Responding to community criticism about the rapid pace of office growth, Palo Alto officials on Monday offered measured support for a complex and deeply contentious solution: an annual cap on commercial development.
Several members of the City Council signaled that they would favor instituting new limitations on office development, though the debate about what these limitations would be has yet to take place. The council stopped short of voting on a development cap and has yet to figure out whether it should be instituted immediately on an interim basis or rolled out as part of the ongoing update of the Comprehensive Plan.
Though the council didn't delve too deeply into the issue on Monday because of time limitations, the members who had a chance to speak made it clear that they would support an annual office cap. They took this position despite deep reservations and fervent objections from various residents, businesses and property owners, most notably Stanford University. Critics of the proposal argued that capping development would not address the impacts that the council is trying to solve, namely, too much traffic and not enough parking.
Jean McCown, Stanford's assistant vice president for government and community relations, urged the council not to take "precipitous actions" and encouraged members to design solutions that fit the problems of specific parts of the city. She was one of several speakers from Stanford who warned about the unintended consequences that the cap would have on Stanford Research Park, a sprawling high-tech campus with a roster of high-tech titans that includes Varian, Tesla and VMWare.
"There is a community concern about parking in the downtown commercial area, but that's not the issue in the Research Park, where properties do provide their own parking," McCown said.
She also noted that unlike in downtown, developments at Stanford Research Park do not apply for "planned-community" zone in hopes of adding more density than their sites would otherwise allow.
Tiffany Griego, managing director for Stanford Research Park, made a similar point in a letter that she co-signed with McCown. The letter noted that between 2004 and 2013, the Research Park has grown at a "modest average rate" of 16,000 square feet per year and that it many cases it resulted in obsolete facilities being transformed to accommodate modern technologies.
Griego asked the council to "encourage this sort of reinvestment which replaces existing improvements with modern, sustainable facilities that are more appropriate for the conduct of cutting-edge research and development."
In the letter, she wrote that Stanford believes that an annual growth limit "could have significantly detrimental impacts on the vitality of the Stanford Research Park"
"Stanford is concerned that an annual cap will compromise our mutual ability to attract companies that create long-term economic stability in our City," Griego wrote.
Jeff Wright, vice president at Varian, also expressed a deep concern about an office cap. The company had recently renovated 110,000 square feet of office and research-and-development space at its Stanford Research Park campus and had put together a master plan that would accommodate a further build-out. The company's plan to continue its growth could be jeopardized by a new cap, which could take the form of a "beauty contest" between development proposals, with the council as the judge.
"We are concerned the contemplated annual growth limit erodes flexibility and predictability, and could have the unintended consequence of prohibiting Varian from ever building out its remaining FAR (floor-area-ratio), particularly if the annual limit is too low," Wright wrote.
The call for caution and careful deliberation won some support from the council, though members were more swayed by the argument from residents that office development has gotten too intense, particularly around downtown. Residents' anxieties over recent growth helped set the stage for a referendum in 2013, in which voters overturned a council-approved housing development on Maybell Avenue, and for the council election of 2014, in which candidates who advocated for slow-growth policies did particularly well.
Two of these candidates, Tom DuBois and Eric Filseth, both spoke in favor of a commercial cap. DuBois cited the recent election and recalled that "all five winning candidates said there is a need to moderate commercial impacts."
"We had very broad input from the community through the last election," DuBois said. "It's not just about traffic and parking. It's about maintaining the aesthetics of the city."
Filseth aligned himself with Vice Mayor Greg Schmid, who made a motion for staff to move ahead with exploring an annual cap between 10,000 square feet and 45,000 square feet as part of the Comprehensive Plan update.
But the council never got to vote on Schmid's motion, with most members agreeing that the March 2 discussion should launch from a clean slate and not be based on a specific proposal. The council voted 6-2, with Schmid and Filseth dissenting and Councilwoman Liz Kniss absent, to table the discussion until then.
"I think it's pretty clear that for a majority of Palo Alto residents, we're at a point in time where the incremental benefits of more office expansion are outweighed by the incremental costs," Filseth said in explaining his support for a cap. "There is an argument that negative impacts can be mitigated but they can't be mitigated completely. It's the first rule of holes. When you're in one, stop digging."
Though the council didn't adopt a cap on Monday, the discussion suggested that it's only a matter of time. Mayor Karen Holman and Councilman Pat Burt had both advocated limiting commercial growth at past discussions. And even Councilman Cory Wolbach, who is not aligned with the slow-growth "residentialist" camp, reiterated on Monday his pre-election argument that what Palo Alto needs is more housing, not more office space.
Even so, Wolbach urged caution when it comes to capping development. By addressing the supply of office space without addressing the demand, the council's action could lead to rising rents, which could pose a challenge for small businesses. He likened an office cap to a tourniquet and argued that "if you aren't careful you can lose a limb."
"Small businesses in Palo Alto could be among the limbs," he said.
Wolbach proved particularly sympathetic to a commonly stated argument that the city shouldn't cap office development outright but rather limit it by demanding amenities such as housing, impact fees and "transportation demand management" programs that shift employees out of cars and into less impactful modes of commuting.
"Tying commercial development to housing, tying commercial development to TDM (transportation demand management) measures -- those are the kinds of things we need to focus on," Wolbach said.