When City Council approved a new Housing Incentive Program early this year for Downtown, California Avenue, and El Camino Real area commercial zones, at least one property owner was paying attention.
Where applicable, the HIP allows for significant increases in built floor area relative to lot size, known as Floor Area Ratio, along with other housing development incentives. In October 2018, council had prescreened a project at 788-796 San Antonio Avenue that sought a zoning change from CS (Commercial Service) to RM-40 (Residential Mixed Use) to allow redevelopment of the site as a four-story, 54-unit residential project. Subsequent passage of the Housing Incentive Program (HIP), however, gave the applicant a better idea: if I stick with CS zoning and can get the city to extend the HIP to this part of town, I can build a much bigger project.
The property owner pitched City Council the idea of extending the HIP in May 2019. Despite last year’s sizable controversy over approval of two nearby Marriott hotels due to anticipated congestion impacts, City Council appeared open to the prospect, even though it would further densify the immediate area. So the applicant submitted new plans and requested zoning code amendments extending the HIP to all CS zoned properties adjacent to San Antonio Road between Middlefield and Charleston Roads. The new plans envision a mixed-use project with 102 for-sale housing units, with 15 percent restricted to below-market rate. The Architectural Review Board provided initial feedback on the project’s architecture, massing and site design on August 15.
This week the Planning and Transportation Commission will hold a public hearing on the scope of a required Environmental Impact Report for the project and will offer initial comments on the proposed zoning amendments which include the following:
Establishing a HIP that includes a waiver to allow up to a 2.0 FAR for housing projects (doubling the current FAR for combined residential and commercial use in that CS zoned site) and changes to lot coverage restrictions;
Eliminating unit density limits;
Allowing rooftop gardens to count towards required open space;
Excluding the first 1,500 square feet of retail floor area from parking requirements;
Amending the citywide retail preservation requirements to:
Modify waiver standards to allow exceptions for housing projects; or
Establish minimum retail floor area replacement requirements for housing projects, but not require full replacement; or
Waive all or part of the required replacement retail floor area from the maximum FAR for housing projects.
Though not subject to PTC review, the project also seeks approval of a nine percent parking reduction and a partial waiver of retail space requirements. In addition, the project requires demolition of a building that appears to be eligible for listing on the California Register for Historic Resources.
The PTC hearing will begin at 6:00 pm on September 11. More detail about the project is available in the staff report.
In October 2018, the city kicked off a formal planning process to create a community-driven, integrated plan for redevelopment of the 60 acre area including and surrounding the Fry’s Electronics site in the North Ventura neighborhood. The North Ventura Coordinated Area Plan, or NVCAP, process is intended to produce a plan and regulatory framework for a walkable, mixed-use neighborhood with multifamily housing, commercial services, green space, and well-defined connections to transit, bicycle and pedestrian facilities.
With the data collection and community “visioning and priorities” stage of the process wrapping up, the city and community working group are shifting their attention to the development of plan alternatives. On August 19, City Council is tentatively scheduled to provide direction on anticipated changes in the scope of consultant services, including a likely budget increase. Staff also plans to seek an extension of the funding deadline in order to address the historic significance of the property, explore options to re-naturalize Matadero Creek, and finalize a contract for feasibility and cost estimates for open space options.
As part of the initial assessment of the plan area, the city commissioned an evaluation of the project area for potential historic resources. The evaluation found that the Fry’s Electronics building at 340 Portage Avenue and an associated office building on Ash street are historically significant due to association with the historic Santa Clara County cannery industry and retain integrity in six of the seven required categories, making the property eligible for listing in the California Register of Historical Resources. According to city staff, “the cannery is associated with the Bayside Canning Company, which was owned by a prominent Chinese immigrant [Thomas Foon Chew] and a groundbreaking figure in the canning industry. Mr. Chew was able to make the Bayside Canning Company the third largest fruit and vegetable cannery in the world in the 1920s, only behind Libby and Del Monte.”
As such, the property qualifies as a historic resource for the purposes of review under the California Environmental Quality Act and will be subject to supplemental environmental analysis. Whether the property’s historic significance will demand preservation of all or parts of the buildings themselves remains to be seen. However, the city’s Historic Resources Board was in agreement on July 25 that the buildings needed to be preserved and incorporated into the new project in some way. How to accomplish that while optimizing the underlying housing potential in that area, located in the core of the NVCAP, adds a new challenge to the planning process.
Editors note: This story has been updated to clarify the DEIR’s conclusions regarding net new daily car trips and distinguish between total daily trips and new trips on specific roadways.
