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HomeMy WebLinkAboutStaff Report 2306-16905.PUBLIC HEARING: Adoption of an Ordinance Amending the Stanford University Medical Center (SUMC) Development Agreement Adjusting the Timeline for Achieving the SUMC Alternative Mode Share Targets and Adoption of a Resolution Updating the Mitigation Monitoring and Reporting Program Accordingly. Zoning District: HD (Hospital District). Environmental Review: Project is Consistent with the 2011 Certified Environmental Impact Report (EIR) for the SUMC Facilities Renewal and Replacement Project. Presentation, Public Comments City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: October 23, 2023 Report #:2306-1690 TITLE PUBLIC HEARING: Adoption of an Ordinance Amending the Stanford University Medical Center (SUMC) Development Agreement Adjusting the Timeline for Achieving the SUMC Alternative Mode Share Targets and Adoption of a Resolution Updating the Mitigation Monitoring and Reporting Program Accordingly. Zoning District: HD (Hospital District). Environmental Review: Project is Consistent with the 2011 Certified Environmental Impact Report (EIR) for the SUMC Facilities Renewal and Replacement Project. RECOMMENDATION Staff recommends that City Council: 1. Find the proposed amendment to the SUMC Development Agreement consistent with the Certified EIR for the SUMC Facilities Renewal and Replacement Project; 2. Adopt an Ordinance (Attachment A) approving Amendment No. 1 to the SUMC Development Agreement; and 3. Adopt a Resolution (Attachment B) updating Mitigation Measure TR-2.3 to be Consistent with the Development Agreement Amendment Number 1; and EXECUTIVE SUMMARY Stanford Hospital and Clinics, Lucile Salter Packard Children’s Hospital, Stanford University, and the City of Palo Alto entered into a Development Agreement in 2011 that allowed Stanford University Medical Center (SUMC) to remodel existing facilities and to construct new facilities at their campuses in Palo Alto. The existing SUMC Development Agreement (DA) and the associated SUMC Facilities Renewal and Replacement Project EIR Mitigation, Monitoring and Reporting Program (MMRP) requires the implementation of a Transportation Demand Management (TDM) program. The TDM program aims to reduce the number of SUMC employees that commute using single occupancy vehicles in favor of alternative transportation modes, such as using public transit, bicycling, walking, and telecommuting. The program includes alternative mode share targets for Target Years 2018, 2021, and 2025. Although SUMC was far exceeding these targets over the first nine years of the Development Agreement, it was unable to meet them during the COVID-19 pandemic, when social distancing was emphasized. As a result, SUMC asserted that a delay in meeting the 2021 and 2025 mode share targets should be permitted under the force majeure clause of the Development Agreement. To resolve the issues raised by the assertion of force majeure, SUMC and City staff propose the attached amendment to the Development Agreement to adjust the timeline by which SUMC is required to achieve their alternative transportation mode share targets. Because Mitigation Measure TR-2.3 also describes the TDM program and contains the same alternative transportation mode share targets, the City would also need to adjust the text in MMRP for consistency. Due to the COVID-19 pandemic effect on employee commute patterns and the time necessary to recover previous high rates of alternative transportation mode usage, SUMC proposes to adjust the timeline to meet their final milestone target of 35.1% of SUMC employees using alternative transportation modes by 2028, instead of the current target year 2025. The FY 2022-2023 Alternative Mode Share Report showed that SUMC employee use of alternative transportation modes was 25.6%, which is down from 33.8% in FY 2018-2019, but represents an increase from the low of 19.9% in FY 2021-2022. If the proposed Development Agreement amendment is not supported, SUMC‘s claim of permitted delay under the force majeure clause and any associated amendments to the TDM program would likely be resolved by a court. BACKGROUND Stanford Hospital and Clinics, Lucile Salter Packard Children’s Hospital, and Stanford University applied to the City of Palo Alto for the opportunity to remodel existing facilities and to construct new facilities. In 2011, after extensive public hearings and the completion of an Environmental Impact Report, the City of Palo Alto certified the SUMC Facilities Renewal and Replacement Project (SUMC Project) Final EIR containing Mitigation, Monitoring and Reporting Program (MMRP),1 as well as approved a Development Agreement,2 Conditional Use Permit, Architectural Review, Zoning Changes, and additional project entitlements. The SUMC Project entitlements allow SUMC to construct and use up to 153,343 total square feet of medical office/clinic buildings, as well as associated facilities, including up to 46,169 net new square feet at the Hoover Medical Campus. At the Main SUMC site, SUMC can construct and use 1 Resolution No 9168, Resolution Certifying the Adequacy of the Final Environmental Impact Report, June 6, 2011: https://www.cityofpaloalto.org/files/assets/public/city-clerk/resolutions/reso-9168.pdf. . 2 Ordinance No. 5124 Approving a Development Agreement, July 11, 2011: https://www.cityofpaloalto.org/files/assets/public/city-clerk/ordinances/ord-5124.pdf. Copy of Recorded SUMC Development Agreement: www.cityofpaloalto.org/files/assets/public/v/1/planning-amp- development-services/current-planning/uploads-for-website/sumc/sumc-development-agreement_- june_6_2011.pdf. up to 3,534,090 total square feet of hospital/clinic and research buildings, as well as associated facilities and infrastructure improvements, including up to 1,265,272 net new square feet. Although the SUMC Development Agreement is in place for thirty (30) years from the date of execution, June 6, 2011, the SUMC Project Final EIR discussed completion of project buildout by 2025. This served to concentrate the analysis of potential environmental impacts of the proposed SUMC development activity into a more compressed period of time. While SUMC originally planned to complete project buildout by 2025, project buildout is now anticipated to continue over the course of the next decade, including due to the impacts of the COVID-19 pandemic on use of existing facilities and construction delays. Development Agreement Alternative Transportation Mode Share Targets In compliance with the Development Agreement and MMRP, SUMC implements a required TDM program for its employees. The goal of the TDM program is to reduce the number of SUMC employees that commute using single occupancy vehicles in favor of alternative transportation modes, such as using public transit, bicycling, walking, and telecommuting. SUMC is required to implement the TDM program, monitor the results, and prepare an annual Alternative Mode Share report that informs the City as to whether SUMC has achieved its alternative mode share targets. The Development Agreement and MMRP contain specific alternative mode share targets for SUMC to meet. Table 1 outlines these specific alternative transportation mode share targets. Table 1: Alternative Mode Share Targets in Development Agreement Section 5(c)(ix) If a target is not met for any two consecutive years prior to 2025, the Development Agreement requires SUMC to provide alternative transportation funding in annual payments to the City in the amount of $175,000 per year until the earlier of the year 2025 or the year the applicable interim mode split target is achieved, subject to a maximum of five annual payments. The annual payment(s) must be used by the City for local projects and programs that encourage use of alternative transportation mode uses or otherwise reduce peak period traffic trips in the intersections impacted by the SUMC Project as identified in the EIR, including and not limited to regional transportation systems and solutions.4 3 SUMC Development Agreement Section 5(c )(ix) utilized “TBD” at the time of execution of the SUMC Development Agreement in 2011, as the Baseline Alternative Mode Share Report would not be submitted to the City until July 5, 2012. 