HomeMy WebLinkAboutStaff Report 2512-5610CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, March 09, 2026
Council Chambers & Hybrid
5:30 PM
Agenda Item
6.Stanford University Medical Center (SUMC) Annual Report to Council for Fiscal Year 2025
(FY 2025)
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: March 9, 2026
Report #:2512-5610
TITLE
Stanford University Medical Center (SUMC) Annual Report to Council for Fiscal Year 2025 (FY
2025)
RECOMMENDATION
Staff recommends that the City Council:
1. Review the Stanford University Medical Center (SUMC) Annual Report for FY 2025, and
find that Stanford Hospitals & Clinics, Lucile Packard Children’s Hospital, and Stanford
University (SUMC Parties) have complied in good faith with the terms and conditions of
the SUMC Development Agreement;
2. Find that the SUMC Parties are not in default with the terms and conditions of the
Agreement in all sections; and
3. Accept the City of Palo Alto’s (City) Annual Report Supplements regarding the funds
received from the SUMC Parties, as required under Section 12(d) of the Development
Agreement (Attachment D).
EXECUTIVE SUMMARY
The City Council is required to review the SUMC Development Agreement, an agreement
between Stanford Hospital and Clinics, Lucile Packard Children’s Hospital, Stanford University
(SUMC Parties), and the City of Palo Alto, (the “Agreement”), to confirm compliance with the
Agreement’s terms. SUMC prepared their SUMC Annual Report for Fiscal Year (FY) 2024-2025
that discusses how they met their compliance obligations during the reporting time period
(Attachment A). The City also uses this Annual Report to Council to provide information on the
City’s compliance obligations, such as providing the required summary and description of how
the City expended funds provided by SUMC per the Agreement.
As documented in this Annual Report to Council, both SUMC and the City are in compliance
with the terms of the Agreement and Agreement Amendment Number 1 for the reporting
period FY 2025.
BACKGROUND
On June 6, 2011, the Council approved Comprehensive Plan amendments, zoning changes, a
conditional use permit, annexation, and design applications for the Stanford University Medical
Center Facilities Renewal and Replacement Project (the “Projects”). The Projects include the
construction of the new Stanford Hospital and clinics buildings, an expansion of the Lucile
Packard Children’s Hospital (LPCH), construction of new School of Medicine (SOM) buildings,
renovation of the existing Hoover Pavilion, construction of a new medical office building and
parking garage at Hoover Pavilion, roadway improvements along Welch Road and Durand Way,
and SUMC design guidelines. The Development Agreement vesting these approvals became
effective on June 6, 2011, and continues for thirty (30) years from the effective date to June 6,
2041. The Development Agreement was amended in 2023 to modify the alternative
transportation mode share targets, in response to changes to transportation patterns resulting
from the COVID-19 pandemic.
1 Previous
annual reports and compliance documentation can be found via the weblinks in Attachment B.
ANALYSIS
Health Care Benefits;
Fiscal Benefits;
Traffic Mitigation and Reduced Vehicle Trips;
Linkages (Pedestrian, Bicycle, and Transit);
Infrastructure, Sustainable Neighborhoods & Communities, Affordable Housing; and
Climate Change.
1 Link to May 12, 2025 City Council Meeting Item 7:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16092.
Construction Activities and Net New Square Footage
Overall, at the Main SUMC site, SUMC is entitled to construct and use 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. Overall, at the
Hoover Pavilion site, SUMC is entitled 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 of medical/office buildings.
SUMC discusses their construction activities for FY 2025 in their SUMC Annual Report
(Attachment A). City staff reviewed the information regarding SUMC net new square footage in
the report and determined this information is complete and correct. A new proton therapy
vault at 875 Blake Wilbur Drive (1,279 square feet) received a certificate of occupancy in FY
2025. School fees were paid for 919 net new square feet.
As reported in the SUMC Annual Report FY 2024-2025 (Attachment A), the following table
summarizes the net new square footage for which a certificate of occupancy has been issued.
Table 1: SUMC Net New Square Footage
Traffic Mitigation and Reduced Vehicle Trips
SUMC implemented all required transportation demand management (TDM) obligations in FY
2025, such as purchasing of Caltrain Go Passes, funding for the AC Transit U-Line, and other
activities. A full list of commuter benefits and other obligations can be found in Attachments A
and C.
Alternative Mode Share Milestone Targets
SUMC previously achieved their alternative mode share milestone targets every year between
2013 and 2019. In 2020, the City conditionally approved a one-year delay in the submittal of
two reports; the FY 2020 Alternative Mode Share Report and Mitigation Measure TR 2.3
Enhanced Stanford University TDM Program report, in response to trip disruption caused by the
COVID-19 pandemic. Conditional approval of this delay was consistent with the procedures in
Section 6(p) of the Agreement.
In FYs 2020-2023, despite continuing to implement all TDM programs, as well as enhancing
communications and promotions, the SUMC parties found that the alternative mode share
milestone target of 33% was again not met. SUMC subsequently filed a Development
Agreement Amendment application that proposed adjusted dates for achieving alternative
mode share milestone target dates to account for the effect of the COVID-19 pandemic on
SUMC employee use of alternative transportation modes. The City Council approved Ord. 5602:
First Amendment to the SUMC Development Agreement Amendment.3 The amendment
adjusted the alternative mode share milestone target dates, while still reaching 35.0% by 2026.
The amendment also reset the interim target years, which trigger penalties in the event the
targets are not met for two consecutive years.
The amendment includes an alternative mode share rate target of 33.0% by 2024 and 35.0% by
2026. No target was set for 2025; however, SUMC increased its alternative mode share from
30.5% in FY 2024 to 33% in FY 2025, showing progress toward its goal of 35% mode share by FY
2026 (Attachment A).
Construction Sales and Use Tax Monitoring Report
SUMC submitted the annual Construction Sales & Use Tax Monitoring Report on June 30, 2025,
for the preceding calendar year. The City sent its required response. Based upon the City’s
review of the annual Construction Sales and Use Tax Monitoring Report, revenues for calendar
years 2011 through 2024 have totaled $5,556,174. This annual reporting assists in the process
of ensuring that the City would receive no less than $8.1 million in construction sales and use
tax revenue by December 31, 2025.
A shortfall in construction sales and use tax is expected, estimated to be $2.4 million. The
likelihood of a shortfall has been acknowledged by the SUMC Parties. Account reconciliation
will occur in August 2026, as required by the Development Agreement and payment of the
3 Link to Ord. 5602: First Amendment to the SUMC Development Agreement Amendment:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=48276&dbid=0&repo=PaloAlto
shortfall is expected from SUMC no later than January 31, 2027. This is expected to be
considered as part of the FY 2027 Budget process.
