Palo Alto's elected leaders found plenty to like on Monday in a new proposal to bring 61 units of desperately needed affordable housing to a transit-friendly site in the Ventura neighborhood.
There's just one serious problem: it would violate the zoning code in more ways than they can count.
The struggle to reconcile the virtues and vices of the development proposed by the nonprofit Palo Alto Housing dominated the City Council's discussion, with members repeatedly saying they support the goal of expanding the city's housing stock while raising concerns about the project's failure to comply with law.
The council didn't take any votes Monday on the four-story development proposed for 3703-3709 El Camino Real, which remains in an early planning stage. Council members did, however, send a signal -- albeit a mixed one -- about their desire to see the housing get built, one way or another. The one question they debated was: Which way, exactly?
If approved, the project would replace two small buildings that currently house three businesses: Treasure Island (a stamp and coin shop), Nouvelle Bridal and Euro Mart. In their stead would stand a four-story development with retail on the ground floor and 61 small apartments targeted toward low-income residents and adults with disabilities.
To proceed, the project would inevitably require a zone change. The "neighborhood commercial" zone in which it's located allows a maximum height of 35 feet and about a dozen dwelling units. Palo Alto Housing proposed project be 48 feet in height (which includes a 6-foot parapet on the roof) and would have roughly five times the number of allowed units. And even though the city has recently passed a law that prohibits the conversion of ground-floor retail to other uses, Palo Alto Housing has asked the council for an option to have another nonprofit take over a portion of the retail space.
The El Camino proposal is Palo Alto Housing's first local project since 2013, when voters rejected in a referendum its bid to build 60 units of housing for low-income seniors and 12 single-family homes at an orchard site on Maybell Avenue. The ill-fated project had far-reaching consequences, prompting the City Council to freeze its "planned community" zoning process (which allowed developers to barter with the city over zoning exemptions) and shaking up the City Council in favor of those favoring slow-growth policies.
The 2013 referendum also prompted Palo Alto Housing Corporation to change its brand by cutting out the last word in its original name and to shift focus away from its hometown to nearby communities Mountain View and Redwood City. Since the Maybell misadventure, Palo Alto Housing has successfully developed 67-unit projects in both cities.
Now, the nonprofit is looking to return to its roots. Candace Gonzalez, CEO of Palo Alto Housing, told the council Monday that the region is going through a housing crisis that requires immediate attention.
"We have thousands of applicants on our combined waitlist, with the average turnover (in apartments) of seven to eight years," said Gonzalez, whose company administers Palo Alto's below-market-rate program. "Our workforce and seniors are getting forced out of town."
The council found the nonprofit's proposal to be reasonable, if somewhat problematic. Councilman Eric Filseth said he likes the fact that the project would create affordable housing. He was less thrilled about the fact that it would do so at a density that is roughly four times greater than what the city's residential zones would normally allow. He called the proposal "a head-scratcher" and, echoing an earlier comment from Mayor Greg Scharff, observed that the project "breaks basically every code we have."
To solve the zoning problem, the council considered three different avenues. One option is to create a local density-bonus law that would allow a higher density for projects that are 100 percent affordable housing, feature ground-floor retail and are located in transit-served areas.
Another option is creating an "affordable housing combining district" in certain sections of the city, a designation that would function like an zoning overlay. Under this alternative, the overlay would be combined with the underlying district to create more flexible development standards for affordable-housing projects.
The third -- and perhaps most controversial option -- is to revive the "planned community" (PC) zone. Scharff favored this approach, noting that it would allow the city to tailor the zoning standards to the particular project without setting any precedents for the rest of the community. Concurrently, the city could launch a community conversation about potentially relaxing some zoning standards to encourage more housing.
But others saw the PC zone as a political hot potato. Councilwoman Karen Holman was one of several members who supported creating an "overlay" district for affordable housing. This should be done through a transparent community discussion and ample resident feedback, she argued.
A development overlay would at least have some element of predictability, Holman said, for both the applicant and the community. A PC zone, conversely, is "really is a wildcard," she said.
