July 8 Newsletter

In this issue:

Should Stanford build housing to meet the demand it creates?

Get up to speed: 

• Employee permits in Downtown RPP set to 1,000 plus 200 in reserve.
• Council protects Churchill Road neighbors from eminent domain and will appoint new advisory panel for grade separation planning.
• Battle over office-growth initiative takes shape.
• In other news: lost housing at President Hotel Apartments; hotel tax; utility rate hikes; budget cuts; health care costs initiative; and public safety building and garage.

Looking Ahead: Calendar of notable upcoming meetings and deadlines.

Should Stanford meet the housing demand its expansion would create?

New analyses show current housing fees insufficient and confirm heightened congestion impacts particular to housing development.

Public comments related to Stanford’s proposed academic expansion raised big concerns about obscured impacts in Stanford’s analysis and unmet new housing demand. Under the leadership of Board President Joe Simitian, the Santa Clara County Board of Supervisors stepped up to the plate to clarify costs and implications.

The original Draft Environmental Impact Report for Stanford’s pending General Use Permit application, (commonly referred to as the Stanford GUP), relied on surrounding communities to provide 2,245 new housing units to support the university’s growth. But vagueness about how much would go where led to limited, generalized analysis of potential impacts. To offer the public a fuller picture, the county commissioned a nexus study to quantify the cost to the county (i.e., taxpayers) of meeting below-market-rate housing needs created by Stanford’s planned expansion. Also at the county’s initiative, Stanford analyzed two alternative housing scenarios in which Stanford would build on-campus housing for more of the faculty, staff and students its expansion would generate. Updated findings are published in a Recirculated Draft Environmental Impact Report.

Together, the new data and analysis highlight a fundamental conundrum. Unless there is a major adjustment to housing impact fees, allowing Stanford to shift its housing burdens to off-campus communities would also shift significant costs to taxpayers (and may risk that the housing won’t get built). But requiring the university to house the new demand it creates will cause additional, substantial, and concentrated impacts in Palo Alto. In addition to teeing up those key trade offs to inform the county’s decisions about the project, the new housing analysis also reveals that even in a truly transit-rich environment, residential development, by its nature, makes it harder to get cars off the road. Read on to learn more about impact fees and key takeaways from the updated DEIR analysis.

If you want to tell the Board of Supervisors your thoughts on housing impact fees, you can email Joe Simitian (our District 5 supervisor) here and find contact info for other supervisors here. The public has until July 26, 2018 to submit comments on the recirculated DEIR to Santa Clara County.

The county will host a public meeting to hear and receive comments on the recirculated DEIR in Palo Alto on July 10, 2018 from 6:00- 8:00 pm (Palo Alto Art Center, 1313 Newell Road).

Housing impact fees fall far short of full mitigation for newly created below-market-rate housing needs.

 

Santa Clara County and many municipalities, including Palo Alto, impose housing impact fees on new development to help offset the cost of public subsidies to meet related affordable housing needs. The new county nexus study indicates that the cost to support below-market-rate housing demand created by Stanford’s planned growth comes to $143.10 per square foot of new academic space. A similar nexus study commissioned by Palo Alto in 2016 found that a housing impact fee charged to commercial developers (office/R&D) could be justified at up to $264 per square foot. Stanford currently pays the county a housing impact fee of $35 per square foot. The 2018 Stanford GUP proposed reducing that payment to $20 per square foot.

On May 8, the County Board of Supervisors discussed raising impact fees to better reflect nexus study findings. County staff recommended charging the maximum supportable fee of $143.10 per square foot for Stanford’s academic development:

“Fee levels below the maximum will exacerbate the existing jobs-housing imbalance and wage disparity – the root causes of the housing affordability crisis.”

Stanford strongly objected, claiming that such a change would “cripple” the university’s ability to fulfill its mission. Board President Simitian countered that even the highest fee would amount to only 0.2 percent of the university’s annual budget, or a mere 2 to 3 days worth of growth in its endowment. Simitian contrasted that impact with 30 percent to 50 percent increases in rent, within a mere couple of years, faced by area residents. The Board of Supervisors expressed support for raising the floor of an impact fee to $68.50 per square foot (roughly double the current charge), with a ceiling of $143.10. It has been reported that Stanford has since offered to increase its housing contribution to about $24.60 per square foot, which they claim aligns with the housing fees paid for office development “in most Bay Area cities.” 