Supplement to the Annual Report
$4.1 million transfer from the Infrastructure, Sustainable Neighborhoods and
Communities, and Affordable Housing Fund to Capital Improvement Project Fire Station
4 Replacement (PE-18004).
Fiscal Year 2025 Adopted Operating Budget, Special Revenue Funds section; and
Fiscal Year 2025 Adopted Capital Budget document.5
$4,075,000 was transferred from the Expansion Cost Mitigation fund for the Fire Station
#4 Replacement (PE-18004).
5 Fiscal Year 2025 Adopted Operating Budget:
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
Image Courtesy of Nearmap US Inc, 2025
PREPARED FOR THE CITY OF PALO ALTO | JULY 3, 2025
2024-25 ANNUAL REPORT
CONTENTS
EXECUTIVE SUMMARY 1
BACKGROUND AND PURPOSE 2
2024-2025 SUMMARY OF PROGRESS 3
LUCILE PACKARD CHILDREN’S HOSPITAL 3
STANFORD HEALTH CARE 4
SCHOOL OF MEDICINE 5
BLAKE WILBUR DRIVE ROADWAY EXTENSION 6
NET NEW SQUARE FOOTAGE 7
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS 8
HEALTH CARE BENEFITS 8
SECTION 5(a) (ii). FUND FOR HEALTHCARE SERVICES 8
SECTION 5(a) (iii). FUND FOR COMMUNITY HEALTH AND SAFETY PROGRAMS 8
PALO ALTO FISCAL BENEFITS 8
SECTIONS 5(b) (i) AND 5(b) (ii). PAYMENT OF SALES AND USE TAXES 9
SECTION 5(b) (iii). FUNDING OF OPERATING DEFICIT 9
SECTION 5(b) (iv). PAYMENT OF UTILITY USER TAX 9
SECTION 5(b) (v). SCHOOL FEES 10
TRAFFIC MITIGATION AND REDUCED VEHICLE TRIPS 10
SECTION 5(c) (ii). MENLO PARK TRAFFIC MITIGATION 10
SECTION 5(c) (iii). EAST PALO ALTO VOLUNTARY MITIGATION 10
SECTION 5(c) (iv). CONTRIBUTIONS TO AC TRANSIT 10
SECTION 5(c) (v). OPTICOM PAYMENTS 11
SECTION 5(c) (vi). CALTRAIN GO PASSES 11
SECTION 5(c) (vii). MARGUERITE SHUTTLE SERVICE 11
SECTION 5(c) (viii). TRANSPORTATION DEMAND MANAGEMENT COORDINATOR 13
SECTION 5(c) (ix). MONITORING OF TDM PROGRAMS 12
LINKAGES 14
SECTION 5(d) (i). INTERMODAL TRANSIT FUND 14
SECTION 5(d) (ii). QUARRY ROAD FUND 14
SECTION 5(d) (iii). STANFORD BARN CONNECTION 14
INFRASTRUCTURE, SUSTAINABLE NEIGHBORHOODS AND COMMUNITIES, AND AFFORDABLE HOUSING 15
SECTION 5(e). 15
CLIMATE CHANGE 15
SECTION 5(f). CLIMATE CHANGE FUND 15
SATISFACTION OF CONDITIONS OF APPROVAL 15
SECTION 5(h). SATISFACTION OF ALL CONDITIONS OF APPROVAL 15
CONCLUSION 16
ANNUAL REPORT 2024-25 1
EXECUTIVE SUMMARY
On June 6, 2011, the Stanford University Medical Center parties (now Stanford Medicine)—comprised of
Stanford Hospital and Clinics (now Stanford Health Care), Lucile Packard Children’s Hospital, and Stanford
University—entered into a Development Agreement with the City of Palo Alto, committing to provide a range
of community benefits in exchange for vested development rights to develop and use the Stanford Medicine
Renewal and Replacement Project (“Renewal Project”) facilities in accordance with the approvals granted
by the City, and a streamlined process for obtaining subsequent project approvals. The Renewal Project—
driven by a growing demand for healthcare services, state-mandated seismic safety requirements, and the
need to replace outmoded facilities with modern, technologically advanced spaces—is transforming the
way that healthcare is delivered and research is conducted.
Today, fourteen years after the execution of the Development Agreement, the Lucile Packard Children’s
Hospital Expansion and the new Stanford Hospital are now open for patient care, and the School of Medicine
has completed the first phase of development of its replacement facilities, with its BioMedical Innovations
building open for research. Interior renovations within the 1989 portion of the preexisting Stanford Hospital
facility are well underway, and are expected to continue for the next several years, bringing the facility up
to modern healthcare standards.
Against this backdrop, Stanford Medicine submits its Annual Report in compliance with Section 12(c) of
the Development Agreement, and looks forward to continued collaboration with the City of Palo Alto in
advancing the goals of both Stanford Medicine and the broader community.
2 ANNUAL REPORT 2024-25
BACKGROUND AND PURPOSE
The Palo Alto City Council’s unanimous approval of the entitlements for the Stanford Medicine Renewal
and Replacement Project in July 2011 has paved the way for a historic investment in new and replacement
facilities for Stanford Medicine. The project approvals—including new zoning for the Renewal Project sites,
a conditional use permit, architectural review approval, and the execution of a Development Agreement—
allow for the construction of approximately 1.3 million net new square feet of hospital facilities, clinics,
medical offices, and medical research spaces, and are enabling the Hospitals to optimize the delivery of
healthcare services to patients, and maintain their position as leading providers of world-class healthcare.
In order to facilitate this important replacement and expansion work, the Stanford Medicine parties entered
into a Development Agreement with the City of Palo Alto, which includes a comprehensive package of
community benefits and additional development conditions. In exchange for these benefits, the City has
vested for a period of 30 years Stanford Medicine’s rights to develop and use the property in accordance
with the project approvals, and agreed to streamline the process for obtaining subsequent approvals.
The terms of the Development Agreement (Section 12(c)) provide for a periodic review of compliance,
and require that Stanford Medicine submit an Annual Report to the City of Palo Alto’s Director of Planning
and Community Environment each year within 30 days of the anniversary of the agreement effective date
(June 6, 2011). The Annual Report is to summarize Stanford Medicine’s progress on the Renewal Project,
including a list of net new square footage for which a certificate of occupancy has been received, and a
description of the steps that Stanford Medicine has taken to comply with the obligations listed in Section 5
of the Development Agreement. With this report, Stanford Medicine fulfills these requirements. Within 45
days of receipt of this Annual Report, the City will prepare a Supplement to the Annual Report, to provide an
accounting of the City’s balances and expenditures from each of the City Funds and how they were used.
