HomeMy WebLinkAbout0136.093January 21, 1993
hONORABLE CITY COUNCIL
Palo Alto, California
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PROPOSED SA1~IL-ijJLL ROAD EXTENSION AND ____ $_rl'~EQBD SHOPPING CENTEB
EXPANSION PROJECT
Members of the Council:
On December 7, 1992, the Council held a joint study session INith
the Planning Commission regarding stanford's appl ication for a
proposed project that \rIould extend and improve Sand Hill Road :'I.nd
expand the stanford Shopping Center. Included as Attachment 1, is
a staff report (CMR:540:92i December 3, 1992) providing background
information related to the proposed project. In addition, Stanford
representatives were present at the study sassion and made
presentations and resp~nded to questions dbout the proposed
project, as well as other planning studies and projects throughout
the Stanford lands.
Mayor McCown and counci 1 Member Rosenbaum have indicated their
intent to place this topic on the agerlda of the January 25, 1993
council meeting for discussion and possible policy direction to
staff.
SUPPLEMENTAL STAFF COMMENTS
Based upon the lil1lited information available about this proposed
project as well as previous studies of Sand Hill Road and related
projects in the area, staff believes that the proposed project has
merit and warrants the thorough understanding, review, evaluation,
and discussion that the formal environmental review process is
intended to provide.
The proposed project appears to offer several favorable attributes,
includiMq the following:
• Rationalization of the shopping center layout.
•
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Maintaining the
competitiveness.
shopping center's vitality and
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a JdI Eo"M) •
• Revenue increases th~t directly benefit Palo Alto.
Rev~nue increases that directly ~enefit Stanford, ~nd
indirectly benefit Palo Alto.
• Ext02nding the roadway 'wo'Jld complet8 2! logical segment. in
an existing incomplete roadway network.
• Sand Hill Roa.d is part of the Ci-t;y I 5 pub} ic roadway
system and serves a considerable amount o! non-Stanford
related traffic as veIl as Stanford related traffic.
• Extending ~he roadway addreS$EZ a basic neeJ that ~ill
not go awaYi the issue ~ill continue to ~esurface until
some p:Jsitive correctiv€ action is take-no
• Processing this application ccncurrAntly with the
Stanford west application has several advantages in terms
of phY$ical planning~
• The scale of road\ol'ay improvement is not likely to attract
large volumes of new traffic that is not already passing
through the adjacent areas on paral16l streets.
• If improvements to Sand :Hill Road do not ('ceur as part of
a coordinated il':'~prover.te:ilt proj ect" spol-adic and piecemeal
improvements will evenlually occur at individual
locations creating a hodgepodge situation.
Therefore, staff believes that the proposed project as submitted
should proceed through the environmental review process and that
the City should keep open the possibility of s>ome level of
financial participation in improvements to Sand Hill Road.
The Environmental Impact Report will include a full analysis and
evaluation of project alternatives and impacts including an
Eccnomic Impacts section. 'Which .. ill address t.he over;;1l E-conomic
effects of the project. The ecc,nomic analysis 'Will eva.lute effects
on businesses in downtown Palo Alte and do'.vntO'..rn Menlo Park as w"ell
as city se.l"vices and revenueS4 The envircnrnental analysis !'will
also contain a discussion of existing and projected road users
(those who would benefit from the road project) .
.As a re.lated point of information, on three previous occasions
(1976, 1978 and 1984), the Palo Alto council approv~d a Sand H~ll
Road extension p::-eject. While subs~quent actici1S and/or inactions
resulted in a project never being built, the then currEnt decision
:naking process I following a thorough envircJ"1.lnsntal r.zview process,
culminated in the approval of a roadway extension p~oject.
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RECOMMENDATIO?,!
Staff =eco~ends that Council support proceeciing with processing of
-r.he proposed project ~pplication, includi l1g possible futt1re
consideration of so~e appropriate level of financial participation
by the City of Palo Alto in the cost of improvements to Sar.d Hill
Road, if and when there is ar. approved project, follo~ing
completion of an appropriate environmental review process. The
amount and conditions of such financial participation vould be the
subject of future discussions betll.reen Palo Alto ar:d stanford.
Respectfully submitted,
itMd .,(jd~~
KENNETH R. SCHREIBER
Director of Pla~ning and
Ccmmunity Environment
FLEM!NG
city Manager
~')! C.L.-----., n. _ -:.0-
EMILY HARRISON
Director of Finance
Attachment: CMF.: 540: 92 (December 3, 1992)
cc: City of Menlo Park (Jan Dolan, Don De La Pena, Don Dey)
Stanford university (Andy Doty. Bill Phillips, Diane Healey,
David Neuman, Susan Herald, Mike Kuntz)
Stanford Shopping Center (David Longbine)
Sand Hill Corridor Distribution List
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December 3. 1'92
HONORABLE CITY COUNCIL
PlANNING COMMISSION
Palo Alto, California
Stanfor~'s Proposed Extension of Sand Mill Road and
E~pinsicn of the Shopping Center
Me~bers of the {ommission and Council:
REPORT IN BRIEF
Stanford has recently SUbmittEd an app1ication for a proposed project that
would: (a) extend and improve Sand Hi IT Road. (b) close Arboretum Road and
construct a ne~ roadway behind the Saks/Nordstrom site, and (c) expand the
Stanford Shopping Center by adding 140.000 squire feet of retail space and
parking decks to provide 700 additional parking spaces. The applicatiQ~ also
includes I proposal that the City participate financially i~ the cost of the
roadway ~~rovement5 by providing $2IJ5~JOOO of the $9,100,000 rcadway
construction budget.
