Old Palo Alto gets residential permit parking and city takes next step toward ending free parking downtown

On October 21, City Council unanimously approved a new residential preferential parking, or RPP, program for an approximately seven-block area of Old Palo Alto, on the east side of the California Avenue bicycle and pedestrian underpass, that has been overrun with commuter parking. Under the new RPP, residents within the RPP zone will be allowed to purchase up to five parking permits for $50 each. No permits will be available to non-residents and those parking in the zone without permits will be limited to a maximum of 2 hours. Under the program, several surrounding residential blocks are eligible to join the RPP zone in the event parking congestion spills over onto their blocks.

On October 28, City Council took a step forward to advance extensive reforms to the city’s parking system, including a parking guidance system to display real-time downtown parking occupancy information and development of a Parking Action Plan to implement 35 recommendations presented in the city’s May 2019 Residential Preferential Parking Program Review, including the recommendation to pursue paid parking downtown. Under contract amendments approved on the council’s consent calendar, parking consultants Dixon Resources will plan, manage installation, and evaluate occupancy indicators and data to support the parking guidance system, develop the Parking Action Plan, and support the process to secure council approval. 

In addition to paid parking downtown, the Action Plan will address parking permit management, wayfinding, and Transportation Demand Management measures. The Parking Action Plan will include recommendations about policy and ordinance changes that would be necessary to implement the plan, an outreach strategy, infrastructure and technology recommendations, recommended rate structures and enforcement, maintenance and operations requirements, parking district boundaries, and staffing resources. 

President Hotel back in the news

Even as they hoped to turn over a new leaf and build community confidence, Adventurous Journeys Capital Partners, the owners of the President Hotel, stirred fresh controversy and community skepticism. In advance of an open house last week to unveil their plans for restoration of the historic building and renovations to convert it from housing to its original hotel use, the owners produced a glossy brochure claiming support from respected local nonprofits and touting $2.4 million in community donations. However, a footnote revealed that the donations were “to be confirmed and subject to change” and “contingent upon the hotel being issued a building permit.” 

Having not forgotten the devastating impact of losing 75 units of naturally affordable housing, protesters at the open house carried signs condemning the proposed conversion and handed out flyers criticizing AJ Capital’s attempt to curry favor through supposed charitable donations that appear instead to be mere quid pro quo, calling on the city to hold the project accountable to our laws without exceptions, and urging the owners to pivot and restore housing at the President Hotel.

AJ Capital stimulated a firestorm of public opposition last year when it announced its intention to convert the 75-unit downtown President Hotel Apartments into a boutique hotel and evicted all residents. The outcry led City Council to enact an emergency ordinance requiring relocation assistance for tenants and a new law banning conversion of downtown housing in “grandfathered” buildings (those built before current development standards were adopted) to non-residential use. In March, AJ Capital’s building permit application was deemed incomplete and in violation of numerous zoning laws, including parking requirements. 

In September AJ Capital submitted a new application. Whether they can overcome multiple zoning hurdles remains to be seen. They contend that because all the tenants had vacated before the city’s new ban on certain residential conversions kicked in, the President Hotel ceased to be housing rendering their project not a conversion. A study submitted by AJ Capital concludes that with a valet program parking demand for their 100-room hotel will be just 30-40 parking spaces, though the zoning code for new hotels would call for closer to 200. The President Hotel currently has 10 parking spaces. Current law also limits new hotels to a Floor Area Ratio of 2.0, while the proposed project has a FAR of approximately 5.5.  

10-22 GUP Hearing

Stanford abruptly withdraws application to expand

Just days after reportedly agreeing to meet the county’s demand for 2,172 new units of faculty and staff housing, on November 1 Stanford abruptly withdrew its application for a General Use Permit for its planned 3.5 million square foot expansion. The Board of Supervisors was scheduled to take final action on the GUP and conditions of approval on November 5. 

Although approval was widely expected, Stanford opted to abandon the application, rather than face a vote on mitigation requirements. The university cited the reluctance of the Santa Clara County Board of Supervisors to substitute a development agreement for the County Planning Commission’s recommended conditions of approval, as well as proposed traffic mitigation requirements that Stanford deemed infeasible, as key sticking points that led the university to put its plans on hold. 

