HomeMy WebLinkAbout0269.094,
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THE HONORABLE CITY COUNCIL
FIILO IILTO. CALI fOr<IUII
Att.entlonl Finance COJU'l1ttee
Draft BQo~o.10 ~esouro.. ~lan
MoMe.l's of tho c;ounci l:
Report In Britt
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On t~ove",,)oor 23, 1993 the Clt~r Council referred the draft Economic
Reeoui'c:es Plan to Policy and Services and }<"'inance committees for
report bacK to City Council. Report and minutes of the February
15, 1994 Policy and Servic~s committee meeting on the draft
ECOnODic Resourcos Plan aro attached. The purpose of this merno is
to present 8o~e of the possible economic and fiscal considerations
of the Plan's recol'lllSclldations for Finance Committee discussion.
The goals ~nd obje~tives of the draft Economic Resources Plan Dre
stated on page 15 of the dr.:.!t Plan. They are as t"ollows:
T¢ identity lOllg-term economic tnmds pertinent to Palo Alto,
and to establish strong~r work in,) relationships with tho
busineos co~unity to naxinize the positive effects of such
trend" on tho city •
~o d~valop an econo~ic framework for City council decision
nakin91 one that incorporntes tho economic future of the city
as an integral part of the information package upon which
council and other BoardR and Commissions' decision are based.
To revisit past policies affecting the business and
davelopMent community to detormine their relevance to the
issues facing' us in tha upco~inq decade, and re-design where
necessary.
To establish an internal "market perspectivel! on issues,
tasks l special assignments, studies, and day-to-day
oporation9; incorporate economic analyses of City functions
and greater receptivity to .... ard neW ways of doing business
~ithin the City organization.
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In 66sEmco, the goals and ohj(wtives of tho draft Plan advocate a
way of doinq business; on& that requires tho city to be sensitive
to all of the co~unlty/s needs, including the business cOMmunity;
and to be proactive ~n ~cco~plishin9 our long range economic and
fiscal goals. It is staff's opinion that the proposals contained
in the Drtlft Plan ar.e consistent with the city Council's high
prioritization of the City's econo~ic future. Xey to City Council
support of any ERP proqral'lll is consensus on tho city' B long; term
fiscal objectives, and an undorstandinCj of how ERP can be "played
out" to accomplish tho so objectives.
C&8e Sty~alysa8
An area of considorable concern to all of tha City's residents and
many within our business cOll1!lunity relates to tho .eventual land use
changes that will occur wIthin Palo Alto over the next few years.
It is staff's opinion that r(!q.,rdles9 of any City chango in zoning
provisions there will ba substantial ph,ysical chanqe .... ithin some
areas of Palo Alto, p~rhaps ~ost notably ~ithin th~ City's
nei9hborhood cOJ;\J;\orcia 1 centers and along the El Car,lno Real. 'l'hese
ch.anges are and wi 11 continue to oeem: for nan}' roasons: aqe of
structures; nse obsolescence; outside co:;"petiticn; retail consumer
pref(lr~nces; property owner transfersj fluctuating propel'ty values;
and a relatively tight financing erwironnent fOl-commercial
development, 1m i llustrativo 8xanple ot &llbstantial change that
will occur in tho near C'jo\olntown areu is the proposed rnovel'Jent of
the palo Alto Medical Clinic to the Urban Lane ar~a, which will
likely result in dramatic phyaiclIil and land uso changes within the.
new and present PAMf" loca.t,ions,
In an effort to illUstrate the possible fiscal effecto of
redevelopment and/or reuse of oxist1nq sites within tho City, staff
has identified fivo kay parcels within tho cOJ:lJ:1unity that are
likely to redevelop' within the next tev years: tho Uyatt Cabana
hotel sits; Ricky"s Hyatt site; the Sta.nford University owned Page
Mill/ECR property; the Town llnd Country Shopping Center; and
existinq Xodak. site on Page Mill Road ,in Stanford Research Park.
A description of these sitos, current use and City revanue stream,
and potential redevelopment scenario~ are shown on the attached
Exhibit .,. A cotMlon charactoristic of thOGO properties is that all
a.re owned by a single entity-, which will facilitate naturally
occuring development or redevalopJ)tont" tssues related to each
property(s) are summarized as (o11ol.\'s:
1) The Hyatt Cabana HotQl 1s loc<l;ted on a 1(} acre site at the
southerly end of the City. The Hotel closed in July of 1993,
an action taken by the Hyatt Corporation to mlni~ize losse3
associated with tha operation of its two lilajOt" hotels in Palo
Alto. At the ti]'1l~ of closure, both the Rickoyl s Uyatt and
Hyatt Caban-a 'Were exporiencing continued decl ine in OGcupancy
rates. The Hyatt Cabana W36 closed based on 6 number of
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factors; Estimated cost of seismic upgrade of the ~ain
building; the smaller num~er of rooms (200 in the Hyatt Ca~na
versus '350 in Rickay's Hyatt) which rosults in .a higher
operational cost per room for smaller full-sar-vice hotels; and
the potential redevelopment of the Hyatt Cabana site tor
residential purposes. The site is presently deSignated on tho
Comprehensive Plan for commer-cial Serv!cE.t/ and is zoned
Planned Community for hotel use only. Present discussions
with the developer of the property, the Housing Group, an
affiliate of the Hyatt corporat.ion, suggest '" proposa 1 tor
approximately 108 single family homes and townho\lses will be
forthcoming. City staff has consistently support.cd
redevelopment of the site for residential use, including
higher density residential.
The proposed redevelopment of the Hyatt Cabana r~pres~nt8 an
unprecedented change in use of an cx1stinq ten aore cOMer-cial
site in the City from commercial to vory low denolty
(approximately ten units per acr~) resident ial. )Ioro
importantly, the proposal is elective on the part of the
pt.'aparty owners, and it is based largely on econot:lic
considerations. Continued hotel operation wa'.3 no longer
deeT~ed pzofitable 1n that location, financing tOl' new hotel
development was virtually non~existent, residential ro-use 'Was
supported by City policies, and the value of r~sidential land
for "for-sale" housing in that location dramatically exceed.od
its value for any other commercial purposes. A comparison of
the revenuo stream to the City from the Ilyatt Cabl'ln-a lit the
time of closure and projected revenueS under residential
redevelopment assumptions (first year) is sho .... n on Exhibit
"A. II
Rickeyls Hyatt sit,e comprises approximatoly 16 ((cree at the
intersection of Charleston and El camino Re~l. It 19 a )50
room full service hotel with restaurant and confcnmcinq
facilities and ancilliary retail uses. The hotol has been 1n
operation in Palo Alto for over 40 years. While cosmetically
maintained to Hyatt standards, the overall facilities and rOO:A
sizes are not to 1990's specifications. The site is
Compre:hensively Planned and 20ned for service cOmJII(n"cial uses l
with hotel as a permitted use. In addtl:ion to a. very tight
hot~l finanCing m~rket, tha City's Hotel Overlay zone applied
to the property subsequent to completion of tne 1986 City-wide
J..and Use and Transportation study will not per r-Ii t
rehabilitation 01" redevelopment. of the site tor hotel
purposes. FAR limitations within the overlay zone arc
substantially below industry 'standards for new hotel
development, including the lower profile execut.ive sl.!ite hotel
lines as the Residence Inn, Harriott Courtyard, or stanford
Court Hotel located in Menlo Park. Existing revenues to the
City frout the Rickey'S Hyatt site are shown on Exhibit '11\,"
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Discussions with the Hyatt Corporation indicate a current
desire to operate. Ricky's Hyatt as a full service hotel in
Palo Alto. Due to age of structures and dramatically changed
market needn in t.he hotel industry since its initial
construction, however, and the highly desireable location of
this property for other commercial purposes, redevelopment of
the Rickey's Hyatt site is inevitable. Present zoning on the
proper.ty would permit a wide range of commercial uses 'With
~inimal discretionary review processesj only zoning
administrator use permit and/or Architectural Review Board
approval is required for such widely varying uses as
automotive service, retail cOl'Mlercial, or ltIultiple family
residential of up to 30 units per acre. In staff's opinion,
many of the permitted uses within the service commercial 2011e
could result in underutiliz.ation of the property (such as all
£lingle family dsvG-loprnent) or in uses potentially unpalatable
~o surrounding residences.