NOl"1lally, the naxt appropriate stEP wDu1d be for the City to proceed 'With the
preparation of an Environmental Impact R!port for the proposed project .. The
preparation of i scope of servlces to hire a consultant to prepare the EIR is
currently underway. However~ due to the significance of t~e proj~ct as well
as the pr~posa' that the City participate financiallY in the costs of the
roadway improvements, a study seSS10n was felt to be a;;propriate, prior to
proceeding through the ErR precess.
The purp<lse of the December 7 Jo;nt Planning COlTl!liss;onjCHy Council Stud'y
Session is to provide City and University representatives ~ltn an opportunity
to understand and discuss the proposed Sand Htll Road (xtension/Stanford
Shoppi~g Center Expansion Project. The purpose of this staff report is t~
provide background information relevant to that discussion.
ORGANIZATION OF AND OBJECTIVES FOR THE STUDY SESSION
The primary objective of the December 7 Planning Comission/City Council Study
Session is to provide City and University representatives with an opporturlity
to review and discuss the prop~sed Sand Hill Road Extension/Stanford Shopping
tenter Expan5ion Project. No decislons can be made because of the Study
Session format, and because these matters ~il1 be the subject of noticed 1
CMR:S40:92
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evidentiary pub1ic hearings at somE! point in thi! future. F'Jrth::-r, any
substantive dacisions on the proposed project require completion of an
fn'lironmental Impact Report. Clty and University Sfiffs ConCur Hti.t
discussion of the project ~ill he facilitated by ~avin9 Stanford s~aff
inftia11y present In overview of ~tanford planning efforts, ~specia11y as they
relate to Fand withi~ the City and issues of concer~ to the City. Th~s an
outi:ne of the St~dy Session includes:
Presentation by Stanford staff of the status of University planning
activities;
Discussion/questions and an~w~rs regarding the first presentition;
Presentaticn ~y Stanford staff of the proposed Project; and
DisCilsdon/Questions and answers regarding the second ,presentation_
a~CKGROUNO INFORMATION REGARDING THE EXTENSION OF SAND HIll ROAD
Sand Hill Road extends from CnterstQte 280 easterly to its terminus at
Arboretum Road. Stanford submitted proposals In J976 and ]984 to extend Sand
Hill Road to El Camino Real. Extension of the road also involved
cor,sideration of various road wid!ning alternati ~es. For a variety ot
financia1, legal ind political reasons, no sucn project ~as bean implemented.
In 1987, the cities of Palo Alto and M!nl0 Park, along with Stanford
University, agreed to pursue further d~,scusSlons regarding potential
improv.m"ots to Sind Hill Road. A Joint Policy Commltt •• (JPC) .is form.d
conSisting of two City Council members from Pale Alto. two (ity Council
members from Henlo Park, and two Vice Presidents from Stanford University.
Thfs effort focused on identifying conceptual alternatives and developing a
·Proc~dural Framewor:C:" for i ccmt1nuing process leading tG the preparation of
an Envitcmmental Impict RepCJrt.
Cn Oecember 1989, Co~ncil directed staff to circulate a Request fer Proposals
to prospective consultants to provide the nec~~sary SerYTCeS for the
pr2parition of an environmental docu~nt for a proposed Sand Hl11 Road
improvement project (CMR:565:9), based upon the information and alterr.atives
developed as part of the preceding procedllral fral'1',ewcrk efforts_
In November 1990, Council adopted i staff rEcommendation to approve a
~ c~n$ultant agree~~Ht with EIP Associates for the preparation of an
£nvironmer.tal Impact Report for the extension and related improvements to Sand
Hill Road (CMR:S67:0). At that time, the Couocil dlrect.d that: (1) an
eXisting separate agreement (Sand Hill Corridor Study Agreement) between
Stanford and Palo Alto be i'Tlodified and (2) the Joint Policy C<lmmittee for Sa.nd
Hill Road be disbanded.
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On September 3. 1991, the Council approved the contract ~ith EIP Associates
f~r the preparation of the EI~ for Sand Hi11 Road. Subsequently, the c<lntract
was fully executed with an effective date of September 30, 1991; and the
formal start date was established as Novembei" 11 1991.
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On November-20, 1991, Stanford requested that the City delay the start of the
Salld Hill Road ErR until February I, 1992~ in order to pro'tide additional time
for them to refine plans for the Stanford West housing dEi'velopment and the
updite of the r~gjonal plan for the Medical Cent~r~ Consequently. City staff
advised tIP Associates to suspend further w~rk en the preparation of the EIR
until further notice. An info~atjonal staff report (CMR:545:91) regarding
the status: of the Sand Hill Road study \lias provided t.o the Council in December
1991.
