Guest Commentary

Please Help Protect the President Hotel Apartments and Residents Citywide

March 29, 2019 – By PAN (Palo Alto Neighborhoods) Committee on Development, Zoning, and Enforcement 

The City Council will decide Monday night whether to remove a 2016 law that currently prevents the President Hotel Apartments and similar buildings from becoming hotels or offices.

The impact on tenants in downtown apartment buildings could be devastating.  Already, occupants of the 75-unit lower-rent President Hotel Apartments have had to leave because the building’s recent buyer, AJ Capital, aims to convert the property into a luxury hotel.  Other tenants downtown may be affected too if the city removes the 2016 law, which is blocking conversions from any use to another in so-called “grandfathered” or oversized buildings.

The city claims the 2016 law was actually an unintended cut-and-paste error and seeks to replace it by a narrower ordinance that limits just the conversion of housing in oversized Downtown buildings to other uses or fewer units.  However, city staff fear that AJ Capital or perhaps other owners will challenge the narrower law in court and prevail.  So the proposal on Monday night also includes a controversial “waiver” process that allows the City Council to exempt a developer from other zoning laws, thinking this might lead to a compromise that would avoid a court battle.

The City’s approach is insufficient and very worrisome.  Instead of just protecting residents in specific Downtown buildings, the Council should enact a city-wide law to prevent all conversions of residences into commercial space, akin to its ban on groundfloor retail and similar uses converting into offices.  Such a law could benefit thousands of renters across town and also potentially be easier to defend.

The waiver process is itself problematic.  The proposal has no guarantee that apartment tenants will be notified when their landlord applies for a waiver.  Without that, they could wake up one morning to discover the City Council has granted their building generous exemptions the night before and that the residents must all move out when their leases end.  Instead, every tenant should receive notice of any waiver hearing for their building well in advance.

The waiver proposal also empowers a slim majority of four councilmembers to grant benefits worth tens of millions of dollars to a developer by placing no limit on how many zoning rules are eliminated or watered down.  For example, a council majority could respond to a waiver request by granting rights to build an office tower with no parking.  Nothing in our municipal code currently gives councilmembers so much unchecked power for a specific site.

When the seven-member Planning and Transportation Commission reviewed the waiver proposal in January, they unanimously recommended against it.  They further advised the Council to obtain outside legal advice after expressing concerns that the waiver process might not even be necessary.  Their votes reflected concerns raised by many residents who spoke and wrote to them.

From the beginning of the President Hotel Apartment tragedy, our city has failed to protect tenants and preserve rental units, despite repeated proclamations that housing is a top priority.  That can change Monday night if we insist that the Council:

  • insure that any waiver process fully protects tenants, 
  • limits developer exemptions to the very minimum required by law, 
  • consider the unanimous Planning Commission recommendation to eliminate the waiver, and
  • look at adopting a city-wide residential preservation ordinance.

We encourage you to send an email in your own words to the City Council at City.Council@CityofPaloAlto.org.  You can also attend Monday’s Council meeting to speak or support others on this issue.  

Links:

City Staff Report Advocating the Law Changes, Including the Waiver:https://www.cityofpaloalto.org/civicax/filebank/documents/70005

Agenda for Monday’s Council Meeting: https://www.cityofpaloalto.org/civicax/filebank/documents/69999

Palo Alto Weekly Article About the December 2018 Council Vote on the Waiver:https://www.paloaltoonline.com/news/2018/12/11/proposed-law-would-prevent-president-hotel-conversion

Palo Alto Weekly Article about the January 2019 Planning Commission Vote to Eliminate the Waiver:https://www.paloaltoonline.com/news/2019/01/31/zone-change-creates-hurdle-for-president-hotel-conversion

Senate Bill 50 could end single-family zoning citywide

“Jobs-rich” designation extends impacts well beyond transit zones in Palo Alto

March 3, 2019 – Palo Alto Matters

First Baptist Church
First Baptist Church N. California Avenue. The site is within 1/4 mile of the California Avenue Caltrain station, making it eligible for multifamily development up to 55 feet tall, with a maximum FAR of 3.25. This could result in a development with up to approximately 150 studio or one-bedroom units on the 0.85 acre site.

Since last year’s defeat of Senate Bill 827, State Senator Scott Weiner has returned to try his hand again at replacing local zoning control with one-size-fits-all, state mandated housing standards. SB-827 sought to encourage bigger, denser housing  projects near transit. This year’s version, Senate Bill 50, extends state mandates beyond transit corridors to include all residentially zoned parcels in “Jobs-Rich” areas. Whether a community is jobs-rich would be determined by proximity to jobs, area median income and public school quality. By those indicators, it seems inevitable that SB-50 impacts would reach all of Palo Alto.

SB-50 creates a tiered system of incentives designed to make dense housing projects more appealing to developers by requiring cities to waive or adjust local zoning rules regarding such things as density, parking, height and the size of a building relative to the size of the lot (known as Floor Area Ratio). Eligible projects also must be granted up to three additional density bonuses of their choosing (e.g., site coverage, setback, or daylight plane adjustments, even more height or FAR, etc.). Different sets of incentives apply based on the category of a project’s location:

  • In a Jobs-rich area or within ¼ mile of a high quality bus corridor.
  • Within ½ mile of a train station.
  • Within ¼ mile of a train station.

Within a ¼ mile of a train station, for example, dense housing projects could be up to 55 feet high (rising to 75 feet with density bonuses), with building floor area of 3.25 times the size of the lot, and no on-site parking.

To help make SB-50 easier for people to understand, we partnered with the Embarcadero Institute, a 501(c)3 nonprofit organization, to commission a professional analysis and visual renderings of what SB-50 could mean, on-the-ground, for Palo Alto. The report explains SB-50’s system of tiered development incentives and maps out where each tier would apply in the city.

Click here to view the full report.

The report also calculates the theoretical maximum housing units that could be produced through SB-50 redevelopment, based on both SB50 incentives and underlying zoning. Those calculations take the very conservative approach of counting only transit rich areas (in the unlikely event that Palo Alto is not ultimately deemed jobs-rich) and not counting extra units that could be achieved through additional density bonuses that may be chosen by developers. Still the theoretical maximum comes to 58,000 units, more than three times the entire city’s current housing stock. Adding in the much larger jobs-rich area would yield a much higher number.

