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.
“Jobs-rich” designation extends impacts well beyond transit zones in Palo Alto
March 3, 2019 – Palo Alto Matters
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.
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.
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).
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.
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.
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.
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.”
Would enforcing the Cap help us get more housing downtown?
February 8, 2019, by Palo Alto Matters
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 firstname.lastname@example.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.
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.
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).
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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. Theyalso 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.
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 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.
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.”
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.
New analyses show current housing fees insufficient and confirm heightened congestion impacts particular to housing development.
Public comments related to Stanford’s proposed academic expansion raised big concerns about obscured impacts in Stanford’s analysis and unmet new housing demand. Under the leadership of Board President Joe Simitian, the Santa Clara County Board of Supervisors stepped up to the plate to clarify costs and implications.
The original Draft Environmental Impact Report for Stanford’s pending General Use Permit application, (commonly referred to as the Stanford GUP), relied on surrounding communities to provide 2,245 new housing units to support the university’s growth. But vagueness about how much would go where led to limited, generalized analysis of potential impacts. To offer the public a fuller picture, the county commissioned a nexus study to quantify the cost to the county (i.e., taxpayers) of meeting below-market-rate housing needs created by Stanford’s planned expansion. Also at the county’s initiative, Stanford analyzed two alternative housing scenarios in which Stanford would build on-campus housing for more of the faculty, staff and students its expansion would generate. Updated findings are published in aRecirculated Draft Environmental Impact Report.
Together, the new data and analysis highlight a fundamental conundrum. Unless there is a major adjustment to housing impact fees, allowing Stanford to shift its housing burdens to off-campus communities would also shift significant costs to taxpayers (and may risk that the housing won’t get built). But requiring the university to house the new demand it creates will cause additional, substantial, and concentrated impacts in Palo Alto. In addition to teeing up those key trade offs to inform the county’s decisions about the project, the new housing analysis also reveals that even in a truly transit-rich environment, residential development, by its nature, makes it harder to get cars off the road. Read on to learn more about impact fees and key takeaways from the updated DEIR analysis.
If you want to tell the Board of Supervisors your thoughts on housing impact fees, you can email Joe Simitian (our District 5 supervisor) here and find contact info for other supervisors here. The public has until July 26, 2018 to submit comments on the recirculated DEIR to Santa Clara County.
The county will host a public meeting to hear and receive comments on the recirculated DEIR in Palo Alto on July 10, 2018 from 6:00- 8:00 pm (Palo Alto Art Center, 1313 Newell Road).
Housing impact fees fall far short of full mitigation for newly created below-market-rate housing needs.
Santa Clara County and many municipalities, including Palo Alto, impose housing impact fees on new development to help offset the cost of public subsidies to meet related affordable housing needs. The new county nexus study indicates that the cost to support below-market-rate housing demand created by Stanford’s planned growth comes to $143.10 per square foot of new academic space. A similar nexus study commissioned by Palo Alto in 2016 found that a housing impact fee charged to commercial developers (office/R&D) could be justified at up to $264 per square foot. Stanford currently pays the county a housing impact fee of $35 per square foot. The 2018 Stanford GUP proposed reducing that payment to $20 per square foot.
On May 8, the County Board of Supervisors discussed raising impact fees to better reflect nexus study findings. County staff recommended charging the maximum supportable fee of $143.10 per square foot for Stanford’s academic development:
“Fee levels below the maximum will exacerbate the existing jobs-housing imbalance and wage disparity – the root causes of the housing affordability crisis.”
Stanford strongly objected, claiming that such a change would “cripple” the university’s ability to fulfill its mission. Board President Simitian countered that even the highest fee would amount to only 0.2 percent of the university’s annual budget, or a mere 2 to 3 days worth of growth in its endowment. Simitian contrasted that impact with 30 percent to 50 percent increases in rent, within a mere couple of years, faced by area residents. The Board of Supervisors expressed support for raising the floor of an impact fee to $68.50 per square foot (roughly double the current charge), with a ceiling of $143.10. It has been reported that Stanford has since offered to increase its housing contribution to about $24.60 per square foot, which they claim aligns with the housing fees paid for office development “in most Bay Area cities.”
The nexus study indicated that a fee of $75 per square foot would be sufficient to provide affordable housing in the county for new Stanford workers with household incomes up to 80 percent of the Area Median Income (AMI). In 2017, the AMI for a family of four was $113,300 per year in Santa Clara County. The board will take a final vote after review by two other county committees.
[Note: In March 2017, City Council voted 5-4 (DuBois, Filseth, Holman, Kou dissenting) to set Palo Alto’s housing impact fees for office/R&D development at $35 per square foot, a significant reduction from the $60 per square foot fee approved by the previous council in December 2016.]
Stanford says more on-campus housing will significantly increase car trips and local congestion, despite transit-rich environment.
