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HomeMy WebLinkAbout2000-12-18 City Council (29)City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: CITY MANAGER CMR: 457:00 DATE: SUBJECT: DECEMBER 18, 2000 MIDDLE SCHOOL/COMMUNITY CENTER CHALLENGE This report provides an update to the City Council on the status of staff’s work with the Palo Alto Unified School District (District), Stanford University and the Jewish Community Center (JCC) on the proposed re-acquisition by the District of the Terman site. BACKGROUND In the late 1970s, the District experienced declining enrollment and closed a number of school sites, with the intention of selling them. The City acquired several sites, including Terman, due to the concern that the closure and sale of the sites would adversely affect City programs and services. On November 1, 1981, the City and the District entered into a 19-year lease for the Terman site. The lease agreement includes the District’s express approval of the JCC sublease. The City has used the Terman site for mixed uses (park, recreational, library and housing purposes), including the JCC, to provide various services. Last month, the City paid the District the last payment of $395,015 and now owns the Terman site. The City has paid $15.2 million to purchase the site and invested another $2.6 million in improvements. The JCC has also made over $2.4 million in improvements. Due to increasing enrollment, the District now needs to re-acquire the Terman site and has indicated that it is now pursuing an eminent domain action. The City Council has committed to facilitate the transition of Terman from the City to the District and to seek another site for a community center to serve southwest Palo Alto. Given the lack of available property as well as the astronomical real estate values in Palo Alto, the search for a new community center has been very difficult. As the City CMR:457:00 Page 1 of 4 searched for appropriate property to acquire for a replacement community center, Stanford University recently came forward and offered the old Mayfield School site at the corner of Page Mill and E1 Camino Reall In its offer letter, Stanford made the offer contingent on the County’s approval of its Community Plan and the General Use Plan. The offer letter contained a number of other conditions, including the requirement that the square footage of the community center built on the Mayfield site be transferred to another site or sites in the Stanford Research Park. DISCUSSION The City Council has established the following goals to guide my work with the various parties involved in the Middle School/Community Center Challenge: 2. 3. 4. Work with the District to facilitate the transition of Terman to the District so it can meet its timeline. Develop a joint use program with the District for the new Terman Middle School. Secure other property for a replacement community center to serve the Palo Alto community (especially southwest Palo Alto) with the JCC as an anchor tenant. Work with JCC and the District to avoid any interruption of community center services. JCC as a Partner The City has a responsibility to ensure the delivery of community services. This municipal responsibility and related policies were. formalized in the City’s Comprehensive Plan. Based on the community-driven Terman Specific Plan, the City of Palo Alto and the JCC entered into a partnership 18 years ago, with the JCC agreeing to provide community services to southwest Palo Alto as well as the larger community. The JCC is a non-profit, non-sectarian United Way agency providing health and human services in the same fashion as Young Men’s Christian Association. The JCC delivers community services at a lower cost than the City. The JCC has a long-term lease with the City, and therefore has legal rights should the District exercise eminent domain, re-acquire the Terman site, and dislocate the JCC. The Mayfield School Site We have recently sent a letter to Stanford and now met with Stanford officials, encouraging the University to immediately apply for the entitlements to transfer the square footage from the Mayfield site to another site or sites in the Research Park. The Mayfield site is zoned for housing. The University wants the equivalent square footage CMR:457:00 Page 2 of 4 to be commercial/office. The City Council will evaluate the University’s offer on its merits once the application moves through our land use process. As City Manager, I have led a Terman stakeholders group which has been working over the last three months. The stakeholders group includes the City Attorney, District, JCC and Stanford. The group has been evaluating potential sites for a replacement community center and is now focusing on the Mayfield site. The stakeholders group has begun to address the following issues related to the Mayfield site: Potential uses on the site (including community services and possibly housing) Proposed service plan and service providers Access Mitigation of traffic, ground-water contamination, and other environmental issues Parking Governance Funding ~Mayfield Is Not Free" While the land is being offered by Stanford to the City for only $1 per year, there are significant costs if the City replaces the Terman Community Center to Mayfield. There are substantial pre-development costs, including traffic, California Environmental Quality Act (CEQA), groundwater contamination, and other environmental studies. Any traffic mitigation measures are costly (e.g., traffic signals cost approximately $250-300,000). Structured parking costs at least $30,000 per space. Any dedicated City community service space would cost an estimated $400 per square foot. For instance, 25,000 square feet would cost the City $10 million. As the anchor tenant, the JCC would