February 9, 2019 Newsletter

In this issue:

  • City Council faces controversial decision on Downtown Commercial Cap
  • Get Up To Speed: VTA to reduce bus service; Cubberley redesign takes shape quickly; Drama continues at President Hotel; Final sections of Housing Ordinance approved; City makes big ask re: Stanford GUP
  • Grassroots Update: More wireless cell nodes win approval; Market at Edgewood hits one year mark; Sky Posse makes gains
  • Calendar of Notable Upcoming Action

Council to revisit Downtown Commercial Cap

Would enforcing the Cap help us get more housing downtown?

February 8, 2019, by Palo Alto Matters

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

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

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


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 moratorium must be 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. 


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.”


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.


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.


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.


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.

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

Get Up To Speed

VTA announces plans to reduce bus service in Palo Alto

The Valley Transportation Authority recently announced that due to a changing financial outlook, it will abandon the Next Network Plan it proposed in 2016. Instead, the VTA hopes to reduce costs by four percent with a new proposal, the 2019 New Transit Plan.

The new plan will reduce the Line 88 service (Veteran’s Hospital to Middlefield Road and Colorado Avenue) from a 6 am to 7 pm weekday schedule, to operate only at the start and end of the school day. Line 22 (Transit Center to Eastridge along El Camino Real) will eliminate 1-4 am service (even though ridership currently exceeds minimum thresholds for those hours), creating new challenges for late night and graveyard shift workers as well as the 40-45 homeless people who seek shelter on the bus during those hours. Finally, the new plan will severely curtail Express bus service. Express lines 101 (Stanford Research Park to San Jose) and 182 (Palo Alto to IBM) will be eliminated and service will be reduced on Express lines 102 (Stanford Research Park to South San Jose) and 103 (Stanford Research Park to Eastridge Shopping Center).

The New Transit Plan and a schedule of community meetings can be found on the VTA website. There will be a public online meeting on February 12 from 1-2 pm. The public comment period ends on February 28.

Click on the above image to enlarge. Buildings in red represent school facilities, blue are community facilities and purple buildings are shared.

Plan for redevelopment of Cubberley takes shape

City and PAUSD officials will get their first look at a design and programming proposal for future shared use of the Cubberley Community Center next week. The ambitious draft plan was produced by the consultant firm Concordia under a joint contract with the city and school district. It builds on the work of the former Cubberley Community Advisory Committee and reflects input collected from online surveys and over 450 participants who attended three community co-design workshops.

The plan recommends phased redevelopment of the 37 acre community center site along with the adjoining Greendell School site and school district-owned 525 San Antonio Road property. It calls for redevelopment of the entire area to allow reclamation of many acres worth of underutilized space. New buildings at two- to four- stories high can accommodate current community programming and much more, along with a new school should it become needed, and possibly some teacher housing – all while expanding green space at the site by nearly 60 percent. Buildings would be aligned in a “shared village” arrangement, with community facilities in the northern section (near Piazzas), school facilities in the southern section, and shared facilities (three gyms, art classrooms, a culinary kitchen, maker space and a large flexible event venue) in between. Parking ultimately will be switched from the current big surface lots to garage parking.

After the city and school district offer their feedback this week, Concordia will develop a phasing plan for discussion at the final community co-design workshop on May 7. The phasing plan will chart plans for redevelopment of community and shared spaces in the near term and school-related facilities as needed over time. The final plan will also identify funding strategies to support the project.

After years of delay, this master planning process is moving quickly. If you haven’t tuned in or weighed in yet, the time is now. Take a look at the draft program plan. (It’s large, so takes a moment to load, but there are lots of pictures, charts and diagrams that facilitate a quick skim. To see the layout and circulation plan, you’ll have to scroll down to the end of the staff report or view it at a public meeting). Take advantage of public hearings to get up to speed: at City Council (Monday, February 11 at 5:30 pm), School Board (Tuesday, February 12, item #4C) or the Planning and Transportation Commission (February 13 at 6:00 pm). You can share your views during public comments. And mark your calendar for the May 7 community workshop – it’s your last best chance to influence the final plan!

