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Home My WebLink About0195.092• - ~C~ ~ 0 , ~ , -.. ' .' ... ' ~.:", April 23, 1992 THE HONORJl,BLE CITY COllNC I L Palo Alto, california Attention: Flnance Ccm~ittee Members of the Ccur.cil: Report in Br i eJ" ~rHE SUBJECT OF THIS REPORT ISA COUNCil PRIORITY This is an informational report; no Council action is necessary. The Lcono!!!ic outlook Car,mi ttce (EOC, ~ias formed in. 198B by the Finance Director to provide insigbt cr. issues in the local economy that might affect the City's budget, and to create a f~rum for business leaders to provide feedback on City ser;iices. The EOC is comprised of City staff members and bLlsiness 1 cadet'S from the local community. Tt-,e Com:r:'1.ittee :':JE'ets quart.erly to discuss topics of economic concern to Ioea 1 goverrr:""ent. a:ild b'",s inesses. Attached are minutes of the latest EOC neeting. The Finance Committee has request.ed that 1':1 i nut.es fr-o~ ~:::'C ::1~et ings be transrni tted as ar.. ir.formatior.al i~em. 70pics c'over-cd at the February r.leeting included a report en 't.he St.anfor-d Eesearch Park master pJan, 3.nd an update Of', Palo Alt,:)' s pctF.rn.i3:1 e.conol':".ic develvprncr.t, \,;ith a review of the Gruen Gruen + Associates report. RoE"Jspectfully subr;it't-=d, -t~'1~ LIBBY Dfv"E se~ior Financial Analyst -j" . ~, Jt:Lc,-<-.£) EMILY HARRISON Director of Finance CMR:195:92 1M. ~. Jj I!l~-!L'E~HNG ' r Assist,=.lnt ci, 'a.nager l I , i ECOiWMIC OUTLOOK COMMITTEE MINUTES February 13~ 1992 Attendee~: Micki Schneider-, Spirals; David Longbine, Stanfor-d Shopping Center; Andy Doty, stanford L"niversity; Diane Healy, Stanford Management Company i Jim Baer I Ware and Freiclenrichj Ray Bly, Varian; Gene Endicott, Hewlett-Packard; City of Palo Alto staff: Emily Harrison, Kevin Riper J Libby Oame, Ken S~h=eiber, and Carol Jansen; Claude , Nina Gruen (Gruen Gruen + Associates) Btan-tor4 Rell,arch Park Maste:r:: __ Pla_~ Diane Healy with stanford Manag2ment Company presented some of the consultant's findings in preparation of the Stanford Research Park (SRP) Master Plan. When the University began examining the SRP, the real estate l!Iarket 'Was booming. That market is no'w relatively stag .. 1ant. The Stanford :Research Park appears quite resilient due to its location and its association .. ith Stanford University. Ho·..,ever, although SRP remains competitive with other busine.ss parks across the country, it is losing its competitive edge, As part of the SRP Master Plan, Stanford Management company is concentrating on hoW' to meet the needs of existing tenants while at the same time encouraging new t~nants co join the Park. Ther~ are many difficult issues to resolve. In December, 1991 a Land Plannir~ consultant and Economic Consultant were retained for the Master Plan project. They found that there are several elements of the SRP that limit the enthusiasm of existing or potential tenants j a major one being the inability .of busi!'!£lsses to expand in the Park. Density levels and traffic flow circulation patterns cause problems for tenants. There are political and environmental concerns aLout expanding. St6lnfcrd 'Would like to develop a set of .erchitectural design guidelines for ne-. .. construction in order to retain consistency ... ithin the Park and to giVe the Park an identity~ The idea arose to define the entrance to the Park with a gateway so that visitors would know when they had entered the Park. A main goal of the st.udy is to establish an effective leasing policy; the Office hopes to make a recommendation to t_he Board of Trustees regarding lease termin<'Jtions, exten.sions and selective investments by th~ University. The proposal ~ill require that the Trustees accept a long-range vision for the Park, I,o'hich is a chang.a in philosophy for the University. Ar. opportunity for Stanford lies in the vacant lot at the Page Mill RoadlEl Camino Real intersection. :Much thought, .... ork and 'Ilarketing 1 L ! , - evaluation naeds to go in~o the decisio~ of what to put there. The concept of combined office, r~tail and hotel is ~ing considered. A question l"l.eeds to be. answered about how to pay tor any "traffic changes required to the Parle lorI'ocld an assessment dis'trict be feasible? The stUdy group ne.eds to really figure out 'What the limit is that tenants are ,.