the Stanford Neuroscience Health Center completed in Fall 2015, and the new facility opened to patient care in
January 2016.
Against this backdrop, Stanford Medicine submits its Annual Report in compliance with Section 12(c) of the Development Agreement, and looks forward to continued collaboration with the City of Palo Alto in
advancing the goals of both the Stanford Medicine and the broader community.
EXECUTIVE SUMMARY
2 ANNUAL REPORT 2015-16
The Palo Alto City Council’s unanimous approval of the entitlements for the Stanford Medicine
Renewal and Replacement Project in July 2011 has paved the way for a historic investment in new
and replacement facilities for Stanford Medicine. The project approvals—including new zoning for the
Project sites, a conditional use permit, architectural review approval, and the execution of a Development
Agreement—allows for the construction of approximately 1.3 million net new square feet of hospital
facilities, clinics, medical offices, and medical research spaces, and will enable the hospitals to optimize
the delivery of healthcare services to patients, and maintain their position as leading providers of world-
class healthcare.
In order to facilitate this important replacement and expansion work, the Stanford Medicine parties
entered into a Development Agreement with the City of Palo Alto, which includes a comprehensive
package of community benefits and voluntary mitigation measures. In exchange for these benefits,
the City has vested for a period of 30 years Stanford Medicine’s rights to develop and use the property
in accordance with the project approvals, and will streamline the process for obtaining subsequent
approvals.
The terms of the Development Agreement (Section 12(c)) provide for a periodic review of compliance,
and require that Stanford Medicine submit an Annual Report to the City of Palo Alto’s Director of Planning
and Community Environment each year within 30 days of the anniversary of the agreement effective date
(June 6, 2011). The Annual Report is to summarize the progress on the Renewal Project, including a
list of net new square footage for which a certificate of occupancy has been received, and a description
of the steps that Stanford Medicine has taken to comply with the obligations listed in the Development
Agreement. With this report, Stanford Medicine fulfills these requirements. Within 45 days of receipt of
this Annual Report, the City will prepare a Supplement to the Annual Report, to provide an accounting of
the City’s expenditures from each of the City Funds and how they were used.
BACKGROUND AND PURPOSE
ANNUAL REPORT 2015-16 3
The Renewal Project continues to progress, with construction activities for both Hospitals well underway. The section to follow provides an overview of central goals for the project elements that presently are
under construction or nearing construction, a synopsis of progress to date, as well as a preview of near-
term upcoming activities.
HOOVER PAVILION SITE
One of the first phases of the Renewal Project was the renovation of Hoover Pavilion to accommodate
modern medical offices and clinics. Renovation of the 1931 building—including structural improvements, mechanical and plumbing upgrades, and restoration of historic architectural details— began in Summer
2011, and completed in Fall 2012. Subsequently, construction of the Hoover Garage (PS-9) completed in Fall 2013, and the garage is now open and serving patients, visitors, and staff. And finally, the
landscaping at the Hoover Medical Campus was transformed to include varied landscaped spaces, including a lawn parterre, Redwood grove, and Oak grove. The groves feature mature trees which have
been transplanted from other locations on the Hoover site, many of which had been boxed and stored offsite during construction.
Most recently, construction of a new Neuroscience Health Center was completed in October 2015
on the Hoover site, on Quarry Road immediately west of the Hoover Pavilion, and northwest of the parking garage. The Neuroscience Health Center opened to patient care in January 2016, and provides
specialized outpatient services for people with Alzheimer’s, Parkinson’s disease, brain tumors, multiple sclerosis, stroke and other neurological disorders. The site features new landscaped spaces, including
a mobility garden beneath a mature oak designed to allow neuroscience patients to practice walking on different surfaces, and a wildflower knoll adjacent to the site’s historic cedar grove.
2015-2016 SUMMARY OF PROGRESS
4 ANNUAL REPORT 2015-16
2015-2016 SUMMARY OF PROGRESS
LUCILE PACKARD CHILDREN’S HOSPITAL
In response to growing community needs for specialized pediatric and obstetric care, Lucile Packard Children’s Hospital is opening an expanded facility. The new hospital, to be located adjacent to the
current Packard Children’s Hospital, will provide patients and doctors with the most modern clinical advancements and technology, while also creating a more patient- and family-centered environment
of care, with additional single-patient rooms and more spaces for families to be with their child during treatment and recovery.
The Packard Children’s expansion will feature a new entrance lobby, public concourse with dining, three
floors of nursing units, and new patient rooms. Spaces have been designed with an attention to natural light and views, and the exterior grounds—more than 3.5 acres of outdoor areas and gardens—will
provide a park-like setting for patients, families, and visitors.
In the past year, significant construction progress has been made on the LPCH expansion project—the exterior enclosure of the building is nearly complete, and interior construction is underway. Meanwhile,
site work continues, with the final form of the hospital’s outdoor spaces beginning to take shape.
ANNUAL REPORT 2015-16 5
NEW STANFORD HOSPITAL
Stanford Health Care is constructing new and replacement hospital facilities that will usher in a new era of advanced patient care. Growth in patient volumes and rapidly changing medical technology have
rendered much of the existing midcentury hospital infrastructure inadequate, while new seismic safety requirements have accelerated the need to construct replacement facilities.