We have chosen two possible redevelopment scenarios for the
Rickey' u Hyatt site. Scenario I represents a mixed use
project with single :family homes along Wilkie Way, with the:
remaining property allocated toward community-based retail use
(such as grocery, pharmacy, and other neighborhood goods and
sel.'vices) I and a 150 room executive suite hotel. Scenario II
suggests a more residential lllixE'.d use project, with both
single falnily homes and townhouses, a 150 t'oom executive suite
hotel, and a smaller specialty retail development at the
Charleston/El Camino Real intersection.
Neither redevelopment scenario shown on Exhibit "1\11 is
projected to generate first year revenues to the City equal to
the current revenue stream from Ricky's Hyatt. Neither,
however, is Bubstantially below present revenues of a full
service hotel, and tho future qrowth potential of both
redevelopment scenarios is potentially greater. That is
particularly so for scenario I, Which allows for a viable
retail center on the site, and therefore greater sales tax
revenue growth t.o the city in the future. I'lot'a importantly,
the size of the property and roixed use development potential
represents one of the few opportunities in the city for
retail, hOUSing, and hotel services ,of this kind~
3) The 6~1 acre site at the corner of E1 Camino Real and Page
Mill Road is located at the entrance of the stanford Research
Park. In th~ late 1910 1 S, the City zoned the site, Which
comprises the former Mayfield School and environs, for high
density multiple family usc. Both City staff and stanford
University lands management staff believe the site to be
inappropriate for residential use, due to its proxiTtlity to
major R&D and manufacturing uses within the Park, its high
Park visibility/high traffic volume intersection location
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(renc%erinq it less desireabla or sui table for residential
use), and the emerging issues surrounding underground water
contaninlltion within the intersection area. In additioll, the
Palo Alto Chamber of Commerce Economic Vitality Task Forco has
identified the recruitment of a full service hotel and
conference facility to the city as a t.op priority, and have
indicated that the Pago Mill/ECR location is the primary
location for such a first clasf'j hotel and conferencinq center.
Finally, the cIty's position within the Peninsula hot.el market
is softi 'We have eeen the recent closure of the 200 room Hyatt
Cam.na facility; and the eventual redevelopment of the Palo
Alto H}lstt site for other uses could result in a 550 room
'reduction in tho city's Hyatt hotel services. Conversations
\lit.h the Stanford Research Park Forum and oth::=r membe.rs of the
Chan.ber of Com71lorce, experts in hotel edevelopment, and
existinq hoteliers indicate that the l"epurcussions to the
city, particularly from a service perspective, of no new hotel
dovolop~ent in Palo Alto is SUbstantial. Also important to
the city, revenue projections from our hotel/motel industry
ha .... a been flat for the last several years, not accollntinq for
inflat.lon. Consequently, the alternative scenarios chosen for
the Page Mill/ECR intersection are the existinq COIT.prch'c'!nsive
Planned multiplo family designation (condominiums) at 40
units/per aero, or a 350 room full service hotel with 20,000
square feot of conferencing facilities. Exhibit rlAII
indicates the revenue generation difference between the two
alternatives.
Town and Country ShoPt==ing Center is an existing Comprehensive
Planned and zoned 13.1 acre commercial center located at the
intersection of EI Camino Real and Embarcadero Roact. The Town
& Country Center is family owned and operated; &everal other
like centors are located in the Peninsula/San J090 area.
Retail outlets in the. conter are community based; however,
sales per sguare foot performance of the center is well below
even national averaqes of centers of its kind. This may be
due to a combination of factors, including existing tenant
composition and owner/operator lea~ing practices, city FAR
cap~ on eKpanBion (.35 versus .40 in other CS zon,!sj, and
perceived aversion in Palo Alto in general to the recroitment
of "chain" outlets.
'fO ..... n and country Shopping Cente::.,· represents a unique retail
niche within the City that is community serving in nature.
Eventual redevelopment of the site, when it occurs, could be
tailored toward aimiliar community needs. Salea per square
foot, and thereforo City share of sales tax projections, could
be enhanced under a redevelopment scenario for a riew community
serving retail commercial center. Such a center would only be
slightly larger in sqtiare footage than the existing
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structurea~ as the presontly zoned .35 FAR was used for
projection Of buildable arca. Given City parking restrictions
and CUt' rent rotail parking requirements, this is not an
unreasQnablo .t!.ssulilpt'ion for a larger commercial s.ltc, and
tharefore tho saWlO aG~umption9 were used for both the Rickey's
Hyatt: rotail redevalopl'Iamt scenat.·10 and Town and Country
Contet'o Such a66u~ptions underscore the economic ~nd private
sector drivon nature, of devoloplllent proposals that cannot be
ignQred, by cities, either 110 ..... or In the future.
5} Tho last sito chosen for illustrative purposes is the
currently v.ftcant Kodak site within Stanford Research Park J
ailticip.nted to be redeveloped (or usc a.s a major research and
davolQP~en~ opet'ation o( an e~st COllist based bio-science firm.
2<ey factors to an'y-pof;entlal rovenuo. analysis of change of use
within the Stanford Research Park is the understanding of
historic tt'ends, the tax structure of the state of California,
and the relationship of future park development/ .... euse to
regional, national aild global econonic trends in genoral. The
City's st~nfQrd Research Park. Study, conducted in 1991,
llointod out· the evolut ionary aspects of park development i from
the early R &: 0 uses 11) el1q1ne~rinq ~nd computer sciences to
the addition of bie-science R & Di the T110Vement toward
manufacturing and Gorporata office uses, and. the last. few
years' retail SQles tax revenue decline within tho Stanford
Research Plu;"k.
All of theae trends point to.at"a socio-oconornic changes, many of
which are beyond the control of tho City of Palo Alto -the
prestige: of location and concomitant increase in land value
associated vlth SRP location; a dwindling labor pool and higher
housing costs for ralo Alto and manufacturing op~rations than in
other arens of tho country or ovel::scas,' lack of land availability
within the. P.r.rk for expansion; changinq pUl'chasinq patterns tor
both individual and corporate consuJ:C.ars; and finally, state t:ax
legislation, which ill essence d&-valu8s property taxes and enhances
the importance of sales tax ;r-evonues to local jurisdictions. Given
these tr&nds, ~nd Stanford Univ~rsity's strategic plan recognition
of the ir..porblTIce of strenghtening the nexus between the
University's research activitio,,; and R " 0 firms within the Park,
traditional revenue sources to the city frol'l SRP users'may continue
to decline. flonetholoss, redevelopment of any park site,
particularly one ourrently vacant, represents a possible seven fold
increase in direct revenues to the City, as shmm on Exhihit "A. II
Not noted are the "indirect 't benefits of having the a new bio
science industry within the cOJfU'Aunity, such as its
ihterrelationship with the SU/Medical Center hio-science community
as a whole and the "spin-off" economic henefits to be derived from
~n estimated 250 ne~ ~mployees within the Park, many of whom may
live and shop in Palo Alto.
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The manner in which an ERP approach to issuas can b~ effoctively
used by th.e City has been exhibited in several recent projects.
