HomeMy WebLinkAbout0378.095FROM:
DATE:
SUBJECT:
REQUEST
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City of Palo Alto
City l\bnager's Report
BONORXBLE CII i COUNCIL
CITY MANAGER
AUGUST 10, 1995
DEP ARTM£NT: ADMlNISTRA TIVE
SERVICES
CMR:378:95
RESPONSE TO LETTER FROM STANFORD MANAGEMENT
COMP A.'O' REGARDING LEASE FOR EL CAMINO PARK
1'Ib! is an informatiooa! rqxxI and no CouncillOClion is req\lired.
EXF.CIITJYF. SJlMMA.U
Re«otly !he Palo Alto City Council and Planning Commissioo received a !etta from
William FhiJlips of Stanford Management C<lmpany, commenting 00 what he termed
"misinfonna1ion" about the lease with Stanford for EI Cami'lO Park (Attaclunent A).
Mr PI!illips' pr=ntatioo is consistent with prior represenWlons by Stanford regarding !his
lease. II is SIanford's position lhatthe City should consider !he revenue,' resulting from the
City's wrious subleases of property cootained in the master lease with Stanford, as
"offsetting" the expense 10 the City of the lease payment for E1 Camino Park and open space
in !he Olympic Redwood Grove. The City Cooncil's consistent position has been that EI
Camino P",k rent is an issue wbkh stands on its own.
Several of !he statements in Mr. PIlll1ips' letIer require clarificatioo. Specifically, Mr.
P!)lllips assens thai the City's rent for lb. entire lease is 4 J>=e!Il return 00 D18lXel value; and
that the City entered into subleases without Stanford's participation (Wo implying thaI !he
City is \he only beneficiary of!he various subleases).
Theoriginall91S lease bet",,,,,,, StanIOOI and the City ofPaIoAho set the annual rental rate
a! 4 percent of !he "nluation of said land, wbi<:h valuation is hereby fixed at Ibe sum of
SI,OOO per acre for the first to years of the Ie<m." After the first 10 Y<lIB, the rent was
a<fJUS!ed 10 he the assessed value of the land, assuming ill<> be set by the County Assessor
..
111.60 pem:nl oC market vam. Wben Proposition 13 (1978) required the assessed vaIuc to
be re-sd at CWTenI marlet value, the City and Stanfo.-d agreed to • fOrmula for calculating
die lIIlIuaI rental requirement, which retained 1hc 4 percent return but created a new base of
cunmI market .1IIue based oolow«nsity multi-family housing, witlwut regard to the actual
use of the property. It is tbJ. change to the rental cakulatioc thaI has resulted in the rapid
escalation oC rent for EI Camino Pari and !he Redwood Grove. Mr. Phillips states that the
4 perceol factor applied 10 the property's market value results in the '~-urrenI rent being baIf
oC what Ioday's marl", rent would be.' The. perC<lIll return was carrie<! ~ard from the
crigjn.al1e8se, and was intended to be aw['Od to • complett:fy different base. Staff doellll{)(
have information as 10 whether I 4 per=t rate oC return was reasonable for • leaseholder 80
years ago, but does Il{)( believe Mr. Phillips is justified in making the statement IMt, "the
City'slll8S1l:llease with Stanford has been and continues 10 be at less than marlet rent," since
he is Il{)( acl:nowledging 1hc contexl within whicb the 4 percent return originated.
Mr. Phillips states that Stanford has • single lease w1ili the City, and thaI, 'It was !he City,
Il{)( Stanford, which over the years created • Dumber oC subleases oCthis single master lease."
There is, indeed, I single master lease with Stanford, which has been amended four ti=.
The pIlIpOOC of !he amendmenls and related provisions is detailed in CMR:271:()
(Atiacbment C). It should be pointed out that the master lease requires that Stanford approve
any subl" .... es, and Stanford', participation is evidenced by tlte revenue requirements for
Slanford incorporaIcd min two oC the master lease amendments, for Holiday Inn and
MacArthur Pad; Restaurant. For Holiday Inn, the rent \0 Stanford was amended to be eitJru
4 pem:nl oCmarlr.et value ... 50 perceoI oC1hc total rent received by the City from the boIet
Beginning July 1, 2013, the rent 10 Stanford is 1 percent oClhe market vaIuc, or the fDt4I
amoonI oCthe reo! received For MacArthur Park Restaurant. the rental rate was amended
10 be 4 perC<lIlI oC market value IUtd 30 percent of the profits !rom the City's sublease wiili
the restaurant. Consequently, iI is more accurate 10 say, "The City's subleases for these
different uses resuJted in the City IUtd SttDl/of'fI (emphasis added) having profitable ongoing
arrangements for the coounerdal parcels. ~
AttaChment 8 pr<Mdes updated information on the amount paid 10 Stanford for each oC the
various sableases, as wen as Stanf<lrd and City revenues for each element oClhe master lease.