4 SUMC Development Agreement Section 5(c)(ix): https://www.cityofpaloalto.org/files/assets/public/v/1/planning- amp-development-services/current-planning/uploads-for-website/sumc/sumc-development-agreement_- june_6_2011.pdf #page=28. Target Year Alternative Mode Share Percentage Change EIR Baseline (2006)22.9%NA Project Approval Baseline (2011)3 TBD TBD 2018 30%7.1% 2021 33%+3% 2025 35.1%+2.1% If SUMC has not demonstrated substantial achievement of the 35.1% target by 2025, the Development Agreement requires SUMC to make a lump sum payment of $4.0 million to the City for use in the same manner as the annual payments, though there are some allowable expansions in use outlined in the Development Agreement, such as contributions toward regional transportation projects. If required, the Development Agreement also allows for the funds to be used by the City to offset SUMC employee trips through citywide trip reduction.5 The City would need to identify any capital projects and program enhancements for which the funds may be applied. A comparison of Table 1 with Figure 1 shows that SUMC achieved and exceeded their alternative transportation mode share targets each year between 2011 and 2019. SUMC achieved their 2021 alternative mode share target early, as already 33% of SUMC employees were commuting by alternative transportation modes by 2013. SUMC was also able to achieve their 2025 alternative mode share target early, as over 35.1% of SUMC employees were already commuting by alternative transportation modes in 2015, 2016, 2017, and 2018. 5 SUMC Development Agreement Section 5(c)(ix)(B): https://www.cityofpaloalto.org/files/assets/public/v/1/planning-amp-development-services/current- planning/uploads-for-website/sumc/sumc-development-agreement_-june_6_2011.pdf%20#page=29. Figure 1: SUMC Hospital Employee Commute Mode Share, 2011-2023* * The percentages shown in Figure 1 reflect the percentage of SUMC employees who drive alone for their commute versus the percentage of SUMC employees that use alternative transportation modes, as reflected in the SUMC Alternative Mode Share Reports submitted to the City in May of each corresponding Target Year. The SUMC Parties were conditionally approved to delay reporting for Fiscal Year 2019-2020, which also considered Target Year 2020. Source: SUMC Alternative Mode Share Report FY 2022-2023. Alternative Mode Share Target Compliance 2020 through 2023 As summarized in Attachment C and despite SUMC’s ongoing implementation of TDM program activities, SUMC indicates COVID-19 pandemic circumstances eventually resulted in SUMC’s inability to achieve the alternative transportation mode share targets of both 30% (2018 target) and 33% (2021 target) in 2021, 2022, and 2023. In 2021, the alternative mode share rate for SUMC decreased to 28.8% between use of alternative modes versus driving alone, largely due to ongoing pandemic conditions. SUMC identified that the share of Caltrain riders dropped most significantly (-6.5%), followed by the carpools (-2.6%), and other forms of transit (-3%). SUMC observed modest increases in other alternative transportation modes, including in remote work and bicycling, but these increases were not sufficient to offset the decrease in transit usage and carpools. In 2022, despite continuing to implement all TDM programs, as well as enhancing communications and promotions, the SUMC parties found that the alternative mode share target of 33% was again not met. It had decreased to 19.9% from 28.8% in the previous year. In 2023, use of alternative transportation modes increased back to 25.6%, but remains below targets. U.S. Health and Human Services Department State of Public Health Emergency Declaration While the general population refers to various Federal, State, Santa Clara County, and City of Palo Alto public health emergency declarations, SUMC also follows the U.S. Health and Human Services Department (HHS) declarations regarding any identified Public Health Emergencies (PHE). HHS issued the first declaration of a Public Health Emergency regarding COVID-19 on January 8, 2020. Subsequently, HHS issued many renewals of this declaration. On May 11, 2023, HHS released a statement declaring the end of the COVID-19 Public Health Emergency. Development Agreement Amendment Processing Requirements City of Palo Alto requirements for preparation of development agreements and development agreement amendments are set forth in City Council Resolution No. 7104.6 This resolution allows for amendments to development agreements through mutual consent of all parties or their successors in interest. Any amendment is considered a legislative act to be approved by ordinance and is subject to referendum. Resolution No. 7104 also states that a development agreement or amendment shall not be approved unless City Council finds that it is consistent with the City’s Comprehensive Plan and any applicable specific plan. ANALYSIS The SUMC amendment application (22PLN-00302)7 represents the first proposed amendment to the original SUMC Development Agreement. Proposed SUMC Development Agreement Amendment Anticipating the ongoing influence of the COVID-19 pandemic on its ability to achieve the alternative transportation mode share targets, SUMC proposed an amendment to the original Development Agreement. SUMC suggests that the amendment language would provide clarity as to how to implement the existing alternative transportation mode share targets and penalty payments as written in Section 5(c)(ix), given their claim of the applicability of Section (18)(c) Force Majeure in the Development Agreement.8 By filing the Development Agreement amendment application, there is an opportunity to create mutual, locally derived implementation clarity regarding present and future compliance with Development Agreement 5(c)(ix) Monitoring of TDM Programs and Section 18(c) Force Majeure, rather than taking this topic to a court for resolution. 6 City of Palo Alto City Council Resolution 7104, June 8, 1992: https://www.cityofpaloalto.org/files/assets/public/city-clerk/resolutions/reso7104.pdf. 7 SUMC Development Agreement Amendment Application 22PLN-00302, received September 7, 2022: www.cityofpaloalto.org/files/assets/public/v/1/planning-amp-development-services/current-planning/uploads- for-website/sumc/sumc-development-agreement-application-22pln-00302_received_september_7_2022.pdf. 8 Section 18(c) Force Majeure provides that performance by SUMC or the City is excused during any period of “Permitted Delay,” such as when a performance delay occurs due to circumstances beyond the reasonable control of a party to the SUMC Development Agreement. Examples of circumstances beyond reasonable control of a party include (a), acts of god, including without limitation earthquakes, floods, fire, and other natural calamities, (b) civil commotion; (c) riots or terrorist acts; (d) strikes or other forms of material labor disputes; (e) shortages of materials or supplies; and (f) vandalism. The proposed amendment language responds to the following time factors: •Claimed period of “Permitted Delay;” •Duration of the HHS COVID-19 Public Health Emergency declaration; and •Time anticipated as necessary for alternative transportation modes to return to frequent usage levels. SUMC proposes amendment language focused only in the following two areas of the Development Agreement: •Section 1 Definitions, and •Section 5(c)(ix) Monitoring of TDM Programs. New Definition Terms and Adjusted Timeline As shown in Table 3, the proposed amendment language removes the specific target years “2021” and “2025” in Development Agreement Section 5(c)(ix) Monitoring of TDM Programs and replaces these with two new terms, “Second Interim Target Year” and “Final Target Year,” respectively. These new terms would be added to the Development Agreement in Section 1 Definitions: •“Second Interim Target Year” to be defined as the year that is one year after the expiration or termination of the United States Secretary of Health and Human Services’ determination, under Section 319 of the Public Health Service Act or any successor statute, that a public health emergency exists due to the COVID-19 pandemic, provided that if such determination expires or is terminated on or after July 1 in a given year, the Second Interim Target Year means the year following one year after the determination expires or is terminated. •“Final Target Year” to be defined as the year that is four years after the “Second Interim Target Year.” Table 3: Proposed Amendments to Alternative Mode Share Targets A comparison of Table 1 and Table 3 shows that these new terms still retain the existing four- year timespan for achieving the 35.1% alternative transportation mode share target for employee commutes. Target Year Alternative Mode Share Percentage Change