They are as follows:
1) As noted in develop~ent. scenario number 5 above r a major bio
science firm Is expected to announce its intention to locat~
II. statu-of-the-art, R &: 0 facility on the forJael" Xodek site
within Stanford Research Park. The firm's 8~lect1on of this
site culminated a nation-wido se6rch, and was based on II.
number of locational, institutional, and soolo-~cono~lc
factors pertinent to its oporation and e~ployee needs. With
the State of California Trada .and COrMle.rce I\qency In the lead,
the City of Palo Alto and Stlllnford University ~ollabornt.od in
an exclusive response to a request for proposal by tho tirA to
identify key environroental and financial LGsues pertinent to
tho firm's selection criteria. In addition. thO Chal'lber of
Comruerce provided strong support for the recruitrr.!O"nt of a now
hio-science firm to tho cor;,.munity. In the process of
responding to the RFP, 'Which required over one-hundred hours
of City staff titTls alone (and several depal::tt::ent' s input), .. a
have developed a u:r.lodel ll respons~ to futuro blo-science
industries looking at Palo Alto locations. Host inportantly,
the City gave a strong l1!essagc to :industry and other public
sector/Stanford participants that our attitude toward new
business in Palo Alto is ong ot openness.,and :.."eceptivity.
What does that uean in terms of direct r4venues to the City?
Direct revenues may not be extraordinary, but the. indirect or
Hsoftrr benefits of re-use of an existing vact'JInt aite within
the Park could be substantial. Due to Palo Alto's long term
jobs-housing i~balance, the City has not been seen as
receptive in recent yea.rs to new eNploylt'lcnt opportunitios.
That is partially based on traditional e~pectations that ~new~
employment meant Itnew" oftice square footago, l'Ind therefore
Hnew" t.raffic; hence, environment~l and noighborhood
de9radation. Those expectations ~ay not apply in the futur~,
due to racessionary employ:rasnt characteristics; econo~.1c
defense adjustment within tho Silicon valley in qo.neral;
competitive land costs within the Park,' very compotitive
hO\lsinq costs (for peninsula locat.ions in general, and P"lo
Alto in particular) I and cOi"C\Jl1.unication options for wOl."k.-at:.
home alternatives. All of theSe! factors, and perhapn many
others, throw into qup.stion the traditional assumptions
related to land use controls and the potential economic and
fisc~l effects the community subscribed to in times past.
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2)
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The varsity Theater proposal recently considered by the City
Council represented an excellent case in point of looking at
an issue from a perspective of ordinemcc-intent, as opposed to
meetin~ the letter of the law. While still in process, the
Council :made a unanimous determination that the option to
allow an application to convert the existing Varsity ThcatElr
to retail use was within the intent of the CitySs Downto~n
RegulatJo"ns, and should not b~ subject to ~. Planne<i comInunity
zone process requiring IIcommunity benefiV· beyond that of the
seismic and historic upgrade already prescribed in the
ordinance.
Digital Equipment Corporation's requDst to assist in a
communication~ link of its downtown buildings eventually led
to a council ;;,.pproved fiber-optics installation agreemellt with
Digital. The agreement allowed for installation of city-o'Wned
fiber that '!:ould permit use by Palo Alto or any authorized
entity for future communications use. More importantly I the
City recognized the importance of Digital f.:"quipment
corporation's presence in Palo hlto in general and the
downtown specifically. Cost savings to oig1 tal over
commercial fiber carrie)."s were substantial I pri.marily becauo6
the city had in-place conduit with space availability. In
r-ecogni tion of the City's efforts, Digital E<Juipmont
Corporation offered to do a demonstration project to connect
Palo Alto to Internet. While not yet completely on-line., the
potential economic, fiscal, and community service
repercussions of City Internet use are extraordinary I and
staff and others are in the process of evaluatinq such
opportunities. In the meantime, the City's experience on this
and othel" communication issues has spawned considel"able
internal discussion, a"i1d many provocative cOlls~rvations with
other private sector experts in the ar.::!a of communications,
including representatives of Smart Valley Group, Sun
rUCt'osystems, and Hewlett Packard Corporation. The Hay 2:),
1994 city Council agenda includes a staff rep'Jort to City
Council to consider-a feasib;'lity study on various options for
a City owned and oper.ated communications utility system in
Palo Alto.
4) In recognition of the economic factors affecting the current
Midtown Shopping Center, the City Council authorized the
preparation of a consultant prepared market analysis of the
Midtown neighborhood commercial area. The RFP has been
prepared and sent to selected consultants, and a co~~ittee of
business representatives, neighborhood interests, effected
property owners, retail experts and 'commercial brokers has
been formed to evaluate the consultant proposals. Inquiries
to ERP staff on available properties within the Midtown area
have be~n substantial since the Council's action on March 28,
1994. While no lease or sale arrangements have materialized,
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it is apparent that the signal of city council receptivity to
lI.ssistinq Midtown in its revitaliz.ation effortu. has been
instrumental ill renewed commercial interest in the Midtown
area.
The on-going reconstruction of the former European llealth Spa
building at the cortlei' of park Boulevard and El Camillo Real is:
a direct. result of Council assisted ERP efforts. commercial
brokers' interests in murxeting the building were stepped up;
out-of-state property owners were contacted by City ERP
staff to relay city interest in r~habilitation or
redevelopment of the site; and City support for office use
beyond that permissable by the eN zoning-regulations was
facilitated. While the project is still underway, there has
been overwhelming community sentiment expL"essed in favor of
the building rehabilitation and its planned rouse for a
community-based insurance aqency.
This report is not intended to invoke historical discussions of the
IIfiscalization ll of zoning issues, but rather to ::rlake the following
points:
Physical l:"'ectevolopment and use changes will occur I regardless
of the city's l'ole or lack thereof. The larger question is
whether the city wishes to play a pro-active, as opposed to
the more traditional re-active role, in that change; and,
secondly, whether "We. wish to cr~ft those changes in a way that
is community sensitivG While positively affecting the City's
long term fiscal picture,
Naturally occuring redevc.lopment can be good per se.,
regardless of whether any other physical changes occur, such
as increased building mass, square footag'e, height, etc. Such
redevelopment brings property values and improvement
assessments into the times, and often results in far :more
useable structures for retail commercial or office purposes
than presently exists.
The policy and fiscal implications of implementing the ERP
program are substantial. No assurances can be; given that
revenue sensitive land use decisions by the City will result
in irlereased dollars to the Cityl s fiscal coffers. It is
increasingly obvious, however, that other decisions, such as
PUC requlations on gas and electric private purchases, and
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equity transfers into tha City's q6-neral fund from ut.ilities,
vill likely negatIvely cffect the city's future fiscal
position. 1m est!matod $1. OM reducti\Jn to tho City's general
fund is anticip01ted in the 1994-5 budget from such equity
t~anstQr8 alone.
There i9 no Uwr!tten in storu:a U prescription for implementing
econo~ic resources plannin9'~ Tha program requires strong City
Counoil support and ,lnvolvement in the implementation of the Plan's
goals and proqra'lll obje:ctlvBs j and constant policy solicitation by
staft on selected issuos. Finally, the nexus between Economic
Resources ,Planning and the City's future fiscal position is clear,
~nd nceds to bo syste~atically incorporated in th~ Council
decision-lUIking: process.
staff recor.~~nds that the Finance committee endorse the
rccoru::endations of tt-.e Draft Econonic Resources Plan located on
Pages 17-19 as su~arizied below:
1. Initiation of a "Business Outreach Program".
3.
Institute
assistance
City.
a bushtess retention program with tarqeted
to l!Jajor nwenuo-generating areas and uses in the
De.velop a progr.am that would help expedite the City process
for those existing businesses desiring to expand within the
community, and for targeted new businesses wishing to locate
in P.!llo 1t.lto~
4. Activoly partiCipate in regional economic stratogic efforts.
5. Consider, on a solective b!isis, the use of traditional
econol'lI!ic deVelopment tools utilized across the state and
outioll to accomplish sp~cific economic goals~
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Respectfully &ubmltted,
Ck~J &~~ /I~At.)