The nexus study indicated that a fee of $75 per square foot would be sufficient to provide affordable housing in the county for new Stanford workers with household incomes up to 80 percent of the Area Median Income (AMI). In 2017, the AMI for a family of four was $113,300 per year in Santa Clara County. The board will take a final vote after review by two other county committees.

[Note:  In March 2017, City Council voted 5-4 (DuBois, Filseth, Holman, Kou dissenting) to set Palo Alto’s housing impact fees for office/R&D development at $35 per square foot, a significant reduction from the $60 per square foot fee approved by the previous council in December 2016.]

Stanford says more on-campus housing will significantly increase car trips and local congestion, despite transit-rich environment.

 

Policy makers at every level of government make great hay over the promise of car-light housing in “transit-rich” areas to reduce car use and ownership, thereby reducing traffic and parking congestion impacts. The new Stanford analysis, however, confirms what many Bay Area residents have long contended is a weakness in that approach: it turns out the complicated transportation demands created by residential development – for trips to school, child care, shopping, medical care, religious services, socializing, recreation, entertainment, etc. – make it less likely people will get out of their cars.

The recirculated DEIR studies two new alternative scenarios: Additional Housing Alternative A, in which all newly created housing demand is met through on-campus construction (adds 2,483 additional multi-family housing units and 66 student beds to the original project); and Additional Housing Alternative B, in which approximately half of the housing demand (1,209 multi-family units and 66 student beds added to the original project) is met on-campus. Even with Stanford’s rich transportation resources, on-campus residential development under both alternatives will lead to more car trips and greater congestion. Stanford also notes that although vehicle miles traveled are reduced when people live near where they work, many new Stanford households (as in all cities), would include folks who commute to work elsewhere, offsetting some of those reductions.

“[O]ne might think having more housing on campus will reduce car trips. But campus residents will need to drive on local roads to do things like take kids to school, buy groceries and commute to off-campus jobs. Analyses show that residents generate more local car trips than commuters to campus.”

– Catherine Palter, Stanford’s associate vice president for land use and environmental planning. 

In order to meet its highly touted No Net New Commute Trips standard (set under the previous, 2000 GUP), Stanford has created a sophisticated Transportation Demand Management program, imposed permit parking requirements across campus, and embraced multi-modal infrastructure to encourage bicycle and pedestrian transportation. Perhaps most importantly, it has effectively deployed an extensive free shuttle system, the Marguerite, that zig zags the entire campus and connects riders to Stanford, Town and Country, and San Antonio Road Shopping Centers, Stanford’s Medical Center and Research Park, downtown Palo Alto and the Palo Alto Transit Center on University Avenue. 

“[T]he No Net New Commute Trips standard may not be achieved because travel demand management (TDM) measures are not as effective in reducing residential trips, compared to commute trips.”

– Recirculated DEIR, p. 2-54

Yet according to the recirculated DEIR, even in that enviable and uncommonly transit-rich environment, and with the addition of new parking and “40,000 square feet of trip reduction amenities such as onsite childcare and mobility hubs,” enough additional residents will still drive that new congestion impacts will be significant and unavoidable.

If Stanford were to build the housing itself, but with all or some of it off-campus (outside Stanford’s transit rich environment), the needed housing units “would disproportionately affect [Palo Alto, Menlo Park and Mountain View] compared to other communities in the Bay Area that house Stanford affiliates.” Though not noted in the original GUP analysis, that also of course would be true without new Stanford housing, but in that case the impacted communities would also have to find a way to get the housing built (or face more long distance commuters).

Even if Stanford builds its own housing, Palo Alto will experience heavy new impacts.

Greater building heights and density along local roads; increased traffic and school growth; and new demands and costs for safety services, water, and parks.