EIR Baseline (2006)22.9%NA Project Approval Baseline (2011)TBD TBD 2018 30%7.1% 2021 Second Interim Target Year 33%+3% 2025 Final Target Year 35.1%+2.1% Given the expiration of the HHS COVID-19 Public Health Emergency on May 11, 2023: •“Second Interim Target Year” is interpreted as 2024 and the SUMC employee commute results would appear in the SUMC Alternative Mode Share Report FY 2023-2024, anticipated to be received by the City by June 2024; and •“Final Target Year” is interpreted as 2028 and the SUMC employee commute results would appear in the SUMC Alternative Mode Share Report FY 2027-2028, anticipated to be received by the City in May or June 2028, which is four years after the “Second Interim Target Year.” Inclusion of Cost Escalator and Spending Flexibility in Development Agreement Language Upon review of the SUMC proposed amendment language, staff identified the need to account for the increased costs of implementing alternative transportation programs. Therefore, SUMC submitted amendment language for a cost escalator. The cost escalator uses the Consumer Price Index (CPI) for the San Francisco Bay Area starting from the year 2025 for both the $175,000 Annual Payment provision and the $4,000,000 lump sum payment provision in the Development Agreement.9 Staff also identified the merit of adding further clarity in how the $175,000 Annual Payments could be spent by the City. Therefore, staff included the amendment language shown below in underline: Section 5(c)(ix) Monitoring of TDM programs: “…The alternative transportation funding must be used by the City for local projects and programs that encourage use of alternative transportation mode uses or otherwise reduce peak period traffic trips in the intersections impacted by the Project as identified in the Project EIR, including but not limited to citywide and regional transportation systems and solutions. The City of Palo Alto should consider transportation systems and solutions that also help to reduce traffic in the City of Menlo Park….” The underlined text is consistent with the text already in Section 5(c)(ix)(B) Final Target Year Mode Split Penalty which allows the $4,000,000 lump sum payment to be used for citywide trip reduction to offset SUMC employee commutes, if necessary. The City and SUMC can consider Development Agreement amendments irrespective of the SUMC notice of intent to claim a “Permitted Delay” under Section 18(c) Force Majeure. An amendment can be made if the City finds that the amendment is consistent with the City’s Comprehensive Plan and any applicable specific plan. City Council can consider the proposed amendment based upon its merits, regardless of any agreement or disagreement of whether the COVID-19 9 SUMC Development Agreement Amendment Application 22PLN-00302, updated February 16, 2023: www.cityofpaloalto.org/files/assets/public/v/1/planning-amp-development-services/current-planning/uploads- for-website/sumc/sumc-development-agreement-application-22pln-00302_updated_february_16_2023.pdf. pandemic qualifies as a condition under the Section 18(c) Force Majeure. Toward this end, staff prepared a draft ordinance (Attachment A) and a draft resolution (Attachment B), consistent with City Council Resolution No. 7104, that contains the Development Agreement amendment language discussed in this report. Alternative Actions City Council could consider the following alternative actions: •Deny the application. This would likely result in a court determining how to resolve the claim of permitted delay due to Force Majeure. •Consider and propose amendment language different than what is in the draft ordinance (Attachment A). In this case, Council could suggest this language and continue the amendment to a future Council meeting for staff and SUMC to analyze the language. •Consider requesting that SUMC withdraw the SUMC Development Agreement amendment application pending the results of additional mode share reports. This alternative would reflect the desire for more time to allow for the percentage of alternative transportation commutes to continue to increase and meet the 35.1% target prior to or by the 2025 monitoring year. This would still leave an unresolved question, however, of whether SUMC would be required to make the $175,000 penalty payments for missing the targets, unless Council could direct staff to delay enforcement of the penalty. If this is not addressed, the issue of permitted delay due to Force Majeure may still be submitted to a court. POLICY IMPLICATIONS The SUMC Project was found to be consistent with the Comprehensive Plan in effect at the time of approval. Staff also referenced the current Comprehensive Plan to identify if consistency findings could also be made or if there were any inconsistencies. At the time of approval, Mitigation Measure TR-2.3 was important because it required TDM program implementation to reduce single-occupancy vehicle trips and reduce greenhouse gas emissions. This remains true at present. SUMC implements one of the most detailed and extensive TDM programs in the City and the proposed Development Agreement Amendment Number 1 does not change this. Draft findings are included in the draft ordinance (Attachment A) regarding consistency between the Comprehensive Plan and the proposed Development Agreement amendment language. FISCAL/RESOURCE IMPACT As previously discussed, due to the claim by SUMC of a “Permitted Delay” under SUMC Development Agreement Section 18(c) Force Majeure, the City deferred seeking the $175,000 Annual Payments that are otherwise due for Fiscal Year 2021-2022 and Fiscal Year 2022-2023. Therefore, it could appear that the resource impact of approving the SUMC Development Agreement amendment would be $350,000 not being available for City expenditure on alternative transportation programs in accordance with Section 5(c)(ix). However, staff recommends approval of SUMC Development Agreement Amendment Number 1. In turn, this would adjust the timeframe for achievement of the alternative mode share targets. The two $175,000 Annual Payments would not be due and there would be no resource impact to the City as a result; the $175,000 Annual Payments and the $4,000,000 Lump Payment would only be due if SUMC missed applicable target years in the future. TIMELINE If City Council takes action to approve the proposed ordinance, the second reading is tentatively scheduled for November 6, 2023. The ordinance would become effective on the 31st day after the date of its adoption, tentatively December 7, 2023. STAKEHOLDER ENGAGEMENT Notification of the filing of this SUMC Development Agreement amendment application was sent to properties within 600 feet of lands within 600 feet of the Hospital (HD) Zoning District when the application was filed in 2022. Staff has not received any public comments on the proposed amendment. Notification of this agenda item was placed in the newspaper on October 13, 2023. ENVIRONMENTAL REVIEW Staff analyzed if the SUMC Development Agreement Amendment Number 1 would substantially change the SUMC Project, as well as if the amendment would result in any new potentially significant environmental impacts or a substantial increase in any previously identified potential environmental impacts. The adjustments to the alternative transportation mode share target timeline did not substantially change the SUMC Project; all original project components and mitigation measures would remain in effect. The SUMC Development Agreement, SUMC Facilities Renewal and Replacement Project Environmental Impact Report, and MMRP analyzed and anticipated that some circumstances might be beyond the control of SUMC or the City. The proposed adjustments to the alternative transportation mode share target timeline do not relieve SUMC of their requirements to implement their TDM Program activities on an ongoing basis, nor increase previously identified transportation impacts or greenhouse gas emissions. ATTACHMENTS Attachment A: Draft Ordinance - SUMC Development Agreement Amendment Number 1 Attachment B: Draft Resolution - Mitigation Measure TR-2.3 Consistency with SUMC Development Agreement Amendment Number 1 Attachment C: SUMC Alternative Mode Share Target Year Compliance Status Summary - 2020 through 2023 APPROVED BY: Jonathan Lait, Planning and Development Services Director Not yet adopted 1 0160123_20230918_ay16 Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Approving The First Amendment to the Stanford University Medical Center Development Agreement Dated June 6, 2011 