CAROL L. JAN~~ "-"",
Manaqer, Economic Rosources
.,.""~
(j,r:;,;;;:; cT
AttRch:mont
co: Sandy Aiken5, Ch~lk", CPAC
Will Sackett, Chair, CPAC
Bv.nlV«1 'fi) .Slr-ojnt ..
~ERNARO H. STROJNY
Asaisthnt City Hanager
Susan frank, C~laRbflr of COt"~erce
Curtis ~'eeny, Stemford Usnd If.!!onage~ent
D~n Azark. Hyatt Corporation
OwnQr ~ Town and Countq· Village
Palo Alto Medical .f'oundation
Planning COr;)J't,ission
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4. ~conomic Reso\lrc,~::LI~.lilJJ
Economic Resources Planning Manager carol .1ansen said the staff
r.eport (CMR: 156:94) pl"ovided what staff viewed as the hi9hli9hts of
implementation of the Economic Resources Plan (EHP), The evolution
of the ERP was pertinent to the City's economic futurc tiS it,t.lholc.
The ERP had been undertaken in order to put into policy porspective
, ... hat a more aggressive economic appt:oach to decision naldng: inside
thG: City would be. The ERP spoke about, !;ubstantivoO issues as well
as how the City should conduct itself, Xt was important fOl' tho
Policy and Services (PCcS) Committee to provide COllncil and staff
its thoughts about how important the ERP was and how ~uch .... eight it
should be given. There were implications fot" boCh the: nanner in
Which Council made a decision and organiz.ationa 1 considerations
because. of shi fts 'Which ~'ould he;: required in ten:lS of resources and
directiolH> in onler to i~plem(mt. The ERP repl:esented ('I change in
the way in which the cit)· ,.,ootl1d conduct business. ~or:e of t110
positive results of the ERr 'Were inroads into the Ln(on~i:'ltlon
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highway netvork, leasing" agreer'!1ent with Digital Equipment
corporation and Intern€l.t I A.tc. 'rhe, formal announcement of a roajo1:
bioscience firms ::-elocation to the Stanford Research Park. ",,'ould
clearly reflect the differenco in the way the City conducted
business; Le., in its respon::;e to the R(lquest for Proposal (RFP}
in concert with Stanford Urdversity and the state of Cali:fornia
which represented an enormous amount of staff \;'Ork. It would be
very valuable to futm:e inquiries. The City had conducted roany
internal discllssions regarding how to handle certain zoning issues
in the City. Staff had identified "soft spot .. areas, i.e., the
hotel industry, where zoning interplayed Hith existing hotel
industry, and how to facilitate new hotel developmollt, if so
desired. The .staffing and organizational issue..:;: were dependent
upon Council deCisions; it Council wanted much accomplished, there
were more implications.
Assistant City Manager Bernie strojny said Council had already
received the ERP, and the public had already spoken about the
issue. The Imp contained t:i ve components a::> part of the
recoromendation and was the focus of the staff recommendation in
terms of ho'.{ staff vicHed proceeding. In terms of P&S committee
attention, staff sought reaction to thH overall plan.
Council Bember NCCown thought the policy implications · .... ere rrlissing
from the ERP. She understood Hs~ J"ll'lscnls reference to the
acquis ition of the nC'.1' bioscience f il:'m, but the irnplicat ions of
doing business in the ne", method were missing. An implicaticil
\.,.ould be if the only reason the lle'W method ""orked was that the City
had to agree to give double the Floor Area Ratio (FAR). She was
interested in Ms. Jansen1s sense of the policy implications, e.g. j
the comparisons and consequences of each. 'rhe ERP did not develop
ideas far enough or provide the analytical piece to assist council
to know whether or not to pursue a certain path.
Ms. Jansen referred to page 18 (ERP) which dealt 'With hotels and
motels. A number of circumstancE".s reveale.d a problem in Palo
Alto r s hotel industry. However, there were two hotel issues which
directly related to zoning. One involved the existing motel stock
along El Camino Real comprised of two-to-three. story facilities, no
conference accommodations, no eating or drinking facilities, along
the Umotel ll style. The other was the hotel with slJbstantial eating
and drinking facilities, 10 to 13 stories, conference
accommodations, etc.r which required very oifferent zoning. A
single zone which might be highly discretionary Hould not attract
a new hotel in Palo Alto in a financing market which was down in a
community with a pattern of having a great deal of discretion in
its zoning process. In order to facilitate t.he one, others had to
be provided up front, i.e., zoning use and expectations would
incllide a development plan and approval process at the
Architectural Revie .... ' Board (ARB). Planning Commission, and council
leveL 1>. guaranteed use ~·IOlll"i exist. a10a9 \·,i to. a plan under the
discretionary review process. It was one way of approaching an
issue which the City wanted to facilitate. A very different method
of dealing ~d th the motel industry along E] Camino Real would be to
recognize the fact that thel..-e Has more appropriately a "motel
overlay zone" Hll~ch could accommodate such facilities without the
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e'Xpcctation of something ~~hich might be ten stories in a single
family development area.
couhcil Member McCown said Ns. Jansen had mostly described a set of
potential tools which could be used once a decision had been made:
about an underlying goal the city wanted to achieve. If there some
polic~T goal because of the pot.ential benefit which outwei.ghed the
negatiVes, pursuing some kind of major hotel use, the underlying
90a1 had to be present and the policy i:rnplications of the goal had
to be cl.aar. There would be other results if a policy decision
W(lt"e made, e.g., smallet' uses put out of existence. 1.'he tool of
providin9 certainty and encouragement ,,",'ould be a later piece. Much
of the ERP'includeci tools, hut tho underlying set of policy goals
and objectives had not been dealt with.
,.M.s. Jansen asked whethck." council Member HcCown saw tlle issue of
hotels and motels addressed in the ERP.
Council 11erober HCCown said the policy implications were not
addressed, e.9., consequences Here not laid out.
lis. Jallsen said page 18 (ERP) read, "Nork with existing hoteliers,
najor employers and consl..l1tants conversant with hotel issues to
identify long-term hotel needs with!.n the community. Resolve
issues impeding retention of existing hotels , and CAP lore expansion
of existing hotels, wllere feasible. II
Council Herober HcCown said tbe statement indicated policy
implications but did not provide the consequences of adopting it as
a course of action ..
Ms, Jansen said if Council directed Ci ty staff to look at the hotel
industry and agreed in principle it WaS worthWhile, each would be
a su,bset of a Ilew report which would address the issues in greater
detail. Staff attclT'lpted to highlight issues. Each issue ,",auld
r.eceive a full report if council so directed.
tlal HicKelson, representing the chamber of Commerce,
167 Greenmeadow, s'aid the Chamber endorsed the points of view
expressed in several pieces of literature by Ms. Jansen and Mr.
Strojny, the Board of Realtors, and former Counci I Member Hike
Cobb. Council was being called upon to make a fUndamental change
in the way it viewed the City 1 s business and the way it instructed
its staff to view the City's business. If the city I ~ economic
resources 'Were to be taken seriously and looked at the revenue
needs of City government, consideration had to be given to the
economic and revenue impacts of individual decisions before the
City. City staff should not be placed in the struight jacket of an
Economic Impact study with all of the procedural consequences of an
}:nvil'onmental Im9act Report (ErR) eVE'l:"y t.iM~ 2: d-ecisicn I,o,as. before
Council , but it f\'tdde sense t,o loo}.;: at tbe revenue and economic
impacts of a proposed decision before it. \,'as made. The propom,nts
of the plan were asking council to instruct staff to make ita
fo~us of its work, repol-t~:;. information for decision makers, etc.,
to determine the exact revenue .1nd economic impacts. Hcgal:"ding
hotels , the abstract quest jon \,,3S Whether the City needed ';1 quality
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conference hotel (rom which endless debates would ensue about the
des!r.t.bility as a'il abstract r..easurc. 'fhe bottom line was the
revenue which couJtJ be cxpc-.cted [170m hotel use, e.g., payrolls to
local residents, sales to local businesses. Decision makers needed
to ~ake such a decision, Without numbers, one was merely another
person with an opinion. The IHJrlbeJ:s should reflect impacts on
economic activity and :rove:nue tOl-the city in each decision council
nade. The coro}l.).):)' ..... ns that (;it~l staff should be instructed to
benchr..lal-k ..... ith pl'ivi1to industry in the kind of market orientation
and evaluation too).s l..lsed in evaluating city activities. Industry
had baen called upon to do Morc with less, re-engineer its
processes, control costs, alit! enhancing quality and customer
satisfaction through private marKot kinds of tools. Nell-run
cities" il1cluding P,f\}o Alto, wero looking at the tools.
