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Palo Alto received a stark reminder last year about the high cost of not having a legally certified housing plan.
Shortly after the city, like many others, missed the Jan. 31, 2023, deadline for having its Housing Element certified by the state Department of Housing and Community Development, requests started coming in from developers pitching “builder’s remedy” projects that exceed local zoning regulations — in some cases, dramatically.
Seven such applications have come in to date, with the most ambitious one featuring a 17-story, 177-foot residential tower in the heart of California Avenue. Three others, each featuring more than 300 apartments, target a single corridor along El Camino Real, just south of Page Mill Road.
City officials continue to question the legality of these builder’s remedy projects, which can only be filed in jurisdictions that don’t have a state certified Housing Element, a document that lays out a city’s vision for meeting its state-imposed housing mandate. But even if some of these projects ultimately don’t advance, planners and council members acknowledge that the process of getting the state’s approval for the new document has taken a high toll, requiring extensive consulting work, substantial revisions to the zoning code, and long meetings by the Palo Alto City Council and the city’s Planning and Transportation Commission, with little guarantee of success.
The most significant of these conversations will unfold on April 15, when the council and the commission are set to hold a joint meeting to once again adopt the city’s Housing Element, a document that will lay out the city’s vision for adding 6,086 housing units between 2023 and 2031.
If things go as planned, the state Department of Housing and Community Development will receive the newly adopted document in May and certify it over the following 60 days, officially bringing to an end what has been a grueling, expensive and often frustrating multi-year exercise.
To date, however, very little has gone as planned. In March 2023, the HCD rejected the city’s initial submission, which it concluded does not go far enough in identifying local constraints to housing construction. It also concluded the city has not sufficiently analyzed past patterns of discrimination in housing nor demonstrated that many of the proposed sites can actually become suitable for residential use in the future.
While the council made some revisions in response to these comments before adopting the document in May 2023, the state agency issued another rejection in August and requested additional analysis of non-vacant sites as well local laws that may constrain housing production, including the city’s tree protection ordinance and its requirement for ground-floor retail in commercial areas.
Yet Palo Alto officials are confident that they’ll get the nod of approval this time around. City staff have held numerous meetings with their HCD reviewers in February and March, according to a new report from Planning Director Jonathan Lait. Based on these conversations, planning staff believe that the revised document fully responds to HCD’s prior comments and “meets all statutory requirements.”
“Accordingly, staff believe the revised Housing Element is appropriate for adoption and are hopeful that HCD will certify this version,” Lait wrote.
City Manager Ed Shikada also told the council that he believes the city’s recent conversations with the HCD have raised the odds of approval.
“We don’t have any guarantee that that consultation will result in an approval, but staff believes this significantly improves the likelihood of having approval by the HCD — by having this consultation prior to the item being brought forward for City Council adoption … or re-adoption,” Shikada said at the Feb. 26 meeting.
The new draft contains changes big and small. The city has beefed up the section of the document that explains how the city will address past patterns of housing discrimination by “affirmatively furthering fair housing” and analyzes racial disparities when it comes to housing, schools, transit and jobs. It provides additional justification for why the city believes nonvacant sites in commercial and industrial areas around San Antonio Road could accommodate an influx of nearly 2,000 dwellings and it includes more discussion about local zoning laws and development standards that constrain new development.
Perhaps most significantly, it revises the list of housing sites to include the newly created “El Camino Real focus area,” a corridor between Page Mill Road and Matadero Road where the council agreed in December to relax height and density standards and allow projects. Residential projects in this area can now have heights of up to 85 feet, well above the city’s historical 50-foot height limit.
Mayor Greer Stone highlighted the city’s efforts to meet the state’s housing targets last month during his “State of the City” speech and alluded to recent initiatives such as easing density restrictions near transit hubs and launching a specific plan for the San Antonio Road area, where the city hopes to convert office and manufacturing sites into residential hubs.
“As a community, we’re going to have to acknowledge the inevitability of change to be able to comply with the incessant stream of state mandates with very little financial support from the state,” Stone said. “Noncompliance would entail relinquishing local control, a consequence that we have to avert.”
