In a stunning rejection of the City Council's judgment and approval of a complex zoning change so a senior housing project could be built in Barron Park, Palo Alto voters decided by a large margin Tuesday it was time to hit the reset button.

The outcome stemmed from the convergence of two motivated sets of voters: one group that believes the specific proposal is flawed and unfair to the neighborhood, and another group that at a broader level is unhappy with the City Council's handling of development proposals, zoning, traffic congestion and parking issues.

The Palo Alto Housing Corporation, a nonprofit that has consistently enjoyed strong support from city councils and the community, chose to run an expensive mail campaign that attempted to deflect the concerns of both of these groups and instead focus on the underlying value of their project: providing affordable senior housing. It followed the lead of Mayor Greg Scharff, who inadvisedly and unsuccessfully tried to cast Measure D simply about the community's support for low-income seniors.

But the issue for most Palo Altans was never whether creating affordable housing for seniors was a good or bad idea, but who should pay what price — financial and otherwise — for building that housing.

For the measure to be successful and the project approved, voters needed to be persuaded that the project was the best that was possible, better than the alternative and that it respected the neighborhood. The "Yes on D" campaign failed at all three, as did the City Council.

It is unprecedented for voters to reject a unanimous action of the City Council in a referendum — by a 12-point margin no less — and the repercussions will surely extend to next fall's council race. The election outcome's message was neither subtle nor trivial; Palo Altans are not happy with how their elected officials and city staff are addressing development of all kinds in the community. Unfortunately for the Housing Corporation, this project and ballot measure became a focal point for that discontent.

How the City Council responds to Measure D's defeat is now a critical test of its leadership, and of its commitment to salvaging a senior housing project out of this train wreck.

We hope the Housing Corporation does not abandon hope that a viable project is still possible, and will give the city a chance to quickly bring forth a plan for working with the neighborhood to address traffic, parking and the number and size of the market-rate homes. In spite of all the other concerns that have been thrown out during the campaign by opponents, these are the key issues around which a way forward can be found.

For its part, the City Council should immediately form an ad hoc committee of Council members to work with its staff, neighbors and the Housing Corporation to explore the possible outlines of a modified project that adds parking and reduces the number of market-rate homes, and require them to conform to R-2 zoning and building limitations, conduct a new traffic study and develop a traffic-mitigation plan that reflects the current and expected future problems.

To give the Housing Corporation some confidence that a successful alternative plan is financially possible, the City Council needs to agree conceptually that the city is open to funding any "gap" due to the Housing Corporation reducing the density of the market-rate portion of the development. The effect of this would be to shift some of the responsibility for making this project work to the city as a whole, rather than impose the entire cost on the neighborhood.

All of this will be futile, however, if the city planning staff cannot produce alternative plot plans that show the various ways the property could be developed by a for-profit developer under the current zoning. Only with that information will neighbors, the broader community and the City Council be able to clearly see the value of reaching agreement on a project similar to what was proposed by the Housing Corporation. It should have been done months ago, but it is essential if there is hope for a compromise.

Finally, the Housing Corporation must be much more transparent about its financial plan. It is not enough to state that the plan approved by the City Council is its bottom line in terms of financial feasibility. Share the projections that led to that conclusion, and the analyses that show what the funding gap might be if the development was scaled back in different ways.

For their part, Measure D opponents must now hit their own reset button, put aside the campaign rhetoric and show their interest in working quickly to forge a compromise. The Housing Corporation cannot remain in limbo for long with this property and needs strong indications that the neighborhood is serious about a compromise to avoid what all can agree is the worst outcome: sale to a private, for-profit real-estate developer.