AITACHMENTS
A) William Pbillips' July 27, I99Hetter
8) Stanf«d Lease Information Cbart
C) CMR:27 I :()
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. RElATED STAFF REPORl'S
CMR:211:0
CMR:S31:92
CITY MANAGER APPROVAL:
CC:. PllID4iDg Commission
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IITTAtlIOl A
STANfORD ~lAI'ACE'\IENT CO.'IPAI'>Y
July 27, 1995
Palo Alto City Council
Palo Alto Planning Commission
Dear Members o{the Couocil and Planning Commission,
During the last several weeks, as the Council and Commission have been considering
certain CPAC recommendatio!lS, 5OIll< significant misinformation regarding wba! has
been caIJed the"EI Camino Ball Par'~ Lease" bas emerged. In particular, recenI
wmmcnls from the Council and Planning Commission about the " .. orl>iWlt renl" being
charged by SllInford for Ibis Ieasc are simply not \nIe. The fActs are as folloW>, and we
would encourage your veri&ation o{!hem by City Staff:
I. Tbesubject 1eose is. sjpalelgasc from SllInford.,., the City of Palo Alto made
in 1915 and cc;vering an.,.. which.-all the "''0)' from the gruve o{treeo
north oCPalo Alto Ave, south 10 and including the Ho6day Inn parcel
(Apptopriale subsequent adjUSlmen!s have been made to .. elude University
Ave, Universily Circle and El Camino R&al riglrt.s",r.way.)
2. The City's rent 1lJIder th.1ease is "mark", value" (defined IS value under low·
density, multi-family res;dentlal) times • factcr 0{ 4~'. A facio< 0{ 4%
<ep<esents about one halfO{wba! ... "uId be the cunen( market me facIo<.
Thorefure, even though the underlying land is valued AI market. the haIf-ra!e
per=tage facio< tesUlIs in cumnt rent being half 0{ wIulIlOday', mark", rent
would be.
3. It WB! the City, DOt SllInford, ,.,mcb over the Y""'" ~ • number 0{ sublease.
0{ Ibis single master lease. ~ subleases included some for comm<rcial use
[Le_ Holiday lnn and McArlhur Pm), some for non-profit use (i .•. CalTraln,
TtSDSit DisIrict and Red Cross) and some for open space (i .•. baseball, ~
fields and the redwood grove). The City's subleases for these different uses
....wted in the City having profitable ""goinj! arrangements for the commercial
parcels, basicaJ!y pass-through or no-profit arrangements 10< the non-profit
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hie AlI<I Cit) Coul>cn
Plio Alto PIsnnina Canmlssk>to
P="r.. omd I ddicit on the opea 'PI" pon:els. 0ve!aIl, be .......... during the m.&Jo<
porUon of the Ierm of this mas!er lease, the City', profital>le suble&ses ha~, more
otl.en Ibm IlOl, offset the deficit assOOated...nh the open space or park pm:e!5. If one
looks at just the last J S years (see ScheduJe A). the City stiIllw 0 10IIII net profit on
the _1euc of ab<>ut S 11,000. The mo<I receot mmua! net deficit is ocly about
S)(),OOO omd declining.
1lI SIlZIImlIly, the City', master Icase with Stanford has been lOd continues 10 be at less
Ihau mazket !eDt, omd !be =nmerciaI subJ ...... negotiated by she City hsve allowed it.
over lb. y_ to effectively subsidize the mil>! cost a!klc:aIed by !he Cit;y 10 the open
space and recreation areas.
F"lIiaiIy, ..., at SWU<>nl "'" not owen: of any Icase exampks, in ci!l!a the priVl!le or public
realm, w!!ere rem is based on • lessee', discretionary .... (or non lISe) of the laDd, instead
ofbeing Iie4IO !be 1Dlder!ying land'. !'air mazket .... omd value.
<C ,..,. FIom .... CIl)'-...
