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HomeMy WebLinkAbout2017-11-06 City Council Summary MinutesCITY OF PALO ALTO CITY COUNCIL TRANSCRIPT Page 1 of 93 Regular Meeting November 6, 2017 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:04 P.M. Present: DuBois, Filseth, Fine, Holman, Kniss, Kou, Scharff, Tanaka, Wolbach Absent: Closed Session 1. CONFERENCE WITH CITY ATTORNEY-EXISTING LITIGATION Subject: Cal River Watch v. City of Palo Alto United States District Court, Northern District of California Case No. C17-01126 MMC Authority: Government Code Section 54956.9(d)(1) Mayor Scharff: We have a conference with the City Attorney regarding some existing litigation, Cal River Watch versus the City of Palo Alto. I need a Motion to go into Closed Session. Vice Mayor Kniss: So moved. Council Member Wolbach: Second. MOTION: Vice Mayor Kniss moved, seconded by Council Member Wolbach to go into Closed Session. Mayor Scharff: If we could vote on the board. That passes unanimously. MOTION PASSED: 9-0 Council went into Closed Session at 6:04 P.M. Council returned from Closed Session at 7:11 P.M. Mayor Scharff announced no reportable action. TRANSCRIPT Page 2 of 93 City Council Meeting Transcript: 11/06/17 Agenda Changes, Additions and Deletions None. City Manager Comments Ed Shikada, Assistant City Manager/Utilities General Manager: Thank you very much. First off, I do want to call your attention to the photo that's on our display. First off, this is not an ATM. As you see these in our City garages and also the City has not surreptitiously implemented paid parking. The machine that you see before you is one of seven new parking permit pay stations that have been installed at the Civic Center, Cowper-Webster, Lytton- Bryant, and High-Alma Street garages Downtown. These pay stations are for the purchase of daily parking permits, and similar pay stations have been installed in the California Avenue area including one in the Cambridge garage, two solar units at the Cambridge-Birch and Sherman-Birch lots. These seven new pay stations replace two units that were well past their operational lifecycle and often broke down. The old stations also could not accept any credit cards other than Visa cards; although, we like Visa, also a local company. The new machines have increased data security, faster transaction processing, and accept all major credit cards. The user interface is customer friendly. Push any button to activate, insert card, and retrieve permit to display on your vehicle. Multiple units have been installed to improve customer service. Those who need to purchase a daily permit can do so without coming to the counter here at City Hall, which we know has been a user pain point. Let's see. A quick update on RPP with the Southgate Resident Permit Parking program. Implementation of the Southgate RPP program has reached the home stretch with parking permits on sale and sign installation nearly complete. Enforcement is scheduled to begin in mid-November. Also related update on the Evergreen Park/Mayfield RPP. This program 1-year pilot has reached its second phase with new 6-month employee permits that became effective on October 1st. In both cases, the employee permits have all been sold. We know that that has left some employees unable to purchase permits. Staff has been meeting with residents and businesses in each of the areas to develop a menu of program modifications that the Council may wish to consider. Staff does hope to bring that back to the Council by the end of the year if we can accomplish that. I've asked Staff to provide additional information as that becomes available. Let's see. Also upcoming on the transportation realm, Our Connecting Palo Alto railroad grade separation program has a few upcoming community roundtables. As a part of that effort, during the month of November we'll be hosting a series of roundtables as a part of outreach efforts to invite the public to attend all four. These are roundtables that are specifically focused on individual potential grade separation locations. First meeting focused on the Charleston-Meadow TRANSCRIPT Page 3 of 93 City Council Meeting Transcript: 11/06/17 crossing is scheduled for next Tuesday, November 14th, 6:00-8:00 P.M. at Mitchell Park Community Center. Also having another one next week on Thursday, November 16th, 6:00 P.M. at the Palo Alto Unified School District office to talk about the Churchill crossing. More information is available on the City's website. Let's see. Also upcoming in the next week, we have the On the Table event that the City is participating in this regional effort being coordinated with the Silicon Valley Community Foundation on November 15th to stimulate conversation around housing. The City and hopefully Council Members will be involved at a number of these events. Our focus of the City- organized events are in the morning, 8:30-10:30 A.M. at Coupa Café on Ramona, Philz on Middlefield, and Printers Café on Cal. Ave. to engage in this conversation with community members. The HRC, Human Relations Commission, is also hosting their own event at Hobee's on El Camino Real starting at 8:45 A.M. We know that there are other events being hosted by other community members in the immediate vicinity as well as throughout the region. More information on that also on the City's homepage. Just a couple of upcoming other events. First off with recognition, our Magical Bridge has received national press recently. First, being named on the 11 best environmentally friendly playgrounds in America by Fatherly magazine as well as by CultureTrip.com for family-friendly activities in Silicon Valley. Finally, this coming Saturday, on November 11th, the Cubberley Arts Studio program hosts its annual winter open studios at the Cubberley Community Center and will feature an exhibition of veteran photographic work and prose. You can watch a fast-paced presentation from the artists between noon and 1:00 p.m. in Room H-1, and then visit artists in their individual studios for workshops, art, and refreshments from 1:30 to 5:30 P.M. Again, this is on Saturday the 11th. That concludes my report. Mayor Scharff: Thank you. Oral Communications Mayor Scharff: Now, we move to Oral Communications. How many speakers do we have? Beth Minor, City Clerk: Sixteen. Mayor Scharff: You'll each have 2 minutes. Alan Wong to be followed by Sea Reddy. Alan Wong: Hello, good evening. My name's Alan Wong. I work for SEIU United Healthcare Workers. I'm responsible for the community and political affairs of our labor union. We represent over 95,000 healthcare workers including workers at Stanford, Kaiser, Sutter Health, and (inaudible). We're here and we'll be involved in the community because we're concerned about TRANSCRIPT Page 4 of 93 City Council Meeting Transcript: 11/06/17 the cost of living, affordability, and the cost of healthcare locally and across the state and nationwide. I look forward to working with you all regarding healthcare in the future and educating the community about a measure that our union is working on regarding healthcare affordability. Thank you. Mayor Scharff: Sea Reddy to be followed by Arushi Gupta. Sea Reddy: Good evening, Mayor, Vice Mayor, and City Council and the citizens of Palo Alto. First of all, I want to thank you for the Veterans Day celebration this afternoon. We wouldn't be this free without them. We take it for granted, all the freedoms we have. Appreciate your support. Also, condolences to loss of many innocent bystanders and church-going people. Just nice people being impacted, not only them but the living of those 26 families. It's a horrible event as well as our own little tragedy of three students traveling down. Losing youngsters is heartbreaking. Let's all remind our children that life is fragile, and they need to be a little bit more vigilant. It's not for granted. The third thing is I want to point out that Dave Price wrote a little article today in the Daily Post that the big companies, the five big companies, Amazon, Apple, Alphabet, Microsoft, Facebook types generate a lot of jobs depending on the cyclical nature and all that. They