January 12, 2020 Newsletter

Letter from the Editor

As a Palo Alto native who is passionate about this city and the importance of a robust civic partnership between the city’s government and residents, it has been a labor of love to produce Palo Alto Matters for the past three years. And an honor to have learned from so many tireless community advocates along the way. 

It has been gratifying to receive so much feedback substantiating the value of this publication to the community. I appreciate the countless gracious testimonials from readers over the years as well as the loyal, and still growing, list of subscribers (spanning every neighborhood in the city and including current and former public officials, city staff, local news organizations, and interested observers from nearby cities). 

Because of that broad validation and my long dedication to the effort, made possible by the generous financial support of the Embarcadero Institute, it is with mixed feelings that I write today to announce that Palo Alto Matters will go on indefinite hiatus after this issue.

Nevertheless, I trust you will stay the course in your ongoing interest in local matters. There is a lot of important action on deck for this city, as always. Just to name a few for this year:

  • City Council will choose a preferred grade separation alternative to address the massive traffic challenge of more frequent gate-down times at train crossings. 
  • Council will also decide whether to put a business tax on this year’s ballot, in part to fund the separation of roadways from the tracks to mitigate those crossing delays.
  • We’ll learn the fate of the controversial housing mandates in Senate Bill 50 and, hopefully, see the city finally take up phase 2 of its 2018 Housing Work Plan.
  • The city will likely scale back free street parking in commercial centers.
  • The Final Environmental Impact Report for Castilleja’s major redevelopment project will come out and city officials will finally weigh in on the project.
  • And of course, come November we will vote to fill four seats on City Council (the seats of Fine, Kniss, Kou and Tanaka will all be up for grabs)!

City Council elected new leadership on January 6, welcoming Councilmember Adrian Fine as Mayor and Councilmember Tom DuBois as Vice Mayor. Hopefully, with this election of two thoughtful, informed, and articulate leaders from across the political divide, like last year, we will see another year of efficient, somewhat balanced, and relatively drama-free deliberations as the city tackles a controversial and daunting agenda.

I’ll be paying attention and weighing in and I hope you will too!

Jennifer Chang Hetterly

In this issue: 

Don’t tune out yet. 

The controversial statewide housing mandates in Senate Bill 50 are in a race against the clock. Behind-doors heavy lifting over the break and a final public scramble for State Senate approval by the end of the month will determine whether State Senator Scott Wiener’s signature plan will move forward or go dormant for the year.

Here at home, polling and analysis has been proceeding apace for a possible business tax on this year’s ballot. Local advocates on both sides are gearing up with process and economic arguments, and in coming months council will show its hand in terms of size, reach, and purpose of the tax. Don’t wait too long to tell them what you think it should look like.

Meanwhile, though perhaps not as high profile, there are strong community rumblings about recent developments related to the College Terrace grocery, cuts to bus service, airplane noise and more.  

Guest Commentary

Aging gracefully? 

Changed circumstances demand a course correction – it’s time for a business tax.

By Karen Holman

Former Mayor of Palo Alto and current President, Midpeninsula Regional Open Space District

In 2019 we celebrated the 125th anniversary of Palo Alto’s incorporation. Perhaps reasonable then to ask, “Is Palo Alto aging gracefully”? 

Not so many years ago, we had only to avoid the “rush hour” to keep from sitting in stalled traffic on 101. Now that peak hour has expanded to become peak period and spans multiple hours, more lanes of freeways, and is painfully installed on our neighborhood streets. Rush hour has become such an antiquated term, it may only be relevant as the name of a 1990’s movie. 

Housing prices in Palo Alto have historically been higher than neighboring towns. Due to the vision and prudence of some leaders decades ago, inclusionary housing laws were adopted such that those who work at lower paying yet critical jobs, jobs that make our community function, could live here. But today, our affordable housing fund that supports affordable units beyond the 15 percent inclusionary set-aside requirement, is essentially empty. 

These two realities, housing and traffic, and the combination of them are often identified as the core issues facing Palo Alto today and blamed for a declining quality of life. The impacts on housing demand and traffic created largely by our daytime population must be mitigated if we have any hope of a reasonable quality of life here, a quality of life that we’ve seen increasingly challenged. 

But while office occupancy densities have been growing for several years, there has not been political will to recognize that fact and address ways to mitigate the impact on our community. The zoning code is far out of date, inaccurately assuming there are only four employees per thousand square feet of office space. The business registry continues to be an unreliable source of information. Transportation Demand Management (TDM) program agreements with developers, aimed at reducing car trips, are inconsistent and all too frequently unenforceable. 