raise $50 million for constructing the great majority of the community service campus. Funding the New Community Center The District insisted that the City purchase the Terman site for fair market value. The City’s appraisal indicates that fair market value for the land and buildings is approximately $35 million. Despite this substantial fair market value, we only hope to recoup the $17 million that the City has sunk into the community center at Terman. The City is willing to forego the cost of the improvements at Terman (approximately $2,595,000). The City is also willing to provide free of charge to the District 7.7 acres of playgrounds that we originally purchased. Moreover, we are willing to work out a payment plan over time. Finally, I have brainstormed with the Superintendent several ways for the District to compensate the City so we can afford to replace the community center. We are open to any number of approaches. CMR:457:00 Page 3 of 4 Frequently Asked Questions (FAOs) Based on a number of issues raised in the community and the press regarding the middle school/community center, we have prepared the attached FAOs and responses. CITY MANAGER APPROVAL:~Y MANAGER ATTACHMENTS Frequemly Asked Questions CMR:457:00 Page 4 of 4 MIDDLE SCHOOL/COMMUNITY CENTER CHALLENGE: FREQENTLy ASKED QUESTIONS 1.Why is the City involved with assisting the JCC? After entering into an agreement to purchase the Terman school site, the City of Palo Alto undertook a community-driven process, which resulted in the Terman Specific Plan (approved by the City Council in 1982). The Specific Plan directed the City to develop a community center on the Terman site in order to serve residents in southwest Palo Alto as well as the general community. The Jewish Community Center (JCC) was recruited to be the major service provider at the new community center. In addition, the Terman Community Center includes a library, playing fields, community meeting rooms and program space. Given the anticipated eminent domain action by the District to re-acquire the Terman site, the City .is being forced to give up the community center, with all its facilities and services being displaced. The JCC has a long-term lease with the City and is one of our most valued service providers. As a leaseholder, the JCC has certain legal rights that the District and the City must honor’. Can’t the City and the District buy out the JCC lease and let the JCC find a new site on its own? The City has a responsibility to provide or facilitate the delivery of community services to our residents. For the last 18 years, significant services have been provided to southwest Palo Alto, as well as the community, by the JCC at the Terman Community Center. Once the Terman Community Center is re-acquired as a school site, the City has a responsibility to secure a site or sites to provide community services for southwest Palo Alto. The JCC is the major provider of those services and a valuable lessee and partner. It is in our interest to maintain our public/private partnership with it in the delivery of community services. 3. What services does the JCC provide? The JCC is a non-sectarian United Way agency that provides health and human services in the same way as the Young Men’s Christian Association. The JCC provides community services cheaper than the City can deliver these services. Services include after school child care; programs for the elderly; recreational services for children and youth; an art gallery; a parent resource center; the cardiac therapy program; lectures, classes, workshops and concerts; a health and fitness center; summer day camp; the Palo Alto Food Closet; the Sound of Music Festival; and early childhood education services. 4.Why is the City making PAUSD pay for Terman? Given our fiduciary responsibil!ty, the City cannot give away for free a $35 million asset, especially in light of all the infrastructure needs facing the community -- taking care of our streets, sidewalks, public buildings, parks and open space, libraries and storm drains. The taxpayers of Palo Alto have clearly told us that they expect the City to be a good steward of existing public funds and have indicated that they are reluctant to give us new tax dollars to invest in infrastructure. 5.How will the City determine the price tag? The City taxpayers have invested $17 million in purchasing the Terman site from the District. We are only requesting reimbursement for that investment. We are not asking for the District to pay for our improvements to the site (several millions of dollars). We are also willing to provide the 7.6 acres of fields and playgrounds (our parkland) without charge to the District, even though we originally purchased them from the District. And we are not asking the District to pay fair market value, which our appraisal indicates is approximately $35 million. o Why should PAUSD pay the City for Terman when the money comes from the very same taxpayers? The City and the District are separate entities with separate budgets, jurisdictions and legal responsibilities. This situation is, in essence, the same situation that occurred in the 1980s, with the roles reversed. The District required that the City pay fair market value when we purchased Terman from the District. Taxpayers accepted the transaction as fair at that time, although they were asked to "take from one pocket and give to the other," because the District had a legitimate need for the money. Likewise, the City has legitimate needs today. Can’t the City charge the District $1 a year and keep ownership of Terman, thereby retaining the asset and save the District money for building schools? Yes, a deal could be structured this way. But by turning back Terman to the District, the City loses a community center including the