The City of Palo Alto will finally enter the fray after standing on the sidelines of a multi-year public relations battle between Castilleja and its residential neighbors over the private school’s ambitious proposal to redesign its campus and expand enrollment to 540 students over the next four years (125 more students than allowed under their existing Conditional Use Permit). On August 14, the Planning and Transportation Commission will hold the first public hearing on a Draft Environmental Impact Report for the project. The DEIR, released on July 17, is subject to a 60-day public comment period, ending on September 16, 2019. The Historic Resources Board will hold another public hearing on September 12. Council action is not yet scheduled.
Two Stories
The sometimes fractious tale of two projects that has unfolded in recent years has the school touting its redesign as a much needed “modernization” that will expand access to “the unique transformational power of an all-girls education,” including to the 22 percent of students who receive financial assistance. (Tuition and fees for 2019/20 school year cost $49,900; current aid recipients represent incomes from below $20,000 to $300,000.) School representatives cite 30 community meetings held since 2012 to support their claim that the plan incorporates neighborhood input and was developed in consultation with the community in order to minimize, and even reduce, neighborhood impacts.
Castilleja officials emphasize that the school’s above-ground building footprint will not increase and that their proposed enrollment growth will be incremental and closely monitored. If it results in an increase in car trips, the next increment must be delayed until the school can bring car trips back under a cap of 440 cars during peak commutes. Finally, they argue that a new underground garage (adding 68 additional parking spaces to the school’s inventory, for a total of 142 spaces) will not invite more driving, but rather is intended to reduce on-street parking and traffic spillover on neighborhood streets.
Neighbors, on the other hand, tell the story of commercial expansion by a tax exempt corporation in an R-1 residential zone, through redevelopment that would overwhelm the quiet neighborhood with traffic and noise, eliminate heritage trees, and violate the city’s municipal code by improperly excluding the underground garage from the site’s floor area limits, resulting in “30,000 more above-ground square feet than is allowed by current code.”
They describe a process that ignored or misrepresented public input, a garage that will incentivize more driving as well as change the face of the neighborhood, replacing houses with a garage exit that will shine hundreds of headlights directly into neighboring property, disrupt traffic patterns, and cause cars to queue along Emerson and Bryant Streets as they wait to enter or leave both the parking garage and Embarcadero Road.
The fact that Castilleja “increased enrollment from 415 to 450 over 12 years [in violation of the school’s Conditional Use Permit], starting 2 years after they agreed on 415,” looms large as a source of mistrust regarding Castilleja’s intentions, practices, and reliability for future compliance.
The Project
Castilleja’s plan includes removing two school-owned houses, replacing five existing buildings with a single new, three-story academic building, eliminating 47 surface parking spots, freeing up green space (including a .33 acre “park” that neighbors would be permitted to access), adding a 50,500 square foot underground parking garage, lowering the pool below grade, and rebuilding basement classroom space. On net, above grade building area will be slightly reduced and below grade built area will increase, resulting in a total expansion of 77,784 square feet, a 47 percent overall increase.
Development will occur in four phases over three to four years, with student enrollment increasing to 490 students in phase one, 520 students in phase three, and reaching the maximum 540 students in phase four. If the school exceeds the car trip cap of 440 peak trips per day, subsequent enrollment growth will be put on hold until they return to compliance.
The DEIR
The Draft Environmental Impact Report noted that the project would “enable improved safety, sustainability and programmatic space” for Castilleja’s student population, and acknowledged features designed to minimize “school-related disruptions on the surrounding neighborhood,” such as new limits on special events, as well as amenities designed to benefit the community, including landscaping, preservation of mature trees, and .33 acre “park” that could be used by the school’s neighbors.
On the other hand, the DEIR concluded that higher student enrollment could significantly increase daily car trips, from the current total of 1198 trips to 1477 total trips, despite Castilleja’s current Transportation Demand Management program. “The net new trips associated with the increased enrollment is 279 or an 18.9% increase from the existing conditions.” Citing a June 2019 analysis prepared by Castilleja’s TDM consultants, Nelson/Nygaard, the DEIR anticipates that the enhanced TDM program proposed in Mitigation Measure 7a could reduce car trips by 12 percent to 22 percent. At the high end of effectiveness, that could mean a net reduction of daily trips to 1152. However, if the enhanced TDM measures perform at the lower end, the project would still produce a net increase of 102 daily trips.
Importantly, even if a successful, enhanced TDM program results in a net reduction in total daily trips, the concentration of school-related traffic on specific roadways due to the consolidation of parking in the underground garage would create significant and unavoidable project-related traffic impacts. In particular, the project would significantly increase daily car loads on Emerson Street between Embarcadero Road and Melville Avenue, and cause considerable new delays at the intersection of Alma Street and Kingsley Avenue. The DEIR deems the enhanced TDM program in Mitigation Measure 7a insufficient to reduce those traffic impacts to less than significant levels. The resulting potential to exacerbate existing land use conflicts between the school and its residential neighborhood was deemed a further significant and unavoidable impact of the project that would “create land use incompatibility or physically divide and established community.”