Conflict over development agreement

A development agreement would have allowed greater flexibility for negotiation of community benefits that the county cannot require under the traditional land use approval process in exchange for leniency around required mitigation of the impacts of Stanford’s growth plan. Stanford has often argued that a privately negotiated, contractual development agreement is necessary to provide certainty that the rules governing their development plans won’t change over the life of the permit. However, the previous Stanford GUP that was approved in 2000 accomplished exactly that without a DA. In its 169 year history, the county has never entered into a development agreement. 

Ironically, it was Stanford’s aggressive pursuit of a privately negotiated DA contract that undermined the prospects for such a deal. This past spring, Stanford made a bilateral agreement with the Palo Alto Unified School District that would have mitigated some school impacts contingent upon county approval of both the GUP and a development agreement. Although a separate agreement between Stanford and PAUSD was appropriate and encouraged, tying it to commitments from the county proved a step too far. By making school enrollment mitigations dependent on county acquiescence to Stanford’s other demands, the move was perceived both to violate the ground rules for DA negotiations and as a cynical political weapon using kids and schools to force county concessions in other critical impact areas. The county then indefinitely paused negotiations, returning instead to the traditional development review process. 

As reported by the Palo Alto Weekly, in response to Stanford’s Friday announcement, Board of Supervisors President Joe Simitian said “The authorization of 3.5 million square feet over 15 to 20 years would’ve been a substantial benefit to the university. But given the requirement for full mitigation, they chose to walk away. I respect their decision, as an applicant, to walk away.” Although he was open to the notion of a development agreement “as an appropriate tool for some narrow and limited benefits” he was not willing to abdicate the county’s police powers and land-use authority.

What impacts and mitigations were at issue?

Community members and public officials from across the region have turned out in droves throughout the public review process seeking mitigation of impacts from Stanford’s expansion plan on housing, traffic and transit, municipal services, schools, parks and open space, air quality and more. Most recently, a public hearing in Palo Alto on October 22 brought an overflow crowd of more than 400 people and was preceded by two rallies calling for full mitigation – one organized by the Stanford Coalition for Planning an Equitable 2035 (SCoPE2035) to insist that Stanford offer more housing and transportation services for employees, and another organized by the Palo Alto Council of Parent Teacher Associations urging Stanford to stand by the spring draft agreement with PAUSD, with or without a development agreement. 

A coalition of elected representatives and staff members from San Mateo County, Atherton, East Palo Alto, Menlo Park, Portola Valley, Redwood City and Woodside also weighed in prior to the hearing calling on Stanford to “pay its fair share” to address the impacts of proposed campus growth, citing the revenue loss already suffered by San Mateo County public agencies due to Stanford’s current $1.2 billion in tax exempt property holdings in the county.

The traditional review process produced a recommendation by the county’s staff and Planning Commission to approve the GUP, but subject to certain conditions designed to achieve full mitigation of negative impacts on housing, traffic and other environmental concerns, including such things as:

  • the addition of 2,172 new housing units for faculty and staff and a housing linkage provision that would require housing construction to move forward concurrent with academic development – that is, Stanford could not build subsequent phases of academic growth until the housing required in the previous phase was complete;
  • a new methodology for counting car trips that considers the entire “peak” commute period rather than a single hour; and
  • long term protection of the foothills from development.  

Under state law, the county cannot require mitigations for school enrollment impacts. However, in order to approve the GUP, the Board of Supervisors would have had to make a legal finding that it would not be “detrimental to public health, safety, and general welfare.” County analysis indicated that PAUSD currently loses $44.5 million in annual revenue due to Stanford’s tax exempt status. The GUP was expected to produce 1,086 new PAUSD students from new tax exempt Stanford properties. Averaging the cost of that enrollment growth across PAUSD’s total enrollment, by 2041 it would result in a $5,050 reduction in funding, for every PAUSD student, every year. County Board President, Supervisor Joe Simitian, indicated on October 22 that absent Stanford contributions to the school district, it could be difficult for the board to make the legal findings necessary to approve the GUP.  

