Divisive zoning tool makes a comeback in Palo Alto

Few phrases have sparked as much debate in Palo Alto’s development circles as “planned community,” a zoning designation that in recent decades has enabled some of the city’s most ambitious developments as well as some of its most heated land-use battles.

The tool, which allows developers to haggle with the city over zoning rules and public benefits, has been on hiatus since 2013, when the Palo Alto City Council bowed to popular pressure and agreed not to accept any more planned-community applications. But with the city eager to add more housing, the zoning tool is experiencing a resurgence of sorts.

On May 6, the city council is scheduled to review and likely approve its first “planned community” project in more than a decade, a 75-condominium project at 800 San Antonio Road. And if things go as planned, the San Antonio project could be one of three planned-community projects that win approval this year.

Three projects may not sound like much, but it’s three more than Palo Alto has approved since 2020, when the city council revived and reformed the planned-community zone. Unlike most zoning districts, which have predictable development standards, planned communities are a product of negotiations between developers who wants to exceed development standards and city officials who want to extract as many public benefits as possible in exchange for loosened regulations.

Historically, the highly discretionary process has been used for development of projects that significantly exceed local zoning regulations, a wide-ranging list that includes Channing House, a residential community for seniors, Palo Alto Square, a business park in the center of the city, and Edgewood Plaza, an Eichler-style shopping center that was rehabilitated a decade ago.

But the process has also been widely derided over the years by land-use watchdogs who characterized it as “zoning for sale” or “spot zoning.” The last planned community project that the city council approved was a proposal to build 60 apartments for low-income seniors and 12 single-family homes at 567 Maybell Ave. After the city approved the zone change in 2013, residents launched a referendum that overturned it, dooming the project. The vote prompted the council to effectively put an end to planned-community projects.

Now, the process is back, albeit with a different name and brand. Rebranded as “planned home zoning” in 2020, it now applies only to residential projects that devote at least 20% of their units to below-market rate housing.

The proposed five-story at 800 San Antonio Road fits that bill. Over the past month, it has won unanimous endorsements from the city’s Architectural Review Board and its Planning and Transportation Commission. If approved, it would bring 75 condominiums and 1,078 square feet of retail space to a largely commercial and industrial neighborhood that Palo Alto officials hope to turn into the city’s next residential hub.

The applicant, Yorke Lee of TS 800 SA, LLP, is requesting exemptions to the city’s height and density limits for a project that would have a height of 60 feet and 8 inches and about three times as much density as zoning would normally allow.

While such requests have encountered resistance in the past, the planning commission agreed last month that it is fully justified in this case. Vice Chair Bryna Chang was one of several commissioners who said they were excited about the San Antonio project. She lauded the applicant for including retail in the development and for making some of the residences available for low-income residents.

The developer has proposed to designate 15 condominiums as below-market rate units for various income levels. Six units would be designated for individuals at the “very low income” level, five would target those at the “low income” level and four would be for “medium income” residents, according to project plans.

“I appreciate the deep affordability for the very livable units, and the project is just beautiful,” Chang said during the April 10 meeting. “This project has my full support.”

While 800 San Antonio Road may get its final green light next week, its experience is an exception rather than the rule for a process that has had more failures than successes in recent years. The council brought back planned-community zoning in 2020 and over the next two years six projects were proposed. Five ultimately dropped out.

Only one — a mixed-use development with 63 apartments and 9,115 square feet of office space proposed for 660 University Ave. — is still going through the process.

The experience of Smith Development, which is spearheading the University Avenue project, in many ways reflects both the promise and perils of planned community zones. While the development would bring a valuable amenity — housing — to the downtown area, the highly discretionary project has resulted in years of negotiations, revisions and opposition from neighboring properties.

The proposal eked out a key victory on April 18, when the Architectural Review Board voted 3-2 to recommend approval. Opponents raised concerns about impacts to a tree adjacent to the project site and the prospect of the development precluding the possibility of a future bike lane. Proponents countered that it’s time to advance the project and bring much needed housing to downtown Palo Alto.

“This project has been two years in the making and we definitely need to get this type of project approved,” board Chair Peter Baltay said before the vote.

The city’s commissions are also now reviewing a third planned-community project that targets a specific population: local teachers. Pitched by Half Dome Capital, the development would bring 44 apartments to 3265 El Camino Real.

The project received a boost last year, when the city council generally supported its goals during its preliminary review and encouraged Half Dome to file a formal application. While some council members and planning commissioners have expressed concerns that the units in this development would not be affordable to most teachers, this project also scored a victory last month when the planning commission voted to advance it for further reviews.

The teacher housing project now has to get through the Architectural Review Board before returning to the Planning and Transportation Commission and ultimately the council for final approval.