News

Palo Alto mulls changes to annual office limit

City Council to consider renewing, modifying law capping office growth at 50,000 square feet in three commercial areas

Palo Alto's effort to limit office growth at three prominent commercial zones is showing signs of success -- though not in a way that anyone on the council had envisioned.

The City Council approved in September 2015 an interim ordinance that capped new office development in downtown, around California Avenue and along El Camino Real at 50,000 square feet annually. The ordinance envisioned a process in which the council would tally up all of its development applications on March 31, 2016, and then select the best projects through a process informally referred to as a "beauty contest."

Then something unexpected happened -- or, rather, didn't happen. Even though the three areas had more than 50,000 square feet of office growth in each of the two years prior to the ordinance's passage, new development slowed to a crawl after the law kicked in. By the end March 2016, the city had received applications for three projects, totaling 40,863 square feet between them -- well below the threshold that would trigger a competition.

When the March deadline arrived earlier this year, the number of projects was even more startling: zero.

And so far this year, the only project in the city's pipeline is a two-story research-and-development building at 3045 Park Blvd., which is looking to add about 11,164 square feet of office space to the California Avenue area.

The results will be dissected on Tuesday, when the City Council considers whether to extend the annual office cap (the interim law expires on Nov. 26). The council also will consider possible modifications to the existing cap. One possible change is allowing developers to "carry over" unused square footage into the next year. Another would eliminate existing exemptions for small projects. Yet another idea, which is favored by Mayor Greg Scharff and Vice Mayor Liz Kniss, would eliminate the "beauty contest" idea altogether and proceed on a first-come, first-served basis.

The council also will consider whether the ordinance should retain its existing boundaries or should also include Stanford Research Park.

If the council approves staff's recommendation, the existing ordinance would be extended until June 30, 2018. After that time, the city's modified ordinance would kick in.

While it's hard to precisely measure the extent to which the new ordinance contributed to the commercial slow down, it's impossible to deny that conditions have changed significantly since the law took effect. The 2015 ordinance cites to the city's recent growth surge and notes that Palo Alto has had six years since 2001 in which there were more than 50,000 square feet of new commercial development in the three districts (including 2014 and 2015). This contributes to parking shortages, traffic congestion and greenhouse gas emission, the ordinance states.

"Record-high monthly rental rates for office space and low-vacancy rates suggest that the rapid pace of development is likely to continue, putting pressure on sites that are not currently developed to their maximum potential, and contributing to a feeling in the community that the character(s) of the City's commercial districts are changing too fast," the ordinance states.

Now, that trend appears to have abated. A new report from the Department of Planning and Community Environment notes that "subsequent to the implementation of the AOL (Annual Office Limit) ordinance, there has not been any significant office development proposed in the ordinance-affected areas."

"Although the time period has been relatively short, it appears that the interim ordinance has reduced the amount of applications for net new office projects," the report states.

Just as in the past, the ordinance has plenty of critics. Though the Planning and Transportation Commission voted unanimously last month to support an extension of the annual office cap, two commissioners remain unabashed opponents of the cap.

Commissioner Eric Rosenblum argued at the March 29 meeting that the office cap has "never been the right mechanism." He noted that office development had not reached the 50,000-square-foot number in either of the cap's two years of existence.

Rosenblum took this as a sign that the new ordinance "hasn't actually done anything." The city's resources, he said, would have been better spent on improving alternatives to cars.

"A lot of the problems we're trying to address have to do with buildings that were constructed even before the 1990s, which were under-parked," Rosenblum said.

If the city does move forward with a new cap on office limit, the ordinance should include a mechanism for "banking unused credit" to future years, Rosenblum said. He also supported retaining the "beauty contest," with a focus on favoring those projects that provide the most urgently needed amenity -- namely, housing.

Chair Michael Alcheck has also expressed reservations about the office cap. In March, he said the ordinance "seems to reek of a response that is politically driven." Others, including Vice Chair Asher Waldfogel and Doria Summa, disagreed and said the ordinance is reasonable and should be extended, possibly with a lower threshold for triggering the competition between projects.