generate jobs, but they don't generate houses. I've been proposing this where they could indirectly take a lot of the capital they have, rather than floating it somewhere else in the world, making money, they should float that into the real estate market. Not directly owning it but making it comfortable for those people that they've just added, 4,000 or 5,000 jobs, maybe a place for 4,000 or 5,000 people in the neighborhoods. Clean up the neighborhoods and build through indirectly. I am not suggesting that they own the buildings. That's possible. In Japan they do that, corporations. I commend Dave Price for bringing it up. Thank you. Mayor Scharff: Thank you. Arushi Gupta to be followed by Ria Sonecha. Arushi Gupta: Good evening, Mayor Scharff, Vice Mayor Kniss, and Honorable Council Members. My name is Arushi Gupta, and I'm a senior at Castilleja. I've lived on Webster Street for 4 1/2 years, and I would like to speak in support of Castilleja's CUP. I'm a member of Castilleja High School's robotics team, Gatorbotics. Our team was founded in 2005 when a small group of girls interested in STEM decided to enter an international robotics competition. They worked out of a closet, learning how to use power tools, program, and design. Since then, Gaborbotics has grown into a team of nearly 50 girls and a key part of Castilleja's STEM program. It provides opportunities to build, program, fundraise, volunteer, and so much more to any students who are interested. Before attending Castilleja, I was a part of a robotics team at my middle school. I was the only girl on the team, and even at competitions there TRANSCRIPT Page 5 of 93 City Council Meeting Transcript: 11/06/17 were only a handful of other girls. When I joined Castilleja's team as a freshman, I was awed by the young women who pursued their passions with tenacity, confidence, and drive. They provided me with an incredible community and innumerable opportunities to learn. Since every part of the robot from conception to fabrication was done by students, I could learn by trying and failing and rethinking. The unique environment, girls eager to learn and experiment, providing each other with support and encouragement, was transformative. Being a part of the Gatorbotics community has helped me develop technical skills I would never have encountered in classes as well as the confidence to share my ideas. If Castilleja's CUP is approved, the team will be able to grow. Even more girls curious about STEM or entrepreneurship will be able to explore their interests in an environment that welcomes them with understanding. The power of Gatorbotics to cultivate a love of learning should be available to as many students as possible. Please vote yes on the CUP because your support means that more girls can access the chance to learn and flourish in a world that often discourages us from pursuing our interests. Thank you. Mayor Scharff: Thank you. Ria Sonecha to be followed by Victoria Dean. Ria Sonecha: Good evening, Mayor Scharff, Vice Mayor Kniss, and Honorable Council Members. My name is Ria Sonecha. I have lived on Los Robles Avenue in Palo Alto my entire life and would like to speak in support of Castilleja's CUP application. I joined Gatorbotics as a freshmen. What I didn't realize at the time is that I wasn't just joining a robotics team. I was joining a community of focused, determined young women dedicated to exploring their interests in STEM and pushing back against stereotypes about female engineers. As a fully student-run organization, every girl who joins the team plays an integral part in our success. During the build season, team members willingly spend upwards of 30 hours per week in Castilleja's born lab. It is because of the resources Castilleja provides us and access to the lab that Gatorbotics has continued to grow as a team. Last year was our most successful season ever, and we hope to perform even better this coming year. In my four years on the team, I have developed technical skills, built lifelong friendships, gained confidence as a leader, and discovered my passion for engineering. Gatorbotics truly embodies women mentoring women as evidenced by our big gator/little gator program, which pairs new members with experienced members, and the preseason workshops we run, which are taught by mentors and senior team members. These workshops help members learn technical skills while building a community that fosters collaboration and strives to show each and every member that her contributions are valuable. Gatorbotics also aims to encourage girls beyond the Castilleja circle to explore their interest in STEM. For example, in partnership with the Halford Young Women Leaders program we run science Saturdays to introduce fourth and fifth grade girls TRANSCRIPT Page 6 of 93 City Council Meeting Transcript: 11/06/17 from underserved communities to science concepts through hands-on activities. Your vote yes for Castilleja's CUP is a vote for support for young women at Castilleja and beyond to pursue their passions for STEM. Thank you for your consideration. Mayor Scharff: Thank you. Victoria Dean to be followed by Neva Yarkin. Victoria Dean: Good evening, Mayor Scharff, Vice Mayor Kniss, and Honorable Council Members. My name is Victoria Dean. I live on Matadero Avenue in Palo Alto and have lived there for 13 years. I would like to speak in support of Castilleja's master plan application. I was a member of the Castilleja class of 2013 and was on the robotics team throughout high school. I'm now the Gatorbotics coach. Castilleja and Gatorbotics are where I developed my love of STEM. At Castilleja, I got to take Calculus theory, a class with 13 like- minded girls passionate about proofs. Being on an all-girls robotics team meant that I got to be the programming lead, a position that on most teams is filled by boys. Without these experiences, I would not have been confident in my computer science major at MIT. As a junior on Gatorbotics, I was introduced to computer vision, where we used a camera to auto aim at basketball hoops. Now, I develop computer vision algorithms every day on the machine learning team at Waymo, using cameras to make self-driving cars a reality. Gatorbotics showed me the challenges of control loops that combine software and hardware. Next year, I will start my Ph.D. in robotics at Carnegie Mellon developing algorithms for perception and control. I now spend my free time mentoring these current Castilleja students because I know how much of a difference it can make. Tonight you have heard from three young women whose lives have changed because of Gatorbotics, and I assure you there are countless other women who have pursued STEM fields in college and beyond because of their experiences at Castilleja. Please vote yes to increase enrollment and modernize Castilleja's campus because when you support Castilleja, you're supporting each young woman with a passion for science and technology in a world that desperately needs more of us. Thank you for your time. Mayor Scharff: Thank you. Neva Yarkin to be followed by Kerry Yarkin. Neva Yarkin: Good evening, Mayor and City Council. My name is Neva Yarkin, and I live on Churchill Avenue. Castilleja expansion is about adding another 125 students in an R-1 neighborhood, not about the quality of education. This has been said many times before. Over 600 Palo Alto residents have signed our petition calling on the City to enforce the school's Conditional Use Permit, which limits the school's enrollment to 415 students. Forty-seven households surrounding Castilleja have signed another petition stating that they want no underground garage. It's time for the City to say enough is enough. We need TRANSCRIPT Page 7 of 93 City Council Meeting Transcript: 11/06/17 to stop wasting Staff time, City Council time, citizens' time, and all the money that has been spent so far. Castilleja and the neighbors need to work it out and find a solution. A mediator that is agreeable to both sides could accomplish this. In the end, it's all about compromise. Castilleja and the neighbors will both need to make concessions to get on with