Projections regarding increased parking congestion due to the reduction or elimination of on-site parking requirements and new population growth were beyond the scope of the study. However it does note that car registrations per capita in Palo Alto have climbed by 14 percent in the last five years, reflecting car ownership trends across the Bay Area.

Max Units by District

Finally, to show the look and feel of increased building density and intensity allowed under SB-50, the report includes before and after images at five Palo Alto locations showing possible projects if developers take advantage of the state mandated up-zoning. Again, a conservative approach was taken to exclude discretionary density bonuses, demonstrating only what could be built under the bill’s explicit provisions regarding elimination of unit density limits, increased height limits, and higher Floor Area Ratios (floor area relative to the size of the lot). 

Addison Ave - BEFORE
Addison Avenue – BEFORE. Currently developed as single-family homes.
Addison Ave - AFTER
Addison Avenue – AFTER. This site is within 1/2 mile of a major transit stop. Development could be 45 feet tall with a maximum FAR of 2.5. This would allow a small apartment building to be built with up to 10 units (about a 16,000 square foot building), or larger apartments to be built if multiple lots were replatted.

Without local controls, developers decide

Surely some will cheer the potential housing growth under SB-50 and welcome a new look and feel for the city. Others will hate it. But don’t be fooled into thinking that “this could never happen in Palo Alto.” With the elimination of local controls under SB-50, the market-driven choices of individual developers and their “reasonable judgment” about zoning requirements will drive the outcome.

Recent studies have shown that up-zoning to increase density significantly increases land values, creating a substantial market incentive to buy up property for redevelopment. Once a site is acquired, developers will be entitled to take advantage of SB-50’s development incentives, whether the city or its voters like it or not. 

The only way the city could stop or constrain an eligible project is through a showing of significant adverse effect on public safety, the physical environment, or properties on the historic registry. In addition, thanks to changes to the state Housing Accountability Act enacted in 2017 (AB-678, SB-167, and AB-1515), courts must defer to the reasonable judgment of the developer rather than a local government’s planning department as to consistency with zoning requirements – without regard for the weight of evidence.

SB-50 is a no-turning-back proposition. Bigger and denser housing projects with little or no on-site parking could result in a radical shift, city-wide, from today’s detached-house development pattern to a townhouse and apartment development pattern. Over time, that may or may not lead to greater affordability or reduced car ownership. Either way, under SB-50’s mandates, it will be up to developers, not the city, to determine whether SB-50’s vision comes to fruition.

Click here to view full report

SB-50 has been referred to the Senate Housing Committee, chaired by State Senator Scott Weiner, and the Senate Governance and Finance Committee, chaired by State Senator Mike McGuire. Whether it will get amended and/or approved in committee and move forward to passage is still an open question. Let your local representatives know what you think about the bill: 

There will be a joint hearing of the Senate Housing and Governance and Finance Committees on March 5, at 1:30 pm focused on: “Addressing California’s Housing Shortage: How Can We Create Environments to Facilitate Housing Development?” Livestream video will be available here. Or you can view it in the media archive after the fact.

Assemblymember Berman will hold a public Open House on March 7, from 4  to 6 pm at his District Office, 5050 El Camino Real, Suite 117, Los Altos.

State Senator Hill will be meeting with mayors and city managers from across the district to discuss housing on March 15. 

The CASA Compact underlying SB-50

Touted as balanced compromise, Compact faces criticism from cities and offers no assurance of cohesive legislation

March 2, 2019 – Palo Alto Matters

SB-50 is perhaps the most prominent in a slew of proposed state legislation to implement an ambitious regional housing plan known as the CASA Compact. The Compact was designed as an interdependent package to address all three legs of the housing stool: production, preservation, and renter protection. Supporters describe the Compact as a necessary, if imperfect, compromise and they hope that controversial elements will have a better chance of passing if they all advance together to the state Capitol. However the Compact itself has been met with strong criticism and there is no certainty or commitment that every piece will move forward. 

What is the CASA Compact?

The CASA Compact was created by the Committee to House the Bay Area, a coalition of developers, business leaders, elected officials, labor interests and tenant advocates convened by the Metropolitan Transportation Commission. Recently endorsed by the MTC and the Association of Bay Area Governments, known as ABAG, the CASA Compact consists of an ambitious ten-point planto: 

  • Spur housing construction through minimum zoning near transit; streamlined approvals and exemptions from the California Environmental Quality Act; property tax breaks for developers; use of public lands for affordable housing; and further incentives for accessory dwelling units. “Sensitive communities” with a high percentage of low income residents, would get a grace period of up to 5 years to propose community-driven alternatives to meet state performance standards (i.e., housing production goals).
  • Protect renters through just-cause eviction rules and relocation assistance; access to emergency rent assistance and legal help; and a temporary cap limiting the size of annual rent increases.

The Compact calls for $1.5 billion in local and regional “self-help” funding (through taxes, fees, bonds and revenue set-asides) to implement the plan including: $1 billion from taxpayers, property owners and local governments; $400 million from employers; and $400 million from developers. At least 60 percent of that funding would go towards housing production, ten percent would go towards renter protections, and 20 percent would go toward preservation. 

Notably, the CASA Compact also calls for state legislation to create an independent Regional Housing Enterprise board comprised of MTC and ABAG representatives and the stakeholder representatives who developed the Compact itself. The unelected RHE would have authority to collect and disburse fees, taxes, and other revenues, allocate funding, and issue debt.

Competing interests of small and big cities 

The Mayors of San Francisco, Oakland, and San Jose were all on the CASA Steering Committee and voted to approve the final CASA Compact. However, numerous other cities and towns have been strongly critical and objected that the interests of their cities were not represented. The Cities Association of Santa Clara County, representing 15 cities, argued that the Compact’s one-size-fits-all solutions neglect the diversity of needs in each city and threaten to leave cities “without adequate funding for the infrastructure that makes our communities whole – schools, transportation, etc.” Similarly, they argued that the failure to engage cities of all sizes in the plan’s development could lead to significant unintended consequences both locally and regionally.

