March 3, 2019 Newsletter

In this issue:

Senate Bill 50 could spell end to single-family zoning citywide

“Jobs-rich” designation extends impacts well beyond transit zones in Palo Alto

March 3, 2019 – Palo Alto Matters

First Baptist Church
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 Palo Alto. 

Click here to view the full report.

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.

Max Units by District

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 Ave - BEFORE
Addison Avenue – BEFORE. Currently developed as single-family homes.
Addison Ave - AFTER
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 liberalized zoning standards, 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 would be up to developers, not the city, to determine whether SB-50’s vision comes to fruition.

Click here to view the full report.

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 an 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.  

The CASA Compact underlying SB-50

Touted as balanced compromise, CASA Compact faces criticism from cities and offers no assurance of cohesive legislation

SB-50 is perhaps the most prominent in a slew of proposed state legislation to implement an ambitious regional housing plan known as the CASA Compact. The Compact was designed as an interdependent package to address all three legs of the housing stool: production, preservation, and renter protection. Supporters describe the Compact as a necessary, if imperfect, compromise and they hope that controversial elements will have a better chance of passing if they all advance together to the state Capitol. However the Compact itself has been met with strong criticism and there is no certainty or commitment that every piece will move forward. 

What is the CASA Compact?

The CASA Compact was created by the Committee to House the Bay Area, a coalition of developers, business leaders, elected officials, labor interests and tenant advocates convened by the Metropolitan Transportation Commission. Recently endorsed by the MTC and the Association of Bay Area Governments, known as ABAG, the CASA Compact consists of an ambitious ten-point planto: 

  • Spur housing construction through minimum zoning near transit; streamlined approvals and exemptions from the California Environmental Quality Act; property tax breaks for developers; use of public lands for affordable housing; and further incentives for accessory dwelling units. “Sensitive communities” with a high percentage of low income residents, would get a grace period of up to 5 years to propose community-driven alternatives to meet state performance standards (i.e., housing production goals).
  • Protect renters through just-cause eviction rules and relocation assistance; access to emergency rent assistance and legal help; and a temporary cap limiting the size of annual rent increases.

The Compact calls for $1.5 billion in local and regional “self-help” funding (through taxes, fees, bonds and revenue set-asides) to implement the plan including: $1 billion from taxpayers, property owners and local governments; $400 million from employers; and $400 million from developers. At least 60 percent of that funding would go towards housing production, ten percent would go towards renter protections, and 20 percent would go toward preservation. 

Notably, the CASA Compact also calls for state legislation to create an independent Regional Housing Enterprise board comprised of MTC and ABAG representatives and the stakeholder representatives who developed the Compact itself. The unelected RHE would have authority to collect and disburse fees, taxes, and other revenues, allocate funding, and issue debt.

Competing interests of small and big cities 

The Mayors of San Francisco, Oakland, and San Jose were all on the CASA Steering Committee and voted to approve the final CASA Compact. However, numerous other cities and towns have been strongly critical and objected that the interests of their cities were not represented. The Cities Association of Santa Clara County, representing 15 cities, argued that the Compact’s one-size-fits-all solutions neglect the diversity of needs in each city and threaten to leave cities “without adequate funding for the infrastructure that makes our communities whole – schools, transportation, etc.” Similarly, they argued that the failure to engage cities of all sizes in the plan’s development could lead to significant unintended consequences both locally and regionally.

In addition to the Cities Association, the cities of Berkeley, Cupertino, Los Altos, Los Gatos, Palo Alto, Santa Clara, and Sunnyvale all logged objections to the CASA Compact. Chief among their concerns were:

  • The intrusion on local land use decision-making (and the associated exclusion of community interests).
  • The diversion of property tax revenues that are vital to local General Funds and could result in cuts to core services in every Bay Area city; and the redistribution of those funds to counties (perceived as likely to benefit big cities at the expense of smaller cities with lesser voice in county decision-making).  
  • Undermining of effective and promising ongoing local strategies to confront jobs/housing imbalances and finance and support the availability of affordable housing.

Sunnyvale Mayor Glenn Hendricks likened the proposed funding mechanisms and changes to land use authority to “a direct assault on cities” and Mayor Steven Scharf of Cupertino described the Compact as “a product that 97 percent of Bay Area cities think is a terrible idea.” Palo Alto’s then-Mayor Liz Kniss wrote that “[i]t would be problematic for MTC, as an organization representing local governments, to advocate the sweeping legislative proposals embodied in the CASA Compact without clear and robust engagement opportunities for Bay Area communities.”