 

Perhaps most revealing, the new housing alternatives give the public its first concrete description of what 1,200 to 2,400 units of local housing could look like, as well as the on-the-ground impacts of such a sizable increase in population (12,573 new residents by 2035 under Alternative A). Stanford proposes that the new housing would be concentrated in East Campus (near Stanford Avenue), along El Camino Real, in the Quarry Road area, and on West Campus (between Sand Hill Road and Campus Drive). Although designated on-campus open spaces are preserved in the new housing alternatives, Stanford suggests that the increased on-campus development density  may increase pressure to develop outside the Academic Growth Boundary after 2035.

Key impacts of new housing alternatives:

Development

The housing itself would add 2.3 million square feet of additional development under Alternative A. Alternative B would add 1.14 million square feet of additional construction and associated environmental impacts. The proposed multi-family housing projects could include densities of 40 to 80 dwelling units per acre, building heights from 50 feet up to 100 to 135 feet, and setbacks of less than 20 feet along local roads. Stanford asserts that the development standards in the El Camino Corridor Plan and the Stanford Community Plan would need to be amended.

Traffic

As for traffic, 55 percent of residential car trips are expected to stay local to Palo Alto and both housing alternatives will increase peak-hour traffic volumes on Palo Alto streets, with a notable (but not deemed technically significant) volume increase in the Crescent Park area. Alternative A will also create new significant impacts at the intersections of Stanford Avenue and Bowdoin Street and Charleston and Middlefield Roads. Under both alternatives, impacts at the intersection of Alma Street and Charleston Road will be significant and unavoidable.

Schools

Alternative A is estimated to add 1,446 new school-aged children to the Palo Alto Unified School District, beyond those counted in the original analysis, while Alternative B would add 861 more new PAUSD students. However, Stanford-owned rental housing is eligible for property tax exemptions and therefore rarely contributes to local property tax revenues that make up the vast majority of local school funding. By contrast, many other universities such as Harvard, Brown, and MIT do pay property taxes for their non-student rental housing. Dartmouth pays property tax for all on- and off-campus housing, including dormitories.

According to PAUSD Trustee Todd Collins, the current enrollment of about 350 students from tax-exempt Stanford housing represents approximately $4.5 million in annual unfunded costs for Palo Alto schools. An influx of new students from tax-exempt housing could have a severe economic impact on the school district.

Public Services

Other population related impacts include substantially greater demands on city-provided Fire and Emergency service to the campus, police dispatch, parking enforcement, and bicycle and pedestrian safety services, including crossing guards. Both alternatives will substantially increase consumption of both potable water and groundwater, including additional use and treatment of groundwater for emergency use to supplement the potable water supply. The water detention basin in the West Campus will have to be relocated, affecting city flood control facilities. Use of city parks, particularly in the College Terrace neighborhood will notably increase, impacting the quality of the facilities and increasing maintenance costs beyond the impacts identified in the original DEIR.

Let the county know what you think of the new alternatives and their impacts, either at the July 10 public meeting (6:00-8:00 pm, Palo Alto Art Center), or by submitting your comments by July 26 to:

City staff are seeking a courtesy extension in order to allow the council an opportunity to review the city’s comments before submittal to the county. If granted, the council likely will discuss them at its special meeting on July 30. The PAUSD Board of Trustees is likely to meet on July 17 or 19 to discuss the GUP.

Get Up To Speed

Under-parked buildings continue to strain downtown resident-business relations.

Council sets cap on employee permits in the Downtown RPP at 1,000, with additional 200 held in reserve.

The total number of employee parking permits to be sold in the Downtown Residential Preferred Parking program has been in flux for several months. First, on February 26, council voted 7-1 (Kniss dissenting, Scharff recused) to reduce the total from 1,500 to 1,000 plus a 100 permit reserve. Following outcry from businesses unable to get nearby permits, on April 2, Councilmembers Fine, Kniss and Tanaka pulled the resolution off the consent calendar for reconsideration. Come June 25, City Council again adjusted the number. Council voted 5-3 (Fine, Kniss, Tanaka dissenting, Scharff recused) to confirm a reduction but added 100 additional permits to the reserve, resulting in a base total of 1,000 employee permits and a 200 permit reserve. Staff is authorized to reallocate allotments to individual zones and tap into the reserve as they see fit.