ANNUAL REPORT 2024-25 3
2024-2025 SUMMARY OF PROGRESS
The Renewal Project has reached key milestones in the past several years, with the opening of the Lucile
Packard Children’s Hospital expansion in 2017, the New Stanford Hospital in 2019, and the School of
Medicine’s BioMedical Innovations building in 20201. While the COVID-19 pandemic changed the pace of
progress on the Renewal Project, as Stanford Medicine focused resources on pandemic response, including
launching clinical trials for therapeutic treatments for COVID-19 and establishing community testing and
vaccination sites, it also highlighted the importance of modern, state-of-the-art facilities to support Stanford
Medicine’s research and patient care.
The section to follow provides an overview of central goals for the project elements that presently are under
construction or nearing construction, a synopsis of progress to date, as well as a preview of near-term
upcoming activities.
LUCILE PACKARD CHILDREN’S HOSPITAL
In response to growing community needs for specialized pediatric and obstetric care, Lucile Packard
Children’s Hospital opened an expanded facility in late 2017. The new Main building, located adjacent to the
preexisting Lucile Packard Children’s Hospital (West building), provides patients and doctors with the most
modern clinical advancements and technology, while also creating a more patient- and family-centered
environment of care, with additional single-patient rooms and more spaces for families to be with their child
during treatment and recovery.
The LPCH Main building features a new entrance lobby, public concourse with dining, three floors of nursing
units, and new patient rooms. Spaces have been designed with an attention to natural light and views, and
the exterior grounds—more than 3.5 acres of outdoor areas and gardens—provide a park-like setting for
patients, families, and visitors.
1 Temporary certificate of occupancy was issued in 2020; final certificate of occupancy was issued in 2021.
4 ANNUAL REPORT 2024-25
LPCH is currently embarking on improvements to its preexisting West building which will modernize
its infrastructure and provide a more comfortable patient experience. These improvements include a
redesigned main lobby entry and drop-off for the West Building; plans were formally submitted to the City
for Architectural Review in Summer 2022 and were approved in Fall 2023. Further recent improvements
have included reimagined NICU, Maternity and Labor and Delivery spaces.
STANFORD HEALTH CARE
Stanford Health Care is constructing new and replacement hospital facilities to usher in a new era of
advanced patient care. Growth in patient volumes and rapidly changing medical technology have rendered
much of the existing midcentury hospital infrastructure inadequate, while new seismic safety requirements
have accelerated the need to construct replacement facilities.
In November 2019, Stanford Health Care’s first phase of facilities renewal completed as the New Stanford
Hospital received its license from the State Department of Public Health and opened to patient care.
With the new Stanford Hospital now complete, Stanford Health Care has begun a series of renovations
within its preexisting facilities, including the sequential upgrade of nursing units in the 1989 portion of the
Hospital; this renovation work is proceeding in phases over the next several years. Stanford Health Care
is also planning an addition to the preexisting Hospital of approximately 37,000 square feet. This proposed
addition received Architectural Review approval in March 2022, and a City grading / excavation permit was
issued in June 2022. Subsequently, an OSHPD building permit was issued in February 2025. Construction
is ongoing.
2024-2025 SUMMARY OF PROGRESS
ANNUAL REPORT 2024-25 5
In addition, a minor 1,279 square foot underground addition at the Stanford Medicine Cancer Center (875
Blake Wilbur Drive) received Architectural Review approval in December 2023 and Building Permit final in
June 2025. The addition accommodates a proton therapy vault to be used for cutting edge cancer treatment.
SCHOOL OF MEDICINE
The Stanford University School of Medicine is replacing its outmoded research buildings with new state-of-
the-art facilities designed to support contemporary translational research. The new facilities will accommodate
21st century medical advancements and enable the development of new medical innovations, featuring
integrated laboratory suites, with easier access between labs and support facilities, enabling transparency,
flexibility, and collaboration.
The first phase of School of Medicine development (BioMedical Innovations Building 1, or “BMI-1”) is now
complete, having received a certificate of occupancy in Spring 2021, and features four above-grade floors
of research labs and light-filled gathering places, and a lower basement level for utility support, as well as
a connective tunnel to other nearby research facilities. Building interiors were designed for best practices
for laboratory design safety and space allocation, with a flexible template to maximize efficient use of space
and ease of renovation. The four above-grade floors provide space for a mix of disciplines, basic and
clinical research, wet and dry labs, and leading-edge translational studies.
2024-2025 SUMMARY OF PROGRESS
6 ANNUAL REPORT 2024-25
BLAKE WILBUR DRIVE ROADWAY EXTENSION
As required by the 2011 Project Approvals, a new link roadway has been established between Sand Hill
Road and Welch Road. This roadway, which was completed in Fall 2023, connects Durand Way to Blake
Wilbur Drive, and provides an important automobile, bicycle, and pedestrian connection in the vicinity of
the Medical Center. Specifically, it serves as an uncongested route for emergency vehicles accessing the
medical campus via Sand Hill Road, and provides improved access to both the Main Medical Campus and
the outer Welch medical office buildings. The new roadway includes two travel lanes in each direction,
Class II bicycle lanes, sidewalks with planter strips including new tree plantings and bioretention areas,
new signal poles, and underground utilities. After the resolution of minor outstanding items, the Street Work
Permit was finaled in February 2025.
2024-2025 SUMMARY OF PROGRESS
ANNUAL REPORT 2024-25 7
2024-2025 SUMMARY OF PROGRESS
NET NEW SQUARE FOOTAGE
The following table summarizes the net new square footage for which a certificate of occupancy has been
issued.
PROJECT COMPONENT GROSS SQUARE
FOOTAGE
STANFORD HEALTH CARE
1101 Welch demolished (40,100)
500 Pasteur 719,266
875 Blake Wilbur (Proton Therapy Vault)1,279
Total 680,445
LUCILE PACKARD CHILDREN’S HOSPITAL EXPANSION
701 Welch demolished (56,300)
703 Welch demolished (23,500)
Lucile Packard Children’s Hospital Expansion 446,088
Total 366,288
SCHOOL OF MEDICINE
BioMedical Innovations building 196,921
Partial decant of Boswell, Grant, Alway, Lane, Edwards (23,608)
Total 173,313
HOOVER PAVILION
Miscellaneous shops and storage demolished (13,831)
Stanford Neuroscience Health Center (Hoover MOB)91,605
Total 77,774
8 ANNUAL REPORT 2024-25
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
This section of the Annual Report summarizes the steps that Stanford Medicine has taken to comply with
its obligations under Section 5 of the Development Agreement.
HEALTH CARE BENEFITS
In addition to the health care funds listed below, Stanford Medicine provides certain intrinsic benefits to the
community, as both a global leader in medical care and research, and as a community healthcare services
provider. The Renewal Project enables Stanford Medicine to continue its important work, and the addition of
more beds for adults and children will help to alleviate overcrowding. Additionally, the new hospital facilities
provide critical emergency preparedness and response resources for the community in the event of an
earthquake, pandemic, or other major disaster.
