When a developer proposes a project in Palo Alto, it's a safe bet that parking will emerge as the main issue of contention.
Just this week, as the City Council took up a proposal to revise its zoning code to encourage more housing, the council discussion was exclusively on the methodology of the parking study that accompanied the staff report. For the dozens of residents who criticized the new housing rules, which included relaxed parking requirements, the city's parking congestion once again emerged as "Exhibit A" in their opposition.
And as the city considers a proposal by the developer Adventurous Journeys Capital Partners (AJ Capital) to return the President Hotel, a 75-unit apartment building at 488 University Ave., to its original use as a hotel, parking is once again the subject of discussions — albeit, private ones.
The issue will have major ramifications for AJ Capital, which in June bought the 89-year-old building. Under the current zoning laws, a new hotel would be required to provide a parking space for every 250 square feet of space. In the case of President Hotel, that would amount to about 200 spaces. But because the iconic Spanish Colonial building existed before the current laws, it only includes 10 basement-level parking spaces.
The city's zoning law also allows commercial developers who are unable to actually build parking spaces to pay "parking in-lieu" fees. As the AJ Capital team is trying to advance its project, one of the questions that the city is weighing is whether to require the developer to pay these fees. In the downtown area, the fees equal $70,094 for each space not provided. A favorable decision — namely, an exemption from the fees — would thus save AJ Capital more than $13 million in in-lieu fees.
Parking fees are mentioned repeatedly in AJ Capital's correspondence with city officials, which the Weekly has obtained, and are featured prominently in the developer's Oct. 26 agreement with the tenants, which offered them more money and an extended stay (until June). It is also listed as a key issue in the two different term sheets that AJ Capital drafted and submitted to the city.
One term sheet, which Tim Franzen, president of AJ Capital's Graduate Hotels division shared with Councilman Greg Scharff on Sept. 24, states that for the agreement with tenants to take effect, the City Council must approve "exempting Hotel President from parking requirements no later than Oct. 8, 2018." Further, it states, the city must approve two loading spaces on Cowper Street adjacent to the hotel by Jan. 31, 2019.
The company dropped the provision for the loading spaces in the one-page term sheet that AJ Capital later put together — a list of demands that Councilwoman Lydia Kou said made her "furious." Even so, AJ Capital requested that by Dec. 10 the city reach a "binding consensus" to approve "applicable parking issues to allow the President Hotel restoration project to proceed without payment of in-lieu parking fees."
The term sheet, to which Kou alluded at this week's council discussion of zone changes, also offers residents additional relocation assistance, with the exact amount based on when the tenant vacates the building. This additional assistance, however, is conditioned on whether or not an "agreement with the city is reached on parking," the sheet states.
Jeff Levinsky, a land-use watchdog who first alerted the city to zoning code that prevents the hotel conversion (which the city is now preparing to reconsider), told the Weekly that the hotel building remains "mostly not parked," which is allowed for certain older residential buildings that are considered "grandfathered." However, AJ Capital would need to provide the parking — or at least pay for it — when proceeding with the conversion. Levinsky estimated that the building would require 198 spaces (other estimates range from 174 to 204 spaces).
"That's a lot of money if you're using the in-lieu program," Levinsky said.
Unlike AJ Capital's other demands — namely, the lifting of the downtown cap on non-residential development and the elimination of the "grandfathered facilities" provision that requires renovated non-conforming buildings to retain the same use — the waiving of parking fees is currently not on the council's docket in the coming weeks. Nor is it clear that the city is entertaining AJ Capital's request for a waiver. (Interim Planning Director Jonathan Lait did not respond to the Weekly's inquiry about whether the city is considering parking exemptions for the hotel project.)
In addition to seeking the exemption, AJ Capital has been making a case that its project would need far fewer parking spaces than the city code requires. In late October, Steve Emslie, a land-use consultant who is advising AJ Capital, submitted to the city a parking-demand study from the transportation-consulting firm Fehr & Peers. The study claims that the city's required parking rate in the downtown district — one parking space for 250 square feet of space for all uses except residential — is "substantially higher than most industry standards and recent hotel parking data collected in surrounding communities." It is also higher than it would be for hotels outside of downtown, where the city requires one space per guest room, with additions for eating and drinking, banquets and other ancillary uses.
According to the Fehr & Peers study, which the Weekly obtained through a Public Records Act request, the hotel would have 100 rooms and 30 full-time employees, spread out over three shifts. The study states that the city's existing requirements for the downtown area result in 174 spaces, or 1.74 spaces per room. If the hotel were located in a different area, the ratio would be one space per room, or 100 spaces.
Even that, however, is higher than necessary, the report states. For that determination, it relies on the Institute of Transportation Engineers parking manual, which lists the average peak parking demand for "business hotels" at 0.60 spaces per room. Those hotels at the upper end of the demand scale (the 85th percentile) had rates of 0.75 spaces per room.
"Therefore, a relatively conservative parking demand for a typical business hotel would range between 0.6 and 0.75 spaces per room," the study states.
The study also makes the case that companies like Uber and Lyft have changed how people travel. Hotels, the consultants wrote, "are reporting a trend where travelers elect to use (ride sharing) over rental cars when traveling by air." The use of these companies, the report states, has a "direct impact of reducing hotel parking demand."
The Fehr and Peers report concludes that the city's parking requirement in the downtown area is "substantially higher than the actual parking demand expected based on industry standards and locally surveyed parking demands for hotels."
This article is part of a larger story titled "Documents reveal secret dealings over President Hotel."
• Watch Weekly journalists discuss this issue on an episode of "Behind the Headlines."