Because of Stanford’s tax exempt status, absent supplemental Stanford contributions to the school district, by 2041 PAUSD would see a $5,050 reduction in funding for every PAUSD student, every year. 

Announcement and reactions

Stanford indicated in its announcement that it will launch “a new phase of engagement with our local communities” and consider the implications of regional challenges for Stanford’s longer-term campus development. The announcement also refers to a poll (commissioned by Stanford) showing that after receiving what the university described as “a neutral description of the [GUP application],” 72 percent of respondents supported Stanford’s expansion plan. 

In a separate letter to the Stanford community, the university again touted the necessity of a development agreement and blamed the Board of Supervisors’ two-member ad hoc negotiating committee for preventing the university from “responding to the many requests for benefits from our neighboring communities.” Stanford also reiterated that mitigating the car trips associated with greater housing requirements would be infeasible and unrealistic and objected to a county proposed study that would have monitored Stanford’s impacts on municipal services. Stanford’s letter says they “will be actively assessing available options for our highest-priority needs” and “will inform and involve the campus community and our neighbors as we determine the next steps.” 

Stanford undergraduate and graduate students behind the influential SCoPE2035 aren’t buying it. In a scathing Facebook post responding to Stanford’s announcement, the group says Stanford’s “reasons for withdrawing the permit are excuses disguising their true motive.” SCoPE2035 argues that the proposed conditions of approval would have provided “just as much certainty as a development agreement” and that “Stanford’s claims of being unable to meet traffic requirements while building new housing are false. The County loosened requirements to make them easier to meet and gave Stanford multiple options and flexibility to meet standards, including unlimited trip credits.” 

The group accused Stanford of treating community pleas for equitable outcomes as mere public relations challenges and posited that the university’s latest move is a “stalling tactic” designed not for further “engagement” with the community but to wait for student activists to graduate, county supervisors to be replaced, and the community to forget.

Members of the San Mateo County coalition expressed both relief and disappointment. It felt like a win that county residents would not soon have to face the problems predicted from Stanford’s expansion plan. But some were disappointed that Stanford opted to withdraw its application rather than confront the cumulative impacts of its long-term growth in partnership with affected communities.

What happens next?

With the application withdrawn, county deliberations on Stanford’s plan come to a full stop. Whether Stanford will submit a new, possibly revised, application for a long-term development permit, pursue piecemeal permits to implement its plans on a project by project basis, or simply pause its development ambitions until the politics are more favorable, remains to be seen. In any case, Stanford still has development entitlements remaining in its allocation from the GUP approved by the county in 2000.

Public hearing in Palo Alto could see action on Stanford GUP

October 20, 2019 – Palo Alto Matters

Tuesday night, the County Board of Supervisors may take their first votes on Stanford’s application for a General Use Permit to add 3.5 million square feet of new campus development by 2035. Schools and the local impacts from Stanford’s tax-exempt presence around the region may feature heavily in the discussion as the supervisors transition from the study session to public hearing phase of their review with the October 22 hearing in Palo Alto City Hall. 

Interested parties have aggressively staked out their positions leading up to the hearing phase. Cities up and down the peninsula have warned of extensive local impacts generating the need for millions of dollars in mitigating investments for affordable housing and transportation infrastructure. Just last Friday, a coalition of elected officials and staff from six San Mateo cities and the county itself came out swinging with an impassioned demand that Stanford pay its fair share to accommodate the impacts of its growth. Most local cities depend heavily on property taxes to cover their General Fund expenses. However, according to the coalition letter, Stanford’s tax exempt status already takes an estimated $1.2 billion in Stanford property holdings out of the tax revenue base in San Mateo County alone. 

“The roads, bridges and pathways Stanford employees use daily receive no funds for repairs or upgrades from Stanford. Likewise, nothing for parks, 9-1-1 dispatch and first responders. Nothing.”

– letter from coalition of San Mateo officials calling on Stanford to pay its fair share.

Similarly, the Palo Alto Unified School District has argued that the estimated 1,500 new k-12 students generated by Stanford’s expansion will irreparably damage the quality of education PAUSD can provide unless Stanford fully mitigates additional costs. According to PAUSD, “adding hundreds of students with little or no new additional property tax revenues would result in significant and permanent PAUSD budget shortfalls, class size increases and program reductions….”

