The council, which has consistently failed to meet its own goals for housing production, adopted planned-home zoning in February 2018 to provide builders flexibility on development standards such as height, density and parking requirements. As such, it invites housing proposals that exceed the city's zoning codes.
The council has already held informal pre-screening sessions for three such proposals, and it has three other proposals in the pipeline, awaiting reviews.
None of the three pre-screened projects has so far advanced. The council offered largely favorable feedback to a mixed-use development at 2951 El Camino Real, which includes 113 apartments. But a project from Sand Hill Property Company that included 187 apartments and a two-story office building at 3300 El Camino Real has already been withdrawn. A 290-apartment complex pitched by Jeff Farrar for 3997 Fabian Way remains on shaky ground after council members suggested in February that it's too tall and dense for the commercial site.
In the community, the planned home zone has emerged as a hot topic, with supporters focusing on the flexibility it creates for housing projects and detractors highlighting the unpredictability that it generates for the neighborhoods where these projects would go up.
The council majority sided with the latter on Monday and voted 5-2, with Alison Cormack and Greg Tanaka dissenting, to narrow the parameters for planned home zones. Among the most significant changes was specifying that planned-home projects will only be allowed in areas that are already zoned for commercial and high-density residential use — and not be allowed in R-1 (single family) and R-2 zones. That determination that effectively dooms the Cato proposal.
Led by Vice Mayor Pat Burt, the council also staked out on Monday broader positions on citywide housing policies, including a desire to steer dense housing projects away from industrial zones and from land east of U.S. Highway 101, an area deemed vulnerable to sea-level rise. While the council did not explicitly ban such projects, it directed its newly created Housing Element Working Group to review potential restrictions in these areas.
Burt and others in the council majority also agreed that to make housing construction more attractive, the city has to make office construction less so. Burt suggested lowering the allowed density for office developments, thus making commercial projects less lucrative. He pointed to California Avenue, where the city has recently created a "housing incentive program" that gives residential developers density bonuses. Despite this action, there have yet to be any takers. Burt surmised that this is because commercial projects — which have the same density limits as housing projects in the new program — remain far more profitable than residential ones.
Pushing back against criticisms that preserving R-1 zoning will deprive the city of promising housing opportunities at a time when the city is struggling to increase its housing stock, several council members, including Burt and Mayor Tom DuBois, pointed out that the city already allows more than one housing unit per lot in R-1 zones, a function of recent state and local efforts to loosen laws surrounding accessory dwelling units.
The nonprofit group Palo Alto Forward, which advocates for more housing, criticized the prohibition on using the planned home zone (PHZ) on R-1 lots, calling it "wrongheaded and inappropriate."
"The PHZ never mentioned exemptions for single family lots and by changing this policy midstream to meet the requests of one neighborhood, the City Council will demonstrate a bad faith effort that blocks new, affordable housing," Palo Alto Forward President Gail Price wrote in a letter to the council. "Further, by limiting the ability to use this important tool across the city, Palo Alto will make it impossible to equitably zone for new housing in every neighborhood."
Cynthia Gildea, a representative from Cato Investments, pointed to the city's recent failure to meet its own housing goals and suggested that limiting R-1 zones exclusively to single-family homes "doubles down" on the exclusionary history surrounding the zoning designation. Why, she asked, is the Wellesley project so scary that it justifies banning multifamily and "missing middle" housing from being built in neighborhoods throughout Palo Alto? The move, she argued in a letter, "amounts to changing the rules in the middle of the game."
"While the City Council continues to pay lip service to the housing crisis, this action sends the message to housing developers that Palo Alto is not a place to build," Gildea wrote.
Between 2016 and 2019, the city didn't approve a single new housing unit for the "very low" income category. In the current housing cycle, which stretches from 2015 to 2023, it has approved 101 such units, which is 15% of its Regional Housing Needs Allocation of 691 units. In the "low" income category, the city has approved 65 units — 15% of its allocation of 432. And it has only approved 28 units in the "moderate" category, just 10% of its allocation.
But the council majority agreed Monday that "planned home" zoning was not intended for single-family neighborhoods but rather to supplement the city's housing-incentive program and to remove barriers for residential developers who need a few additional feet of height or a slight reduction in parking requirements to make projects pencil out.
Council member Eric Filseth said he was surprised to see the planned-home zoning get conflated with questions about R-1 neighborhoods. The idea of making major changes to R-1 zones, which make up 70% of the city, did not cross his mind last year when the council voted to create the new zoning tool, Filseth said.
Numerous residents argued Monday that while planned-home projects may be appropriate in some parts of the city, they should not be considered in R-1 neighborhoods. College Terrace resident Anna Lembke was among them.
"This is not about NIMBY. This is about making sure that we still have backyards in College Terrace 20 years from now," said Lembke, who lives near the site of Cato's proposed development. "This is also not about structural racism. This is really about preserving the integrity of walkable neighborhoods."
Cormack and Tanaka both dissented and suggested that the city should not be taking away its own discretion to review housing projects.
"Each of these sites is unique," Cormack said. "Every time we limit ourselves a degree of freedom, we may be foreclosing an option we may not even be aware of."
Cormack, Tanaka and Filseth also voted against Burt's proposal to explore a host of other long-term policies pertaining to housing, including adjustments to floor-area-ratio limits for commercial projects. While his colleagues pointed to the city's famously high jobs-to-housing ratio as a reason to support a shift away from commercial development and toward residential, Tanaka argued that jobs are inherently good.
"I don't think we've had a thorough discussion on that, and I think it's premature to make jobs the bogeyman right now, especially when people are looking for jobs," Tanaka said.
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