Stove Player, representing the C'll<lrJber of COl"merce, 187~ Guinda,
saId ther~ waS an increased level of cooperation bet,"'een the public
and private sectors and a novcr.:ent to .... ·ard public and private
partnershipg~ The Chapbor ,,'as forf7'inlJ its own ccononic development,
task force to consider ..... <.ys toO naintain the vitlbllity of the
econoPiic cor.;":'lunity, standing closely with the City in
inpler.:entation of idcns \o,Ihich hiqht be forthconing, A commi.tMent
from Council and the City 'h'ould be necessary to implement the ERP.
lie had heen closel~' involved \J ith Ms. Jansen and the city on the
Interllet and Wbrld Cup Soccer issues. ThB continued partnership
between the t):o sactors \,,"as a vcn' positive direction. The .ERP was
very po~itivc ar.d one \"'hich the Cilanber fully sUpPol-ted.
Alisa .'onq, Palo Alto Doal'd of Realtors, 610 Cowper street,
endorsed the ERP. Gr"ater cont~\'1nication bct",'een the business
sector and the City \lOV '~C r,ntually boneficial. Realtors were in
the business of housiJ-. played a part in City !'ovenues at every
hOT.1e tr.ansaction j ,UlCJ property tax revenue through
reassessment of ftlll r.. '.'alo.e of evol.''j house sold, Home sales
also stimulated the businc~s econony by creating home improvement
sales, et.c. Bat:'riers to home .owfl<trship in Palo Alto were
tre~endous, averaging $450,000 """hich, although, mostly due to market
forces such a$ land cost, roaltors hoped tile city would be mindful
of and not seek to increase or produce ne'o"J barriers, thus
preventing hofilC o ..... nership in Palo Alto. The Palo Alto Board of
Realtors {PAOR} supported the ERP and looked forward to helping the
city prol':lcte a st.!'ong business and real estate ~nvironment to
provide funds to support sorvic'es Palo Alto had COTl1E.' to enjoy.
Council Henner Andersen asked whether Ms. Fong suggested Council
shOUld increase the housing stock.
Ms. Fong said not nccessa~ily.
counci I Member Andersen did not llnderstand
Pl"0l1l0te. fmtlilies n0ving into tilE: <'!":,~a if the
additional increase in value to real estate.
the supply. the priCing of re~l estate would
nore difficult, to pUlchase Ilousing,
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heH the City could
ERP also created a,,,:
without increasing
illcrease, making it
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Ms. t:'ong said th~ P~.BR'S "posJtion on the ERP in general wa::; to
support tho points outlined. She was not prC'parcd to r.1ake comments
about the housing stock and how it pl<3ycd into the ERP. '1'he PABH
thought all outreach to the business conmunity would Iwlp provide
for services for which people ca~e to Palo Alto.
Denny Pctrosian, 443 Ventta.~a Avc-nut::, asked tor lHl lnrnediate
response to her-written comments (on filo 'With the City Clot:k's
Office). If there were wrong assumptions 1.1 tile ERP, it should be
cleaned up prior to submittal to Council. The Gru.en & Grllon report
was a flimsy basis for some of the stata:eonts in tho ERP. There
were general concepts which should be focused on with t<!spect to
zoning. Page ·18 (ERP) I Section rr. 0., spoke, about land ova i lab!o
for mini-mall~, but the only land ava i labl.n was, land ctlrr.ently
zoned for multi-family housing. Relocation of auto repah· into a
mini-mall roade space for toys (or the rich a.t tho expense of
housing for firefighters and othel" valncd public servants. The
concept Which should be considered ""as ... hether livability of the
City should be sacrificed tor revenuo, ,If the Cit)" zoned for
something in particular. it did not ne.:'ln the Cit~' would secure the
business for which it was Zoned. A pi~ce of land could be set
aside for hotel develop;nent and l:c~a;in Vac,lnt tor ten y('ars. In a
soft and volatile econony, there 'fas no gu~rantee the City would
get what it want".cd. She too).:; strong exception to cor;-,'r';e-nts that
Palo Alto was business unfriendly. Then~ .... ·C}:~ sor:::e business
interests which would create the issue out of t!lin air for their
own advantage or expansion. It \"as !lot helpful to discuss issues
in general; cases needed to be nadc for p,lrticulrn' goals, such as(
hotels. If a conference center ~ore so necessary~ she queried why
one had not already been developC'-d in the Stall[onl Research P<1rk.
Rather than removing valuable housing land, it slwlIld be located in
an area where it was most needed. If trenendous reSOHrces ","'cl-e
placed in staffing, materials, RFPs, etc. ~ the city night etlCOln-agc
btlSiness into Palo Alt.o, but business in specific would occllr~ A
general program to attract business could result in spinnillg ""heels
without an economy to SUPPO)"t it. The c!.ty needC'd to soriously
consider the economy and be willing to respond appropriately.
Council Member McCown asked ~taff ..... hat outcome and response we-l·e
needed from the PGS Committee.
Ms. Jansen said both the P&S and finance Cor.uuittees ""'ould comment.
Her intention was return to council wfth detailed responses to all
committee comments. Anything the P&S Con~itt~e wanted staff to do
which would assIst Council In Tll3.ldng declsions abcut the ERP I .... ould
be helpful.
Council Member Andersen thought there had been tonal differences
from Council to encourage staff to proceed with the effort..
Several council Nerobers had attempted to indicate whitt they
recognized in ba lancil1g the issues of busi.ness, )"c$.id.nnt ial i
envil."onmp.ntal, etc., wherein conditions had ch.:ltl9cd. Tlw b\lsinef>s
community \"o'aS mor~ syrnp"thetic and had ch;mqed its 0'.·m applQ~H;hl
i.e., there .... 'as pr~bably not a more proqre$~ille Ch<HT,bel" of Commerce
than palo Altols \Hth regard to many of the isslies sun:-ounding the
community. council needed to give a clear messi'lg~ th.lt thQ Cit}'
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could not continue to conduct b~lsiness as it had in the past.
Businesses previously lined 'up to he in Palo Alto, but the r.'I;arket
had changed dramatically, as refl~cted in the ERP. It lias time to
determine to what extent the City would be assertive or proactive
in an effort to retain existing and encourage nelt' businesses.
Former Council Member Cobb was correct in his assessment that the
City had to recognize that much of the benefit the community
derived froIn toe. current tax base was directly a result of
husinesses in the City which could not be taken for granted. In
some respects, it not only had been taken for granted but also had
concealed some of the problernsr Le., not recognizing or dealing
with the issue of infrastructure as effectively as it could have.
