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County hikes Stanford fees for affordable housing

Board of Supervisors supports new ordinances over university's objections

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Despite a heavy pushback from Stanford University, the Santa Clara County Board of Supervisors approved on Tuesday new policies that require the university to pay higher fees to support affordable housing and to construct more such housing as part of its expansion plans.

The new housing impact fee policy, which the board adopted by a unanimous vote, nearly doubles how much Stanford would be required to pay for every square foot of new development, from the existing level of $36.22 to $68.50, with the higher fee set to kick in on July 1, 2020. The "inclusionary housing" zoning ordinance would require 16 percent of all market-rate housing for faculty and staff to be designated as affordable housing.

In adopting the new housing-impact fee, the board opted not to move ahead with a prior proposal, which would have raised the fee up to $143.10 per square foot. That fee was supported by a nexus study that the county commissioned to evaluate what it would take to subsidize the construction of the 964 units that would be required for accommodate employees making up to 120 percent of area median income. Even the relatively lower fee of $68.50 per square foot, however, is by far the highest in the region.

The new ordinances moved ahead Tuesday despite heavy opposition from Stanford, which proposed that the county forego the two ordinances and to instead collaborate with the university on a development agreement that would generate more below-market-rate housing sooner. In late July, the university proposed converting up to 200 apartments on its campus into below-market-rate units and creating an evergreen fund that would pool investments from area employers and foundations to invest in future housing projects.

Stanford officials reiterated their objections on Tuesday and requested that the board delay its vote on the two ordinances. Jean McCown, Stanford's associate vice president for government and community relations, argued that the ordinances will not achieve affordable housing in the near-term and urged the board to consider options to produce housing in a more expeditious manner. Jean Snider, the university's associate vice president for real estate, emphasized that all employers throughout the county generate the need for affordable housing and suggested it's unfair for the county to single out Stanford.

"The recommended fee is four times the Bay Area's average commercial linkage fee," Snider said. "How is this justified?"

Stanford had also requested that the supervisors, at the very least, include a "sunset" clause to both ordinances ensuring that each would be repealed as soon as the development agreement is reached.

Robert Reidy, Stanford's vice president for land, buildings and real estate, requested in a letter that the discussions of the potential agreement begin as soon as possible. He proposed that the board appoint two supervisors to serve on an ad hoc committee that would negotiate with Stanford. A draft agreement would then be presented for formal hearings on Stanford's 2018 General Use Permit application, which the board plans to take up early next year.

The university also alleges that the fee of $68.50 per square foot is "excessive," "unsupported," and based on a study that suffers from "serious mathematical and logical errors." If these errors were corrected, the nexus study supports a maximum fee of no more than $17 to $20, according to Stanford.

Specifically, the county study on which the $68.50 fee is based on assumes that the initial funding to build affordable housing is a permanent subsidy, rather than a loan that gets repaid over the lifetime of the project, Stanford's letter states. The university also claims that the study overstates land-acquisition costs and that it bases its fee on housing demand outside of the county's jurisdictional boundaries.

Stanford also protested that the new inclusionary rules are "unfair and unsupported" and that the ordinance ignores "the significant contributions that Stanford makes in providing this affordable housing." The university specifically took issue with a rule that doubles the requirement for below-market-rate housing from 16 percent to 32 percent in cases where Stanford converts existing market-rate units rather than builds new ones.

While the ordinance intends to spur more construction of below-market-rate units, Stanford characterized the higher requirement as a "penalty that discourages the use of Stanford's extensive stock of existing market-rate housing to comply with the affordability rules, rather than a meaningful alternative to comply."

"There is no evidentiary support for doubling the requirements, just because the affordable units are converted rather than constructed," the letter from Stanford stated.

The board didn't buy these arguments. Board President Joe Simitian acknowledged that the Stanford fee would be higher than fees elsewhere. He also noted, however, that the fees in places like Palo Alto, Mountain View and Menlo Park have been insufficient in addressing the jobs to housing imbalance. Palo Alto has an ratio of about 3.49 jobs per housing units -- the highest in the county. Mountain View and Menlo Park each have a ration of about 2.5 to 1.

