After falling woefully short of their own housing goals, Palo Alto city leaders are bracing for a daunting new assignment: a state mandate that may force them to plan for more than 5,000 units by 2031.
Like other cities across the state, Palo Alto is preparing to receive in the coming months its latest mandate from the Association of Bay Area Governments and the Metropolitan Transportation Commission, the two regional planning agencies that are in the midst of crafting a long-term growth strategy called Plan Bay Area 2050. The two agencies also charged with administrating the Regional Housing Needs Allocation process, which assigns each city a certain number of housing units to plan for various income levels.
To date, Palo Alto has fallen well short of the regional goals. In the current cycle which runs from 2015 to 2022, the city was assigned 1,988 housing units. By the end of 2019, it had only approved 554 units, of which 420 were market-rate units listed in the "above moderate" income category. And while Palo Alto City Council members often talk about the need to address the shortage of affordable housing, the city has only produced 43 units in the "very low" income category since 2015. In the "low" and "moderate" categories, the city has approved 65 and 26 units, respectively.
Palo Alto leaders don't yet know exactly how many units they'll have to plan for in the next cycle, but all signs suggest the number could double or triple in the next cycle. Last month, the state Department of Housing and Community Development assigned to the Bay Area an allocation of 441,176 units, spread across all income categories.
The regional agencies are still finalizing the methodology for assigning housing numbers to cities, but given the projected growth rate of 16%, Palo Alto's planning staff are estimating that the city will get an allocation of at least 4,475 units, based on the city's share of the region's household. Under certain scenarios, the city's share could be as high as 6,532, according to staff.
Some residents have argued that the Bay Area numbers are far too high and have urged the city to appeal the 441,176 figure that the state had assigned to ABAG and MTC. The regional agencies have until this Friday, July 10, to challenge the number and have not indicated that they plan to do so.
Former Palo Alto Vice Mayor Greg Schmid is among those who believe the city should request a delay. During the Planning and Transportation Commission's discussion on Wednesday of the new regional allocations, Schmid argued that the numbers are based on a "jobs-driven" forecast that disproportionately impacts already jobs-rich cities like Palo Alto.
While the numbers roughly double the number of housing units across the Bay Area, Schmid noted that Palo Alto's allocations could triple under the methodology that ABAG is considering.
"These numbers are based on a jobs-driven forecast in already jobs-rich areas and will cost billions of dollars in subsidies in Palo Alto alone, along with a likely loss of control of neighborhood zoning," Schmid said.
Other residents joined his call to slow down the process. Terry Holzemer said he found it "regrettable" and "shameful" that the process is moving toward the July 10 deadline with few opportunities for the public to weigh in.
"This is a major plan that not only affects one area of the city, but all areas of the city," Holzemer said.
Others, however, argued that the numbers should be higher. Kelsey Banes, executive director of Peninsula for Everyone, a housing advocacy group, said she was hoping that the number assigned by the state housing department for the region would be between 600,000 and 1 million.
"We think a number this low is planning to fail, and planning to continue on in a housing crisis," Banes said. "We know we need to build more inclusive housing in our region if we're going to address our climate emergency and if we're going to dismantle our structure of segregation."
The commission did not support delaying the process, noting that the decision to appeal the Bay Area allocation should come from ABAG, not individual cities. While commissioners agreed that Palo Alto needs to plan for — and build — more housing, they disagreed about the consequences that the city may face if it falls short of the regional targets.
Commissioner Bart Hechtman said he is not fearful about the prospect of the state taking away local zoning powers. He noted that the state mandate could benefit developers who want to build a project in Palo Alto by allowing them to benefit from a streamlined approval process.
"That would be a good problem to have — developers coming here and wanting to build in the city. … If the RHNA numbers spur that activity in our market, I think that's a good thing," Hechtman said.
Commissioner Michael Alcheck said that he believes it is "moot to lose sleep over this number," noting that the city has repeatedly fallen well short of its allocation numbers and has not suffered any significant consequences.
"I think it's a red herring to get the community worked up about the allocation and the fear … because it just hasn't played out," Alcheck said.
But others pointed to recent state efforts to add some teeth to the housing allocation process and restrict cities' abilities to reject housing proposals. Even though the most ambitious of these efforts, Senate Bill 50, fizzled earlier this year, other bills have already been approved or will likely win passage in the near future.
Commissioner Ed Lauing said he believes the state will pass new laws so that allocations will be enforced.
"There's no question, these things put local control in question," Lauing said.
Vice Chair Giselle Roohparvar pointed to bills like Senate Bill 35, a 2017 law that streamlines housing construction, and the numerous efforts to spur the creation of more accessory-dwelling units.
The city, she said, needs to do more to actually address the barriers to housing construction.
"You can say you want housing all you want, but you've got to put your money where your mouth is and make it happen. … What we really need to do is drill down into the nuts and bolts and make the changes that are needed in order to attract the type of housing and the type of diversity and community that we want to see in this city," Roohparvar said.