Since November 1991, Stanford has gone through an internal reevaluation
regarding Sand Hill Road and other related development projects and has now
(oncltlded: (1) that tney M bnger wi sh to proceed with the previously agreed
upon Sand Hill Road project and fIR study and (2) t,at they now wish to
pr~ceed with a new and ~ifferent project inve1vlng beth tne Stanford Shopping
Center and Sand Hill Road. rt lS this new project, involving an ~~pansion of
the Stanford Shopping C!nter and the extension of Sand Hill Road, that ;s the
focus of this staff report and Council study session.
lt l~ staff's understanding with Stanford that the existing contract, between
the City of Palo Alto and the EIP Ass~ciates for the preparation of a Sand
Hill Road [!P. (e)(Ecuted September 30, 1991), will be formally tenniT'.ated, once
Stanford fO~Glizes such a request in writing to the City. The te~ination of
this contract is based UPI)I'I the change fn t.:l! SCOPE of the project be; ng
proposed and a desire to closely coordinate the envirnnmental study for this
new prr.ject with the ~nvironmental st~dy fo~ the Stanford West housing
project; and it has notning to do with the ability of EIP Associates to
perform tne necessary work, or tha progress of such work. EJP Associates hGs
been very understanding throughout this convoluted process and has always
expressed an ir:terest in. and readiness to proceed 'lilith, the work.
It is also stiff's understanding with Stanford that the existing Sand Hill
Corridor Study Agreement between Stanford and Palo Alto is to be formally
terminated by mutual co"sent and not replaced with any similzr type of
agreement.
MAJOR ELEMENTS OF THE PROPOSED PROJECT
Attachment A is the project tppTication submitted to the City on October 20,
1992. Key elements of the project inciude:
]. Widening of Sand Hili Road to four lanes from Santa Cruz Allenue to
Arboretum Road and a four-lane extension of Sand Hill Road from
Arboretum Road to E1 Camino Reali
2. Abandonment of the City's roadwa.Y easement for Arbnretum Road
between Sand Hill and Quarry Roads {with City retention of the
exiting utility cnrridor and easement in the Arboret~m Road
a 1i gnment) ;
3. Construction of a new pr'vate road south of the Saks!Nordstrom
site connecting Sand Hill and Quarry Roads;
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4.
5.
Addition ~f approximately 140 1 000 square feet of retail space to
t~e Stanford Sh~p~ing Center, iocat~d pr,marily in the ar~a
between He main shopping center and tt:e Salc:s/i'1ol"'dstrom sHe; and
Constructfon of t~re~ new sin~le-story parking decks and addition
of a second deck to the existing parking structure for ~ net gain
of 700 parking spaces.
Cunstruction of the roadway portions of the project are estimated to cost
$9,100,000 in 1992 dollars. Th. cost estim.tes a,sume that Stanford will
construct the roadways to City standards.
A viry 1mport!nt element of the proposal is that thf City financially
parti<ipale by providing $2,ISO,OOO of the $9,100,000 road.oy <onstruet;on
budget.
The portion of the roadway project from the Bridge ~est to the Santa Cruz/Sand
Hill tntersection will need approval and permits fr<lm the City of ME.nlo Park.
Under conventional environmental revi!w procedures. the agency ilfitM the major
portion of the project is the lead agenc! and other agencies are re$ponsible
agencies. The _lead agency prepares the Draft Environmental Impact Report in
close consultation with responsible agencies. Palo Alto and Menlo Pirk staffs
have discussed the project review process and agreed that there will be early
consultation ~Hh Menlo Par-k and ongoing opportunities for involvement 'in the
Draft EJR. The specifics of that involvement will be resolved in the next
weeks~
RELATION Of SAND HILL/SHOPPING CENTER PROPOSAL TO PROPOSED STANFORD WEST
HOUSING PROJECT
In June l~;l, Stanford and the Sand kill Senl0r Partners submitted two
applications for development of the 72-acre Sta~ford West site of Sand Hill
Road {the 46-acre open ar~i and the 26-acre former Children's ~ospital sit~}.
The ntw Stanford West projects c~nsist of: 1) Gn application by tne Senior
Partners t~ construct 388 units of seni~r condcmini~ms, a 72-unit assisted
living facility, a 54-room skilled nursing facility and a 7,50Q-square-foot
Age Center; and 2) an application by Stanford University to construct a 750-
una apartmeflt/townhouse condomin1Q;'T! prC'ject. Tnese ippiications were
declared incomplete and an environmental impact report was required by City
staff .
.. The circulation pl an for the 72 acres ''is a iTiajor Entrance at Sand Hn 1 and
Arboretum Roads. The Sand Hill Road Extension/Shopping Center Expansion
project ~uld require redeslgn of the Stanford West proposal to modify He
circulation system to shift the Arboret~m entrance, so that it will be across
from the proposed new road south of the Nvrd'strom.,'Saks site.
City and University staffs have agreed that both tne Stanfor<! ~'est EIR and the
Sand Hill ExtensIon/Shopping Center £,pansion EIR, .ncludinS the tr~ff~c
sections, should be done by the same consultant team. City staff continUES to
work on the Requests for Proposals for the two ErRs and hopes to iSsuE the
RFPs in Jinuary 1993.
