Supporters call it a valuable tool for allowing flexibility and encouraging the creation of much needed housing for seniors and low-income families.
Opponents call it a "racket" that allows developers to line their pockets by exceeding zoning regulations and providing meager "public benefits" that at times never materialize.
Everyone on the City Council agrees that the "planned-community" process is broken. Now, fixes are on the way.
A year after Palo Alto put a halt on planned-community (PC) proposals, the city is moving ahead with reforms that officials hope will add some clarity and predictability to the city's most controversial zoning process. The reforms, which the Planning and Transportation Commission wrestled with on Wednesday night, aim to revamp a process that allows developers to exceed zoning regulations in exchange for benefits that are negotiated between the council and the builder.
When it premiered in 1951, the planned-community zone was used primarily for affordable-housing and senior-housing complexes. On occasion, that's still the case in the modern era.
The Opportunity Center and the recently expanded Palo Alto Commons, for example, both relied on the PC zone. Over the past few years, however, it's been used just as often for office complexes that are far more dense than existing zoning would allow.
Recent developments that have relied on the PC zone include 2180 El Camino Real (around the former JJ&F market); 101 Lytton Ave. (now home of Survey Monkey); the renovated Edgewood Plaza; Alma Village; the Taube-Koret Center for Jewish Life; and 488 Charleston Road (the affordable-housing complex known as Tree House). It was also used by the Palo Alto Housing Corporation in 2013 for its proposed housing development at 567 Maybell Ave., a project that voters shot down in November of that year after a successful referendum.
Another PC zone proposal for a four-story building at 2755 El Camino Real, at the busy corner of El Camino Real and Page Mill Road, was withdrawn last year after the council put the freeze on the zone-change process. The mixed-use building with a heavy office component has since been resubmitted under a different zone-change proposal.
The zoning process has long been criticized for offering insufficient benefits in exchange for lucrative zoning exemptions that exacerbate the city's traffic and parking problems. But as the planning commission demonstrated on Wednesday night, fixing the process is a complex affair. Over a wide-ranging discussion that stretched for more than three hours and featured more than a dozen informal votes, the commission grappled with a list of changes offered by staff that aim to make planned-community proposals feel more predictable and less transactional.
One improvement is creating an actual definition of "public benefit," a term that over the years has encompassed everything from sculptures and bike paths to cash payments and affordable-housing units. The proposed ordinance also includes a new rule that requires a developer to submit an economic analysis for the project -- a pro forma document that would help the council weigh the value of public benefits against the profit the developer would earn as a result of the zoning exemptions.
Yet while it offers a definition of "public benefits," the proposed ordinance doesn't go as far as to actually create a menu of benefits that could be considered in exchange for the requested entitlements. The definition remains open-ended: "specific improvements or amenities for the local community or neighborhood provided by the developer in exchange for uses, densities, and/or a development configuration specific to the PC district that would be unattainable in general zoning districts or combining districts."
"Public benefits shall include affordable housing, significant monetary or 'in kind' contributions toward meeting goals of the City's adopted infrastructure plan or human services needs assessment with a nexus to the proposed project, or other similar amenities or improvements identified by the City Council," the ordinance states.
It also notes that "from time to time, the City Council may adopt by resolution a menu of public benefits that represents current City priorities."
The commission agreed with many of the proposed reforms, though it quibbled with a few and split on two. Members generally agreed that the menu isn't necessary but Commissioners Kate Downing and Eric Roseblum both favored including "preferred uses" such as affordable housing and senior housing.
Downing argued that PC projects should have "intrinsic value" that is, be beneficial in of themselves. She gave as an example amenities like affordable housing and community centers. She also argued against allowing developers to make cash payments because this gives the city an incentive to "underzone" and turns the process into a "huge negotiation, like buying a used car."
She acknowledged that the process, as it stands, has been a cause of much anxiety.
"People, when they talk about zoning or a project out of zoning (compliance), they talk about it like a crime is being committed, like we're violating the law when we're doing something outside zoning," Downing said.
Zoning laws, she argued, are different from other types of laws in that they reflects the community's aesthetics and cultural preferences, which change over time. In Palo Alto's case, the process of updating the official community vision, the Comprehensive Plan, has been dragging since 2006 and is still about two years away from completion. The planned-community zone, Downing said, can "bridge that gap."
"It allows you to build things that maybe we all agreed that we like and that are going in the direction that we like, and we haven't had a chance for our processes to catch up with it," Downing said.
Przenek Gardias was the only commissioner who supported limiting planned-community projects to particular geographical areas of the city and capping the exemption that a developer could request. Downing and Vice Chair Adrian Fine both argued against these proposal, as did Michael Alcheck.
"Common sense will help guide these developers," Alcheck said, adding that the City Council would still have the discretion to approve or shoot down the projects if it doesn't like what it sees.
Alcheck also lobbied for removing a requirement proposed by staff that developers establish a fund that would be used to support the city's compliance reviews on an annual basis. He argued that this requirement would be "too burdensome" for some property owners and developers.
Another requirement that Alcheck opposed is one that forces developers to provide an economic analysis for the projects. In both cases, the commission took the opposite view. He also disagreed with Downing and made an argument for allowing developers to offer cash and other "extrinsic benefits" in exchange for zoning exemptions, a proposal that split the six commissioners down the middle (Mark Michael was absent). Chair Greg Tanaka and Gardias generally agreed with Alcheck, while Vice Chair Adrian Fine, Downing and Rosenblum disagreed.
"I feel that we don't want to sell zoning," Rosenblum said. "It's an attractive thing, because everyone likes the money. But it's a slippery slope."
The commission didn't vote on the ordinance Wednesday but directed staff to return on March 11 with a revised proposal. After the commission votes on its recommendation, the ordinance would go to the council for adoption.