Selective enactment could subvert the “compromise.”

Without legislative action toward all three goals of production, preservation, and protection, the so-called compromise embodied in the CASA Compact falls apart. Although SB-50 is a fairly fleshed out bill, not every Compact element has received as much attention. And there is no mechanism to ensure cohesion among the bills seeking to implement various elements of the Compact. While housing production incentives have picked up steam, both in Sacramento and locally, they focus mostly on “missing middle” populations earning up to 150 percent of medium income or more. Efforts to expand low-income housing, renter protections and anti-displacement policies have faired more poorly. 

Perhaps indicative of the fragile promise of the CASA Compact’s “compromise,” the California Apartment Association, which represents landlords and participated in the CASA planning process, has already said it “will oppose any [CASA Compact] related legislation aimed at implementing the rent control and just cause eviction elements.”

Get Up To Speed

Council abandons longstanding promise of Downtown Commercial Cap

By a narrow 4-3 vote (DuBois, Filseth, Kou dissenting) on February 11, City Council repealed the longstanding Downtown Commercial Cap ordinance that would have triggered a one year moratorium on non-residential growth in the Downtown area in the near future. The writing has been on the wall since a similar majority took the controversial step of removing the Cap from the Comprehensive Plan in 2017. But many voters were hopeful that Council’s new membership would preserve the Downtown Cap ordinance. Former Councilmember Cory Wolbach who initiated the 2017 motion to remove the Cap from the Comprehensive Plan is no longer on the council and newly elected Councilmember Alison Cormack had indicated during the campaign that growth caps “have served us well” and at the time she “didn’t see any reason to remove the cap.”

The Downtown Commercial Cap was created in 1986 due to widespread concern about negative community impacts from unfettered downtown commercial growth. It set a limit of 350,000 cumulative square feet of new non-residential development (e.g., office, hotels, services and retail) in the downtown area. Once the cap was reached, it would have triggered a one-year moratorium on non-residential downtown development to help the city implement appropriate new regulations to manage downtown land use and its impacts. With only about 18,000 square feet remaining under the cap, the moratorium was imminent.

The Cap took on heightened significance in the past year as voters expressed increasing concern about office growth and its competitive impact on housing. The Planning Commission opposed repealing the Cap and a citizens’ initiative to limit citywide office growth was adopted last fall. The proposed conversion of the Palo Alto Hotel Apartments to commercial use became a poster child for how market forces can undermine residential uses. The Downtown Cap moratorium stood as a barrier to the hotel conversion.

Dozens of community members urged the Council to retain the Downtown Cap, citing the need for effective tools to counter the economic incentives favoring office growth over housing, the desire to preserve the President Hotel apartments, and a sense that repealing the cap at the very moment its consequences were to take affect amounted to a broken promise. Others, including the Chamber of Commerce, argued that the only way to get more housing downtown was through mixed use development where more profitable office space helps finance residential space. The Palo Alto Weekly’s Editor characterized repeal of the Downtown Cap as “the opposite of smart pro-housing policy.”

In the end, Council split 4-3 to reject a compromise motion that would have retained the cap (and impending moratorium) but exempted retail square footage. The final motion repealed the Downtown Cap ordinance and directed staff to return with a study on net new office floor area, including square footage per office staff and draft policy recommendations to encourage housing production Downtown including possible restrictions to office space Downtown if needed. The repeal was upheld by the same margin on a second reading February 25.

Council backs up on plans to build parking garage downtown

After years of planning to build a new 324-space parking structure downtown, a unanimous City Council declined to approve a design contract that would have moved the project forward. In an abrupt turn-around on February 11, the council cited concerns about mounting costs and environmental impacts and the general success of downtown’s Residential Preferential Parking program as reason to reconsider the need for six-story project.

Judy Kleinberg, the CEO of the Chamber of Commerce strongly opposed the move, stating that new downtown parking was “badly needed [to address] a significant parking deficit downtown.” Others expressed concern that adding parking supply merely invited more driving, that downtown property owners and their tenants should pay a greater share of the costs, that a permanent structure lacked the necessary flexibility for today’s rapidly changing transportation landscape, and that the funds might be better spent on other promised parking solutions such as valet parking and wayfinding.

In the end, council was persuaded to think a bit more about the wisdom of spending $25-35 million on a permanent parking structure. They approved the Final Environmental Impact Report and a Record of Land Use Action approving the Architectural Review Application for a three year period to keep the garage option open, but directed staff to return to the Policy and Services Committee with a parking management strategy and other options to address Downtown parking needs.