"Surrounding communities aren't getting the job done with the fee they have in place. That's why we're having this conversation," Simitian said. "If we keep doing what we're doing, we'll keep getting what we got, which is a 2.5 or 3.5 jobs-housing imbalance."

Simitian also rejected Stanford's criticism about being uniquely -- and, hence, unfairly -- targeted by the new ordinances. Stanford, he observed, is indeed unique in that it has about 4,000 acres of developed space.

"When we look at the county, we don't have another one of these because we appropriately push development into incorporated communities," said Simitian, whose district includes Palo Alto.

The debate over broader housing policies is also expected to continue next year, as the board reviews Stanford's ambitious application to build up to 2.275 million square feet of academic space and 3,150 new units (a combination of apartments and student beds) by 2035 as part of its 2018 General Use Permit application. Earlier this year, the county responded to demands for more housing by commissioning an analysis that considers two additional alternatives, each with significantly more units.

During Tuesday's more narrow discussion, Simitian's colleagues generally agreed that the county needs to do more to encourage housing, particularly for those with incomes at or below the area median income. Supervisor Ken Yeager called the lack of affordable housing "the issue of our time."

"We've been trying to respond. The county is doing more than we ever had relating to housing but we obviously need to do more. I'd rather not wait to act."

Numerous members of the public, including housing advocates and local officials, also encouraged the board to act. Mountain View Mayor Lenny Siegel (speaking for himself and not the city) said the new inclusionary-zoning requirement has the potential to generate a huge number of affordable housing units as a byproduct of Stanford's expansion.

The university, he said, should not be allowed to shift the impact of its growth on other communities, he said.

"Stanford is the root of the jobs-housing imbalance," Siegel said. "They aren't being singled out; they're jumping out. They have more land than Mountain View."

Even in approving the two ordinances, the board left the door open for revising or even repealing them, should the county reach a development agreement with Stanford over an alternative proposal. Simitian included in his motion a clause that explicitly authorizes the board to "suspend, amend or rescind" the new rules at a future date, pending an agreement.

"I remain optimistic that the discussion will continue with Stanford," Supervisor Dave Cortese said. "I'm looking at this as essentially a package that could be superseded by something more attractive to all of us down the road."

Mountain View Voice staff writer Kevin Forestieri contributed to this report.


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5 people like this
Posted by XDOW
a resident of Downtown North
on Sep 26, 2018 at 2:49 am

More housing by 2035? Most of the prospects will be around mid to upper 30's by then. Wish they would erect more affordable housing within a few years and quit playing "hide the weenie". This is a state issue and it's not going away.

5 people like this
Posted by Bunyip
a resident of Adobe-Meadow
on Sep 26, 2018 at 7:00 am

Yet google gets a sweetheart deal - guess it's who you know.

5 people like this
Posted by densely
a resident of Embarcadero Oaks/Leland
on Sep 26, 2018 at 11:08 am

Google deals with Mountain View, not with the county. Google pays taxes.

Like this comment
Posted by not suprised
a resident of another community
on Sep 26, 2018 at 11:20 am

Nothing short of highway robbery. Stanford is a captive audience here...Facebook, Google and any other company can pick up and leave if these outrageous demands were placed on them. Stanford would be welcome anywhere in the country for what it brings and does for the surrounding communities. As a cancer patient at Stanford Healthcare, no where else could I receive the level of care, with the latest advances in cancer research than at Stanford. These demands on a teaching and research institute will do nothing other than mis-use funds that could go towards more research and financial aid. Stop looking just at Stanford to solve problems created by the Silicon Valley boom. By the way, the comments by the Mountain View mayor are simply short-sided and not very helpful.

11 people like this
Posted by 24.8 Billion endowment
a resident of Stanford
on Sep 26, 2018 at 12:17 pm

Oh, boo hoo! Poor Stanford is being discriminated against.

Only 24.8 Billion endowment! That's a B.

Stanford has one of the largest university endowments in the country
except for Yale.