their lives. It's time to start working on the other big issues that Palo Alto is faced with, which are many. Thank you very much. Mayor Scharff: Thank you. Kerry Yarkin to be followed by Bill Powar. Kerry Yarkin: Good evening, Mayor Scharff and City Council Members. I agree with everything my sister said. I would like to say that our family, the Yarkin family, has owned two homes within 600 feet of Castilleja School since the mid-'60s. We as a family are opposed to the expansion of Castilleja. Currently, it's a 6-acre property; it has 415 girls. At one time, I think there were 90 girls, and it was a boarding school, and there was plenty of land. Those girls, I knew some that went there, and it was very nice. It's just gone— it's too out of control. Increasing the population of the school to 540 would mean 90 more girls, 90 girls per acre. That's not something that I feel is educationally sound or good for the girls. When other private schools in Palo Alto expanded, they split into two. Castilleja should be held to the same standard as these other private schools that have done that. I would also like to mention that I am very embarrassed to see all the signage that Castilleja supporters have stating that they support women's education. We all support women's education. I also support public education. The strawman argument shows to what lengths the Board of Trustees and the administrators of Castilleja will go to deceive the public about the real issue. The real issue is the compatibility of a large private school in the middle of a beautiful residential, R-1 neighborhood. Please stop the—I call it industrialization of the neighborhood by saying no to these expansion plans. Castilleja should not be rewarded for 15 years of noncompliance with their CUP. The key word was it was conditional. You all are the people that decide if they're meeting a standard or they're not. They were not. I do not think that they should be rewarded with a larger campus, more students, more traffic. Just say no. Mayor Scharff: Thank you. Bill Powar to be followed by Kimberley Wong. Bill Powar: Good evening, Mr. Mayor and City Council Members. My name is Bill Powar. I live at 1310 Emerson Street, across from the school, and have since 1993. For the 11 years before that, I lived at what was then 211 Melville. It's now 1269 Emerson, owned by Castilleja, and they refer to it as the Lockey house. I've been on that block for 30-some years. I'm here tonight to express my consternation that the school is characterizing the neighborhood's opposition to their expansion plans as an expression of opposition to women's TRANSCRIPT Page 8 of 93 City Council Meeting Transcript: 11/06/17 education. Nothing could be further from the truth. The neighborhood in general and my family in particular has long supported the school in their efforts to address the impacts of the 60-percent enrollment increase that has taken place since we first moved into the neighborhood. Twenty-five years ago, I stood before this Council—Liz, you may have been here at the time— and supported the school when they petitioned the City to give up the easement that the City had on Melville to allow them to build the playing field. Seventeen years ago, the City, the school, and the neighbors worked for 6-9 months to craft a set of conditions that would allow the school to increase their enrollment. Unfortunately, the school virtually immediately began not complying with those conditions. The issue that we face today is at what size does the school's nonconforming use in an R-1 neighborhood place an undue burden on that neighborhood. In 2000, the City put a limit of 415 students even though the school had asked for 425, and the City told them at that time no more. It's time for—sorry. Mayor Scharff: Kimberley Wong to be followed by Jim Poppy. Kimberley Wong: Dear Mayor and City Council Members, today I am speaking about the Castilleja expansion plan in part that has relevance to the Comp Plan discussed in the past 2 weeks. Inadequate infrastructure to support the extra traffic brought in by more development and garages is my greatest concern. As many have said, build more garages and cars will come. We support women's education including the robotics program, but that is not the issue. The issue is the impact of the plans to the neighborhood. Castilleja proposes to build an underground garage; this will tie up traffic for years to come as they funnel cars from Embarcadero, a severely congested artery, onto one of the main bicycle boulevards of Palo Alto. In the next few months, decisions on the train corridor could also result in more traffic to Embarcadero by possibly closing the Churchill corridor to cars. Traffic studies done at this point clearly will not assess future impacts of traffic as we consider high speed rail. Although 47 households surrounding Castilleja campus have submitted letters to the school opposing the garage, the school still pushes its plans through the EIR process rather than scrapping its plans and incorporating greener and less impactful solutions such as shuttling and building a satellite campus, which neighbors have suggested. Please stand up if you are one of those households who are concerned about the impact to the neighborhood. I suggest that we hold off on EIR studies for the Castilleja project until we see future rail plans and obtain more relevant data. In the meantime, let us add more alternative transportation and satellite parking garages off 101 as mentioned by other speakers. Let's see if we can reduce traffic congestion before introducing more into the City. Let's work together to create more sustainable solutions. Thank you. TRANSCRIPT Page 9 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: Thank you. Jim Poppy to be followed by Carla Befera. Jim Poppy: Good evening, Mayor and City Council. My wife and I have lived at 135 Melville for 40 years. We raised two daughters, who both went to Addison, Jordan, and Paly. Our daughters are 7 years apart. As one was moving from Addison to Jordan, we started again at Addison, so that was 12 years at Addison, 6 years at Jordan, and 8 years at Paly. Our oldest daughter, Kendra, graduated from Smith College and went on to earn a Master's at UC Santa Cruz. She and her husband just bought a house in San Leandro. Our youngest daughter, Julia, recently graduated from Northwestern University and is now at graduate school in London studying art history. Both daughters were fortunate to have teachers and aides who inspired them, and they learned how to treat people the way they would like to be treated. If you listen to Castilleja, my daughters were lucky to survive. Apparently, women can only get a good education at Castilleja. Only Castilleja students volunteer and give back to the community. Anyone who opposes the expansion is against women's education. The arrogance is staggering. Residents of Palo Alto who live near the school would just like to preserve their neighborhood. We would like to live next door to a neighbor, not a massive concrete, underground garage exit. Anyone who looks at the plans for the garage can see how badly flawed it is. The Palo Alto Weekly highlighted this in an editorial in June. The garage would not be used for drop-offs and pickups. Who in their right mind would want to queue up for an underground garage and then be forced back onto Embarcadero Road heading east, when they could spend a fraction of the time dropping off a student on a surface street in the neighborhood? It's just simply human nature. Castilleja would like everyone to believe that the only impact is at 8:00 a.m. and 3:00 p.m. Monday through Friday, and that there would be no new trips to the school. Then, why build a garage? An underground parking garage would enable the school to hold larger events. They already hold more than 100 events a year. Thank you. Mayor Scharff: Thank you. Carla Befera to be followed by Bruce McLeod. Carla Befera: My family has lived across the street from Castilleja for 49 years. Over that time, we've watched the school slowly but surely outgrow its current home. We've hoped to find