In that sense, it functioned much like the city's old "planned community" zone, which allowed developers to haggle with the City Council over public benefits and zoning exemptions. The main differences were that the new planned home zone applied specifically to residential projects and that the public benefit would be clearly defined as housing.
Since then, the city has received pitches from developers for a variety of zone-busting housing projects in different parts of town. The projects have ranged in size from 24 apartments in a single-family zone in College Terrace to a 290-apartment complex in an industrial area on Fabian Way. When combined, these projects carried the potential to add nearly 700 dwellings to the city's housing stock, according to data from the Department of Planning and Community Environment.
The potential, however, has not been realized. To date, not a single developer who proposed a planned-home zone project has actually filed a formal application, Planning Director Jonathan Lait said earlier this month. As a result, the city only approved 95 new dwellings in 2021, of which 89 are accessory dwelling units, Lait told the council during its annual retreat on Feb. 5.
"I think at this point, we don't have confidence that any of them are moving forward at this time," Lait said.
The developers' reasons for not proceeding with applications vary. In some cases, the decision to abandon the projects was based on negative feedback. The process is inherently a negotiation and in several cases the City Council decided that the proposal represented a bad deal for the city. In other cases, developers cited economic factors or complications with putting a feasible project together.
The proposal from Cato Investments for a 24-apartment complex at 2239 Wellesley Ave. falls squarely in the former camp. Even though the proposal was the smallest of those received in terms of the number of units, its location in a single-family neighborhood made it a tough sell politically. With neighbors rallying against the project, the City Council made a point of clarifying last April that the planned-home zone would not be allowed in single-family zones, effectively killing the Cato project.
After the council took that action, Cato representative Cynthea Gildea accused the city in a letter of "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.
At other times, the council deemed the location for a planned-home zone project suitable but concluded that the project was either too large or did not offer enough apartments at below-market-rate.
When Jeff Farrar proposed a 62-foot-tall building with 290 apartments at a commercial site on 3997 Fabian Way, council members pointed to both factors to explain their opposition. Tom DuBois spoke for most of his council colleagues when he called the project "very aggressive" and suggested that it "pushes too far." Pat Burt said he would support a "significant project" at the Fabian Way site but called it excessive.
"I'm not closed-minded to a significant project here, but I think it needs to be not breaking the bank," Burt said.
Other developers pointed to economic factors as central to their decision not to proceed. Architect Heather Young received generally positive feedback from the council last May after she pitched a mixed-use project with 36 studios and 6,000 square feet of office space at 955 Alma St. Though some council members argued that the project should have a larger affordable-housing component, they generally agreed that the building's location near downtown and Town & Country Village made it well-suited for the type of project that Young had proposed on behalf of property owner John Tarlton. Council members also said they would support height increases to make the project possible.
Despite this feedback, Tarlton opted not to move ahead with the project at this time, Young said in an email.
"At this point it's economically infeasible to build, but we're cautiously optimistic that with the new and upcoming State and Assembly Bills there will be a path forward for the property as a mixed-use development," Young said.
Acclaim Companies also received plaudits from the city for its proposal to build 113 apartments in the Ventura neighborhood as part of a mixed-use development that consolidates three parcels at El Camino Real and Olive Avenue.
The Menlo Park-based developer revised and slightly scaled down its proposal after getting a mixed reaction in October 2020. The project it presented in January 2020 consisted of 24 studios, 65 one-bedroom apartments and 24 two-bedroom apartments and would offer 23 dwellings at below market rate.
"I think this is the kind of proposal we asked for when we talked about this planned housing zone," DuBois said during the council's review of the project in January 2021.
Since then, however, the project has run into complications. Gary Johnson, vice president at Acclaim Companies, told this publication that the company has not been able to pursue its plan to combine the parcels because a property owner who was initially onboard did not follow through. At the same time, the company has been dealing with escalating construction costs and constraints in the supply chain.
"There have been a few times in my life where I've been really excited about a project and that has been one of them," Johnson said in an interview. "It's heartbreaking that the project has not been able to go ahead."
He said the company continues to hold out hope that the project will come together in the future. And while he expressed some concern about Palo Alto's recent move to increase affordable-housing impact fees for residential developers, he said he looks forward to working with the City Council on future housing projects.
"There are so many great opportunities that are ahead of us in the city of Palo Alto," Johnson said.
While the city saw an early wave of planned-home proposals just after the zoning designation was created, Lait said that the city is currently not processing any applications from developers looking to utilize the city's new zoning tool.
"I think it's probably a combination of the economy and COVID has put a little bit of a wildcard into some of these applications. Others were maybe looking for a little more incentive than the program was anticipated to provide," Lait said.
"I've had a conversation with a couple of property owners. We may get a couple of more that may be forthcoming, but as of now we're not actively working on any of them and I don't have a sense that any of them will be going forward."
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