The New Stanford Hospital will substantially increase capacity, and will also address a rapidly advancing
medical landscape. High-tech spaces such as Surgery, Radiology, and Intensive Care will be replaced to accommodate the latest advances in medical technology, while still retaining the flexibility to adapt
to future innovations. Facilities will feature new patient rooms, an enlarged Level-1 trauma center and Emergency Department, and new surgical, diagnostic, and treatment rooms. And foremost, the
new facility will create a healing environment responsive to the needs of patients, visitors, and staff. Upper-level pavilions will feature light-filled patient rooms, and a mid-level garden floor will offer dining,
conference, and educational facilities, as well as social and spiritual support spaces.
Substantial progress has been made on the New Stanford Hospital project over the past year. The exterior enclosure for the Hospital is now nearly complete; mechanical, electrical and plumbing rough-ins
are nearly complete; and interior finish construction has recently begun. Meanwhile, at the adjacent New Stanford Hospital Garage, the exterior façade is nearly complete and construction of the rooftop pavilions
is underway. A temporary Certificate of Occupancy issued by the City in 2014 allows for contractor parking while construction continues.
2015-2016 SUMMARY OF PROGRESS 2015-2016 SUMMARY OF PROGRESS
6 ANNUAL REPORT 2015-16
2015-2016 SUMMARY OF PROGRESS
SCHOOL OF MEDICINE
The Stanford University School of Medicine will replace its outmoded research buildings with new
state-of-the-art facilities designed to support contemporary translational research. The new facilities
will accommodate 21st century medical advancements and enable the development of new medical
innovations. The new buildings will feature integrated laboratory suites, with easier access between
labs and support facilities, enabling transparency, flexibility, and collaboration. The new facilities will be
surrounded by landscaped areas and tree-lined walkways.
The School of Medicine development is not yet underway. In the interim, part of the site that will
ultimately be developed is currently in use as a temporary valet parking area for Hospital patients and
visitors.
NET NEW SQUARE FOOTAGE
The following table summarizes the net new square footage for which a certificate of occupancy has
been issued.
PROJECT COMPONENT GROSS SQUARE
FOOTAGE
NEW STANFORD HOSPITAL
1101 Welch demolished (40,100) Total (40,100)
LUCILE PACKARD CHILDREN’S HOSPITAL EXPANSION
701 Welch demolished (56,300)
703 Welch demolished (23,500)
Total (79,800)
SCHOOL OF MEDICINE
None 0
HOOVER PAVILION
Misc. shops and storage demolished (13,831) Stanford Neuroscience Health Center (Hoover MOB) 91,605
Total 77,774
PROJECT COMPONENT GROSS SQUARE
FOOTAGE
ANNUAL REPORT 2015-16 7
This section of the Annual Report summarizes the steps that Stanford Medicine has taken to comply with
their obligations in Section 5 of the Development Agreement.
HEALTH CARE BENEFITS
Stanford Medicine provides certain intrinsic benefits to the community, as both a global leader in medical
care and research, and as a community healthcare services provider. The Renewal Project enables
Stanford Medicine to continue its important work, and the addition of more beds for adults and children
will help to alleviate overcrowding. Additionally, the new hospital facilities will provide critical emergency
preparedness and response resources for the community in the event of an earthquake, pandemic, or
other major disaster.
Section 5(a)(ii). Fund for Healthcare Services
The Hospitals have designated the amount of $3 million for Healthcare Services which will increase
to $5.6 million by December 31, 2025. No further action is required until 2026. This amount will be
reconciled with the construction tax use payments as described in Development Agreement Section 5(b)
(ii)(C).
Section 5(a)(iii). Fund for Community Health and Safety Programs
Stanford Medicine has contributed a single lump-sum payment of $4 million to establish a Community
Health and Safety Program Fund for the City of Palo Alto. This fund is to be distributed to selected
community health programs that benefit residents of the City, including the Project Safety Net
Program, a community-based mental health plan for youth well-being in Palo Alto. A joint committee
is to be established to evaluate proposals regarding the other specific programs to receive funding,
composed of two representatives selected by the Stanford Medicine Parties and two representatives
selected by the City; this committee shall make annual recommendations to the City Council regarding
proposed disbursements from the Community Health and Safety Program Fund, and the City Council
shall use its reasonable discretion to decide whether to accept, reject, or modify the joint committee
recommendations.
Stanford Medicine provided the entire required contribution to the Community Health and Safety
Program Fund on August 25, 2011. No further action is required by Stanford Medicine to comply with
this Development Agreement provision. As required by Development Agreement Section 12(d), the City
will provide yearly Supplements to the Annual Report to provide an accounting of the City’s expenditures
from this fund, and the purposes for which the expenditures were used.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
8 ANNUAL REPORT 2015-16
PALO ALTO FISCAL BENEFITS
The Stanford Medicine Renewal Project brings considerable fiscal benefits to the City of Palo Alto. The
project is expected to generate at least $8.1 million in sales and use tax revenues for the City, and multiple
mechanisms have been put into place to ensure that this target is met. The Development Agreement also
provides for further fiscal benefits to the City, including a payment by Stanford Medicine to fund the City’s
operating deficit, and the payment of utility user taxes and school fees.