While planning staff is confident that the new draft will pass state muster, not everyone is so sure. Scott O’Neil, who serves on the board of the nonprofit group Palo Alto Forward, told this publication in an interview that many of the changes in the new draft read like justifications of the city’s past approaches, which the HCD has already rejected.
O’Neil said he supports the zone changes that the council has adopted over the past year, including the new El Camino housing focus zone and its move in January to upzone sites elsewhere in the city that are listed on the housing inventory. But these actions, while laudable, don’t go far enough to enable housing projects that would be economically feasible, O’Neil said.
O’Neil argued that the city should demonstrate its commitment to affirmatively further fair housing by relaxing zoning in major corridors throughout the city, not just around El Camino and San Antonio. This could include broadening the application of the city’s “housing incentive program,” which relaxes zoning standards and creates a streamlined approval process for residential projects. To date, the program has only applied to San Antonio Road and El Camino Real, areas that O’Neil noted make up only a tiny portion of the city but that are expected to absorb most of its housing demand.
The most viable solution to addressing the state’s concerns is to build more apartment complexes in other parts of Palo Alto, he said.
“It’s very critical that get a lot of apartments and that they are spread throughout the city,” O’Neil said.
Palo Alto is far from the only city still seeking state certification. In Santa Clara County, nine of the 16 jurisdictions that have submitted drafts to the state have received a finding of “substantial compliance.” Los Gatos, Monte Sereno, Santa Clara, Santa Clara County, Saratoga and Sunnyvale are also still seeking state approval, according to HCD data.
In San Mateo County, nine jurisdictions — Atherton, Belmont, Daly City, Half Moon Bay, Pacifica, San Bruno, San Carlos, San Mateo County and Woodside — are still working to secure an HCD finding of substantial compliance. They were joined by a tenth last month, when Portola Valley became the first town to have its Housing Element certified and then de-certified because the town did not implement the required zone changes to further its vision.
Palo Alto, for its part, can point to some tangible accomplishments since its last rejection. According to the revised Housing Element, its development pipeline now includes 1,118 housing units that have either already been entitled or are now going through the review process, with final action expected this year.
The list includes the 380-apartment complex that Acclaim Companies is looking to construct at 3150 El Camino Real, former site of the Fish Market; the 129-apartment development for low-income residents that the nonprofit Charities Housing is building at 3001 El Camino Real, former site of Mike’s Bikes; and the 110-apartment project for educators that Santa Clara County is spearheading at 231 Grant Ave., near the Palo Alto Courthouse.
Stone noted in his speech last month that 517 of the units in the pipeline projects are designated for affordable housing, an area in which Palo Alto has historically struggled to meet its state targets. Despite all of the criticism that the city has been getting, the city has a “storied legacy of prioritizing inclusive development,” Stone said.
“As we witness fruition of our reforms, I’m optimistic that our future plans will continue to propel positive development, fostering a community where affordable housing abounds,” Stone said.
Why are cities always playing defense? Scott McNeil / Palo Alto Forward you have no responsibility for providing the upgrades to the PA utility system as a result of these added burdens. At this time we are now upgrading the piping system on El Camino. We are upgrading the water system plant. It has been reported in the papers that each city will be allocated water based on some higher evaluation of need and forced to cut back if necessary.
ECR is a crime scene regarding resurfacing. The safety issue is the road being totally gutted. Bike lanes are not going to solve the problem. Bike lanes are what happens after you resurface the street.
Sewer System – at my house I was told the main sewer in my area is over 70 years old and they come and do activities to clean it. The line from my house to the street is infested with the roots of street trees. Those are city protected trees. Now we are getting notifications about waste – more waste then they can deal with.
Yours and HCD’s problems is that you have no responsibility for the finances for any of these activities.