In addition to the Cities Association, the cities of Berkeley, Cupertino, Los Altos, Los Gatos, Palo Alto, Santa Clara, and Sunnyvale all logged objections to the CASA Compact. Chief among their concerns were:

  • The intrusion on local land use decision-making (and the associated exclusion of community interests).
  • The diversion of property tax revenues that are vital to local General Funds and could result in cuts to core services in every Bay Area city; and the redistribution of those funds to counties (perceived as likely to benefit big cities at the expense of smaller cities with lesser voice in county decision-making).  
  • Undermining of effective and promising ongoing local strategies to confront jobs/housing imbalances and finance and support the availability of affordable housing.

Sunnyvale Mayor Glenn Hendricks likened the proposed funding mechanisms and changes to land use authority to “a direct assault on cities” and Mayor Steven Scharf of Cupertino described the Compact as “a product that 97 percent of Bay Area cities think is a terrible idea.” Palo Alto’s then-Mayor Liz Kniss wrote that “[i]t would be problematic for MTC, as an organization representing local governments, to advocate the sweeping legislative proposals embodied in the CASA Compact without clear and robust engagement opportunities for Bay Area communities.”

Selective enactment could subvert the “compromise.”

Without legislative action toward all three goals of production, preservation, and protection, the so-called compromise embodied in the CASA Compact falls apart. Although SB-50 is a fairly fleshed out bill, not every Compact element has received as much attention. And there is no mechanism to ensure cohesion among the bills seeking to implement various elements of the Compact. While housing production incentives have picked up steam, both in Sacramento and locally, they focus mostly on “missing middle” populations earning up to 150 percent of medium income or more. Efforts to expand low-income housing, renter protections and anti-displacement policies have faired more poorly. 

Perhaps indicative of the fragile promise of the CASA Compact’s “compromise,” the California Apartment Association, which represents landlords and participated in the CASA planning process, has already said it “will oppose any [CASA Compact] related legislation aimed at implementing the rent control and just cause eviction elements.”

Council to revisit Downtown Commercial Cap

Would enforcing the Cap help us get more housing downtown?

February 8, 2019, by Palo Alto Matters

Downtown commercial growth
Since 2005, the city has approved from 220,000 to 230,000 square feet of downtown commercial space as compared to only 65,000 square feet added in the previous fifteen years.

The City Council is poised to repeal the Downtown Commercial Cap in Monday, February 11 with potentially major impacts on commercial and housing development downtown. Many Palo Altans don’t know about the Downtown Commercial Cap or understandably confuse it with Palo Alto’s other commercial caps. So we thought it was time to get you up to speed on how the Downtown Cap fits into the big picture of land use management in the city. Read on or scroll down to learn why the Downtown Cap is suddenly a big deal and where our public officials stand on it.

With the profit margin for commercial space well above that for most housing, the right combination of commercial controls and housing incentives could be key to tilting our jobs/housing imbalance.

COMMERCIAL DEVELOPMENT CAPS

Having struggled for several decades with an outsized jobs to housing ratio and the negative local impacts it creates, the city over the years has created three major limitations on commercial (jobs producing) development:

  • City-wide Cumulative Cap:  Imposes an 850,000 square foot limit on the total amount of office and research-and-development growth in the city by the year 2030 (excluding medical offices in the vicinity of Stanford Medical Center). The City-wide Cap was reduced from 1.7 million new square feet in response to a citizens initiative in the summer of 2018. The lower Cap equates to an annual average of about 57,000 new square feet of office/R&D.
  • Annual Limit: Regulates the pace of office/R&D growth in the California Avenue, downtown, and El Camino Real areas by limiting project approvals to 50,000 square feet of office/R&D development in a single year. The Annual Limit does, however, permit unused square footage to be rolled over and added to the subsequent year’s allowable growth and includes some exemptions. 
  • Downtown Commercial Cap: A cumulative limit on the total amount of new commercial development specifically in the downtown district. This Downtown Cap applies to all new non-residential development (e.g., office, R&D, hotel, retail, etc.). Once 350,000 square feet of new commercial development has been approved (relative to a May 1986 baseline), a one-year moratorium is imposed, preventing new downtown commercial floor area for one year while the city undertakes study and implementation of appropriate new regulations to manage downtown land use and its impacts. 

HOUSING DEVELOPMENT INCENTIVES

The city recently created substantial new incentives designed to make housing development more economically attractive and feasible. In addition to new Affordable and Workforce Housing Overlays, the newly approved Housing Ordinance makes major changes throughout the zoning code, including the downtown district, that convey millions of dollars worth of value by reducing development standards for parking, density, size, and the like for both new and existing residential and mixed-use projects. 

However, private economic incentives continue to strongly favor office over housing development downtown (higher rents per square foot offer greater return on investment for developers/owners). The city’s recent Downtown Development Evaluation Residential Capacity and Feasibility Analysis (October 2017) concluded that “the strength of competing uses (specifically for office space)” is one of the primary barriers to significant residential development in downtown Palo Alto. Indeed, the city itself speculated in a recent staff report that the new Housing Ordinance “is not likely to persuade a land owner redeveloping their property to build residential housing instead of commercial.”

WHY THE URGENCY AROUND THE DOWNTOWN CAP?

The goal of controlling commercial growth embodied in the 33-year old Downtown Commercial Cap ordinance is about to become real. City staff estimates that only about 18,000 square feet of commercial growth remains allowable under the Cap. Once that 18,000 square feet are consumed, the moratorium will kick in, preventing any new non-residential development downtown for one year (or more if extended), while appropriate new policies are designed and implemented. That means the proposed conversion of the President Hotel Apartments to a hotel, which given its size “would puncture the cap,” must wait, as must other new office, retail, or other commercial projects. On the other hand, allowing little or no commercial expansion downtown, even temporarily, could encourage developers to switch to housing, especially given the new housing incentives.

Whatever the council does on Monday night will have prompt and lasting impact. They could repeal the Downtown Cap, rendering meaningless its longtime promise of controlling downtown commercial growth on the eve of fulfillment. They could retain the Cap and hold downtown commercial development static while the city figures out whether and/or how to accommodate more commercial growth. Or they could direct staff to return with a proposal to revise the Cap to prioritize current community needs and preferences such as enabling additional commercial growth only for local-serving retail and services. Whichever way they go, it could largely determine how much new housing gets built.