Critics of the cap point to the ambiguous and uncertain nature of the "beauty contest" as a deterrent to developers, most of whom simply opt not to participate (during a July hearing, Rosenblum said the cap is having a "chilling effect on development"). But for supporters of the cap, this weakness is a strength; by deterring office developers, they say, the law is doing exactly what the council wanted: reducing commercial growth.

City planner Clare Campbell noted at the March 29 commission meeting that it already takes a lot for developers to get through "even a normal application process."

"But when we have to add this additional contest for this evaluation I think it makes it much more unpredictable for applicants to project forward and to invest time and energy to do something here in Palo Alto," Campbell said.

The council, for its part, is unlikely to pull the plug on the new program. Earlier this year, the council voted not to include the annual cap in its updated Comprehensive Plan. But members also agreed at the Jan. 30 meeting to maintain the annual limit by extending -- and possibly modifying -- the existing ordinance.

Scharff expressed support for the annual limit, though he called the beauty contest idea "sort of a failure." He also favored a provision that would allow the city to "roll over" allowed square footage from one year to another.

"In my view, the whole purpose is to level it out," Scharff said at the Jan. 30 meeting. "So that we basically have growth at a certain rate, as opposed to huge amounts of growth."

---

Follow the Palo Alto Weekly/Palo Alto Online on Twitter @PaloAltoWeekly and Facebook for breaking news, local events, photos, videos and more.

What is democracy worth to you?
Support local journalism.

Comments

12 people like this
Posted by Stephen
a resident of Duveneck/St. Francis
on Sep 1, 2017 at 12:22 pm

Any guess as to number of new employees 45,000 sf (roughly) means? For example at 200 sf/employee (one # I found online) this means about 225 new workers in Palo Alto? How dos this # compare to housing units added in the same time?


19 people like this
Posted by Marie
a resident of Midtown
on Sep 1, 2017 at 12:32 pm

Marie is a registered user.

Please keep the beauty contest. Then the city council can prioritize proposals that meet zoning (what a concept), include housing and provide enough parking. Wouldn't it be nice if public benefits for upzoning were restricted to parking above what is required and including enough housing for new employees? I can dream can't I?


15 people like this
Posted by Curmudgeon
a resident of Downtown North
on Sep 1, 2017 at 12:34 pm

"He [Scharff] also favored a provision that would allow the city to "roll over" allowed square footage from one year to another."

Atta boy, Mr Mayor. Build more offices. Housing is going begging.


40 people like this
Posted by It's Us vs. Palantir
a resident of Crescent Park
on Sep 1, 2017 at 2:04 pm

> Rosenblum said the cap is having a "chilling effect on development"

It would be appropriate for the article to note that Eric Rosenblum is also a manager at Palantir, the largest downtown office tenant. Palantir has complained to the city to about the office cap limiting its growth opportunities. Why then is Rosenblum even allowed to participate as a public commissioner on this issue?

And his notion that city resources "would have been better spent on improving alternatives to cars" is absurd. The city spends virtually no resources to enforce the office cap. Rather, the office cap reduces the need for planning staff and the very real costs of handling the extra cars that office growth brings.

Palantir has hijacked our local government and the press should not let them get away with it.


21 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Sep 1, 2017 at 2:18 pm

Online Name is a registered user.

"A lot of the problems we're trying to address have to do with buildings that were constructed even before the 1990s, which were under-parked," Rosenblum said."

What?? Are we not reading about slews of new developments each week in 2017 that are under-parked before they even start construction in 2017? Does Palo Alto NOT have a 4:1 ratio of commuters to residents for whom the Transportation Management expects us to pay expenses?

Maybe Palantir could follow Google's example in Mountain View and fund our shuttles?

If you have to build anything, build housing, not more offices and hotels.


21 people like this
Posted by margaret heath
a resident of College Terrace
on Sep 1, 2017 at 2:28 pm

Chair Michael Alcheck has also expressed reservations about the office cap. In March, he said the ordinance "seems to reek of a response that is politically driven."

As if the push for commercial development from previous councils, some current council members, and in recent years the majority of the Planning and Transport Commission members, has't been/isn't political. Just take a look at the sources of council campaign donations and who pushed for some of the appointments on the Planning and Transport Commission members where the correct political alignment trumped experience and/or any deep knowledge of Palo Alto.

