Key issues will drive policy through the seasons of 2014

Palo Alto’s new year began with an election hangover — the same way it will likely end.

The City Council’s inaugural meeting of the year, typically a jolly old affair, sounded a more somber tone this week. City Manager James Keene, who finds his city in the midst of unprecedented economic prosperity called the current climate “the best of times, the worst of times.” Nancy Shepherd, in her first speech as mayor, alluded to the “challenges” ahead and quoted residents who say Palo Alto is “stumbling over our success.”

Councilman Larry Klein observed that while past mayoral elections have functioned more as “coronations” or “parties,” the Jan. 6 meeting was appropriately devoid of entertainment, given the “difficult issues” the council is now wrestling with.

These issues — too much traffic, not enough parking, a seismically deficient police headquarters and a citizenry upset about the height, density and appearance of new developments — will continue to hold the spotlight at City Hall in 2014.

The year will certainly be filled with surprises: city leaders emerging, public projects proposed, ambitious development applications filing into the city’s Development Center. Undoubtedly, these factors will influence the council’s work and bring with them a fresh slate of problems and solutions. But given how much unfinished business the council is carrying over from 2013 into 2014, and given the fact that the official priorities the council set in 2013 are scheduled to continue in 2014, it is safe to say that the new year will begin right where the old one left off — with a downtown Battle Royale over parking policies.

Here is a preview of the coming attractions.

WINTER

Key issue: Parking

Key action: City Council is set to unveil in January a citywide framework for a residential parking-permit program.

Key question: Can Palo Alto get cars off residential streets?

“In a city of the future, it is difficult to find a space,” the rock band Radiohead proclaimed in its 1998 song, “Palo Alto.”

As Palo Alto kicks off 2014, the lyrics sound particularly prophetic. As the “year of the future” — then-Mayor Greg Scharff’s phrase for 2013 — ticked down toward its final weeks, downtown’s deepening parking shortages loomed as the city’s most vexing problem.

The City Council’s top priority of 2013, “the future of downtown and California Avenue,” fostered much debate and plenty of data-gathering throughout the year, with city planners and citizen activists counting cars and crafting proposals for parking-permit programs. Yet when the ball dropped on New Year’s Eve, solutions remained beyond the horizon and finding a space remained difficult, particularly during normal business hours in the residential neighborhoods of Downtown North and Professorville, which lie adjacent to downtown.

In the first few months of the year, parking shortages and their annoying cousin, traffic jams, will return to the spotlight at City Hall. This month, the council plans to launch what promises to be a contentious discussion of a proposed residential parking-permit program, which would set time limits on cars that lack permits and, in theory, provide residents with some relief from downtown employees who leave their cars in the neighborhoods to avoid the time restrictions in downtown’s commercial core. Residents have been clamoring for a permit program for years and have argued persuasively that parking congestion will spill to other neighborhoods in the coming years, as more commercial developments come online. City planners note in a Dec. 16 report that community concern about parking supply and traffic congestion in and around levels have reached “critical levels.”

Yet solutions remain elusive. While the permit program has yet to be presented to the council, early reviews suggest that City Hall may be heading for a winter of discontent. A coalition of residents from Downtown North, Professorville and Crescent Park argued in a memo that the proposed program is problematic for many reasons. Citing “unreasonable hurdles” for participation, residents urge a lower threshold for participation in the permit program (the approval of 50-percent-plus-1 residents in an area, as opposed to the staff’s proposal of 70-percent-plus-1) and recommend that the program be implemented “block-by-block,” rather than neighborhood-by-neighborhood.

Arguing the program is too complicated, they are requesting clear standards for determining when parking is considered to be intruding on a neighborhood.

Many downtown businesses are similarly displeased with the early offering. A group of about two dozen businesses and employees have been circulating fliers and voicing opposition on their website, PaloAltoParkingSolutions.org. Calling the program a “huge waste of money,” they advocate as an alternative painting some curbs to reduce the number of parked cars on residential streets and designating some spaces as for residents only. The program, they argue, will push employees out of the neighborhoods without providing them with reasonable alternatives for parking.

“Employees have been parking on these residential streets for decades. It’s simply unfair to suddenly evict them and give them no other workable alternative,” claims the site, which has been endorsed by Whole Foods Market, Watercourse Way, Peninsula Creamery and a host of other businesses.

Key issue: Traffic

Key action: In February, the council is scheduled to consider a “transportation demand management” program aimed at getting drivers to switch to other modes of transportation.

Key question: Can Palo Alto become more like Google?