The:! City neede9 the rasources to ensure long-term iF1frastructure
needs -were met. Council had taken major steps, but Tllore was
necess~iry. The basis of the ERP was to generate revenue, but other
issues needed consideration. Planning and zoning efforts heeded to
keep in mind hmtl to retain community services 'Which could become
priced out as dramatic shifts ""ere made. special zones could be
created so some businesses, which would not J:'ti'l.ke it in i'ln
aggressive market, were not lost. He \I/as interested in exploring
a hotel zone, as it ",ould be a benefit to the connunity. In
looking at a most appropriate site for a !lotel l land currently
zoned for housing \"'ould require shuffling the pieces. flo was
uncomfort\.~ble reducing the City's commitment to existing hOllsing
stock. There would be Ti1UCll flexibilit~, in land lIse over the coning
years which \I,'ould allow for such reshuiflJng. The City needed to
Hork closely with the hotel community in terms of 'dhat W.?lS
marketable I what worked, and ~"hat was effective. He had a hard
time understanding ..... nether there was a place in the City for
a1.1tomobile dealerships.
Hs. Jansen said some cities had handled automobile dealerships in
gradatj,ons , e.g., mini-malls with three or four dealerships which
were more attainable. It ~"as important to know where people went,
and it was important to recognize dealerships were undersized il.nd
in poor locations. Dealerships .... 'hich ~ ... ere grouped together would
enhance sales and generate revenue for the city. Hajor land use
decisions Which could accommodate dealerships grouped together
would have to come out of the COJ:'tprehensive Plan. It was possible
if the City thought it was a .... 'orthwhile activity to work w.ith the
Comprehensive Plan or economic development group along with the
information which needed to be garnered from the automobile
dealerships to determine ""hat should be done and how it could bo
aChieved. rt might not be achiev~ble.
Council I·,ember Andersen was concerned about_ the future of the
City's au_tomobile dealerships and the mar~:et being created, but he
was intel"('!:sted in exploring the issue further. The City might not
have the flexibility to create the type. of market approach
available in ot.her cities. The city was not in a position to be
very aggressive. Traditionally, Palo Alto h2'_(i attt-acted high value
businesses, but the natura of the I..msinessas had changed to no
longer be labor intensive. One positive aspect was that thc'.
businesses did not generate a lot of vehiculat" traffic. Recent
efforts suggested ways in .. ,hich the City could promote high valuo
business. He W.1S very comfoI:tablc \J,'_1t:h the Ci t~. I S targ(~ting the
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kinds of businesses it thought were appropr iate and consistent with
the 'policy dh'e.ctionf: council mig~lt give and to comMunicate with
brokers and assist in efforts to establish such businesses in the
community, as it was in the city's inter.est to do so. He did not
support one of the comment.s in the ERP concerning tax deferred
payments as the city was not that competitive. He was also
strongly opposad to the suggestion to use city funds for financial
inducements to bring businesses into the City.
Ms. Jansen asked whether council Member Andersen I s comment referred
to page 19 (ERP) section V.D .. regarding tluse of t,he city IS credit
rating for loan guarantees ~"I
C<lunci-l Metl1ber Andersen replied yes. The other section which dealt
with the issue was on page 19 (ERP) Section V.F. He asked for an
example of section V.D, and the effect it would have on the City .
. ".:",_ .... , . }Is, :Ja~~·en· ,~aid ':Qne(' e~~mpl~ :'i~~~'ived -\h:e', f~C{ ·th'~b. 'th~~~' w~·s
..... '., esso'nti"ally' flo' hoteT ~iinancing 'ava'~ lable-. Many' cities' had backed
financing of hotels-through a redevelopment agency or through loan
guarantees. It might not be necessary in Pa 10 Alto, but some
cities had used the method 1 especially ' .... hen there was no commercial
financing available.
Coullci 1 Member-Andersen recogni zed some of the concerns but was not
interested in having the city involved in the hotel financing
business. The City faced some"' real changes in the Tl1arket and
needed to be r..ora assertive.. There Here many s-upport net\o.'orks for
businesses. If the cit}· acted, rather than putting its head in the
sand, it might not have to prostrate itself.
Council Nernber McCown referred to page. 9 (ERP) under the
Assumptions section. She acknowledged a perception 'wlhich ran
tlltough the l'RP and acknowledged some extent of the reality,
however; there was a large piece Hhich was overstated not only in
the ERP but also in otller in-vogue thinking. The perception ~ ... as
that overcagulation was the source of enormous evil. At the top of
page 9 1 the ERP stated "" ,legal compliance and mUch greater
emphases on the r~9ulatory, ve~sus enabling aspects of ·city
government, ··have'·became. more 'ihstrumental in ,city_ administration:of.
.public .pol.1cy.'1 _~t was _a _qualitu.tive, .value judgment statement
Which' she' did riot adopt·,'-' . The second-paragraph on the right side of
page 9 (f:Rf» stated, u1'he ability to take l~isks is essential to
promoting economic an resources plan.,.11 I~'hich she neither accepted
nor understood. f>he also did not understand the statement that
innovation \I'hich led t.o failure was not well received in Palo Alto.
There '''as a tone or implication that dec.i.sions .... 'hich had been -made
which were perceived to be regulatory in impact had a completely
negati ve cast, and only if free from the imposition of such a
structure would the City succeed in the plan, witb ~Jhich she did
not agree. There were concepts. in the plan ,-"hich could be
implemented successfully with good due process. 'rhe reality in
Palo Alto was that tile due process or public process it had was
sometimes perceived a~ legal cOTllpliancc-and all the rest Has a
cteJl1and of the community .... 'hich would not go away, '1'he same citizen5
who elected c.ouncil members and were very concerned about connci ls I
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not taking heed to the concerns of the neighborhoods were the
ef<l;ployecs of the businessmen dj sC1..1ssing the same constituency of
people. The perception 0,.;("15 a negative impact on Ule ability to be
effective employers and business people, yet it h'as the employees
which 'Who citizens of the cO~t.lunity with the expectations of how it
was perceived. p.lge 10 (ERP) revealed the sarno concept when it
refel:red to the call on the Stanford Shopping CentctO, Page 11 (ERP)
read, 111n particular. the last t\<\'o decades of City regulatory
legislation, including down-zoning, have contributed to an
cnlliront';lQnt Hhich lnhibits flexibility und creativity.1I She
thought many in the co:r:u':'lUnity would say the regulatory environment>,
including do\o,'n-zoning, had barely nanaged to maintain a tolerable
qU61ity Qf 1 ito. Ot:;!cisions about down-zoning Dm~nto""n, which
J.lnpose~" a typ~ of cap, still saw people who thought it had not
achieved what needed to be achieved in light of impacts on traffic
on Univ-ersity Avenuo~ There was an over-emphasis wit.h not enough
recoqnition of" tho origins of the cause of people's concern about
having cont"l>(ll over the environment. :It was a tone ..... hich she did
not. support. The ERP was good with only a couple of places with
questions or suggestions. The Business outreach Concept on page 17
(ERP) ~'as excellent but should be broadened and more inclu.sive,
i.e.. SecLion 0 proi:'.otcd ua regular Cit}' fOl"Urn to promote
City/business cot:lJ":1l1nity discllssions on economic issues" to which
she ,",ould include neighborhood involvernenL Relationships should
be built for a successful r·lidtown and cou.ld be a pO'lo.'crful resource.
Section 1:: spoke of ttll! tlassignT:1ont of an expeditor! facili tator on
all T:lt\jor projects within the City" but should be more specific as
t.o When, -w!1ethCl: it applied to any pl"oject, only projects
consistent with zoning, ho ..... it all fit, etc. There had been
contlents r.l:?de during the public hearings on page 10. (};RP) in Which
Stanfo:n~ Shopping Centcl.-and the Stanford Research Park were
iuentifiecl with various issues, California Avenue, neighborhood
cOf.lrnerci.al areas, e.tc. A question was raised as to ~ .. hcther other
areas should he ta~~en into consideration and the relative priority.