solutions with them to help reduce its impact. Recently, we've seen a mounting campaign by the school that suggests a vote against expansion is a vote against women's education. Let me state again all the neighbors are very supportive of the good work done by the school and agree that it should continue. We do not understand why the school chooses not to divide into two campuses, as many other private schools have done in Palo Alto, or why it chooses not to establish a satellite parking lot and mandate that all ingress and egress is via shuttle or explore moving to another parcel. A trade with Stanford has been floated, and that TRANSCRIPT Page 10 of 93 City Council Meeting Transcript: 11/06/17 seems like an option very worth exploring. We would like to remind the Council of the period when the Palo Alto Medical Foundation was located in residential Professorville. No one argued that treating patients was not important, useful work, but it was argued successfully that the Medical Center had outgrown its 1-block plot of land. Now, that site is home to an appropriate residential dwelling and a small public park. The Medical Foundation continues to serve more and more patients at its current location, where it has plenty of room for growth and all the parking it needs. Surely that was a win-win. For the record, this is a middle and high school, which hosts continuous evening and weekend events and summer camps. We believe the school should grow and continue its good work, but at an appropriate location not on an overcrowded lot in a residential neighborhood. Mayor Scharff: Thank you. Bruce McLeod to be followed by Patricia Wong. Bruce McLeod: Thank you for the opportunity, Council. I live at 1404 Bryant Street, directly across Kellogg from Castilleja School. I've lived there for 15, 16 years. I teach at Foothill College, and I was part of a small group of neighbors who met with Castilleja for over 18 months in the mistaken belief that there was some sort of compromise that might allow Castilleja room to grow and also give the neighborhood a better quality of life. That did not come to pass. Despite what Castilleja supporters would have you believe, this dispute is not about women's education. None of the neighbors, as you've heard tonight, have ever at any time suggested that Castilleja does not have a laudable purpose or should not exist. What it is about are residential neighborhood impacts and unrestrained growth. Castilleja even at its currently permitted enrollment has more students per acre than any other school, public or private, in Palo Alto. It is the smallest school site in the City. At last count, over two-thirds of their students come from outside our City. The traffic and parking impacts affect not only the immediate neighborhood, but also Embarcadero Road, Churchill Avenue, and other streets beyond that. It is not good for our City. Despite Castilleja's long history on the site, please remember that the school is the nonconforming use in this situation and must show that their use does not unduly impact the neighborhood. The City's Municipal Code, as I'm sure you know, states that a conditional use shall not be detrimental or injurious to property or improvements in the vicinity and will not be detrimental to the public health, safety, general welfare, or convenience. I think you would be hard pressed to find a residential neighborhood anywhere else in the City or anywhere in the City that feels that over 800 car trips a day, 80-100 cars parked each day in their neighborhood streets, evening and weekend events on an average of four times per week would not be detrimental to the general welfare of their home. To those other Palo Alto residents in other neighborhoods who might be complacent about this particular issue, I would say you could be next. TRANSCRIPT Page 11 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: Thanks. Patricia Wong to be followed by David Quigley. Patricia Wong: Good evening, Mayor, Vice Mayor, and Honorable Council Members. My name is Patricia Wong. My husband and I along with our two children live at 1336 Emerson Street, right across street from Castilleja School. We as a family are proud residents of this beautiful City for the past 12 years. I oppose Castilleja School's major construction plan where an underground garage bring more traffic to an already congested Embarcadero Road. How will 5-plus years of construction trucks coming in and out of Bryant, Waverley Street through Alma, Embarcadero Road affect our neighboring homes, pedestrian, Paly kids walking and biking to and from school, and resident commuters? I have an 8-year-old daughter who loves art and animals. As a mother of a daughter and a son and previously working as a nursing educator, I support women's education. What I don't understand is the reality of Castilleja's continued violation of the current Conditional Use Permit (CUP). How is that teaching our generation of young men and women about respecting the law, integrity, and building character? Thank you for your time and allowing me to speak. I truly hope our City Council will consider the voice of neighbors who have put our trust in your leadership for the individuals and families who live in this beautiful, safe, peaceful, R-1 neighborhood. Thank you. Mayor Scharff: Thank you. David Quigley to be followed by Caryn Huberman. David Quigley: Good evening. I want to speak about Castilleja's expansion. My name is David Quigley. I live at 1326 Emerson Street. First of all, I want to thank Castilleja for acknowledging the power of our neighborhood's sign program. As they say, imitation is the sincerest form of flattery. Now, Casti has signs too. What's interesting about the school's new signs is how they are trying to reframe the issue and make it about women's education when, in fact, that is not the issue at all. I'm the father of three teenage daughters. I care about women's education as much or more than anyone associated with Castilleja. The issue for the people of Palo Alto is traffic. Everyone knows that traffic in Palo Alto is bad and getting worse. There is an article in today's Mercury News with the headline, "Stanford's Expansion Plans Stir Debate in Congested Palo Alto." That's right, congested Palo Alto. There are only a few major thoroughfares in Palo Alto, and we all know that they are packed with cars most of the day. Castilleja happens to be right on one of them, Embarcadero Road. It also happens to be on the corner of Bryant Street, Palo Alto's main bike corridor. Does this Council really want to approve a massive development that will bring many more cars to this intersection, a corner that has bikers going north to work in Downtown, middle school children biking to Jordan Middle School the other way, high schoolers biking back and forth to Paly? Do we really want to substantially increase the risk that something TRANSCRIPT Page 12 of 93 City Council Meeting Transcript: 11/06/17 terrible happens at this intersection? Look, everyone agrees that Castilleja does a great job of educating young women, but we must remember that most of them don't live in Palo Alto. Three-quarters of Castilleja's students live outside of the City. That's right, 75 percent. They come from all over and drive on every street imaginable to wind their way to school. Most of them don't take a shuttle bus, and most of them won't in the future. They will drive on our congested streets. Our City can't handle this giant expansion, especially when the majority of the people that will benefit don't even live here. Thank you. Mayor Scharff: Thank you. Caryn Huberman to be followed by Stephanie Munoz. Caryn Huberman: Thank you, Mayor Scharff and Council Members. My name is Caryn Huberman. I live at 567 Lincoln Avenue in Palo Alto. I've lived in Palo Alto for 46 years and have raised two children, one daughter who is now a therapist and lives in San Francisco and my son who's a neuroscientist at Stanford. They both went to all the public schools in Palo Alto. I think you've heard a lot of arguments this evening from neighbors of Castilleja and farther out from the immediate neighborhood. I