HOW WE GOT HERE

The city passed the Downtown Commercial Cap ordinance in 1986 due to widespread concern about negative community impacts from unfettered downtown commercial growth. The 350,000 square foot limit allows about 10 percent growth beyond the total downtown commercial square footage existing as of 1986. That Downtown Cap was later embedded in the city’s 1998 Comprehensive Plan and updated in the zoning code in 2006.

Consistent with the law, once cumulative approvals of new non-residential floor area reached 235,000 square feet, the city commissioned a study in 2013 to reevaluate the limit. The Downtown Development Study was to be completed in two-phases: a data collection and projection analysis Phase I, and a policy analysis Phase II to formulate appropriate response strategies. Phase I was completed and shared with City Council and the Planning and Transportation Commission in 2014 and 2015.

According to Monday night’s staff report however, work on the policy analysis Phase II was stayed in January 2017 when a slim 5-4 majority led by Cory Wolbach and Greg Scharff voted to eliminate the Downtown Cap from the city’s updated Comprehensive Plan. Without the benefit of the planned Phase II analysis, both council members and the community at large were denied the opportunity to consider informed policy alternatives.

Although no longer in the Comprehensive Plan, the city’s broad guiding policy framework, the Downtown Cap remains a city ordinance. Last summer, just as the controversy over the President Hotel was heating up, city staff brought a proposal to repeal the ordinance to the Planning and Transportation Commission. Staff interpreted City Council’s January 2017 action as signaling intent also to repeal the longstanding, underlying ordinance. Nonetheless, the PTC voted 4-0-1 against recommending repeal, primarily on the grounds that it seemed inconsistent with the city’s push to promote housing downtown and the groundswell of community support for the citizens initiative seeking to reduce office growth citywide. Now the fate of the Downtown Cap ordinance will return to council with Monday’s vote.

PRO OR CON?

Arguments against the Downtown Cap

Those seeking to repeal the Downtown Cap argue that the cap is too blunt an instrument. They contend that downtown’s transit resources make it a good place for commercial growth and that the City-wide Cumulative Cap together with the Annual Limit in the California Avenue, downtown and El Camino Real areas make the Downtown Commercial Cap unnecessary.

Arguments for the Downtown Cap

Supporters of the Downtown Cap counter that the concerns leading to its original enactment have been borne out, with significant downtown commercial growth exacerbating the jobs/housing imbalance, creating major traffic and parking problems, and contributing to spiking rents by squeezing out housing. Because the Citywide Cap and Annual Limit allow average annual office space to expand more and faster than the historic average, they assert that those tools are insufficient to slow commercial growth. Finally, they argue that enforcing the cap offers the best promise for actually getting needed, and vigorously prioritized, new housing downtown. If the Downtown Cap is repealed, the economic incentives favoring office growth will persist.

WHO STANDS WHERE?

Councilmembers Fine, Kniss, and Tanaka all voted to eliminate the Downtown Cap from the Comprehensive Plan in 2017 and Councilmembers Dubois, Filseth, and Kou voted to retain it. If those returning councilmembers maintain their position as to repeal of the Downtown Cap ordinance, that leaves newly elected Councilmember Alison Cormack as the swing vote. At a public debate during the campaign, she “didn’t see any reason to remove the Cap,” but cautioned that there may be details she didn’t know or wasn’t privy to. More recently, she has indicated in meetings with residents that her view of the issues has changed.

At the grassroots level, Palo Alto Neighborhoods (PAN) recently issued a call to action in support of keeping the Downtown Commercial Cap. 

If you have an opinion regarding repeal or retention of the Downtown Commercial Cap ordinance, or suggestions for a “third way,” be sure to share it with City Council. You can email the full council at city.council@cityofpaloalto.org or attend the City Council meeting on Monday, February 11 to speak or support others on the issue. The Downtown Cap item is scheduled for discussion beginning at 8:45 pm.

SB-50 targets high quality school districts in renewed effort to limit local control over housing

Palo Alto Matters – December 8, 2018

Following the defeat of SB-827 in the 2018 legislative session, State Senator Scott Weiner circled the wagons and returned this month with a new proposal, SB-50, that adds some protections for existing rental housing sites and temporarily preserves local control for “sensitive communities” that are particularly vulnerable to displacement pressures. At the same time, however, SB-50 reaches far beyond the “transit-rich corridors” targeted for state mandates under SB-827.

SB-50 would require local governments to grant housing developers an “equitable communities incentive” not only for housing projects within a half mile of a major transit stop (rail station or ferry terminal) or a quarter mile of a stop on a high quality bus corridor, but also ANYWHERE that housing is allowed in an area deemed “job-rich” based on indicators such as “proximity to jobs, high area median income relative to the relevant region, and high-quality public schools.”  

At a minimum, the equitable communities incentive must include waivers of parking requirements greater than 0.5 spots per unit and any maximum density controls, as well as up to three additional incentives and concessions available under the existing State Density Bonus law. Those additional concessions include such things as increased height, site coverage, and Floor Area Ratio limits; reduced side- and rear- setback requirements; and reduced daylight plane requirements. 

Projects that are also close to transit and include a minimum, unspecified percentage of affordable units are then entitled to additional waivers as follows:

  • Within 1/2 mile, but more than 1/4 mile from a major transit stop: no height limits less than 45 feet, no Floor Area Ratio limits less than 2.5, and no parking requirements.
  • Within 1/4 mile of a major transit stop: no height limits less than 55 feet, no FAR limit less than 3.25, and no parking requirements.

The new, greater unit densities enabled by the waivers will form the baseline for calculating available additional concessions under the State Density Bonus law. 

SB-50 has only just been introduced and is likely to undergo some amendment before coming to a vote. However, if passed in its current form it would likely apply to all residential, mixed use, and commercial zones in Palo Alto, including every single-family neighborhood. Council members have already begun to weigh in with differing perspectives. On one hand Councilmember Adrian Fine expressed general support, saying “we need the state to step in … [l]ocal councils and the idolatry around local control are not going to solve our housing issues.” In contrast, Councilmember Eric Filseth said the bill was “horrible for voters” because it ignores that addressing the housing crisis depends on paying for all the infrastructure necessary to sustain regional growth. SB-50 “skips all that.” Whether City Council will take a position on SB-50 remains to be seen.