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rt is impurtant to emphasize that t~e t~o projects are independent proposals
tha t wi11 be proct: S S ed and d,'~c i ded upon sepiira te 1,)' . Ho .... ~'''e r, they ar e
cor.t"lguous and interrelated in terms of physical de'llelopment and environmental
impacts. Therefore, coordinated evaTuitfon .nd co~sideration is e~tremely
advantageous. Some members of the community ha~e assumed that the Road
fxtension project is nEcessary for the Stanford West hcu:s ing project to be
apprc~~. When a pre'deus Stanford' West housing proposa1 was eniuated in the
earli ]9805, appro .... l of the ~ous1n9 required numerous traffiC mitigations bJt
the amo'Jnt of additional traffic gO'ing to and from £1 Cami no Real did not
require extension of Sand Hill Road. His issue ""ill be re-analyzed in the
two new ErRs.
INITIAL CIn STAFF REACTIONS TO STANFORD'S PROPOSAL
Roadway Modifications
The PaTo Alto Comprehensive Plan Land Use Map nas contained an exter.sion of
Sand Hill Road from Arboretum Road to E1 Camino Real since the 1976 adopti~n
of the Plan. In the 19705 and 1980s, staff reconrrrendea ccnstt'uction of the
Extension based on t~e public value of a dtr~ct connection to E1 Camino R~al
and the ben!f1t to the Shoppi~g Center of removing tne traffic that use~ the
main entrance and parking 10t to go to and from Sand Hill Road. T~ese
historic factors are still very evident, and staff has encouraged Stanford to
again seek approval of a Sand Hill Road extension project. It is important to
emphasize that past staff recommendations have incTuded substantial traffic
mitigitions, and any future staff recommendation wou1d be made after
completion of an Environmental Impact Report and would 10corporate in-depth
~~iew cf the findings and mitigati~ns identified in the fIR.
C~rehens;ve Plan Transportation Program 19 is: ~Reduce traffic congestion
on Sarld liill Road while prohibiting a direct connection from Sand Hill Road to
Palo Alto Aven~e/Alma Street across [1 Camino Real.~ Stanfcrd's proposal is
cO~$istent with Program 19. While the Draft EIR will need to review an
.lternatf", th,t would connect Sand Hill Road with Palo Alto A"'nue/Al~a
Stre!t, staff's intentior. is t~ find a way for a Sand Hill Road extension tc
be consistent with Program 19.
The proposal to close Arboretum Road and to pro~ide a new connectlon between
Sand Hill and Quarry Rnds has not been previo'Jsly identified or ewaluated.
While staff does not see any inherent pr~blems. the analysis ir. the Draft EIR
will be cr~cial in formulating staff's recommend~t~on.
Expansion of the SheQping Center
One ~f the outcomes of the Citywide lind Use and Tr2nsportation Study.
appro~ed by the City CounCil in 1989, WdS the iffiposition of a ~5.000-square
foot expansion cap on the Stanford Shopping Center. This cap was adopted
pending resolution of the traffic and parking problems in and near the Center.
As ~f November 1992, approximately 15,000 sq~are feet have been added since
the cap was imposed, leavirg 50,000 square feet of development potentia1.
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Tne Stanford proposal is to add 140,000 square fe~t of retail spac~ in the
area bet .... ee:n the main ce~ter and the Saks/Nordstrom sHe. Some of the squar-e
footagE wouJd be 1..,cated alo;}g ttle west side of the existing parkin9 ded, .and
~Jost of the new soaCi! wouTd form tne conrject ion across the to·be-i1bal1doned
Artxlretum Road area.
lnitial staff reactions to the expansion concept include:
If the existing parking ~nd especially traffic prDblems primarily
associated with Sand Hill Road can be rEsolved through construction of
the Extension, th~n there is no reason to ret~in the ciJrrent square
footagE cap; and consideration can be ~iven to additional square footage
bfyond the current limit.
Connection of the tillin center with the Sa~s/Nordstrom site is logical
and would enhance the functioning of the entire shopping center.
The retail comp€t1tiveness of larger shopping cent~rs has become in part
related to the pr~vision of -mini anchor~ stores (e.g., t~e expanded
'Sap, Polo), and the lxpans'ion proposed would facilitate these as well as
smaller uses.
The retail environment wili become even more competit~ve in tne future
and expansion of th! Cent~r, by providing opportunities for new retail
locations, appears to be in the best interest of the (enter.
In calendar 1991, the Shopping Cente, pro"lided $3,16B,180 (If sales tax
revenues to the City, or 23.S percent of all sales tax revenues, and
efforts to keep the Center competitive and modern ar~ In the (tty's
long-range financial best interests.
£11y Financial PartiCipation
~,a,tlons to the proposal for tne City to participate financially In the ro,d
portion of this project can focus an the general policy of City financial
participatiGn, the nature ~f tne traffic problems being addressed, and the
financial value to the City of tn~ 5hoppin9 Center Expansion.
The extent tCi which a municipality and the propeorty owners have financial
responsibility for public improvements varies by jurisdiction and the nature
of the improvement. For example, in many jUrisdictions, replacement of water
and 5Ewer lines and Dld sidewalks is partial1y or entirely t~e property
ownerls financial r~spcnsibi1ity. In Pa10 Alto, these types of physical
repair's ate paid for out of Citt revem.:es. It is quite CO[J1l1on for
jurisdictions, based on potent1al economic benefits; to pay for physical
improvements (e.g., roads, parl<irlg) associated with a mt.:nicipal revenue
generator. Som~ jurisdictions, such as the (Tty of Mountain View, provide
financial incentives to revenue generators 'e.g., among (ltner incentiVES,
Mo~ntain View helped pay for th€ land in order to have a Costcv store Tocate
in the city). During at 1eilst the past 30 years, Palo Alto has not used large:
amounts of general City re~enues to help pay for roadway and related
i~provements ass~ciated with pri~ijte development proposals. HDwever~ this is
CMR: 540 :92 12/1/92
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ill p01icy issue. and tt1ere is no inhe.ent (£'asr-n why the CHy t.tl'J r,~t
participate in. these types of ~xpenses if the CO;.J!'1cil b-e1ieves that it is in
the best interests of the City.