The Transportation Management Authority (TMA), the entity charged with reducing traffic, is being funded primarily by General Fund dollars and has been only somewhat successful. A significant portion of the General Fund comes from property taxes that are skewed to demand less of commercial property owners due to Prop 13 loopholes. So the residents are picking up the majority of the bill for reducing traffic impacts induced by office dwellers.  

In simple terms, there are more office workers in smaller spaces, and the residents are paying the price not only in terms of worsening traffic but also by financially subsidizing efforts to reduce the impacts. 

And to address housing demands, Palo Altans are being asked to accept larger buildings, more traffic, more parking in neighborhoods. And most of the housing being built does not address the greatest need for a resilient community, housing for the lower income sector. 

Palo Alto is due and overdue a course correction. We cannot zone our way, build our way, or General Fund our way out of our very real challenges. At this juncture, a business tax is not only the most logical but the fair source of relief. 

A response 

The City Council can make great strides to improve our lot and set a new direction as it once again considers a business tax, a measure that has been considered twice in recent years and both times abandoned by the council majority. We often tax ourselves to improve our libraries, build better schools, repair storm drains. A responsible business tax is just such a measure, a tax that can improve conditions for both residents and employees alike. It also provides an opportunity for the council to provide assurance that it is listening, that it understands both people and businesses are leaving Palo Alto. Yes, for a variety of reasons perhaps, but housing availability and certainly traffic, commute times, resultant noise and air quality are factors. 

Developers pay impact fees to offset certain impositions on the community such as housing needs, parks, public safety. But those fees do not come close to mitigating the imposition on the community. And those fees are a one-time event while the effects persist and accumulate in ongoing ways.

In thinking about whether to put forward a rational business tax, think about where we are today as a community, what we’ve become, and what the possibilities are for our future. Perhaps we need to consider who we are, what we have created. And what we going to make of where we are.


My hope is that council members develop the resolve to do this one right thing, this one corrective thing. And see to it that the ballot measure, the business tax itself, is clearly written, states the purpose, is easily enforceable, and identifies appropriate non-profit and retail exemptions. Adopt an accompanying advisory measure that identifies specific purposes for the funds such as housing, especially Below Market Rate units, and traffic relief. And develop criteria for spending and appoint an oversight committee. None of these were done in the failed 2009 business tax measure. We can take advantage from those learnings to create a success.

My further hope is that the business and property owners will recognize the mutual benefits of such a proposal, especially housing and improved commutes, and get behind the tax. And recognize that most surrounding and peninsula cities already have business taxes and yet enterprise is able to survive and even thrive. 

There is hope for Palo Alto to be better than it is today. That hope rests in the support and passage of a responsible business tax, the most logical and fair source of relief.

Get Up To Speed

Newly amended SB50 faces January 31 deadline for adoption by State Senate. 

Senate Bill 50, also known as the “MORE Homes Act,” will likely steal headlines throughout January as State Senator Scott Wiener makes a final push to gain Senate passage of his bill to impose statewide mandates for taller, denser housing near transit and in “jobs-rich” communities. The controversial legislation hit a major road bump in May 2019 when the Chair of the State Senate Appropriations Committee designated it as a two-year bill – delaying further votes until 2020. The bill now must pass the State Senate by January 31, 2020 or fall to defeat. If passed by the State Senate this month, SB-50 will move to the Assembly for further consideration this year.

SB50 Basics

Under SB-50, local governments would be required to approve housing projects with minimal or no on-site parking and waive local zoning rules such as height and density limits, set-backs from street or neighboring properties, floor area ratio, and daylight plane protections. 

SB-50 requires local jurisdictions to allow a range of developer incentives based on the proposed location of new residential projects. Those within one-half mile of a major transit stop are entitled to the most local government concessions, but by targeting “jobs-rich” as well as “transit-rich” areas, the bill would ensure that even single-family neighborhoods distant from public transit are subject to upzoning under the law. 

“Jobs-rich” areas are loosely defined as areas with characteristics “associated with positive educational and economic outcomes” and where new housing would enable residents to live close to more jobs or enjoy “shorter commute distances relative to existing commute patterns and jobs-housing fit.” With all of Palo Alto likely to be deemed “jobs rich,” passage of SB-50 not only would allow denser, taller, under-parked buildings near transit, but also would have citywide impacts (regardless of proximity to transit) – most notably by eliminating single family residential zones and reducing the residential parking developers must provide on site. 