Guest Commentary

Proposed City Law Threatens Housing and Renters

January 27, 2019 – From the Palo Alto Neighborhoods Committee on Development, Zoning, and Enforcement (PANCODZE)

All Palo Altans should urge the Planning and Transportation Commission to reject a controversial staff proposal that would make it easier for Downtown residences such as the President Hotel Apartments at 488 University to become hotels or offices.  Scheduled for discussion this Wednesday, January 30, the staff proposal would create a new waiver process that vastly favors owners and developers of Downtown buildings over tenants.

Under the proposed waiver process, City staff could cast aside or “adjust” existing laws that require oversized Downtown buildings, such as the six-floor President Hotel, to retain the same mix of uses they have at present.   So while the rule, known as the Grandfathered Facility Law, currently protecting the residences would remain in place, owners and developers would need only to “assert” in writing that it conflicts with some state or federal law.  Staff would then need only to find that the “assertion has merit” and could then immediately grant the waiver.

The proposed process does not require that tenants of the buildings, the press, or the public at large be notified when a waiver is being sought.  No public hearing will necessarily occur and no written legal opinion from the City Attorney citing relevant case law for public review would necessarily be issued. Although the waiver could in theory be appealed to the City Council, tenants and others may not even know a waiver has been granted until after the appeal deadline expires.  Renters might instead find out only once their leases expire and be too late to appeal.

Palo Alto requires a much more open process for other waivers. For example, the law that buildings cannot convert existing ground floor retail and similar uses into offices requires that an exemption request be accompanied by financial data and be approved by the City Council at a public hearing.  Such exemptions might only affect thousands of dollars of rental income a year, yet the waiver enabling the President Hotel residences to become a hotel might be worth tens of millions of dollars. So why shouldn’t the waivers be decided by the City Council too, in full public view?

And why is a waiver process even needed for the law protecting Downtown residences? The staff report for Wednesday’s meeting states a waiver would be granted when the law preserving residences would lead to “a violation of state or federal law (i.e.; Ellis Act).”  But preserving residences is legal and cities have long had the right to do so. Most of Palo Alto is already zoned to allow only residential and similar uses such as day-care facilities. Federal law allows cities to further restrict what is in buildings as long as some viable economic use remains.  Residential property in Palo Alto is surely viable, given that it often sells for over $2,000 a square foot. 

Staff has repeatedly cited the state’s Ellis Act to justify the need for a waiver process, as in the quote above.  Yet that law explicitly states the opposite of what staff claims, namely that it does not bar cities from controlling how properties are used.  The Ellis Act merely allows owners to cease renting out residences and instead have those become owner-occupied or company-owned housing if cities so allow.  If the Ellis Act actually required cities to allow residential buildings to convert to some other use contrary to local laws, apartment complexes in Palo Alto and all over the state would have long ago turned into office buildings. 

So why are senior City staff actually asking for the waiver process for this law and not for the hundreds of others in our municipal code?   Despite staff’s insistence that they are not favoring AJ Capital, the Chicago-based purchaser of the President Hotel, the waiver proposal seems crafted to allow AJ Capital to sidestep many City laws and replace the existing housing in the building with a hotel.

We urgently need to retain housing in Palo Alto.  We do not want tenants evicted and forced to find new places to live.  And we do not want staff to grant waivers worth perhaps tens of millions of dollars to developers when there’s no legal necessity and outside of public view.  Please email the Planning and Transportation Commission at Planning.Commission@CityofPaloAlto.org to urge them in your own words to reject the waiver process proposed by staff.  And please attend the Commission meeting if possible at 6 pm on Wednesday night at City Hall (250 Hamilton).  

Links:

Planning Commission Agenda for January 30, 2019 Meeting: https://www.cityofpaloalto.org/civicax/filebank/documents/68695

Staff Report on the Proposed Change in the Law https://www.cityofpaloalto.org/civicax/filebank/documents/68694

Palo Alto Weekly December 7, 2018 Editorial Critical of Changing Laws to Help AJ Capital https://www.paloaltoonline.com/news/2018/12/07/editorial-a-stealth-agenda

Palo Alto Weekly Story on the December 10, 2018 City Council Action on the Waiver https://www.paloaltoonline.com/news/2018/12/11/proposed-law-would-prevent-president-hotel-conversion

Minutes of the December 10, 2018 City Council Meeting https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=52082.73&BlobID=68210

Palo Alto Weekly January 25, 2019 Update on the President Hotel

https://www.paloaltoonline.com/news/2019/01/25/nonprofit-tries-to-get-reprieve-for-president-hotel-tenants

Do you have thoughts to share about goings on in local government? Palo Alto Matters welcomes guest opinion pieces and calls-to-action from the community. Email editor@paloaltomatters.org for further information.

The plot thickens around the President Hotel

December 8, 2018 – Palo Alto Matters

Investigative reporting by the Palo Alto Weekly has shed troubling new light on behind the scenes interactions that may have led to the city’s surprise rush to enable the elimination of 75 housing units at the President Hotel Apartments. Communications secured through a Public Records Act request depicted an intensive lobbying campaign by AJ Capital Ventures, the new owners of the President Hotel building. AJ’s efforts included threat of litigation, side communications with a sitting council member, use of former senior-level city staff to gain access, a private agreement with tenants to silence their opposition to the project, and notably, a proposal to extend significant short term benefits to remaining tenants if the city acts, by a certain date, to make the zoning changes needed to enable conversion of the building to a hotel. 

Against the backdrop of overwhelming community support for preserving housing at the President, in late November, the city added two action items to its end-of-year calendar that could eliminate regulatory barriers to conversion of the building, just in time to meet the deadlines in AJ’s proposal. One of those is a “grandfathering” rule that will be taken up on December 10. The provision prevents remodeling of an oversized building associated with a change from its grandfathered use (e.g. housing to hotel). The agenda item makes no reference to the President Hotel and the staff report describes the code change as correction of a mere “administrative error,” yet contends that it must be made in advance of the normally required Planning Commission review in order to “preserve the public health, safety and welfare.”  