"I think this community very much supports affordable housing, but people also have a right to expect projects and proposals that fit in with the context," Holman said.
Her colleagues largely agreed. Councilwoman Lydia Kou, who vehemently opposed the Maybell project in 2013, argued that the PC process has been "abused and manipulated" by developers. Historically, the process was used to build popular affordable-housing and senior-housing projects, including Lytton Gardens and Channing House. More recently, commercial developers relied on it to obtain height exceptions and density bonuses in exchange for "public benefits" that many in the community deemed as dubious and that in some cases failed to materialize at all.
Kou argued that the zoning tool ultimately did more harm than good because it divided the community and fostered distrust.
"I'd hope in this process that we do come together in an open and transparent way in moving (this) forward ... ," Kou said.
While council members Kou, Filseth and Tom DuBois all opposed the Maybell proposal in 2013, each of them lauded Palo Alto Housing on Monday for its work in reaching out to the community -- even if each had some reservations about the current plans.
The nonprofit has already had more than 20 meetings with neighbors, said project manager Danny Ross. Over the course of its discussions with neighbors, Palo Alto Housing had agreed to reduce the number of stories from five to four; lower the number of units from 67 to 61; scrap its proposal to move its office to the new development; and add two parking spots, for a total of 44.
DuBois lauded the organization for the early outreach work. But like Filseth, he was hesitant to commit support to a project that violates the zoning code.
"It is putting a pretty urban building in a low-intensity residential area," DuBois said.
Vice Mayor Liz Kniss had fewer hesitations. A staunch proponent of building more housing, Kniss emphasized the fact that the project does not exceed the citywide 50-foot height limit (even if it goes above the 35-foot limit in this specific zone). She noted that the city hadn't built any affordable-housing projects since 2012 and praised Palo Alto Housing for getting neighbors' feedback on its early plans.
"I think it's important that people know that you met with so many neighbors, that you thought about it very carefully and that you did come up with (a proposal) under the 50-foot height limit," Kniss said.
The Monday discussion suggested that -- much like in the Maybell debate -- the outcome of the El Camino project will have reverberations well beyond its immediate site. Filseth, Holman and Councilman Cory Wolbach all said they support creating a "framework" for evaluating future affordable-housing project and, if needed, providing them with more flexibility in development standards.
Planning staff will present options for achieving this broader goal in the coming months, as it concurrently processes the application from Palo Alto Housing.
So far, the response from the public to the new housing proposal has been largely positive, with more than a dozen residents, housing advocates and parents of children with disabilities attending the Monday meeting -- mostly to support the project.
Resident Ron Hall cited Palo Alto's history of creating housing to meet surging demand in the aftermath of World War II. He asked the council to move ahead with similar urgency.
"The need in the area and the need in Palo Alto is extreme," Hall said. "It's easy to do. All you have to do is commit to do it."
But Ventura resident Becky Sanders urged the council not to play "fast and loose with the building codes" in approving a large new building in an area already rife with new developments. Her neighborhood's parking shortage is a real problem, she said. So is the size and mass of the proposed building, she added, and the potential loss of retail space.
Rebecca Parker Mankey, who also lives in Ventura, saw things differently. Having a reduction of retail space at this site would not be a huge deal, she said.
"We'd just end up with another restaurant that I can't afford," Parker Mankey said. "I'd rather have more neighbors."
"We need housing more than we need restaurants. Let's face it, we can all find somewhere to eat."
Another voice of support came from just beyond the city's southern border.
"Where does Palo Alto Housing build housing? In Mountain View," said Mountain View Vice Mayor Lenny Siegel, in reference to the nonprofit's 67-unit development for veterans and low-income residents at 1701 El Camino Real (Palo Alto Housing broke ground on "Eagle Park Apartments" last month).
Speaking as an individual (and not in his official capacity) Siegel asked the Palo Alto council to join his city and "return to the history of building affordable housing at a time when all our communities need it."
"Send a signal to the builders -- not just Palo Alto Housing but other nonprofit developers -- that Palo Alto is again open to affordable-housing development," Siegel said.