Just because this year there has been a lull in development applications for the two areas the office cap covers doesn't mean that this will be true next year, or the year after. In addition, there is a spurt of commercial development about to go up along El Camino corridor south of California Avenue, and given the number projects we already know of it is probably safe to assume other property owners along this stretch of El Camino are also planning construction projects that are not yet public. All of which will further exacerbate traffic and parking. Perhaps we should be considering an additional office cap along El Camino as well.

The self-interest of forces that push to build out Palo Alto to the maximum as quickly as possible (take the money and run?) ignores the council's responsibility to also think about and plan for retaining some flexibility for the need for development in the future. Which may be different. And the need to make sure Palo Alto has the resources and infrastructure that can evolve to meet the needs of additional growth.


23 people like this
Posted by Abitarian
a resident of Downtown North
on Sep 1, 2017 at 5:51 pm

Unbelievable. The last thing this city needs is any more offices, which only exacerbate chronic problems such as housing, traffic, etc.

Instead, we should be looking for ways to convert existing office space into housing, recreation facilities, etc.

Mayor Scharff, Vice Mayor Kniss and their buddies only want to stimulate office growth to pay back their developer friends who contribute so generously to their election campaigns.


25 people like this
Posted by No to development
a resident of Downtown North
on Sep 1, 2017 at 8:55 pm

We don't need to add one more square foot of development. We are way too crowded, traffic is awful, schools and infrastructure are suffering, our environment is dirty and quality of life suffers. More jobs leads to more screaming about the jobs-housing imbalance.

I find it hilarious that the city representatives who scream the loudest about needing more housing and keep pushing relaxing zoning laws for giant housing complexes are the same ones who also want the most office development. Are they stupid and don't see the connection, or are they just in league with developers and will build anything that will make their friends a buck. Or Both?


16 people like this
Posted by speak with forked tongue
a resident of Midtown
on Sep 1, 2017 at 10:14 pm

Scharff supports the limit *except* that he doesn't.

He also favors a provision that would allow the city to "roll over" allowed square footage from one year to another.

I think that can be described as speaking with a forked tongue. He does his profession proud. Of course he's not the only one.


16 people like this
Posted by Mj
a resident of Los Altos Hills
on Sep 2, 2017 at 2:45 pm

I implore Palo Alto to NOT build any more office buildings without adding comparable housing: add 200 employees, add 200 housing units ( studio apts, even). The constant building boom in Stanford industrial park has made driving through surrounding towns (like Los Altos Hills) hellish--speeding and cut through traffic on residential country roads during commute times, to say nothing of having to get down Page Mill road to doctors appointments at Stanford at just about any time of day.

I constantly read about residents in Palo Alto complaining about traffic and quality of life on this forum. So I will ask what most of you won't! PLEASE STOP BUILDING OFFICES!!!! I also know that Palo Alto residents don't want ANY MORE housing because you want your property values to continue to rise. But the consequence of that is you are driving out workers that you need--waiters, clerks, clerks, stylists, and anyone who works an hourly wage. Even teachers cannot afford to live here, and those software programmers will have to commute farther and your children will all have to move somewhere else "affordable".

Please no more offices! But please build high density small apartments!


7 people like this
Posted by Curmudgeon
a resident of Downtown North
on Sep 2, 2017 at 3:02 pm

"The constant building boom in Stanford industrial park has made driving through surrounding towns (like Los Altos Hills) hellish ... Even teachers cannot afford to live here, and those software programmers will have to commute farther and your children will all have to move somewhere else "affordable". Please no more offices! But please build high density small apartments!"

Housing like what? Could you nice people in Los Altos Hills please set an example for us poor benighted flatlanders? Your estates up there are so huge and way underdeveloped. I bet you could solve the whole housing problem right there in the LAH town limits. Think of how smug you could be then.


18 people like this
Posted by Pat Burt
a resident of Community Center
on Sep 2, 2017 at 7:32 pm

Pat Burt is a registered user.