Section 5(a)(ii). Fund for Healthcare Services
The Hospitals have designated the amount of $3 million for Healthcare Services, which will increase to $5.6
million by December 31, 2025. No further action is required until 2026. This amount will be reconciled with
the construction use tax payments as described in Development Agreement Section 5(b)(ii)(C), and will be
spent between 2026 and 2036.
Section 5(a)(iii). Fund for Community Health and Safety Programs
Stanford Medicine has contributed a single lump-sum payment of $4 million to establish a Community Health
and Safety Program Fund for the City of Palo Alto. This fund is to be distributed to selected community health
programs that benefit residents of the City, including the Project Safety Net Program, a community-based
mental health plan for youth well-being in Palo Alto. A joint committee has been established to evaluate
proposals regarding the other specific programs to receive funding, composed of two representatives
selected by Stanford Medicine and two representatives selected by the City; this committee shall make
annual recommendations to the City Council regarding proposed disbursements from the Community
Health and Safety Program Fund, and the City Council shall use its reasonable discretion to decide whether
to accept, reject, or modify the joint committee recommendations.
Stanford Medicine provided the entire required contribution to the Community Health and Safety Program
Fund on August 25, 2011. No further action is required by Stanford Medicine to comply with this Development
Agreement provision, though in the past three years Stanford Medicine has engaged with City staff as part
of the joint committee to evaluate proposals for programs to receive funding. The City uses the funds
to support the Psychiatric Emergency Response Team (PERT), which, in years past, was operated in
partnership with the Santa Clara County Behavioral Health Services Department. However, the City has
noted that the County clinicians are no longer available and that funds will be used for City PERT officers
who perform similar duties. As required by Development Agreement Section 12(d), the City will provide
yearly Supplements to the Annual Report to provide an accounting of the City’s expenditures from this fund,
and the purposes for which the expenditures were used.
PALO ALTO FISCAL BENEFITS
The Stanford Medicine Renewal Project brings considerable fiscal benefits to the City of Palo Alto. The
project was expected to generate $8.1 million in sales and use tax revenues for the City, and multiple
mechanisms have been put into place to ensure that this target is met. The Development Agreement also
provides for further fiscal benefits to the City, including a payment by Stanford Medicine to fund the City’s
ANNUAL REPORT 2024-25 9
operating deficit, and the payment of utility user taxes and school fees.
Sections 5(b)(i) and 5(b)(ii). Payment of Sales and Use Taxes
As required by the Development Agreement, Stanford Medicine submitted its annual Construction Sales
and Use Tax monitoring report to the City on June 30, 2025. The Stanford Medicine parties will continue to
submit such a report annually during the construction period for the Renewal Project so that the City can
determine the share of construction use taxes that it has received as a result of the Renewal Project. Each
year, within 60 days of receiving the monitoring report, the City will provide its determination of the amount of
construction use taxes that it has received as a result of the Renewal Project during the preceding calendar
year. In August 2026 or soon thereafter, Stanford Medicine and the City will conduct a reconciliation process
to confirm whether the City has received at least $8.1 million in construction use taxes as a result of the
Renewal Project, as further described in Development Agreement Section 5(b)(ii).
To date, Stanford Medicine has taken the following steps detailed below to maximize the City’s allocation
of sales and use taxes associated with Project construction and operation. Documentation of each of these
items is included in the 2024 construction use tax monitoring report already submitted.
• Stanford Medicine has obtained all permits and licenses necessary to maximize the City’s allocation
of construction use taxes derived from the project, including California Seller’s Permits and Use Tax
Direct Pay Permits.
• Stanford Medicine has designated and required all contractors and subcontractors to designate the
project site as the place of sale of all fixtures furnished or installed as part of the project.
• Stanford Medicine has designated and required all contractors and subcontractors to designate the
project site as the place of use of all materials used in the construction of the project.
• Stanford Medicine has required all contractors and subcontractors to allocate the local sales and
use taxes derived from their contracts directly to the City. Stanford Medicine has used best efforts to
require contractors and subcontractors to complete and file any forms required by the State Board of
Equalization to effect these designations.
• Both Hospitals have obtained use tax direct pay permits from the State of California for their existing
facilities in order to increase the City tax allocation for the Hospitals’ purchases. The Hospitals will
maintain the use tax direct pay permit for the life of the project.
• Finally, Stanford Medicine has assisted the City in establishing and administering a Retail Sales
and Use Tax Reporting District for the Renewal Project, to enable the City to track the generation,
allocation, reporting and payment of sales and use taxes derived from the Project.
Section 5(b)(iii). Funding of Operating Deficit
In order to assure that City costs associated with the Renewal Project do not exceed revenues to the City
resulting from construction and operation of the project, Stanford Medicine has provided to the City a single
lump sum payment in the amount of $2,417,000. This payment was made on August 25, 2011. No further
action is required by Stanford Medicine to comply with this Development Agreement provision.
Section 5(b)(iv). Payment of Utility User Tax
Stanford Medicine will pay the City a utility user tax at a minimum rate of 5 percent of all electricity, gas, and
water charges allocable to new construction completed as part of the project for the life of the project. This
rate may be increased by the City as provided by Section 2.35.100(b) of the Municipal Code. The 5 percent
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
10 ANNUAL REPORT 2024-25
utility user tax is currently being paid by Stanford Medicine.
Section 5(b)(v). School Fees
Stanford Medicine will pay to the City—which is then to forward to the Palo Alto Unified School District—
school fees upon issuance of each building permit from the City or OSHPD , in the amount that is generally
applicable to non-residential development at the time of payment based upon net new square footage, as
defined in the Development Agreement.
School fees were paid in 2012 for LPCH and SHC in the amounts of $188,815 and $153,802, respectively.
In July 2013, additional school fees were paid in the amount of $7,051 to account for additional program
square footage for the New Stanford Hospital and Garage. In May 2014, an additional payment of school
fees in the amount of $16,119 was made to account for the incremental square footage associated with
the Hoover Medical Office Building, beyond the 60,000 square feet originally planned. In November 2015,
additional school fees in the amount of $461.16 were paid to account for incremental square footage for
the New Stanford Hospital Garage. In May 2022, school fees in the amount of $22,641 were paid to Palo
Alto Unified School District to account for Stanford Health Care’s planned addition to the 1989 portion of
the preexisting hospital.
TRAFFIC MITIGATION AND REDUCED VEHICLE TRIPS
Stanford Medicine has taken a number of steps to mitigate the potential traffic impacts projected at full
project buildout. Stanford Medicine provides a robust transportation demand management program, offering
a variety of incentives for employees to forego driving alone to work. As required by the Development
Agreement, Stanford Medicine has taken the additional actions outlined below.