At the Dec. 9 City Council meeting, City Manager James Keene cited the Dalai Lama, who — when asked what the main problem in the world was — replied: “Too many people.”

“What’s the main problem with traffic?” Keene asked. “Too many cars.”

From the city’s perspective, the most beneficial way to curb traffic jams would be getting commuters out of cars entirely.

In recent months, city staff has been considering a host of “transportation demand management” strategies, including an expansion of the city’s shuttle program, a program to provide Caltrain GoPasses (allowing unlimited rides) to downtown employees, and the use of car-share services such as Zipcar and City CarShare at local garages.

At the Dec. 9 meeting, council members heard from leading experts in the field — Stanford University, Google and the Contra Costa Transit Center.

But learning about initiatives is one thing, implementing them is another. Google, for instance, offers its employees a convenient (and, for some, foreboding) shuttle service, a plethora of car-share and van-pool programs, and “conference bikes” that can seat up to seven employees, according to Kevin Mathis, Google’s transportation manager.

But Google, for all its feel-good frills and new-age amenities, is a benign dictatorship, with leaders at the top enjoying a monopoly on decision-making authority. Unlike the Mountain View giant, a Palo Alto transportation-demand-management (TDM) program would have to overcome a thicket of competing interests, including downtown employers, neighborhood residents, city workers and regional organizations, from Caltrains to the VTA.

In early February, city planners and the council are scheduled to consider a formal program, including the establishment of “TDM districts,” which would require businesses to track metrics and meet traffic-reduction targets for their employees.

The districts will likely include the better parts of downtown, California Avenue and the Stanford Research Park. After that, the council will have to consider funding mechanisms (it’s worth noting that deep-pocketed Google has 122 shuttle buses, while Palo Alto has two cross-town shuttles), traffic-reduction targets, and various carrots and sticks.

“It makes sense from a health standpoint, it makes sense from an environmental standpoint, makes sense from a stress standpoint,” Councilman Marc Berman said Dec. 9, referring to a citywide TDM program.

Everyone on the council agrees. The big question is: How will Palo Alto get there?

SPRING

Key issue: Infrastructure funding

Key action: City Council decides on ballot measure to pay for infrastructure projects

Key question: Will the city make any progress on a new public-safety facility?

While the council’s conversation over city growth is still in its seedling phase, its three-year-old debate over sprucing up Palo Alto’s dilapidated infrastructure is poised to finally bear fruit in spring 2014.

That’s when the council is to narrow its options for a revenue measure that would appear on the November ballot and launch an aggressive outreach campaign to raise support for the measure. If things go as planned, by the time the season concludes, some of the most pressing questions pertaining to the council’s second priority of 2013 — “infrastructure strategy and funding” — should finally be answered, albeit with the glaring exception of a new police headquarters.

So far, an increase in hotel taxes is the most promising option on the table. The city’s current rate of 12 percent is on par with the neighboring communities of Redwood City and Menlo Park but trails Oakland and San Francisco (which both have 14 percent rates) and Anaheim (15 percent).

A 2 percent increase in a hotel tax rate, also known as the transient-occupancy tax, combined with proceeds from new hotels that are scheduled to come online, could net the city about $4.6 million, which the city could leverage to obtain $64.4 million in infrastructure funding through a bond mechanism known as “certificates of participation.”

A recent poll by the firm Fairbank, Maslin, Maullin, Metz & Associates showed that 77 percent of the voters would approve a 2 percent increase to the city’s hotel tax, well above the two-thirds threshold a new tax would need for passage.

Other options that the council is considering for the November ballot include an increase in sales tax. Revenues from this increase, however, cannot be pegged specifically to infrastructure projects but would have to go to the city’s General Fund, which pays for police, firefighters, libraries and most other basic services. Polls suggest a simple majority of voters, but not a supermajority, would approve of a sales-tax hike.

The council may also opt to pursue a “transportation bond” to fund a host of bike and pedestrian improvements, a package that polls suggest might barely win the needed supermajority.

According to the city’s schedule, staff and its consultants will spend March, April and May conducting outreach meetings and collecting feedback about the potential ballot measure before the council makes an official decision in June about a ballot measure.

During the council’s Dec. 9 discussion, Larry Klein called the potential measure a “complicated issue,” with so many variables still “floating around.” Yet there are plenty of positive signs on the infrastructure front. The city now has a sizable infrastructure reserve, thanks to robust growth in its tax revenues and a recent policy decision to allocate budget surpluses in the General Fund to infrastructure fixes. In the past two year alone, the council had transferred more than $16 million into its Infrastructure Reserve.