The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings and Determinations A. The City of Palo Alto (City) and Stanford Hospital and Clinics, Lucile Salter Packard Children’s Hospital, and the Board of Trustees of the Leland Stanford Junior University (“SUMC Parties”) are parties to a certain Development Agreement dated June 6, 2011 (the "SUMC Development Agreement" or "Agreement"), concerning the replacement, retrofit, and enhancement of Stanford University Medical Center facilities in Palo Alto, B.Section 65868 of the California Government Code and section 8(b) of Palo Alto Resolution No. 7104 (June 8, 1992) provide that a development agreement may be amended by mutual consent of the parties to the agreement. C.Pursuant to these provisions, Section 15 of the Agreement provides that the City and SUMC Parties may amend the Agreement from time to time by mutual consent. D.Section 5, subdivision (c)(ix) of the Agreement, Monitoring of TDM Programs, sets forth a series of transportation demand management (TDM) program targets for the share of employees using alternative modes of travel (“Alternative Mode Share Targets”). These provisions include penalties for failure to meet the Alternative Mode Share Targets. E.Section 18, subdivision (c), of the Agreement, Force Majeure, provides that performance of an obligation under the Agreement may be excused during any period of “permitted delay” caused by events beyond the reasonable control of a party. F. On June 10, 2022, SUMC Parties provided a notice of intent to claim a permitted delay in compliance with the Alternative Mode Share Targets as a result of the COVID-19 pandemic. G.The City and SUMC Parties wish to adopt the First Amendment to the Agreement (“Amendment”) in light of the SUMC Parties’ claim of permitted delay. H.The City Council, as the planning agency pursuant to Government Code Section 65867, has given notice of intention to consider the Amendment and has conducted a public hearing on the Amendment. I.The City Council that the provisions of the Agreement and the Amendment are consistent with City’s Comprehensive Plan. Not yet adopted 2 0160123_20230918_ay16 SECTION 2. The City Council hereby approves the First Amendment to the Development Agreement between the City of Palo Alto and Stanford Hospital and Clinics, Lucile Salter Packard Children’s Hospital, and the Board of Trustees of the Leland Stanford Junior University, a copy of which is attached hereto as Exhibit "A", and authorizes the Mayor to execute the Agreement on behalf of the City. SECTION 3. The City Clerk is directed to cause a copy of the development agreement to be recorded with the County Recorder not later than ten (10) days after it becomes effective. SECTION 4. Because the amendment implements a permitted delay contemplated by the Agreement, and because the permitted delay will not result in any new, significant environmental impacts, the City Council finds that the potential environmental impacts of the Amendment were adequately studied and addressed in the Final Environmental Impact Report for the Stanford University Medical Center Facilities Renewal and Replacement Project, which was certified by Resolution No. 9168. SECTION 5. This ordinance shall be effective upon the thirty-first (31st) day after its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Director of Planning and Development Services 1 157750738.2 This document is recorded for the benefit of the City of Palo Alto and is entitled to be recorded free of charge in accordance with Section 6103 of the Government Code. After Recordation, mail to: Office of the City Attorney City of Palo Alto 250 Hamilton Ave Palo Alto, CA 94301 AMENDMENT TO DEVELOPMENT AGREEMENT This AMENDMENT TO THE DEVELOPMENT AGREEMENT (“Amendment”) is entered into as of this ____ day of ___________, 2023, by and between the CITY OF PALO ALTO, a chartered city and municipal corporation of the State of California (“City”); STANFORD HEALTH CARE, formerly known as Stanford Hospital and Clinics, a California nonprofit public benefit corporation (“SHC”); LUCILE SALTER PACKARD CHILDREN’S HOSPITAL AT STANFORD, a California nonprofit public benefit corporation (“LPCH”); and THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate powers under the laws of the State of California (“University,” and together with SHC and LPCH, collectively, the “SUMC Parties”). RECITALS THIS AMENDMENT is entered into on the basis of the following facts, understandings, and intentions of the parties: A.City and the SUMC Parties entered into that certain Development Agreement, dated June 6, 2011, and recorded in the Official Records of Santa Clara County on ____________________ as Document Number ___________ (“Development Agreement”). B.On June 13, 2022, the SUMC Parties provided City, under Section 18(c) of the Development Agreement, with notice of an intent to claim a Permitted Delay (“Notice”) toward achievement of (1) all applicable interim alternative mode share targets and (2) the 2025 alternative mode share target of 35.1 percent, both of which are identified in Section 5(c)(ix) of the Development Agreement. The SUMC Parties’ Notice explained why the ongoing COVID-19 pandemic has caused the Hospitals to be unable to achieve, on schedule, the interim and 2025 alternative mode share targets. C.City and the SUMC Parties wish to amend the Development Agreement as set forth in this Amendment to adjust the timing of the SUMC Parties’ obligations under Section 5(c)(ix) of the Development Agreement, to align with the anticipated period of Permitted Delay resulting from the COVID-19 pandemic. 2 157750738.2 D.All proceedings necessary for the valid adoption and execution of this Second Amendment have taken place in accordance with California Government Code sections 65864 through 65869.5, the California Environmental Quality Act, and City Resolution No. 7104 (June 8, 1992). E.The City Council has given notice of intention to consider this Amendment and conducted a public hearing on this Amendment, and the City Council has found that the Development Agreement, as amended by this Amendment, is consistent with the City’s Comprehensive Plan. AGREEMENT NOW, THEREFORE, City and the SUMC Parties agree as follows: 1.Updated Requirement for Monitoring of TDM Programs. Section 5(c)(ix) of the Development Agreement is amended and restated in its entirety to read as follows: (ix)Monitoring of TDM programs. The City and the SUMC Parties acknowledge that because use of transit by employees of the Hospitals is voluntary and may be influenced by a number of factors outside of the reasonable control of the Hospitals, such as gasoline prices, costs and availability of alternative transit, housing costs and availability, and personal preferences of employees, the Hospitals cannot guarantee the results of their TDM programs. However, the Hospitals shall monitor the success of their TDM programs from the date of the Initial Project Approvals through the Life of the Project. The following interim targets shall be used to measure the progress toward meeting the desired mode split by 2026. These interim targets assume that in the early phases of implementation, there may be larger shifts to alternative modes than the shifts that may occur in later phases of the TDM program enhancement. For purposes of calculating alternative mode share, any mode that does not constitute driving in a single-occupant vehicle to and from the work site shall be considered an “Alternative Mode,” including working remotely from home. Target Year Alternative Mode Share Percent Change EIR Baseline (2006) 22.9% NA 2018 30 % 7.1 % 2024 33 % +3 % 2026 35.l %+2.1 % Excluding the period from 2022 through 2023, during which time this provision shall not apply, if the applicable interim target is not met for any two consecutive years prior to 2026, the Hospitals shall provide alternative transportation funding to the City in Annual Payments in the amount of One Hundred Seventy-Five Thousand Dollars ($175,000) per year. For payments made after January 1,2025, the amount of the payment shall be adjusted to reflect the change in the San Francisco Area Consumer Price Index between January 1, 2025 and the date on which 3 157750738.2 the Annual Payment is due. The alternative transportation funding must be used by the City for local projects and programs that encourage use of alternative transportation mode uses or otherwise reduce peak period traffic trips in the intersections impacted by the Project as identified in the Project EIR, including but not limited to