hope you have heard loud and clear that Castilleja no longer should seek to expand in this area. It is an R-1 area. Castilleja, for all of its high-flown promises of education, is a business in an R-1 neighborhood. The quality of life for Palo Alto citizens in that neighborhood will deteriorate significantly if you are not with your eyes open looking at what is happening here. I sincerely hope that Castilleja does expand as much as it likes but elsewhere. Thank you. Mayor Scharff: Thank you. Stephanie Munoz. Stephanie Munoz: I've been listening to these worthy people for some weeks now, and it's become clear to me that the real problem of density isn't the people, hundreds or thousands of them. It's the cars. It's the cars that those people are complaining about and the garage to hold them. They could probably live with a couple of thousand young teenage girls merrily trotting along, but not any more cars. The rest of our problem is very similar. The density problem is essentially a problem of cars that are necessary because the houses are too far away from the place where the workers work. I believe that at some point you are going to have to insist—Menlo Park is going to have to insist, Mountain View—that the companies build housing for their workers, at least for the bachelor workers and then can work up to my single-family house in the garden. In these 2 weeks because of great churning of the agenda, there have been a couple of things about companies which are already established as office buildings seeking for more office space. One of those is the rooftop garden. We were going to have that last week. Realize TRANSCRIPT Page 13 of 93 City Council Meeting Transcript: 11/06/17 that a rooftop garden, if you mean by that a place where you grow vegetables to eat, is wonderful. It would be good to even expand the concept to balcony gardens and have more green space in Palo Alto. If by roof garden you mean a nice place with a few plants with a lot of tables and chairs, you have to realize that is an incipient work space and insist that they exchange it for other space in the building that is not work space. It is, for instance, residence. Thank you. Mayor Scharff: Thank you. Thank you to everyone that spoke. Minutes Approval 2. Approval of Action Minutes for the October 23, 2017 Council Meeting. Mayor Scharff: Now, we're at the Minutes Approval. Can I have a Motion for approval of the Minutes? Council Member DuBois: So moved. Mayor Scharff: I'll second that. MOTION: Council Member DuBois moved, seconded by Mayor Scharff to approve the Action Minutes for the October 23, 2017 Council Meeting. Mayor Scharff: If we could vote on the board. That passes unanimously. MOTION PASSED: 9-0 Consent Calendar Mayor Scharff: Now, we're at the Consent Calendar. Do we have any speakers on the Consent Calendar? I'll move the Consent Calendar. Can I have a second? Second. MOTION: Mayor Scharff moved, seconded by Council Member Kou to approve Agenda Item Numbers 3-7. 3. Approval and Authorization for the City Manager to Execute Contract Amendment Number 1 With RMC Water and Environment to Extend the Term of the Agreement Three Additional Years to end November 9, 2020 for Professional Services Related to the Implementation of the Regional Water Quality Control Plant Long Range Facilities Plan CIP WQ-10001. 4. Approval of Contract Amendment Number 2 With Townsend Public Affairs for State Legislative Representation to Extend the Contract for TRANSCRIPT Page 14 of 93 City Council Meeting Transcript: 11/06/17 Two-years Through December 31, 2019 and add $204,000 for a Total Not-to-Exceed Amount of $595,000. 5. Approval of a Contract With Van Scoyoc Associates Inc. for Federal Legislative Advocacy Services for a Term of Four-years, From January 1, 2018 to December 31, 2022, for a Total Not-to-Exceed Amount of $331,200. 6. Approval of the Fiscal Year 2017 Re-appropriation Requests to be Carried Forward Into Fiscal Year 2018 and Approve Budget Amendments in Various Funds. 7. Policy and Services Committee Recommendation to Accept the Auditor's Office Quarterly Report as of June 30, 2017. Mayor Scharff: If we could vote on the board. That passes unanimously. MOTION PASSED: 9-0 Action Items 8. Resolution 9717 Entitled, “Resolution of the Council of the City of Palo Alto Authorizing the Filing of an Application to the Metropolitan Transportation Commission for a Priority Development Area Grant for the North Ventura Coordinated Area Plan (CAP), Expressing Local Support and Committing any Necessary Matching Funds, and Stating Assurance to Complete the Project; and Approval and Authorization to the City Manager to Execute a Funding Agreement With the Sobrato Organization for Sobrato to Provide the Local Matching Funds and Additional Supporting Funds for Environmental Review in the Amount of $250,000; and Initiation of the North Ventura Coordinated Area Plan Process. Environmental Assessment: Exempt Under California Environmental Quality Act (CEQA) Guidelines Sections 15061(b)(3) and 15262. Mayor Scharff: Now, we're at our first Action Item, adoption of a Resolution authorizing the filing of an application to the MTC. Let's see if we have a Staff Report. Jonathan Lait, Planning and Community Environment Assistant Director: Good evening, Mayor and City Council. My name is Jonathan Lait. I'm the Assistant Director with the Planning and Community Environment Department. This evening we're asking the City Council to adopt a resolution signaling local support for a grant being issued through VTA. With that grant, some obligations of the City are to support the completion of a coordinated TRANSCRIPT Page 15 of 93 City Council Meeting Transcript: 11/06/17 area plan for the North Ventura area; the Staff resources to go along with that; acquisition of matching funds to meet the grant requirements. In addition, we're asking that the City Council prepare the initiation of the coordinated area plan and direct Staff to review a funding agreement that is included in your packet, that is between the City and the Sobrato Organization for the matching funds associated with the grant. We would return to the City Council with a coordinated area plan, goals, objectives, plan boundaries, and schedules. I'll say at this point that I think a more robust conversation on those points would probably be held at a future meeting before the Council. Tonight we're really just looking at starting the process of signaling our support and interest for the grant funding. This Staff Report includes some background information about a previous effort to initiate a coordinated area plan at this location or approximately nearly this location. That effort didn't advance very far. Here we are now in 2017 on the verge of approving an updated Comprehensive Plan, and that includes a program for the City to prepare a coordinated area plan for the North Ventura area. In anticipation of that, the Staff in July of this year submitted an application to VTA. VTA has indicated support and funding $638,000 to the City for this purpose. Funding comes from a variety of sources, regional and Federal funds. We'll be working most closely with Caltrans and VTA, but all these different agencies are involved, and we'll be working to process the necessary paperwork for that. Most of the funding comes from the grant, $638,000. The two other colors shown on the diagram are supported by the Sobrato Organization. The $112,000 are the matching funds required by the grant. The additional $138,000 is to support the environmental analysis that will be associated with the work that we do for this project. This map shows the priority development area in a grayed out or light green color on the map. There's a dotted blue line that is Staff's initial effort to identify a project boundary that we included in the grant application that was submitted to VTA. There will be an opportunity for the Council to have a discussion about those boundaries at a future meeting. If there's some comments now, we're certainly welcome to take those. The whole PDA area is about 95 acres. The planning area is 39, and the Fry's site, which