Sections 5(b)(i) and 5(b)(ii). Payment of Sales and Use Taxes
As required by the Development Agreement, Stanford Medicine submitted its annual Construction Sales
and Use Tax monitoring report to the City on June 30, 2016. The Stanford Medicine parties will continue
to submit such a report annually during the construction period for the Renewal Project so that the City
can determine the share of construction use taxes that it has received as a result of the Renewal Project.
Each year, within 60 days of receiving the monitoring report, the City will provide its determination of
the amount of construction use taxes that it has received as a result of the Renewal Project during the
preceding calendar year. In August 2026, Stanford Medicine and the City will conduct a reconciliation
process to confirm that the City has received at least $8.1 million in construction use taxes as a result of
the Project, as further described in Development Agreement Section 5(b)(ii).
To date, Stanford Medicine has taken the following steps to maximize the City’s allocation of sales and
use taxes associated with Project construction and operation. Documentation of each of these items is
included in the 2015 construction use tax monitoring report already submitted.
• The Stanford Medicine Parties have obtained all permits and licenses necessary to maximize the
City’s allocation of construction use taxes derived from the project, including California Seller’s Permits
and Use Tax Direct Pay Permits. Copies of permits and licenses are attached to the 2015 monitoring
report.
• Stanford Medicine has designated and required all contractors and subcontractors to designate the
project site as the place of sale of all fixtures furnished or installed as part of the project.
• Stanford Medicine has designated and required all contractors and subcontractors to designate the
project site as the place of use of all materials used in the construction of the project.
• Stanford Medicine has required all contractors and subcontractors to allocate the local sales and
use taxes derived from their contracts directly to the city. Stanford Medicine has used best efforts to
require contractors and subcontractors to complete and file any forms required by the State Board of
Equalization to effect these designations.
• Both Hospitals have obtained use tax direct pay permits from the State of California for their existing
facilities in order to increase the City tax allocation for the Hospitals’ purchases. The Hospitals will
maintain the use tax direct pay permit for the life of the project.
• Finally, Stanford Medicine has assisted the City in establishing and administering a Retail Sales
and Use Tax Reporting District for the Renewal Project, to enable the City to track the generation,
allocation, reporting and payment of sales and use taxes derived from the Project.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
ANNUAL REPORT 2015-16 9
Section 5(b)(iii). Funding of Operating Deficit
In order to assure that City costs associated with the Renewal Project do not exceed revenues to the
City resulting from construction and operation of the project, Stanford Medicine has provided to the City a
single lump sum payment in the amount of $2,417,000. This payment was made on August 25, 2011. No
further action is required by Stanford Medicine to comply with this Development Agreement provision.
Section 5(b)(iv). Payment of Utility User Tax
Stanford Medicine will pay the City a utility user tax at a minimum rate of 5 percent of all electricity, gas,
and water charges allocable to new construction completed as part of the project for the life of the project.
This rate may be increased by the City as provided by Section 2.35.100(b) of the Municipal Code. The 5
percent utility user tax is currently being paid by Stanford Medicine.
Section 5(b)(v). School Fees
Stanford Medicine will pay to the City—who is then to forward to the Palo Alto Unified School District—
school fees upon issuance of each building permit from the City or OSHPD, in the amount that is
generally applicable to non-residential development at the time of payment based upon net new square
footage, as defined in the Development Agreement.
School fees were paid in 2012 for LPCH and SHC in the amounts of $188,815 and $153,802,
respectively. In July 2013, additional school fees were paid in the amount of $7,051 to account for
additional program square footage for the New Stanford Hospital and Garage. In May 2014, an additional
payment of school fees in the amount of $16,119 was made to account for the incremental square
footage associated with the Hoover Medical Office Building, beyond the 60,000 square feet originally
planned. In November 2015, additional school fees in the amount of $461.16 were paid to account for
incremental square footage for the New Stanford Hospital Garage.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
10 ANNUAL REPORT 2015-16
TRAFFIC MITIGATION AND REDUCED VEHICLE TRIPS
Stanford Medicine has taken a number of steps to mitigate the potential traffic impacts projected at full
project buildout. Already, Stanford Medicine provides a robust transportation demand management
program, offering a variety of incentives for employees to forego driving alone to work. As the Renewal
Project moves forward, Stanford Medicine will take the following actions outlined below.
Section 5(c)(ii). Menlo Park Traffic Mitigation
Stanford Medicine has agreed to contribute to the City of Menlo Park a total of $3,699,000 for use
in connection with traffic mitigation, infrastructure enhancements, and the promotion of sustainable
neighborhoods and communities and affordable housing. This contribution is to be made in three equal
payments; the first payment of $1,233,000 was made on August 19, 2011. The second payment of
$1,233,000 was made on December 5, 2012, following the November 2012 issuance of the first Hospital
foundation permit. The final payment will be made within 30 days from issuance of the first Hospital
Occupancy Permit by the State of California.
Section 5(c)(iii). East Palo Alto Voluntary Mitigation
Stanford Medicine has contributed a single lump sum payment of $200,000 to East Palo Alto to be
used for roadway and traffic signal improvements on University Avenue. This payment was made on
August 19, 2011. No further action is required by Stanford Medicine to comply with this Development
Agreement provision. In the event that Stanford Medicine does not meet alternative transportation mode
goals specified in the Development Agreement by 2025 and is assessed a $4 million payment under
Development Agreement section 5(c)(ix)(B), the City will be required to remit $150,000 of such payment
to the City of East Palo Alto.