Policy makers at every level of government make great hay over the promise of car-light housing in “transit-rich” areas to reduce car use and ownership, thereby reducing traffic and parking congestion impacts. The new Stanford analysis, however, confirms what many Bay Area residents have long contended is a weakness in that approach: it turns out the complicated transportation demands created by residential development – for trips to school, child care, shopping, medical care, religious services, socializing, recreation, entertainment, etc. – make it less likely people will get out of their cars.
The recirculated DEIR studies two new alternative scenarios: Additional Housing Alternative A, in which all newly created housing demand is met through on-campus construction (adds 2,483 additional multi-family housing units and 66 student beds to the original project); and Additional Housing Alternative B, in which approximately half of the housing demand (1,209 multi-family units and 66 student beds added to the original project) is met on-campus. Even with Stanford’s rich transportation resources, on-campus residential development under both alternatives will lead to more car trips and greater congestion. Stanford also notes that although vehicle miles traveled are reduced when people live near where they work, many new Stanford households (as in all cities), would include folks who commute to work elsewhere, offsetting some of those reductions.
“[O]ne might think having more housing on campus will reduce car trips. But campus residents will need to drive on local roads to do things like take kids to school, buy groceries and commute to off-campus jobs. Analyses show that residents generate more local car trips than commuters to campus.”
– Catherine Palter, Stanford’s associate vice president for land use and environmental planning.
In order to meet its highly touted No Net New Commute Trips standard (set under the previous, 2000 GUP), Stanford has created a sophisticated Transportation Demand Management program, imposed permit parking requirements across campus, and embraced multi-modal infrastructure to encourage bicycle and pedestrian transportation. Perhaps most importantly, it has effectively deployed an extensive free shuttle system, the Marguerite, that zig zags the entire campus and connects riders to Stanford, Town and Country, and San Antonio Road Shopping Centers, Stanford’s Medical Center and Research Park, downtown Palo Alto and the Palo Alto Transit Center on University Avenue.
“[T]he No Net New Commute Trips standard may not be achieved because travel demand management (TDM) measures are not as effective in reducing residential trips, compared to commute trips.”
– Recirculated DEIR, p. 2-54
Yet according to the recirculated DEIR, even in that enviable and uncommonly transit-rich environment, and with the addition of new parking and “40,000 square feet of trip reduction amenities such as onsite childcare and mobility hubs,” enough additional residents will still drive that new congestion impacts will be significant and unavoidable.
If Stanford were to build the housing itself, but with all or some of it off-campus (outside Stanford’s transit rich environment), the needed housing units “would disproportionately affect [Palo Alto, Menlo Park and Mountain View] compared to other communities in the Bay Area that house Stanford affiliates.” Though not noted in the original GUP analysis, that also of course would be true without new Stanford housing, but in that case the impacted communities would also have to find a way to get the housing built (or face more long distance commuters).
Even if Stanford builds its own housing, Palo Alto will experience heavy new impacts.
Greater building heights and density along local roads; increased traffic and school growth; and new demands and costs for safety services, water, and parks.
Perhaps most revealing, the new housing alternatives give the public its first concrete description of what 1,200 to 2,400 units of local housing could look like, as well as the on-the-ground impacts of such a sizable increase in population (12,573 new residents by 2035 under Alternative A). Stanford proposes that the new housing would be concentrated in East Campus (near Stanford Avenue), along El Camino Real, in the Quarry Road area, and on West Campus (between Sand Hill Road and Campus Drive). Although designated on-campus open spaces are preserved in the new housing alternatives, Stanford suggests that the increased on-campus development density may increase pressure to develop outside the Academic Growth Boundary after 2035.
Key impacts of new housing alternatives:
The housing itself would add 2.3 million square feet of additional development under Alternative A. Alternative B would add 1.14 million square feet of additional construction and associated environmental impacts. The proposed multi-family housing projects could include densities of 40 to 80 dwelling units per acre, building heights from 50 feet up to 100 to 135 feet, and setbacks of less than 20 feet along local roads. Stanford asserts that the development standards in the El Camino Corridor Plan and the Stanford Community Plan would need to be amended.
As for traffic, 55 percent of residential car trips are expected to stay local to Palo Alto and both housing alternatives will increase peak-hour traffic volumes on Palo Alto streets, with a notable (but not deemed technically significant) volume increase in the Crescent Park area. Alternative A will also create new significant impacts at the intersections of Stanford Avenue and Bowdoin Street and Charleston and Middlefield Roads. Under both alternatives, impacts at the intersection of Alma Street and Charleston Road will be significant and unavoidable.
Alternative A is estimated to add 1,446 new school-aged children to the Palo Alto Unified School District, beyond those counted in the original analysis, while Alternative B would add 861 more new PAUSD students. However, Stanford-owned rental housing is eligible for property tax exemptions and therefore rarely contributes to local property tax revenues that make up the vast majority of local school funding. By contrast, many other universities such as Harvard, Brown, and MIT do pay property taxes for their non-student rental housing. Dartmouth pays property tax for all on- and off-campus housing, including dormitories.