Drama continues for President Hotel Apartments

In the ongoing saga of President Hotel Apartments, on January 29 the city issued a letter to the new owners making them aware of a longstanding city law requiring all residential tenants to be offered a one year lease. The city does not proactively enforce that law, but according to City Attorney Molly Stump, the rule “provides for enforcement in an eviction proceeding in court.” On January 30, the Planning and Transportation Commission recommended eliminating an apparent error in the zoning code regarding grandfathered uses and facilities, and supported adding a new provision to the grandfathering rules that would prohibit older buildings that don’t comply with current code standards from converting from residential to commercial use. Despite a last minute revision provided at-places, the PTC also rejected a proposed waiver process that would allow such residential conversions in certain circumstances.

For its part, AJ Capital (the new owners of the President Hotel Apartments) extended the eviction deadline for the few remaining tenants to the end of February and last week finally submitted an application to the city for its planned hotel conversion.

In other news:

  • Final Sections of Housing Ordinance get council nod. In December council voted to relax zoning standards and create a new Housing Incentive Program as an alternative to by-right housing approvals required by SB35 (enacted by the state last year). On February 4, council extended similar changes to the California Avenue and El Camino Real Areas. Under the new HIP, project approvals will be streamlined by eliminating Planning Commission site and design review (the Architectural Review Board will continue to have discretionary review). Building density will be allowed to triple for housing projects with 15 percent below market rate units (SB35 required 50 percent affordable units, but didn’t allow ARB review). Floor Area Ratio (comparing building size to lot size) limits were raised from 0.6 to an FAR of 2.0 on California Avenue. Along El Camino Real they will jump from the current FAR of 0.5 or 0.6 (depending on the zone) to a new FAR limit of 1.5.
  • Stanford GUP: As negotiations ramp up on a development agreement between Santa Clara County and Stanford to secure approval of Stanford’s General Use Permit application, the City Council on February 4 directed staff to submit a letter itemizing public benefits the city hopes to get out of the deal. The GUP seeks to add 2.3 million square feet of new academic space on the Stanford campus. The city’s request includes such things as affordable housing fees, bike paths, expanded Marguerite shuttle service, help with rail crossing improvements and contributions to planning efforts for the downtown area.
  • Midpen Media Center: On January 28, the council voted to join a consortium of cities served by the Midpeninsula Media Center in a plan to purchase the Media Center‘s building with revenue from public education and government, or PEG fees, that are already collected via cable bills. Much like a reverse mortgage, the long-term purchase plan will provide the Media Center with ongoing revenue to support its operations.
  • Council Retreat: City Council adopts four priorities for 2019: The Climate Action Plan, Grade Separations, Transportation and Traffic, and Fiscal Sustainability. “Regaining public trust” and Cubberley redevelopment narrowly missed the cut.
  • Jonathan Lait appointed as new Palo Alto Planning Director

Grassroots Update

Narrow Council majority rejects ARB recommendation and residents’ appeal on wireless antennas

The local grassroots group, United Neighbors, continues to “fight the phone company” to prevent the installation of unsightly and noise polluting, above-ground wireless cell equipment in the public right of way throughout our neighborhoods. Nonetheless, on February 4 a narrow council majority (4-3, DuBois, Kou and Tanaka dissenting) approved the second cluster of Crown Castle/Verizon wireless antennas, this one including five nodes spread across University South. A first cluster of 11 nodes in three south Palo Alto neighborhoods was approved in May 2018 and a third, proposed for Downtown North is likely to come before council soon.

State and federal regulations govern most telecommunications issues and a recent Federal Communication Commission rule created a streamlined approval process that allows only 60 days for city review and approval. Several cities, including San Jose and Burlingame have challenged that rule in court and litigation is still pending. Rather than join in opposing that rule, the Planning and Transportation Commission recommended on December 12 that the city revise its municipal code to reflect the new requirements.

Meanwhile, back and forth with Crown Castle/Verizon about the design and location of new wireless nodes is tightly constrained by the 60 day “shot clock.” After the Architectural Review Board voted on December 6 to require that all equipment be placed underground, Planning Director Lait concluded that doing so would be infeasible. Instead he approved a modified, above-ground design that had not been publicly presented to the ARB.

United Neighbors appealed that decision to the City Council. They objected to a lack of transparency about why undergrounding was infeasible and argued that the director’s decision denied the ARB and the public the opportunity to review and comment on alternative designs. According to United Neighbors spokesperson, Jeanne Flemming, Crown Castle’s lawyer stated for the record that the company had offered to delay the “shot clock” for 30 days to allow time for ARB review, but that offer was declined.