Regarding the nature ~f the S~nd H111 Road traffic prab1e~s~ in 1989 the City
initiated in or'gin-destination survey of traffic using Sand Hill Road in Palo
AHD_ Tne survey results indicated that significant amounts of Sand HilT Road
traffic are not cnmiflg fr-om Or destined to Stanford lands. Improvement {}f
traffic flow in the Sind Hill corridor wi11 ~ave considerable ger:eral public
benef~t as well as benefit for Stanford l~nds.
Staff has made in initial examinati~11 'Of ttl~ Stanford proposal, as well as a
preliminary estimate of tMe project's relative financial benefit, botM to
Stanford and to the City. This preliminary analysis ;5 based on a number of
assumptions, ,1' of which can and wi11 be challenged anc refined if staff
pursues furt~er negotiations ~ith Stanford.
For the finant1al value of the Shopping Center expansion to Stanford, those
assumptions include a $35.9 million est~~ated construction cost for the new
retail space and parking garage 'spread over 3 years); 4 percent annual
increases for botM construction costs a~d rental income; and additional rental
income beginning in 1~91 and reacMi~9 full lease-up of th~ ent1re 140,000-
square-foot expansion in 1999.
Regarding the financial value of the 5Mopping Center e~pa~s1cn to the City,
C,ty staff have analyzed projected sa1es tax and ather reve~ues li~ely to come
to tne City, as well as tMe value ~f the additional 140,000 SQuare feet of
retail area to the University. The sales tax projections for the )40,000
squire feet of ~rea are based on CU~Tent $!1es per ~Guare feot of non-rnnjOf
department store uses at the Center and a four percent a~nual growth rate in
sales. WM1le there is some assumed benefit for current Center tenants
included in the overa" revenue prQjections, staff Mas discounted Stanford~s
original estimates to reflect both the uncertainty of these ·s~i'1over· siles
as well as the fact tnat so~ of the additional revenues may come at the
expense ar otMeT Palo AHa shopping districts. Staff belie'lles that these eire
reasonably conservative sa1es forecast assumptions.
The table on the next page sho.s the oddlt;on.l ca,~ flow to each partJ. by
year, from 1993 to 2010, und2r the assumptions listed above. Stanford expends
more than $40 mi11~on in 1994·96, and b~9in$ to reap t~e f~ll benefit of the
expansion in 1'999 WMen more than .$7 million of additional revenue ;s
available; this amount grows to more than S1) miliion annually by 2010. For
th~ City, there are no out-of-pocket c~sts for the $hc?p~ng Center expans,on,
and additional sales tax revenue begins to flow in 1997? increasing to nearly
Sl ~illion by 1999. By 2010 the annual additional revenue under the
~ssumpt1ons used here 1S nearly $1.5 ml11ion per year.
Based on these estimated cash flows, staff has a1so conducted net present
valuE ana1ysjs~ Using reasonable ranges c·f possib1e discount rates f.or
Stanford aTld for the City • ."hieh take into account relatil{~ risk. and
alternative fnvestment scenarios, staff estimates that the net present value
of the Shopping (enter .'panslon could range from 54.S to 510 million for
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TABLE 1
PROJECTED ARNb~ CASH FLOM PROK SHOP~INO ~TER RXPARSION.
1993 THRObOH 201~
($000)
Is! st!Oft»rd il.U ill.! illl lUi .l!!1. ill.! llU ~ Incr~mental Revenuft
(fTom "deB.tional
rt;ntll)
2,384 4,960 7,~17 7,568
0 ( , -'/ \ \ rncremental Ex~n888
(for conetruction) ----2 'LW-~ ll..W. liJ.'ll! --. • • Nl!t CAsh Flow (O) (7,76;!) (16,144) (16,790) 2,J84 4,960 7,271 '7,56B
1JU!1 LQQ.l = 12!!i 2l!M R~. WIT ~ :lIM!! J.2!l!
7,810 ~.185 8,513 8,853 9,207 9,576 9,959 ]0,.)57 10, '171 11,200 ------------j 7,870 a,185 8,51) B,BSJ 9,207 9,576 9,959 10,351 10,771 11,1.00
{
~ TD "alo Alto ill.Z l!.9.,! ill.! l~Q 4, Net Cash Flow (rom
I
IncrAmental R8venue 321 63. • •• 1,003 D = l.Q.Q1 1QQJ. 12!!i = ~ lllP-I J.2.Q! 1JU!! 1Q!l!
1,042 1,083 1,125 I,Hi9 1,215 1,262 1,JU I,J63 1,416 .' ,47)
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Stanford, and from 54.5 to S5.5 millian for the City. HO',i2ver, these net
preseflt .... alues are computed on cash flow:. Dr,ly through 2010; if the table \IIHe
Extended further in~o the future. the net present val L!es could be
Significantly dHferent, depending on each party's assumed dlscount rate.