Council grants height and floor area exceptions for roof-top decks downtown

The debate over Palo Alto’s new housing ordinance featured a good deal of dissension regarding the prospect of allowing roof-top decks to satisfy on-site open space requirements, and get limited exceptions from height and FAR limits, for new residential projects. Having approved that change, council appears to be going all-in for roof-top decks. On February 25, Council gave long-awaited approval to a request by interior design company Houzz to add a rooftop deck to its oversized downtown commercial building. And paved the way for many more oversized buildings to do the same.

The owners of the Houzz building, located at 285 Hamilton Avenue, had sought a zoning code amendment to allow grandfathered downtown buildings that already exceed both current height and Floor Area Ratio limits to increase their nonconformity through the addition of roof-top decks. The requested change would have impacted approximately seven nonconforming buildings downtown.

In response to concerns from councilmembers DuBois and Kou about the potential noise roof-top activities could generate, council agreed to limit the hours of roof-top use to between 8 am to 9 pm daily and prohibited the use of amplified sound. But its enthusiasm for roof-top decks as an amenity, could not otherwise be contained. Council voted 5-2 (DuBois, Kou dissenting) to broaden the requested zoning amendment to encompass about 110 oversized downtown buildings – including any that are nonconforming due to either height or FAR.

Grassroots Spotlight

The PAUSD Parent Teacher Association Council is working hard to make sure that local concerns about unfunded school enrollment growth are considered in negotiations between Stanford and Santa Clara County regarding a Development Agreement to enable Stanford’s proposed expansion. Below is their call to action:


PTAC – Advocate For Our Children NOW – FULLY MITIGATE

Stanford General Use Permit Calls to Action: (1) Attend March 14 Rally to Protect our Schools, P.A. City Hall, 5:30 p.m. (2) Message the County and Stanford to Protect our Schools; (3) write Letters to the Editor, (4) School PTSA letters, (5) attend 2/28 hearing in San JoseOn Wednesday, February 13th, Joe Simitian spoke at the General Association Meeting. He and applauded the community’s response to voice our concerns for mitigation. If you haven’t done so yet, NOW is the time to message the County and Stanford, on the Click My Cause Two-Tap App (select Palo Alto PTA Council) or sign our online petition. He encourages us to attend the upcoming 3/14 TOWN HALL on the Stanford GUP and WRITE to newspapers/media so that non-school families know about Stanford’s gigantic proposed building IMPACT. School impact may not be squarely considered by FINAL Environmental Impact Report (EIR), however, the Development Agreement (DA) currently being negotiated may contemplate additional conditions to mitigate impact to our schools, including per student funding, neighborhood school construction (Quarry Road), safe routes to school (SRTS), and afterschool childcare. A copy of the FINAL EIR is at local libraries or online: schools are beginning their own letter writing campaign. To learn more or volunteer, please email: For resource materials, go here to read more:

Notable Upcoming Action

March 4, 2019

City Council will review and discuss the city’s Long Range Financial ForecastBeginning at 8:00 pm (City Hall). Click here for staff report.

March 5, 2019

State of the City: Mayor Filseth will present the State of the City Address. Beginning at 7:00 pm (Mitchell Park Community Center – El Palo Alto Room).

March 11, 2019

North Ventura Plan: City Council is scheduled to hold a Town Hall meeting and joint study session with the Working Group for the North Ventura Coordinated Area Plan to review progress and next steps. Also, staff will present survey data from the 2018 National Citizens Survey relevant to Ventura. Meet and greet beginning at 5:30 pm, Call to order at 6:00 pm (Ventura Community Center, 3990 Ventura Court, Palo Alto). Click here for staff report.

March 14, 2019

Stanford GUP: County Supervisor Joe Simitian will hold a Town Hall Meeting about the proposed conditions of approval and final Environmental Impact Report for Stanford’s General Use Permit application  to expand its campus with 2,275,000 square feet of new academic space. 6:30 to 8:00 pm (City Hall).

Stanford GUP Rally: The PAUSD PTA Council is hosting, a rally immediately preceding Supervisor Simitian’s Town Hall, to amplify community concerns about unfunded school enrollment growth due to Stanford’s expansion plans. Beginning at 5:30 pm (City Hall).

March 18, 2019 – (Tentative)

City Council is tentatively scheduled to discuss airplane noise and environmental impacts.

April 1, 2019 – (Tentative)

Hotel Parmani: Council is tentatively scheduled to vote on elimination of a 50-foot special setback on Hansen Way to accommodate a new Hotel at 3200 El Camino Real.