The San Mateo coalition criticized Stanford’s refusal to acknowledge or discuss their concerns about the university’s expansion and said that Stanford told them it was only willing to negotiate with the coalition if they lobbied Santa Clara County to enter into a development agreement with the university. 

A development agreement would allow more flexible, and less public, negotiations around community benefits and the mitigations and conditions of approval that might otherwise be required under the traditional GUP and environmental review process. Under the traditional process in this case, Santa Clara County staff and Planning Commission have recommended, among other things, that approval of the GUP be conditioned upon a rough quadrupling of Stanford’s proposed new faculty and staff housing, to a total of at least 2,172 units.  

For its part, Stanford adamantly opposes the housing requirement and has dug in across the board to push Santa Clara County to enter a more flexible development agreement. Stanford insists that it will “only accept a general use permit that has feasible conditions that Stanford can implement and that is accompanied by a development agreement.”

Indeed, that pressure itself led to the breakdown of negotiations for a development agreement earlier this year when Stanford reached a separate bilateral agreement with the Palo Alto Unified School District but conditioned it on the county’s approval of the GUP and a development agreement. (Whether Stanford will still provide the promised PAUSD-related investments without a development agreement is uncertain). Although Stanford was free to enter a separate agreement with PAUSD, tying it to county action was thought to violate the ground rules for the development agreement negotiations. Seeing the move as an attempt by Stanford to gain leverage over the county, Supervisors Simitian and Chavez immediately halted negotiations over a development agreement. As of their October 8 study session, most of the supervisors seemed to think a development agreement is unnecessary. 

Tuesday’s hearing will begin at 6:00 pm at Palo Alto City Hall. Two rallies are scheduled on the steps of City Hall to precede the hearing: 4:00 pm Stanford Coalition for Planning an Equitable 2035 (SCOPE 2035); and 5:15 pm PAUSD community.

The final hearing of the Santa Clara County Board of Supervisors is scheduled for November 5 at 1:30 pm in San Jose (Board of Supervisors’ Chambers, 70 West Hedding Street).

Click here for more information from the county about the Stanford GUP.

Colleagues’ Memo seeks renewed focus on affordable housing strategies

September 21, 2019 – Palo Alto Matters

The city’s ambitious Housing Work Plan was approved to great fanfare in 2018. It outlined a balanced array of strategies designed to address housing production, affordability, and preservation. But key opportunities for the city to expand BMR supply and preserve existing, naturally more affordable units remain untapped. 

First year policy changes pursuant to the HWP created new potential for significant growth in market rate, multifamily housing units and enabled approval of the Wilton Court project, a 59-unit, 100 percent affordable housing development in the Ventura neighborhood. However, Palo Alto still needs well over 1,000 new affordable units by 2023 to meet state mandated housing targets and inaction on housing preservation left the city with little recourse when faced with the conversion of the 75-unit President Hotel Apartments to hotel use. Since January 2019, the public has seen little action to move the remainder of the work plan forward. 

On September 23, City Council will consider a Colleagues’ Memo by Councilmembers DuBois and Kou asking council to prioritize outstanding HWP affordable housing items as well as additional strategies to “produce affordability within the extremely low (0-30 percent Area Median Income), very low (31-50 percent AMI), and low (51-80 percent AMI) income limits.” 

The Colleagues’ Memo calls for urgent action to:

  • Implement the “Palmer Fix,” a recent state law restoring the authority of local governments to require new multi-family rental housing to include a minimum percentage of Below Market Rate units (current city law only requires for-sale projects to include BMR housing). (HWP item 3.1)
  • Increase development impact fees to $64 per square foot for commercial projects. Santa Clara County recently adopted the same fee for commercial development at Stanford, based on a nexus study showing that the public cost to meet housing demand created by commercial growth in the area far exceeds that amount. 