The m~nicipal revenue forecast aSSumes that the new flo~r area will be leased
over severa1 years with full occupancy by 1999. Again, m~st revenue comes
from saTes. tu, and sales pel" square foot 3re based on current sales acti .... ity
in the Center ,!~calated by fo'j)" percent per year. The forecast assumes that
there ~;1' be nQ change in the current Stale sales tax e11ocation formula,
und~r which sales tax is returned tc tne City where the sale occurs. There
has been cunsiderab1e discussion in tne last several years of the State
modifying the a11ocation formula to distribute ~~2 ~~Gtc ur the sales tax on
a per capita bash. If an allocati-or. change occurred, the City might receive
littl!, if any, of the ir.creased sales tax revenue.
lI.t this point in time) staff's conclus~o~s regi!rding ftnancial partiCipation
in the Sand Hill Road project are:
Based on the potential value of additional sales tax (assumir.g that the
State continues to distribute sales tax on t~e basis of point of sale
and net a per capita or other formula). City financial participation
would be appr~priate.
Becausa of the potential for Stat~ modifitation of t~£ sales tax
distribution ~rocess and the va1ue of the Center's expansion to
Star'lford~ a!li' City particfpation should be tied to increased ules tax
received by the City.
Stanford's proposal that the City pay $1,150,000 should not be accepted
at the present time. Any City financial partiCipation sncu1d be the
subject of future negotiations.
CONCLUSION AND NEXT STEPS
Staff continues to fa .... or addressing Sand Hiil corridor traffic problem:.-in
part by having Sand Hill Road extended from Arboretum Road to E1 Camino Real.
This direct connection would ser¥E t~e public and tr.~ Shopping Center better
tnzn the current indirect connection using the E1 Camino Real entrance and
parking lot of the C.nter.
Past analysis ~ndicates thit extension of the Road is unlikely to be
deSirable, without addressing other traffic p~oblems along and near Sand Hill
Road. These include provid',Tl9 additional traffic capacity at He Pasteur, Oak
Creek East and Oak (reek West intersections. as well as widening the bridge
anc the section of Sand H111 from the Creek to the Santa Cruz intersect.ion.
The 1984 Sand HiTl Road extension project resu1ted in a mitigation of adding a
second westbound lan~ from Pa~teur to Santa Cruz. Subsequent traffiC analysis
in i Santa Clara County ErR raised the desirability of a second eastbour.d
lane. Thus, staff concludes that tne currert propos.al for a four-lal"l~ Sand
Hill Road from Santi Cruz Avenue to ET Camino Real is the most loQical
s.tarting point for a 1993 Sand Hill Road Extension project. .
CMR:540:92 12/3j92
Page 9
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An additional public benefit cf upgradlng the tr~fflc cond1tion5 in the Sand
Hill corridor ~ould be the ~alue of these improvements to City emergency
response staff. The functiC'nlng of Pc-lice and espechlly fire and raramed-;c
servic2S could be ~ub$tantial1y improved.
In the past years, thp. City has become increasingly aware of the impoct of
~nicipal revenues faiTing to keep up with pxpenditure trends. Protecting and
enr.iilrlcing munlcipal re .... enue sources 1 s a valid City concern. The dos ing of
Arbo~tum Road ~nd expansion of tne Shopp;n~ C!nter offer an opvortunity to
both adGress t~e need for th~ Shopping Center to remafr. competitive and
protect anC: enhance a key municipal revenue sour·ce.
Clearly t.he extension and widening of Sanlj Hill Road as proposed by Stanford
offers (onsiderable,be~er;t to Stanford lands. H~w~ver, addressing the
triffie p~oblEms in the Sand Hill corridor would also be of benefit to members
of the geileroill pl.i'colic who trivel this corridor without benefiting Stanford
1 ands.
Given the potenti~l value to tne City and the general public of the Sand Hill
ExtenSion/Shopping Center Expansion project. a strong Clse can be made for the
appropl"ilteness of City fir,ancial participation in the pub' ie road' portion of
this project. The speeifit 12ve1 of financial partlcipation would need to be
c!reful1y negotiated with Stanford. further. any City financial partiCipation
sholJld be directly tied to the futLlre receipt of idditiof:il sales tax and
other revenues from the floor area idded to the Shopping (enter.
In summary, staff's initial r!actions to Stanford's propos~l is that tt could
provide an opport~n1ty to botn rationalize the current roadway network ar.~
benefit muni~ipal revenues throu~h increased sales tax receipts. Stanford~s
proposal ~s a public-prlvat! partnership opportunity tnat should be pursued.
Staff proposes that the City respond to the prcposed project an1 request for
City financial participation by naving City staff do four things:
1. Proceed with the processing of the propose~ project, including
djstribut~~n in January of the Request for Proposals to do the
EIR;
2. At Stanford's rfquest, terminate the existing Sand Hill Corridor
stiJdy Agref!ment tld ... een Stanford and Pa10 Alto;
3. Review and anaTyze thi! clJrrent proposa1 as a pctential
,pub1ic/private partners~ip; and
4. Pursue furthf'r negotiations r.:ith Stanford staff regarding the
appropriate level of City financial participation.