Section 5(c)(ii). Menlo Park Traffic Mitigation
Stanford Medicine agreed to contribute to the City of Menlo Park a total of $3,699,000 for use in connection
with traffic mitigation, infrastructure enhancements, and the promotion of sustainable neighborhoods and
communities and affordable housing. This contribution has been made in three equal payments; the first
payment of $1,233,000 was made on August 19, 2011. The second payment of $1,233,000 was made on
December 5, 2012, following the November 2012 issuance of the first Hospital foundation permit. The final
payment in the amount of $1,233,000 was made on December 14, 2017, within 30 days from issuance of
the first Hospital occupancy permit. No further action is required by Stanford Medicine to comply with this
Development Agreement provision.
Section 5(c)(iii). East Palo Alto Voluntary Mitigation
Stanford Medicine has contributed a single lump sum payment of $200,000 to East Palo Alto to be used
for roadway and traffic signal improvements on University Avenue. This payment was made on August
19, 2011. No further action is required by Stanford Medicine to comply with this Development Agreement
provision. In the event that Stanford Medicine does not meet the alternative transportation mode goals
specified in the Development Agreement by 2026 and is assessed an approximately $4 million payment
under Development Agreement section 5(c)(ix)(B), the City will be required to remit $150,000 of such
payment to the City of East Palo Alto.
Section 5(c)(iv). Contributions to AC Transit
The Hospitals committed to the following actions within 30 days from issuance of the first Hospital occupancy
permit, and have fulfilled these commitments as outlined below:
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
ANNUAL REPORT 2024-25 11
• The Hospitals agreed to offer a one-time payment of $250,000 to AC Transit to be used for capital
improvements to the U-Line to increase capacity (Section 5(c)(iv)(A)). As required, the Hospitals
offered to contribute $250,000 to AC Transit for capital improvements to the U Line; this offer was
accepted, and the payment was made on January 5, 2018.
• The Hospitals agreed to offer to make annual payments to AC Transit in a reasonable amount, not to
exceed $50,000, to be used for operating costs of the U-Line to maintain a load factor for bus service
to the Medical Center of less than 1 (Section 5(c)(iv)(B)). The Hospitals are making annual payments
to AC Transit for purposes of U-Line operating costs.
• In order to encourage Hospital employees living in the East Bay to use public transit for their commute,
the Hospitals committed to using best efforts to lease 75 parking spaces at the Ardenwood Park and
Ride lot, or an equivalent location, at a cost not to exceed $45,000 per year (Section 5(c)(iv)(C)).
The Hospitals entered into an agreement with AC Transit as of September 2024 to lease 75 spaces
at the Ardenwood Park & Ride Lot. The Hospitals previously met this requirement by leasing spaces
at a more distant site in Newark (356263 Fircrest Drive), and once the Hospitals were able to lease
spaces at the Ardenwood Park & Ride as originally intended, the leased spaces at 35263 Fircrest
Drive were discontinued. At the Ardenwood location, commuters continue to utilize the U Line and DB
Express, which continue to have capacity to service current demand.
Section 5(c)(v). Opticom Payments
Within 30 days from issuance of the first Hospital occupancy permit, the Hospitals committed to pay $11,200
to the City of Palo Alto to be used for the installation of Opticom traffic control systems at the following seven
intersections: El Camino Real/Palm Drive/University Avenue; El Camino Real/Page Mill Road; Middlefield
Road/Lytton Road; Junipero Serra/Page Mill Road; Junipero Serra/Campus Drive West; Galvez/Arboretum;
and the Alpine/280 Northbound ramp. However, since the time that this commitment was made, the City
determined that Opticom systems are outdated, and proposed the purchase and installation of the ATMS.
now Emergency.now package, which would allow coordinated prioritization at all City-maintained traffic
signals. Agreement to this change in traffic signal priority system is documented in a letter dated December
12, 2017 from the City Manager to the SUMC Parties, which was accepted and agreed to by the SUMC
Parties by countersigned letter. The required payment was made on December 12, 2017, within 30 days of
issuance of the first Hospital occupancy permit.
Section 5(c)(vi). Caltrain GO Passes
The Development Agreement requires that the Hospitals purchase annual Caltrain GO Passes for all existing
and new Hospital employees who work more than 20 hours per week at a cost of up to approximately $1.8
million per year, beginning on September 1, 2015. This obligation is expected to continue for a period of 51
years.
Hospital management accelerated the purchase of the annual GO Pass for Hospital employees, and began
providing free GO Passes to employees commencing on January 1, 2012. Annual passes were purchased
again for all existing and new eligible employees for 2025. In addition, in order to further encourage ridership,
a new pilot program allows eligible Hospital employees to obtain free Caltrain parking passes.
Section 5(c)(vii). Marguerite Shuttle Service
The Hospitals will fund the reasonable costs, in an approximate amount of $2 million, for the purchase
of additional shuttle vehicles for the Marguerite shuttle service, as and when required to meet increased
demand for shuttle service between the project sites and the Palo Alto Intermodal Transit Station. In addition,
the Hospitals will fund as annual payments the reasonable costs, in an approximate amount of $450,000
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
12 ANNUAL REPORT 2024-25
per year, to cover the net increase in operating costs for the Marguerite Shuttle. Demand for the Marguerite
shuttle increased in 2012, and the Hospitals funded the purchase of three new hybrid shuttles to meet this
increased demand. Since this time, the Hospitals have funded as annual payments the reasonable costs of
the net increase in operating costs for the Marguerite Shuttle.
Section 5(c)(viii). Transportation Demand Management Coordinator
The Development Agreement requires that the Hospitals employ an onsite qualified Transportation Demand
Management (TDM) Coordinator for Stanford Medicine, commencing on September 1, 2015, and continuing
through the life of the Renewal Project.
Because the Hospitals accelerated the purchase of the Caltrain GO Pass, the Hospitals also accelerated
the hiring of the TDM Coordinator, filling this position in March 2012. The TDM Coordinator is responsible
for overseeing the analysis, development, and implementation of programs to advance the Hospitals’ TDM
objectives. Specific duties that are carried out in collaboration with Stanford Transportation include raising
awareness among commuters about alternative transportation options and Stanford’s commute incentive
programs; providing alternative commute planning assistance and responses to customer inquiries; writing
and editing electronic and print communications; coordinating and staffing outreach events, such as free
transit pass distributions and employee fairs; and providing alternative transportation information and
resources at new employee orientations.