EmDy ~ !>it.-0( A4mmistroIi" Services
Williao F.-. Aoall'ropcny MmIopF
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SCHEDULE A 0
slIIIUDar)'-C\ty .rPaI. AIlo Leuc
Pl&lo AIIo RoY ..... IIld Lu.s. P.ym..,1J 10 SWJIonf
paro Alto SWlford Palo Alto',
Year Reveoue Lease poyment S"'Fr~fi<:it)
._ 1919180 Sl64,38'J $223)30 S40,450
1980ill S286,'rn 5241,212 $45,514
19*1112 S351,311 S279,7(}7 571,666
198M3 5371,145 -S291,956 Sn.I.9
19BJI!.C $435,893 $331,330 5104,s61
1984185 $491,034 $473,928 $17,106
198M!5 $466,533 $472,295 ($$,763)
1986/87 $469,651 $481,917 ($12,266)
1987188 $485,745 $497,244 (511,499)
1988189 WI,5il 5511,917 (S20,>46)
1989190 $574,244 $648,361 ($74,123)
199M1 S5&4,761 5669,711 ($84,95IJ)
I99Jm 5669,846 $129,116 ($59,970)
1992t93 S73I,431 Sm,2S3 ($41,816)
1993194 $780,361 $8H),329 (S29,968)
Tolals $7,454,706 $1,443,919 SIO,787
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ATIACIID11
El CAMINO PARK SUBlEASES
RENTS 1992 TO 1995
-~ -........... --""'--..-~,,~ ~ ro~ ~ .........
SI". ........ MD7t '-,863 ....... l'Zf _.m ""."" ."-'I"'~'IftCfI • -.......
.s:I., ...... " ilI»"r;) 11''-101 '"'.'"' ....... II1;:l.CIII
.. __ ... ~'llNdl1I --
~---"""" "'.~,m 'il1.tTI ..., 1'''451
,..JDt:t "''"ftfIT~ -... -.............. , ..... . '" •. , ...... .... ~~fI_ .. -
''5,lI0II -"" -."'" '15.00D
-........ "' ..... "" ....
1IS'T.113
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om ....
'11I5,5Q: CIi'35,$Q) 11a,1ICII :1--
GAAlC." lOTALI .n""2lI ___ rrn._~ ~l___ 1Jm~~~_II~
--.... -... -_ 12-~ ~CIIY _
1m .... ---'" -...
....... "'7.~ ""'" "'.?II
F] ... .... ..... ....
'"' ....." ....... ,.. . --...... "".'" ......
:-:[ ~ :; -...,,~ •
Jl.il 3, 1990
HONOAABtE (m COONe! l
fll. Alt~, C.llf.rol.
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An"'C~T( o 11
ST,l,NfORJ) LEASEltl WINO PAPS, MAC AATHUIl p.we RESTAUlWIT, RED C~OSS, SANTA ClAAA
n!!!IlI TRANS IT
Attention: flnance.o4 Public Works Co~ittee
~rs of t~e Council:
As • ,.rt .f t~. 1989·90 budget deliber.t;ons, Council expr.ssed coneer. that
t~. estimate Gf the Dew (I C •• fno 'ark rentll cost, Vhi.\ Is based upon the
apprlised ... rket .. lae of the property, seemed .. , ... IY •• Council directed staff
t. retur. prior t •• ny payment of an '.creased rent., amount. The porpos. of
this report Is t. present t. Council I.fonn.tion ,ellted t. 11 Comino Park and
recommend severil alternatfve directiQns stiff could ta~e i. its ~egotiltlcns
t. reduce or .11.fnate the re.t p.i~ to St.nford University for t~o l.os •• f
16.33 acrts, Vhlch includes £1 Comino Park, ",eArthar Fark Rest.urant, the faT.
ATto Red Cross and the S.P. Gop.t IS shown o. [xhibit A.
Da<:igrQund
On June 10. 1915, the (itl of ,,10 Alt. Ind Stanford Univ.rsit] ent.re~ fota a
98-1ear leas., tenol •• tIDg June 3D, 2013, under the terms of .hle. P.lo Alt.
hased approxillitel, 2S.~ aores of land lying between Ue Souther. PaCific
Rlilroad rfgbt of WI, o. the west .nd [I Camino R.al on the eist. lb. purpose
of the l •• se was t. provide the City with sp.ce for I ""nidp.' Services Center
and I park. Under the tenos af t~e origin.' lease, lhe Cit, paid re.t equal t •
• per,ent of t~ •• ss.ssed YI1,ation of the I •• sed ar... lbe Citl also paid .11
prcpert, tues. One unusual iSpett of Ule-agreement WiIS the lick ~f I
t ... inatio. ellaso: both parties are obligated for the f.ll te .. of the I •• ,e.
Over the J(·ye •• ,".fad sloco ISIS, the lcluol l.a,. area ~os 'hanged. first
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the Ir .. was reduced to 2Q.36 len. to ol1ow for the Unlversit1 Av.nue und.r~as.
and the [1 Caml.o Re.l roadvld •• l.g; then I. 1961 the are. va. Incr •••• ~ to it.
pr •••• t 23.3 leresvhe. the Southero ~IClflc Depot propert, was added.