DEIR analysis of estimated change in traffic volume at various roadway segments attributable to Castilleja’s proposed project
The DEIR also identified significant or potentially significant environmental impacts on noise, trees (biological resources), air quality and seismicity associated with the project, but concluded that mitigation measures could reduce those impacts to less than significant.
Finally, the Castilleja project was found to be generally consistent with the city’s Comprehensive Plan. However, the DEIR’s zoning consistency analysis highlights that the proposed above-grade gross floor area represents a .41 Floor Area Ratio whereas the maximum FAR allowed on the site per city code would be .3026. Existing buildings on the site represent a FAR of .43 and Castilleja has requested a variance from the city to allow it to maintain its existing above-grade FAR. Because the proposed project results in a smaller non-compliance, the DEIR deems the proposed .41 FAR to present no new adverse physical environmental effects. The DEIR analysis does not count the project’s 128,166 below-grade basement square footage in the FAR calculation.
What’s next?
In addition to analysis of Castilleja’s proposed project, the Draft EIR analyzed three alternatives:
Alternative 1: No project.
Alternative 2: Moderate enrollment increase. Reduce maximum enrollment from 540 to 506 students, allowing for slight reductions in both the size of the new academic building and the number of off-street parking spaces.
Alternative 3: Moderate enrollment increase with reduced parking. Reduce maximum enrollment from 540 to 506 and reduce on-site parking to 92 spaces (minimum required by city code), with 52 spaces in the below grade garage and the rest in on-site surface lot at the corner of Emerson and Kellogg.
The public has 60 days to comment on the DEIR. You can email comments to Castilleja.expansion@cityofpaloalto.org, offer oral comments at the August 14 Planning and Transportation Commission Hearing (6:00 pm, Council Chambers, City Hall) or the September 12 Historic Resources Board Hearing (8:30 am, Council Chambers, City Hall), or send them to:
Amy French, Chief Planning Official, Planning & Community Environmental Department, City of Palo Alto, 250 Hamilton Ave, 5th Floor, Palo Alto, CA 94301
Following the public comment period, a Final Environmental Impact Report will be prepared, including responses to each submitted comment and any additional analysis conducted. The FEIR will also be subject to a public comment period and will provide the final analysis to guide City Council’s decision on whether to approve or deny the proposed project or an alternative. A Final EIR indicating significant and unavoidable impacts would require the council to make a finding of “overriding considerations” justifying approval of the project.
Note: DEIR comments are most effective when they specifically address impacts identified in the report or gaps in analysis or offer additional relevant information that can inform the analysis.
For more information related to the project visit the following websites:
Second vote on controversial Mercedes/Audi dealership coming up on consent August 5
On August 5, on second reading, council will vote up or down, without debate to confirm its approval of a new Mercedes/Audi dealership at the former Ming’s restaurant site at the corner of Embarcadero Road and East Bayshore Road. When first approved on June 24, the project stirred objections from the public about spot zoning, traffic, and environmental impacts at an already badly congested intersection in a sensitive area subject to the Baylands Master Plan. Residents also raised concerns about the accuracy and adequacy of the city’s analysis of the proposed project and recently submitted a letter demanding corrective action for alleged Brown Act violations, citing improper public notice and a lack of transparency whereby city council members had access to details that were not made available to the public prior to the vote. The Planning and Transportation Commission recommended approval on a narrow 4-3 vote.
For its part, the Architectural Review Board was unable over the course of three meetings to make the “Findings” required for them to recommend council approval. Rather than continue ARB deliberations, Planning Director Jonathan Lait opted to bring the project to council without the benefit of an ARB recommendation, citing a city preference for “streamlined” review limiting the ARB to three meetings. After lengthy debate on June 24, council voted 6-1 (Kou dissenting) to approve the zone change and site and design application, but also directed additional consideration by the ARB to further refine the Conditions of Approval, taking into account project lighting, trees, and consistency with the Baylands Master Plan in particular.
City may allow taller Wireless Communications Facility designs
On April 2019 the City Council adopted objective standards to regulate the design and location of wireless cell equipment installations on streetlight and utility poles throughout the city. June 17, council added an interim standard requiring a 300 foot setback from public schools. The Wireless Communications Facility, or WCF, standards are now slated to be amended once again on August 12 when council will vote, via the Consent Calendar, on adjusting the standards to allow taller WCF installation designs.