Section 5(c)(iv). Contributions to AC Transit
The Hospitals have committed to offering the following contributions to AC Transit within 30 days from
issuance of the first Hospital occupancy permit:
• The Hospitals will contribute a one-time payment of $250,000 to AC Transit to be used for capital
improvements to the U-Line to increase capacity (Section 5(c)(iv)(A)).
• The Hospitals will offer to make annual payments to AC Transit in a reasonable amount, not to exceed
$50,000, to be used for operating costs of the U-Line to maintain a load factor for bus service to the
Medical Center of less than 1 (Section 5(c)(iv)(B).
• In order to encourage Hospital employees living in the East Bay to use public transit for their
commute, the Hospitals have committed to using best efforts to lease 75 parking spaces at the
Ardenwood Park and Ride lot, or an equivalent location, at a cost not to exceed $45,000 per year
(Section 5(c)(iv)(C)). No action is required at this time; however, since May 2014, a 100-space park-
and-ride facility on Kaiser Drive at Campus Drive in Fremont (0.9 mile from Ardenwood Park & Ride)
has been under lease for the use of Stanford University and Hospital commuters.
These offers have not yet been made to AC Transit because the first Hospital occupancy permit has not
yet been issued.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
ANNUAL REPORT 2015-16 11
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
Section 5(c)(v). Opticom Payments
Within 30 days from issuance of the first Hospital occupancy permit, the Hospitals will pay $11,200 to
the City of Palo Alto to be used for the installation of Opticom traffic control systems at the following
seven intersections: El Camino Real/Palm Drive/University Avenue; El Camino Real/Page Mill Road;
Middlefield Road/Lytton Road; Junipero Serra/Page Mill Road; Junipero Serra/Campus Drive West;
Galvez/Arboretum; and the Alpine/280 Northbound ramp. This payment has yet not been made because
the first Hospital occupancy permit has not yet been issued.
Section 5(c)(vi). Caltrain GO Passes
The Development Agreement requires that the hospitals purchase annual Caltrain GO Passes for all
existing and new Hospital employees who work more than 20 hours per week at a cost of up to $1.8
million per year, beginning on September 1, 2015. This obligation is to continue for a period of 51 years.
Hospital management accelerated the purchase of the annual GO Pass for Hospital employees, and
began providing free GO Passes to employees commencing on January 1, 2012. Further details
regarding the GO Pass purchase can be found in the Alternative Mode Share report, which was
submitted to the City on May 31, 2016.
Section 5(c)(vii). Marguerite Shuttle Service
The Hospitals will fund the reasonable costs, in an approximate amount of $2 million for the purchase
of additional shuttle vehicles for the Marguerite shuttle service, as and when required to meet increased
demand for shuttle service between the project sites and the Palo Alto Intermodal Transit Station. In
addition, the Hospitals will fund as annual payments the reasonable costs, in an approximate amount
of $450,000 per year, to cover the net increase in operating costs for the Marguerite Shuttle. Demand
for the Marguerite shuttle increased in 2012, and the Hospitals funded the purchase of three new hybrid
shuttles to meet this increased demand.
Section 5(c)(viii). Transportation Demand Management Coordinator
The Development Agreement requires that the Hospitals employ an onsite qualified Transportation
Demand Management (TDM) Coordinator for Stanford Medicine, commencing on September 1, 2015,
and continuing through the life of the Renewal Project.
Because the Hospitals accelerated the purchase of the Caltrain GO Pass, the Hospitals also accelerated
the hiring of the TDM Coordinator, filling this position in March 2012. The TDM Coordinator (Sustainable
Transportation Lead) is responsible for analyzing, developing, and implementing programs to advance
the Hospitals’ TDM objectives. Specifically, the position supports the Hospitals’ TDM program by raising
awareness among commuters about alternative transportation options and Stanford’s commute incentive
programs; providing alternative commute planning assistance and responses to customer inquiries;
writing and editing electronic and print communications; coordinating and staffing outreach events, such
as free transit pass distributions and employee fairs; and providing alternative transportation information
and resources at new employee orientations.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
12 ANNUAL REPORT 2015-16
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
Section 5(c)(ix). Monitoring of TDM Programs
The Hospitals are required to submit annual monitoring reports showing the current number of employees
employed over 20 hours per week; the number of employees using an alternative transportation mode as
documented by a study or survey to be completed by the Hospitals using a method mutually agreeable
to the City, and the efforts used by the Hospitals to attempt to achieve the Alternative Mode Targets
identified in the Development Agreement. The Development Agreement specifies payments to be made
in the event that such targets are not met during particular time periods. Stanford Medicine submitted
its 2015-16 Alternative Mode Share Report to the City on May 31, 2016; this report shows an alternative
mode split of 31.9% for the Hospitals. This mode split exceeds the Alternative Mode Share target for
2018.
ANNUAL REPORT 2015-16 13
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
LINKAGES
To further encourage use of Caltrain, bus, and other transit services, and to enhance and encourage use
of pedestrian and bicycle connections between Stanford Medicine and Palo Alto, Stanford Medicine has
funded or will fund the following specific infrastructure improvements.