is included in this outline, is about 15 acres. The City has a coordinated area plan for the South of Forest Area. The Zoning Code sets forth a very precise set of requirements for initiation, adopting, plan content of a coordinated area plan. We'll be in the process of meeting all those requirements and submitting that to the City Council. One of the other things that we'll need to do at some point is form a citizens working group, and that'll be a Council-appointed group, that will be advisory to Staff and the various Boards and Commissions that'll be working on this. I think I've touched on most of these items. I will say that we do anticipate having to engage a variety of consultants for outreach, urban design, economic and fiscal analysis, as well as transportation and parking analysis that'll be TRANSCRIPT Page 16 of 93 City Council Meeting Transcript: 11/06/17 associated with the plan effort. Here's just another illustration showing where we are and where we want to go. With that, I'll conclude my report. Mayor Scharff: Our first public speaker is Angela Dellaporta, to be followed by Ken Joye. You'll have 3 minutes. Go ahead. Angela Dellaporta: Good evening. My name's Angela Dellaporta. I'm a resident of the Ventura neighborhood, and I'm a retired Gunn High School teacher. As a member of the Ventura Neighborhood Association, I want to let you know how very pleased we are that the City will be creating a formal working group to plan the North Ventura coordinated area plan. Neighborhood representation on this working group will allow our voices to be heard regarding the developments that will affect our neighborhood. We are already reaching out to our neighborhood's residents, and we look forward very much to participating in the planning of this project that will have such a large impact on our neighborhood. Thanks very much. Mayor Scharff: Thank you. Ken Joye to be followed by Becky Sanders. Ken Joye: Mayor Scharff, Council Members, thank you for the opportunity to speak. I have lived on Park Boulevard in the Ventura neighborhood since 1992. I'm glad to read in the NV CAP Staff Report that the City plans to support context sensitive, pedestrian-scaled development and enhanced connectivity for bicyclists. Easy access to the California Avenue shopping district is one of the reasons I am glad to live where I do. While I know that NV CAP is specifically focused on Sobrato's project, I would like to highlight one statement in the VTA grant proposal, which reads this project offers the City a comprehensive approach to improvements, something that was not possible when development happened on a project-by-project approach. I endorse a comprehensive approach to development and hope it can be applied to other projects in the Ventura neighborhood. To draft this coordinated area plan, you will be selecting residents of the community to serve on the working group. I would like to take part in that work and hope that you can include me as one of the members of the team. Thank you very much. Mayor Scharff: Thank you. Becky Sanders to be followed by Bob Moss. Becky Sanders: Good evening, Council Members. My name is Becky Sanders, and I am the moderator of the Ventura Neighborhood Association. I live in Ventura. With the development of the Fry's site, Venturans very much want to enter into true community partnership where everyone benefits and where we work together to build environments that all Palo Altans can be proud of and that all neighbors can enjoy. As we move through the NV CAP process, we have some major concerns including that the proposed development is going to create massive traffic and parking problems. A few years ago, the TRANSCRIPT Page 17 of 93 City Council Meeting Transcript: 11/06/17 developer Jay Paul wanted to add about 311,000 square feet of commercial space to our neighborhood, but the owner's traffic study concluded that this would make already congested roads like Oregon and Page Mill even worse. As you might recall, Jay Paul withdrew those plans. Now, I see in the discussions that we had around the Cal. Ave. concept plan a few years ago that the City proposed more than tripling the Jay Paul thing onto the Fry's site. That increase alone amounts to about three of the Jay Paul-sized projects. If one Jay Paul project was already too much, it really makes no sense to try to put three Jay Paul projects on the Fry's site and potentially more sites in the pipeline. I hope that makes sense. We ask that you please scale expectations way back on how much new square footage should be on the table. We should not be creating dense office complexes, but rather we should be encouraging neighborhoods of homes and community-serving businesses and parks. We know that we need residences, homes. You know we need that, right? Remember we are here to build a better, stronger Palo Alto, not a better, stronger Sobrato with all due respect. Thank you. Mayor Scharff: Thank you. Now, we return to Council. Oh, Bob Moss. Bob Moss: Thank you, Mayor Scharff and Council Members. I'd like to give you a little insight into the Fry's site. I certainly hope that if this area is redeveloped, we retain as much retail as possible. I suspect that most of you aren't aware of the fact that, at one time in the 1930s and '40s, that site was the most intensive commercial industrial use in the City. It was a packing shed. The building was built in the early '20s, and the Valley of Heart's Delight sent its produce there to be processed. In fact, there used to be a railroad spur. If you look at the site design, there's a curved area; that's where the railroad line ran. The Fry's site is important in terms of retaining residential- serving retail. I'm very familiar with that building. Cable Co-Op had our offices and our studios there, so I was in the building for 20 years. It's a very interesting location. I would like to see that building preserved if possible. One of the reasons, by the way, that the developer shows an awful lot of office space in the area around it is because the retail uses which used to be there were replaced by offices because we don't have a prohibition on replacing retail with offices in that neighborhood, in that area. Office rentals are higher than retail rentals, so that's what the developers want to put in. It's not because of the economic viability of retail on that location. I would like to see very careful evaluation of how future residential spaces in that area will be served. In particular, how are the children who live there going to get to school? There are no schools within walking distance of that location. How are the people who live there going to commute? There are no commuting lines there, and it's not—let me give you an example. There is a residential development at the corner of California and Park. About 5 or 6 years ago, I spoke to the fellow who at that time was the president of the homeowners TRANSCRIPT Page 18 of 93 City Council Meeting Transcript: 11/06/17 association. You couldn't be much closer to the Caltrain station than they are. He did a survey, and 80 percent of his neighbors drive by themselves to work. Only about 5 percent take the train. Living close to the train station does not mean people are going to take public transit. It's a fallacy. Look very carefully at the development that's going to go in there and how much impact it's going to have on traffic, parking, and schools. Mayor Scharff: Thank you. Now, we return to Council for Motions, questions, comments. I see one light, and that's Council Member Wolbach. Council Member Wolbach: Only to move the Staff recommendation. Council Member Fine: Second. Vice Mayor Kniss: Second. Mayor Scharff: I will give it to Council Member Fine. Was it you? It was either you or Vice Mayor Kniss. Do you want to speak to your Motion, Council Member Wolbach? MOTION: Council Member Wolbach moved, seconded by Council Member Fine to: A. Adopt a Resolution approving the filing of the application for a Priority Development Area grant for federal funding assigned to the Metropolitan Transportation Commission (MTC), expressing local support for preparation of a