Palo Alto City Council on Monday night took its most aggressive and polarizing step yet toward curbing the rapid pace of growth when it adopted an annual limit on office construction in the city's three prime commercial areas.
In a unanimous vote that belied deep fissures in its ranks, the council adopted an annual cap of 50,000 square feet for office and research-and-development projects in downtown, California Avenue and El Camino Real. The vote came after hours of dispute, months of debate and strident opposition from high-tech companies, the Chamber of Commerce and, for a while, the city's own Planning and Transportation Commission.
The council also had plenty of skeptics within its ranks. Though the council voted 8-0 earlier this year, with Tom DuBois recusing himself, to adopt a general framework for the cap, several members questioned whether the measure should be pursued and squabbled over how it should be implemented.
The proposal that the council ultimately adopted on Monday followed many of the broad outlines from prior discussions. The cap would last for either two years or until the city approves its updated Comprehensive Plan. It would apply only to the three districts. If by next March the projects in the city's pipeline collectively exceed 50,000 square feet, the city would decide which to approve based on a set of criteria that includes such things as traffic impacts, land use and design.
Yet under a last-minute amendment that was championed by Councilman Greg Scharff and that the council adopted by a 5-4 vote, most of these criteria wouldn't be particularly relevant until the second year of the ordinance. Priority in the first year, meanwhile, would go to the current projects. Initially, the council had planned to give the pipeline project preferential treatment in recognition of the time and resources that have already been spent throughout the application process. Scharff argued that mere preference is not enough and that they should be placed in front of the line.
It's unfair, Scharff said, to throw developers who have spent hundreds of thousands of dollars "into the mix after they spend all that money without any clear sense that they may never be able to build that project."
Ray Paul, who represented the Jay Paul Co. at Monday's meeting, told the council that the development company has already spent close to $600,000 on the two applications, which included an Environmental Impact Report.
Scharff's proposal to place Jay Paul's projects, as well as the three others in the pipeline, at the "head of the line" won a bare majority, with Councilman Marc Berman, Councilwoman Liz Kniss and Councilman Cory Wolbach joining him. The fifth vote was provided by Councilman Eric Filseth, who typically votes with the slow-growth "residentialists" but who made an exception in this case.
"Commercial real estate is a high risk, high return kind of endeavor," Filseth said. "One of the risks is municipal zoning there is an exposure to it."
But Filseth also called Scharff's proposal a "reasonable accommodation" and supported his amendment.
"It deals equability with people who invested in the process so far," Filseth said.
Others strongly disagreed, including Councilman Pat Burt, who helped craft the motion that delineated the criteria for choosing developments. Burt argued that Scharff's amendment basically makes the criteria moot and that the amendment "undercuts" the entire effort.
There were other areas of division as well. Kniss and Wolbach initially proposed a "first-come, first-serve" process for selecting projects under the cap, a recommendation that didn't win support from any of their colleagues.
Wolbach said this approach is simpler than the proposed "beauty contest" because it would "kill two birds with one stone." It would reduce the staff time in evaluating projects and make things "simple, clean and straight-forward for a short two-year ordinance."
Burt disagreed and argued that the focus should be quality and that the evaluation process is the most critical component of the ordinance.
"I do agree it would kill two birds with one stone but one would be a golden eagle," Burt said. "The race toward quality is perhaps more important than the control on quantity."
Councilman Tom DuBois also criticized the proposal to eliminate the "beauty contest" between projects. Giving preference to projects based on when they were submitted will do nothing to encourage quality, he said.
"It sounds like a race to the bottom," DuBois said. "We aren't going to get quality. We'll get quick submissions."
Now, at least in the first year, the preference won't go to the projects with the highest quality but to those that have advanced furthest along in the application process. The city has four "pipeline" projects, with the two largest ones both proposed by the Jay Paul Co. and located on Park Boulevard, near the California Avenue Business District. One, at 2747 Park Blvd., would bring 28,200 square feet of new development to the California Avenue area. The other, at 3045 Park Blvd. would add 29,120 square feet of new commercial space to the rapidly growing district, according to planning staff (Ray Paul, representing Jay Paul, disputed this number and said that the net gain would actually be only 11,000 square feet because the existing building already has about 18,000 square feet of office use).
The other two projects whose applications have been deemed complete by planning staff are far smaller. There is a project at 3225 El Camino Real that includes 3,437 square feet of new office space; and one at 411-437 Lytton Ave, with 6,096 square feet.
Collectively, these projects constitute 66,873 square feet of net new office space, enough to fill the cap in the first year and to fill up a good chunk of the cap in the second.
Another area of disagreement was "concept area plans," detailed vision documents that target a specific section of the city and that are crafted with community input over a process that typically takes several years. In June, the council split 4-4, with Tom DuBois recusing himself, on whether the office cap should apply to these areas.
This time, the council concluded that these areas should not be excluded. Council members also acknowledged that this once controversial issue is effectively a moot point, given that the ordinance will only last two years and that the city has no new concept area plans in the works.
Among the public, the office cap also proved to be a polarizing proposition. Land-use watchdogs, residentialists, neighborhood groups and members of Palo Altans for Sensible Zoning (which includes plenty of both) have urged the council to adopt the cap to curb the recent period of heavy growth.
High-tech titans such as HP, Palantir and SurveyMonkey have spoke out against the cap, arguing that the city should focus its energies on the negative impacts of development namely, traffic and parking, rather than on development itself.
Planning and Transportation Commission members characterized it as a "blunt tool" and a distraction from the bigger goal: the update of the Comprehensive Plan.
Peter Stone, a member of the Palo Alto Chamber of Commerce, also took issue with the office cap. His group, he said, would like to see the council and staff pay more attention to the ongoing efforts by the city's new Transportation Management Association and the business community to reduce traffic.
"We think the entire discussion of growth limits would be better served in the Comprehensive Plan process rather than through the adoption of an interim ordinance," Stone said.
But Terry Holzemer, a resident of Palo Alto Central, a condominium complex on California Avenue, urged the council to move ahead with the cap and pointed to the recent influx in traffic and parking problems in the area.
"As long as there's no cap of office space, growth there will be unimpeded and will continue to have an effect on our environment and will continue to make our lives worse," Holzemer said.