TIle 10ued .r .. ~ .. bee. Ind Is bel.g osed for I nrletl of pur~os.s. Attachm.nt
A outHnes •• e~ of the current .... Ine! the .r .. occupied. The 15.33 acre,
bet .... e. UDlversltl Av",,"" Ind Sa. Frlncls~ult. Creet Is ..... occupied by or
wt I1lnd by ~acArt~ur Part Reshuront. the ,.10 Alto Chapter of the Alteric," R.d
Cross. Slntl Claro Count! Tnnsit District •• ~etch ~etc~yll&ter S,St." f"l1itl,
the Olympic Recloood GrD •• , I portIo" of the ,,10 Alto Av.nue •• ten.lon and [}
(aclno 'ork. I. 1965. ty • vote of the tit, r.sldents, .11 of the le.sed site
except the Ro1ldl)' Inn portion Ind the Depot v •• d.dlc.t.d .s park land. I.
order to und.rshne! the opUons the Cit, •• , have fa d.allng with the rent.l
Increa •• fer [1 (amIno '"rk. It Is oo<o,s,rl te reylev the 1 •••• agr.ement I.
light of t~e omen~nts lnd subl •••• lrr.ng<=ents. A more detall.d account of
.ac~ Dr t~e ... t.r I •••• omendments f.ll ......
E!i$tiDg Scblrises and Mister lease MQdificatfgns
Mister l •••• Amendment No. J: HolldiJ Inn
Tbe ~un\cipil Services (crporatian YITd ind Anfmal Snelter were relocated from
""ere the HoHdiill ;nn rlOW stand's to trleir present loc.atfon by 1971, and the le.ase
Vi. omended for t~e first time. Is.l.tlog t~. E.6) .cre rare.1 Molldi, Inn site
frON the original le.se. Th. rental rate. pile! to Stanford by t~e (itl, wa.
est.bll.hed a. 4 perc.nt of t~e •••• ss.d ,.1ue of the land ~ 50 percent of the
tot.1 percent.ge rent rec.lved from t~. Holld.y Inn sub1 ••• e through June 30,
201l. TIle tena of the Holldil Inn portion ef t~. le ... wit' Stanford ,.as
extended elgbt y •• r. t. t.nal.ate en June 30, 2021. R.ntal to St.nford for the
ext.nded elght-y.,r perIod Is 100 p.rcent of the t.t,l percentage rent r.ceiyed
froo Rolldil Inn. Rent.l received from ~olld.y Inn for the 19Sa·89 flsc,l year
va.5lll.339. Rentd pal~ to Stanford for the same period ns $155.670. flalld.y
Inn recentl, receIved pe .. l.slon to expand the number .f It. hot.l rooms. and
revenue i. expected to Increase vhe. the new con$t~tlon is completed.
Ma.ter l •••• Am.ndment No. Z: IIllll.oso. Act ProYls!on.
On February 26~ 1973. the lease was amended fer the $eco~d time to red~(e the
tues paid by the (It,. bylocludfng 11.85 lcres of t~e leased ar.a located north
or Vol.er.ity Avonue '"t. a .tlt.·de.~gnated Williamson land Con,ervation Act
Preserve. The Preserve h an. ango'ng ten·yur agreement: 1.5 ead. year expire'S.
the ogreement is .ut .... tfcall' .. tended one year. The agreemeot un be
t.~fnated fo three way.: 1) gO-d.y notice prfor to January J and a w.itlng
p.rlod of lIne year. during Whlc. t~e propert1 t •• Is Increased t. currenl ta.
leyols; 2) 90·clay notice priqrto_J'nuary 1 In.e! l.Jle_naltJ fee .r 12·1/2 percent .r the current "arket n'.e ~r.u.iJl.Ut!:r ... E,Q3S,OOO}; or l) an e~Inent domaio
Ictlon will Immediatel, c.r.cel t~e Preserve vlfh no penalt, f ••.
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Rister l •• se Aaendmeot "0. 3: KacArt~ur Pirt Ind Red Cross Subl •• ses
10 1'19, t~. flr.t ""'cl~.'II·sponsored communitl tenter w.s .st.bllshed r. I
~orld Vir I .Illtary building ~.ed to the le.s. site fro. ~.cl. P.rk', C.~
frl!lDDnt. JIIe bul1~lng WlIS Titer lu .. <1 to t~e 'etorln's Council. After sever.1
Iurs of .egleet, Bill CO" a loel1 de.eloper. purc~ ... d the building, preseryed
t~. exterIor I,d cORP'et.l] refurbished the foterlor. transfaralng It loto the
DOW popular R.cArt~ur Port Rest.uran!. T~e remod., of the building fncluded a
roco fDr •• rlous Yet,ran.' groups t. cont!nu. thel~ ~.tlnss. On Ko.ember II,
U76. the building .... dedicated as I ell Hor'al. Hi.t<>rlc.' Landmark. The
dedfcatlog ,hqueshtes that the building Is the onlI remorolog c.1i fOri Ia Vorld
Var I trllll.g camp structure, Ind t~it It f. the first .,nlclp.lII·sponsored
cooownltl center t. the nation.
