Opinion: Questions and answers about whether PAUSD should take the Stanford offer

OPINION

BY DAVE PRICE
Daily Post Editor

When you’re in a difficult negotiation and feeling pressured, sometimes the best decision is to say “no.”

That would be my advice to the Palo Alto school board about the offer they’ve received from Stanford regarding money to educate the students who are expected to fill the schools after the university completes its 3.5 million-square-foot expansion.

After I wrote an editorial about this on Wednesday (you can find it at padailypost.com), I’ve been getting phone calls and emails asking questions about my position, so I’ll try to answer those questions here.

Q: If the school board accepts this offer, how does it affect Santa Clara County’s negotiations with Stanford over the growth permit the university is seeking?

A: It gives Stanford undue leverage in those negotiations.

County Supervisor Joe Simitian is trying to make Stanford fully mitigate all of the problems this massive development would create, especially when it comes to increasing the housing demand and putting cars onto local streets and highways.

In the past, elected officials have been satisfied if a developer partially mitigated the problems they created, but Simitian is going for 100%. Stanford is seeking something less than full mitigation.

In the negotiation process, Stanford could argue that if they don’t get their way, they’ll walk away from their agreement with the school district. The district will become the university’s pawn. Stanford will be able to hold the district and its students hostage to its demands.

Q: You called this a lousy deal for the schools. Why is that?

A: Stanford — which is exempt from property taxes on much of its land — is offering about $5,800 a student per year to the district. But the district’s cost of educating a student is $19,200. Instead of full mitigation, Stanford is offering 30% on the dollar.

If Stanford gets away with 30% mitigation, maybe they’ll argue that they should only have to mitigate the housing demand they create by 30%, and traffic by 30%?

The deal also says that Stanford won’t even talk to the school district about a location for a new school on campus until 2032 — 13 years from now. Yet the deal also confirms that Stanford’s expansion will increase enrollment by 275 kids by 2023 and 500 by 2029. The only solution offered in the deal is to pack these kids into the two PAUSD schools on campus, which are already crowded, with 527 kids at Escondido and 446 at Nixon.

In other words, in accepting this deal, the school board is saying it’s OK to have elementary campuses with 700 kids or more. And there’s no commitment for another school on campus, just a promise to talk someday.

Q: What if Stanford says, “Take this agreement now because we won’t offer it again”?

A: Then you’ll know Stanford isn’t sincere about solving the problems they’ll create in the school district and that the only reason they’re offering this deal now is that they want undue leverage in the negotiations with the county.

Q: OK, say the board declines the offer. Will the school board have any leverage to force Stanford to keep or improve its offer after the county negotiations end?

A: It’s pretty clear from this low-ball offer that the school board doesn’t have any leverage now. The district’s negotiators didn’t force Stanford to do much of anything.
Legally, the district doesn’t have much of a hammer — it can demand about $4.2 million in one-time-only developer fees, and that’s it.

The school board’s real clout is in the court of public opinion. Palo Altans are intelligent and fair-minded. They will expect Stanford to fully fund the cost of public school students coming from university housing. A 30% deal means residents in the rest of the community have to subsidize a $6.3 billion enterprise with a $26.5 billion endowment. That will look awful. A public relations disaster. Stanford spends so much time and money trying to burnish its public image. Imagine what the nation will think when this makes the front page of the New York Times or is the focus of a “60 Minutes” segment?

I think Stanford President Marc Tessier-Lavigne will feel pressure to go for 100% mitigation from his own faculty and employees, whose children will be attending the Palo Alto public schools.

It’s easy for outsiders to think of Stanford as a monolith with one point of view and everybody walking in lockstep. But sharp debates go on within the university on things like this, and department heads have a lot of autonomy and power. If the university tries to shortchange the schools, there will be loud public dissent from distinguished faculty.

The school board needs to politely tell Stanford that they appreciate the offer, but they’re going to postpone action on this agreement until the county growth permit is complete.

That could be a couple of years because, while it’s likely the public hearings over the permit will conclude this year or early next year, Stanford is already suing the county and that will need to be wrapped up before anything goes forward. And if the final deal from the county isn’t for 100% mitigation, I think it’s likely that Palo Alto and other cities could sue over this. So much needs to happen before the school board is in the position to make a strong deal with Stanford.

Editor Dave Price’s column appears on Mondays. His email address is price@padailypost.com.

An update — an earlier version of this column said the school board would be considering the offer at its Tuesday, April 23, meeting. However it does not appear on the agenda and the date for the item returning hasn’t been set.

10 Comments

  1. Thanks Dave,
    I’m curious to hear your opinion on why Dr. Austin and the three voting board members all made comments that made it sound as if this was a great deal for PAUSD when, as you’ve illustrated, it is a great deal for Stanford. Can PAUSD leadership be that bad at negotiations?