SB-50 takes a decidedly supply-side approach to housing affordability, seeking to stimulate market rate housing production by eliminating local zoning constraints that make housing projects less appealing to developers. Weiner told the San Jose Mercury on Tuesday that “SB 50 will be a huge boon for affordable housing.” SB50 proponents point to the bill’s inclusionary requirement mandating that certain projects include a minimum percentage of below market rate units. They also contend that as people move into new market rate housing, it will free up more affordable occupancy in existing, older buildings. 

The bill doesn’t require any below market rate housing in projects with 20 units or less (the most likely option in single family neighborhoods). For large projects, however, developers taking advantage of the new incentives must include a minimum percentage of affordable units either on site or through a “comparable affordability contribution” towards housing off site:

Palo Alto law already requires a 15 percent inclusionary rate for projects with three or more units. With the notable exceptions of Stanford Research Park, Stanford Shopping Center, and the Fry’s Electronics property in North Ventura, there are very few local parcels that could accommodate projects large enough to trigger a higher percentage of below market rate housing under SB50. (Note, however, that until and unless the city enacts the “Palmer Fix,” the city can only require inclusionary units in for-sale housing projects, like condos and townhomes, not rental units.)   

Revised Bill

Wiener unveiled amendments to the bill last week in response to staunch criticism that SB50’s one-size-fits-all mandates usurp local control over how and where development should occur in a community and threaten gentrification and displacement of lower income residents. 

The newly amended version would give cities two years to design alternative strategies to zone for as much or more housing as that enabled through SB50’s mandates. Such local alternative plans must gain state certification by 2023 in order to avoid SB50’s one-size-fits-all approach. According to Weiner, “As long as the city’s alternative approach zones for at least the same amount of additional housing as SB 50 would, then the plan qualifies.”

A 2019 analysis by the Embarcadero Institute calculated that SB50’s mandates would enable an additional 46,000 housing units in “transit-rich” and “high quality bus corridor” areas, alone, in Palo Alto. The number of new units enabled in areas that are more distant from transit, but still considered “jobs-rich” is harder to quantify. However, with approximately 13,000 land parcels falling under that category, SB50’s proposed upzoning to four-plexes would likely bring the total amount of new housing enabled by SB50 well above 46,000 units. 

First Baptist Church sits on an unusually large, 0.85 acre, parcel at the corner of N. California Avenue and Bryant Street. This rendering shows the eligible size of a multifamily development on that “transit rich” site under SB50. With small units (studios or one-bedrooms) it could accommodate approximately 150 units. Palo Alto would have to zone for 100’s of these to meet the SB50 standard. Rendering courtesy of Embarcadero Institute.

Thus in contrast to the current requirement that Palo Alto zone for 1,988 units of new housing from 2015-2023 (our state mandated Regional Housing Needs Allocation), any effort by Palo Alto to craft an “alternative approach” under SB50’s new two-year nod to local control would have to zone for 46,000-plus new housing units to avoid SB50’s land use design. 

The other notable change in the revised bill seeks to reduce displacement by requiring developers to reserve 40 percent of any new affordable units for eligible residents already living within a half mile of the new project. 

Sharp divisions remain

SB50 enjoys the support of the Bay Area’s big city mayors in San Francisco, Oakland, and San Jose and the bill recently earned a cautious endorsement from the Santa Clara County Board of Supervisors (with Board President Joe Simitian abstaining). However, the San Francisco Board of Supervisors have voted three times to oppose the bill since it was introduced. Los Angeles and smaller cities like Sunnyvale and Cupertino also voted to oppose and the League of California Cities has taken a position in opposition. 

Palo Alto’s City Council has not voted to take a position on the bill. Mayor Adrian Fine has been a consistent supporter, but former Mayor Eric Filseth has vigorously opposed it, including in his 2019 State of the City speech and as recently as this week in an Op-Ed. Councilmember Lydia Kou has also been a vocal opponent. 

Khoury's Market

Battle over legal penalties wages on as another College Terrace grocery store prepares to shut down

Khoury’s Market announced last week that it plans to close – the second grocery to shutter at the College Terrace Centre at 501 Oxford Avenue in two years. Both Khoury’s and the College Terrace Market that preceded it cited long delays getting approved signage to give their stores the necessary visibility to thrive. Khoury’s also had numerous problems with the elevator connecting the market to underground parking. Perhaps most problematic, however, was the property owner’s planned one-month exterior upgrade that extended to seven months, all the while keeping the grocery shrouded in scaffolding and construction netting.

