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Supervisors won't restart negotiations with Stanford on campus expansion

Rejecting university's requests, Santa Clara County moves ahead with regular review process

Frustrated by its inability to negotiate a deal with Santa Clara County for a significant campus expansion, Stanford University requested Tuesday, Oct. 8, that the county pause its review of the growth plan and return to the negotiating table.

The request failed, however, to sway the Board of Supervisors, with most members agreeing with staff that the best path forward is to follow the county's regular rules for approving major developments. While the board didn't make any decisions on Stanford's application for a general use permit, several members said they see no reason to move away from the typical approval process, in which the county sets conditions that Stanford is legally required to meet. Stanford is seeking to engage the county in a new process, one in which the county and the university negotiate a "development agreement" to govern the expansion.

The Tuesday meeting was the second in a series of hearings that the county is holding on Stanford's proposed expansion, which supervisors often refer to as the largest project in the county's history. The proposal calls for about 3.5 million square feet of development, which includes 2.275 million square feet of new academic space and 2,600 student beds. Stanford has also proposed 550 new housing units for staff and faculty. County staff is recommending that the number of units be increased to 2,192, a condition that Stanford has vociferously opposed.

Much like at prior meetings, Stanford officials continued to press the county to enter into a development agreement — a mechanism that the university has used for major development projects in other jurisdictions (including the new Stanford Hospital in Palo Alto) but that the county has never employed. While the county approved an ordinance in October 2018 authorizing the use of a development agreement, negotiations fizzled in April, after Stanford entered into a side deal with the Palo Alto Unified School District. Because the side deal included a provision requiring the county to approve a development agreement, county supervisors saw it as a ploy for Stanford to get leverage over the county and a violation of ground rules that the county and Stanford had previously established.

County staff and consultants also concluded that Stanford's most recent offer, which the university submitted on June 24, provides little in the way of actual benefits. While Stanford had claimed that its offer comprises $4.7 billion in benefits, the county has flatly rejected that estimate. According to a report from Deputy County Executive Sylvia Gallegos and Jacqueline Onciano, director of the county's Department of Planning and Development, the actual value of the benefits Stanford had offered comprises of just 3.6% of the amount Stanford has cited.

County staff also argued that in exchange for these benefits, Stanford had requested concessions on housing and traffic, which county officials said would "impair the County's ability to avoid worsening the housing crisis and traffic congestion." Stanford has vociferously opposed, for example, the county's recommendation that it roughly quadruple the number of new housing units it would build as part of the expansion.

Catherine Palter, Stanford's associate vice president for land use and environmental planning, said Tuesday a development agreement is necessary to provide certainty to all parties. She also argued that it is the only legislative tool that can provide such predictability. And she rejected the notion that development agreements are not transparent, noting that the deal would be presented to the board and approved in a public hearing, much like conditions of approval.

"We know of no applicant anywhere who would invest hundreds of millions, let alone billions, of dollars in the items that the community requests, much of them front-loaded, without receiving assurances that it later will be able to construct the full amount of the facilities it seeks to build," Palter said. "Without such predictability, the applicant would make these substantial front-loaded investments in community benefits, and then a future Board of Supervisors or City Council could pass additional fees or other requirements that would make the remaining facilities prohibitively expensive or even impossible to build."

Gallegos, however, noted that based on Stanford's recent offer, the university and the county are "very far apart" on what a development agreement should entail. As such, she did not recommending moving ahead with such an agreement.

"The review and processing of a development application is a regulatory process. It's not a negotiation," Gallegos said.

Geoff Bradley, the consulting planner who is managing the county's review of the Stanford application, said that most of the "community benefits" that Stanford had proposed actually fall into one of three categories: housing that addresses the needs from the 2000 GUP (namely, Escondido Village and Middle Plaza) rather than the new permit; items that are part of the application itself (specifically, the 2,600 student beds requested by Stanford); or items that are already required by the county through conditions of approval.

The only items that can truly be considered "community benefits" in Stanford's offer are the $30 million that Stanford had proposed contributing toward transportation projects and $138 million that the university pledged to commit to the Palo Alto Unified School District. This, Bradley said, reduces the total value of benefits offered by Stanford from $4.7 billion to $168 million.

Palter countered that the $4.7 billion in the proposed development agreement proposal is intended to support housing, transportation, schools and other benefits — all areas that go beyond the cost of building the academic facilities that form the core of Stanford's project.

"The bottom line is that, regardless of how you categorize these investments, Stanford is committed to invest $4.7 billion to support housing, transportation, schools and other community benefits as part of the permit and development agreement," Palter said.

Stanford has also argued that the proposed conditions on housing extend beyond the legal authority of the county. That is why, she said, additional housing should be discussed within the construct of a development agreement. But board President Joe Simitian countered that the number of housing units recommended by staff comes directly from a nexus study that the county had conducted, which showed that Stanford's development would increase the campus population by 9,610. While Stanford has opposed the county's proposal to require more housing units and to impose stricter standards for measuring traffic impacts (unlike in the past, the new requirements would factor in reverse commutes and average daily traffic), Simitian argued that these measures are required to ensure that the Stanford project "will not substantially worsen traffic congestion affecting the surrounding area," which is one of the findings the county has to make in approving a project.

"So we cannot approve the project unless we can make that finding," said Simitian, who along with Supervisor Cindy Chavez sits on an ad hoc committee charged with working with Stanford on a possible development agreement.

The only supervisor who criticized the county's actions in regards to a development agreement was Dave Cortese, who wondered why staff and the ad hoc committee didn't check in with the rest of the board before halting their negotiations with Stanford in April.

"I don't think it's OK for staff, for the administration, to make a unilateral decision to dispense with the direction of the board without coming back to the board and at least letting us know that it is your preference to do so," Cortese said.

The failure of staff to return to the full board for direction feels like "a huge lost opportunity to me to weigh in on a timely basis," he said.

Chavez said she and Simitian "did our very best to live up to the spirit of what we were trying to accomplish." She also said she felt very bad about insufficiently communicating with the full board.

Supervisor Mike Wasserman agreed with staff and most of his colleagues that a development agreement may not be necessary.

"I have to tell you, every time I speak with somebody different, I am less and less convinced that we can't accomplish all we want in a GUP itself — and not need a development agreement," Wasserman said.

Wasserman's position presents a setback for Stanford, which suggested over the past month that it would not accept approval of the general use permit unless it's part of a package that also includes a development agreement. When Palter said a development agreement would allow Stanford to "front-load" its benefits by constructing most of the housing well before the academic expansion occurs, Wasserman suggested that this front-loading can be accomplished through conditions in the general use permit, without the need for a development agreement.

As in prior hearings, the board heard from dozens of residents, with some urging the supervisors to embrace Stanford's application proposal and others calling for them to ensure that the university's growth plans don't exacerbate the area's housing and transportation problems. Numerous elected leaders, including Menlo Park Vice Mayor Cecelia Taylor and Palo Alto Mayor Eric Filseth, urged the board to proceed in a transparent manner and to make sure Stanford fully mitigates its impacts.

"Stanford did not create the challenges that the region faces but we all are where we are," Filseth said. "If our region is to continue to thrive, then we're all going to have to embrace the full-mitigation, reality-based approaches to housing and transportation, public transparency and other principles embodied in the county's process."

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