The Hospitals also established a new role, Transportation/TDM Director, that is in addition to the previously
established TDM Coordinator role, to lead the effort of increasing the use of alternative transportation
among Hospital employees.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
ANNUAL REPORT 2024-25 13
Section 5(c)(ix). Monitoring of TDM Programs
The Hospitals are required to submit annual monitoring reports showing the current number of employees
employed over 20 hours per week; the number of employees using an alternative transportation mode as
documented by a study or survey to be completed by the Hospitals using a method mutually agreeable to
the City and the Hospitals; and the efforts used by the Hospitals to attempt to achieve the Alternative Mode
Targets identified in the Development Agreement. The Development Agreement specifies payments to be
made in the event that such targets are not met during particular time periods. Stanford Medicine submitted
its 2025 Alternative Mode Share Report to the City on May 30, 2025; this report shows an alternative mode
split of 33.01% for the Hospitals, reflecting a continuation of the trend of on-campus Hospital staff shifting
back to mass transportation and other alternative modes.
In previous years where the pandemic had a pronounced impact on daily life, a shift was observed from
alternative modes to single-occupancy vehicles, and the Hospitals’ previously successful alternative mode
share slipped significantly. This change in behavior was attributed to reduced levels of transit service at the
time and perceived health risks of public transportation. Further exacerbating these issues was the inability
for staff to work remotely as they primarily occupy roles which require direct patient interface or otherwise
require physical presence. Since the times of the pandemic, transit service levels have normalized and
concerns about the health risks of public transit have diminished.
The 2024-25 survey results demonstrate that the Hospitals are continuing along the path to recovery of
their previously successful alternative mode share. Reducing drive-alone rates for employees remains a
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
14 ANNUAL REPORT 2024-25
priority, and the Hospitals continue to pilot additional programs to meet the unique needs of their employees
while continuing to provide and promote existing alternative mode opportunities.
LINKAGES
To further encourage use of Caltrain, bus, and other transit services, and to enhance and encourage use of
pedestrian and bicycle connections between Stanford Medicine and downtown Palo Alto, Stanford Medicine
has funded the following specific infrastructure improvements.
Section 5(d)(i). Intermodal Transit Fund
Stanford Medicine has provided to the City one lump sum payment of $2.25 million for improvements
to enhance the pedestrian and bicycle connection from the Palo Alto Intermodal Transit Center to the
existing intersection of El Camino Real and Quarry Road. Up to $2 million of this amount is to be used by
the City for the development of an attractive, landscaped passive park/green space with a clearly marked
and lighted pedestrian pathway, benches, and flower borders. Stanford Medicine paid the entire required
amount for the Intermodal Transit Fund on August 25, 2011. No further action is required by Stanford
Medicine to comply with this Development Agreement provision. As required by Development Agreement
Section 12(d), the City will provide yearly Supplements to the Annual Report to provide an accounting of the
City’s expenditures from this fund, and the purposes for which the expenditures were used.
In Summer 2017, prior to issuance of the first Hospital Occupancy Permit, the City completed a temporary
path with associated lighting, landscaping/green space, benches, and flower borders from the transit center
to the existing crosswalk at the intersection of El Camino Real and Quarry Road. Available funds remaining
will be applied to the construction of permanent improvements in the future, which may include a bus transit
connection in addition to the planned bicycle and pedestrian improvements.
Section 5(d)(ii). Quarry Road Fund
Stanford Medicine has provided to the City one lump sum payment of $400,000 for improvements to and
within the public right-of-way to enhance the pedestrian and bicycle connection from the west side of El
Camino Real to Welch Road along Quarry Road, including urban design elements and way finding, wider
bicycle lanes, as necessary, on Quarry Road, enhanced transit nodes for bus and/or shuttle stops, and
prominent bicycle facilities. Stanford Medicine paid the entire required amount for the Quarry Road Fund
on August 25, 2011. No further action is required by Stanford Medicine to comply with this Development
Agreement provision. As required by Development Agreement Section 12(d), the City will provide yearly
Supplements to the Annual Report to provide an accounting of the City’s expenditures from this fund, and
the purposes for which the expenditures were used. The City was required to construct the improvements
prior to issuance of the first Hospital Occupancy Permit, but as agreed to with Stanford Medicine, delayed
implementation of these improvements until utility trenching to the Medical Center was complete. In late
2018, the City completed these improvements, including enhanced crosswalks and bicycle striping and
signage.
Section 5(d)(iii). Stanford Barn Connection
Stanford Medicine agreed to construct up to $700,000 of improvements to enhance the pedestrian
connection between the Main Medical Campus and the Stanford Shopping Center from Welch Road to
Vineyard Lane, in the area adjacent to the Stanford Barn prior to issuance of the first Hospital Occupancy
permit. Construction of the improvements completed in November 2017, in advance of issuance of the
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
ANNUAL REPORT 2024-25 15
first Hospital Occupancy permit. No further action is required by Stanford Medicine to comply with this
Development Agreement provision.
INFRASTRUCTURE, SUSTAINABLE NEIGHBORHOODS AND COMMUNITIES, AND
AFFORDABLE HOUSING
Section 5(e). Infrastructure, Sustainable Neighborhoods and Communities, and Affordable
Housing Fund
Stanford Medicine agreed to contribute a total amount of $23.2 million toward City of Palo Alto infrastructure,
sustainable neighborhoods and communities, and affordable housing. As required by the Development
Agreement, this contribution has been made in three equal payments. The first payment, in the amount of
$7,733,333, was made on August 25, 2011; the second payment of $7,733,333 was made on December 5,
2012, following the November 2012 issuance of the first Hospital foundation permit; and the final payment of
$7,733,333 was made on December 12, 2017, within 30 days from issuance of the first Hospital occupancy
permit. No further action is required by Stanford Medicine to comply with this Development Agreement
provision. As required by Development Agreement Section 12(d), the City will provide yearly Supplements
to the Annual Report to provide an accounting of the City’s expenditures from this fund, and the purposes
for which the expenditures were used.
The City will use $1,720,488 of these funds in the same manner as funds collected under the City’s housing
fee ordinance.
CLIMATE CHANGE
Section 5(f). Climate Change Fund
Stanford Medicine agreed to contribute a total amount of $12 million toward City projects and programs for a
sustainable community, including programs identified in the City’s Climate Action Plan, carbon credits, and
investments in renewable energy and energy conservation. As required by the Development Agreement,
this contribution has been made in three equal payments. The first payment, in the amount of $4 million,
was made on August 25, 2011; the second payment of $4 million was made on December 5, 2012, following
the November 2012 issuance of the first Hospital foundation permit; and the final payment of $4 million
was made on December 12, 2017, within 30 days from issuance of the first Hospital occupancy permit. No
further action is required by Stanford Medicine to comply with this Development Agreement provision. As
required by Development Agreement Section 12(d), the City will provide yearly Supplements to the Annual
Report to provide an accounting of the City’s expenditures from this fund, and the purposes for which the
expenditures were used.
