A developer's plan to build hundreds of apartments on the El Camino Real site currently occupied by Creekside Inn appeared doomed Monday night after the Palo Alto City Council deemed the project too big, too dense and too contentious to win approval.
Pitched by Oxford Capital Group, the development calls for demolishing the hotel at 3400 El Camino Real and replacing it with two buildings, one with 316 apartments and another with 66. Each building would be six stories tall with a height of 61 feet.
The Oxford development is the latest in Palo Alto's recent wave of "planned home zoning" (PHZ) projects, which are allowed to exceed zoning regulations in exchange for provision of housing. Over the past two months, council members have offered generally positive feedback on other PHZ projects, including a 20-condominium development proposed near Town & Country Village and a 75-condominium project pitched for 800 San Antonio Road.
In both instances, council members used their "pre-screening" hearings to encourage developers to submit formal applications with some revisions. In each case, they cited the need to dramatically ramp up housing production to meet a state mandate of 6,086 new housing units between 2023 and 2031.
When it came to the Creekside Inn project, council members agreed that the developer is asking for too much. Echoing concerns from neighbors, council members decried the potential demolition of Creekside Inn, Driftwood Deli and Market and Cibo Restaurant, three businesses that would have to make way for the new housing. Critics also noted that the proposed development would require removal of more than 100 trees, that the El Camino site is close to a toxic underground plume and that the builder's proposal to place a vehicle entrance at Matadero Avenue would endanger a popular bike corridor.
"We're in an election cycle now so there's been a lot of talk about supporting good projects but not necessarily every project," council member Eric Filseth said during Monday's discussion. "This council has seen some good proposals in the last couple of months that we've indicated support for. The one before us, as defined tonight anyway, has some real challenges in this location."
The developer also ran into intense opposition from the immediate neighborhood, with the Barron Park Association voting last month to formally oppose the project. In a letter to the council, the neighborhood association's board of directors described the project as "massively out of scale" and argued that it would "present a host of density-related, environmental and traffic problems to this area."
"If built as proposed, this project will eliminate two local businesses that the surrounding neighborhood relies on, as well as a 136-room hotel that supports business travelers and other visitors to Palo Alto and Stanford and provides revenue to the City and state," the neighborhood's letter states. "The profound impact on the area's water usage, waste management, parking, environment (with potential toxic damage to Matadero Creek), and privacy will disrupt lives, bring unnecessary stressors to the neighborhood and increase traffic tenfold."
John King, president of the neighborhood association, said Monday that the Barron Park neighborhood generally supports the addition of new housing throughout the city, as suitable sites are identified.
"The current proposed pre-screening to redevelop Creekside Inn just doesn't seem to be feasible in many ways," King told the council.
Others argued that the development falls well short when it comes to affordable housing. By law, every planned home zone project needs to offer 20% of its units at below market rate. In this case, this would mean 76 apartments with income restrictions.
As proposed, however, half of these units would be designated for residents in the "moderate" or "above moderate" categories, which target residents between 80% and 140% of the area median income (for a two-person household, the 140% standards equates to a total income of $188,729). Sheri Furman and Rebecca Sanders, co-chairs of the umbrella group Palo Alto Neighborhoods, were among those who argued that the project does not represent true affordable housing.
"The proposal essentially asks residents and the City to underwrite a private developer's massive project of mostly market-rate housing," Sanders and Furman wrote. "Instead, we should be reserving upzoning for applicants who propose 100% below-market-rate housing to ensure they win the bidding wars for redevelopable land."
While opponents argued that the project is large for the site, project manager Ted O'Hanlon countered that its density is similar to other residential projects that the city had recently reviewed and, in some cases, approved. This includes the Wilton Court development, which is now nearing completion at 3702 El Camino Real and which offers 58 apartments to low-income residents and adults with disabilities. The main difference, O'Hanlon said, is the size of the project site.
"The biggest thing about this site is its scale," O'Hanlon said. "It's a 3.6-acre site.
There's not a lot of these in Palo Alto. If you look at any of the planned home zoning proposals that have come in in the last one, two or three years — if they're an acre, they're large. This one is three times that."
Economist Steve Levy also urged the council to advance the project, noting that the concerns raised by residents could be evaluated and mitigated as part of the approval process.
"This project brings huge benefits in terms of a number of units, the number of below-market-rate units — it's more than Wilton Court — a location with great access to jobs, shopping, services, amenities and transit on a major corridor, El Camino, that the city has identified for lots of housing," Levy said.
Council members, however, were not swayed. While council member Alison Cormack lauded the project for accommodating health care workers and council member Greg Tanaka praised Oxford for including many studios (which, he reasoned, would be naturally affordable), their colleagues uniformly rejected the proposal, making it highly improbable that Oxford will move ahead with a formal application.
Mayor Pat Burt observed that as part of the application, the developer has requested that the city waive all or some of the roughly $21 million in impact fees that it would need to pay as part of the project. The fees are designated for construction or expansion of parks, libraries and community centers.
Burt strongly rejected the waiver request, noting that the city would already lose the hotel taxes that Creekside Inn currently brings in if the application moves forward.
"We don't have the resources to be able to not only lose that hotel tax but to subsidize market-rate developers and their obligations for proportionate investments in new infrastructure needs," Burt said.
Some of his colleagues came out even stronger against the project. Council member Greer Stone lamented the potential loss of Driftwood Deli, a popular neighborhood staple. While Oxford has discussed the possibility of having Driftwood occupy the 4,000-square-foot retail component of the project, Stone suggested that it would be difficult, if not impossible, for the business to stay alive during the construction, which is expected to take at least two years.
"I'd like to see a somewhat concrete plan rather than a somewhat hollow promise that they'll be able to have a place to return," Stone said. "Because we all know that's not going to happen."
Vice Mayor Lydia Kou called Oxford's request for a fee waiver "unconscionable" and fully agreed that Matadero Avenue is too valuable as a bike commute route to accommodate the housing project.
"We want Safe Routes to School to be successful," Kou said. "So let's keep the street safe, and let's stop putting these outrageous developments in these locations."