When Palo Alto's elected officials learned last fall that they may soon be required to plan for more than 10,000 new housing units in the next decade, they quickly denounced the regional mandate as unrealistic, unattainable and deeply flawed.
Last month, however, the Association of Bay Area Governments has revised its numbers in a way that may have significant ramifications for the city and its housing plans. In a bid to better align with Plan Bay Area 2050, a broad document filled with strategies for Bay Area growth, ABAG revised the allocation figures in December.
For most cities, the revisions have resulted in only slight changes. Palo Alto is among the notable exceptions. Its total housing allocation has been reduced by 39% and now stands at 6,086 new units in the eight-year cycle between 2023 and 2031.
But while the numbers have changed, the City Council's concerns have not. On Monday night, during a broad discussion of Plan Bay Area 2050 and Regional Housing Needs Allocations, numerous council members continued to criticize the state's housing-allocation process and to offer reasons for why the numbers are not attainable.
Council member Lydia Kou, a frequent critic of regional housing mandates, called the recent decision to cut the allocations of Palo Alto and Cupertino "divisive" and suggested that the council should continue to oppose the RHNA process, a planning tool that she said has been "weaponized by state legislation."
"When this planning tool has penalties and also removal of local jurisdictions' land use and zoning, it's actually something we should fight back against and it is also setting us up to fail," Kou said.
Failure, however, would carry consequences. Recent state laws, most notably Senate Bill 35, create a streamlining approval process for residential developments in cities that have failed to meet their RHNA goals, effectively restricting the ability of these cities to reject development applications.
Mayor Tom DuBois said Monday that even with the recent reduction in the allocation, the new numbers represent a "pretty significant percentage of our housing." The new allocation, he noted, would still be about three times greater than Palo Alto's housing allocation in the current RHNA cycle, which is 1,988 units.
"With the new laws, there are now teeth to not hitting these numbers," DuBois said.
Palo Alto's city planners believe the downward revision in the city's allocation can be attributed in large part to three new strategies in Plan Bay Area 2050. One strategy, which calls for building "adequate affordable housing to ensure homes for all," forecasted more housing for San Francisco and the east bay, according to a report from the Department of Planning and Development Services. Another, which seeks to offer incentives to employers to "shift jobs to housing-rich areas well served by transit," moved some of the jobs that were originally forecasted for the south bay to other regions and assigned to those areas additional housing units. And the strategy calling for accelerating "reuse of public and community-owned land for mixed-income housing and essential service" apparently promoted more distribution of housing opportunities, the report states.
Other neighboring cities have seen only slight changes. Menlo Park would see its household growth move from 24% under the old methodology to 23% under the new one, with its allocation reduced from 3,074 new units to 2,946. Mountain View will remain at 33% growth, with its projected allocation moving from 11,380 new households over the eight-year period to 11,238.
In Palo Alto, the number of units drops from 10,058 under the prior proposal to 6,086 under the new one. Instead of being required to plan for 2,573 units in the "very-low" income category (for those earning less than 50% of area median income) and 1,482 in the "low" income category (those earning between 50% and 80% of AMI) over the next eight years, the city would now see allocations of 1,556 and 896 in the two categories, respectively.
At the same time, the revised methodology shifts more growth to San Francisco and to the east bay. Whereas San Francisco was initially required to accommodate a 19% growth in housing units, the number was raised to 22% in the new draft (this results in 10,760 additional units). The east bay cities of Pleasanton, Emeryville, Lafayette and Orinda have each seen their allocations increased by between 3% and 5%.
Palo Alto's council members had little to say on Monday about the city’s share of the regional allocation, but plenty about the broader process of mandating significant growth. Kou and council member Eric Filseth both maintained that the main problem is the overall housing target that the Bay Area has been told to plan for by the state Department of Housing and Community Development.
The state agency had determined last year that the nine counties that make up the Bay Area need to plan for 441,176 new units in the next eight-year cycle of the allocation process. Filseth emphasized the need to scrutinize the regional projections, given the consequences for cities that fail to meet their allocations and suggested that the city include in its correspondence to ABAG criticism of the HCD number, which both he and Kou argued demands further scrutiny.