Section 5(d)(i). Intermodal Transit Fund
Stanford Medicine has provided to the City one lump sum payment of $2.25 million for improvements to
enhance the pedestrian and bicycle connection from the Palo Alto Intermodal Transit Center to the existing
intersection of El Camino Real and Quarry Road. Up to $2 million of this amount is to be used by the
City for the development of an attractive, landscaped passive park/green space with a clearly marked
and lighted pedestrian pathway, benches, and flower borders. Stanford Medicine paid the entire required
amount for the Intermodal Transit Fund on August 25, 2011. No further action is required by Stanford
Medicine to comply with this Development Agreement provision. As required by Development Agreement
Section 12(d), the City will provide yearly Supplements to the Annual Report to provide an accounting of
the City’s expenditures from this fund, and the purposes for which the expenditures were used. The City is
required to construct the improvements prior to issuance of the first Hospital Occupancy Permit, currently
anticipated to be issued in Summer 2017.
The City is moving forward with plans for these improvements, and has shared with the Stanford Medicine
Parties preliminary designs for a temporary path with associated lighting, landscaping/green space,
benches, and flower borders from the transit center to the existing crosswalk at the intersection of El
Camino Real and Quarry Road. Available funds remaining after this work is completed may be applied to
the construction of permanent improvements in the future.
Section 5(d)(ii). Quarry Road Fund
Stanford Medicine has provided to the City one lump sum payment of $400,000 for improvements to and
within the public right-of-way to enhance the pedestrian and bicycle connection from the west side of El
Camino Real to Welch Road along Quarry Road, including urban design elements and way finding, wider
bicycle lanes, as necessary, on Quarry Road, enhanced transit nodes for bus and/or shuttle stops, and
prominent bicycle facilities. Stanford Medicine paid the entire required amount for the Quarry Road Fund
on August 25, 2011. No further action is required by Stanford Medicine to comply with this Development
Agreement provision. As required by Development Agreement Section 12(d), the City will provide yearly
Supplements to the Annual Report to provide an accounting of the City’s expenditures from this fund, and
the purposes for which the expenditures were used. The City is required to construct the improvements
prior to issuance of the first Hospital Occupancy Permit, currently anticipated to be issued in Summer 2017.
The City is moving forward with plans for these improvements, and has shared with the Stanford Medicine
Parties preliminary designs for bicycle enhancements along Quarry Road.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
14 ANNUAL REPORT 2015-16
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
Section 5(d)(iii). Stanford Barn Connection
Stanford Medicine will construct up to $700,000 of improvements to enhance the pedestrian connection
between the Main Medical Campus and the Stanford Shopping Center from Welch Road to Vineyard
Lane, in the area adjacent to the Stanford Barn. Stanford Medicine is required to construct these
improvements prior to issuance of the first Hospital Occupancy permit, currently anticipated to be issued
in Summer 2017. Stanford Medicine anticipates submitting its pedestrian connection design to the City
for minor architectural review in 2016.
INFRASTRUCTURE, SUSTAINABLE NEIGHBORHOODS AND COMMUNITIES, AND
AFFORDABLE HOUSING
Section 5(e). Infrastructure, Sustainable Neighborhoods and Communities, and Affordable
Housing
Stanford Medicine will contribute a total amount of $23.2 million toward City of Palo Alto infrastructure,
sustainable neighborhoods and communities, and affordable housing. The Development Agreement
requires this amount to be contributed in three equal payments. The first payment, in the amount of
$7,733,333, was made on August 25, 2011; the second payment of $7,733,333 was made on December
5, 2012, following the November 2012 issuance of the first Hospital foundation permit; and the final
payment is to be made within 30 days from issuance of the first Hospital occupancy permit. As required
by Development Agreement Section 12(d), the City will provide yearly Supplements to the Annual Report
to provide an accounting of the City’s expenditures from this fund, and the purposes for which the
expenditures were used.
The City will use $1,720,488 of these funds in the same manner as funds collected under the City’s
housing fee ordinance.
CLIMATE CHANGE
Section 5(f). Climate Change Fund
Stanford Medicine will contribute a total amount of $12 million toward City projects and programs for a
sustainable community, including programs identified in the City’s Climate Action Plan, carbon credits,
and investments in renewable energy and energy conservation. The Development Agreement requires
this amount to be contributed in three equal payments. The first payment, in the amount of $4 million,
was made on August 25, 2011; the second payment of $4 million was made on December 5, 2012,
following the November 2012 issuance of the first Hospital foundation permit; and the final payment
is to be made within 30 days from issuance of the first Hospital occupancy permit. As required by
Development Agreement Section 12(d), the City will provide yearly Supplements to the Annual Report
to provide an accounting of the City’s expenditures from this fund, and the purposes for which the
expenditures were used.
ANNUAL REPORT 2015-16 15
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
SATISFACTION OF CONDITIONS OF APPROVAL
Stanford Medicine will satisfy all Conditions of Approval by the dates and within the time periods required
by the project approvals, and has taken several steps in order to ensure that this requirement is met
(Section 5(h)). The Conditions of Approval encompass conditions imposed by the Architectural Review
Board, mitigation measures enumerated in the Mitigation Monitoring and Reporting Program, and
conditions attached to the Conditional Use Permit.