lbe thange to Testauront ese required the t'Ird amendment to the ~a'ter lease
witll Sian ford. II JIIarck of 1981. the Council executed 11> amendment to the lease
t~.t required the 'itl to poy the ground rent.nd 50 percent of the profits from
t.e percentlge rent subl ... e with .... cArthur Pari. nellacArth"r Park loase al '0
required voter approval to remove the restl~r,nt land from park dedication. and
the developer paid. penalty fee for romevlng the subleased site from the st.te·
deslgn,ted Williamson Act Pre,erv.. The r .. t recehed fro. ~.c""'thur Park by
the tltJ froa Marc' 1968 to April 1989 ~.s S91.012. The rent paid t. Stonford
was $62,010.
!~ October 1946. the (Ity entered fnt. I leo.e agreement with the f.lo Alto
Chopter or the Arneric.n Red Cro... the Red Cro •• tonstructed Its own building
00 .551 icre' of subl"sed hnd. II J"il 1976 the woter, of Palo Alto appro.ed
the remo.o' of the Red Cross I.as. fro. park dedlcatf.n ~e. the (It 1 Attorney
lIetermlood that the Red Cross use was h vloliHon of the (itl's part dedication
ordi •• nce. The Red Cross reimburses the tit, for the rent .nd t .. os attributable
t. It, portfon Df the 1.ased area. The Red Cross portion of the rent for 1989-
90 was SI4.2ZQ. T~e .nnual rent of $1,982. est.bllshed I. 1971 for t~eir .55
acre 5u:bleased site lIu 1n.creued 617 perc-ent. If the rent continues to 'ncrease
as projected. the Red Cross ~411 pa, $72,000 for rent 10 the ye.r 2010.
Rister t.ase AmEndment No.4: Santa (lara Count1 Tronslt Dlstr;ot
1. Jul, 1981. after seyer.l ~onths of ext.nded negotIations between St.nford
Un!.ersitl. Southen Pacific Transportalfon Age",y. the Santa Chra County
Transit Clstrict and the Cit, of P.l. Alto, the City and Stanford entered ioto
the fourth ond last amendment t. tho .,aster Jease. Souther. PaCific. by
.gr .... eot. nllnquished Its fDterest fl the University Ayenue Cepot t. Stanford.
lbe 2.8 ocr. Uol.ersltl Avenue Cepot {land and fmprovementsi was added to t~e
orlgi.ol .a.ter leo.e with St.nford. The Cit,. i. tur., suble.sed the propertl
Ind improyemeots t. the Santa CI,ra 'ountJ Transit DistrIct. Tbe Clstr;ct bas
.Ince establishd 0 C011llllltor triO. fer hcl1ltl and sob·suble ... s t~e .ld baggage
~ to the Coa,t Su.rd ~uxlll.ry. lhe District's portion of the rent paid to
St,"ford for 1989·90 Is S79,203.
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E) '.mIng BtcrJ.tCQo.l 'jrt
[\ till,". Recreation,l PiT" ~on"$h of approxh •• tel, l.S lere. of the re.ll.109
12.19 leres of , .. $tefrr.peTty. the \IgMtcf , ... btll ":l1lty Is used pd"",r\1,
by .2 .~ult teas. dur ng the sunoer S ••• o. lnd 11 od.lt t • ..s during the f",
seuon •. [ac~ ._r su.on tu," poi. $~30 per 'eUon l.d eacll fan seUon team
PlYS $ZZQ per Se •• on for .se ef tb. field. Thr ••• eparate soccer l •• gues .s.
the soccer fleU., Ho"""ny, Pal. Att., and the Cal Iferall louth Soccer
Anoch\;o1\S (C~Sl.I. TIle H • ....,nl Ind h1. "lh l .. g ... P01 $10 per bour. tiS"'
8SIS th fl.14 fnt of olrge. {The Shnf.T6 V-.. 's Softbll1 hilt also .at ..
II.ned .... af the noll for putt leo. ltlthout p"ying renL} lb •• e Ire no other
tlty focllill., l.ollibl. fer the ba •• b.l, t.~s. The ren~o' ~.Iv.d for .5.
of tbe flt'd> \& 19S5-B9 was Il'proxlaaU', $a,sso. II cent rut, the onn .. 1
r.ot,l to Stanford for the S~ 7.5 aer •• In 19&9-90 WlS $192,896.