SATISFACTION OF CONDITIONS OF APPROVAL
Section 5(h). Satisfaction of All Conditions of Approval
Stanford Medicine will satisfy all Conditions of Approval by the dates and within the time periods required
by the project approvals, subject to modifications allowed by the Development Agreement, and has taken
several steps in order to ensure that this requirement is met (Section 5(h)). The Conditions of Approval
encompass conditions imposed by the Architectural Review Board, mitigation measures enumerated in
the Mitigation Monitoring and Reporting Program, and conditions attached to the Conditional Use Permit.
COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS
16 ANNUAL REPORT 2024-25
In order to implement, monitor, and report on the implementation of this diverse array of conditions, Stanford
Medicine, with input from City planning staff, has created two Excel spreadsheet tracking and reporting
tools. These spreadsheets serve as a centralized repository for compliance monitoring information and
documentation, and are updated by the Stanford Medicine project teams on a regular basis, and reviewed
by the City.
CONCLUSION
As the Renewal Project completes its fourteenth year, Stanford Medicine looks forward to continued
engagement with the City of Palo Alto as the project continues to progress.
ATTACHMENT B
SUMC Development Agreement Annual Reporting
https://www.paloalto.gov/News-Articles/Planning-and-Development-Services/SUMC-Renewal-
Replacement-Project
SUMC Development Agreement, Section 5 - SUMC Parties’ Promises Attachment C
FY 2024-2025
1 SUMC Development Agreement Compliance: FY 2024-20251
0
2
3
2
Health Care Benefits
DA
Section Description Summary Activity Complies?
5(a)(ii)
Fund for
Healthcare
Services
Financial assistance
for Palo Alto
residents
SUMC establishment of a $3M fund that will
grow to $5.6M by December 31, 2025. Fund
will be used in even increments over a ten-
year period from 2026-2036 to assist Palo
Alto residents who have self-payment
responsibilities beyond their financial
means, as described in Section 5(a)(ii).
Yes, complies – No activity
required in FY 2024-25.
5(a)(iii)
Fund for
Community
Health and
Safety Programs
$4M fund for
selected community
health programs for
Palo Alto residents
$4M City fund established on August 25,
2011. No expenditures were planned or
made in FY 2024-25.
Yes, complies - Fund
activity and balances in FY
2024-25 reported in
Attachment E.
Fiscal Benefits
DA
Section Description Summary Activity Complies?
5(b)(i), (ii)
Payment of
Sales and Use
Taxes
Activities to
maximize sales and
use taxes paid to the
City
SUMC contributes to General Fund Sales and
Use Tax revenues via construction-related
activities. The City reviews the Construction
Sales & Use Tax Monitoring Report that is
submitted by SUMC on June 30 of each year.
The City submits a letter to SUMC each year
that notes local tax received from SUMC
project activities for the year. Based upon
the City’s review of the annual Construction
Sales and Use Tax Monitoring Report,
Yes, complies - SUMC
timely submitted the
Construction Sales & Use
Tax Monitoring Report for
the previous calendar year.
The City sent their
required response. This
annual reporting assists in
the process of ensuring
that the City would receive
no less than $8.1M in
SUMC Development Agreement, Section 5 - SUMC Parties’ Promises Attachment C
FY 2024-2025
2 SUMC Development Agreement Compliance: FY 2024-20251
0
2
3
2
revenues for calendar years 2011 through
2024 have totaled $5,556,174.
construction sales and tax
revenue by December 31,
2025.
5(b)(iii)
Funding of
Operating
Deficit /
Expansion Cost
Mitigation
$2.417M fund to
assure City costs
associated with the
project do not
exceed revenues
resulting from
construction and
operation of the
project.
$2.417M fund established on August 25,
2011. No expenditures were planned or
made in FY 2024-25.
Yes, complies - Fund
activity and balances in FY
2024-25 reported in
Attachment E.
5(b)(iv)Payment of
Utility Users Tax
5% tax on all
electricity, gas and
water charges on
new construction
Established in past fiscal years, the Utility
Users Tax is paid through the normal billing
process for each building.
Yes, complies.
5(b)(v)School Fees
Payment of PAUSD
fees for net new
square footage
PAUSD school fees have been paid based on
the net new square footage reported in the
SUMC Annual Report. No occupancy for new
square footage occurred in FY 2024-25.
Yes, complies – No activity
in FY 2024-25
Traffic Mitigation and Reduced Vehicle Trips
DA
Section Description Summary Activity Complies?
5(c)(ii)
Menlo Park
Traffic
Mitigation
$3,699,000 payment
for traffic mitigation,
infrastructure,
sustainable
neighborhoods,
affordable housing
All required payments were made to Menlo
Park between 2011-2017. No further activity
needed.
Yes, complies - completed
in FY 2017-18.
SUMC Development Agreement, Section 5 - SUMC Parties’ Promises Attachment C
FY 2024-2025
3 SUMC Development Agreement Compliance: FY 2024-20251
0
2
3
2
5(c)(iii)
East Palo Alto
Voluntary
Mitigation
$200K for roadway
and signal
improvements on
University Ave.
$200K payment made on
August 19, 2011.
Yes, complies - completed
in FY 2011-12.
5(c)(iv)Contributions
to AC Transit
U-line capital
improvements, low
load factor ratios,
parking spaces at
Ardenwood Park &
Ride
$250K payment made to AC Transit on
January 5, 2018.
SUMC is also invoiced by AC Transit for
payments throughout the year that total
over the $50K per year discussed in the
SUMC Development Agreement. Payments
to AC Transit are required for the life of the
project.
SUMC is currently leasing 75 parking spaces
at the Ardenwood Park & Ride.
Yes, complies.
5(c)(v)Opticom
Payments
$11,200 payment
for Opticom traffic
control system at 7
intersections
$11.2K payment made to the City in FY
2017-2018. As the City has upgraded
systems, the City and SUMC agreed through
a letter exchange that the payment could be
used for the new coordinated prioritization
signaling at City-maintained traffic signals.
Yes, complies - completed.
5(c)(vi)Caltrain Go
Passes
SUMC purchase of
passes for all
existing and new
hospital employees
working
>20hrs/week
Go Passes have been purchased per the
Development Agreement since January 1,
2012, including for FY 2024-2025.
Yes, complies.
5(c)(vii)Marguerite
Shuttle Service
Purchase of
additional shuttles
to meet demand
Between 2011-2018, the fleet was expanded
to five renewable diesel-electric hybrid
buses and 41 all-electric buses.
Yes, complies - completed.
SUMC Development Agreement, Section 5 - SUMC Parties’ Promises Attachment C
FY 2024-2025
4 SUMC Development Agreement Compliance: FY 2024-20251
0
2
3
2
5(c)(viii)
SUMC
Transportation
Demand
Management
(TDM)
Coordinator
SUMC hires
coordinator to
promote alternative
transportation
options
TDM Coordinator was hired in March 2012.