The appearance of behind closed door dealings, the city’s efforts to play down implications for the President building, and the prospect that the city may take affirmative action to facilitate reduction of housing stock while conveying multi-million dollar benefits to AJ Capital have raised substantial concern in the community. It stimulated both a scathing editorial by the Palo Alto Weekly, and a call to action from Palo Alto Neighborhoods (PAN) opposing any change to the “grandfathered facilities” law without the normally required vetting by the Planning Commission and urging that “any revision should continue to prevent residential uses from changing to commercial ones so as to preserve Downtown housing and protect tenants from being displaced.”

City Council will vote on the “grandfathered facilities” provision on Monday, December 10.

Election 2018

Your vote is your voice!

We have city council vote trackers and a wealth of election 2018 resources to help you use it well.

As we enter the final days of campaign season, our mailboxes and local media are full of political ads with perfect pictures, simple messages, and high-profile or personal endorsements – whatever might catch our attention in a few short minutes and get our vote without making us think too hard. Makes sense. We’re all busy, the issues are complicated, and it’s hard to focus beyond the craziness of national politics.

But as you can imagine, we at Palo Alto Matters hope you won’t rely on a few short minutes standing over the recycling bin to decide how to vote. Scroll down for all the voter resources you need. And we hope you’ll keep the big picture in mind – all policy is interdependent at the local level. Together, we live, play, and shop here; work, raise families, and retire here; walk, bike, and drive here. Home is no place for single-issue or identity politics.

We know local matters matter to you.

From bite-sized to gulp-sized, you can find the info you need to make informed votes here.

Over the past two years Palo Alto Matters invested countless hours putting local headlines in context to help you understand and influence the decisions being made on your behalf here at home. Our diverse, growing, subscriber list from every neighborhood in town and your many gracious letters tell us that Palo Altans, community wide, care about what happens here. You’ve risen to the challenge, doing your homework, turning out at meetings, and reaching out to local officials in record numbers on a wide range of issues.

Now we’re here to help you recall what happened and connect you to a wealth of voter info created by local news media and nonprofits. Palo Alto Matters’ one-of-a-kind vote tracker compiles the voting record for our three incumbent City Council candidates on key issues we’ve covered over the past two years. In addition, we’re including links to other election resources available to the community – covering the City Council, School Board, and Midpeninsula Regional Open Space District (Ward 5) races as well as local and state ballot measures.

We hope you’ll review and share these voter resources, encourage your friends, neighbors and colleagues to subscribe (free!) to Palo Alto Matters, and make the best ballot choices for the future of our community!

Palo Alto Matters’ City Council Vote Trackers

Palo Alto Matters pays attention to local policy debates and chatter and, as you know, we think the facts and details matter. We urge you to resist basing your vote on campaign rhetoric and instead look critically at the actual record. We’ve pulled it together for you below in what we hope is an easily digestible form. Yes, we know it’s not exciting to read a list of policy actions, (and, sorry, we don’t have the bandwidth to make it pretty or interactive for you) but voting records offer a much better indicator of where a candidate really stands than campaign messaging does. 

Vote Tracker - Narrow VotesTo help you differentiate between the three incumbent Palo Alto City Council Members seeking re-election in 2018, Tom DuBois, Eric Filseth, and Cory Wolbach, we’ve compiled a table showing where they’ve disagreed in controversial council decisions over the past two years. We think we’ve captured the bulk of them, but if we’ve missed something important (or gotten something wrong!), please let us know. We’re happy to update the on-line version of our vote trackers.

A useful companion to our vote tracker, and in addition to their election guide below, the Palo Alto Weekly has compiled it’s editorials on city issues from the past two years that flesh out some of the controversies that have swept the community. The Weekly’s editorials on school issues is also well worth review to put the candidate debates in context.

Vote Tracker - HousingFor the Housing Vote Tracker we included all adopted housing-related policies. Contrary to popular rhetoric, there was “across the aisle” agreement among the incumbent city council members seeking re-election in 2018 on nearly every housing action over the past two years. Where housing motions passed or failed it was typically by at least a two-thirds margin. Thus we thought the full list of adopted policies offered the benefit of showing where incumbent candidates diverged while also presenting the big picture of what’s happened on housing.

 

Unfortunately, without a voting record, it’s harder to assess how newcomers Alison Cormack and Pat Boone would perform if elected. But our local news media and nonprofits have done their best to nail them down on specifics. Take advantage of their good work by reviewing the resources below.

Additional Resources for Election Information

The Palo Alto Weekly, Palo Alto Daily Post, League of Women Voters of Palo Alto, Palo Alto Neighborhoods, and Midpen Media Center have done yeoman’s work to help you make informed votes. From candidate interviews, questionnaires, and debates, to side-by-side position summaries, to pros-cons forums, to reasoned endorsements – you can find them below.

To get up to speed on the state-wide ballot, we highly recommend CALMatters.org. CALmatters (a nonpartisan, nonprofit journalism venture committed to explaining how California’s state Capitol works and why it matters) has everything from 1-minute videos along with in-depth looks at statewide ballot measures, to candidate profiles, to issue briefs and news stories related to California’s politics and November ballot. Their coverage throughout the year is astute and informative, we recommend you subscribe (free) and support their work.

Click here for the Palo Alto Weekly’s “Election 2018: Complete coverage of Palo Alto races, measures.”

Click here for the Palo Alto Daily Post’s “Readers’ guide to local elections.”

Click here for the League of Women Voters of Palo Alto’s 2018 Election Guide

Click here for Palo Alto Neighborhoods’ 2018 City Council Candidates Questionnaire and Palo Alto City Council Candidates Forum

Click here for Midpen Media Center’s video coverage of the Palo Alto City Council, PAUSD Board of Education, Midpeninsula Open Space District (Ward 5), and County Sheriff races, along with pro-con arguments for local ballot measures.

Click here for the CalMatters.org state-wide “2018 Voter Guide.”

Protect your voice in negotiations with Stanford

Stanford asks for development agreement that would preempt new affordable housing requirements.

County to consider offer and negotiations process on October 16.

Over the past year, we’ve all studied up on Stanford’s expansion plans and the potential impacts of the 2.3 million square foot academic expansion proposed in Stanford’s 2018 General Use Permit application (2018 GUP) and weighed in on the adequacy of draft mitigations. In addition, the Santa Clara County Board of Supervisors has looked closely at the affordable housing demand that Stanford’s expansion will create and passed new ordinances to raise housing impact fees and require more affordable housing.