The new limits are intended to uphold the city’s commitment to reduce the employee cap once data on demand and uptake showed excess supply, while also providing flexibility for localized modifications as needed. As of June 25, only 830 employee permits had been purchased and dozens of permits remained available for sale. According to RPP watchdog Neilson Buchanan, “substantial unused all-day permit capacity [also remains] available in two downtown garages.” On the other hand, zones closest to the downtown core sell-out quickly; several community-serving businesses reported that employees’ inability to purchase permits in zones close to their work threatened employee retention and the viability of their businesses.  

It was abundantly clear from the discussion, however, that the most needed changes to reduce conflict and frustration remain hampered by administrative challenges. Given the lack of on-site parking in downtown’s commercial core, surrounded by residential neighborhoods, Mr. Buchanan frequently reminds that it is “impossible and inappropriate” to meet the demands of hundreds of downtown businesses for parking closest to their location. Residents and businesses alike contend that incremental additions or reallocations among zones mask the need for systems that ensure limited permits are distributed efficiently and in a manner consistent with policy priorities.

The RPP was designed in recognition of the fact that all needs would not be met. Low income employees are given first priority in buying permits and council directed staff over a year ago to develop a strategy that would also prioritize community-serving businesses. Problems with the business registry have so far made it infeasible to define and identify eligible businesses, and incompatible systems make tracking of permits extremely time consuming. Indeed, according to the city’s Chief Transportation Officer, it currently takes weeks to identify the current number of permits associated with particular businesses. 

In addition, the on-line process for obtaining permits is overly complex and extremely cumbersome; small businesses that lack a dedicated permit manager face significant inefficiencies as individual employees must navigate the system. And because permits are not transferrable, when employees leave the business, so does their permit. Meanwhile, delayed implementation of valet parking services and wayfinding systems, and permitted garage stalls that go unused impede optimization of the limited parking that already exists.

Progress on those system-wide improvements is likely to remain slow due to limited funding and staff resources, but the urgency of the need continues to grow as new under-parked uses come on line. Planning department approval of an 82-person-capacity gym at the old Anthropologie location on Alma Street was quickly appealed to the Planning Commission and City Council, citing major on-street parking impacts. The project has only seven dedicated off-street parking spaces.

Heeding resident concerns, council eliminates grade separation options at Churchill Road and approves new Community Advisory Panel.

Caltrain is already at standing-room-only capacity during morning and evening commutes and demand will only increase as the region grows and expands efforts to move people out of their cars and onto public transit. The city expects 20 trains per peak hour (ten in each direction) within the next ten years, resulting in a mere two minute window between rail gate closures, and causing traffic capacity reductions to more than triple (i.e., traffic will pile up trying to cross the tracks).

As the city whittles down the options for separating roads from the railway to allow free traffic flow, residents are increasingly tuning in to the details of what is at stake. Petitions have gathered hundreds of signatures opposing grade separation options that could lead to eminent domain takings of residential properties or that would result in widening of the Embarcadero Road underpass. On June 19, in addition to taking partial action on those fronts, council approved a new community engagement plan to expand and better integrate community input and outreach in the grade separation planning process.

Churchill Road Alternatives Reduced

After previously declining to rule out use of eminent domain for future grade separations, on June 19 the City Council nonetheless greatly reduced the threat of property takings for residents near the Churchill Road crossing. Council voted 5-1 (Tanaka dissenting) to eliminate the only grade-separated options contemplated for Churchill Road. The “hybrid” option would have partially raised the train tracks and partially lowered the road, imposing “significant impacts” on 14 properties and requiring eight driveway modifications. The “reverse hybrid” option would have done the opposite by lowering the tracks and raising the road, significantly impacting 43 residential properties and requiring three driveway modifications. While that decision offered comfort to Churchill Road area residents, property owners near the Meadow and Charleston Road crossings remain in limbo.

The following images, prepared by the grassroots group Californians Advocating Responsible Rail Design (CARRD), approximate the property impacts associated with raising or lowering the road at Churchill Avenue, Meadow Road and Charleston Road rail intersections. Yellow areas indicate full acquisition. Blue areas indicate partial impact.