Re!It"ng Lf.Std Art,
The remattlng 4.69 ler •• cClIlPrhes the arU of V .• OlYlllPIC Grove of ~.4woO<!s o.d
the .on·recreatlonal park poclleD '",ludln9 the '1roY •• f trees ooMII of the Al~a
extenslo •. The .. nUL' rent.l paId to Slanfor4 fcr thh portIo" of the lease is
SI1;,615.
lb. br.lkdown .f Inco.e retelved Ind the r •• t.l pold to Stanford is summarized
as fsHows: .
CUrrent
fjxmt~li t~ Stinf~rd
ftevenue
aCrtlge t!lllettod: Lind] ,nc t Rgllt
flo lido, Inn 6.61 S311,339 S --5155,670
M.cArHuT Part 1.084
Restaurant
91,011 21,879 34,131
Red Cr •• s .551 14,120 14,220
Santa tlaTa Count, t.781
Transit
79,203 19,203
n , ... i •• Part 7.5 25,S()O 19Z,89\i
Remal.l"g le.s. Arel J..R. -IlO,fZS
lotol ZJ.282 H21,5H $434,823 Sl89,80}
CMl!: 271: I)
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lb. s~rl shows that this ,.,r the tlty will p,y about 197,000 more per yeir
th •• It recehes fr ... the ten.nts lnd p.rt users. nls discrepanel wIll esc.lat.
floynr t~e lel.$e ~ontlnu.s. ne I • .cn.se 11 renhl fs due to the piSsa; .. of
fToposlU~n Jl II June Df JS7B lnd dromoUc IDere .... to the .arket .,lue of
lzoc!. 11'.1. Is ill~strated ,. the grlph below:
STANFORD LEASE RENT for 16.33 ACRES
1I7C-1t" .so ,S>
.00
3SO
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~ 30.
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" • " 2<>. ~ • ~ <> "'" l-
.00
00 ~J5=
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69-'0 "-75 ,,-eo 1!!14-!.S ~!i-90
S .... CROS[ IIIiI R£NT
Prior to PropositloD 13, r •• hl for the £1 ta~lno sito .... cak.hted based on
4 percent of. the assessee! val •• of the l.ast>c! property. After Propositio. 13.
asseSSEe! .. l.atIOD grown .... s !lolled .nel no 10n;er topt pice with .. rl:et ralae.
fa un, the l .. se for ev"ythlng but the 1101 idoy Inn p.rcel .... s mutuallI a •• nded
t& appraise the propert1 blsed D ... rl:et Y~lue every five yelrs by a Member of
the Appraf'~l I.stlt.t. according to the prOpErty', 'ig~e't and best .se, whie~
WiS estobllsbed f. 1971 a. lao-density re,ldEntl.l.
The gropb below s~ows w~at t~. fncre.s. would be If t~e ~ark.t .01ue continues
to fncrease by 50 percent every five years and by 5 percent (PI increases 11 the
totervenlng years. [xhibit I al.o shows what t~. re,t is .stfmite~ to be for
the 12.191 leres, for whlco the (itl Is directly responsible over the remai.;ng
t ... or the le.se.
CIIR:l71:e 5
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EI Camino Park Rent·
1989-90 through 2012-13
T _~h~~~asn~~d~S~ ______________________________________ -,
3000~
2500 1-......................................................................................................................... -
2000 I-....... -.......... _ ...................................................................................... .
1500 1-........................................................... -.......................... .
1000 1-.................... _ ................ _............. ... ... . ... ..
6: ~.~ .. -~-~. ~.
~~~~~~~~~~O'23456789~ft~~
_ 16.33 Acres ~ 12.~ Acres
C!\R;271 :0
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MegotiJtIons
Stanford Unl,.r.ltl ~as express.d • willlngn.5. t. work with the (it! IS long
as th ..... Is .0 •• dlletlon in rent. tltl stiff Ind Stanford repre .. nt.!fve. ~ave
eXplored sn.rll optIons {s.e ExMblt B). Eac~ OptiOD bas Its 6nwbacks.
St.nford f •• ls that It could find I better o.e for the propertl I~ order t.
gooorat. I .1900r r.to of retur.. Stiff believes Stanf.rd's d •• lre to dev.',p
the Proportl t. Its .Igho.t lnd be.t .s ... ans thlt llttl. conslder,tlon would
be ,tv •• to the current subtenants and the .lstorlc.l val.e of t~e propertJ
.nould the Cit! decide to ghe up the ontlre lused .r... EIC~ of the subless •• s
, ••• xpressed a de.fre '0 continue ••• of thefr lubl •• sed site.. Holiday Inn
soon will begl. con.tr"'tlo~ D. Its .'panslon; ",eArthur fart Restaur.nt lis.
want. t ••• pand fts .peration; the Red (ro.s woald like to remodel its facilit,
and .xpand the parking lot •• n6 the Urban ~!.Istrl would like to establi, ••
pen1aneBt locatfon. for its homele~s drop-b center.. The Sinh Clin CDunt,
Transit District fs continuing t. explore the possibility of .ut .... ting the Depot
portfon of Its opentlo ••• nd there Is 10Cil hterest i. efeveloplng a flower
5tand and passenger food $e~fte flt4lity fa the Oepot.. I~ eac~ cise. it is not
anticipatEd Hat the additional inco,,", that ~ay be developed will k •• p pace with
the anticipated incre.se fa the rental p.ld to Stanford. Sased on this
Information. staff has developed five different alternatives for (ouncil
constderit;o~.