Now Stanford is hoping to preempt a Final Environmental Impact Report (and associated, transparent conditions of approval for their 2018 GUP application) and go behind closed doors to negotiate an alternative that will supersede imposition of the County’s new affordable housing ordinances, prevent imposition of additional mitigation requirements, and freeze the County’s authority to regulate land use in the Stanford Community Plan Area until completion of the full expansion or for 30 years, whichever comes sooner.

Stanford seeks to negotiate a development agreement in exchange for “community benefits” in the form of proposed affordable housing commitments and investments, but county staff says Stanford’s affordable housing proposal doesn’t go as far as current law.

This Tuesday, October 16, the Santa Clara County Board of Supervisors will hold a public hearing to discuss whether Stanford’s proposed development agreement warrants further discussion and negotiation and if so, what the negotiation process should entail. Public comment is welcome in person and via email (referencing “agenda item #9”) to boardoperations@cob.sccgov.org.

Read on for more info about Stanford’s housing offer and county staff’s analysis and recommendation.

What is a development agreement?

A development agreement is a voluntary contract with a local jurisdiction (Santa Clara County) in which a property owner (Stanford) is granted new entitlements or exceptions to existing rules in exchange for providing community benefits that otherwise would be difficult for the jurisdiction to obtain. In contrast to the transparent 2018 GUP analysis and review process, negotiators typically bargain over the trade-offs in private. In Santa Clara County only a single public hearing is required. The public and affiliated government entities, like the City of Palo Alto and the PAUSD, do not have a seat at the table and might only be informed of the details after the parameters of a deal have been struck. 

Stanford’s offer of affordable housing investments as a “community benefit” falls well short of housing funds due under current law.

The primary community benefit cited in Stanford’s development agreement application is affordable housing commitments and investments. However, according to the county staff report,

“As currently offered, Stanford University’s housing proposal does not constitute community benefits in that the proposal does not offer affordable housing beyond a level that can be obtained through existing regulations [and county authority].”

Indeed, the staff analysis indicates that Stanford’s proposed development agreement would produce an affordable housing subsidy value of $89 million less than Stanford would be required to contribute under the county’s new impact fee and inclusionary housing ordinances. Stanford emphasizes the timely value of up-front housing funds in its development agreement application, but even adjusting for net present value, their proposal falls short of current law by $75 million.

By county staff’s estimate, applying current requirements to Stanford’s GUP would produce a total of 663 new and converted affordable units, while the total under Stanford’s proposed development agreement would range from 314 to 455 affordable units.

County analysis of affordable housing benefit

County staff recommends pre-conditions to negotiation, integration with the ongoing GUP review process, and additional public engagement.

Given the lack of community benefits in Stanford’s development agreement proposal, county staff recommends that the Board of Supervisors only enter development agreement negotiations if Stanford first agrees in writing to:

  • Increase its affordable housing proposal to exceed what current housing ordinances would require.
  • Express a willingness to include other benefits, such as school site dedication and/or ongoing funding and other benefits relating to transportation and traffic mitigation, sustainability, open space, etc.
  • Accept an extension of the 2018 GUP application timeline to allow for negotiations with a concurrent community engagement and communication process.
  • Reconsider its demand that mitigations be limited to those proposed in the Draft Environmental Impact Report for the 2018 GUP; and
  • Express a willingness to reduce the scope of applicable county rules to be held constant during the life of the development agreement.

Stanford seeks to condition its community benefits offer on limiting environmental mitigations to those already proposed in the Draft EIR. However, if the Board of Supervisors chooses to move forward with development agreement negotiations, staff recommends finalization of the Environmental Impact Report and staff preparation of conditions of approval for the 2018 GUP (targeted for late 2018) before the parties begin negotiations. Staff asserts that this will “provide a stable regulatory baseline for negotiations and ensure integration and consistency” with the 2018 GUP application review process. The Development Agreement would then be included in the Final EIR along with conditions of approval and monitoring and reporting requirements for Board of Supervisors’ consideration in 2019.  

County staff also proposes additional public outreach, (to both the general public and staff and elected officials representing public agencies and cities near Stanford) to inform the negotiations and obtain input on terms and desired community benefits at three stages in the process:

  • within the first few weeks of starting negotiations.
  • at the point in negotiations at which proposed community benefits are identified.
  • at the conclusion of development agreement negotiations but prior to Planning  Commission public hearings on the 2018 GUP in 2019.

Process matters. Let the Board of Supervisors know what you think.

Are you surprised that Stanford’s development agreement application promises less affordable housing than the county’s newly passed impact fee and inclusionary ordinances would produce? Do you support negotiation of a development agreement with Stanford or prefer to rely only on the in-progress 2018 GUP process? Is it premature to begin negotiating a development agreement before the Final EIR is available to the public and/or reviewed by the county Planning Commission? Do you support staff’s recommendation to make entering negotiations contingent on certain expectations? Did they identify the right contingencies? What do you think about the proposed outreach process?

You can offer comments in person on Tuesday October 16 at 10:00 am or send an email with “agenda item #9” in the subject line to boardoperations@cob.sccgov.org.

The public hearing will be held on the first floor of the County Government Center located at 70 W. Hedding Street in San Jose and will begin no earlier than 10:00 am. (There is some free, marked 2-hour public parking on the side of the building parallel to San Pedro Street; there are parking meters in the general area; and there is a lot where parking can be purchased at 171 W. Hedding that is also open to the public.

 

Renter Protections 101

Most of us don’t know much about the complexity and diversity of renter protection rules. But as Palo Alto gives them a closer look and voters statewide consider Proposition 10 that would eliminate major restrictions on local rent control rules, it’s time to get a better sense of the basics and where Palo Alto law stands.

Renter protections vary extensively by local jurisdiction, but they essentially fall into three main buckets reflecting increasingly more intensive regulation of the landlord-tenant relationship. The summary of key strategies below is drawn primarily from the Palo Alto Municipal Code and a September 23, 2015 County of San Mateo Interdepartmental Correspondence on the “Continuum of Residential Tenant Protection Measures.” The full county memo appears as Attachment A accompanying the Palo Alto Colleague’s Memo on renter protections. Click here for excerpts outlining commonly advanced pros and cons of policies regarding just cause eviction, relocation assistance, and rent stabilization.

