In a bid to moderate office development in three prominent commercial areas, the Palo Alto City Council voted on Monday night to both cement and relax the city's annual cap on new projects.
By a 5-4 vote -- with Adrian Fine, Karen Holman, Lydia Kou and Tom DuBois dissenting -- the council agreed to make permanent the 50,000-square-foot limit on office and research-and-development projects in downtown, around California Avenue and along El Camino Real, a restriction that has been in place on an interim basis since fall 2015.
In doing so, however, the council also agreed to make two significant changes to the ordinance. The law will now have a "rollover" provision that will allow the city to carry over unused square footage during slow years to the following year. The council also scrapped the "beauty contest" provision that pitted proposals in the three areas against one another during years when development would exceed the 50,000-square-foot threshold, which has not happened since the cap was put in place. Instead, office projects will now be approved on a first-come, first-served basis.
The outcome of the Monday vote wasn't entirely surprising. Last fall, the council directed staff by a 5-4 vote to make the two modifications to the ordinance, much to the chagrin of those residents and some council members who felt the changes would significantly weaken the law. Some argued Monday that rather than loosen the cap on office development, the city should tighten it by applying it beyond the three designated areas.
Former Vice Mayor Greg Schmid, who is now spearheading a citizen initiative to limit citywide office development to about 58,000 square feet per year, urged the council to make sure commercial growth in Palo Alto remains at or below the city's historical average. Hamilton Hitchings, who served on a citizen committee that helped update the city's guiding land-use document, the Comprehensive Plan, also made a case for applying the cap more broadly.
"If the office cap was expanded to all Palo Alto, that would help further address our housing and traffic challenges," Hitchings said. "Please pass the office cap ordinance without any more amendments that reduce its effectiveness."
Just about everyone on the council and among public speakers agreed that the office cap has some flaws, though members vehemently disagreed about what those are. For some it was too broad, for others too narrow. Most agreed, however, that the mechanism is working as intended. In 2017, the city didn't have any office projects in the three areas where the cap applies. So far this year, there are three pending applications totaling 16,790 square feet -- well below the 50,000-square-foot limit.
DuBois was among those who argued against approving the "rollover" provision, which (given the dearth of projects in 2017) would have allowed up to 100,000 square feet of office development in 2018. A cap of 100,000 square feet is "just not a cap at all," DuBois said.
"Every square foot of office development just makes our housing shortage worse," DuBois said.
Restricting office space helps to address the city's housing shortage because it frees up space for residential development, DuBois said. But the council, by a bare majority, rejected this position, which Councilman Fine called a red herring.
Fine had his own concerns about the cap, which he argued does not address the core problems that the city is trying to solve: too much traffic and not enough housing.
"If we want more housing, we should focus on more housing," Fine said. "Focusing on the office cap does absolutely nothing to address that."
Councilman Greg Scharff and Mayor Liz Kniss concurred and took issue with the idea that new office space is a bad thing. The notion that office development is "somehow evil" is ludicrous, Scharff said.
"I'm surprised people can say it with a straight face," Scharff said.
"This attack on office (space) is really a straw man -- it's not going to build more housing," Scharff said.
Kniss agreed and made a case of welcoming commercial development.
"At some point, a city dies if there is no building," Kniss said. "There are cities throughout the country who would not believe the conversation we're having."
She also proposed evaluating the impact of the ordinance in the next two to four years. Her suggestion was approved by a 5-4 vote, with Kou (who was phoning in from China), joining Scharff, Fine and Councilman Cory Wolbach in supporting her amendment.
"I feel if we revisit it within two to four years, we'll be able to tell whether or not we have totally killed any business development in Palo Alto in the areas that are defined, which I think would frankly be not only sad but detrimental to the vitality, diversity and the opportunities within the community," Kniss said.
The council ultimately agreed to adopt the rollover provision after Vice Mayor Eric Filseth's proposal to eliminate it was rejected by a 5-4 vote (DuBois, Holman and Kou joined Filseth). By the same vote, the council agreed to scrap the "beauty contest" provision, which DuBois and Holman both favored.
Holman noted that the council often gets complaints from the community about the quality of new developments. Giving the council a chance to compare projects based on quantifiable factors would give the city a chance to address these concerns, she said.
"Having something we can put a yardstick to will actually help ameliorate all of those concerns and I think we'll be a better community for it," Holman said.
After their various amendments failed, Holman, DuBois and Kou all voted against the revised cap, with Fine joining the three slower-growth council members in an unusual alliance. Filseth, meanwhile, joined Kniss, Scharff, Councilman Greg Tanaka and Wolbach to give the ordinance the five votes it needed to pass.
"I think we can say it is working," Wolbach said during the discussion. "We do not have a lot of office development in Palo Alto right now."