Alternative I: Status QUo
The Council eould continue the le.s. agre.ment with Stanf.rd and pay the r •• t.l
as establish.db, the apprils.l. lbe 1989·90 rental for the 1.5 .cre £1 t .. ino
Fart and the 4.6g nOD-re,reatlonal area is S31J~521.
Alte,natlve 2: Dlscontln.ance of £1 ta.ino Plrk l •• se
Stiff coald Investlgat. the po"fbili!, of giving up the park portion (12.191
acres) of the leln propert,. St.nford Is willing to tlke the propert, baci witb
t~e condition they be allowed to develop the propert! I. some f.s~ioo. Cis·
tOl'ltinuiDg. the hase win requfre vohr appraviil under the park dedication
provisions cf t~e Cit, C~arter~ Disconttnuing t~e lease would also req~;re t~e
property be withdrawn from the ~lll;ams.D Act. Th. (it, would be re~uir.d to
po, a penalt" for witMro.al of approxi •• tel, $1.~3S.000. 10 .doltioD. the Cit,
flannlng Dep.rtlllO.t bas Indiclted th.t in office park dev.lopment wo.le! confifct
wit~ •• arlet" of compre~e.'lve plan pollel ... although residential use would
complement sO!!le policies. rnc~.di.g the !;olde. Triangle PoHcJ previous1,
opproved by CounciL Any developoent condition by Shnford or 0 part hi
tefll;flitfon aDd in] fu.ture development yould reQ.ufre an en.vironmental .assessment.
Alternative 3: r.ltlat, [minent Domal. Procedur.s for the E.tire Lea5ed Sit.
St.ff could hvestlgate tne possibll it, of ioitiatiD9 eminent domail proceedings
fOT the entire leased Site II order to protect the eXlsttng uses a l~is action
would require t~at the .,ariet .. 1 ue be established .nd an .ffer .ade to St..ford,
0\R:Z71:C 1
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Tb~ •• rt.t •• lu. would tl .11 likelihood bo b.sed on the .5. established b1 the
1 •••• (low densltl ~ouslng) 'nd fnclude compensation for the preseot •• 1"e of
t~e ostf .. ted loss of reyenue. A prof.sslo.al appr.ls.l would bo requited, but
for purpos.s of t!ls disc.ss!on, ,t.ff •• t! •• ted filrtet val.o .t SlO.5 mlllio.
and prosent v.luo of lo.s of revenU' at or I •• xcess Df S20 .Illion. Under t~e
.. Ioeot domalo procedure, the (itl """ld Dot ~". to PI1 • per"Hl for
wlthdr.w1og the propertl from tbe Villl .. son Act tre.erve. .
A1 ter".t Ive C: P.rtlll C.Rd .... atlon of lUted SI!e~.eArthur P.rk, S.P. Depot
and Red (rou
Another opt fen would be te IDvestl~.t. ',Itl,tlog .~Inent do •• I, action for just
the portion of the l ••• ed propert, that cover. the "aeArthur P.rt Rest.urant,
Red tross .nd Santa Cllr. lrlnslt Dlstrltt subl •• sed properlies. The Holiday
Inn portion of the property wou1c! tontlnue IS h. The 12.I9I·o<ro El Ca.ino fir.
ar~ surrounding grove would b. returned to Stanf.rd. Discontinuing the par.
portion of the l •• se woald require vot~r approval. I. order to file an eminent
dom.la o<lien, staff would bav. to \Ir. an appral.er t •• ,tabllsh the ~ar\.t
value Sn<ludfDg se~erlnce damages and loss of revenue and Dffer that amount to
StanfDrd'~ Tbts adiDO: WQQld Ihe reql.lfre an envlrontlecUl usessme:nt. for
CfiCUSS~~D purposes. staff estfmates t~e aarket value and the present vll~e for
tbe estimated ltss tf revenue at or ;a exceSS of $6 mllliDn~ Severance darni9!S
"1 er .al not be " I$sue anc! woald ~av. to be determined by in appniser. The
present •• 1ue portion wou1~ be .. duced subst.ntial1, 1f Stanford could dev.lop
the propert11nd ge"erat~ an frlcOQe froa the propert1 during wflat would lIave been
the remlhitl9 teT1l of tne le-l$t~ Under thb proposal. the titJ 'WlJ.uld' pay
approxlmatel, SI,O}S,DOC I. pen.lt! fEes for wit~~rawin9 the propertl from the
WilHam,on Act.
