The hospital expansion project moved a step forward this week as the Menlo Park City Council accepted the University’s traffic deal and the Palo Alto City Council voted unanimously to accept Stanford’s offer of $3.7 million for traffic mitigation related to the planned expansion.

Under this deal, Menlo Park stands to receive $3.7 million for traffic and infrastructure improvements related to the expansion. The University will pay Menlo Park in three different payouts — one after final project approval and the remaining amounts in 2013 and 2018.  By approving the deal, the Council has also agreed to not sue over the project’s environmental impact report.

The Palo Alto City Council voted 4-2 to recommend certification of the Final Environmental Impact for the expansion after four years of negotiations with the University.

Next week, the council will debate the project’s development agreement. As part this agreement, Stanford would provide $7 million in health care programs and services, $23 million in housing program fees, $12 million to support climate change initiatives and $3.4 million for the city to improve bicycle and pedestrian paths near the medical center.

Barring future obstacles, the $3.5 billion expansion plan is projected to add 1.3 million square feet of new development and more than 2,200 new employees to Palo Alto by 2025.

–Ivy Nguyen