North Ventura Coordinated Area Plan, committing the necessary matching funds, and affirming the City’s commitment to pursue to completion the planning effort; and B. Approve and authorize the City Manager to execute an agreement with the Sobrato Organization for $112,000 in matching funds required by the grant and an additional $138,000 to pay for environmental analysis; and C. Direct Staff to return to Council as soon as possible with a Grant Agreement and/or Resolution meeting requirements of the funding agency and making necessary budget adjustments; and D. Initiate the local planning process for a North Ventura Coordinated Area Plan in accordance with Palo Alto Municipal Code Section 19.10.020; and E. Direct Staff to return to Council for identification of goals, objectives, formal plan boundaries, and a schedule for preparation of the North Ventura Coordinated Area Plan; and TRANSCRIPT Page 19 of 93 City Council Meeting Transcript: 11/06/17 F. Find these actions exempt from review under the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15061(b)(3) and Section 15262 (Feasibility and Planning Studies). Council Member Wolbach: Yeah. I hope moving this forward at this point is not controversial. I expect that there will be a lot of lively discussion as we really head down the course of figuring out what we want the product to look like. It's too early for us to dictate the details, but the kinds of things that— this is a preview for future discussions. The kinds of things I'm hoping that we'll be talking about and focusing on is the product as a result, things like retail, residential, especially reasonably priced or below market rate residential, park space, and connectivity. I think those are some of the key things that I'll be looking for, especially as was mentioned before and highlighted by one of the speakers, the human scale, the pedestrian scale, something that really does fit into the existing neighborhood, maybe something we could even consider a neighborhood within a neighborhood. What this is really about tonight is a process. That's a process that is not simply developer-led, which is frankly the way we usually do things. We've been frustrated by that in a lot of ways. This is more a process of community-led, neighborhood-led, City-led. There have been a couple of times recently, especially through pre-screenings, where the Council has been able to head off a developer idea and steer it towards something else. Say a developer comes in and wants to do mixed-use with a bunch of office, and we say what we'd really rather see is more residential. They go back or somebody else comes back and says, "We've got an idea to do that instead." That's still us being reactive to a developer proposal and then reactive to maybe an alternate developer proposal. It's not really a discourse, and it doesn't really involve the neighborhood early on in the way that a coordinated area plan can. Everybody knows I've been talking about my desire to see Palo Alto do more coordinated area plans for several years. This is really a prime location to test out whether we can do it a little more efficiently than we did with the South of Forest Avenue (SOFA) I and II but with no less focus on collaboration, neighborhood input, and ending up with something that really is a gem in an important, very central location in the City. When it really comes to the process side, it's going to be so important to have neighbors from Ventura and other abutting neighborhoods involved in the community committee. It's going to be important for our local press to cover this. It's going to be important for the City Council to stay engaged, and it's going to be important for the property owners to come and listen to what the community is looking for and work collaboratively with us. It seems that they're interested in doing that, and that's great. As we're wrapping up our Comprehensive Plan, the Staff capacity to do things like this is going to open up, not like Planning Staff doesn't have a million other things on their plate. I do know that once we TRANSCRIPT Page 20 of 93 City Council Meeting Transcript: 11/06/17 finish up the Comprehensive Plan, there will be a little bit more bandwidth to focus on this project. I also really want to give credit to Staff for seeking and finding funding sources for this. I think that's really, really critical. With that, I hope that my colleagues will embrace this. I don't think we want to get too much into the details of the product right now. Again, this is about starting a collaborative process that's really community focused. Mayor Scharff: Council Member Fine, you were the seconder. Council Member Fine: Thank you, Mr. Mayor. Thank you to the speakers who showed up tonight. I really appreciate you guys getting here early and often. Just to speak to my second, a few comments and then questions. As Council Member Wolbach mentioned, this really is the beginning of a process. I won't go into the detail that he did, but I truly hope that the nine of us can accept grant money from MTC and the Sobrato Organization to do a planning process here in Palo Alto, where we want have to expend much money. I think that's a great thing for us to do. I'll just leave it at that in terms of this motion. I think Staff has laid out a pretty aggressive but reasonable schedule for how we would do this planning process. I want to get into a few comments and questions, if that's good by the Mayor. Mayor Scharff: That's totally fine. Council Member Fine: Just two comments. One, something we often hear about from Ventura and on Parks and Rec and around the community is the issue of the ATT site next to Boulware Park. Whatever boundary we do consider here, that's an integral part of this. As some of those speakers mentioned, park space to some degree is lacking in Ventura. This is one of our last opportunities to expand it, so I would truly encourage us to consider the ATT site as a really integral part of this. Second, on the schedule that Staff handed us, January and February look pretty aggressive to me. I don't know if any of my colleagues noticed this, but it's looking at goal setting, selecting the committee, putting out the RFP, things like that. It just seems a little tight. That's two comments. Then, three quick questions. One, what are MTC's requirements for a priority development area? What are we encumbered with if we're going to accept this grant money in terms of our process and outcomes? Mr. Lait: With respect to the grant obligations, there is an expectation that we will adequately staff the effort; that we will complete the project within a specified timeframe; that we will secure the necessary matching funds to support the grant obligations. Then, there's some quarterly reporting that we'll be doing to MTC, informational reporting, things of that nature. TRANSCRIPT Page 21 of 93 City Council Meeting Transcript: 11/06/17 Council Member Fine: What does the priority development mean? This just sounds like a process, priority, staff, completion, and funding. Is there anything about relation to transit, housing obligations, things like that? Hillary Gitelman, Planning and Community Environment Director: Hillary Gitelman, the Planning Director. The priority development area designation is something that the City applied for and received many years ago, before I was with the City. It was 2008, so it was a program established by the regional planning agencies to identify throughout the Bay Area places where they thought the growth was going to happen in the upcoming decade or so. A number of sites in Santa Clara and San Mateo Counties were identified including in many jurisdictions along El Camino. Here in Palo Alto, my understanding is the Council wanted to focus instead on this California Avenue area. This boundary was selected by the City at that time, and it's made the City eligible for transportation funding and for this kind of planning money. Council Member Fine: That's good. Thank you. Second question is kind of on the (South of Forest Area) SOFA experience. When you go through SOFA in Palo Alto, it's a great neighborhood. A