In order to implement, monitor, and report on the implementation of this diverse array of conditions,
Stanford Medicine, with input from City planning staff, has created two Excel spreadsheet tracking
and reporting tools. These spreadsheets serve as a centralized repository for compliance monitoring
information and documentation, and are updated by the Stanford Medicine project teams on a regular
basis, and reviewed by the City.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
16 ANNUAL REPORT 2015-16
CONCLUSION
As the Renewal Project completes its fifth year, Stanford Medicine looks forward to continued
engagement with the City of Palo Alto as the project continues to forge ahead.
Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16
1 SUMC Development Agreement Compliance: 2015-2016
DA Section Description Summary Activity Complies?
Health Care Benefits
5(a)(ii) Fund for Healthcare Services Financial assistance for Palo Alto
residents
Establishment of $3M SUMC
fund
Yes
5(a)(iii) Fund for Community Health and
Safety Programs
$4M fund for selected
community health programs for
Palo Alto residents
Payment of $4M on August 25,
2011 to establish City fund Yes
Fiscal Benefits
5(b)(i), (ii) Payment of Sales and Use Taxes Activities to maximize sales and
use taxes paid to the City
General Fund Sales and Use Tax
revenues in calendar year 2015
resulting from construction-
related activities totaled
approximately $884,649 based
on the 2016 City Auditor’s
review of the Construction Sales
& Use Tax Monitoring Report
submitted by SUMC on June 30,
2016.
Ongoing
5(b)(iii)
Funding of Operating Deficit
$2.417M fund to address long-
Payment of $2.417M on August
Yes
Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16
2 SUMC Development Agreement Compliance: 2015-2016
DA Section Description Summary Activity Complies?
term deficits 25, 2011 to establish fund.
(B11)
5(b)(iv) Payment of Utility Users Tax
5% tax on all electricity, gas and
water charges on new
construction.
Utilities confirmed that billing
accounts were created when
new meters were set for new
construction and the Utility
Users Tax has been paid through
the normal billing process for
the Hoover Neuroscience
Building.
Yes
5(b)(v) School Fees Payment of PAUSD fees for net
new square footage
$342,617 fee paid for LPCH and
NSH expansion in 2012. $7,051
fee paid for NSH and NSH
Garage expansion in July 2013.
$16,119 fee paid for Hoover
Medical Office Building
expansion in May 2014. $461.16
fee paid to account for
incremental square footage for
the New Stanford Hospital
Garage.
Yes
Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16
3 SUMC Development Agreement Compliance: 2015-2016
Traffic Mitigation and Reduced Vehicle Trips
DA Section Description Summary Activity Complies?
5(c)(ii) Menlo Park Traffic Mitigation
$3.7M payment for traffic
mitigation, infrastructure,
sustainable neighborhoods,
affordable housing
First of three $1.23M payments
made on August 19, 2011.
Second payment of $1.23M
made on December 5, 2012.
Final Payment to be made
within 30 days from issuance of
the first Hospital Occupancy
Permit.
Yes
5(c)(iii) East Palo Alto Voluntary
Mitigation
$200K for Roadway and single
improvements on University
Ave.
$200K payment made on
August 19, 2011. Yes
5(c)(iv) Contributions to AC Transit
U-line capital improvements,
low load factor ratios, parking
spaces at Ardenwood Park &
Ride
No activity. Payment to be made
within 30 days from issuance of
the first Hospital Occupancy
Permit.
NA
Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16
4 SUMC Development Agreement Compliance: 2015-2016
DA Section Description Summary Activity Complies?
5(c)(v) Opticom Payments
$11,200 payment for Opticom
traffic control system at 7
intersections
No activity. Payment to be made
within 30 days from issuance of
the first Hospital Occupancy
Permit.
NA
5(c)(vi) CalTrain Go Passes
SUMC purchase of passes for all
hospital employees working
>20hrs/week
Go Passes have been purchased
per the Development
Agreement since January 1,
2012.
Yes
5(c)(vii) Marguerite Shuttle Service Purchase of additional shuttles
to meet demand
Purchased additional shuttle
buses for the Marguerite Shuttle
service which now includes five
renewable diesel-electric hybrid
buses and three all-electric
buses.
Yes
Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16
5 SUMC Development Agreement Compliance: 2015-2016
DA Section Description Summary Activity Complies?
5(c)(viii)
SUMC Transportation Demand
Management (TDM)
Coordinator
SUMC hires coordinator to
promote alternative
transportation options
TDM Coordinator was hired in
March 2012. Yes
5(c)(ix) Monitoring of TDM Programs Yearly report regarding
alternative transit mode use
2016 Alternative Mode Share
Report indicates 31.9% of SUMC
employees using alt modes.
Yes
Linkages
5(d)(i) Intermodal Transit Fund
$2.25M payment to improve
pedestrian linkages to PA
Intermodal Transit Center
Payment of $2.25M on August
25, 2011 to establish City fund.
(C11)
Yes
5(d)(ii) Quarry Road Fund
$400K payment to improve
pedestrian linkages along
Quarry Road
Payment of $400K on August 25,
2011 to establish City fund.
(D11)
Yes
Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16
6 SUMC Development Agreement Compliance: 2015-2016
DA Section Description Summary Activity Complies?
