A state push to more than double Bay Area's housing production in the next eight years is stoking opposition in Palo Alto, with some City Council members characterizing the new goals as unrealistic, unachievable and largely unfunded.
The city is still waiting to see how many housing units it will have to plan for in the next of the Regional Housing Needs Allocation cycle, which will stretch from 2023 to 2031. But city leaders know the number will be significantly higher than in the past.
The state has recently determined that the Bay Area needs to plan for 441,176 units over the eight-year period. Now, it's up to two regional agencies, the Metropolitan Transportation Commission and Association of Bay Area Governments, to determine how many housing units each Bay Area county should be required to plan for in each income category.
Under any scenario, Palo Alto would have to aim significantly higher on housing. If the regional agencies choose to base the new allocations on the 2019 numbers (and assumes population growth of 16%), Palo Alto would need to plan for 4,475 new housing units between 2023 and 2031.
That's more than double the 1,988-unit allocation that the city is trying to meet in the current eight-year cycle. So far, Palo Alto has issued 554 building permits, the vast majority of them in the "moderate" or "above moderate" income categories.
Other factors, which are meant to promote equity and encourage housing near jobs and transit, could make Palo Alto's housing allocations even higher. For example, a methodology that prioritizes a link between jobs and transportation would raise Palo Alto's allocation by about 24%, requiring it to plan for 6,532 new units (ABAG's Housing Methodology Committee is scheduled to discuss various strategies for allocating housing units at its Aug. 13 meeting).
In addition to advancing the housing-allocation process, the two regional planning agencies are also now developing a long-range planning document called Plan Bay Area 2050 for the nine Bay Area counties. Staff from Palo Alto's Planning and Development Services Department estimates that under some of the proposed growth strategies in Plan Bay Area 2050, the city would have to plan for between 11,000 and 15,000 housing units over the next eight-year cycle. Planning staff noted in a new report that an expectation that the city would increase its housing supply by 55% over the next eight years is "clearly unattainable."
The council agreed on Monday that just about any target beyond the 2019 baseline would be impossible to meet, though members clashed over how to express their oppositions. Some blasted the entire allocation process, while others lauded its goals and acknowledged the need to be more aggressive on hosing. Ultimately, a four-member majority of Mayor Adrian Fine and council members Alison Cormack, Liz Kniss and Greg Tanaka endorsed a letter that urged the Housing Methodology Committee to use the 2019 allocation (with 16% projected growth) to determine the next housing targets.
A three-member minority of Vice Mayor Tom DuBois and council members Eric Filseth and Lydia Kou argued that the allocation process is inherently flawed and that the regional agencies should come up with a new model with lower housing obligations for cities that are proactively limiting job growth.
All seven council members acknowledged that just about any option that ABAG will present would be extremely difficult, if not impossible, for the city to meet. The city has been consistently falling well short of the council's goal to build 300 units per year, despite a series of zone changes that council members had approved since 2018 to streamline the approval process and to offer incentives to affordable-housing developers.
The letter that the council approved by a 4-3 vote argued that any approach that goes beyond the 2019 "baseline" would effectively set up cities for dramatic failure. The regional growth plan requires "significant economic investment and an extraordinary amount of regional policy collaboration to implement its vision."
"Building a methodology today that is actionable over the next eight years and relies on an idealized model depicting a regional housing distribution thirty years from now ignores the reality that the infrastructure, funding and local regulatory framework is simply not yet present to achieve this goal," the letter states.
Signed by City Manager Ed Shikada, the letter also notes that the city recognizes its role in stimulating more housing, particularly "more equitable and inclusive housing for all."
"At the same time, Palo Alto cannot reasonably be expected to increase its housing supply by more than 50% over the next eight years, as would be required under some early modeling results that use the Draft Blueprint as a baseline," the letter states.
DuBois, Filseth and Kou, who make up the council's slow-growth wing, suggested that the regional model is inherently flawed and unduly burdensome on west Santa Clara County, the area that the regional agencies project to see the heaviest growth in jobs and housing. All three argued that regional agencies should develop a new model that considers job restrictions as a factor in allocating housing units. Because Palo Alto has an annual cap on office development in three main commercial areas (as well as a citywide cap on nonresidential growth), its housing obligations would be lowered under such a model.
"We need to get our arms around this jobs thing as well, if we're ever going to get out from under this rock, especially the affordable-housing rock, without doing unnatural things that create more demand for it than actual supply," Filseth said. "We've got to get that idea more socialized in the world. I think it's an important one, and I don't understand why we wouldn't take this opportunity to take a little leadership on that, because I think most Palo Altans support it."
Before the Monday meeting, DuBois, Kou and Filseth co-authored an alternate letter urging the Housing Methodology Committee to consider "upper limits on allocation" based on job-growth limits in communities that "proactively seek to address their jobs/housing imbalance."
"Balancing jobs-housing growth at the City level is an important and realistically-achievable first step towards regional sustainability," their letter stated.
DuBois suggested that the new housing targets will be "pretty unattainable" and, as such, represent a "clear threat to charter cities." That's because cities that fall well short of the regional targets will become subject to the provisions of Senate Bill 35, which requires them to approve residential developments through a streamlined process.
"I think failure to meet those numbers is going to mean override of local land use," DuBois said. "And control of local land use is really one of the reasons we have local governments. It's the idea that local representation can understand the local conditions best."
DuBois wondered on Monday whether the city should "willingly participate in a process where we're set up to fail, and that's leading us to relinquishing our rights as a city." Kou agreed and suggested that in establishing aggressive housing goals for Santa Clara County, the regional agencies have failed to consider recent trends, including the shift by employees to telecommuting and the disruptions in transportation services.
While DuBois characterized the regional allocation as an "unfunded mandate," Fine countered that the state directives are necessary to prod cities such as Palo Alto to do better on housing.
"I think our community and, specifically, this council has never missed an opportunity to miss an opportunity on housing," Fine said. "We have shown an unwillingness to solve this problem locally, using the local control we have to actually build new market rate housing and affordable housing.
"Of course, we as a city don't build it, but we create conditions by which home builders do it, and we failed at that. In my opinion, that's why we actually need regional and state guidance on planning. Otherwise, cities like ours are going to wilt on the vine."
Cormack and Kniss similarly favored a more cooperative and less adversarial approach. As Kou and DuBois pushed for the city to consider legal options or lobbying strategies to modify or delay the allocation process, Cormack suggested that the city is "not an island" and that it will have to "operate beyond our borders in ways that perhaps we hadn't had to before."
The full council agreed that identifying funding for affordable housing will be a major barrier. While Filseth and DuBois pointed to the funding gap for below-market-rate housing as evidence for why the regional plan is unrealistic, Kniss suggested that the city can generate local funding for housing by approving commercial projects.
"Most cities fund their affordable housing through building offices. Unless we find another way in our city of raising money to go for affordable housing, we are going to be stuck where we are right now," Kniss said.
Editor's note: This article incorrectly stated the time range for the upcoming Regional Housing Needs Allocation cycle. Palo Alto Online regrets the error.