citywide and regional transportation systems and solutions. The City of Palo Alto should consider transportation systems and solutions that also help to reduce traffic in the City of Menlo Park. (A)Submission of Reports. The Hospitals shall submit annual reports showing the current number of employees employed over 20 hours per week; the number of employees using an alternative mode share as documented by a study or survey to be completed by the Hospitals using a method mutually agreeable to the City and Hospitals; and the efforts used by the Hospitals to attempt to achieve the Alternative Mode targets. (B)2026 Mode Split Penalty. If the annual report for 2026 does not demonstrate that the Hospitals have substantially achieved the Thirty Five and One-Tenth Percent (35.1%) target modal split for alternative transportation modes, the Hospitals shall make a lump sum payment of Four Million Dollars ($4.0 million), as adjusted to reflect the change in the San Francisco Area Consumer Price Index from January 1, 2025 to January 1, 2026, to the City for local projects and programs that encourage and improve use of alternative transportation mode uses or otherwise reduce peak period traffic trips in the intersections impacted by the Project as identified in the Project EIR, including but not limited to regional transportation systems or solutions. The City shall identify capital projects and program enhancements for which the funds may be applied. Sample projects may include contributions towards regional transportation projects of interest to the City and that are identified within the Valley Transportation Authority-Valley Transportation Plan or other local planning documents. The City of Palo Alto should consider transportation systems and solutions that also help to reduce traffic in the City of Menlo Park. If required, said Four Million Dollar ($4,000,000) payment, as adjusted for inflation, shall constitute funds to be used by the City to offset trips by Hospital employees through citywide trip reduction. The Four Million Dollar ($4,000,000) payment, as adjusted for inflation, shall not relieve the SUMC Parties of any of their other obligations under this Agreement, including but not limited to their obligations to continue to attempt to achieve the 35.1% target modal split through implementation of the GO Pass or substantially similar program, or a substitute program mutually agreed upon by the SUMC Parties and the City’s Director of Planning and Community Environment, which shall continue pursuant to the terms of this Agreement for fifty-one (51) years from commencement of the GO Pass program. Further, the Hospitals shall continue to implement an enhanced TDM program, monitor modal splits by Hospital employees, and strive to maximize use of alternative commute modes by Hospital employees. In addition, the Hospitals shall continue to meet with the City on a regular basis to identify potential improvements to the enhanced TDM program. The City shall keep all payments received from the Hospitals pursuant to this Section 5(c)(ix) in a separate account (the “TDM Fund”), to be used only for the purposes described in this Section 5(c)(ix). The City shall deliver an annual report of disbursements from the TDM Fund in accordance with Section 12 below. 4 157750738.2 --- 4.Full Force and Effect. As amended by this Amendment, the Development Agreement shall remain in full force and effect. 5. Counterparts. This Amendment may be executed in any number of identical counterparts, and each counterpart shall be deemed to be an original document. All executed counterparts together shall constitute one and the same document, and any counterpart signature pages may be detached and assembled to form a single original document. [Signatures on following page] 5 157750738.2 IN WITNESS WHEREOF, this Amendment has been duly executed by the parties as of the day and year first above written. CITY OF PALO ALTO: Attest: By: _____________________________ _________________________________ Hon. Lydia Kou, Mayor City Clerk Approved: ________________________________ Ed Shikada, City Manager Approved as to Content: ________________________________ Jonathan Lait, Director of Planning and Community Environment Approved as to Form: ________________________________ Assistant City Attorney STANFORD HEALTH CARE (formerly STANFORD HOSPITAL AND CLINICS) By: ____________________________ David Entwistle, President and Chief Executive Officer LUCILE SALTER PACKARD CHILDREN’S HOSPITAL AT STANFORD By: ____________________________ Paul A. King, President and Chief Executive Officer THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY By: ___________________________ Robert C. Reidy, Vice President of Land, Buildings & Real Estate *NOT YET APPROVED* 1 0160124_20230926_ay16 Resolution No. ______ Resolution of the Council of the City of Palo Alto to Update the Mitigation Monitoring and Reporting Program for the Stanford University Medical Center (SUMC) Facilities Renewal and Replacement Project to be Align Mitigation Measure TR-2.3 with the SUMC Development Agreement Amendment No. 1 RECITALS A. On June 6, 2011, the Council of the City of Palo Alto adopted Resolution No 9168 certifying the adequacy of the Final Environmental Impact Report for the Stanford University Medical Center Facilities Renewal and Replacement Project (Final EIR) Pursuant to the California Environmental Quality Act and Adopting the Mitigation Monitoring and Reporting Program (MMRP) and the Statement of Overriding Considerations; and B. On June 6, 2011, Stanford Hospital and Clinics, Lucile Salter Packard Children’s Hospital, Stanford University, and the City of Palo Alto entered into a Development Agreement that allowed Stanford University Medical Center (SUMC Parties) to remodel existing facilities and to construct new facilities at their campuses in Palo Alto; and C. The SUMC Development Agreement is in place for thirty (30) years from the date of execution, allows for the adjustment of the timing for performance of conditions of approval, allows for permitted delays in performance caused by force majeure, and allows for SUMC Parties to develop the project in their sole discretion in accordance with their own time schedule subject to the terms and conditions of the Development Agreement; and D. SUMC Parties claimed a permitted delay in performance of interim and final alternative transportation mode share targets due to the effects of the COVID-19 pandemic; and E. SUMC Parties filed an application for a Development Agreement amendment (22PLN-00302) on September 7, 2022 to adjust the timeline by which SUMC is required to achieve their alternative transportation mode share targets outlined in the Development Agreement Section 5(c)(ix) Monitoring of TDM Programs and, correspondingly, the timing of performance in MMRP Mitigation Measure TR-2.3; and F. SUMC Parties implement one of the most detailed and extensive Transportation Demand Management (TDM) programs in the City and has historically achieved high rates of SUMC employee use of alternative transportation modes; and G. SUMC Parties will continue to fully implement the requirements outlined in *NOT YET APPROVED* 2 0160124_20230926_ay16 Development Agreement Section 5(c)(ix) Monitoring of TDM Programs and MMRP Mitigation Measure TR-2.3, including ongoing implementation of the SUMC TDM program activities, annual monitoring of SUMC employee use of alternative transportation modes, and annual preparation of the SUMC Alternative Mode Share Report; and H. The COVID-19 pandemic slowed the ability for SUMC Parties to complete the new construction and remodeling anticipated to be complete by 2025, as previously analyzed in the Final EIR and full project build-out for the full SUMC entitled square footage has not yet occurred and will not occur until after 2025; and I. The proposed adjustments to the alternative mode share targets in SUMC Development Agreement Amendment No. 1 are consistent with the Project analyzed in the Final EIR and will not result in new potentially significant environmental impacts, a substantial increase in any previously identified potential environmental impacts, or a misalignment in the previous evaluation of potential SUMC Project environmental impacts relative to the timing of project buildout; and J. SUMC Development Agreement Amendment Number 1 does not change the approved SUMC project, nor convey new rights or entitlements that were not previously analyzed; and K. On ________, the City Council adopted Ordinance No. ______, approving and authorizing the Mayor to execute Amendment No.1 to the SUMC Development Agreement; // // // // // // // // // // *NOT YET APPROVED* 3 0160124_20230926_ay16 // The Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The Mitigation Monitoring and Reporting Program for the Stanford University Medical Center (SUMC) Facilities Renewal and Replacement Project shall be updated as shown in Attachment A, to align Mitigation Measure TR-2.3 with the SUMC Development Agreement Amendment No. 1. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Director of Planning and Development Services *NOT YET APPROVED* 4 0160124_20230926_ay16 Attachment A STANFORD UNIVERSITY MEDICAL CENTER FACILITIES RENEWAL AND REPLACEMENT MITIGATION MONITORING AND REPORTING PLAN (Note: Underline/Strikeout – Edits made to be consistent with SUMC Development Agreement Amendment Number 1) Mitigation Measures Monitoring or Reporting Action Responsibility Timing Signature/Date Completed TR-2.3 Enhance Stanford University Transportation Demand Management (TDM) Program. The SUMC Project sponsors shall enhance the currently implemented TDM program in order to achieve 35.1 percent usage of alternative transportation modes (i.e., carpool, vanpool, bus, Caltrain, bicycle, and walk) by Hospital employees. The initial enhancements to the SUMC TDM program shall include the following: • Commencing on September 1, 2015, the Hospitals shall 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 of up to One Million Eight Hundred Thousand Dollars ($1,800,000) per year, which amount shall be adjusted annually to reflect any change in the San Francisco Bay Area Consumer Price Index (the “GO Pass Amount”). The Hospitals’ obligation to provide GO Passes shall continue for fifty-one (51) years , or until such earlier date as: (a) Caltrain discontinues the GO Pass program, or a substantially similar program; (b) Caltrain increases the cost of GO Passes, or a substantially similar program, such that the Hospitals’ annual costs would exceed the GO Pass Amount; or (c) Caltrain service is reduced by such an extent that the Hospitals and the City mutually determine purchase of annual GO Passes, or a substantially similar program, would no longer be effective in substantially reducing Hospital employee peak Review TDM reports to verify that enhancements of TDM program have been implemented and determine whether interim mode split targets have been achieved; transmit TDM reports to City of Menlo Park for their review City and SUMC Project sponsors will meet annually to discuss effectiveness of enhanced TDM program and to identify potential improvements. SUMC Project sponsors may modify enhanced TDM program as needed to improve its effectiveness. Verify lease of 75 parking spaces at Ardenwood Park and Ride lot, or an City of Palo Alto Department of Planning and Community Environment Baseline TDM report within six months of SUMC Project approval Annual TDM reports submitted each Spring Baseline TDM Report ________________________ ______________ Signature Date Spring 2013 ________________________ ______________ Signature Date Spring 2014 ________________________ ______________ Signature Date Spring 2015 ________________________ ______________ Signature Date Spring 2016 ________________________ ______________ Signature Date Spring 2017 ________________________ ______________ Signature Date *NOT YET APPROVED* 5 0160124_20230926_ay16 period trips in order to achieve the Alternative Mode targets in Table 3.4-19A in Section 3 in the Final EIR. If the cost of obtaining GO Passes exceeds the GO Pass Amount, the Hospitals shall have the option to elect either to purchase the GO Passes at the then applicable price, or to terminate the obligation to provide GO Passes, or a substantially similar program. If the Hospitals’ obligation to provide GO Passes, or a substantially similar program, terminates for any of the reasons specified in this measure , the Hospitals shall contribute the GO Pass Amount to one or more substitute programs to encourage use of transit by Hospital employees or otherwise reduce peak period traffic trips in the intersections impacted by the Project as identified in the Project EIR, including but not limited to regional transportations systems or solutions. The substitute program or programs shall be mutually agreed upon by the SUMC Parties and the City’s Director of Planning and Community Environment. • Use all reasonable efforts to arrange with AC Transit to lease 75 spaces at the Ardenwood Park & Ride Lot, or an equivalent facility, to serve SUMC employees who commute from the East Bay. • Expand the Marguerite shuttle bus service between the SUMC and PAITS as needed to accommodate increased ridership by Hospital employees. • Use all reasonable efforts to assure that the controlling transit agency maintains load factors less than 1.00 on the U-Line. • Maintain a load factor less than or equal to 1.25 on the Marguerite shuttle. equivalent location, at a cost not to exceed $45,000 per year. For U-Line load factors, verify Initial Payment offer to AC transit ($250,000) and then subsequent annual payment offers up to $50,000 total. Spring 2018 ________________________ ______________ Signature Date Spring 2019 ________________________ ______________ Signature Date Spring 2020 ________________________ ______________ Signature Date Spring 2021 ________________________ ______________ Signature Date Spring 2022 ________________________ ______________ Signature Date Spring 2023 ________________________ ______________ Signature Date Spring 2024 ________________________ ______________ Signature Date Spring 2025 ________________________ ______________ *NOT YET APPROVED* 6 0160124_20230926_ay16 • Expand and improve the bicycle and pedestrian networks as specified by Project site plans. • Provide a full-time on-site TDM coordinator by 2015 for the hospital components. The coordinator would be responsible for organizing and disseminating TDM information primarily to hospital employees and also to hospital patients. A central location would be made available to provide information on alternative travel modes. Also, the SUMC or Hospitals’ website would contain information on TDM programs. • Provide a guaranteed ride home program for all employees who use transit and other transport alternatives like carpool and vanpool. The guarantee ride home shall allow employees with dependent children the ability to use alternative modes to travel to and from work but still be able to travel home mid-day in case of an emergency. • Provide employees with shower facilities within the SUMC Sites to encourage bicycling to work. The SUMC Project sponsors shall also provide bicycle storage facilities on the SUMC Sites that would be conveniently located near the employee showers. • Establish, in conjunction with the GO Pass implementation, a “Zip Car” (or other similar carsharing program) with Zip Cars available at the medical complex. • Perform annual TDM monitoring from the date of initial project approval through the life of the project (51 years after project approval) and submit the report to the City of Palo Alto. This report also shall be submitted to the City of Menlo Park for its review. Signature Date Spring 2026 ________________________ ______________ Signature Date Spring 2062 ________________________ ______________ Signature Date *NOT YET APPROVED* 7 0160124_20230926_ay16 • Within six (6) months of project approval, and annually for a period of fifty-one (51) years from initial project approval, the SUMC Project sponsors shall submit to the City’s Director of Planning and Community Environment, a Hospital TDM Program Report that shows the current number of employees employed over 20 hours per week;, the number of employees using an alternative mode share as documented by a study or survey to be completed by the Hospitals using a method mutually agreeable to the City and Hospitals; and the efforts used by the Hospitals to attempt to achieve the Alternative Mode targets. These enhancements may not immediately change the mode split for Hospital employees. Further, because transit use by employees of the Hospitals is voluntary, and may be influenced by a number of factors outside the reasonable control of the Hospitals, such as gasoline prices, costs and availability of alternative transit, housing costs and availability, and personal preferences of employees, the Hospitals cannot guarantee the results of their TDM programs. *NOT YET APPROVED* 8 0160124_20230926_ay16 The interim targets