This position has since been elevated to a
TDM Program Manager position and the
position remains filled.
Yes, complies.
5(c)(ix)
Monitoring of
TDM Programs
Yearly report
regarding
alternative transit
mode use
SUMC timely submitted their annual
Alternative Mode Share report for FY 2024-
2025.
The SUMC parties found that the alternative
mode share milestone target of 33%
outlined in SUMC DA Section 5(c)(ix) was
met for 2025.
Yes, complies.
Linkages
DA
Section Description Summary Activity Complies?
5(d)(i)Intermodal
Transit Fund
$2.25M payment to
improve pedestrian
linkages to PA
Intermodal Transit
Center
$2.25M City fund established on August 25,
2011. City constructed temporary
improvements prior to the issuance of the
first Hospital Occupancy Permit (LPCH) to
serve the linkage goal and functional
requirements.
No expenditures were planned or made in
FY 2024-25.
Yes, complies - Fund
activity and balances in FY
2024-25 reported in
Attachment E.
5(d)(ii)Quarry Road
Fund
$400K payment to
improve pedestrian
linkages along
Quarry Road
$400K City fund established on August 25,
2011. City constructed the improvements
prior to the issuance of the first Hospital
Occupancy Permit (LPCH) to serve the
linkage goal and functional requirements.
Yes, complies – Completed
FY 2019.
SUMC Development Agreement, Section 5 - SUMC Parties’ Promises Attachment C
FY 2024-2025
4 SUMC Development Agreement Compliance: FY 2024-20251
0
2
3
2
SUMC Development Agreement, Section 5 - SUMC Parties’ Promises Attachment C
FY 2024-2025
5 SUMC Development Agreement Compliance: FY 2024-20251
0
2
3
2
5(d)(iii)Stanford Barn
Connection
SUMC budgets up to
$700K for
connections in the
vicinity of barn
SUMC constructed the Stanford Barn
Connection prior to the issuance of the first
Hospital Occupancy Permit (LPCH) to serve
the linkage goal and facilities are fully
operational.
Yes, complies –
Completed.
Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing
DA
Section Description Summary Activity Complies?
5(e)
Infrastructure,
Sustainable
Neighborhoods
and
Communities,
and Affordable
Housing Fund
$23.2M payment for
these uses
$23.2M fund established between 2011-
2017. There was a $4.1M expenditure
budgeted from this fund during the
reporting period FY 2024-25. Actual
expenditure $4.075M
The funds allotted to Affordable Housing
were fully exhausted in FY 2013 for the
Stevenson House Project, and in FY 2020 for
the Wilton Court Housing Project.
Yes, complies -Fund
activity and balances in FY
2024-2025 reported in
Attachment E.
Climate Change
DA
Section Description Summary Activity Complies?
5(f)
Climate Change
– Sustainability
Programs
Benefit Fund
$12M payment for
climate change-
related projects and
programs
$12M fund established 2011-2017.
No expenditures were planned or made in
FY 2024-25.
Yes, complies -Fund
activity and balances in FY
2024-25 reported in
Attachment E.
ATTACHMENT D
SUMC Development Agreement Annual Reporting
Background and Purpose
On June 6, 2011, the City Council approved Comprehensive Plan amendments, zoning changes, a
conditional use permit, annexation and design applications for the Stanford University Medical Center
Facilities Renewal and Replacement Project (the “Projects”). The Projects include the construction of a
new Stanford Hospital and clinics buildings, an expansion of the Lucile Packard Children’s Hospital,
construction of new School of Medicine buildings, renovation of the existing Hoover Pavilion,
construction of a new medical office building and parking garage at Hoover Pavilion, roadway
improvements along Welch Road and Durand Way, and SUMC design guidelines. A Development
Agreement (the “Agreement”) vesting these approvals was entered into between the SUMC Parties and
the City and was effective on June 6, 2011 and continues for thirty (30) years from the effective date.
The Agreement requires an annual report, prepared by SUMC that outlines the activities of the
preceding year and the efforts to fulfill the obligations of the Agreement.
Per the requirements of sections 12(a) and 12(c) of the Agreement, The City of Palo Alto is to prepare a
supplement to the annual report that contains an accounting of the funds described in the Section 5 of
the Agreement (“SUMC Parties’ Promises”) including the fund balances and expenditures and the
purposes for which the expenditures were used.
Public Benefit Fund Accounting
This SUMC Annual Report Supplement covers the period during the fourteeth year of the Agreement:
June 6, 2024 through June 6, 2025. Accounting for the funds outlined extends through the end of the
City’s FY 2025.
The specific funding accounts reported in this SUMC Annual Report Supplement are consistent with
Section 5 of the Agreement. These funds have been assigned a unique cost center number for
accounting purposes. This SUMC Annual Report Supplement also contains the investment earnings and
the earnings allocation to the various cost centers.
In summary, the SUMC Parties have paid approximately $44.3 million in public benefit fees to the City
since June 6, 2011 through the FY 2024-2025 reporting period. There were no required new payments
from the SUMC Parties during the FY 2024-2025 reporting period.
The first payment of $20,800,333 on August 11, 2011 was for the following funds:
Fund for Community Health and Safety, Project Safety Net (Section 5(a)(iii));
Fund for Expansion Cost Mitigation (Section 5(b)(iii));
Fund for Pedestrian and Bicycle Connections from Intermodal Transit Center to El Camino
Real/Quarry Road Intersection (Section 5(d)(i));
Fund for Public Right of Way Improvements to Enhance Pedestrian and Bicycle Connections on
Quarry Road (Section 5(d)(ii));
Fund for Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing
(Section 5(e)), and
Fund for Climate Change - Sustainable Programs Benefit (Section 5(f)(i)).
The second payment of $11,733,333 payment on December 5, 2012 was for the following funds:
• Fund for Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing
(Section 5(e)) and
• Fund for Climate Change - Sustainable Programs Benefit (Section 5(f)(i)).
The third payment and final payment of $11,744,533 on December 12, 2017 was for the following funds:
Fund for Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing
(Section 5(e));
Fund for Climate Change -Sustainable Programs Benefit (Section 5(f)(i)); and
Fund for Community Health and Safety, Project Safety Net (Section 5(a)(iii)).
Public Benefit Fund Expenditures
Expenditures and other activity occurred in the following funds in FY 2024-2025:
Budgeted:
$4.1 million transfer from the Infrastructure, Sustainable Neighborhoods and Communities, and
Affordable Housing Fund to Capital Improvement Project Fire Station 4 Replacement (PE-18004);
Actual:
$4,075,000 was transferred from the Infrastructure and Affordable Housing fund for the Fire
Station #4 Replacement (PE-18004)