5(d)(iii) Stanford Barn Connection
SUMC budgets up to $700K for
pedestrian connections in the
vicinity of barn
SUMC is required to construct
these improvements prior to the
issuance of the first Hospital
Occupancy permit.
NA
Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing
5(e)
Infrastructure, Sustainable
Neighborhoods and
Communities, and Affordable
Housing Fund
$23.2M payment for these uses
First of three $7.3M payments
made on August 19, 2011. (E11)
Second payment of $7.3M made
on December 5, 2012. (E13)
Final Payment to be made
within 30 days from issuance of
the first Hospital Occupancy
Permit.
Yes
Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16
7 SUMC Development Agreement Compliance: 2015-2016
Climate Change (F11, F13)
DA Section Description Summary Activity Complies?
5(f) Climate Change Fund
$12M payment for climate
change-related projects and
programs
First of three $4M payments
made on August 19, 2011. (F11)
Second payment of $4M made
on December 5, 2012. (F13)
Final Payment to be made
within 30 days from issuance of
the first Hospital Occupancy
Permit.
Yes
2015-2016 Annual Report Supplement
Prepared by the City of Palo Alto
July 27, 2017
Background and Purpose
On June 6, 2011, the City Council approved Comprehensive Plan amendments, zoning changes, a
conditional use permit, annexation and design applications for the Stanford University Medical Center
Facilities Renewal and Replacement Project (the “Projects”). The Projects include the construction of a
new Stanford Hospital and clinics buildings, an expansion of the Lucile Packard Children’s Hospital,
construction of new School of Medicine buildings, renovation of the existing Hoover Pavilion,
construction of a new medical office building and parking garage at Hoover Pavilion, roadway
improvements along Welch Road and Durand Way, and SUMC design guidelines. A Development
Agreement (the “Agreement”) vesting these approvals was entered into between the SUMC Parties and
the City and was effective on June 6, 2011 and continues for thirty (30) years from the effective date.
The Agreement requires an annual report, prepared by SUMC that outlines the activities of the
preceding year and the efforts to fulfill the obligations of the Agreement.
Per the requirements of sections 12(a) and 12(c) of the Agreement, The City of Palo Alto is to prepare a
supplement to the annual report that contains an accounting of the funds described in the Section 5 of
the Agreement (“SUMC Parties’ Promises”) including the fund balances and expenditures and the
purposes for which the expenditures were used.
This annual report supplement covers the period during the fifth year of the Agreement: June 6, 2015
through June 6, 2016. Accounting for the funds outlined in the attachment extends through the end of
the City’s Fiscal Year 2016, June 30, 2016.
Public Benefit Fund Accounting
Attachment A to this Supplement contains a spreadsheet showing the funds received and the use of
those funds pursuant to the Agreement as of June 30, 2016. In summary, the SUMC Parties have paid
approximately $32.5 million in public benefit fees to the City. The first payment of $20,800,333 on
August 11, 2011 was for the following funds:
Fund for Community Health and Safety, Project Safety Net (Section 5(a)(iii));
Fund for SUMC Project Operating Deficit (Section 5(b)(iii));
Fund for Pedestrian and Bicycle Connections from Intermodal Transit Center to El Camino
Real/Quarry Road Intersection (Section 5(d)(i));
Fund for Public Right of Way Improvements to Enhance Pedestrian and Bicycle Connections on
Quarry Road (Section 5(d)(ii));
Fund for Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing
(Section 5(e)), and
Fund for Sustainable Programs Benefit (Section 5(f)(i))
An additional $11,733,333 payment was made on December 5, 2012 for the following funds:
• Fund for Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing
(Section 5(e)), and
• Fund for Sustainable Programs Benefit (Section 5(f)(i))
The specific funding amounts as shown on Attachment A are consistent with Section 5 of the
Agreement. These funds have been assigned a unique cost center number for accounting purposes.
Attachment A to this Supplement also contains the investment earnings and the earnings allocation to
the various cost centers.
Public Benefit Fund Expenditures
Expenditures and other activity occurred in the following funds in Fiscal Year 2015-2016 through June
30, 2016:
Fund for Quarry Road Improvements and Fund for Intermodal Transit: $92,004.00 from the Fund for
Quarry Road Improvements was utilized for the design, permitting, and design support during
construction phases for the following two projects described in Development Agreement Section 5(d)(i)
and (ii):
Improvements to and within the public right of way to enhance the pedestrian and bicycle
connection from the west side of El Camino Real to Welch Road, including urban design
elements and way finding, wider bicycle lanes, as necessary on Quarry Road, enhanced transit
nodes for bus and/or shuttle stops, and prominent bicycle facilities; and
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, including
development of an attractive, landscaped passive park/green space with a clearly marked and
lighted pedestrian pathway, benches and flower borders.
There were no expenditures from the Fund for Intermodal Transit during FY 2015-2016. However, on
June 20, 2016 (ID 6838) Council approved concept plans and authorized staff to proceed with final
construction documents for both the Quarry Road Improvements (estimated at $400,000) and a
Temporary Park Connection (estimated at $350,000). Associated expenditures for both the Fund for
Quarry Road Improvements and the Fund for Intermodal Transit will be shown in the FY 2016-2017
reporting period.
