A Palo Alto commercial property owner will soon buy from the City of Palo Alto the right to build a new building that is 2,500 square feet larger than the zoning allows.
The price tag for this privilege, to be determined in a bidding process, could be as high as $300 per square foot, or $750,000.
Why is the city auctioning off these bonus development credits, making money from property owners anxious to build beyond the legal limits?
In a convoluted and irrational scheme, the city is using the sale to fund its promised $300,000 contribution toward the $4 million renovation of the city-owned "EcoCenter" in the Palo Alto Baylands, completed three years ago by the nonprofit Environmental Volunteers, which occupies the building under a long-term lease.
The city is taking advantage of a program that gives incentives to property owners who seismically retrofit their building or renovate an historic building. In this case, since the city is the property owner, it is using the 2,500 square feet in transferable development credits (TDRs) that a private owner would have received. A similar process was recently used by the city to raise money for the renovation of the dilapidated city-owned former Palo Alto Medical Foundation "Roth" building at 300 Homer Ave.
Three city council members, Tom DuBois, Eric Filseth and Greg Schmid, attempted to de-rail the EcoCenter TDR sale by proposing the city simply pay the $300,000 it owed to Environmental Volunteers out of the city's general fund rather than enable a new commercial building to exceed the zoning limits. Their proposal was defeated on a 5-3 vote, with Mayor Pat Burt, Marc Berman, Karen Holman, Greg Scharff and Cory Wolbach opposed and Liz Kniss absent.
Burt and Holman argued that the original 2007 agreement with Environmental Volunteers called for the TDR sale and that the current City Council should not change a prior council's action. We find that reasoning completely without merit. City councils alter the policies and actions of past councils all the time as circumstances and political attitudes change. This should have been an easy vote to end a practice that was never envisioned when the transfer of development rights program was established. The city has no business making money from selling bonus square footage to property owners. As DuBois, Filseth and Schmid have urged, this practice should be ended.