But things look as bleak as ever for a possible “public safety bond” that would pay for a new public-safety building and the reconstruction of two outdated fire stations. November polls confirmed what many have suspected based on prior surveys: While a simple majority of voters would be willing to pay for a new police building, the project probably wouldn’t net the needed two-thirds to pass.

“Until there is a more fully developed package that the council has reviewed and signed off on, maybe more specific in its cost and lower amounts, it’s hard to see this measure winning,” pollster David Metz told the council on Dec. 9.

In December, the city’s long quest toward a new police building suffered another hiccup when San Francisco developer Jay Paul Company withdrew a proposal that would have built the headquarters in exchange for the city’s permission to build an office complex at 395 Page Mill Road. Though a public-safety bond remains a tough sell, the prospects of using proceeds from tax increases to build the new facility now look far brighter than ever. Councilman Greg Scharff, who served on the council’s Infrastructure Committee this year, is optimistic that by the end of the year the city will have a clear path toward the new police building, which would replace the undersized and seismically deficient one at City Hall.

“I predict we will have a ballot measure that will fund infrastructure improvements and, as part of that effort, we will come up with a plan for a public-safety building,” Scharff told the Weekly this week.

Key issue: Infrastructure projects

Key action: Dozens of small infrastructure projects move forward

Key question: What to build next?

While the police building remains a wild card, Palo Alto residents should see plenty of infrastructure action on the ground this spring. The city has more than doubled its street-repair budget in recent years (annual spending grew from $1.8 million in 2011 to $5.1 million in 2013), with the goal of giving every street a passing grade by 2019. A badly damaged portion of Greer Road — depicted in the Infrastructure Blue Ribbon Committee report as an example of the city’s dilapidating infrastructure — is one of many that is now freshly paved. Sidewalk replacement is also proceeding apace. Keene noted this week that the city has replaced 98,000 square feet of sidewalks in 2013, almost double the 51,000 square feet replaced in 2012.

Spring will also see one high-profile infrastructure project kick into full gear and another possibly come to a close. The long-awaited streetscape project on California Avenue, which includes new plaza, new street furniture and a reduction of lanes from four to two, is expected get going in the spring after years of legal and political setbacks. The even-longer-awaited reconstruction of the Mitchell Park Library and Community Center, Palo Alto’s largest infrastructure project in decades, is also scheduled to finally conclude, though after nearly two years of delays, construction errors and failed inspections, residents are advised not to hold their breaths. This week, Keene referred to the project’s construction saga as an “extreme disappointment” and assured residents that it is finally nearing completion.

Palo Alto’s golfers will also experience some disruption in April as the city shuts down the Palo Alto Municipal Golf Course and proceeds with a dramatic redesign that will shift just about every hole, emphasize the course’s Baylands setting and make it compatible with a regional flood-control plan shepherded by the San Francisquito Creek Joint Powers Authority.

Another ambitious Baylands project that should see some progress come spring is the planned bike bridge over U.S. Highway 101, at Adobe Creek. The city is now completing an environmental review for this project and officials plan to launch a design competition for the new bridge in the spring. With a price tag of $10 million ($8 million of which is covered by grants), the bike-bridge project is one of the most dramatic and expensive components of Palo Alto’s recently adopted Bike and Pedestrian Master Plan. But it is far from the only bike project on the council’s immediate agenda. Keene said the city has as many as 18 bike projects on its annual to-do list. These include designing nine bike boulevards and five “enhanced bikeways.”

Spring will also be the time for the council to consider its next steps on one of the city’s most contentious infrastructure projects — a proposed waste-to-energy facility, which could be located on a 10-acre portion of Byxbee Park in the Baylands. Ever since voters agreed in November 2011 to “undedicate” this parkland site for a waste facility, the city has been soliciting proposals from companies willing to either build an anaerobic digester — a plant that converts food waste, yard scraps and biosolids into energy — or export these materials to a different site for processing.

The issue, often framed as a green-on-green feud between proponents of renewable energy and proponents of park conservation, had remained behind the scenes for most of 2013, with city officials surveying options and studying the costs and benefits of each. Community meetings on next steps, initially pegged for December 2013, are now planned for later this month. Public Works staff plans to present a recommendation to the council in March or April.

SUMMER

Key issue: City budget

Key action: Council likely to approve budget with added services, projects

Key question: Which deferred capital projects will get the city’s backing?

Every now and then, Palo Altans suffering from development fatigue need a reminder that economic prosperity isn’t all that horrible a thing. This year’s budget season, which kicks off in May, promises to be particularly sunny on the economic front, with revenues growing at a rapid clip in every major tax category and council members opening their minds to new spending opportunities.