1n addition, staff would work closely with City of ~enlo Park staff on t~e EiR
prp.paratlon proc~s~.
Stdff intends to proceed with these actions unless. following the Study
Sessior., members of the COlmCn agen.r::!ile these matters and Council directs
CKR:540:92 11/3/91
Page 1 a
-'
staff to pursue other actions. The contract for pre!'ir-atiOri of the £1R shouTd
be fir.alized b,Y April 1993. Negotiations .... ith Stanford regard'ing City
financial participation may take longer, ar-Id staff 'Would not intend to 1 ink
re-so1ution cf this issOJe with beginning work on the DR.
Respectfully submitted,
~%'XI'd If' Jdzakt ~. Ii" J:)
KEmlrTH R. SCHREIBER ,/ ~HAliR'I~~
Director of PJannfn; and Director of Financ~ C~Jn1ty Environment
1\ ~kwJMJ J~lE~ING ·--"~·r I~~~. City Manager
cc: Sand Hill Corridor Mailing list
Attachment: Project Application letter
CMR:540:92 12/3/92
P~.Q'IY Page 11
ST A..'JFORD UNIVERSITY
City of Palo ."-lIO
250 East Hamilton Avenue
Palo AltO, CA 943C I
Ladies/Gentlemen:
OClOber 19, 1992
Enclosed please find Stanford University's applic2liorl for an environmental imp.:!cl
ass.essmem and all nece~aj)' City approvafs for a project comisting of (i) the
widening of Sand Hilt Road to four lanes from Santa Cruz Avenue and eXlel"'.sion of
Sand Hill Road through to EI Camino, (ii) abandonment of the City's [Q.1dway
easement for and demolition of the portion of Arboretum Road iDeated between"
Sand Hill Road 2nd Quarry Ruad {with re:ention of an u~iljt)' corridor and
easement in th~ Arboretum Road atignmen!), (iii) construction of a private ro~d
running between Sand Hill Road and Quarry Road behind the Salts Fifth Avenue
and Nordstrom stores., ... nd (ly) the: addition to the Stanford Shopping Center of
approximately 140,000 squ3r.e feet afretail space (40,000 square feel allowable
under currenT City code req'Jirements plus an additional 100,00 square feet) joining
the main body of the shopping center and the Nardstfom·Saks site acros.s the fonner
Arboretum Road and the construction of additional deck parking providing !let
additional parking of approximately 700 spaces.
Tbe project proposed by Stanford contemplates an agreement betv.'een the Ct\}' and
Slanford pursuant to w!'.ich Stanford would desigr: and construct the project and the
City would abandon the roadway easement for Arboretum Road between Sand Hill
Road and Quarry Road and contribute $1.15 million towards the co::.ls of the Sand
Hill Road exlemlon and widening improvemenls frum Oak Creek \Vest to EI
Camino.
Construction of the portion of the projec! within the boundaries of Menlo Pall
would be subject to the issuance by MenTa Park of all necessary permits and
approvals. Stanford will make the appropriate applicatio!1..5 tn tl:v". Cit; of ]".1e:-,.lo
Park after completion of the ErR process and approval of the project by the Oty of
Palo A1l0. Stanford intends to begin discussions with the Oty ofMen!o Park in the
near future regarding the approval-process and possible COSt allocations
' ...
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Cl~y of Palo Afto
O.::toba 19,1992
Page 2
Stanford's applicalion includ(:s the follo .... ·irg materials:
I. City of Palo NtQ Application form
2. Project Information including a c~scr;ption of the project and
preiil":ltnary estimates of the costs of the project and effect of the
shopping ~nler elCpa1l5ion on City revenues
.1 Sand Hill Road and Nordstrom Drive lrnprovemer.1 Plans, including
the following:
Sheet I -Title Sheet
Sheets 2 -7 -Sand Hill Road
Sheet 8 -Nordstrom Drive
.. I. Environmental .Assessment Woricsheets
Please Jet us know if you have any questions or require any addition;:!.! information.
Ver)' truly yours,
~<4a_
William T. Phillips ~ Exf=U~i"'t Director of Rea~state
Stanforc Management Company
i< 1!LIJI{;-
R. MichJd Kun(z
Civil Engineering Manager
Facilities Depat!m~nt
.. \
\
" 2
---.,-~---........... .
h.
;\
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PROJECT 1!\'POR.>.1ATION
FROJECT DESCRH'IlON
The proposed project COflSi~ts of the following:
1. Extension of Sand Hill Road (fou;, ]ant" J frem Ihe current inter~e{'lirm of
Sand Hill and Arboretum through r-:';"j Camino
2 CQnstruc[ion of a private two lane roa::f with tu m p'..'lCkets behind rn:
Nordstrom and Saks Fifth Avenl.!e stores
J. Abandonment of the Ciry':! roadway easement for Arboretum Road'
between Sand HiU Road and Quarry Road and d~mo[jllon of tI"Jat portion
of Arboretum Road; an utility corridor and easement [0 be ret..aine.d by
the City in the ArOOreti.Jm Road alignment
4. Widening of Sand Hill Rood (adding two lanes) from Oak Creek Wes' '0
the fonner A:borerum inte~tioJ1. and, subject to issuance of nece.s.sary
pennics and approvals by Menlo Park, from Oak Creek West to Sa.nta
Cruz Avenue
5. Expansion of the Stanford Shopping Cenler by adding up to 140,000
square feet of addltiolla1 retail space joi.ning the main body of tne
shopping cer.ter to the Nordstrom·Saks site across the fOrTJ1er Arbaret'.Im
Rnad and ccnstructing three new parking structures and an additiuruU
deck OIl the exlsring parking structure to. provide approximately iOO n'!t
additional parklng spaces
Attachment A illustrates th~ location and aJignment of the projeCt.