Edgewood grocery celebrates one year anniversary

You may recall the controversy back in 2015 when the Fresh Market grocery in Edgewood Plaza closed. The owner of the Edgewood Shopping Center, Sand Hill Property Company, had received city approval to build 10 homes on the site (which grossed $30 million) in exchange for maintaining a grocery store as one of the public benefits in a Planned Community zone agreement. When the Fresh Market chain pulled out of California, the grocery sat empty despite Sand Hill’s commitment to provide a grocery on site for the life of the project.

Seeing no incentive for compliance, community members demanded a fine for the PC violation. Then in November 2016, residents flooded City Hall to insist the fines rise from $1,000 to $5,000 per day, which the City Council unanimously enacted. Those efforts finally paid off in January 2018 when the new Market at Edgewood opened.

Last month the Market celebrated its one-year anniversary with live music, BBQ, and free samples and discounts to thank the community for its enthusiastic welcoming and patronage. The family-owned and operated Market has “seen solid and steady growth” and the owners are on-site daily interacting with customers to tailor their selection to local needs.

Meanwhile, battles over the Sand Hill Project continue. The city is still litigating Sand Hill’s appeal of a judgment affirming the city’s fines related to the Fresh Market vacancy. Neighbors are struggling to get compliance with loading zone rules for Edgewood Plaza businesses as delivery trucks continue to eschew the loading zones, instead parking in red zones on the street. The neighborhood is also still awaiting promised management of traffic impacts at the intersection of Channing Avenue and St. Francis.

Sky Posse still hard at work

Community volunteers with Sky Posse Palo Alto continue to advocate locally, regionally, and at the federal level for transparency, local representation, and use of data-driven metrics to better evaluate and manage airplane noise. Thanks to their efforts, Palo Alto finally has a seat at the table with the recent creation of the Santa Clara/Santa Cruz Roundtable, an intergovernmental partnership between the cities and counties of Santa Clara and San Cruz, Norman Y. Minéta San Jose International Airport, San Francisco International Airport, and the Federal Aviation Administration. Councilmember Lydia Kou has been appointed as Palo Alto’s representative.

To stay up to speed on new developments related to airplane noise or find out how you can help, visit www.skypossepaloalto.org and sign up for the Sky Posse newsletter.

Notable Upcoming Action

February 11, 2019

Cubberley Master Plan: Council will hold a study session on the Cubberley Co-design progress to date. Beginning at 5:30 pm (City Hall).  Click here for the Program Document synthesizing input to date. Click here for the staff report.

Downtown Parking Structure: Council will vote to certify the Final Environmental Impact Report and Approve the Architectural Review Application for the Downtown parking garage at 375 Hamilton Avenue. Beginning at 7:10 pm (City Hall). Click here for staff report.

Downtown Commercial Cap: Council will consider repealing the current cap on downtown non-residential development. Current commercial development is at or near the cap. When reached, the cap triggers a one-year moratorium on new non-residential development downtown. The Downtown Commercial Cap currently presents a major obstacle to the conversion of the President Hotel Apartments from residential to hotel use. Beginning at 8:45 pm (City Hall). Click here for staff report.

February 13, 2019

Cubberley Master Plan: The Planning and Transportation Commission will hold a study session on progress and conceptual site layout and circulation for the redesign of Cubberley Community Center. Meeting begins at 6:00 pm (City Hall).

Comprehensive Plan and Housing Element: The PTC will do its annual review of the Comprehensive Plan, including the Housing Element, and make recommendations for changes or additions to the Plan. Meeting begins at 6:00 pm (City Hall). Click here for staff report.

February 25, 2019 (Tentative)

City Council is tentatively scheduled to consider an updated Urban Forest Master Plan: an ordinance allowing extra height and floor area to accommodate Roof-top Decks; and possible new appeals regarding planned installation of Wireless Cell Equipment in the public right-of-way.

March 4, 2019 (Tentative)

City Council is tentatively scheduled to hold a study session on Comprehensive Plan and Housing Element progress; consider an ordinance to adopt new federal rules regarding wireless cell equipment as part of our municipal code; consider development plans for Hotel Parmani at 3200 El Camino Real; and review the city’s Long Term Financial Forecast.

March 11, 2019 (Tentative)

City Council is tentatively scheduled to hold a Town Hall meeting and joint study session with the Working Group for the North Ventura Coordinated Area Plan. Time and location TBD.