Under the hotel/motel issue, her strongest interest was how the
City could assist existinq sit.es or hotel uses to remain in the
con~unity to beCO[:l9 more successful. It was a higher priority than
attracting new hotels. In the entire sect.ioll IlIon page 18 (ERP)
regarding expediting the City process for businesses desiring to
expand, it was h~portant in the eagerness to grow the economic base
that the City did not neglect existin9 companies. Under retail
usos on p~go 19 (ERP) , she asked how the city would know hoW to
solicit Ilelectronics and home improvement sales operations and
various ValUe-oriented 'boutique' Qutlets.1I There "taS a
facilitatoL"' role the City could adopt, but at some point ttle market
had Y\llCh t\ore to say, and it ~wuld be difficult for the City to
stay dhe"ld of "Such trends. She \""0$ skeptical of the City's
becoming too involved in sucll a path. 1'he bottom of page 19 (ERP)
indicatrad forming a redevelopment agency, which was questionable.
Cities which had formed redevelopment <lgencies regretted the
decision and had been hurt i.1ore by the :state budget take-al.,rays
beCi\use of having n~d(!velopment agencies. Legally, it t .. as
extrcrlcly unlike}]' Palo Alto woul.d qualify> She agreed Il'ith
questions j""ir.ed by COllllCi 1 Ner:lbel" AncicrsC?n about_ t,he direct
financi.;11 role, arid she advOC<1.tcd proceeding with cant ion. A
cornl:lent had ",Iso been Dade in the ERP concerning participation in
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regional econoll1ic stratcgi'c efforts~ which was ver-y good. It was
absolutely critical in thinking nbolJt Palo Alto's neighbors,
especially East Palo "lto, that the city tak(Jo a lc.)dership pos.ition
in how it wOl'kc.d 0" the issues in n cooporative r.I1Hm~r and not get
into bidding wars ovet such things as a Costeo site, etc. The City
had an greater opportunity to forqe strollgol' t"clatiQnships with its
neighbors than it evor had.
chairpers.on Hulj;er agreed with Council Member Anderset,ls ptd.losophy
on automobile dealerships l'C911rding (Jxploratioh and suitable sites.
He took ..... o[".;ts like IIsuitablo" soriously, He .agreed with Council
Hember Mccown"s cOIn .. !':I('Int <m Section IV t.'ogarding reqion.1t economic
stra.tegic efforts. It 'WaS important for the City to participate
wheneve1-possible and provide lead",·ship. Although it .... ould not
m.ean revenue t()l,' the city, It should be done llccausfl it was good
for tho r:-eqion and woul<l benefit some of thn· less well-served
nei9hbors. 1'11e listed itc'f!1s under Section V on page 19 (ERP)
containe.d only t",·o itot:',s in \o,'hich t.ho cOi-Munity would h~ve an
interest--B and E, Tho' other ite~s did not have ouch chance in
Palo Alto at tho cmT~lIt ti~e. OYerall, the cit.i' nccdlP.'d to pay
nore attention to the econonic side of \-"hat it did. In doing so,
nothing was given up or trAditional interests ov~..');turned in
providing hO\lsing, r.eaucinq trat(ic~ lir.'liting developncnt, etc.
For }'ears, the City had functioncd under a la.issz-caire :basis,
business was good, <1Ild decisions did not ';"".ia~:e dny difference. It
'Was no longer tpJe. The cit~, needed to be r.on:· active, but it did
not mean tllrowing housing zones out the wil~do .... ·. It nade Sll"IlSl' to
deal with businesses bec~,usc it \.'as Ilot onl~' .1. sotll'ce of revenue
hut also TJeant jobs for residents, and it provided rllH!'.(:rouS and
valuable services. On(; of Ilis COncorns invc)veo whe:t:e policyrnakers
carnG into tho picturo, e.g., whether people ...... ould sho,,' up wanting
to place hot"els in a particular place ot'" \.'hoUier something in
advance \o,'ould be diScussed to ctet('rminc \,'hc-thcr there was even
interest, i.e., it a COllneil Ner.1b(!l' did not want biotech at
Stanford.
Hs. Jansen silid. biotech wa~ a parni tted use b}' zoni ng, so in times
past they would have sat dmm. part of the play of doing the ERP
was to be very inclusive of policYlll'd~(!rs. 1n the Hidt.:n·1'n area, a
number of council KC1:Ibars regularly had discussions Io.'ith the
Midtown Herchants l\sscciati,on. There ",'as an understanding from
staff i s perspective that so~e council M~nbers thought the City
should be going with Hidtown at the current time, looking at
certain issues. It was one of the r.lost effective rnetho(l.s of
involving policyrna}~ers outside the .comal puhlic hearing process.
Another l1lcthod was to usc inforIllation staff reports to Council l7Iore
often, laying out so.me of the policy options available. It was one
of the avenues staff planned to t.?iY..c on the. d i$c~:ct. i onary aspects
o( zoning. Council could then provide feedback, 'Which ",as at a
conceptual level. rattler th'-~n ..... aiting for an applic~mt to bring in
a plan.
council MeT11b~r MeCo .... ·" said the ERP dt'SeT] b('d a ne .... • method of doing
business 'II'hich wa.s oxcellent for-government involvomcnt into tbe
business cor.lnJunity, J1t the S<"ITl1C tiFt€', the City needed to be very
inclusive and enconp<\ssinq of th(~ " .. hole eG~~un i ty in proceeding
2/15/94 P&S: 23
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dewn tho E'RP path. The CIty should not move allead of tho: COHlI:lUnity
~nd find nQ one 'Was following the same path. Growth control
measures hali been taken br':l:cause tho public/private partnorsh.l.ps had
been gqi!1g on, but citizens 'Were not in a9ree;~1ent. The
Comprehensive. Plan Advi!1ory Comroittee {CPAC) Pl."OCCSS was revealihg
new , ... ays of governance. citizens wanted more hanas-on involvement
in decisions which affected the quality of life and 'h'anted a ,",oro
active role, not leaving it t",Q Council Members. 1'he t'"'O should not
run counter: to one another. Forums to discuss economic issues
should not only include MidtOlm merchants but also the entire
citizenry which cared much about the quality of life in the
community. It was not, and should not be, an advcl"sarial
enyironment •.. The only way people knew how to deal 'ilth pot()ntial
over~building in Downtown Palo Alto in 1ge5 was to place n lid on
it. It was probably not a good I:lethod in which to deal with tnt:
buainess community in the futur.e. 1'he snart way HbS to cl'oSate <]000
JUethods. The community had to feel comfortable that it was gott.tng
what it wanted by following a set of rules.
Council Member Andel::"sen said Council and the bUsinc95 c()!:;,,\lnit),
needed to km able to educate the cOr:1rLlllllit}' about. idc::as .. hich had
been emerging. The dollar issues needed to boG 0xplore-d.
Inclusiveness was a two-way st.reet, Businesses shotlld j)e able to
point out some of the realities with "'hich the City Jlad to deal.
Council needed not only to discuss the revenue Ileeds, bCGilUSO it
did not always sell well, hut also to N1phasi2c th8rC Mere issues
other than services which needed to be providC!d.
NO AC~ION TAREN.
2/15/94 P&S: 24
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staff . r----=-_:Jeport ___ _
February 101 1994
THE HONORABLE C.tT~ COUl/eIL
PALO ALTO. CI\I.IFORNIA
Attent,ion: PO"licy and services committee
Policy Implications of Economic Resources Planning
HeJ1lbers of the Colinei 1:
Itackgroll.n~
On November 22, 1993, the city council referred the dt"aft Economic
Resources Plan (ERl') to the Pol icy and Services and Finance
Committees of the city Council for l"Cport back to the full Council.
Finance committee review \o'ill be scheduled subsequent to the Policy
and Services Committee discussions "-'nd recommenclations on ERP.