In addition to seeking action “as soon as possible” on those items, the memo asks council to:

  • Explore a “no net loss” policy when housing is redeveloped. (HWP item 3.3) The memo suggests considering an in-lieu fee or off-site replacement requirement if existing units are removed. 
  • Explore protections for existing, naturally more affordable housing types such as cottage clusters and duplexes in low-density zones (HWP item 2.9) in order to preserve both “missing middle housing” and transitions between low and higher density zones. 
  • Ensure that when mixed-use projects (mix of commercial, residential and/or retail use) are awarded density bonuses (typically extra floor area) the bonus is applied to the housing portion of the project to the extent legally permissible.
  • Explore citywide regulations to prevent conversion of existing housing to commercial/hotel use.

Staff indicates that a study of the Palmer Fix and possible adjustment of the city’s current inclusionary rate is currently underway and will be presented to the Planning and Transportation Commission in October, with possible council action on a new ordinance early next year. For all the other items, however, staff expects significant additional work would be required.

Market-rate housing production on pace, but affordable units lag far behind regional requirements

Since adoption of Palo Alto’s 2018 Comprehensive Plan Update, we often hear about the city’s goal of producing an average of 300 new housing units a year for the period 2015-2030. To meet the Regional Housing Needs Allocation, or RHNA requirements, set by the Association of Bay Area Governments, we need a total of 1,988 new units during the period 2015-2023. With only five years left in the plan horizon, that translates to an average of 308 new units per year from here on out. But those overall targets don’t tell the whole story. Built into the 1,988 total are specific targets for multiple levels of affordability.

What we don’t hear much about is that a full 70 percent of that mandated 1,988 total must be new Below Market Rate units. 

According to the 2018 Housing Work Plan, the city anticipates exceeding the RHNA mandated target for the above moderate income category (serving households earning more than 120 percent of Area Median Income). The city’s 2018 progress report to the state bears that out, showing that more than half of the required above moderate income units were permitted in the first four years of the nine year RHNA planning horizon. If the recent annual average of 76 market rate units per year continues through 2023, Palo Alto will exceed its required market rate target by 97 units. 

The first year of the city’s ambitious two-year Housing Work Plan saw intensive policy action to spur new housing by loosening zoning standards to allow significantly greater density and floor area, make housing projects more profitable through parking and design flexibility, and streamline approvals by reining in the public review process. But those development incentives are likely to overwhelmingly benefit market rate rather than affordable projects.

Meanwhile, we are and have historically been WAY behind in meeting required targets for Below Market Rate housing. According to the Housing Work Plan, during the period from 1998 through 2017, only 24 percent of approved new units qualified as affordable. To meet RHNA targets for units accessible to people earning up to 80 percent of the Area Median Income, the city will need an additional 1,022 subsidized units between now and 2023. Add in the moderate income category (81-120 percent of AMI) and the total affordable units still needed jumps to 1,258 — 82 percent of the city’s entire remaining RHNA obligation. 

New Affordable Housing district unlikely to build sufficient supply

The principle affordability effort of the Housing Work Plan to date was the creation of an Affordable Housing overlay making special development incentives available to housing projects with 100 percent of units serving people earning up to 120 percent of AMI. Designed to accommodate a specific project, the overlay paved the way for the January 2019 approval of a 59-unit, 100 percent affordable project near Wilton Avenue in the Ventura neighborhood.

As important as that project is, it represents a mere drop in the bucket toward our 1,258 unit affordable housing deficit. Furthermore, given Palo Alto’s land costs, such projects are few and far between. If the city hopes to make more progress toward affordable housing targets, it will need several more of these AND an expanded toolkit.

State and local development incentives create urgent opportunity

What is the Palmer Fix?

For many years Palo Alto required inclusion of BMR units in both for-sale and rental housing projects, but in 2009 a California Court of Appeals in the “Palmer” case struck down a Los Angeles inclusionary rule, thereafter forbidding local governments from imposing inclusionary requirements on rental housing. The inability to condition development entitlements on inclusion of a limited number of BMR units has contributed to a decline in BMR production in communities across the state. 

Following a failed legislative attempt in 2013 to reverse the Palmer rule, a 2015 State Supreme Court decision regarding a San Jose inclusionary law paved the way for the 2017 enactment of AB 1505, a State law explicitly authorizing local inclusionary rules for rental housing projects. That law became known as the “Palmer Fix” and since 2017 affordable housing advocates across the state have encouraged local governments to implement it.