Notice requirements, minimum lease terms, and mediation

Notice of Lease Termination

In California, state law sets a minimum standard of 30 days prior written notice of lease termination. Tenants who have resided in the rental unit for at least a year must be given 60 days prior written notice. Local governments are permitted to exceed that standard. Palo Alto has not done so.

Notice of Rent Increase

State law preempts local regulations regarding notice of rent increases, setting a statewide standard of at least 30 days advance notice if a proposed rent increase is less than or equal to ten percent of the rent charged at any time during the preceding year. If the proposed increase exceeds that ten percent, the landlord must give 60 days prior written notice.

Minimum Lease Terms

Palo Alto Municipal Code Section 9.68 requires that a tenant be offered a lease term of at least 12 months during which the rental rate cannot be increased. If the tenant rejects the offer of a one-year term, a shorter lease may be negotiated, but once that tenant has occupied the unit for 12 months, the landlord must again offer a 12 month lease. A 12 month lease must be offered annually, (or at the conclusion of a longer lease) but at the end of each lease term, the rental rate may be increased.

Mediation of Rent Increases

Some jurisdictions offer or require a mediation process to address certain rent increases or other landlord-tenant disputes. Palo Alto Municipal Code Section 9.72 defines a mandatory dispute resolution process (conciliation and mediation) that can be triggered by a written request from either tenant or landlord regarding rental rate increases, deposits, repairs and maintenance, utilities, occupants, parking and storage facilities, privacy, quiet enjoyment, or use of common areas.

Retaliatory acts or omissions against any party to the dispute resolution process are prohibited and, if identified within six months of the party’s participation, may be referred to the city attorney for remedial action. Every rental agreement must include notice of the right to mediation and protection from retaliation, including contact information for the city facilitator.

Palo Alto’s dispute resolution ordinance applies to any residential rental property that contains two or more units (except two-unit properties in which one of the units is owner-occupied) and any residential rental property when the owner owns two or more residential rental units anywhere in the city.

Just cause and relocation assistance

Just Cause Evictions

Palo Alto does not currently have a just cause eviction ordinance. Just cause eviction ordinances define a specifically enumerated list of reasons that permit a landlord to evict a residential tenant. They also often require a landlord to identify the grounds and supporting facts for the eviction. Typical examples include:

  • failure to pay rent, damage to the property, creating a nuisance or interfering with other tenant’s safety or comfort, illegal activities, or unauthorized subtenants;
  • new occupancy by owner, family member or resident manager;
  • substantial renovations; or
  • removal of the property from the rental market.

Relocation Assistance

Many local governments require landlords to pay relocation assistance when an eviction is not the fault of the tenant (“no-fault evictions”). Such requirements typically include lump sum payments and/or relocation assistance services. Sometimes the payments are required for all no-fault evictions, other times they apply only based on certain types of eviction (such as to facilitate owner occupancy of the unit) or the status of the affected tenant (such as income or disability).

The emergency ordinance enacted in Palo Alto on August 27 requires a base relocation payment based on the size of the unit being vacated, ranging from $7,000 for a studio to $17,000 for 3 or more bedrooms. They will increase annually based on the Consumer Price Index (CPI). The base payments are set at approximately three times the current market rate for each type of unit, reflecting high start-up costs of a new tenancy, in addition to the cost of moving and potential lost wages. A single additional payment of $3,000 will be added where the unit is occupied by a low-income household or one or more tenants who is elderly, disabled, or a minor child.

To be eligible for relocation assistance under the emergency ordinance, a displaced residential household must have an annual household income that does not exceed one hundred (100) percent of the area median household income for Santa Clara County as adjusted for household size. Affordable housing developments are exempt and the emergency ordinance only applies to multi-family housing of 50 units or more. It is expected to impact approximately 25 parcels.

Rent stabilization

Rent stabilization ordinances take a wide variety of forms, but generally speaking they include some combination of limits on increased rents, limits on landlord conduct that has the effect of imposing a rent increase (such as reduction in services), or eviction controls. The implementation of a rent stabilization ordinance can be managed by a rent board or integrated into the jurisdiction’s staff responsibilities.

Rent Control

There are two forms of allowable local rent control in California. The least restrictive type (permanent decontrol) limits rent increases for units occupied at the time of adoption, but expires altogether as soon as those units become vacant. The other type (vacancy decontrol-recontrol) allows a landlord to set the initial rent, but limits increases as long as the same tenant occupies the unit. Once the unit is vacant, rents typically rise to the market rate which then becomes the new “base rent” on which the rent increase limits apply. All rent control ordinances “make some allowance for automatic periodic rent increase, and also for additional rent increases when required to ensure the landlord receives [a] fair rate of return.”

Eviction Controls

Because landlords can raise rents between tenancies, rent control alone can create an incentive for landlords to evict tenants for the very purpose of increasing rents. As a result, most rent stabilization ordinances include carefully crafted just cause eviction limits. For example, California’s Ellis Act gives landlords an almost absolute right to evict tenants for the purpose or exiting the rental business, but jurisdictions can still require relocation assistance in such cases and can potentially impose additional requirements should the landlord try to re-enter the rental market.

Evictions to allow owner occupancy are typically (though not always) considered just cause, but localities can impose requirements that the owner take occupancy within a certain period of time or that they maintain occupancy for minimum tenure. Finally, evictions for major renovations are often allowed, but some cities require the landlord to demonstrate that the evictions are actually necessary or require that the tenants be given a right to return following construction and even a comparable base rent, adjusting for amortized capital improvements.

Costa Hawkins Rental Housing Act

California’s 1995 Costa Hawkins Act imposed strict limits on the reach of local rent stabilization efforts. Under the Act, all housing built after February 1, 1995 and all single family homes and condominiums are exempt from local rent stabilization laws. Also, localities are prohibited from regulating the initial rent offered to a new tenant following a vacancy. Statewide Proposition 10, on the ballot this November, would repeal the Costa Hawkins Act, opening the door to much greater impacts from local rent stabilization rules.