As Stanford University is preparing to kick off negotiations with Santa Clara County on a first-of-its-kind development agreement to guide the university's long-term growth, Palo Alto's school officials and residents are growing increasingly alarmed about being left out of the process.

The county's Board of Supervisors, which is scheduled to make a decision on Stanford's application for a new general use permit (GUP) by next summer, set the stage for the upcoming talks on Tuesday morning, when it largely embraced staff's approach for the negotiations. The board also agreed to create a subcommittee, consisting of board President Joe Simitian and Supervisor Cindy Chavez, to work on the Stanford negotiations and to require any potential development agreement be publicized at least 14 days before potential adoption.

By agreeing to pursue the development agreement, the board is entering into uncharted territory in its dealings with Stanford. The development agreement would allow both parties to have virtually open-ended negotiations about how much growth the county should allow and how much Stanford has to contribute to cover the growth's impacts.

Even as these negotiations proceed, the county and its consultants will be putting together the Final Environmental Impact Report that will analyze the impacts of Stanford's proposed growth. The county is also still considering two new ordinances that would significantly increase Stanford's obligations for affordable housing: a housing-impact fee of $68.50 for every new square foot of academic space and a new "inclusionary zoning" ordinance requiring that 16 percent of Stanford's housing units be designated for affordable housing.

The county is hoping to have both the ordinances and the proposed development agreement in place next year, when the board considers which of these mechanisms -- if not both -- to pursue. Stanford, for its part, is hoping that it can reach an agreement that would obviate the need for either the raised fee or the inclusionary zoning requirement.

Stanford's ultimate goal is to get the board's approval for a general use permit that will allow the university to build up to 2.275 million square feet of academic space and 3,150 housing units or beds by 2035. University officials had argued that a development agreement would be more effective than the ordinances because it would allow the university to provide much-needed housing immediately, rather than gradually (as would be the case if housing production were tied to academic development).

In late July, it proposed a plan that would create 200 units of affordable housing (for those making 80 percent or less of area median income) on campus. This, however, could entail conversion of some or even all existing market-rate units to below-market rate. Stanford had also proposed providing funding to subsidize 38 units for extremely-low-income residents and to start an "evergreen loan fund" that would pool resources from area foundations and employers for affordable housing (the university would contribute $21.7 million to that fund).

While the university had characterized this proposal as an effective way to immediately address the region's housing crisis, county staff maintained Tuesday that the terms in the Stanford proposal fall well short of what the county could achieve through the two ordinances. Deputy County Executive Sylvia Gallegos estimated that the county's two ordinances could generate $89 million more for housing than the terms proposed by Stanford in July. In addition, she estimated that the county ordinances would produce 663 new or converted units of affordable housing, while Stanford's proposal would create between 314 and 455 units.

Given the disparity, Gallegos said staff believes the university would have to make far greater contributions as part of a potential development agreement than it has offered thus far. The current proposal, she said, "does not constitute community benefits."

"Stanford University will have to put more on the table, if in fact we were to get community benefits," Gallegos said.

One question that is sure to come up during the talks is Stanford's potential contribution to Palo Alto schools. School board member Todd Collins has been adamant in recent months about the need to have the university chip in for the added costs of educating the influx of students that would result from the campus expansion.

The school community, he said at Tuesday's meeting, would be very happy to add more students to the district.

"But as anyone involved with schools knows, students without funding can only have one result -– larger class sizes and thinner program offerings. That's just the cold, hard math and it goes to the fundamental quality of education. ... Let's make sure that Stanford, the largest and wealthiest landlord in our community, covers the cost of its growth and allows us to provide the same great education to new and future residents that it does today."

While Collins has been leading on this issue, he now has plenty of company. Board Supervisor Mike Wasserman observed that out of about 150 letters that he had received in the week prior to the Tuesday meeting, about 146 were from Palo Alto's school community. Board members Terry Godfrey and Melissa Baten Caswell co-signed a letter requesting that any agreement with Stanford include a funding stream to support new students.

"With respect to our public schools, we maintain that your proposed scenarios must ensure that all of the students in the impacted community continue to have access to an undiminished, sustainable and robust educational program," states the letter, which Baten Caswell read to the supervisors at the meeting.

Board Vice President Jennifer DiBrienza submitted a separate letter, co-signed by Mayor Liz Kniss and resident Debbie Mytel, which supports moving ahead with a negotiated development agreement but requests that the negotiations follow a "clear process that includes input to identify public benefits" and that it address the impacts of Stanford's growth on schools, traffic and open space access.

Many in the school community cited transparency as a top concern and made the case for more public involvement. Palo Alto Unified School District (PAUSD) Superintendent Don Austin chided Stanford in a letter for refusing to meet with district staff to discuss potential up-front payments for possible school construction and to develop an algorithm to attach ongoing funding to students living in Stanford housing.

"The development agreement is angering our residents," Austin wrote. "We believe that Stanford is unwilling to work with PAUSD and see the development agreement as a circumvent of the process with us. We deserve a say in the process and feel strongly that the development wing of Stanford University should handle the application one step at a time."

Some members of the public encouraged county staff to wait until the Final Environmental Impact Report is completed before negotiating the new development agreement. Palo Alto City Manager James Keene signed a letter to the county calling such discussions "premature" given that the environmental study is being revised.

"The city and other jurisdictions have documented flaws with the Draft Environmental Impact Report that will require re-circulation and additional public comment," Keene's letter states.


Neither the county board nor Stanford University staff supported such a delay. Jean McCown, Stanford's associate vice president for government and community relations, noted that the university had successfully completed two major development agreements with Palo Alto in the past: the Mayfield agreement that allowed Stanford to build 250 housing units and provided soccer fields for the city; and the more recent development agreement that authorized the significant expansion and renovation of the Stanford University Medical Center.

In both of those cases, she said, negotiations on a development agreement occurred concurrently with the environmental review. Contrary to some public comments, "preliminary discussions do not result in decisions made in secret," she said.

The board concurred, with several members observing that the preliminary discussions on development agreements have already effectively begun. Board members pointed to the high number of speakers lobbying for their particular issues, whether it's school, traffic improvements or open space.

President Joe Simitian, whose district includes Stanford and Palo Alto, underscored that the board would not be making any decisions on a development agreement until after the environmental review is completed. The agreement, he said, will ultimately be considered alongside other tools, which will include ordinances, legislative actions and quasi-judicial actions.

"The full array should be before us so that we can understand which tool is the most appropriate tool for which particular challenge in the exercise," Simitian said.

Simitian, who was also part of Stanford's last permit application in 2000, will have a central role in the current talks as well. As part of the board's new two-member subcommittee, Simitian will work with staff on the negotiations with Stanford.

And in a nod to transparency, the board accepted a proposal from Supervisor Dave Cortese to publicize the development agreement two weeks before any action is taken.

Despite the complex exercise, Simitian said he is optimistic about a mutually beneficial conclusion. He noted that in Stanford's 133-year history, the university has never had a project application denied. But he also said he was mindful of the fact that this was the largest application that the county has ever received.

"It's big, it's important, it's going to affect a lot of folks in a lot of ways and there will be a lot of competing interests that we'll have to balance," Simitian said.