2 people like this
Posted by not surprised
a resident of another community
on Sep 26, 2018 at 1:15 pm what. We all know this is a high cost area for us as well as Stanford (and I'm sure Yale's dollar goes further in Connecticut, than Stanford's in California). As I understand it, the university's endowment functions more like a long-term savings account. Should Stanford empty its savings account to bail out local government's poor planning and lack of foresight? We've known for a while that Facebook, Google, Cisco, Intel, etc. were getting more successful and bigger over the past decade or two. Traffic congestion and housing shortages are not new issues in the Bay Area - but they are now crisis issues. The county supervisors (and now apparently the Mountain View Mayor) are using mis-direction by pointing the finger at the university as the usual go-to villain. Its just plain lazy and easier to go after Stanford than going after Facebook or Google, et al. Again, not surprised.

10 people like this
Posted by long view
a resident of South of Midtown
on Sep 26, 2018 at 2:11 pm

long view is a registered user.

If Stanford doesn't like being held accountable for the impacts of its added development, then it can choose to renovate existing buildings, and stay within its currently developed footprint.

2 people like this
Posted by Sea Reddy
a resident of College Terrace
on Sep 27, 2018 at 6:45 am

Sea Reddy is a registered user.

Good move by the county supervisors.

Like this comment
Posted by Matt Regan
a resident of another community
on Sep 27, 2018 at 10:49 am

In this country we use tax policy to encourage/discourage certain things. We tax cigarettes and give tax credits for health insurance. We tax cars and give tax breaks for taking public transit. What message is Santa Clara sending when they tax classrooms and libraries? that education is a bad thing and we should have less of it? Really?

4 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Sep 27, 2018 at 11:49 am

I read the article, but, I really don't understand how these things all tie together. What is lacking is some kind of chart comparing the size of the fees, what they are assessed on, and how these fees would be used by the County, compared to how other SC County feeds paid by Google and Cisco etc. are assessed and used.

One point I would argue is the comment about Stanford being a captive. Is Stanford a classical education-oriented university, or, is it a business with a valuable "brand"? If Stanford wants to act like a business with a brand, then, I would ask the same question as in another thread-- why not build satellite campuses as other university -systems- have done as they have outgrown the ivy-covered-library university concept? Easy to escape SC County fees by building a satellite campus in Lake County or wherever.

2 people like this
Posted by Students for sanity
a resident of Stanford
on Sep 27, 2018 at 12:36 pm

When I see Stanford I see a natural resource that is in tension between public and private control. The admin at Stanford can pack up and take their big S with them, the University will remain. It will still be prestigious with or without them. The University is a physical object of the silicon valley cultural capital, that is a natural resource. Is that public or private? Who created it? Name one University admin that made Stanford prestigious. Name just a department. Does Land Building and Real Estate make Stanford Stanford? No. LBRE has failed their duty to the public, they have now damaged the University's goodwill (which is a real asset that has now been damaged by LBRE). The role of elected public policy representatives is to step in when natural resources are mismanaged. They have stepped in. Hopefully, this is goodbye to excess bagage in LBRE. Thet can go find another University to screw up. Maybe Harvard is hiring.

Like this comment
Posted by Anon
a resident of Another Palo Alto neighborhood
on Sep 27, 2018 at 4:46 pm

Posted by Students for sanity, a resident of Stanford

>> Name one University admin that made Stanford prestigious.

(see below)

>> Name just a department.

Chemistry, physics, EE, CS were all well known back in the day. SLAC if you want to consider it as a sort of department. The med school and hospital.

>> Does Land Building and Real Estate make Stanford Stanford? No.

Your point is well taken, but, let me be contrarian for a second. After the '89 quake, Stanford somehow made the right institutional choice and actually institutionally decided to re-build in a seismically robust way. That was unusual. I forget the person's name, but, there was somebody, in LBRE I think, who was or is credited with really pushing through on seismic safety. My memory is hazy on the details, but, it is worth looking into. So, if my memory is correct, there may actually be "an admin who made Stanford Stanford" as it is today.

>> LBRE has failed their duty to the public, they have now damaged the University's goodwill (which is a real asset that has now been damaged by LBRE).

Agreed. The last few years Stanford seems to be trying hard to destroy goodwill. I don't understand it.

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