"We've got to step up and be leaders," Councilman John Barton said, arguing the need to accommodate the additional housing.
"People ought to live near where they work and near transportation," he said. "I think this can only make our community better, as hard as it may be to get from here to there."
But Vice Mayor Larry Klein questioned whether building housing in Palo Alto would guarantee slower development in outlying areas.
"It might destroy the character of this community for a very uncertain prize. We would be having a very, very negative impact on what I think is one of the jewels of our country," Klein said.
Also, allowing for 2,800 units at 40 units an acre would require 70 acres of land, he said.
"Has anybody from ABAG tried to identify where those 70 acres are?" Klein asked.
To construct the required affordable housing, at least 6,000 units of market-rate housing would have to be built to induce developers to pay for them, Councilman Bern Beecham said.
"There's not a chance in the world that we are going to build 6,000 units in the next seven years," Beecham said.
But the city's failure to accommodate that growth could be its most "significant failure" to combat climate change, he said.
"I certainly don't care to see my neighborhood bulldozed, but I am very frustrated at what it means for the future," Beecham said.
Councilwoman Dena Mossar said the city should take its regional responsibility and plan for the new housing.
But council members LaDoris Cordell and Jack Morton said the allocation was too high.
The city should emphasize the more than 1,000 "extra" units it approved from 1999 to 2006, Councilman Jack Morton said. Assigned 1,397, the city issued permits for 2,433 units, although most were priced for higher-income buyers.
"Why do we ask permission to take credit?" Morton asked. "We just take it, and if they say no, we have an argument."
Morton said he didn't agree Palo Alto should have to build more housing because it provides jobs.
"The whole thing seems designed to punish those who succeed economically," Morton said.
Councilwoman Judy Kleinberg said although she supports affordable housing, the public-transportation system is not adequate to accommodate the growth without adding more vehicles to the roads. She said she was also concerned about schools and other city services.
And Mayor Yoriko Kishimoto urged her colleagues to consider the consequences of adding jobs such as the Stanford Medical Center and Shopping Center expansions. The cost of providing sufficient housing should be included, she said.
Representatives of the Sierra Club, the League of Women Voters and the Center for the Continuing Study of the California Economy urged the council to accept its allocation for the good of the region and its benefits to climate change.
The real answer is reducing the population, said resident Steve Raney, founder of the non-profit Cities21 group that advocates "smart growth" to reduce lengthy commutes to work.
But longtime city observer Bob Moss called the ABAG figures a "lousy idea" and said people want to live in houses with yards.
To allow for 2,800 new homes, Palo Alto would have to plan for 690 very low-income families, 544 low-income, 641 moderate income and 985 above-moderate-income households, Palo Alto Planning Director Steve Emslie told the council.
In Santa Clara County, a family of four earning less than $126,600 would qualify for moderate-income housing, Emslie said. The same family could earn up to $53,000 for very-low-income housing and up to $84,900 for low-income.
The city's current assignments are actually 3,505 units, but Emslie said he has been told the 645 units allocated to Stanford University will be subtracted from Palo Alto and added to unincorporated Santa Clara County's share.
Palo Alto received its preliminary allocations in January. This year, for the first time, ABAG used a formula that included a city's number of jobs and access to transportation hubs such as Caltrain stations. The new formula resulted in Palo Alto receiving a higher allocation than in previous years.
The city protested the assignments in a Sept. 13 letter, citing the overly high growth projections, the misallocation of Stanford's units and penalization for the city's existing smart-growth policies.
The city does not expect a formal response to its letter until mid-November, Emslie said.
On Monday, the council agreed that it, rather than city staff, should be responsible for the next letter the city sends to ABAG.
The final assignments will be issued in June 2008, giving the city one year to incorporate its figures into the city's Comprehensive Plan, Emslie said.
If the city does not comply it could jeopardize some government grants, Planning and Transportation Commissioner Samir Tuma told the council Monday.
ABAG is a regional planning agency. Throughout the nine-county Bay Area it assigned 214,500 units — to accommodate new employees — over the next seven years.
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