In an effort to spur the construction of more affordable housing, Palo Alto is preparing to create a new zoning district that would relax parking requirements and other development standards for residential projects that provide below-market-rate units.
The new "affordable housing combining district," which the Planning and Transportation Commission will review on Feb. 14, is part of the city's broader effort to revise its zoning code so as to meet the City Council's new housing-production goals. At its retreat last Saturday, the council reaffirmed its commitment to helping create new housing and meeting the goals of its Comprehensive Plan, which will require the city to produce about 300 housing units per year between now and 2030.
The city's new Housing Work Plan, which the council began discussing this week and is expected to adopt Monday night, places a particular premium on "affordable housing," which it defines as "affordable to extremely low, very low, low or moderate households," as defined by the area median income.
Santa Clara County's area median income ranges from $74,187 for an individual to $105,937 for a family of four.
For a family of four in the "extremely low" income category -- between 0 and 30 percent of area median income -- affordable rent would be $895. For a family in the "higher moderate" category, with income between 101 and 120 percent of area median income, affordable rent is $3,399.
The Housing Work Plan calls affordability "a huge issue in Palo Alto, where the median rent for a two-bedroom apartment is $3,500, the median sale price for a condo is $1.6 million, and the median sales price for a single-family home is $3.07 million."
"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 roommate or family members," the plan states. "These issues can affect income-restricted and special-needs populations, such as the elderly and disabled, more than others, and the number of such households in Palo Alto has been increasing over time."
The new affordable-housing combining district would give significant parking concessions to housing developments consisting entirely of below-market-rate units. Normally, the city requires multifamily residential housing to provide 1.25 parking spaces per studio; 1.5 spaces per one-bedroom unit; and 2 spaces per two-bedroom (or larger) units, one of which must be covered.
In the affordable-housing zone, projects would only have to have 0.5 parking spaces per unit. The city's planning director would also have the authority to lower these requirements based on findings that the project would need fewer spaces. For units targeting residents with special needs, the required parking ratio would be 0.3 spaces per unit.
The zoning district could be applied to commercially zoned sites within a half-mile of major transit stops and "high-quality transit corridors," according to a report from the Department of Planning and Community Environment.
The new district would set an important precedent for local zoning: Rather than setting a maximum number of units that could be developed, it is intentionally leaving that variable open. Instead, development will be limited by floor-area-ratio (the actual amount of building that is allowed) and the city's 50-foot height limit, which will continue to apply.
The floor-area ratio in the new district will be 2 to 1, which means that a lot with an area of 25,000 square feet would accommodate up to 50,000 square feet of development.
The new district would also relax development standards relating to how much of a lot is covered by development and usable open space.
The idea of eliminating the "maximum units" requirement was one of more than a dozen proposals that came out of a memo by Councilman Adrian Fine, Mayor Liz Kniss and Councilman Cory Wolbach. The memo, which was unanimously endorsed by the council in November, directed staff to come up with a plan for significantly ramping up housing production near jobs and transit.
On Monday, Planning Director Hillary Gitelman introduced the new Housing Work Plan and emphasized the need for zoning revisions to meet the Comprehensive Plan goal of producing between 3,545 and 4,410 units between now and 2030. Currently, the zoning code is incentivizing property owners to build office spaces instead of housing, she said.
"The rate of housing production in Palo Alto has decreased over time," Gitelman said. "We will have to turn this around if we're to meet our goals."
One project that would directly benefit from the new zone is the proposal by Palo Alto Housing to build 61 units of affordable housing at 3709 El Camino Real, in the Ventura neighborhood. The developer had proposed building 42 parking spaces -- well below what the current code requires but within the standards of the new zoning district.
In reviewing the project last August, members of the City Council generally supported the idea of affordable housing, even as some voiced concerns about this proposal's failure to comply with existing zoning.
Councilwoman Karen Holman was one of several council members who said she would support creating a new "zoning overlay district" -- one that would work in combination with the underlying zoning designation but that would offer additional flexibility to builders of affordable housing.
Such a mechanism, council members agreed, would be preferable to the "planned community" (PC) zoning that the city has used in the past for affordable housing project. A PC district is the product an ad hoc agreement between the city and the developer, who generally proposes a package of "public benefits" in exchange for concessions on height, density and other development standards.
The council agreed to temporarily stop accepting "planned community" applications in 2014, shortly after voters struck down a PC-zoned proposal from Palo Alto Housing that included 60 units for low-income seniors and 12 single-family homes along Maybell Avenue.
"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 during the August review, in arguing in favor of the overlay zone.
Danny Ross, senior development manager at Palo Alto Housing, told the council this week that he is very hopeful that the affordable-housing overlay zone will be approved and implemented soon. Even though Palo Alto is the nonprofit organization's hometown, it has recently expanded into San Mateo County and has been looking for housing sites as far south as San Jose, Ross said.
"The housing crisis is a regional issue and one the city cannot solve alone," Ross said. "In addition to our existing 25 Palo Alto properties and the proposed new development site at Wilton, we'd like to provide even more affordable housing within this city as well."
Ross also requested that the council consider waiving the requirement for ground-floor retail for projects that are 100 percent affordable housing. The retail component, he said, hinders housing projects because it keeps them from being eligible from tax credits, which typically and in large part fund such projects.
The proposed affordable-housing district is the second new zoning district the city has introduced in the past two weeks. On Jan. 31, the Planning and Transportation Commission approved a new "workforce housing combining district" aimed at addressing the "missing middle" -- residents whose income is too high to qualify them for below-market-rate housing but too low to buy at Palo Alto's market rate.
The planning commission also recommended establishing the new district for 2755 El Camino Real to accommodate a 60-unit housing development in which 12 apartments will be deed-restricted to residents making 120 percent of area median income.