Time is of the essence to implement the Palmer Fix

This year’s passage of substantial new state and local development incentives designed to spur market rate, multifamily housing production could lead to thousands of new market rate housing units in Palo Alto in the coming years. But because the city’s current inclusionary requirements only apply to certain for-sale units, that market rate growth won’t produce as many Below Market Rate units as it could. 

The Housing Work Plan called for an economic study in mid-2018 of the impacts of a Palmer Fix at various inclusionary rates, and for council action at the end of last year. Yet the study, which also explores possible adjustments to the city’s existing inclusionary rate of 15 percent, has yet to see the light of day and staff doesn’t expect an ordinance to go to council until early next year.  Every market rate rental project approved while city action on the Palmer Fix is delayed could represent a lost opportunity to expand BMR housing in the city.

Will recent action by Santa Clara County spur Palo Alto to raise commercial development impact fees?

Palo Alto, like most cities, imposes affordable housing impact fees on commercial development to offset some of the public cost of meeting the BMR demand created by a new commercial project. In 2017, Palo Alto’s commercial impact fees became a source of significant controversy. Supported by a nexus study showing that impact fees could be justified at up to $264 per square foot, the previous council had voted to raise the fees imposed on office and research and development projects from $20.37 to $60 per square foot. By the time the ordinance came up for a second reading, however, a new council majority had taken over. Under the new leadership, council reversed course, lowering the affordable housing fees to $35/sf.

In order to inform its decision on Stanford’s General Use Permit Application, Santa Clara County commissioned a nexus study in 2018 to understand the public cost of meeting affordable housing demand created by Stanford growth. The nexus study revealed that the public cost far exceeded the $36.22 per square foot impact fee the county then charged the university. County staff recommended raising the fee to $143.10/sf, but the Board of Supervisors opted for a more moderate increase to $68.50/sf. In addition the County Planning Commission conditioned its recommendation for approval of the Stanford GUP on a requirement that Stanford itself build at least 2,172 new housing units (not counting student beds) on campus.

Although the council’s political dynamics have not changed significantly since 2017, recent research and action taken by Santa Clara County may make the council more inclined to consider a higher fee.

Council discussion of the Colleagues’ Memo is scheduled to begin at 9:30 pm on Monday, September 23. 

Want to keep your underground utilities? Reach for your wallet.

September 8, 2019 – Palo Alto Matters

Green Acres I may have to self-fund keeping their electric utilities equipment underground 

Under a program started in 1965, 33 districts in Palo Alto had their utility wires undergrounded, with transformers and other equipment placed in subsurface vaults. As utilities standards have changed over the years, most of those subsurface vaults have been converted to above-ground, pad-mounted installations, but nine districts still enjoy fully underground electric utilities in their neighborhood. One of those, Green Acres I, is due for a system rebuild. Citing aesthetics, safety and property values, many residents want to keep their system fully undergrounded. 

City of Palo Alto Utilities says meeting current functional and safety requirements while keeping the infrastructure fully underground would require costly and extensive new subsurface construction. So if the neighborhood wants to avoid the switch to pad-mounted, above ground equipment boxes, city staff and the Utilities Advisory Commission recommend making the neighborhood responsible for raising funds and paying up front for the cost difference.

A resolution going to City Council for a vote on September 16, would amend city regulations to allow a community to keep the equipment underground if they pay both the incremental installation costs and ongoing ownership costs for undergrounding. CPAU roughly estimates that for the Green Acres I project, property owners would have to prepay a total of about $475,000. The remaining eight districts that have not already been converted to above ground equipment boxes would also have access to the self-funding option when their area comes due for a system rebuild.

To initiate subsurface installation under the proposed self-funding option, a proponent would have 45 days to collect signatures from owners of at least 60 percent of the affected parcels and gather funds sufficient to cover the cost of developing a cost estimate for non-standard, subsurface improvements. CPAU would then prepare a cost estimate for the installation and the neighborhood would have 90 days to collect and prepay the difference between the planned standard installation and the fully subsurface installation (including the net present value of the higher continuing ownership costs).  

Council discussion will begin at 7:00 pm on September 16. For more information about the thinking behind the self-fund option, read the staff report.