---illing to tolerate financial1:r' and otherwise. Stanford 'Wants the tenant:; t.C', torisn to stay. A concern for Stanford is the key role that the City 'Will play in any decisions. Especially for the site at Page Mill/El camino, the city needs to agree with Stanford's proposal or it will be imposeihle to make it viable. The City "'ill need to help the project get over any hurdles. Educating residents as to the need for change will also be )c:ey~ COlnIUunity residents n'.ust be convinced that change and deVElopment are necessarj'. Gruan Gruen + Aasoci,~es Cla.ude and Nina Gruen of Gruen Grue'l ~ Associates presented their report on ~J,.anni __ ng Policy Audit of Ret~J~~~he City of Pa~Q Alto. The report covers the retail sector only and focuses mostly on El Camino, California Avenue, the Sta:r:ford Shopping Center, and three neighborhood shopping centers. They did not include the downtown a.rea in their study. Rather tha'l'l restate their study for thi.s group. the Gruens decided to revie'W a few findir.gs and then open the floor for discussion~ A Significant factor affecting the conclusions of the report is that the economy of the 1970's is gone. rhe period that made Silicon Valley thrive is no longer, and this are.a will not have the dominance that it used to enjoy~ A companyrs design compon~nt and headquarters will probably stay in this area, but production will go elsewhere. Average consumers spend less today on retail than they did prior to 1984, and this situatien is not likely to change over the next decade. Ro .... ever, the suppl}' of retai 1 has increased over the same time period, with a key factor being the prolifera tion of catalog sales. Th.e Stanford Shopping Center accounts for approximatelj~ 2S percent of all taxable sales in the City. The expansion cap, 'Which limits growth in the center. is a very restrictive factor. The Sand Hill Road extension is another limiting factor that ~ould need to be remedied in association with removing the cap, or traffic could become a major problem~ Several of the larger ("anchoc") stores are having financial prOblems, so the Center soon could underg0 a transformation. The group then debated the impact that retenanting and remodeling the Stanford Shopping Center would have on other are~s. Jim saer, a developer who has focused mostly on the downtown areal believes that there 'Would b.e a hea".,ry impact on downto'wrr'n vendors if the 2 L I ~ [I " ~1 i ~ , , Stanford Shopping Center expands. The Gruens feel that Stanford Shopping Center does not really directly compete \.rith dO .... 'TJto:.m; the center is a regional competitor, attract.inq consumers from far ~istances. ~hereas downtown serves strictly e local clientele. Kr~ BaE'.r reiterated that expansion 'Would affect e.'Oilmto .... "l1 merchants, especi-slly restaurants. 'l'he Gruens emphasized the need for regional shopping centers to have flexibility in order to respond to changes in the .marketplace~ If they cannot change, then tney cannot adequately compete~ The qroup tt'l.en discussed options for what could happen 'With various parcels on El camino Real. Most felt that a hotel ~culd be viable, especially if one of the existing hotels -was to fold, but that the location vould need to be carefully chosen. They discussed retail outlets alonq £1 camino and the difficulty in meeting parking requirem~nts~ They ~16o discussed possible variations in densities tor areas that are currently residential~ llart xe. t ing The naxt Economic Outlook Committee meeting is scheduled for Friday June 5, 10:00 a.m. to neon. The main topic ~ill be a discussion of the City's proposed 1992-94 budget and a look at proposed new revenue sources. The group hopes also to have a presentation on stanford's proposed budget. Minutes prepared by Libby Dall!E'., Senior Financial Analyst. 3 '--.~--,-..