 

 

 

 

 

Elimination of the grade-separated options limits the remaining Churchill Road alternatives to either partial or full closure of the crossing, or making no change. Each of those alternatives is expected to drive new traffic to Embarcadero Road. Facing objections to widening the Embarcadero Road undercrossing as part of any closure of the Churchill crossing, the Rail Committee recommended removing language to that effect, with Councilmember Scharff calling discussion about widening Embarcadero to accommodate Churchill’s closure a “community distraction.” Council accepted the Rail Committee’s recommendation, committing instead to “study options” for addressing increased Embarcadero Road traffic.

Councilmember DuBois, rejoining the rail discussion after a provisional recusal, raised concerns about addressing traffic impacts separately from decisions about specific grade crossing options. He argued that available traffic mitigations should inform decisions about any alternative, that it was unrealistic to leave Embarcadero Road out of the discussion when considering possible closure of Churchill, just as it would be for University Avenue in the case of a Palo Alto Avenue closure. “They can’t be separate steps if you want to get the community on board.” DuBois also encouraged the council to consider a more holistic, citywide approach to a complete set of alternatives, cautioning that eliminating property threats at Churchill, but not other impacted crossings could create the impression that neighborhoods were being treated differently. Councilmember Tanaka, the sole dissenter, favored eliminating all options that could result in the taking of an entire property.

New Community Engagement Plan

Having encountered persistent dissatisfaction with the nature of public participation in the grade separation planning process, the city is turning the page with a new community engagement plan coordinated by a different consultant. The new plan will roll out between July and December of this year. It includes appointment of a 12-member Community Advisory Panel (CAP) to advise consultants and staff and to help disseminate new information to the broader community. There will also be a series of stakeholder meetings and three more community-wide meetings. 

The specific stakeholder groups have not yet been finalized, but likely will include, at a minimum, Stanford, the Chamber of Commerce, real estate interests and some neighborhood leaders. The new plan stops short of a Context Sensitive Solution (CSS) process rejected by the city last year; the CAP and other stakeholders will not be brought together to build consensus. However unlike the last public engagement series, participants at community meetings will be able to directly interface with the project team and the technical experts.

The City Manager will accept applications for the Community Advisory Panel until 5:00 pm on July 16 and is seeking applicants representing a diversity of thought and neighborhood/geographic representation. The group is anticipated to begin meeting in August, and would meet up to six times during the six-month process. Click here for more information about the CAP as well as the application.

For more information about the new community engagement plan, click here.

Californian’s Advocating Responsible Rail Design (CARRD) created an excellent primer on the need for grade separations in Palo Alto and the issues and challenges they raise. To view the presentation, follow this link.

Battle over office growth heats up as critics of tighter limits flex their muscle.

Palo Alto’s new Comprehensive Plan allows 1.7 million square feet of additional office/R&D growth by the year 2030, an average of about 113,000 new square feet per year. Citing public concerns about worsening congestion and an extreme imbalance of jobs to housing, a Palo Alto citizens’ initiative seeks to prevent office growth from exceeding its historical average rate of approximately 58,000 square feet per year. The initiative stirred renewed public debate about how much office growth is best for the community. Now that the initiative has qualified for the ballot, rhetoric is heating up and political maneuvering has begun.

The Comp Plan as a whole emerged from a lengthy public and inclusive process and was ultimately approved by a 7-2 majority of the council. However, the specific policy allowing 1.7 million square feet of office growth passed on a narrow 5-4 vote. On June 11, the same slim majority, Councilmembers Fine, Kniss, Scharff, Tanaka and Wolbach, voted to delay putting the citizens’ initiative on the ballot, commission a comprehensive study of its potential impacts (in consultation with Stanford, non-profits, and the business community), and assign an ad hoc council committee to prepare a possible competing measure for November’s ballot. The Palo Alto Weekly editorial board deemed the June 11 action:

“… an obvious politically motivated effort, at taxpayer’s expense, to use a consultant to develop the case against the initiative that could then be used to defeat it or win approval for an alternative measure.”

Following City Council’s June 11 vote, a professional poll of unknown origin hit the streets presenting four arguments in support of the initiative and nine against it, and incorrectly stating that the Comprehensive Plan was adopted by a unanimous vote of the council. The poll probed respondents’ impressions of current council candidates and tested two political narratives about a hypothetical candidate’s receptiveness to new development. In addition, the poll tested a hypothetical alternative ballot measure that would reduce the office/R&D limit, but exempt the Stanford Research Park. For their part, at the June 11 council meeting, Stanford officials called the citizens’ initiative’s growth cap a “radical downsizing” that could “undermine the long-term economic stability” of the city and school district. 

