Palo Alto's effort to encourage more housing advanced Monday night, when the City Council approved a slew of zoning revisions that speed up the approval process and grant density bonuses to certain residential projects around California Avenue and along El Camino Real.
Over a series of votes, the council concluded on Monday a process that it launched more than a year ago to promote more housing. The effort reached a major milestone on Dec. 3, when the outgoing council relaxed zoning standards in the downtown area and created a new program that grants residential builders significant density bonuses. It continued this week, when council members approved similar changes for the other commercial districts.
The newly approved zone change aims to both grant developers new incentives to construct residential projects and provide them with an alternative to Senate Bill 35, a state law that creates a streamlining approval process for residential projects that designate at least half of their units as below-market-rate units. By contrast, Palo Alto's new "housing incentive program" preserves the existing review process and includes a less stringent below-market-rate housing requirement (15 percent of the units are required to be designated as below-market-rate).
Palo Alto's program also offers significant density bonuses. On California Avenue, residential density would be more than tripled, with permitted floor-area-ratio (a measure of density) increasing from 0.6 to 2.0. Along El Camino Real, allowed density would be increased from 0.5 or 0.6 (depending on the zone) to 1.5.
Both programs are similar to the one that the council approved for downtown, where the council raised the permitted density last month 3.0. Interim Planning Director Jonathan Lait told the council that the goal is to "encourage more housing, and for that housing to take place through a local process that we still want to maintain."
In addition to allowing more floor area, the council officially scrapped its limit on housing units. With the new rules, as long as a project meets all the development standards — height, setback and floor area, it can have as many units as the developer wants. It also specified that developers can use roof decks to meet their "open space" requirements, a chance that will allow builders to dedicate a greater share of their space to housing units.
In keeping with the council's new spirit of compromise, the council was nearly unanimous in approving most of these changes. Councilwoman Lydia Kou was the sole dissenter on the items that pertained to rooftop open spaces. Citing their potential noise impacts, Kou argued that the city should institute code-enforcement provisions before relaxing the rules.
Kou said she was particularly concerned about allowing too many roof decks on El Camino Real, given that several sections of the thoroughfare include single-family homes.
"I don't think it's thought out carefully," Kou said of the new rooftop rules. "We want to have more housing stock, but at the same time we can't forget the impacts to the residents who will be living there."
Councilman Tom DuBois also raised concerns about the new rooftop policy and suggested a requirement that rooftop gardens be only allowed on the third story of a building or higher. His colleagues agreed.
The zone revisions mark another victory for Palo Alto's housing advocates and another achievement for a council that is trying to meet a goal of generating 300 units annually. In just the past two months, the council has made a slew of zoning revisions and approved its first affordable-housing project in seven years, a 59-unit complex in the Ventura neighborhood known as Wilton Court.
Mayor Eric Filseth touted the series of zone changes as a significant accomplishment, particularly when considered alongside the council's Dec. 3 actions and its recently adopted restrictions on office development. Palo Alto's efforts to simultaneously boost its housing stock and limit commercial development are an important step toward addressing the regional imbalance of jobs to housing.
And while housing production in Palo Alto has been slim in recent years, with only one multifamily project approved in 2018, Filseth said he was confident that the zone changes, along with the city's recent easing of rules on accessory-dwelling units, will help Palo Alto get to its goal of 300 annual units.
"We should allow ourselves to acknowledge and (take) credit and be happy about that," Filseth said at the conclusion of the discussion.
While council members were united on most issues, they continued to split over what exactly constitutes "affordable housing" and over how far the council should go to favor affordable housing over the market-rate variety. Under the city's existing definition, the term can apply to housing geared for "moderate-income" residents who make up to 120 percent of area median income, which amounts to about $125,000 for a family of four, according to Lait.
Councilman Tom DuBois favored the more restrictive definition of 80 percent of area-median income. In discussing zone changes around California Avenue, DuBois argued that only projects geared toward low-income residents should be eligible for the new "affordable housing overlay" district and exempt from the city's ground-floor-retail requirement.
"I remain concerned that what we're calling affordable housing overlay is going to favor market-rate housing and I want to make sure it's attractive to projects that are below market rate to have some additional incentive," DuBois said.
Others countered that even the "moderate-income" level is well below Palo Alto's market rate. Vice Mayor Adrian Fine, the lead author of a colleagues memo that prompted the zoning revision, pointed at 57-unit development that the council approved last year for the corner of El Camino and Page Mill. Despite consisting entirely of "microunits," the developers were planning to charge rents of well above the "moderate-income" level, about 180 to 190 percent of area-median income, Fine estimated.
"Yes, we should be providing more regulatory flexibility for those low-income units," Fine said. "But here in Palo Alto, we'd be lucky if we got a project for 80 to 100 percent."
After DuBois made a motion to limit the ground-floor exemption to projects geared toward 80 percent of area median income, Fine proposed an amendment raising it to 100 percent. Fine's amendment failed by a 3-3 vote, with Filseth recusing and DuBois, Kou and Greg Tanaka dissenting. The council then voted unanimously to support the 80 percent level.