Fall Real Estate 2002

Publication Date: Wednesday, October 16, 2002

Affordable housing or urban sprawl?
Palo Alto needs a neighborhood approach to increasing below-market-rate units

by Harold A. Justman

The dearth of affordable housing in California has created a plethora of bold solutions. In Sacramento affordable housing activists, such as the Alliance of Retired Americans, and real estate interests, such as the California Association of Realtors, joined forces to pass an assembly bill, AB1866, which requires cities to grant a 25 percent housing density bonus -- free of parking, setback and floor-area-ratio restrictions -- to developers of affordable housing projects.

AB1866 also requires cities to grant permits for second units (granny units) in residential neighborhoods free from the requirements of a public hearing. To put teeth in the law, AB1866 provides that developers can recover their attorneys' fees from a city, if the city violates the law.

Palo Alto's Assemblyman, the Honorable Joe Simitian, did not vote for this bill. Palo Alto's Senator, the Honorable Byron Sher, voted against this bill. Nonetheless, AB1866 passed.

Another assembly bill that passed, AB2292, prohibits a city from permitting without substantial evidence construction on a parcel that is less than the residential density that was utilized by the State Department of Housing Area Community Development in approving a city's housing element plan. Again, developers can recover their attorneys' fees from a city, if the city violates this law. Senator Sher did not vote for AB2292. Assembly member Simitian voted for AB2292.

Meanwhile, the housing debate in Sacramento is spreading to Palo Alto. Affordable housing advocates, such as the League of Women Voters of Palo Alto, are joining forces with real estate interests, such as the Santa Clara Housing Action Coalition, to support the construction of 64 condominiums on a one-acre site near downtown Palo Alto. The city's redevelopment agency is advocating 50 housing units at the Edgewood Plaza site at Embarcadero and 101. The developer of the Hyatt project on El Camino is proposing hundreds of housing units. Also, like the politicians in Sacramento, the city of Palo Alto is now exploring granny-unit zoning laws that would increase housing density throughout every neighborhood in the city. As in Sacramento, the local argument for increased housing density is that higher density is needed to make residential developments with below market rate (BMR) units economically feasible.
Neighborhood associations, such as University South Neighborhood Group, the Charleston Meadows Association, the Crescent Park Neighborhood Association and the Midtown Homeowners Association are concerned. The neighborhood leaders point out that a policy of approving the construction of five to six market-rate housing units to encourage the construction of one BMR unit is a tradeoff that adds up to urban sprawl from one end of Palo Alto to the other without significantly improving the supply of affordable housing. The potential for granny units in every residential neighborhood in Palo Alto increases the possibility of Palo Alto becoming so dense as to be unrecognizable as a once suburban community.

The idea that greater housing density will produce affordable housing in amounts sufficient to meet our housing needs is not supported by the history of the city's BMR program during the last 25 years. During that time the BMR program has only produced about 170 BMR ownership units.

Several times that many market-rate units were built in order to induce the construction of those BMR units. Even more disappointing is that the BMR program has produced housing units that are not necessarily affordable to repair. Some of the owners of BMR units at the Arbitare on High Street have complained that they cannot afford repairs necessitated by water leaks. A house is not affordable if the owner cannot afford to repair it.

A policy of increasing housing density throughout Palo Alto is an unworkable policy for our neighborhoods. Our neighborhoods cannot afford the consequences of that policy, such as increased traffic.

The Palo Alto Oaks Housing Development at Ramona and Channing points the way towards affordable housing that our neighborhoods can afford. A collaboration between the city of Palo Alto and the Palo Alto Housing Corporation will result in about 53 BMR rental units on a little more than an acre of land. Building 53 BMR rental units should make a significant contribution to diversity in Palo Alto. Moreover, there are other sites where this solution can be implemented. The Mayfield site, the Hoover Pavilion, and the Fry's site all offer the potential of direct construction of affordable housing without urbanization of every Palo Alto neighborhood.

The public is willing to make direct investments in affordable housing. The Housing Trust of Santa Clara (Trust) is one year old and the only one in the nation financed by voluntary contributions of which two-thirds are from the private sector. In one year the Trust has helped finance 649 affordable apartments.

With direct construction of affordable housing we can make choices about housing density that are responsive to local neighborhood needs. Local choices for local needs should also be the policy for granny units in residential neighborhoods. Presently, each neighborhood can decide as to whether or not second stories should be permitted in that neighborhood. Similarly, granny units should be permitted in single-family neighborhoods only if the neighbors vote in favor of that type of increased housing density for their neighborhood. The goal of diversity should include preserving single-family homes where appropriate.
Neighborhood needs should determine where we choose to build affordable housing. And if we really want to increase the amount of affordable housing, we need to build it directly rather than rely on a policy of increased housing density to eke out one BMR unit at the cost of several market-rate units. Let us build housing that Palo Alto neighborhoods can afford.

Harold Justman has lived in Palo Alto since 1964. He has specialized in real estate law for more than 20 years and writes a monthly column on real estate law for the Weekly. Send questions to Justman care of Palo Alto Weekly, P.O. Box 1610, Palo Alto, CA 94302 or e-mail cblitzer@paweekly.com.