Eager to encourage more affordable housing, Palo Alto's elected officials signaled in February that they'd be willing to compromise on height limits, density, parking requirements and other zoning rules to support residential projects.
But as the City Council considered on Monday the latest such proposal, a mixed-use project in the Ventura neighborhood, members made it clear that their tolerance for zoning exemptions is extremely limited. After a wide-ranging discussion, the council split into familiar camps, with those on the more pro-growth side touting on the project's benefits — namely, 119 units of housing – and their three slow-growth colleagues focusing on the costs — significant height and density concessions.
The proposal from Menlo Park-based Acclaim Companies is the latest project to seek to develop under the new "planned housing zone" — a designation that allows builders to request zoning exemptions in exchange for housing. A descendent of the contentious "planned community" zone, which similarly allowed the city to bargain with developers over zoning exceptions and public benefits, the planned housing zone explicitly names housing as the primary benefit.
To date, the new zone has been generating some interest, though no takers. Planning Director Jonathan Lait said Monday that the city has been speaking to property owners from all over the city, with the various proposals adding up to about 1,000 housing units.
Acclaim's proposal for 2951 El Camino Real is among them. The project would combine five parcels — three zoned for commercial use and two zoned for single-family residential use between Pepper and Olive avenues, near Page Mill Road — for a five-story building with 119 apartments, 5,000 square feet of office space and 1,000 square feet of retail. According to the Acclaim Companies, 24 of the apartments would be below-market-rate units.
But to make the project possible, Acclaim is seeking significant zoning exemptions. Acclaim is proposing a terraced five-story building that is about 56 feet tall on the El Camino Real side and about 37 feet tall in the rear, adjacent to the single-family zones on Olive and Pepper avenues. The proposed height exceeds the city's 35-foot height limit in areas that are located within 150 feet of single-family-zoned properties.
Acclaim is also requesting significant density bonuses from the city. It proposes to nearly double the floor-to-area ratio in the project, from the current limit of 1.5 to the proposed level of 2.8. The project also proposes a residential density of 108 dwelling units per acre, far exceeding the city's usual limits of 30 or 40 units per acre, depending on the zone.
With a mix of studio, one-bedroom and two-bedroom apartments, the project would provide an average of 425 square feet of space per unit.
"These zoning modifications will contribute to a vibrant, mixed-use community by preserving existing ground floor retail and adding up to 24 affordable residential units," Acclaim wrote in the project description.
Gary Johnson, managing partner at Acclaim, noted that the development will have ample parking in its underground garage and that its apartments will include a variety of housing types, including studios, one-bedroom and two-bedroom units. The height limit, Johnson told the council, is necessary to make the project financially feasible.
"The highest land values in the country, combined with the highest construction costs in the country here in Palo Alto make it very difficult for multifamily developers like us to build," Johnson said during the council's study session. "For housing projects in Palo Alto, the details really matter."
Several council members said they'd like to see Accclaim move ahead with a proposal for formal development. Prior to Monday's review, the only "planned home zoning" proposal that the council had considered was Sand Hill Property Company's plan to build 187 apartments next to an office development on a Stanford Research Park site at 3300 El Camino Real. Mayor Adrian Fine announced Monday that the developer has decided not to move ahead with that project. He urged his colleagues to be flexible.
"That project is not going forward as the developer thought we were too strong in our criticism," Fine said. "That's 187 housing units lost in Palo Alto, that we aren't going to see. And we're going to end up with an office building and a parking lot."
Councilwoman Liz Kniss shared his view.
"I don't know how many of these we'll turn down before finally anyone who wishes to develop will come to us any longer," Kniss said. "I hope at some point there will be some agreement among the council about what's acceptable and what could be built. If not, in the years to come we'll be way behind our numbers and way behind on the amount of affordable housing that gets build, should it ever get built."
But for others, the sheer magnitude of the sought exemptions was too tough a sell. Vice Mayor Tom DuBois said that while he would be willing to support design exemptions that allow minor height increases, in this case, the proposal dramatically exceeds what the code would allow. The city, he noted, already requires housing developments to devote 15% of their units to affordable housing. This proposal, he said, pitched an offer of 20% of its units at below-market-rate housing. He suggested that it would be hard to approve such a "massive" project for just an extra 5% of affordable-housing units.
"We're being asked to exceed zoning. We have existing property owners who bought their homes with certain expectations of what would be built next door," DuBois said.
Johnson, however, indicated that without zoning exemptions, there probably won't be any new housing at all at the site. By having five stories, the developer can get the density that is required to make the project financially feasible, he argued. Affordable units, he added, provide no financial benefits to the builder.
Even so, Councilwoman Lydia Kou insisted that a developer that seeks so many zoning exemptions needs to designate a higher percentage of units for affordable housing. She bemoaned the fact that most of the apartments in the proposed development would be "luxury units," with only 24 earmarked for residents making 80% of area median income.
"If the benefit is supposed to be affordable housing, 20% is not significant enough. It needs to be a lot higher — 50% or more," Kou said.
Fine countered that the only reason the market-rate units are considered "luxury" is because they're rare.
"And they're certainly not going to become cheaper by us opposing more housing projects," Fine said.
The project also received a mixed signal from the community, with several housing advocates urging the council to advance it and numerous residents who live near the project site expressing concern about the proposed building's mass and height.
"If you will approve this proposal, would you support a similar proposal at California and Bryant?" asked Ventura resident Ken Joye. "I absolutely believe more housing is needed in this community. … I am, however, not convinced that this is what best serves in Palo Alto."
Angie Evans, who lives in Crescent Park, said she would absolutely love to see such developments in her neighborhood and asked the council to support Acclaim's plan. More and more families, she said, are moving out of Palo Alto because of the city's shortage of affordable housing.
"I hope we can all really start to prioritize housing and make it feasible," Evans said. "Because if we don't, the wonderful things about Palo Alto — our neighbors, our community members — are all going to be gone."
Some Ventura residents pointed to the high number of projects going up in their neighborhood, including new mixed-use projects at 2755 El Camino Real (the former Santa Clara Valley Transportation Authority site at El Camino Real and Page Mill Road) and on the 2500 block of El Camino Real (the former Olive Garden site). Anupa Bajwa, whose lives on Olive Avenue, next to the project site, said she was concerned that the new building will "completely block out the sun for us."
"Please consider very carefully what kind of precedent you will set when you allow a developer to take over your city, when you allow the rezoning to be without consideration of the neighbors, without even asking the neighbors what they want and without taking their input into account" Bajwa said.
Fine agreed that the city needs to do more to encourage new housing in other neighborhoods, including downtown. But Councilwoman Alison Cormack noted that the El Camino location eyed by Acclaim is particularly suitable for housing, given its proximity to Stanford Research Park and its wealth of jobs.
"That's the kind of an exception that I'm willing to make and I think most people in the community would understand," Cormack said.