Deal struck with medical group guarantees a windfall in revenue

City officials and the Palo Alto Medical Foundation have negotiated a plan guaranteeing millions in revenue for the city, quelling some fears that a proposed hospital would not generate enough tax dollars to San Carlos.

PAMF plans to build a new, 110-bed hospital and medical center at the corner of Holly Street and Industrial Road. The nonprofit is negotiating a development agreement in response to city concerns that the hospital would not generate the $30,000 per year in property taxes expected from a commercial development.

In the proposed 30-year development agreement, to be reviewed for the first time Monday by the City Council, PAMF would create a $9 million endowment guaranteeing the city at least $630,000 annually, according to a city memorandum. That figure will increase to more than $1 million per year toward the end of the agreement.

PAMF is also committed to a one-time $1 million contribution toward the city’s athletic fields and facilities and another $1.5 million to the San Carlos Educational Foundation, PAMF spokesman Ben Drew said.

“I’m comfortable with what I’ve seen so far,” Mayor Matt Grocott said.

Sol Kutner, Chairman of awatchdog group formed in response to the project, the San Carlos Citizens for Responsible Planning, said his group remains concerned about infrastructure funding, particularly for traffic mitigation, which has not been laid out in the development agreement. “It sounds like they’re contributing what I call feel-good social services like nurses and police,” Kutner said. “But to me, that’s secondary to the infrastructure.”

tramroop@examiner.com

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