Seeking to significantly ramp up housing production, city of Palo Alto planners are preparing to advance a package of zoning changes in the coming months with the goal of adopting them by the end of this year.
The proposed zoning revision is a central component of the city's new Housing Work Plan, which the city's Department of Planning and Community Environment released this week and the City Council is scheduled to discuss on Monday. The plan aims to address one of the council's top priorities -- the city's severe housing shortage -- and help the council reach the housing goals of its recently updated Comprehensive Plan.
As the work plan makes clear, meeting these goals and addressing the housing crisis will require dramatic action -- including a roughly three-fold increase in housing production, when compared to recent years'.
One proposal would add new incentives for developers of high-density housing in areas served by public transit, including limited exceptions to the citywide 50-foot height limit. Other changes on the table for near-term implementation include: density bonuses for developments that offer 100 percent affordable housing; new incentives for residential development on properties that are identified in the city's Housing Element; and a requirement that developers with residential projects offer a "minimum density" of eight units per acre in districts zoned RM-15 (multi-family residential). Today, these districts only have a maximum density of 15 units per acre.
City planners are also exploring zoning changes to promote high-density multi-family housing in the downtown area, including a new "Pedestrian and Transit Oriented Development (PTOD) district" around University Avenue, according to the work plan. They are considering allowing housing at Stanford Shopping Center and along the El Camino Real frontage of the Stanford Research Park. And they are looking to create a new zoning district that would allow a mix of retail and residential space -- but no office.
"The intent of these changes would be to encourage a mix of land uses that contributes to the vitality and walkability of commercial centers and transit corridors," the plan states.
Many of the ideas in the work plan are a direct response to a memo that was penned last year by Councilman Adrian Fine, co-signed by Mayor Liz Kniss and Councilman Cory Wolbach, and unanimously endorsed last November by the council. The memo makes a case for more aggressive action to address the region's housing crisis, which "causes significant economic, social and environmental harm."
"While Palo Alto may never be a truly affordable place to live, the City Council has an obligation to current and future residents to explore policies that expand housing choices for people of different incomes, generations and needs," states the memo, which then directs staff to come up with the plan for pursuing housing initiatives.
The new Housing Work Plan makes clear that reaching the council's current housing targets will require a host of ambitious initiatives, including zoning reforms, direct subsidies by the city and partnership with other agencies and organization. The city will need to "go big" on the zoning changes, the plan states, if it is to "increase Palo Alto's rate of housing production in a meaningful way and see the amount of new housing envisioned as part of the recent Comprehensive Plan update."
Between 1970 and 2010, the city permitted new housing at an average rate of about 160 units per year, according to the plan. But between 2011 and 2014, the rate dipped to just 64. Since then, the numbers have fluctuated dramatically. In 2015, the city permitted 246 net new housing units; in 2016, just 18. Last year, 80 units were permitted, according to the plan.
If the city were to stay on its current course, it would fall well short both of its own goals -- as articulated in the new Comprehensive Plan -- and of regional targets. The Regional Housing Needs Allocation calls for the city to develop 1,988 units at varying levels of affordability between 2015 and 2030. Meanwhile, the city's updated Comprehensive Plan calls for policies that would result in a production of 3,545 to 4,420 new units between 2015 and 2030 -- an annual rate of between 230 and 290 units.
It doesn't help that the city is already playing catchup. Between 2015 and 2017, the city only permitted 118 units per year -- well short of the mark. This means that to meet its mid-range Comprehensive Plan projections, it would need to ramp up production to about 303 units per year between 2018 and 2030.
The work plan also includes a host of new programs focused on below-market-rate housing. To encourage such housing, city planners are considering a zone change that would offer developers incentives such as reduced parking requirements, reduced landscaping requirements and smaller fees, according to the work plan.
Currently, about 8.25 percent of the city's roughly 28,000 housing units are deed-restricted as below-market-rate housing, the plan states. Given the city's sky-high housing costs, the plan makes a case for significantly boosting this number. It notes that the median rent for a two-bedroom apartment in Palo Alto was $3,500 in November 2017, while the median sale price for a single-family home was $3 million, according to Zillow.
"This contributes to both housing insecurity and overcrowding, as residents are forced to spend more and more to pay their rent/mortgage and find themselves living in smaller spaces with more roommates or family members," the plan states. "These issues can affect income restricted and special needs populations, such as the elderly and disabled, more than the others, and the number of such households in Palo Alto has been increasing over time."
The city has already taken some steps to stimulate more housing. Last year, the council voted to relax restrictions for building accessory-dwelling units, in some cases going beyond the requirements of new state laws designed to achieve the same objective. It also contributed funds to preserve the Buena Vista Mobile Home Park and signaled its intent to move ahead with a new "concept area plan" for a portion of the Ventura neighborhood that includes Fry's Electronics. The commercial campus anchored by Fry's is widely seen as one of the city's most underdeveloped areas. As such, the council sees it as particularly promising for housing.
The next 12 months promise far more action on the housing front. In addition to moving ahead with the new zoning ordinance, staff is preparing to look at increasing the city's "inclusionary (below-market-rate) requirements" for new developments from 15 percent to 20 percent (which means 20 percent of the units in new developments would have to be comprised of affordable housing).
The council also signaled its commitment to addressing the housing crisis when it united behind the Fine memo last November. Newly elected Mayor Kniss is [particularly passionate about the topic. Minutes after getting promoted to the mayor's chair on Jan. 9, Kniss told the assembled crowd that the city is "way behind on providing housing" and emphasized the need to do more.
"It's beholden on us -- on our integrity -- to do that," Kniss said.