The policy implications of implementing the draft E'conomic
Resources Plan are substantiaL City Council approval of th~ goa Is
and objectives ot the Plan, regardless. of \'lhich ERP specific
program recommendations arc eventually adopted, represents. a
substantive change in the wa~· in which we do business within the
City of Palo Alto.
Developing an economic intormatio!i framework for City Council
decision-making, revisiting past policies affecting the business
and development community, and establishing an Internal "ma)"k~t
perspective ll wi thin the city on issues having an economic, and
therefore, fiscal impact clearly represent a different way of doing
business for city staff. The questions we ask ourselves
internally, what information we present to policy makers l and when
and in' what context information is presented neceositate IIshifting
ge~rs," 1n a sense, for all of tis.
Fundamental to the implementation of Economic Resources Planning is
the concept that balanced input to Council deCision-making is
essential to the economic future' of the community. In times past,
Palo Alto has had the affordability of' making decisions that have
had economic consequences not generally afforded other COJlllrlUn ities.
We are not in a crisis budget mode. Nonetheless, we aL'C not
guaranteed that the past Is predictive 01" the future.
CMR:156:94
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£ccnomic Resources Planning avolved in a sense with no formal City
council approval of the concepts behind ERP 'being established.
However, there have been several ERP related issues that represent
a shS,ft' in thinking and openness to busilless ideas that are note
worthy. 1\ slITnple of those is as follows;
1) Annouhcement of the probable location of a major east-coast
based hie-science firm to a stanford Research Park site.
CUlminates the efforts of tlle city of Palo Altai the state of
California l the Palo Al'to C'han1ber of Commerce, and Stanford
University to attract industry to the city of Palo Alto that
best fits' our, and their, criteria for location. This effort
was extensive, and involved the City staff ill responding to
request for information.
2) Recent inroads into the City's 1Iinformation highway" network
fncillde Digital Equipmt."!nt corporation's connection ot' the City
of P.alo Alto to the Internet, which is consistent. with the
city Council's stated objoctives to place the City of P.alo
Alto in 'i:he forefront on conmunicat).ons issues in the region
and nation.
Olle exar.,ple of an upcoming issue to be considered by tIle city
Council is that of discretional':'}' zoning I where the play between
past actions, perceived pUblic sentiment, and potentially new
philosophy is particularly evident, Internal city staff
discussions have been held recently rer:larding a long outstanding
city council directive to bring forward a revised hotel 20ne that
will accomplish the City's goal to maintain a viable hotel room
stock, while at the same time facilitating new hotel development.
f'undamental policy aspects of this iSS118 are at the core of
Economic Re,som:ces Plannhlq: is the traditional regulatory
approa.ch of defining all physical development parameters prior to
any discretionary use approval still apPl"opriate, or should the
city consider a morH proactive stand that wlll faciLitate Ilew hotel
development?
These are the types of issues that can assist the City Council in
better understanding the possible role of Economic Resources
Planning in furthe!.'ing the Council's priority wh~Gh focuses on the
City's economic future.
Respectively submitted,
r:~.OJt c--f ;;/... ·<.-to.n~~ r'\.
CAROL L. JANSEN
Hanager, Economic ReSOllrces Planning
t:d/~i;-B~;~AR~ H-;-S-r:R6JNY
Assistant City Manager
CHR:156:94
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Exhibit A
Squ= ilo<cI ~ Cost 0(' T..,I ~ TOGI "!'~: C"Jtj':s E.>tmd. "'-l. F~ ~ Cit>j":s "t.u TOC<l:
"""'" 00Uan! I of 'Foe:. to Opoy, TOT "--c:o..of Coot Uo<i . l';><y Sho,. ::;-x=tr. uty. vcy V1Icl. Sales Nd:of CityT.ax
u'"' u ... Develop R.> .. Por Ucit. Cocl<o:. Pc;-UD.it V.lue T"" l';><yTx T.x txJ>d« Tox F"", Tn "'!"~ft,T.ax Yc:at" 1
@IOl< OI% @12% 0>,33$ @5%
RICKErs HY A IT
4219 E1 O:I£/~iho ReII!
C==tSWC 16 3SO 81~,ooo 6),000 8.000 17.'-'<» 46,000 ~ 389,000
SCENARIO I
E)CeCutive Scite Hotel ~ 110 ISO 700 75% .;$2,000 ISO 15,7SO.000 15,000 2,250.000 120,000 22,000 59.000 232.000 12.eoo 25.000 sn.OCO m,f;fJO
SiDglt:l Family Homes 2 550,000 13 i!,SOO 9,000 24,000 :U,OOO 2,000 2,000 l:.l,C(Q 27.COO
Rotoil5ro= 9 125.000 90 ll,2S0,ooo 12 4,704.<XXl t.so,@ \9,000 S3,OOO 1(,0-,'000 ~,OCO 233,0C¢ 315,000 362,000
<hocety Store 500 SO,OOO 63,000
0dJer Sto«s 300 75,000 225,000
TocaI 16 452,000
SCENARIOD
Z7;()()Q,000 6.954.000 411.5oo 50,000 136,000 423,000 22,000 2.000 3t3,QOCl "'2.000 975.000
Ex:=:cutive Suite Hotel 5 IlO ISO 700 75% 452.000 ,50 l5,7S0,COO 15.000 2,1.50.000 I30.COO 22,000 59,000 23Z.<XX> !2.(l(X) 25.000 51l,CQO 570,000
Single Family Homes 2 550,000 13 72,000 9,000 24,000 3l,O);) 2.000 2,000 13,000 37,000
Townl>omes 5 350,000 (1) 210.000 25.000 059.000 108,000 5,000 6.000 36,000 !OS.OOO
~tail Stores 4 300 2 50.000 90 4,SOO,OCO :2 2.09 I ,QClO 66.000 S.OOO 22,000 64,000 3.000 150,000 161,;)00 183,000
ToW 16 4S2.oo:.'l 20.2S0.000 4.341.000 S2S,0X) 64.000 174,000 435,000 22.000 8.COO :75.000 '?2I,OCO &95.000
PAGe MIl.I..II>L CAMINO
FcazJer MI1;~lidd School Site
Current St:J.tc 6.1 43,COO 5,000 li,OCO r"ooo 22,000
Class A Hotel 6.1 100 350 800 75% 958,000 125 37,500.000 15,000 5.250.000 428,000 51.000 141.000 616,000 :;1,000 4S,000 ~ 1,229,000
Higb. De:l$i.ty Multiple 6.1 350,000 244 854.000 102.000 282,000 439,000 22.000 :/4.000 118,000 43C.OOO
TOWN & CO\JNTRY Vll.LAGE
1155 F-I Csn»nc Reo!
Current Ce:r!ter 13 160,000 85.000 IC.OOO Futlb,-~ Cect.er 13 350 200.000 11,000 iS3,OOO ~ 20<.000 ?O !8,OOO,OOO 12 6,79S,{)(X) 35,000 10,000 23,000 !I ,DOC 700,000 721 <XX) 749.000
STANFORD RES£A~CH PARK
925 hgc Mill RO:Jd
Former Kocbk M.:JDfg. ]0 61,000 7.000 Future Bi~cience RD 10 174,000 250 43,500,000 2
7.fX1O I,OCIJ
<.045,000 44S,@ 53,000 147,000 80,000 l1t ooo 280.000
HYATT CASANA
42!XJ £1 C:1b~inc Re:rl
Former Hoter . 10.03 200 33B,OOO 50,000 6,000 Proposed: Residen~;"1 lOS 9.000 19.000 3nOOO 372.000
Siag!e F.:uni~y HOn1e::; 4U.000 59,000 160,000 227.000 !2:.ooo 13.000 84,000 244,000 550,000 "-54
T~ 3SO,OOO
~7,000 36,000 9&,000 130,000 7.000 8.000 SI.($$) 149,OCO 54 J$9,000 23.000 62.000 97,000 5.000 5.000 3J,OOO 95,000 .