  2. Dave, please notice that it’s the county that forces Stanford to build 4x more units than the original proposal. As a result, PAUSD HAS to face 4x more students. I guess you intentionally hide this “cause”.

    If county’s top priority is affordable housing, please do not take advantage of Stanford, and please use your own money. County is using the GUP as bargaining chip to get it’s own political gains. It’s a very sad thing.

    PAUSD has no say in this process, unfortunately.

    Please ask the county not to force Stanford to build so much more units. That’s the root cause of the problem.

    • The county is going to make Stanford house the people they add to campus, rather than have them live an hour or two away and clog the freeways. You say that Stanford shouldn’t have to house the new employees and students they draw to campus? Do you work for Stanford’s development office?

  3. >it’s the county that forces Stanford to build 4x more units…As a result,
    >PAUSD HAS to face 4x more students…ask the county not to force Stanford
    >to build so much more units.

    Waitaminute!
    The 4X housing (which the County apparently requires of Stanford) is necessitated by Stanford’s own expansion. If Stanford doesn’t provide that housing it will result in people living in communities around (near or far) Stanford…which would only result in more traffic and other infrastructure issues. In other words, Stanford by not providing that 4X housing is externalizing a problem it produced onto others…and those others have to pay a cost for Stanford’s decision. That doesn’t seem fair or reasonable or acceptable at all. Look around: cities like Los Altos (and Hills), Saratoga, Palo Alto too, etc. have to and are paying for the costs of decisions made by Mountain View, Menlo Park, and so on.

    Reason and common sense suggests it is right and proper to “force Stanford to build more units”, as is proportionate to their expansion.

  4. Hold on! I’ve been in Palo Alto a long, long time. Stanford has not created this problem – the tech company explosion and accompanying salaries in combination with Palo Alto’s “no new housing” policy did. Less than 20 years ago, Stanford ees could afford to live in Palo Alto – so could nurses and teachers and firemen, etc. Does every company need to build housing on its office campus for its employees? What about the hotel expansion on El Camino Real? The City Council approved a remodel/rebuild of the place to expand it from 36 rooms to 99 rooms. That will create more jobs – and not high paying ones. Where are those ees going to live? Okay, so it’s not a ton of new ees, but it all adds up. The County needs a decent public transportation system.

  5. >Stanford has not created this problem
    Stanford didn’t and nobody is asking it to fix or mitigate it.
    However Stanford is poised to worsen the problem. No reasonable or fair-minded person would want or accept that.

    >the tech company explosion …Palo Alto’s “no new housing” policy
    I agree, Palo Alto (and Menlo Park and Mountain View…) should have been required or had the foresight to balance housing with the jobs they were creating. They didn’t and we now have a serious problem on our hands and are deep in the proverbial hole. That doesn’t mean we now permit Stanford to do what got us in the hole. It would mean we are complicit in Stanford digging us deeper in the hole we already are in…when the first order of business is for us to stop digging and then find a way to get out of the hole we are in.

    Back to business now and let’s not conflate the mistakes of the past, however recent, with what we need to do going forward.

  6. > Palo Alto (and Menlo Park and Mountain View…) should have been required or
    >had the foresight to balance housing with the jobs they were creating.

    Should read “jobs they were permitting within their jurisdiction”. For none of these cities “create” jobs nor are they capable of it!

  7. What this entire area needs a Regional Housing Plan. Palo Alto is home to PAMF, Stanford Hospital, the VA and a whole lot of other businesses that do not pay enough to buy a $1M home – let alone a $3M one. However, Menlo Park, Cupertino and Mountain View are home to places like Google and Facebook – many of those ees live in Palo Alto. And, they are wonderful people. But, this whole notion that each town is going to provide housing for every job in its town just doesn’t make sense. There has to be a much better approach to this problem.

  8. > each town is going to provide housing for every job in its town just
    doesn’t make sense…What this entire area needs a Regional Housing Plan

    Right now we are so way out of whack the State is threatening (with SB50 and other bills) to mandate every city alter its character and quality of life “to provide high density housing…”. That is a very high cost borne by all cities for the mistakes of some.
    A “Regional Housing Plan” sounds nice but human nature and politics being what they are, is likely to devolve quickly into point-the-finger and pass-the-blame. Explain how the entities in the Plan can be held accountable and contrast that to how much more straight forward it is with cities. A Regional Plan is superior in theory provided you have the necessary checks and balances in place to make it work.

    p.s. The VA, PAMF, Stanford Hospital now have presence all over the area so your claim “holding a city accountable for all the jobs” they generate is a red herring. That accountability would be spread across several cities.

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