The city approved a planned community ordinance, or PC, in 2014 to allow redevelopment of 2100 El Camino Real into the mixed-use, College Terrace Centre. In exchange for zoning concessions, the PC required the property owners to provide a continuously operating grocery store on the site as a public benefit. At the time of negotiations, there was tremendous neighborhood concern about the loss of long-time grocer JJ&F and the developer volunteered to pay a penalty if the promised replacement grocery at the Centre failed to remain open. 

The final agreement specified a penalty of $2,000 per day, adjusted for inflation, in the event of failure to provide a grocery onsite. The property owners would be allowed six months grace period without penalty every five years to allow time to replace the grocery tenant if necessary. Unfortunately, although the $2,000 per day penalty was recorded in a restrictive covenant for the property, the city failed to add the negotiated penalty to its Administrative Penalty Schedule, which lists the fine for such a violation at $1,000 per day, or in the PC ordinance governing the project. 

With the year-long vacancy after closure of the College Terrace Market, those omissions appear to have allowed the property owners to avoid over $200,000 in fines. When the city tried to impose accrued $2,000 a day penalties, the current property owner, Blox Ventures CEO Jason Oberman, contested the fines. In a May 2019 ruling, Administrative Law Judge Alan Selzer held that under the existing Administrative Penalty Schedule, the vacant grocery amounted to a “code violation” for which penalties are capped at $1,000 per day. 

Now Oberman, through his limited partnership ABG-Pact Owner LP, has filed for an injunction in Santa Clara County Superior Court to block all of the penalties and prevent the city from imposing any further fines. College Terrace Market closed in January 2018 and Oberman purchased the property in June of the same year, prior to the first penalty. The ABG suit claims the penalties are arbitrary, unconstitutional, and unenforceable. It further argues that the original building developer’s obligation to the city isn’t transferable to a new owner. Selzer has called that “an argument (that) has an absurd result” because it would allow developers to “escape the promises made in exchange for the benefits granted by a development permit.”

Now that Khoury’s Market intends to close, with the property owners’ six month grace period already used up, additional penalties are likely to accrue. Furthermore, Selzer’s May ruling left open the possibility that the city could enforce the higher $2,000 a day rate via a separate civil action for breaching the language of the restrictive covenant. The city is contesting ABG’s suit, but has not indicated whether it will pursue civil enforcement of the higher penalty rate in the restrictive covenant. 

88 bus line replacements

As VTA strives to fix leadership, Palo Alto riders face service gaps earlier than expected

A scathing civil grand jury report in June 2019 blamed the Board of Directors for the Santa Clara Valley Transportation Authority for making the VTA one of the most inefficient and dysfunctional transit agencies in the country. On top of that, approximately 70 percent of respondents in a recent performance survey gave the VTA board low marks. In response, the board last month commissioned an independent review to assess possible solutions ranging from simple operational adjustments to major reconfiguration of what is currently an entrenched political system for appointing VTA directors.

Meanwhile, the agency’s New Service Plan took effect at the end of December, with new bus routes and schedules that increase service on busy arteries, but limit options for local riders. Changes in Palo Alto include replacing the 88 line serving west and south city neighborhoods with three different variants, the 288, 288L and 288M, with compressed schedules and altered routes. All three of the new 288 buses operate only on school days. They serve Gunn High School on route to the Veteran’s Administration Hospital. But unlike the 88, which ran about once an hour between 6:30 a.m. and 6:30 p.m., the last bus of the day leaves the VA at 4:10 pm, passing Gunn a mere hour after school ends and potentially stranding students participating in after-school activities who are dependent on the bus.

The City of Palo Alto had hoped to fill the service gap for Gunn students through an expansion of the city’s shuttle, but according to a letter from Gunn’s PTSA president, the VTA’s December 28 implementation of the service changes took the city by surprise. The city had understood that rollout of the 88 line changes had been postponed along with BART adjustments. So when VTA notified the city just before Thanksgiving of the December rollout, it was too late to secure necessary approvals to fill the gap before the service changes took effect. The city expects to consider adjustments to the Palo Alto Shuttle, largely to address gaps in VTA service, in the spring.