The WCF standards currently limit streetlight WCFs to 3 feet or 6 feet above the height of “similar surrounding poles,” depending on the type of design used. However, due to an unforeseen conflict with the Public Works and Utilities departments’ streetlight replacement standards, staff anticipates that the April 2019 WCF standards could unintentionally preclude an applicant from building any of the WCF designs described in the standards. Under the city’s replacement streetlight standard, over time new streetlights will exceed the height of surrounding poles by at least 2 to 4 feet, leaving insufficient space for pole-top WCF antennae or other equipment. The proposed August 12 amendments would clarify that WCFs may not exceed 3- or 6-feet above the height of the “existing pole or replacement pole,” and eliminate the vague “similar surrounding poles” reference.
The city’s approval of a spate of new wireless equipment installations in the public right of way and recently adopted standards for wireless communications facilities have stirred significant public controversy as residents have sought greater protection from potential negative impacts arising from cell antennas close to homes and schools. However recent Federal Communications Commission regulations strictly limited local discretion to reject small cell antenna equipment installations, constraining the city’s regulatory authority to “aesthetics” and allowing controls only by way of “objective standards.” Although some favor the promise of improved wireless signals and argue that negative impacts are overestimated, residents consistently comment by the dozens objecting to health and safety, visual, and property value impacts from the proliferation of small cell antennas and their associated equipment.
The Cubberley Community Center Master Plan offers an example of the tensions and trade-offs involved in an all out push to build housing supply — in particular, whether limited publicly-owned land should be committed to long-term residential use or dedicated to the community services and facilities necessary to support a growing population.
On May 9, city consultants will convene the fourth and final community engagement session on a master plan to redevelop the Cubberley site. Anticipated as a wrap-up of the community co-design process, the consultants recently announced, based on discussions with City Council and the School Board, that the final meeting will also cover four brand new housing scenarios for the site. The scope and magnitude of the new housing concepts have not yet been released. But to the extent they impinge significantly on the priorities developed throughout the seven-month community “co-design” process, they could meet with some pushback.
The first community meeting focused on identifying the kinds of programming/uses participants hoped to see on the consolidated 43-acre site (Cubberley plus Greendell School plus PAUSD owned property at 525 San Antonio Road). The second meeting focused on prioritizing those uses. Affordable housing registered as desirable to some in both meetings, but in both instances was heavily outweighed by other priorities. The third meeting presented a draft concept plan that introduced potential teacher housing on the PAUSD property at 525 San Antonio, but focused primarily on site organization, massing, circulation, parking, and architecture and landscape styles. After that meeting, 73 percent of participants agreed or strongly agreed that “The Cubberley Master Plan is on the right track.”
One of the five priorities in the city’s 2018 Housing Work Plan included “engag[ing] in community conversations about the use of publicly-owned land for affordable housing.” With no city action on that goal to date, the introduction of new housing concepts at the final meeting of the Cubberley design process may demonstrate that the “conversation” is past due.
The Planning and Transportation Commission on Wednesday divided over zoning changes and impacts in the sensitive Baylands location as they voted 4-3 (Lauing, Summa, Templeton dissenting) to recommend accommodating a 48 foot tall, combined Mercedes and Audi car dealership in at 1700 and 1730 Embarcadero Road. The prospect of tax revenues from car sales seemed to carry the day, despite concern that the proposed project was far “out of scale” with the surrounding area and incompatible with the Baylands Master Plan.
The former Mings Restaurant site at 1700 Embarcadero had been previously up-zoned to allow a proposed hotel, introducing much more lenient development standards regarding height and density to the area. Although the hotel plan fell through, the new underlying zoning for that individual site remained, allowing the new owners to seek a similar intensity of use, still inconsistent with the surrounding area. The current application then sought to extend the more lenient zoning to an additional parcel to facilitate the combined Mercedes/Audi project.
Former PTC Chair Lauing encouraged his colleagues to resist doubling down on the controversial practice of project by project re-zoning and stay true to long established policy to maintain compatibility with other development across the surrounding area. Instead, the PTC majority relied on the existing, up-zoned Ming’s site to justify extending the zone to the neighboring parcel as “generally consistent” with area zoning.
Other concerns included both ecological and traffic impacts. The PTC voted to recommend conditions of approval to ensure that night-time lighting did not exceed that of other area properties and require that construction impacts on migratory birds would be mitigated. As for traffic, the adjacent intersection at Embarcadero and East Bayshore Roads is deemed one of the worst congested in the city. However, even with a requirement that the project pay a fair share of traffic mitigations associated with its impact, short term mitigations will be insufficient to manage the new traffic load and long term mitigations remain years away.
“Jobs-rich” designation extends impacts well beyond transit zones in Palo Alto
March 3, 2019 – Palo Alto Matters
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.
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).
Addison Avenue – BEFORE. Currently developed as single-family homes.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.
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.
Would enforcing the Cap help us get more housing downtown?
February 8, 2019, by Palo Alto Matters
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.
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.
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.