The annual office cap has proven to be an effective tool since its adoption with office development in the effected area having been cut back by two thirds in the two years since its adoption.
Despite the tenor of the Weekly article, the public should be on guard that the mayor and his supporters on the council are determined to dilute the cap as much as possible. Their first step would be to create a "roll over" rule so that any development below the cap in one year would be added to the allowed amount the subsequent year.
The second change would be to eliminate the planned scoring system which has been described falsely as a "beauty contest". In reality, it was adopted as a system to give preference to projects that had the least traffic and parking impacts, were the most environmentally sustainable buildings, and were architecturally the most compatible and highest quality. The mayor and those who opposed the cap have called these measure a beauty contest as a back door means to undermine support for the cap.


17 people like this
Posted by Norman Beamer
a resident of Crescent Park
on Sep 4, 2017 at 7:57 am

Palo Alto does not need to accommodate office space growth. The office to housing ratio is already one of the highest anywhere. Not only should the cap be retained, but the area of the cap should be expanded and the amount of annual square feet allowed should be lowered.


3 people like this
Posted by need a reset
a resident of Another Palo Alto neighborhood
on Sep 4, 2017 at 6:09 pm

The city is not even close to addressing the
issues and impacts from office over-development. Simply phasing in the sq footage over a somewhat
longer time-span with an annual office cap results in the same long-term outcome.We need to declare a moratorium on new office construction while a down-zoning takes place. The recent approval of 429 University Ave makes that clear. That project should be seen as the final blow-off to years of government mismanagement and failure with all the
disastrous consequences. The whole discussion
needs to be reset. We also need a reset on the
staff's intent and apparent blank check to cover the City streets with paint and signs and bollards which to put it bluntly in most instances make no sense from a traffic safety standpoint and actually have the opposite effect. This City must address the crisis it is facing straight-on.


Like this comment
Posted by Mark Michael
a resident of Community Center
on Sep 5, 2017 at 8:34 am

Many of the comments offer thoughtful perspectives on Palo Alto's land use policies. Yet, merely extending an interim ordinance does not effect a long-term solution to the challenges of balancing needs for housing, community-serving retail and commercial office space, along with associated impacts on schools, streets, parking, parks and public safety. Why not devote the energy taken by debating an interim development cap into finally adopting the long overdue update to the Comprehensive Plan. The elapsed time since the 1998-2010 version continues to grow. Then, update the zoning code. Then, conduct community outreach, Council debate and adopt Precise Plans for the downtown, California Avenue neighborhoods and the El Camino corridor. One of the comments above puts attention on the ratio of office space to housing, which is crucial. Indeed, this may be even more complex if you include retail. Former Mayor Burt's comment is very well informed, but reflects a concern that "growth" may have adverse impacts. For most of the 50+ years I have lived in and around Palo Alto, the population of the City has been either static or has only gradual increased. We have been built out for half a century and, in that sense, there is no potential geographic expansion. A better metaphor might be "change." How should or could Palo Alto evolve in the future so that inevitable changes would be beneficial? And balance land use and impacts among residents, young and old, workers, visitors and other stakeholders?


1 person likes this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Sep 5, 2017 at 9:05 am

Some of the council are up for reelection next year. None of them are dumb enough to completely oppose the office cap, but the ones who want developer money will try to weaken it. That way they can tell residents they supported it, and also tell developers they got them something.


2 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Sep 5, 2017 at 10:46 am

Remember to write to the City Council TODAY to tell them what you think about building more offices. Don't delay.


Sorry, but further commenting on this topic has been closed.

All your news. All in one place. Every day.

Su Hong Palo Alto's last day of business will be Sept. 29
By Elena Kadvany | 15 comments | 4,732 views

Troubling safety issues in our fair city
By Diana Diamond | 16 comments | 1,424 views

Natural Wines?
By Laura Stec | 1 comment | 1,067 views

Premarital, Women Over 50 Do Get Married
By Chandrama Anderson | 0 comments | 1,039 views

Electric Buses: A case study
By Sherry Listgarten | 1 comment | 642 views

 

Register now!

On Friday, October 11, join us at the Palo Alto Baylands for a 5K walk, 5K run, 10K run or half marathon! All proceeds benefit local nonprofits serving children and families.

More Info