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Opting to avert an expected Election Day showdown, a divided Palo Alto City Council moved on Monday to adopt a citizen initiative that slashes in half the amount of office space that the city will allow between now and 2030.
By a 5-4 vote, with Mayor Liz Kniss and council members Adrian Fine, Greg Scharff and Greg Tanaka dissenting, the council moved to revise a key policy in its recently adopted Comprehensive Plan in accordance with an initiative measure launched by the citizens group Palo Altans for Sensible Zoning. The initiative, which had received more than enough signatures to qualify for the November ballot, reduces the citywide cap on office and research-and-development space from the 1.7-million-square-foot level in the city's newly adopted Comprehensive Plan to 850,000 square feet.
The swing vote was Councilman Cory Wolbach, who on Monday sided with the council's slow-growth "residentialist" wing -- Vice Mayor Eric Filseth, Tom DuBois, Karen Holman and Lydia Kou -- and supported adopting the new limit rather than placing the issue on the ballot. Though Wolbach did not speak during the council's discussion, he told the Weekly after the vote that he believes the reduction in the office cap is the right policy for addressing the city's jobs-to-housing imbalance.
"It brings us closer to balance," Wolbach said in a text message. "Now we need to actually do the housing we all committed to."
The vote followed a robust council debate over what effect, if any, the new cap would have on office growth. A fiscal analysis that the City Council commissioned last month concluded that because the city had averaged only about 14,000 square feet in new office and research-and-development space per year between 2001 and 2017 (and 45,000 between 2015 and 2017), the city is unlikely to reach the threshold any time soon, even if the cap is halved.
Yet the study also noted that the historic numbers are low because the new construction was offset by the conversion of Sun Microsystems into Oshman Family Jewish Community Center (which led to a net loss of 390,000 square feet of office space) and by the demolition of the former Facebook headquarters (a 323,000-square-foot decrease).
If conversions and demolitions are taken out of equation, "it is conceivable that the Initiative Measure cap of 850,000 square feet could become a binding constraint more quickly," the study says.
The study also pointed to concerns from some stakeholders, particularly those at Stanford Research Park, who said in interviews that the tighter cap would have a chilling effect on the business climate because it will make companies less certain of their expansion potential. While the city currently has an annual 50,000-square-foot cap that applies to new office space in downtown, around California Avenue and along El Camino Real, the Research Park is exempt from the annual limit.
The new ordinance will effectively change that. By reducing the cap, the ordinance that the council approved would effectively restrict citywide development to 50,000 square feet.
The new 850,000-square-foot limit considers new construction after January 2015. Since then, the city has already added about 145,000 square feet; another 106,000 square feet are now in the pipeline, City Manager James Keene said. That this only leaves a cap of about 600,000 square feet for the next 12 years -- or 50,000 square feet a year.
The cap, he said, effectively takes the existing 50,000-square-foot annual cap and "pulls the Research Park into the issue." Given that the Research Park is a place where the city and the school district collect property taxes, the new cap could put a dent in the city's bottom line.
The city's analysis estimated that -- assuming a full build-out -- the initiative could cost the city about $1 million annually.
Not everyone was convinced that this is a problem. Holman noted that the impact fees that the city collects from commercial projects fall far short of what's needed to mitigate their impacts. And the study explicitly stated that it is not taking into account factors such as traffic impacts, environmental conditions and other "quality of life" factors -- factors that were central to the proponents' argument about the need to limit office growth.
Council members also sparred Monday over whether adopting the citizen initiative would respect the will of the people or effectively thwart it.
Scharff and Kniss, who on June 12 supported delaying the placement of the issue on the ballot pending a fiscal analysis (they prevailed then by a 5-4 vote, with Wolbach, Fine and Tanaka's support), both argued Monday that sending it to the voters is the more democratic path than simply adopting their proposal as an ordinance.
"This is really about democracy," Scharff said. "We as a council pride ourselves on community engagement. To vote not to put this on the ballot but to adopt it is to stifle community engagement."
Meanwhile, the residentialist council members who in June supported placing the measure on the ballot, now favored simply adopting it. With Wolbach joining them, they carried the day by a 5-4 majority.
Before the vote, the council heard from about two dozen speakers, the vast majority of whom supported the petition and asked that the proposal be adopted outright. Residents repeatedly pointed to city's housing shortage and traffic congestion, problems that they argued are aggravated by commercial growth.
"If you all decide to adopt the initiative this evening, it would show that you have listened to the thousands of residents of Palo Alto and that you truly represent them," said Suzanne Keehn, a member of the Palo Altans for Sensible Zoning steering committee.
Former Vice Mayor Greg Schmid, who spearheaded the citizen measure, told the council on Monday that the goal of the initiative is to address Palo Alto's jobs-to-housing imbalance (the city's 3-to-1 ratio of jobs to employed residents is by far the highest in Santa Clara County) and the impacts it brings when it comes to traffic congestion and housing prices.
"By limiting office growth, we are effectively doing the one thing we can do for affordable housing -- not just low-income housing, but middle-class housing -- in our community," Schmid said during the meeting. "The goal of this initiative is to have a public debate about economic issues of land, congestion, pricing and what we can do about it. And limiting office growth is the most effective tool."
That sought-for debate concluded shortly after it began. Kniss and Fine made the motion to place the initiative on the ballot, though their motion was pre-empted by Kou, who made a substitute proposal to adopt the new limit in accordance with the measure. Her motion prevailed by a 5-4 vote.
Kou argued that the impacts of commercial growth are particularly severe given the growing number of employees per square foot of office. Holman agreed and emphasized that this initiative would not stop office development, just limit it for the next 12 years.
"It is to rein it in for a period of time so that when it gets to 850,000 square feet, we can take another look at it and see where we are. It's a rational approach," Holman said.
Not everyone favored this approach. Judy Kleinberg, president and CEO of the Palo Alto Chamber of Commerce, was one of the few speakers who opposed the new cap. She warned the council of unintended consequences for the city's business community, including a negative impact on the city's "economic competitiveness and productivity."
"If we want to solve the traffic congestion problem, we should start by funding and expanding our free shuttle and our TMA throughout the community," Kleinberg said.
After the council agreed to simply adopt the initiative and revise the new Comprehensive Plan, Schmid said he was satisfied with the action.
"I am happy it passed," Schmid told the Weekly. "I still think it would have been nice to have a debate."