As Palo Alto launches its high-stakes effort to develop a new vision for housing, city planners, elected leaders and citizen volunteers are preparing for a complex mathematical exercise with deep political implications and conflicting notions of what constitutes success.
The city is required to submit by January 2023 its plan to accommodate more than 6,000 new residences between 2023 and 2031, a heavy lift for a city that has struggled to even come close to meeting the far more modest targets of its current Housing Element document. The planning task will require the city to launch new programs for affordable housing, find new sites for housing in a city that planners and City Council members often describe as "built-out" and demonstrate that these sites can realistically accommodate an influx of new homes and apartments.
And thanks to recently passed state laws, the city also will face new restrictions when it comes to identifying housing sites — as well as new consequences for a failure to do so. These range from mandatorily streamlined approval processes for new housing projects to the loss of local power to approve building permits and zone changes.
Updating the city's Housing Element will be the chief focus of a special joint meeting between the council and the Planning and Transportation Commission on Monday night, when the two bodies are expected to finalize the process for crafting the new document.
One major change that all municipalities are required to make in the next Housing Element is that the identified housing sites must be both available for development and "suitable" for housing. Because of this requirement, which was included in Assembly Bill 1397, all sites that aren't currently vacant must be shown to have a "realistic and demonstrated potential for redevelopment" as housing.
That means that any non-vacant site put in the city's housing-site inventory must have zoning that accommodates at least 20 units per acre. Cities would also have to adopt programs that allow housing construction by right within the first three years of the planning period, provided that at least 20% of the units in the new housing developments are affordable to lower-income households.
The law makes it much more difficult for Palo Alto to rely on large, underdeveloped sites like 340 Portage Ave., former home to Fry's Electronics, for housing. Though the city's current Housing Element states that the parcel has a "realistic capacity" of 221 residential units, the city in the next Housing Element would have to demonstrate that the campus will be ripe for redevelopment because existing leases are set to expire, an application for a new development is in the works or market conditions make the new housing development likely.
Authored by Assembly member Evan Low, D-Campbell, the bill also makes it more difficult for the city to designate small parcels for low-income housing. If it were to include a site that is smaller than half an acre, it would have to provide examples of "realistic capacity" by pointing to other small sites that have been developed for high-density affordable housing over the past planning period.
A similar requirement will apply to sites that are greater than 10 acres. According to a new report from the city's Department of Planning and Development Services, about 78% of the housing-opportunity sites listed in the current Housing Element fall either below or above these thresholds and, as such, would require further analysis before they could be included in the next housing document.
Other recent state bills further complicate the city's planning effort. Senate Bill 166, a 2017 law that was spearheaded by Sen. Nancy Skinner, D-Berkeley, includes a "no net loss" requirement, which means that if the city identifies a site with a capacity for 50 residences but only approves 30 residences, it would have to spread the remaining 20 units over other sites — and rezone those sites to accommodate these units — within 180 days of approval.
And AB 686, which became law in 2018, requires cities to adopt strategies that "affirmatively further fair housing," which includes analyzing historic patterns of segregation and disparities in areas of opportunities.
The bill, which was authored by Assembly member Miguel Santiago, D-Los Angeles, specifically requires cities to take "meaningful actions, in order to combat discrimination, that overcome patterns of segregation and foster inclusive communities free from barriers that restrict access to opportunities based on protected characteristics."
The new report from the city's Planning and Development Services notes that while the requirements of AB 686 may not directly affect the city's selection of sites, the law means that the city "must approach the site inventory with an 'affirmatively further fair housing' lens."
"While Palo Alto comprises mostly areas of high opportunity, our site selection must ensure the selected sites do not lead to further segregation or greater disparity in fair housing opportunities," the report states.
The city's debate over which housing sites are suitable for new developments is expected to get louder in the coming weeks, as the Housing Element Working Group begins its deliberations on the new document (its introductory meeting is scheduled for Thursday evening) and the council considers two housing projects with significant implications for future growth.
On May 18, the council will consider proposals for a mixed-use project with 36 microunits (with an average size of 342 square feet) at 955 Alma St., as well as a proposal for a 24-apartment building at 2239 Wellesley Ave., a single-family zone in College Terrace.
The College Terrace project, which is being proposed by Cate Investments, is already creating a stir, with dozens of neighborhood residents rallying against the project, which they say does not belong in a neighborhood zoned for single-family homes. Housing advocates, meanwhile, maintain that the type of projects being proposed by Cato is precisely what the city needs to do to make housing policies more equitable.
Kelsey Banes, executive director of the advocacy group Peninsula for Everyone, made that point at the council's April 12 meeting, just before the council determined that its new "planned home" zone, which aims to encourage more residential development, should not apply to R-1 districts.
"I think all of our neighborhoods have room for affordable homes and we should be thinking creatively to make it happen and not precluding our options before we even get to see them," Banes said at the April 12 meeting.
Even the Sierra Club, which had endorsed several council members who favor slower city growth, wrote in an April 29 letter to the city that the organization is "greatly concerned that the City Council has decided to make it significantly harder or impossible to build affordable housing in the vast majority of Palo Alto's neighborhoods."
"If Palo Alto wants to continue to be seen as a champion of climate action and positive social change, it needs to be more flexible in the types of housing it allows in many of its neighborhoods," wrote Gladwyn D'Souza, conservation chair of the Sierra Club Loma Prieta Chapter. "The ability of people who work in Palo Alto to live in Palo Alto would make a huge difference in their carbon footprint, to say nothing of their enjoyment of life and access to clean air, good schools, and a walkable/bikeable lifestyle."
Despite the new state mandates, the council indicated last month that it has no plans to densify single-family zones. Council member Eric Filseth said at the April 12 meeting that when the city agreed to use planned-home zones, no one had considered the idea that they would apply to R-1 zones.
"What I thought I was voting for was a mechanism to relax design standards for larger projects in already dense areas in exchange for higher below-market-rate inclusionary rates. … I'm surprised it should be conflated with this issue of whether we should have R-1 zoning in Palo Alto or not," Filseth said.
Mayor Tom DuBois also strongly pushed back against Sierra Club's assertion that the city made it harder to develop affordable housing by prohibiting the use of the planned-home zone in single-family residential (R-1) neighborhoods.
The zoning "was never intended to be used in R-1 neighborhoods; those who claim otherwise are mistaken, which should be obvious: Palo Alto has never allowed apartment buildings in R-1 neighborhoods to begin with," DuBois wrote in response to D'Souza's letter. "So, the notion that introducing (the planned-home zoning) has somehow reduced the available space for affordable housing in Palo Alto is simply absurd; in fact, the opposite is true."
The root cause of the area's housing crunch, DuBois maintained, is "unsustainably faster job growth than housing growth." He cited Palo Alto's recent efforts to address this trend by restricting commercial growth by adopting caps on new office development.
"We are working to manage both supply and demand," DuBois wrote. "Our objective is to be a net annual new housing supplier to the region — to balance our own jobs and housing growth, while shifting as much of our housing mix as we can to the affordable side."