At the council’s joint meeting with the Parks and Recreation Commission in early December, one member after another pitched capital projects for the city to pursue. Larry Klein, a dog owner, argued that it’s high time the city address its shortage of dog parks. Pat Burt lobbied for revamping the Lucy Evans Baylands Interpretive Center. Greg Scharff advocated rebuilding the clubhouse at the soon-to-be-renovated Palo Alto Municipal Golf Course.

“Our revenues are increasing,” Scharff said. “We’re in a much better situation than we were before,

and some of these things may be very well worth doing.

There is a reason why council members are feeling so optimistic. In November, the financial results from the first quarter of fiscal year 2013 indicated the city is now in better financial shape than it was before the economic meltdown of 2008. The combination of benefit reforms for city workers and swelling tax revenues (sales-tax revenues alone jumped by 48 percent between the first quarters of 2012 and 2013) mean that the council will not be spending its spring and summer months wondering what programs to cut and which positions to trim.

City Manager James Keene noted in his “year in review” presentation this week that hotel occupancy has risen from 66 percent in 2010 to 85 percent in 2014, prompting a tax-revenue increase of 76 percent, or $5.2 million, between then and now.

Home-sales values, meanwhile, have risen from an average of $1.23 million in 2009 to $1.8 million in 2013, and property-transfer tax revenues (collected when property is bought and sold) have been growing by 19 percent a year since 2010.

Keene acknowledged in his presentation that the economic prosperity has brought plenty of problems, including parking and traffic congestion. These pressures, he said, are “as inevitable as the profits we reap as a city.”

“There’s some good news and some bad news, but they come from the same source,” Keene said.

While the bad news is expected to dominate the council’s time and energy, much of the good news will be obscured in the fine print of the fiscal year 2015 budget that the council will adopt this summer. Last year’s offering showed the General Fund growing by 4.6 percent, or $7 million, from the prior year. With the economy still sizzling, this year’s budget could see a similar leap.

Key issue: Development “recalibration”

Key action: Council to consider changes to planned-community zoning

Key question: Will the city reform its development process?

The very growth that is contributing to the city’s financial prosperity is also bringing political headaches and raising thorny questions about planning and zoning. The council will spend much of 2014 hosting community meetings focusing on growth and development, with topics ranging from the city’s Comprehensive Plan (its land-use bible), to a study of downtown that will assess its capacity for growth, to the downtown site known as 27 University Ave., where developer John Arrillaga had once hoped to build four skyscrapers and a theater.

The Arrillaga proposal is now effectively dead, even as the wave of anxiety among residents that it helped usher in continues to grow. In December 2012 — long before the 2013 uproar over the Maybell development, which led to last November’s Measure D — residents mounted a protest against the Arrillaga proposal, a product of months of closed-door negotiations between city officials and the billionaire developer. The council, which had considered holding a special election on the Arrillaga concept, abandoned the plan and opted to arrange a series of public meetings to obtain a “community vision” for the site. More recently, city officials decided to fold the discussion of 27 University’s vision into the broader conversation about downtown development.

At the same time, new Mayor Nancy Shepherd and her council colleagues will spend much of its summer considering reforms to the city’s development process. Councilman Pat Burt on Dec. 2 stressed the need to “recalibrate things” and “re-establish our credibility with the community.” This includes taking a stance against development proposals that go far beyond what the public would accept and “dialing back” commercial development. Shepherd concurred that it’s important for the council to “recalibrate” how the council discusses development with the community.

This recalibration process, which began with a Dec. 2 discussion and is set to continue in February, should heat up in the summer, when election season begins. Among the most critical questions that the council will wrestle with is whether to reform the city’s controversial “planned community” process, which allows developers to swap negotiated “public benefits” for zoning exemptions.

So far council members have showed little appetite for abolishing planned communities, though some revisions may be on their way. On Dec. 2, the council offered a range of opinions on growth, with Karen Holman saying she would support a moratorium on new development, Pat Burt advocating “moderate” growth, and Larry Klein rejecting any possible moratoriums and stressing the need to adjust to change. Gail Price also opposed a moratorium on development, noting that the prosperous city is in desperate need of affordable housing, particularly for seniors and young professionals.

“We can’t just stop and shut the doors,” Price said. “We need to keep moving.”