Fund for Infrastructure and Affordable Housing: $1,100,000 was utilized for the New Public Safety
Building capital project. Additional activity included:
In August 2016, $720,220 was transferred from the Residential Affordable Housing Fund to the
SUMC Fund for Infrastructure and Affordable Housing, where the funds originated. Previously in
April 2014, the Palo Alto Housing Corporation (PAHC) returned $720,220 for the Maybell
affordable housing project that was overturned by voters and that amount was placed into the
Residential Affordable Housing Fund.
In August 2016, $1,720,488 was transferred out of the SUMC Fund for Infrastructure and
Affordable Housing into the Commercial Housing Fund in order to satisfy the provision in the
Development Agreement that the funds shall be used in the same manner as funds collected by
the City pursuant to its housing fee ordinance. The $1,720,488 will remain in the Commercial
Affordable Housing Fund until an appropriate affordable housing project is identified and the
funds are approved by the City Council for use on the project.
SUMC Fund
(260)
Housing Comm
Fund (234)
Housing Res Fund
(233)
Transfer from Housing Res Fund 233
to SUMC Fund 260
Transfer In
$ 720,220
Transfer out
($ 720,220)
Transfer from SUMC fund 260 to
Housing Comm Fund 234
Transfer out
($1,720,488)
Transfer In
$1,720,488
Fund for Community Health and Safety, Project Safety Net: $1,074,011.98 was utilized for Project
Safety Net and funding for railroad track security guards, fencing and vegetation removal, and intrusion
detection cameras. The Project Safety Net program is specifically identified in the Agreement as a
community health program that would be an appropriate program for the use of this fund.
Fund for Expansion Cost Mitigation and Climate Change & Sustainability: $1,200,000 was transferred
for the implementation of the Bicycle & Pedestrian Transportation Plan.
ATTACHMENT C
City of Palo Alto
Stanford Medical Center Development Agreement (Fund 260)
Jul 2015 - June 2016, AUDITED BALANCES
Expansion Cost Intermodal Transit
Mitigation
cost centers 26000000 60260010
Beginning Balances, 7/1/2015 206,365.48 2,088,059.62
Adjustments made in FY 2016
Allocated Investment Earnings 77,603.48 (5.49)
Operating Transfers in FY 2014 1,200,000.00
Operating Transfers in FY 2015 1,200,000.00
Adjusted Beginning Balances, 7/1/2015 2,683,968.96 2,088,054.14
Revenues:
Revenues From Stanford - -
Transfer from Housing Residential (repayment of 2014 advances for
Maybell)
Investment Earnings 851,552.00
Allocate to categories (851,552.00)
Allocated Investment Earnings 90,368.72 70,304.39
Total Revenues 90,368.72 70,304.39
Expenditures:
Temp Salaries/Benefits
Contract Services
Other expenses
Interdepartmental Service Charges
Transfer to Housing Commercial (Dev Impact Fee portion of SUMC
Agreement)
Transfer to Capital Projects
Total Expenditures - -
FY 2016 Revenues less Exp 90,368.72 70,304.39
Net total 6/30/2016, Audited Balances 2,774,337.68 2,158,358.52
Less: Unrealized Gain/Loss, 6/30/16 (52,490.78) (40,836.39)
Reserve for Encumbrances, 6/30/2016 (ZFIR44)- -
Interest Receivable, 6/30/16 (13,235.58) (10,296.92)
Net total available 6/30/2016 (Audited Balances)2,708,611.32 2,107,225.22
Future Revenues from Stanford:
Estimated January 2018-1st hospital
occupancy permit
Quarry Road Infrastructure &Climate Change Community Total FY 2016 FY 2016
Improvements Afford Housing & Sustainability Health & Safety Actuals Budget
60260020 60260030 60260040 80260010
444,183.04 14,699,225.06 8,611,415.17 3,708,298.17 29,757,546.54
(1.17) (38.62) (77,629.86) 71.65 -
(1,200,000.00) -
(1,200,000.00) -
444,181.87 14,699,186.44 6,133,785.31 3,708,369.82 29,757,546.54
- - - - -
720,220.00 720,220.00
851,552.00 662,800.00
(851,552.00)
11,857.76 424,203.19 166,119.61 88,698.33 851,552.00 -
11,857.76 1,144,423.19 166,119.61 88,698.33 1,571,772.00 662,800.00
(109,036.93) (109,036.93) (112,355.98)
(952,956.39) (952,956.39) (1,199,790.50)
(6,598.66) (6,598.66) (5,400.00)
(5,420.00) (5,420.00) (226.00)
(1,720,488.00) (1,720,488.00)
(92,004.00) (1,100,000.00) (1,200,000.00) (2,392,004.00) (2,392,004.00)
(92,004.00) (2,820,488.00) (1,200,000.00) (1,074,011.98) (5,186,503.98) (3,709,776.48)
(80,146.24) (1,676,064.81) (1,033,880.39) (985,313.65) (3,614,731.98) (3,046,976.48)
364,035.63 13,023,121.63 5,099,904.92 2,723,056.17 26,142,814.56
(6,887.60) (246,398.93) (96,490.78) (51,520.53) (494,625.00)
- - - (782.00) (782.00)
(1,736.71) (62,129.64) (24,330.21) (12,990.93) (124,720.00)
-
355,411.33 12,714,593.06 4,979,083.94 2,657,762.70 25,522,687.56
7,733,333.00 4,000,000.00