HomeMy WebLinkAboutStaff Report 2310-216613.SECOND READING: Adoption of an Ordinance Amending the Stanford University Medical
Center (SUMC) Development Agreement Adjusting the Timeline for Achieving the SUMC
Alternative Mode Share Targets. 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. (FIRST READING: October 23,
2023 PASSED 4-2-1, Lythcott-Haims and Tanaka No, Veenker Recused)
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: November 27, 2023
Report #: 2310-2166
TITLE
SECOND READING: Adoption of an Ordinance Amending the Stanford University Medical Center
(SUMC) Development Agreement Adjusting the Timeline for Achieving the SUMC Alternative
Mode Share Targets. 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. (FIRST READING: October 23, 2023 PASSED 4-2-1, Lythcott-
Haims and Tanaka No, Veenker Recused)
RECOMMENDATION
Approve on second reading the attached ordinance amending the SUMC development
agreement in accordance with the City Council’s prior action.
BACKGROUND
On October 23, 2023, City Council heard SUMC Development Agreement Amendment Number 1
for a first reading of a draft ordinance and adoption of an associated draft resolution.1 In a vote
4-2-1 (Lythcott-Haims and Tanaka No, Veenker Recused), City Council took the following actions:
1. Found the proposed amendment to the SUMC Development Agreement consistent with
the Certified EIR for the SUMC Facilities Renewal and Replacement Project;
2. Adopted an Ordinance approving Amendment No. 1 to the SUMC Development
Agreement; and modify language as follows: to extend the second interim target year to
2024 and the final target year to 2026;
3. Adopted a Resolution updating Mitigation Measure TR-2.3 to be Consistent with the
Development Agreement Amendment Number 1; and
4. Prioritized use of any payments to the City for trip reduction in the Northwest commercial
areas of the City, meaning the hospital area and the shopping center areas.2
1 City Council City Manager Report # 2306-1690, October 23, 2023:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13044.
2 City Council Draft Action Minutes, October 23, 2023: https://www.cityofpaloalto.org/Departments/City-
Clerk/Citys-Meeting-Agendas/Meeting-Agendas-and-Minutes.
In summary, City Council approved an adjustment to the timeline for which SUMC would need to
meet the alternative transportation mode share targets in the original SUMC Development
Agreement Section 5(ix) Monitoring of TDM Programs as follows:
•SUMC proposed adjusting the 2021 target (33% of SUMC employees using alternative
transportation modes) to be achieved in 2024. This would be reported in the SUMC
Alternative Mode Share Report FY 2023-2024 that would be submitted to the City in June
2024. This was accepted by City Council.
•SUMC proposed adjusting the 2025 target (35.1% of SUMC employees using alternative
transportation modes) to be achieved in 2028. This would be reported in the SUMC
Alternative Mode Share Report FY 2027-2028 that would be submitted to the City in June
2028. However, City Council did not accept this adjustment. Instead, City Council
proposed adjusting the 2025 target to be achieved in 2026, which would be reported in
the SUMC Alternative Mode Share Report FY 2025-2026 that would be submitted to the
City in June 2026.
City Council also approved the proposed spending flexibility for any potential future $175,000
Annual Payment and the inclusion of a cost escalator using the Consumer Price Index for any
potential future $175,000 Annual Payment or $4,000,000 Mode Split Penalty Payment.
Given that amendments to any Development Agreement requires City Council approval by
ordinance, a second reading action on the associated draft ordinance (Attachment A) is required.
ANALYSIS
Staff updated the draft Ordinance (Attachment A) to reflect City Council action on October 23,
2023. The updates pertain to the removal of new terms “Second Interim Target Year” and “Final
Target Year” that SUMC proposed as additions to the existing SUMC Development Agreement
Section 1 Definitions. The updates also reflect City Council’s proposed adjustments to the 2021
and 2025 alternative transportation mode target dates to now be 2025 and 2026, respectively.
City Council action on this second reading completes review of the SUMC Development
Agreement Amendment application filed on September 7, 2022. If the second reading is
approved by City Council, City staff will make SUMC Development Agreement Amendment
Number 1 available for execution by the City and SUMC and final recordation with Santa Clara
County.
If SUMC Development Agreement Amendment Number 1 is not executed by any party, then the
original SUMC Development Agreement will remain in effect and the SUMC Development
Agreement Amendment Number 1 documents will become moot. At the time this report was
prepared, SUMC had indicated its acceptance for Council’s directed action.
FISCAL/RESOURCE IMPACT
This action has no fiscal impact. As previously discussed on October 23, 2023, 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 Number 1 would be $350,000 not
being available for City expenditure on alternative transportation programs in accordance with
SUMC Development Agreement Section 5(c)(ix). However, SUMC Development Agreement
Amendment Number 1 adjusts 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,
both with the CPI cost escalator, would only be due if SUMC missed applicable target years in the
future.
STAKEHOLDER ENGAGEMENT
City staff coordinated with SUMC prior to and subsequent to the October 23, 2023 City Council
meeting. Noticing for this item has been conducted in a manner consistent with the municipal
code regulations.
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
APPROVED BY:
Jonathan Lait, Planning and Development Services Director
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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.
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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
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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.
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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
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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.
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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]
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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