"It used to be that RHNA targets were broad and aspirational and under current direction in Sacramento they become explicit quantitative mandates," Filseth said. "The standard for accuracy in projections and rigor is much, much higher for quantitative mandates than if they are aspirational zoning things."
Palo Alto is one of dozens of cities that have submitted letters to ABAG expressing concerns or offering suggestions about the allocation methodology. Some, including Cupertino, echoed Palo Alto's concerns about the HCD's allocation to the Bay Area. Others, including Atherton, argued that their jurisdiction could not absorb the proposed allocations without seeing a significant change in its community character.
Rick DeGolia, Atherton's mayor in 2020, challenged the RHNA methodology for placing too much housing near jobs. Neighboring jurisdictions, his letter stated, "regularly approve large scale commercial developments that result in job growth, demands on local resources, and a demand for new housing in those communities."
"Those communities in turn, also benefit from the resulting tax bases and should be required to provide their fair share of housing and resource amenities to meet a healthy job-to-housing ratio," DeGolia's letter states. "As the Town does not anticipate growth, let alone job growth within the Town limits, this methodology is not applicable to the Town of Atherton."
In Palo Alto, council members approved on Monday a letter that urged ABAG to consider additional factors before determining the final allocations. These include the impacts of the COVID-19 pandemic on the regional growth plan.
"While the plan's time horizon is long, the impacts of the pandemic and recession are also long; no doubt the pandemic and recovery will shape the next generation," the draft of Palo Alto's letter states. "Responsible planning must clearly and easily show how the pandemic is accounted for year by year, especially in terms of job growth, population growth, housing demand, and anticipated viability of various funding streams in Plan Bay Area 2050."
The approved letter also plays up the impact of telecommuting, which "could represent a large share of jobs, and thus a reduction in the number of commuters and a shift in where jobs are located."
"For example, the City anticipates retention of telecommuting for many employees with jobs attributed to Palo Alto employers and the possibility of associated lower demand for housing within the City and nearby," the letter states.
Vice Mayor Pat Burt also suggested that the city includes in the letter actions it has already taken to manage its growth and address the housing shortage. This includes adopting policies that restrain office growth (such as office caps) and to encourage low- to moderate-income housing (such as the creation of the affordable-housing overlay zoning and the "planned housing" zone, which relaxes development standards for residential projects).
The goal, Burt said, is to "put forth our proactive approach to policy changes that we have taken, and those that we intend to take."
Palo Alto's overtures are unlikely, however, to sway state and regional planning officials. Numerous cities had requested last year that ABAG challenge HCD's methodology. After reviewing the methodology, ABAG had concluded that the state methodology adheres to applicable legal requirements, according to a December report from ABAG staff. Last June, the ABAG board decided not to challenge the Bay Area-wide allocation number and the window of appeal of that number has since closed.
Similarly, ABAG does not use existing zoning designation as a basis for limiting RHNA allocations. Gilian Adams, ABAG's project manager for the RHNA process, said at the Dec. 17 meeting that while various cities have expressed concern about not being able to accommodate new housing, ABAG is required to "consider potential for increase of residential development under alternative zoning ordinances and land use restrictions."
She also noted that telecommuting is one of the strategies in the Plan Bay Area 2050 Blueprint and, as such, is embedded in the RHNA methodology.
"The potential impacts of the trend toward telecommuting in the longer term are incorporated in the RHNA through the Plan Bay Area 2050 Blueprint, which includes strategies to expand commute trip reduction programs through telecommuting and other sustainable modes of travel," Adams said.
ABAG's Regional Planning Committee will discuss the draft methodology for RHNA at its Jan. 14 meeting. The agency's Executive Board will review it on Jan. 21.
Berkeley Mayor Jesse Arreguin, president of ABAG's executive board, said at the board's Dec. 17 meeting that given the direction from the state, cities throughout the Bay Area will have to absorb some impact of the projected growth.
"We know that due to recent changes in state legislation that this region does have to accommodate a much larger number than we had to in years past, and every community in the Bay Area is going to be impacted, there's no question about it," Arreguin said. "Our job at ABAG is to not just make a decision on how these units are distributed but provide support to local governments in developing their Housing Elements."