PROJECT COSTS
Costs of the project as pro?Osed, excluding costs of expansIon of the shoppIng center
and construction of add:lionaJ parking structures in the center, <lIe estimated at
approximately 59.] million doUars in 1992 do)Iars.
Attachments A and B show the estimated costs of the project by irs compor.enls.
EFFECT ON CIIT REVENUES
A~lachment C is a cash flow an<Ilysi.s of the estimated efft'..(.-B of the incremental
100,000 square foot shopping center expansion On Crty revenues.
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MUNICIPAL CODE TEXT CHA."1GE
Currently unGer Seclion 18,43.050 of the Palo Alto Munjeipal Code, th.e shopping
cemer i.s subject to a limit of 65,000 additional square feet of spa{'e, of which
approximately 40.00c square feet re:nalns available forcxpa.nsion, The contempiarcd
expansion requires a further 100,000 square feet. To accommodate l~'! proje.:-c the
provisions or Section i8.43.0S0 would need 10 be revisc:".d to provide that, in addilion 10
the 65/)00 additional square feet currently j>ennittoo, the snopplI1g cenrer may add a
further 100,000 square. feet if the: S<iJ1d Hill Roaj 'tI,.'jdcning and exrension from Oak
Creek West tn EI Camino is undertaken prior [0 or ccncurrentl), with such expansion.
DEVELOPMENT AGREEMENT
Under the lenns and cor.tditions of a de .... elopment agreement between the City of Palo
Alto and Stanford. Stanford would initiate. design and construct the project and the -
City would comribllte $2_15 million to the cOSts oftbe e.'Ctension and widening of Sand
Hltl Road within the city limits of Palo Afec and abandon ilS roadway easemen~ Oiler
the portion of Arboretum affec 7ed by the project_ The d~velopment agreement would
specify thal construction of cht:: portion of the Sand Hill Road projecc within ~ren1o
Park dty Jimits would be subject 10 the issuance by Menlo Park of all necessary
pecmits and approvals_
/
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...... ;....:.;..;;;.....-'->-.---------------
~ ATT;a.~ A
V
SHOPPING CENTER/SAND HILL ROAD PROJECT
--
Sand' H!J'1 rmprolf9m8nt!!,
~.'T1Ad.loOak
Cr_ W_: $2 milion
J
~HIiII~ .. ~n..Rd
~ • Nord....,. Rc1...: U 1 IrIoIIDoa -+
11 ~ E'lR ... .JItoilll .. ;.JdM
TOTAlCO$T: $8.' Mlt..UON
5 --------_ .. -
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ATTACHM£NT B
~ -1 [SAND HILL ROAD CORRiDOR PROJECT _
CONSTRUCTION COST SUMMARY
S T I'.NFORD UN!VERSIW
SEGMENT
------
DESCRIPTION
NO.
I NEW INTERSECTION OF S"ND HILL ROAD AND
lSANTA CRUZ AVENUE
8R!A.N KA.N'JAS ;:::O"U·.:
981 RIDDEP. PARK. C':;iVE
SUITE: 100
SAN JOSE, CA S513:
10f12f92
r-ES1'M.~ TED
__ L£P:9JECT COST
S32S,OOO.OO
" SANTA CRUZ AVENUE TO SAN FRANC!SQUlrO BRIDGE -------;S"'875,OOO"OO
EXIST!NG ROAO W!TH TWO LANE WIDENING
INCLUDING FRONTAGE ROAD WITH SOUNDWALL
III SAN FRANCISQUITO BRIDGE
EXISTING BRIDGE IMTH TWO LANE WIDENING
r.r SAN FRANCISQUITO BRIDGE TO PASTEUR DRivE
EX!STING ROAO WITH TWO LANE WIOENING
V PASTEUR DRIVE TO ARBORETUM ROAD
EXISTING ROAD WITH TWO LANE WIDENING
Vl ARBORETUM ROAD TO El CAMINO R~L
NEW FOUR LANE ROAD
V!l NEW INTERSECTION OF ~AND HILL ROAD AND
EL CAMINO R~L
VIII NORDSTROM ROAD CONSTRUCTION
IX ARBORETUM ROAD DEMOLITION
FROM SAND H!LL ROAD TO QUARRY ROAD
X GOLF COURSE MODIFICATIONS
XI EIR AND CONTIN-GENCIES
--,---
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No'rES: THIS (STI"A TE IS BASED 0« 1992 PHiCES
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LTOTAL
51,125,000.00
5950.000 00
S1,070,OOO 00
51,785,000.00
5325,000.00
5845,000.00
SI60,OOO,OO
S650,OO(] 00
-~ S1,OO'J,OOO 00
---,
,_ $9,110,000.00 J
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