Santa Clara County Supervisors Meeting Confusion
October 25, 2019
October 25, 2019

The Santa Clara County Board of Supervisors held their meeting in Palo Alto on October 22 to discuss the Stanford General Use Permit (GUP) application. Some process issues arose during the meeting, contributing to confusion about our understanding with Stanford University and their commitment to financially support our schools despite building tax-exempt housing.

On October 23, Stanford University clarified their position as it relates to our agreement and their building plans. The statement from Stanford University reads:

In light of the confusion in the press about our remarks at last night’s hearing on Stanford’s General Use Permit application, we are taking this opportunity to set the record straight. We will not accept the General Use Permit unless we obtain an accompanying Development Agreement. We are standing by our commitments to PAUSD and enclose our signed agreement.

GUP vs. Development Agreement

As previously stated, PAUSD has no position regarding Stanford’s building plans or desire to pursue a Development Agreement absent an expectation for mitigation. If there is no building, there is nothing for Stanford to mitigate with PAUSD and no negative impact. Stanford has clarified that they will not accept a GUP. The process is completely in the hands of Stanford University and the Santa Clara County Board of Supervisors.

Stanford’s decision to require a Development Agreement prior to building has absolutely nothing to do with PAUSD. Stanford has signed our agreement in the event a Development Agreement is reached in the future, effectively putting an end to our involvement in the process.

Next Steps with Signed Agreement

Stanford’s signed contract with PAUSD is the first step of executing an agreement. We have no predetermined timeline to bring the contract forward to the PAUSD Board of Education. If the County and Stanford engage in Development Agreement discussions, we will determine the right time to present the contract for action. We will have an agenda item for the November 5 meeting to discuss the GUP process and recap the October 22 meeting. The item will not revisit our conditional agreement or direct negotiations with Stanford.

Value of Agreement Grows to a Quarter of a Billion Dollars Using County’s Assumptions

The original GUP conditional mitigation agreement between the Palo Alto Unified School District and Stanford University was estimated at a value of $138.4 million over forty years. The original valuation included assumptions that Stanford housing would generate approximately 250 students from Years 4-10 and 500 students from Years 11-40.

The average per pupil funding remains roughly $7,050 over the lifetime of the agreement, although it is often misreported as $5,800. It reaches a high-point of roughly $8,500 in Year 20.

On October 22, 2019, the County of Santa Clara Department of Planning and Development Supplemental Response Memorandum 98788 was presented by the County, adjusting student generation numbers to align with County expectations. Page 12 of the County’s report outlines their assumptions:

Figure 6 displays the three housing proposals and the resulting new students, utilizing the student generation factor of 0.5 per housing unit. The figure also shows the phased implementation of the housing proposals as recommended by the Planning Commission, with the first phase assumed to be completed in 2020–21.

Figure 6 shows that in Phase 1 under Stanford’s GUP proposal, 138 housing units are completed, yielding 69 students. Under the Planning Commission’s minimum housing recommendation, 543 units are completed in Phase 1, generating 272 students. The Planning Commission’s recommended maximum housing units is one-third greater than the minimum, with 723 units generating 362 students.

Figure 6: Housing Proposal and Student Generation

Year Stanford EIR Units Stanford EIR Students Planning Commission Recommendation Minimum Units Planning Commission Recommendation Minimum Students Planning Commission Recommendation Maximum Units Planning Comission Recommendation Maximum Students
2018–19 0 0 0 0 0 0
2019–20 0 0 0 0 0 0
2020–21 138 69 543 272 723 362
2021–22 138 69 543 272 723 362
2022–23 138 69 543 272 723 362
2023–24 138 69 543 272 723 362
2024–25 138 69 543 272 723 362
2025–26 275 138 1,086 543 1,446 723
2026–27 275 138 1,086 543 1,446 723
2027–28 275 138 1,086 543 1,446 723
2028–29 275 138 1,086 543 1,446 723
2029–30 275 138 1,086 543 1,446 723
2030–31 413 206 1,629 815 2,169 1,085
2031–32 413 206 1,629 815 2,169 1,085
2032–33 413 206 1,629 815 2,169 1,085
2033–34 413 206 1,629 815 2,169 1,085
2034–35 413 206 1,629 815 2,169 1,085
2035–36 550 275 2,172 1,086 2,892 1,446
2036–37 550 275 2,172 1,086 2,892 1,446
2037–38 550 275 2,172 1,086 2,892 1,446
2038–39 550 275 2,172 1,086 2,892 1,446
2039–40 550 275 2,172 1,086 2,892 1,446
2040–41 550 275 2,172 1,086 2,892 1,446

Source: Stanford University, 2018 General Use Permit; Santa Clara County Planning Commission

After receiving the County’s report of PAUSD finances on October 18, the potential value of our agreement was recalculated. The estimated value of our agreement using the County’s published minimum student generation assumptions swells to $250 million over forty years, including $233.5 million in operational revenue. The increase is due to our uncapped per pupil allocation and a higher than expected directive for Stanford to build additional housing. In our methodology, we used the minimum numbers presented from Years 1-17 and froze enrollment numbers at the highest minimum student generation number in the out years (1,086) through Year 40.

The Process and Acknowledgements

The Palo Alto PTA has been by our side as steadfast partners throughout the entire journey. Board of Education members, past and present, worked tirelessly to protect and preserve our exceptional school system. Stanford University negotiated in good faith, publicly and clearly declared their commitment to our schools, and has solidified our partnership together for the future.

The value of our agreement is still based on two conditions beyond the control of PAUSD. First, the mitigation is predicated upon Stanford reaching a Development Agreement and building housing. Second, all student generation rates are estimates and will likely fluctuate. The pace of building and actual student generate rate will determine the true operational revenue stream. Finally, there is no negative impact to PAUSD if Stanford does not develop new housing.