According to PAUSD Trustee Todd Collins, the current enrollment of about 350 students from tax-exempt Stanford housing represents approximately $4.5 million in annual unfunded costs for Palo Alto schools. An influx of new students from tax-exempt housing could have a severe economic impact on the school district.
Other population related impacts include substantially greater demands on city-provided Fire and Emergency service to the campus, police dispatch, parking enforcement, and bicycle and pedestrian safety services, including crossing guards. Both alternatives will substantially increase consumption of both potable water and groundwater, including additional use and treatment of groundwater for emergency use to supplement the potable water supply. The water detention basin in the West Campus will have to be relocated, affecting city flood control facilities. Use of city parks, particularly in the College Terrace neighborhood will notably increase, impacting the quality of the facilities and increasing maintenance costs beyond the impacts identified in the original DEIR.
Let the county know what you think of the new alternatives and their impacts, either at the July 10 public meeting (6:00-8:00 pm, Palo Alto Art Center), or by submitting your comments by July 26 to:
County of Santa Clara Department of Planning and Development Attention: David Rader County Government Center 70 West Hedding Street, San Jose, CA 95110 Email: David.Rader@pln.sccgov.org
City staff are seeking a courtesy extension in order to allow the council an opportunity to review the city’s comments before submittal to the county. If granted, the council likely will discuss them at its special meeting on July 30. The PAUSD Board of Trustees is likely to meet on July 17 or 19 to discuss the GUP.
State Senator Scott Weiner (D-11th District), the author of last year’s “By-right Housing” law, (SB-35), has a pair of new “go-big” proposals. Designed to incentivize construction of dense, multi-family housing near transit, SB-827 would “up zone” all parcels, statewide, within 1/2 mile of a major transit stop or within 1/4 mile of a high quality transit corridor. Residential development projects in those “transit rich” areas would receive a “transit-rich housing bonus” exempting them from local rules regardingdensity, parking, floor area limits and design standards. Height limits would be set between 45 feet and 85 feet, depending on location. SB-827 does not specify any affordability requirements or minimum residential component.
Following on the heels of new State penalties for failure to meet regional housing allocations (RHNA), Senator Weiner’s second proposal, SB-828, would effectively double the RHNA requirements for all local jurisdictions, requiring that they “plan and accommodate for 200 percent of the local housing allocation for every income category in its housing element.”
So what would SB-827 mean for Palo Alto? More than a third of the city’s built environment would be eligible for conversion to dense “housing developments” up to as much as 85 feet high: approximately 6,000 parcels (out of 18,050 total parcels in the city), including 3,694 parcels currently zoned for single family homes and 1,416 zoned for multi-family residential (which currently have height limits of 30 to 40 feet). As written, SB-827 appears to apply across all zoning categories.
Click the image below for a story map with multiple tabs analyzing the impacts of SB-827 on Palo Alto (created by AnimaDesign, courtesy of the Embarcadero Institute, 501(c)3).
The zoomable map shows the new maximum building heights in the areas impacted by the Weiner proposal. Yellow = maximum height of 45 feet, Orange = maximum height of 55 feet, and Red = maximum height of 85 feet. If the project is eligible for another state “density bonus,” heights could go up to 105 feet. On site parking, area wide, will be left entirely to the discretion of the developer.
What do 55 foot and 85 foot buildings look like?
It is widely agreed that passage of SB-827 would substantially curtail the decision-making powers of local government, but community advocates are lining up both for and against the bill. Many avid housing proponents see less local control as a good thing, but it does raise some thorny questions.
Will it disrupt carefully crafted area plans, such as SOFA I/II and the soon to kick off North Ventura Coordinated Area Plan or the local balance and distribution of schools, parks and other community facilities? How will it impact the local economy when all commercial uses within the transit-rich area have to compete with more highly entitled housing developments (akin to government incentives for office growth in recent years)? Will they have to move farther from transit? Will it promote displacement of low and moderate income residents from older, more affordable housing stock? What happens if transit routes change? Will it deter the creation of new transit routes? What will be the likely service demands and fiscal impacts on the City?
Whether SB-827 will move out of committee and forward to passage is still an open question. Let your local representatives know what you think about the bill: City Council, County Supervisor Joe Simitian, State Assemblymember Marc Berman, and State Senator Jerry Hill.
Palo Alto Weekly – by Palo Alto Weekly editorial board / January 26, 2018
Simitian vision for subsidized teacher housing has long road to travel
Every organization in Palo Alto — business, nonprofit and government — is struggling with the lack of affordable housing and the resulting employee-recruiting and commute challenges. So before letting teacher housing become the sole focus, we’d like to see clear evidence of need and demand and a policy discussion about whether and why teacher housing should be a higher priority than other subsidized housing when considering the re-purposing of limited public property.
The value of teachers living within the community may very well be worth making it the priority for the use of this county property, but the public deserves a lot more analysis showing such a plan will actually result in the desired outcome before reaching that policy decision.