Every city has a defined utility system that can handle a defined amount of activity. Any increase in that activity is measurable. HCD has no investment in each cities capabilities to process the daily and weekly use of all of the systems, including electricity. PAF has no financial investment in any of these activities. I recall one mayor who was a PAF person who complained about SU having a fence around property. That property was an EPA site that had to be cleaned up before any activity took place. I attend the meetings on the clean=up at Moffett Field – an EPA site. I am looking at total ignorance of what is required of a city when you put a house up – or group of houses. East Palo Alto has a good idea – any one who want to come in with a mega project must also upgrade the sewer system for the city. Does everyone here focus on PA because we do not play defense. EPA plays defense and will get a new utility system if and when mega project knocks on the door. Make HCD define how they will provide funding for these demands they are making.
The State should do its part here by revisiting the #s. Are the cities once deemed “jobs rich” still in that category? Are “transit rich” areas in fact transit rich? The State, which is so poorly managed that it burned through a multi-billion dollar surplus and managed to build a $70 billion deficit, should acknowledge some financial facts, starting with this one: some parts of California stopped being affordable years ago and that is unlikely to change between now and 2031. Planning is great, but execution is another story all-together in cities that are land-limited and the cost of both land and construction is very, very high. Redirecting some of the money that is spent on bureaucracies such as HCD towards actually building housing in places where construction does “pencil out” would be a better use of money. And maybe some percentage of the number of houses required in expensive cities could be achieved via donations to a housing fund to be used for construction in such places. It is painfully obvious that current policies are not working; time for some new thinking.
Annette is absolutely right that it’s time — past time — for the state to revise its housing mandates to reflect the new reality that the state is running a huge deficit, that population continues to decline, that the drought continues and NOW the insurance companies are refusing to cover homes due to DENSITY which makes the homes too risky to cover.
But instead the state is doubling down on its 8-year ban on any reconsideration of the unrealistic housing targets making it even tougher for local communities to argue against.
Where’s the reality and democracy in eliminating local control when cities and counties are also running huge deficits and can’t even adequately serve their own CURRENT populations?
The Bay Area is mandated to absorb 2,000,000 more people. Where are they supposed to go when the roads are already jammed and all the public transit budgets are being cut?
Someone’s going to make out like bandits with those huge builders remedy atrocities and it sure isn’t us. Instead we get stuck for the costs of lane reductions are the Sunset “builders remedy” and all the traffic that will back up it — a shamefully stupid fiasco.
Gennady Sheyner. Restrictive R1 Zones are killing approvals for a housing element. R1Zones in PA make up 80% of the housing stock and streets in this town. And yet. Historically, there was Fair Play Housing locally. The thenm Palo Alto Housing Association played a big role in securing inclusionary housing in Palo Alto. One was called the Lawerence Tract off of Colorado Ave, and behind the Quaker church. These homes were for purchase and African American families, Japanese Americans were encouraged and welcomed to become homeowners. This came to be in the late 1940’s. It was spearheaded by Gerta Isenberg.
Yet that progress was stopped dead in its tracks. Residential 1 zoning prevailed which prejudiced multi family and lower income homes for a more diverse work/live resident. Pat Burt boasts of all the Deed Restricted properties (mostly run by Alta Housing). This is true. But were it not for Palo Alto Housing Association and Gerta Isenberg these deeds would not exist today.
The other was the expansion of neighborhood associations which locked out what was deemed as “riff raff”. I am sorry this publication has not done a comprehensive investigative piece on Palo Alto housing discrimination practices or what referred to “red lining”. The fact too that much of old PA housing stock and parcels are owned by Giant Tech monopolies: Google, Facebook, Apple. This is of major concern — it’s like these corps are privatizing our public streets for their exclusive right of ways to all their residential and office suites (that double as historic homes).
If we were building dense housing we would have significantly increased sales tax revenues (I believe the per capita spend for Palo Altans is like $21,000) and property tax revenues. I mean 300 condos versus the property tax from a closed Olive Garden, you cannot even compare. If we want to maintain and upgrade our parks, utilities, and services – we need more money to do it and we sure as heck are NOT building more office. Our only option is to add residential uses. We have hear that much from Council.