Today, May 7, the City Council will consider approving the controversial "Lytton Gateway" office building at the corner of Lytton Avenue and Alma Street, a decision that once again points out the need for stronger criteria and follow-up for developments to qualify for Planned Community status, which is awarded to projects that exceed normal zoning but offer offsetting public benefits.
The project at 355 Alma, on the site of the former Shell service station, is being touted as an example of transit-oriented development where employees arrive by train and work in a building that serves as a "gateway" to downtown.
Its developers are seeking to far exceed height and density limits for the neighborhood, in return for contributing millions of dollars to the city, including $2 million for affordable housing, a $1.5 million in-lieu parking fee and numerous other benefits, especially for parking, adding up to more than $1 million.
But in its latest four-story design, without the housing included in the original five-story version, the project's only true "public benefit" is that it will provide office space for workers who might arrive on Caltrain.
This project is just another office building, but three times the size allowed by the zoning. With the actual current zoning for the site, a two-story building totaling 17,000 square feet would be permitted. Instead, the proposed building would exceed 50,000 square feet.
Under the rules in Palo Alto, a developer can seek approval of a larger-than-permitted project by offering so-called public benefits that make the excess development seem worth it for the community.
These planned community (PC) projects have become a favored tool of developers but a challenge for policy-makers, since each project must be negotiated on a case-by-case basis and no standards exist.
Projects exceeding the zoning have been approved over the years in exchange for creation of public plazas, housing, grocery stores, child care, public art, additional parking and a host of other things. Rarely, if ever, has an economic analysis been done to determine the actual value of the public benefits compared to the profits received by the developer due to building a larger project than allowed by the zoning.
In this case, the developers initially proposed 14 units of housing on the fifth floor (including half at below-market rates) as the primary public benefit. The Council appropriately rejected it due to the excessive size and height and concern about parking.
What returns to the Council on Monday is the same building without the fifth floor and housing, and with a laundry list of new public benefits, mostly cash.
We see little justification for Council approving this project.
As revised, this is just another large office building that will add to the parking problems downtown, where residents are already heavily impacted by both daytime employee parking and evening visitors.
The developers have substituted a generous amount of money for the housing they originally proposed as public benefits, but accepting money as the primary public benefit would be unprecedented and would establish that with enough money any developer can obtain approval for a project that meets neither the city's zoning nor Comprehensive Plan policies.
A skeptical City Council asked good questions when it reviewed this project in March, including wanting to understand the value to the developers of gaining 32,000 square feet over what the zoning allowed. Staff responded it didn't have the expertise to do that analysis, but Council member Greg Scharff estimated the value at as much as $15 million to $20 million, far less than the proposed public benefits.
But in addition to determining how much the 32,000 extra square feet are worth to the developers, an equally important question for the council is whether it is good public policy to approve zoning exceptions in exchange for payment of money.
We can't imagine the city entertaining the idea of a homeowner paying the city in order to build a bigger house than the zoning allows. Why should office buildings be any different?
As we've repeatedly urged, a complete overhaul of the PC zone and the concept of public benefits is needed, and the City Council can start by rejecting this project as currently proposed.