More than two years in the making, Palo Alto's ambitious plan to add more than 6,000 housing units by 2031 is finally ready for prime time.
The City Council on Monday unanimously voted to submit the city's Housing Element to the Department of Housing and Community Development (HCD), the state agency charged with ensuring that cities meet their fair share of the region's housing demand. The 323-page document lists more than 290 local sites that can accommodate new housing, including dozens of industrial and commercial properties around San Antonio Road and U.S. Highway 101 that would be converted for residential use and accommodate about 2,000 housing units.
The document also includes 26 new housing programs, including ones calling for the development of housing on city-owned parking lots, reducing application costs for affordable-housing projects and expanding the city's "housing incentive program," which relaxes development standards for residential projects. The council's vote, which followed more than a dozen public hearings and community meetings, empowers staff to submit the plan to the HCD after the public comment period concludes on Dec. 7.
The Housing Element that the council approved on Monday night was characterized, by turns, as both a hopeful document and hopeless one. Council members, residents and housing advocates celebrated the document's potential to spur housing growth and the community's ability to identify enough sites to accommodate the city's mandate of 6,086 dwellings, as dictated by the Regional Housing Needs Assessment (RHNA).
"We all want to see Palo Alto succeed in its lofty and difficult goal to build more than 6,000 units in eight years," said local resident Amy Ashton, who is affiliated with the nonprofit Palo Alto Forward but who was representing her own views. "The draft is just a start of making Palo Alto a stronger, more equal, more sustainable community."
Council member Greer Stone, a longtime critic of the housing allocation process, marveled at the fact that city staff and community volunteers were able to meet what at times seemed like an insurmountable challenge.
"When we started this activity of having to identify over 6,000 housing sites, I thought we'd have as much of a chance in identifying those sites as I did of getting Taylor Swift tickets — which was zero," Stone said. "But we found a way to be able to identify those housing sites. I think that's really incredible."
Stone and others acknowledged, however, that without a heavy infusion of state funding, Palo Alto is highly unlikely to meet its obligations for affordable housing, which include 1,556 dwellings for individuals in the "very low" income category and 896 for those in the "low" income category.
"As policymakers, we deal with the world as it is, not how we wish it were, and we simply do not have the money to construct the amount of affordable housing that the state is requiring," he said.
Palo Alto is one of just a handful of Peninsula cities that have yet to submit a draft Housing Element to the state. Most have sent in their drafts months ago and are now revising them based on HCD guidance. Among cities in Santa Clara County, only Palo Alto and Cupertino have yet to submit their Housing Elements, according to the HCD's online dashboard.
While the Housing Element process has in the past been treated as largely an academic exercise with no serious consequences, a recent influx of state housing laws has raised the stakes for local jurisdictions. Cities that fail to meet their mandates now risk losing state grants or, in the most extreme scenario, their land-use powers. Some are also increasingly worried about "builder's remedy," a legally murky and heretofore obscure provision that is now spooking mayors and council members in cities across the state. The provision, which has been a part of the state's Housing Accountability Act since 1990, restricts the ability of cities that do not have a compliant Housing Element from denying residential projects that include affordable housing, even if these projects fail to meet local zoning regulations.
Just as the consequences have increased, the assignment of drafting a Housing Element has gotten harder than in the past. Palo Alto's housing mandate has more than tripled in the current cycle, which stretches from 2015 to 2022 and which required the city plan for 1,988 dwellings.
The HCD, which subjects each Housing Element to a 90-day review period, has also become increasingly strict. Menlo Park and Woodside, for example, submitted their initial Housing Element drafts in July and were told to make revisions. Atherton and Portola Valley followed suit in early August and met the same fate. All are now revising their plans after getting word from the HCD that their initial drafts failed to pass muster.
Other cities, including Redwood City and Mountain View, have already submitted their drafts, received letters from the Department of Housing of Community Development requesting changes and then resubmitted updated versions that are now undergoing review.
Palo Alto meanwhile, has continued to modify its draft element up until the final minute. On Monday, council members agreed to revise its policy for encouraging apartment buildings on city parking lots by specifying that these developments would have to either be affordable to individuals making up to 80% of area median income or able to accommodate city workers and teachers. While the council largely agreed that public land should only be used for affordable housing, council members Tom DuBois and Eric Filseth dissented in the 4-2 vote on a provision to include Palo Alto Unified School District employees in the new restriction (council member Alison Cormack recused because she derived income in the past year from an affiliate of Stanford University, which may see financial impacts from the council's housing plans.).
Council member Greg Tanaka had a broader concern about limiting housing construction on public lots to affordable housing and suggested that the restriction may discourage construction altogether.
"I think the idea of 100% affordable housing is very noble. It's like cherry pie and all the good stuff in life. ... The main challenge I have is you're expecting developers to lose money to build something," he said.
DuBois, who made the motion to advance the Housing Element and to include the affordability requirement for housing on public lots, underscored the challenge that the city is facing from a recent period of job growth among big tech companies, which will likely require higher taxes on these companies to build affordable housing. He also pointed to inflation and high mortgage rates as challenges that the city would have to overcome to meet the state's housing goals.
"It seems like the state is not going to ease up on these goals, even though the construction industry may not be constructing," DuBois said.
Another new policy, which was championed by Mayor Pat Burt and supported by most of his colleagues was evaluating Stanford Research Park as a possible place for new housing. Burt noted that many sites in the sprawling network of corporate campuses already allow residential development with a conditional use permit. He proposed removing the permit requirement so that housing is allowed by right. The suggestion was part of a broader motion that advanced by a 5-1 vote, with Tanaka as the sole dissenter.
Over the course long discussion, council members did not mask their contempt for the state's housing policies. Vice Mayor Lydia Kou maintained that the state's methodology for determining housing allocations is flawed, Stone accused the state of being stingy when it comes to supporting affordable housing and Burt argued that the RHNA process places too much emphasis on the number of units that cities must produce and not enough on the types of housing being developed. The upshot, he said, is that cities are primarily focusing on building studios and one-bedroom homes to meet their housing targets.
"The way that the allocations are set up are incentivizing anti-family housing," Burt said. "What we should instead be doing is some formula that is bedroom-based and have some balance of types of housing units that are being mandated. Right now, we're all being incentivized to build massive numbers of studio apartments. I think that's destructive to the social and economic diversity that we all value."
Members of the Planning and Transportation Commission, which scrutinized the Housing Element over a series of meetings earlier this year, stressed that the goal was to balance the city's needs with the regional mandate. Commission Chair Ed Lauing, who has also served on the Housing Element Working Group and who was elected to the council earlier this month, said that the focus of both groups has been to accommodate "the real needs for Palo Alto," which includes housing for seniors and larger homes for families.
"We feel the comprehensiveness of the review by both of the bodies I've been on really added a lot of integrity to the priorities here and I feel pretty good about that," Lauing said. "I hope also the state feels good that we are compelling in terms of the way we present this."
Other commissioners emphasized that the planning work is just beginning. Several noted that the city's plan to build thousands of housing units around San Antonio Road and Fabian Way will require significant investments in transportation improvements, retail, parks and other amenities.
"We have a wonderful community here. Great parks, great bike paths. We just don't want to warehouse these people," said Keith Reckdahl, a member of the planning commission who had served on the Housing Element Working Group. "We're entering them into the community, we want them to have same type of amenities that we have. That takes planning. Making a park is easier said than done."