in Table 3.4-19A in Section 3 in the Final EIR were previously shall be used to measure the progress toward meeting the desired mode split by 2025. The interim and final targets are now as outlined in SUMC Development Agreement Amendment Number 1, modifying the targets to be as follows: The These interim targets assume that in the early phases of implementation, there may be larger shifts to alternative modes than the shifts that may occur in later phases of the TDM program enhancement. For purposes of calculating alternative mode share, any mode that does not constitute driving in a single occupant vehicle to and from the work site shall be considered an “Alternative Mode,” including working remotely from home. For each of the interim target years, following submission of the Hospitals TDM Annual Report, the City shall determine if the interim year target has been met. If the Hospitals have not met the interim target, the Hospitals and the City shall meet to review the TDM Program and to identify possible additional TDM Program enhancements that the Hospitals should consider incorporating into their TDM Program in order to increase the Program’s effectiveness. Excluding the period from 2022 through 2023, during Target Year Alternative Mode Share Percentage Change EIR Baseline (2006) 22.9% NA Project Approval Baseline (2011) TBD TBD 2018 30% 7.1% 2021 2024 33% +3% 2025 2026 35.1% +2.1% *NOT YET APPROVED* 9 0160124_20230926_ay16 which time this provision shall not apply, if If the Hospitals do not meet the applicable interim targets for any two consecutive years prior to 2025 2026, the Hospitals shall provide alternative transportation funding to the City of Palo Alto in annual payments in the amount of $175,000 per year, as adjusted to reflect the change in the San Francisco Area Consumer Price Index between January 1, 2025 and the date on which the Annual Payment is due. The alternative transportation funding shall be used by the City of Palo Alto for local projects and programs that encourage citywide use of alternative transportation mode uses or otherwise reduce peak period traffic trips in the intersections impacted by the Project as identified in the Project EIR, including but not limited to citywide and regional transportation systems and solutions. The City of Palo Alto should consider transportation systems and solutions that also help to reduce traffic in the City of Menlo Park. If by 2025 the 2026 annual report does not demonstrate that the Hospitals have substantially achieved, the Hospitals have not demonstrated substantial achievement of the 35.1 percent target modal split for alternative transportation modes, the following measure shall be required: • The Hospitals shall make a lump sum payment of $4.0 million, as adjusted to reflect the change in the San Francisco Area Consumer Price Index from January 1, 2025 to January 1 2026, to the City of Palo Alto for local projects and programs that encourage and improve citywide use of alternative transportation mode uses or otherwise reduce peak period traffic trips in the intersections impacted by the Project as identified in the Project EIR, including but not limited to regional transportation systems and solutions. The City of Palo Alto shall identify capital projects and program enhancements for which the funds may be *NOT YET APPROVED* 10 0160124_20230926_ay16 applied. Sample projects may include contributions towards regional transportation projects of interest to the City of Palo Alto and that are identified within the Valley Transportation Authority – Valley Transportation Plan or other local planning documents. The City of Palo Alto should consider transportation systems and solutions that also help to reduce traffic in the City of Menlo Park. If required, said $4.0 million payment, as adjusted by inflation, shall constitute funds to be used by the City to offset trips by Hospital employees through citywide trip reduction. The $4.0 million payment, as adjusted by inflation, shall not relieve the Hospitals of any of their obligations under this measure, including but not limited to their obligations to continue to attempt to achieve the 35.1 percent target modal split through implementation of the GO Pass or substantially similar program, or a substitute program mutually agreed upon by the Hospitals and the City’s Director of Planning and Community Environment, which shall continue for 51 years from the date of Project approval. Further, the Hospitals shall continue to implement an enhanced TDM program, monitor modal splits by Hospital employees, and strive to maximize use of alternative commute modes by Hospital employees. In addition, the Hospitals shall continue to meet with the City on a regular basis to identify potential improvements to the enhanced TDM program. 1 Attachment C SUMC Alternative Mode Share Target Year Compliance Status Summary - 2020 through 2023 Fiscal Year/ Target Year TDM Implementation Alternative Mode Share Status Status Notes Fiscal Year 2019- 2020/ Target Year 2020 SUMC implemented TDM program activities in Fiscal Year 2019-2020. Not applicable; City approved a delay in the submittal of Fiscal Year 2019-2020 Alternative Mode Share Report. COVID-19 pandemic shelter-in-place orders issued in March 2020. As monitoring of SUMC employee commutes was scheduled for the April/May 2020 timeframe, the information collected would not reflect normal SUMC staff operations due to the shelter-in-place directives. Therefore, on March 27, 2020, the City conditionally approved a one- year delay in the submittal of the FY 2019-2020 Alternative Mode Share Report. Fiscal Year 2020- 2021/ Target Year 2021 SUMC implemented TDM program activities in Fiscal Year 2020-2021. Target not achieved. The Fiscal Year 2020-2021 Alternative Mode Share Report showed alternative mode share rate had decreased to 28.8% (target 33%). This is considered the first year for missed targets. Per the Development Agreement, the City coordinated with SUMC and monitored the status of TDM activities. Fiscal Year 2021- 2022/ Target Year 2022 SUMC implemented TDM program activities in Fiscal Year 2021-2022.1 Target not achieved. The Fiscal Year 2021-2022 Alternative Mode Share Report showed alternative mode share rate had further decreased to 19.9% (target 33%). On June 14, 2022, the City received SUMC’s notice of intent to claim a “Permitted Delay” for achieving alternative transportation mode share targets under Section 18(c) Force Majeure in the Development Agreement. 1 Memorandum from SUMC describing TDM Activities in Fiscal Year 2021-2022, received February 11, 2022: www.cityofpaloalto.org/files/assets/public/v/1/planning-amp-development-services/current-planning/uploads- for-website/sumc/sumc-memo-tdm-program-activities_february_11_2022.pdf. 2 This is considered the second consecutive year for missed targets. Fiscal Year 2022- 2023/ Target Year 2023 SUMC implemented TDM program activities in Fiscal Year 2022-20232 and on an ongoing basis. Target not achieved. The Fiscal Year 2022-2023 Alternative Mode Share Report showed alternative mode share rate increased from the previous year to 25.6% but is still below the 33% target. This is considered the third consecutive year for missed targets. On July 27, 2022, the City acknowledged receipt of the notice of intent to claim a “Permitted Delay” and deferred seeking the $175,000 alternative transportation funding Annual Payment outlined in the Development Agreement, pending resolution of the proposed SUMC Development Agreement amendment. On September 7, 2022, SUMC filed application 22PLN-00302 for SUMC Development Agreement Amendment Number 1. The City deferred seeking a second $175,000 alternative transportation funding Annual Payment after SUMC submitted the Fiscal Year 2022-2023 Alternative Mode Share report in May 2023. The City remains in coordination with SUMC regarding implementation of their TDM program. On May 11, 2023, the U.S. Health and Human Services Department released a statement declaring the end of the COVID-19 Public Health Emergency. 