Alternatiye 5: Part!al Condemnation of leased Sit_lEI t .. ino Park Portion
II this scenario, staff would Iovestlgate the posslbiHt1 of filing •• in,nt
<!<Hula procndlngs fGr U. park portio. lIZ. lSI acres) GO'J. The (ltJ's
sublessees weold contlnu. to pay rent for the remainIng ~.cArthur Park, et al
portion of the le .... nh .1ternatlv! would usure th.t the p.r. wuld centinu.
t. exist beyond the t,rIO of th lo .. e. nls attlon woald oct require veter
approval. nor would the (;tl be pe.allled under the Villi.~soo Act. It would
require that the lIarket wilue be established .. in offer Ilade to Stanford ... and an
e~vironmenti' assessment. for purposes of t~ls discussiQn. us~ng the curr&nt
appraisal. staff estimates the market ,.1Ul of the lan~ lnd the present v.lue
ef '.s •• f revenu, It or i ••• cess of 515 million.
lecpapendat i on
!a 1915 U. CHI needed hnd for • ~unl<ip.l Service Ce,.ter and. park. Stanford
owned the land and ~ade It 'Y,il.ble. rhe rent •• gotiated ~ •• agreed to by both
partfes. Until 1978 the CH, e.j0.Yed the benefit of leasing the land ,t •
f,,,roble rat.. The tn, rolled o. t~.t hvonbl. nt •• nd tstal>1is~"d ncn·
revenue-g-enerit1ng uses ([1 Camino Park .. Ue Red Crtss and the veterans'
CI'\R;211 :0 8
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c.Ildfng). IA 196~, lhe Cttl and Stanford explored the Id.a of de.elopl'9 EI
C,,'.o '.rt. The ~Itlzens of '.1. Alt. ,..cttd by passIng an loltl,tl.o t~at
II C ... 'o. ,.rk be dedlcotiOd IS put hnd. h the 1910's and 198Q's the CltJ
saw the opportunity t. generde re •• nuos JKolldl1 I., and IIacArt~ur Park
bstauri.ot}. Eve. the., the reven ... g,.ente .... s lIot lin lin"" t~ jlal for other
llses of the sit •• TIle p .... g. of Proposltlo. Jl and th. Incr .... h hnd nl ...
brought an end t. the Cit,'. ad •• ntageous 'e.s. positIon. TIl. Cltl I, lo<ked
flta an agl'eaent II wIIfch the rechl paid for n Culno Port u«ods the benefit
~a\&ed frca the ast of the port sit •.
Unless the Cc~11 directs staff t. stay .nth the status quo, staff recommend.
th,t Council lire,t st.ff to ret"rI viti I,foro.tlen on:
1)
2)
3i
5)
Ii)
1)
8)
tMR:%1J :0
[n.I"' .... nt.l .."vl." and preparation of an Enlronme.hl Impact
Report.
The posslbl. relocatf"" .f [1 C.,.lna f .. t hcllltles to other
locatlO1ls.
lho returo of [I Camino Part and ,urroundlng groves portion of the
l •• s. to Stanford University (12.191 acro.).
An .ppral.,l of the market .il ••• r t~. MacArth.r 'ark Re.t.urlnt
and the Red Cr •• s lands and the S.P. Depot, land and building.
\III,ther the State hnds C_issl •• would consider vafving the
~1111 .. sa. Act f •••
'ot.ntl.l fl •• nclng to •• pport the above actions.
An update cn an1 f,rther neg.tlltlons wlt~ St •• ford.
Prep,ratlon Dr ballot I,s •• t. presont t. the yotors for ,o .. val ~!
the plrk dedication If (I t.aino Park.
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Staft" 11$0 reccosoen4s Council d'~l ftoff to p'y UII yea,'s r •• t.l for tho
•• tlr. flte IS .st&bll,~ad b, t~. 'ppra' •• l ,rovlded by St.nford.
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1I1UIAMfER (;ttl'la ge.
(,,: '1 Mlog C .... lsslo.
Stanford Unlverslt,
Clt, ~f lien'. Pirk
Red Cn>S5
MoHda:! I ..
Sa.t. Cl.r. Tra.sportatlon Age,cI
Cit, '.rt, and RecreatIon
CMR:Z7I:lI IG
EH:1I1l A
LEGEND
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