Business tax favored to fund “transportation and/or housing investments”

September 8, 2019 – Palo Alto Matters

The city aims to decide in the next couple of months on the core attributes of a local tax measure for the 2020 ballot. To that end, staff and the Finance Committee have been analyzing and evaluating alternatives and narrowing the parameters for a tax proposal.  On September 16, City Council will weigh in on the Finance Committee’s efforts and confirm identified next steps and areas for further staff analysis.

Over three meetings since June, the Finance Committee narrowed its focus to direct further analysis toward a general business tax based on either number of employees or square footage and a parcel tax based on square footage, with an overall goal of generating between one and six percent of General Fund revenues.

Both flat and tiered pricing structures remain on the table and agreement has not been reached on whether to pursue a general tax (with non-binding advisory language on intended use of funds) or a special tax (designating specific uses). A general tax can be approved by a simple majority of voters while a special tax requires a two-thirds majority of voters to pass. The business community strongly encouraged the city to pursue the special tax route.

Analysis and costing for possible exemptions or phase-in strategies remains to be done, but the Finance Committee is interested in exemptions for public utilities, hospitality, retail, restaurants, and small medical facilities/clinics. Full discussion of desired exemptions will have to wait until an ongoing review of potential financial conflicts of interest is completed.

Transportation (grade separations and expanded city shuttles are most often cited), infrastructure improvements, and affordable housing are all on the city’s wish list for use of business tax revenues, but targeted allocations will be determined at a later date and informed by polling. Potential uses of new tax revenues will also consider the nexus between the use of the funds and those paying the tax. The Finance Committee agreed that unfunded infrastructure projects like the Cubberley redevelopment, the Palo Alto History Museum, and expansion of the animal shelter should wait for a parcel tax or general obligation bond at a future date.

Council discussion of this topic will begin at 8:00 pm on September 16. More information can be found in the staff report.

Mixed-use project on San Antonio Road seeks expansion of city’s Housing Incentive Program

September 8, 2019 – Palo Alto Matters

When City Council approved a new Housing Incentive Program early this year for Downtown, California Avenue, and El Camino Real area commercial zones, at least one property owner was paying attention. 

Where applicable, the HIP allows for significant increases in built floor area relative to lot size, known as Floor Area Ratio, along with other housing development incentives. In October 2018, council had prescreened a project at 788-796 San Antonio Avenue that sought a zoning change from CS (Commercial Service) to RM-40 (Residential Mixed Use) to allow redevelopment of the site as a four-story, 54-unit residential project. Subsequent passage of the Housing Incentive Program (HIP), however, gave the applicant a better idea: if I stick with CS zoning and can get the city to extend the HIP to this part of town, I can build a much bigger project. 

The property owner pitched City Council the idea of extending the HIP in May 2019. Despite last year’s sizable controversy over approval of two nearby Marriott hotels due to anticipated congestion impacts, City Council appeared open to the prospect, even though it would further densify the immediate area. So the applicant submitted new plans and requested zoning code amendments extending the HIP to all CS zoned properties adjacent to San Antonio Road between Middlefield and Charleston Roads. The new plans envision a mixed-use project with 102 for-sale housing units, with 15 percent restricted to below-market rate. The Architectural Review Board provided initial feedback on the project’s architecture, massing and site design on August 15.   

This week the Planning and Transportation Commission will hold a public hearing on the scope of a required Environmental Impact Report for the project and will offer initial comments on the proposed zoning amendments which include the following:

  • Establishing a HIP that includes a waiver to allow up to a 2.0 FAR for housing projects (doubling the current FAR for combined residential and commercial use in that CS zoned site) and changes to lot coverage restrictions;
  • Eliminating unit density limits;
  • Allowing rooftop gardens to count towards required open space;
  • Excluding the first 1,500 square feet of retail floor area from parking requirements;
  • Amending the citywide retail preservation requirements to:
    • Modify waiver standards to allow exceptions for housing projects; or
    • Establish minimum retail floor area replacement requirements for housing projects, but not require full replacement; or
    • Waive all or part of the required replacement retail floor area from the maximum FAR for housing projects.