2 Memorandum from SUMC describing TDM Activities in Fiscal Year 2022-2023, received February 27, 2023: www.cityofpaloalto.org/files/assets/public/v/1/planning-amp-development-services/current-planning/uploads- for-website/sumc/sumc-memo-tdm-program-activities_february_-27_2023.pdf. City Council –October 23, 2023 www.cityofpaloalto.org SUMC Development Agreement Amendment Number 1 Purpose 2 Consider a draft ordinance to amend the SUMC Development Agreement to adjust the timeline for achieving the SUMC Alternative Mode Share Targets SUMC Development Agreement/MMRP 3 •Effective June 6, 2011 (30-Year Agreement) •SUMC/City ongoing monitoring of DA and other entitlement requirements •SUMC filed application for Amendment Number 1 due to COVID-19 influence on employee commute patterns SUMC TDM Requirements 4 •DA and MMRP TR-2.3 contain the same language and require SUMC to implement a TDM program, monitor, and report each year •SUMC TDM targets achievement of the following percentages of employees using alternative transportation modes for their commutes: SUMC TDM Performance 5 •Ongoing SUMC achievement of targets between 2011-2019 •Early achievement of 2025 target between 2015-2018 •Missed targets between 2021-2023 TDM Missed Targets 2021-2023 6 •COVID-19 Pandemic Shelter-in-Place Order March 2020 prevented accurate employee commute counts •DA/MMRP requires SUMC to provide $175K alternative transportation funding to City if targets missed two consecutive years before 2025 •Monitoring Year: 2021 –first year 33% target missed (no payment required) 2022 –second year 33% target missed ($175K payment) 2023 –third year 33% target missed ($175K payment) Rationale for Amendment 7 •SUMC suggests Amendment would provide clarity on how to implement alternative mode share targets/annual payments with respect to SUMC claim of Force Majeure due to COVID-19 •Accounts for: •Claimed period of “Permitted Delay” •Duration of HHS COVID-19 Public Health Emergency •Time for alternative transportation to recover Amendment Details 8 •Amendment focused on two DA Sections: •Section 1 Definitions •Section 5(c)(ix) Monitoring of TDM Programs •Amendment text: •Adjustment of timing of performance: •achievement of 2021 33% target by 2024 •achievement of 2025 35.1% target by 2028 •Cost escalator using CPI from 2025 •Spending flexibility Staff Recommendation 9 1.Find the proposed Amendment Number 1 consistent with the SUMC Facilities Renewal and Replacement Project Certified EIR 2.Adopt an Ordinance (Attachment A) approving Amendment Number 1 3.Adopt a Resolution (Attachment B) updating Mitigation Measure TR-2.3 to be consistent with Amendment Number 1 1 SUMC Development Agreement Alternative Mode Share Requirements Target Year Required Alternative Mode Share Percentage Change EIR Baseline (2006)22.9%NA 2018 30%7.1% 2021 33%+3% 2025 35.1%+2.1% •If interim target is not met for 2 consecutive years, Hospitals to pay City of Palo Alto $175K per year until target is achieved.Funds to be spent by the City on local projects / programs to increase citywide use of alternative modes. •If final target is not achieved, Hospitals to pay City of Palo Alto $4M, and continue to attempt to meet target.$4M to be spent by the City on local projects / programs to improve citywide use of alternative modes or otherwise reduce peak period trips at impacted intersections identified in the SUMC EIR. Absent the pandemic, the SUMC Development Agreement with the City of Palo Alto requires the Hospitals to achieve alternative mode share targets of 30%, 33% and 35.1% for on-campus employees in 2018, 2021 and 2025, respectively. 2 Alternative Mode Share Results to Date Hospitals were regularly exceeding the applicable targets until 2020. The pandemic caused the alternative mode share to dip significantly. Now, the Hospitals’ mode share is beginning to rebound, but full recovery will take time. 2020: Gap in survey / reporting due to pandemic 2020: Gap in survey / reporting due to pandemic 2021 target (33%) 2018 target (30%) From:herb To:Council, City; Clerk, City Subject:October 23, 2023 Council Meeting, Item #5: Stanford Development Agreement Date:Sunday, October 22, 2023 5:35:32 PM CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links. OCATOBER 23, 2023, CITY COUNCIL MEETING, AGENDA ITEM #5STANFORD UNIVERSITY MEDICAL CENTER DEVELOPMENT AGREEMENT I urge you to direct staff to return this agenda item to youwith a recommendation from the City Manager instead of arecommendation from a Department Director, and to supplementthe percentages shown with the actual numbers for each categoryreported. In the City of Palo Alto's Council-Manager system of localgovernment it is the City Manager who makes recommendations tothe City Council. As in all previous years, items on the CityCouncil agenda should be from one of the Council AppointedOfficers, or in the case of the City Manager, from the CityManager or the Assistant City Manager acting on behalf of theCity Manager. If and when you do consider the proposed agreement forapproval, you should not focus on a failed land developmentstrategy advocated by the Bay Area Council and Silicon ValleyLeadership group that requires lower-income employees to livefurther and further from work so that they have to usetransportation systems they don't want to use. Stanford owns substantial housing in the Sand Hill Roadcorridor that is within walking distance of the StanfordUniversity Medical Center, and Stanford has complete controlover its ability to increase the percentage and distribution ofStanford employees among faculty, senior staff, and other staffin that housing, as well as the distribution of those housingunits among Medical Center employees and other Stanfordemployees. Having more of those employees live within walking distance towork is a better solution for a Development Agreementamendment, than trying to get those employees to travel longdistances to work and changing the traffic monitoring andmitigation timelines. Herb Borock From:Diane To:Council, City Subject:SUMC Development Agreement Date:Sunday, October 22, 2023 1:09:19 PM [Some people who received this message don't often get email from dianeef@comcast.net. Learn why this is important at https://aka.ms/LearnAboutSenderIdentification ] CAUTION: This email originated from outside of the organization. Be cautious of opening attachments and clicking on links. ________________________________ Dear Mayor Kou and members of the Council: The request to redo the present agreement should be rejected. A deal is a deal, it seems, unless Stanford wants to change the rules. The threat of litigation should not be the reason to change this agreement. Looking at the data published in the Weekly, the big problem is that Stanford has not been successful in requiring their employees to forgo their private car usage. Please, the treat of possible litigation should not be the reason for a bad decision. Diane Finkelstein 2049 Dartmouth Street Palo Alto Sent from my iPad From:Jo Ann Mandinach To:Council, City Subject:Do NOT cave to Stanford re transportation demand management Date:Saturday, October 21, 2023 1:59:06 PM CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links. Stanford knew what the agreement was and overtly violated it and should pay the penalty and the fine, both of which are way to modfest in my opinion given the harm that their insatiable need for growth has inflicted on patients and medical professionals. Case in point: As soon as they got a huge grant to expand their Children's Health facilities, they IMMEDIATELY evicted all the medical and dental professionals from 700 Welsh Road DURING THE PANDEMIC. There was NO reason for their immediate eviction since Stanford couldn't start construction work for years without plans but did they care about the damage they caused to all of the professionals and their patients? Of course not! My dental specialist was one of them and he was forced to camp out in other dentists' offices so he could treat EMERGENCY patients while letting everyone else -- including me -- go without care until he could find a new office, find constructional professionals in the middle of the pandemic. Stanford showed no respect to the medical professionals who'd had offices at 700 Welsh Rd for DECADES even though some, like my dental specialist, were on the Stanford faculty. My dental specialist -- like all the other medical professionals -- is STILL playing catchup and years later, I'm STILL waiting. Their selfish arrogance is no excuse for knowingly violating their agreements and their claim about "no new car trips" has been an absurd joke? lie? for decades. Just say no to any exceptions and raise the penalties for their continued violations. If they wabt to sue, let them. They've certainly had enough well-deserved bad press recently so one more incident The two current council members who used to work for Stanford should recuse themselves from this and other decisions regarding Stanford. Most sincerely, Jo Ann Mandinach Palo Alto, CA 94301