In other news…

  • Congestion conundrum at Churchill Avenue rail crossing – According to a new traffic study for the grade separation project, leaving the Churchill crossing open to car traffic could lead to 10 minute-long queues for left turns at the intersection of Churchill and Alma Street. On the other hand, closing the crossing would significantly worsen traffic at six other intersections. The study suggests an assortment of traffic improvements on Alma Street, and around Embarcadero Road and Oregon Expressway that consultants think could significantly lessen, but not eliminate, overflow impacts. Proposed improvements range from installation of traffic signals and optimized signal timing, to additional turn lanes at multiple intersections, to a complete reconfiguration of the intersection of Alma and Embarcadero. 
  • City tries to steer wireless antennas away from neighborhoods, schools – On December 16 City Council voted 6-1 (Fine dissenting) to approve a resolution discouraging Wireless Communication Facilities in residential areas and establishing minimum setbacks from schools (600 feet, but exceptions could be allowed for WCF’s further than 300 feet) and homes (20 feet, no exceptions allowed). Council also directed staff to study the noise impacts of wireless equipment, consider the feasibility of requiring underground vaults for antennas in residential areas, and explore proposing a state bill pertaining to wireless equipment.
  • The battle continues over airplane noise – U.S. Reps. Jackie Speier, Anna Eshoo, and Jimmy Panetta introduced five bills last month to address community concerns about heightened airplane noise. The bills seek to impose quiet hours at night, include health impacts as a priority in developing flight plans, and improve communications between the Federal Aviation Administration and the public, including representation on FAA working groups, time limits for responding to members of Congress, and notification to local governments about new or modified flight plans. Meanwhile, the local grassroots group Sky Posse Palo Alto has issued a call to action asking people to submit comments on the Draft Environmental Impact Report for San Jose Airport’s proposed expansion.
  • New plans envision housing, retail at former Fry’s site – Despite some major setbacks, including limited planning funds and the stated reluctance of the Fry’s site owners to redevelop, the North Ventura Coordinated Area Plan Working Group continues to work toward a community vision for future development in the North Ventura neighborhood. Last month the NVCAP consultants presented three alternative concept plans for the 60-acre planning area reflecting a range of appetites for residential, retail, community, and office space. 
  • With recycled water deal signed, attention shifts to contentious Baylands site – Palo Alto, Mountain View, and Valley Water approved a 76-year agreement last month to build a wastewater purification plant at the Regional Water Quality Control Plant in Palo Alto. As part of the agreement, Valley Water will explore potential construction of a second, more advanced, regional purification plant that can effectively convert high quality recycled water produced at Palo Alto’s RWQCP for potable use. One possible location under consideration for that larger project is the 10-acre site at Byxbee Park that was undedicated as parkland in 2011 to accommodate a possible anaerobic digestion plant under Measure E. Now that the city has ruled out an anaerobic digestion plant, City Council will have the option in 2021 to rededicate the acreage to parkland. Any other use of the site, including a water purification facility, will require a public vote. 

Notable Upcoming Action

January 13, 2020

Weed Abatement: Council will hold a public hearing on objections to weed abatement and vote to adopt a resolution ordering the abatement of weed nuisances in the city. Beginning at 6:35 pm (City Hall). Click here for staff report.

State ADU Requirements: City Council will vote to adopt an interim urgency ordinance to implement state legislation effective January 2020. Beginning at 6:50 pm (City Hall). Click here for staff report.

New Priority Development Area and Priority Conservation Areas: City Council will vote to adopt resolutions designating a new PDA in Downtown/University Avenue and new PCAs in Baylands and Foothills Park. Council will also consider the Planning Commission’s recommendation to expand the PDA to all parcels adjacent to El Camino Real. Beginning at 8:00 pm (City Hall). Click here for staff report.

Overnight Safe Parking Pilot for Vehicle Dwellers: City Council will vote to adopt an interim ordinance to temporarily allow overnight safe parking as an ancillary use to churches and religious institutions and establishing temporary regulations related to safe parking. Beginning at 9:00 pm (City Hall). Click here for staff report.

January 16, 2020

788 San Antonio Avenue: The Architectural Review Board will provide input on a design plan to replace a 12,000 square foot commercial building that currently includes the popular Studio Kicks martial arts studio, with a four-story mixed use building with limited underground parking. The proposed project includes 102 residential units and 1,780 square feet of commercial space. Sixteen of the units would be Below Market Rate. A Draft Environmental Impact Report for the project is expected in late February. Meeting begins at 8:30 am (City Hall). Click here for staff report.

January 21, 2020 – Tentative

City Council is tentatively scheduled to hear an update on grade separations and discuss the Housing Workplan.

January 27, 2020 – Tentative

Council is tentatively scheduled to discuss the preferred alternative for improvements to the San Antonio Road and East Charleston Road Intersection, consider polling results and public outreach regarding a possible 2020 tax measure.