Though not subject to PTC review, the project also seeks approval of a nine percent parking reduction and a partial waiver of retail space requirements. In addition, the project requires demolition of a building that appears to be eligible for listing on the California Register for Historic Resources.

The PTC hearing will begin at 6:00 pm on September 11. More detail about the project is available in the staff report.

Council to act on new rail committee September 9

September 7, 2019 – Palo Alto Matters

Discussion of a new Rail Blue Ribbon Commission to advise the council on political and funding strategies was mostly deferred on August 19. City Council and many public speakers were unenthusiastic about staff’s proposal to comprise the RBRC of former mayors and council members, and many questions were raised about the roles and interaction between the proposed RBRC and the existing Expanded Community Advisory Panel, or XCAP. Staff returns to City Council on September 9 for a full discussion. 

The recommendation for exclusive appointment of former elected officials has been softened, but staff still urges a non-voting role for the Chamber of Commerce, Stanford, Caltrain, the Valley Transportation Authority (VTA) and the Silicon Valley Leadership Group.

A revised staff report clarifies that the XCAP is primarily involved in building an informed understanding of grade separation options – developing and evaluating grade separation alternatives reflective of neighborhood perspectives. While the XCAP informs the process, they are not charged with making recommendations to council. As that process wraps up, the RBRC will engage to consider the political viability of the alternatives and potential funding strategies, leading to a design and funding strategy recommendation to City Council. Unlike the XCAP, the RBRC will report directly to council and be subject to the Brown Act and conflict of interest rules to ensure the RBRC’s recommendations are not tainted by potential real estate or financial interests of its members.

Monday’s continued discussion is scheduled for 6:45 pm on September 9 and will focus on the RBRC’s scope of assignment, its composition, and how members would be selected. 

Remember the Stanford GUP? It’s coming back.

September 7, 2019 – Palo Alto Matters

Stanford’s application for a General Use Permit for add 3.5 million square feet of new development will take center stage again this fall as the Santa Clara County Board of Supervisors begins final deliberations. On June 27, 2019, the county Planning Commission rejected Stanford’s bid for a Development Agreement that would credit the university for housing that is existing or already in the pipeline. Instead they recommended conditioned approval of Stanford’s expansion based on Alternative A from the Environmental Impact Report, which would require Stanford to build a minimum of 2,172 new units of housing (not counting student beds) – far exceeding the 550 new units proposed in Stanford’s application. 70 percent of the units in each income category must be be constructed on campus. 

Regarding conditions related to traffic mitigation, the commission supported the recommendation that car trips be counted during the entire peak period of the commute (rather than a single hour), but did not support staff’s proposal to count reverse commute trips and average daily traffic as part of Stanford’s no-net-new-trips obligation, opting instead for further study to develop an alternative regulatory standard. 

A third major component of recommended conditions of approval for the GUP is long term protection of the Stanford foothills. On August 28, the Midpeninsula Regional Open Space District sought to shore up that recommendation of the county staff and Planning Commission. The district unanimously passed a resolution asking the county to limit development outside of the university’s current Academic Growth Boundary for 99 years unless a supermajority (4 out of 5 supervisors) approve breaching the AGB. Read the District resolution

Meanwhile, new research by a group of media organizations revealed that Stanford has been buying up single family homes in the area, now owning at least 37 in Palo Alto and 700 countywide. The media groups expect to publish and air their report in mid to late October. 

The County has scheduled study sessions and final public hearings on the following dates:

  • Tuesday, September 24: Study Session #1 at 1:30 pm
    Board of Supervisors’ Chambers, 70 West Hedding Street, San Jose
  • Tuesday, October 8, 2019: Study Session #2 at 1:30 pm
    Board of Supervisors’ Chambers, 70 West Hedding Street, San Jose
  • Tuesday, October 22, 2019: Public Hearing #1 at 6:00 pm
    City of Palo Alto Council Chambers, 250 Hamilton Avenue, Palo Alto
  • Tuesday, November 5, 2019: Public Hearing #2 at 1:30 pm
    Board of Supervisors’ Chambers, 70 West Hedding Street, San Jose

To get back up to speed on how we got here, check out our past coverage of the Stanford GUP and explore the county’s website dedicated to the project.