Yet by late summer, with election season in full swing, the pressure to act will be considerable. The new group Palo Altans for Sensible Zoning, which includes the leaders of the “Vote Against D” campaign, has been adamant about the need to kill or reform PC zoning. As Cheryl Lilienstein, president of the new citizens group, told the council on Jan. 6.: “Those of us who worked very hard against the high-density rezone of our neighborhood want to see some city-wide results from that effort.”

With new candidates joining the council-election race, crowds packing into the council chambers and disillusioned residents talking about recalling the existing council, the time may be politically ripe in late summer for the city to pivot from outreach meetings to meaningful reforms.

These reforms could take various shapes. After the 2013 election, Scharff said he would support limiting planned-community zones to areas outside neighborhoods. Burt argued that the council should be more forceful in immediately rejecting mega-projects such as ones proposed by Jay Paul Company and John Arrillaga, thereby restoring the council’s credibility with the public. Another idea that was pitched by the Planning and Transportation Commission involves creating a menu of possible “public benefits” a developer could choose from in exchange for zoning exemptions — a reform that aims to make the zoning negotiations more predictable and less akin to late-night poker.

By the time the summer concludes, the council will have had plenty of time to consider these changes. And with the clock ticking toward Election Day, it may start implementing them.

FALL

Key issue: Election

Key action: Voters to choose five council members, vote on infrastructure measure.

Key question: Who will rule the city in 2015?

Two years ago, only six candidates opted to run for City Council in Palo Alto, making the election one of the mildest and most anti-climatic in recent years. With incumbents Pat Burt and Greg Schmid winning fresh seats in 2012 and Liz Kniss returning to a dais where she had previously spent more than a decade, Marc Berman was the only real newcomer to local politics.

Recent events suggest the 2014 election could be far more interesting, possibly resembling the council’s election in 2009. At that time, 14 candidates vied for five seats, and Greg Scharff, Nancy Shepherd, Karen Holman and Gail Price launched their council careers. The top vote-getter in that election was Larry Klein, whose second consecutive term will come to an end in 2014. Klein, who will have spent more than two decades on the council, is the only one not eligible to run for another four years. This means that when 2015 begins, the nine-member council will have at least one and possibly as many as five new members. In recent years, the city’s outgoing mayors — Peter Drekmeier (2009), Sid Espinosa (2011) and Yiaway Yeh (2012) have been reluctant to seek second terms. Scharff has no such reservations.

“I am going to run for another term in November,” Scharff told the Weekly this week, becoming the first candidate in what could shape up to be a crowded field.

The big question now is: Who will join him on the ballot?

The 2014 election should answer many of the questions raised by the 2013 one. Leaders of the “Vote Against D” campaign have maintained throughout the year that the 2013 election was never just about Maybell. They point to the support Barron Park received from all other city neighborhoods and characterize their victory as a reflection of widespread public frustration about dense developments, planned-community zones, unfortunately designed architecture and a council that favors builders over citizens.

But for some members of the City Council, including Klein and Kniss, the Measure D message was muddled at best. On Dec. 2, Klein said he was “amazed” by the fact that “everyone seems to know what everyone felt in a vote.”

He agreed that Measure D told the council that it needs to “re-evaluate things” but said he has no idea what’s in the mind of the people who voted against the measure. He also noted that far more people voted in 2012 to elect Kniss, who supported the Maybell development, to the council. Presumably, he said, these voters endorse her views.

The city’s new mayor, Nancy Shepherd, also struggled to come to grips with the political turmoil of late 2013. At the Dec. 2 meeting, she marveled at the fact that so many people spoke out against the Maybell development back in June, when the council approved the zone change that enabled it, while so few stuck around after the Maybell discussion to watch the council adopt its Housing Element, an influential state-mandated document that lays out the city’s housing policies and designates future housing sites.

“I am trying to figure out how to navigate and read this community,” Shepherd said.

Whatever message one derives from the vote, the battle over Maybell gave birth to a new movement of citizen activists. Tim Gray, who had previously lost several bids to join the council and who helped lead the anti-D campaign, finally had a reason to celebrate in November. Joining him at the election after-party were neighborhoods leaders from College Terrace, Downtown North and other parts of the city nowhere near the Maybell site. Other neighborhood activists, including downtown’s Neilson Buchanan and former planning Commissioner Susan Fineberg, showed their solidarity with the “Vote Against D” camp by contributing money and speaking out at recent council meetings.

At the Dec. 2 meeting on the city’s future, Fineberg beseeched the council to represent “all of us,” not just a “powerful and entrenched minority.”

“The citizens of Palo Alto should not be collateral damage in a fight for power and money,” Fineberg said, voicing a popular sentiment.

Will this sentiment coalesce into political action? Stay tuned.