The ad hoc council committee (whose membership has not been disclosed) will meet during the summer recess to develop an alternative office growth measure. Both the consultant study and any alternative ballot measure will be presented to City Council on July 30 at which time council will review the study and vote to call for inclusion of any new measure, as well as the citizens’ initiative, on the November ballot.

In other news…

• Homes lost at President Hotel Apartments: 75 studio and one-bedroom units in the historic downtown building may be lost due to conversion of the building to its original hotel use. Current residents have until November to move out, but are unlikely to find comparable rents elsewhere. Tenants and other community members have asked the city to step in to avoid the displacement of residents.
• Hotel tax increase: Council voted 6-1 (Kou dissenting, DuBois and Tanaka absent) to place a measure on the ballot that would raise the city’s hotel tax to 15.5 percent.
• Utilities rates going up: Utilities users will see a number of rate hikes in coming months. Electricity rates will increase by 6 percent, water by 3 percent, and wastewater by 11 percent.
• Paying down the pension backlog: Concerned about mounting unfunded pension liabilities, council opted to reduce the General Fund budget by $4 million to start paying down the backlog. The specific cuts have yet to be identified.
• Teacher housing: City Council set aside $3 million in affordable housing funds to support a teacher housing project spearheaded by county Supervisor Joe Simitian. The project would be located on county-owned land at 231 Grant Avenue.
• Health care costs initiative goes to ballot: A public initiative to limit the amounts Palo Alto medical providers can charge for patient care will require the city’s Administrative Services Department to regulate payments. Council will review a staff analysis of the initiative’s potential effects on Palo Alto in August.
• Public safety building and garage: City Council approved the environmental impact analysis and made necessary zoning changes for the new safety building and parking structure to move forward this fall, despite reservations by some council members about the need for the parking garage.

Looking Ahead

July 10, 2018

Stanford GUP: Santa Clara County will host at public meeting on two Additional Housing Alternatives studied in a recirculated Draft Environmental Impact Report for Stanford’s proposed expansion. Under Alternative A, Stanford would build housing to accommodate all the demand created by its academic expansion. Under Alternative B, the University would build housing for about half the housing needs it creates. 6:00 pm to 8:00 pm (Palo Alto Art Center). Click here for more information.  Public comments can be submitted until July 26, 2018.

July 16, 2018

Deadline:  Community Advisory Panel on Grade Separations: Deadline to submit applications to join the Community Advisory Panel to work with the City’s project team on grade separation planning. Deadline is 5:00 pm. Click here for more information and application.

July 26, 2018

Deadline:  Stanford GUP: Deadline to submit public comments on the two Additional Housing Alternatives analyzed in a recirculated DEIR for the Stanford expansion. Click here for more information. Comments can be submitted via email to David Rader at the Santa Clara County Department of Planning and Development: David.Rader@pln.sccgov.org

July 30, 2018

Office Cap Ballot Measures and Stanford GUP: City Council will hold a special meeting to put the citizens’ initiative on the ballot, along with a possible competing measure from the City, and to approve submittal of formal comments on the Recirculated DEIR for the Stanford GUP. Tentative, TBD.

August 13, 2018

Animal Shelter: City Council will vote to approve an operating agreement with Pets in Need and interim improvements to the Palo Alto Animal Shelter. Tentative, TBD.

Transportation Impact Fees: City Council will vote to establish an updated citywide transportation impact fee (a one-time fee on new development and redevelopment throughout Palo Alto to fund transportation improvements to accommodate and mitigate the impacts of future development in the city) and update the municipal fee schedule. Tentative, TBD. 

Urban Forest Master Plan: City Council will vote to adopt the Urban Forest Master Plan (Second Edition) and Implementation Plan. Tentative, TBD.

August 23, 2018

Community Meeting on Grade Separations: The first of three in a new series of community meetings will be held from 6:00 to 8:00 pm. Location TBD.