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Despite general recognition of the housing crisis, Palo Alto's elected officials took a skeptical stance last week toward a new Santa Clara County Grand Jury Report that criticized jurisdictions throughout the county for failing to adopt policies that encourage affordable housing.
The council last week signed off on a letter penned by interim Planning Director Jonathan Lait that takes issue with many of the report's findings and recommendations. These include the Grand Jury's findings that the county's employers have created a vibrant economy that resulted in an "inflated housing market"; that mass-transit stations create opportunities for below-market-rate housing; and that cities aren't using density-bonus programs aggressively enough in encouraging affordable housing near transit hubs.
In a response letter that several housing advocates had described as "anemic," Palo Alto asserts that transit zones alone may not be a sufficient catalyst to create opportunities for below-market-rate housing, which requires an alignment of "zoning, property values, construction costs and other land use policies."
The response comes at a time when the City Council is trying — and failing — to meet its goal of producing 300 housing units annually. So far, it has only approved one major multi-family development this year, with a total of 57 units geared toward employees. It is also facing the prospect of losing 75 residential units as part of a plan to convert President Hotel into a hotel.
Despite the acknowledged housing shortage, the city disputed in its response the Grand Jury's finding that developers are "less willing to consider below-market-rate developments in cities with the county's highest real estate values because these developments cannot meet their target return on investment." Palo Alto has no evidence to support this finding, the city states in its response.
"While return on investment is a key factor for any developer, there may be other considerations that make housing development less attractive," the response states, noting that office development generates a higher return rate and that "housing policy decisions" may have as much influence as costs on a developer's decision to locate housing in a particular jurisdiction.
The Grand Jury did make one suggestion that the city immediately embraced: the idea that cities should form a "sub-region" to tackle the housing crisis and meet their collective obligations under the Regional Housing Needs Allocation (RHNA). During its Sept. 10 discussion of the Grand Jury report, several council members said they would like to explore working with other cities on accomplishing housing goals.
Councilman Tom DuBois said the "sub-region" approach seems to work well in San Mateo County, which already has a system in place. Councilman Greg Scharff, who has represented the city on the Association of Bay Area Governments board, also praised this approach, noting that it will give the cities and the county a forum for exchanging ideas and collaborating.
In its official response, however, the city is less than gung-ho about the types of collaborations proposed by the Grand Jury. One of the report's recommendations calls for the formation of a RHNA sub-region, including "one or more low-cost cities with one or more high-cost cities" by the end of 2021. In such a sub-region, the Grand Jury report stated, cities would "strike their own alliances depending on mutual needs." It would, for example, allow high-cost cities that build less affordable housing to offer funding for transportation and infrastructure to nearby low-cost cities, who would build more such housing.
Palo Alto's response says this recommendation will not be implemented because it's "not reasonable." Palo Alto, the response states, "cannot accept a recommendation on another jurisdiction's behalf." In addition, Palo Alto's response states, below-market-rate housing "should not be directed to low-cost cities as implied with this recommendation."
"Housing affordability are acute problems in high-cost cities and the city supports equitable distribution throughout the region," the response states.
The council voted 8-1 on Sept. 10 to approve the response. Councilman Adrian Fine, the sole dissenter, agreed with several members of the public, who argued that the response is too feeble and disagreeable. Mark Mollineaux, an advocate for more housing, said he found the council's response to the "sub-region" question laughable, given the city's recent history of now building adequate housing. The city, he said, is basically saying: We don't think it's fair that we only build in low-cost areas. Everyone should do their share.
"That's a fantastic point," Mollineaux said. "The problem is: Palo Alto isn't. You've failed in doing your share. You're saying we shouldn't compensate them because we should do our part but you're not doing your part."
Kelsey Banes, a psychologist at Palo Alto VA, said she is "very disappointed" in her city's response, which reads like the city is really shirking its responsibility for creating and responding to the housing crisis. She also argued that NIMBYism is real that is a "natural human response to new things coming in and change happening."
"I'd suggest that instead of reacting by looking for ways to disagree with this report, staff and the council look for ways to take responsibility for mistakes that had been made that led to this crisis and look for ways we can build more affordable housing and more housing in general to provide for the people who live and work here," Banes said.
Fine agreed and said the response is "anemic" and amounts to "wallpapering over the report." He pointed to Grand Jury data showing Palo Alto far behind other cities in housing productions.
"It came across like we don't treat the problem seriously," Fine said.
But some of his colleagues took issue with the Grand Jury's tone, particularly when it talks about "NIMBY (not in my backyard) mindset" that hinders housing production and recommends that Santa Clara County lead a "unified communication campaign that aims to convert NIMBYs into YIMBYs." Councilwoman Karen Holman encouraged the Grand Jury to move away from using these terms.
"They are both used from my experience to describe extreme views and extreme perspectives, and I think they are absolutely detrimental to having a helpful conversation," Holman said.