JCC, a library, park land, community rooms and recreation space -- facilities that people in southwest Palo Alto rely on. These facilities need to be replaced or the quality of life for our residents is jeopardized. Replacing these facilities is the City’s responsibility and will cost money. In light of Stanford’s generous offers to provide $10 million to the District in association with its ten-year GUP, and its offer of the Mayfield site to the City for $1 per year, why isn’t the City being more generous in its dealings with PAUSD? The City has been and will continue to be extremely generous with the School District. The City provides approximately $7 million a year to the District on an annual basis. We pay $5.5 million a year in utility users tax dollars to PAUSD. This is a constant lifeline of revenue from the City to PAUSD. The City pays half the costs of reconstructing and maintaining elementary and middle school playing fields and school tennis courts, pays $176,000 annually to provide crossing guards for the schools (and the District wants additional guards this year), dedicates two police officers to the high schools and middle schools and provides a myriad of recreation, library, theatre and arts and culture programs to the District. We do not begrudge these programs, since they are critical to the District and the City has seen its financial support as serving the broader community. e But isn’t Stanford giving the City a replacement site for a community center at Mayfield for one dollar a year? While Stanford is offering the land for only $1 per year, the Mayfield site offer has strings attached. Stanford is being compensated for the site since the City has to allow it to develop at least 100,000 more square feet of commercial space in the Research Park, at a site yet to be determined. This proposed entitlement creates many million dollars of value for Stanford in commercial lease revenues. The impacts of this proposed entitlement to Stanford have yet to be fully evaluated. 10.What if the Stanford rezoning for 100,000 square feet of commercial development is denied by the City Council or the community? This is a possibility. Therefore the City has continued to pursue back-up sites, for a community center, such as the Elks property and other alternatives. These alternatives will be part of any future environmental analysis so that we can have a safety net if Stanford withdraws its offer or the City cannot meet Stanford’s terms. And acquisition of any site will cost millions of dollars. 11.Are there other costs associated with the Mayfield site? Yes. There are significant costs to the City in siting a community center there. There are substantial pre-development costs, including traffic mitigation, CEQA, groundwater . contamination, and other environmental studies. Any traffic mitigation measures are costly (e.g., traffic signals cost approximately $250-300,000). Structured parking costs at least $30,000 per space. Even if the JCC pays for most of the construction of a new community center, any dedicated city community service space would cost an estimated $400 per square foot. For inst~ance, 25,000 square feet would cost the City $10 million. All these costs, taken together, could exceed the $17 million that the City is asking for from the District. 12.Would it be simpler and less complex for the City to get out of the middle of the deal with Stanford/JCC and the District? From one point of view, it would simplify the process if the City stepped out of the current four-way negotiations. Under current zoning, locating a new community center on the Mayfield site is a fairly straight forward process requiring a conditional use permit since the site is currently zoned for housing. The center might be developed in connection with housing, in fact, as a mixed-use project. However, to do this, Stanford University would have to restructure its offer, eliminating its contingency that the City provide 100,000 more square feet of new commercial space in the Research Park. This is unlikely to happen. In addition, the City would lose an. opportunity to provide other community services at the new community center. These services will be needed in the future to serve our growing population of residents and employees. 13.How long will the four-way negotiations take and when can construction start? It is estimated that the best case timeline for negotiations, entitlement applications, EIR and building permits is two years. Another two years is estimated for construction, from ground breaking to ribbon cutting, if all goes well. 14.But the Terman Middle School is planned to reopen in Fall 2003, isn’t it? Yes. We’ve been working with the District and the JCC on an interim relocation plan, which would move the JCC services into temporary quarters on other school sites until a new community center site is available. 15.Are we going to have the same crisis situation with Cubberley Community Center if the District wants to take it back for another high school? The City is very concerned about the need to maintain Cubberley as a community center over the long-term and to upgrade the facilities at Cubberley. Consequently, the City and the District have committed to work on a long-term joint facilities master plan that is intended to avoid the kind of crisis situation that we’ve all experienced with Terman. 4 Stanford University is also participating in the master planning process. The community will be provided with multiple opportunities to have input to the plan, which is expected to be completed by the end of next year. 16.If the District takes back Terman, will there be an opportunity for a joint city/school partnership on a library there? Yes. That is one of the opportunities being studied as part of the master plan. 5