lot of Palo Altans don't even realize it was our only coordinated area plan. It's kind of distinct from the rest of our zoning and land use map. At the same time, it did take a number of years, and I believe there was a report in hindsight, looking back on how SOFA was successful, how we could have done better, where we may want to improve the coordinated area plan process. I'm wondering what lessons from that are we going to execute here. Ms. Gitelman: Thank you for mentioning that, Council Member Fine. We will go find that document and review the lessons learned and learn them. One thing I would note is we are committing to the funding agencies that we'll try and complete this within the 18-month timeframe, and that's 18 months from the kickoff which, as you point out, it's probably aggressive to think that would be January/February. It's probably going to be more like April/May next year for the kickoff, and then it would be 18 months from then. Council Member Fine: If Staff could find that report and forward it to the Council, that'd be very helpful as we go through this process. Thank you, Hillary, you kind of answered my third question. I'll just finish up by encouraging my colleagues to please support this motion kicking off a really important process for a really important part of town. Thank you. Mayor Scharff: Thank you. Council Member Filseth. Council Member Filseth: In general, this is something we said we're going to do, and this is a step along that process, so that's good. Some of the first career advice I ever got was don't turn down free money and don't turn down TRANSCRIPT Page 22 of 93 City Council Meeting Transcript: 11/06/17 free food. I've tried to live my life that way ever since. This could be a bit of a devil's advocate question, but it goes to something that Council Member Fine touched on. $900,000, that's a lot of money for a plan. Mayor Scharff: $50,000 a month. Council Member Filseth: Did we spend this much on the SOFA plan? Vice Mayor Kniss: That was 20 years ago. Ms. Gitelman: We'll have to get back to you on what that cost. I know it took considerably longer, but I don't know what the cost was. Council Member Filseth: Were there lots of out-of-pocket costs like this or was it more a question of (crosstalk). Ms. Gitelman: I'm sure there was. Any planning effort like this requires an extensive consultant team to run the community engagement, the urban design, financial analysis, all of that. Council Member Filseth: Council Member Fine touched on the issue of grant obligations. You talk mostly about commitments in terms of the structure of the process. If we take this, are there constraints on what the outcome might look like, explicit or implicit? Ms. Gitelman: If you read the Resolution that we've been asked to adopt, it is really focused on process, and it states explicitly that there's not one specific outcome. The content of the plan is within the discretion of the Council at the end of the day. Council Member Filseth: I understand. No particular strings. Thanks very much. Mayor Scharff: Vice Mayor Kniss. Vice Mayor Kniss: I would say kudos to the Staff. This is something we've waited a long time to see, as certainly Cory Wolbach mentioned. More than that, I'm really glad to see a working group. You might be thinking of how you might construct the working group because it's going to be a group that'll be very desirable to be on. I am sure that they're going to look at a number of things that you will also look at, such as coordination within this area. The parks someone has already mentioned. What I haven't heard mentioned yet is—we usually talk about this with Stanford—number of kids and what the impact on the schools is going to be. The closest elementary school, I think, as the crow flies is probably Ventura. Bob Moss is still here, and I know that we've talked a number of times about what does happen, what do you do. TRANSCRIPT Page 23 of 93 City Council Meeting Transcript: 11/06/17 It's been a long time since Ventura was opened. I'm not sure that, given what's happened since then, that's a possible way to go forward, but we'll see. I know it sounds as though this is a fair amount of money. I have a feeling that it will be put to very good use. What I'm glad to see with this is the number of different funding sources that are going into this. In particular, I would say this is unusual to have the builder involved and contributing money as well. It just seems as though this is a win on many fronts. There'll be a working group on this. We're getting money from a whole variety of funding sources, including Sobrato, and going ahead with a plan that we've talked about doing for years in that particular area. I think the only long-term question I would have—probably it's one that others will have as well—is have we included enough area in this identified map at this point and should we be going further south. Did you anticipate that when you outlined the map? Ms. Gitelman: Thank you for that question, Vice Mayor Kniss. I should say Elena Lee on our Staff, who couldn't be here this evening, participated in drafting the grant application. I will pass the Council's thanks onto her. Also Tim Steele from Sobrato called earlier this evening and wasn't going to be able to make it; although, he promised he was listening at home. We thank them, of course, for their willingness to pay the matching funds and the funding for the environmental analysis. In terms of the project boundaries, when we applied for the grant, one of the requirements was that it be located entirely within the PDA boundaries. What we've given you is a boundary for the planning area that meets that criteria. Subsequent to the application, we understood from VTA staff that there might be a little bit of flexibility there. I think there may be an opportunity to adjust the boundary farther south to Lambert Avenue if we wanted to include those parcels on the other side of the Sobrato site. That's something we can talk about at another time. You're wise to mention that we might just want to look at some adjustments around the periphery of the planning area when the Council considers goals and objectives. Vice Mayor Kniss: My last question is the more sobering question. People may think that there'd be something there within a year or two. I simply cannot imagine that we're actually going to get stated on this before 4 or 5 years from now. Do you want to comment? Do you think I'm in the right ballpark? Ms. Gitelman: I think our goal is to get a plan in place that would include the regulations and policies that would apply to private development in the area and some kind of infrastructure plan that would talk about what we envision for the area within a couple of years. Actually implementing that plan will, of course, take longer as you say. TRANSCRIPT Page 24 of 93 City Council Meeting Transcript: 11/06/17 Vice Mayor Kniss: Also because we are putting together a working group, that sometimes extends the planning and the life of the plan further than anticipated. Mine is to indicate to the community I wouldn't look for housing there in the next year or two. I think we'd be over-promising if we did that. Just to keep the reality in this, this will take some time. I also recall the lease runs out at the end of '19. Is that correct? Nothing can happen before the end of 2 years from now. Correct? Thanks very much. You really did a very commendable job. Mayor Scharff: Council Member Holman. Council Member Holman: Thank you. It's always nice to say thank you for going out and finding money. What I'm going to say may sound counter to that, and it's really not intended to be that way. I have similar questions perhaps to what Council Member Filseth asked as to what the commitments are. The City has—probably even before you've come—found itself in a position of saying yes to things that weren't necessarily the most desirable because we had financial obligations to grantors. What makes me wonder that about especially the MTC grant is I found on Page 177, for instance, of the grant application—it's the third paragraph down. It says the purpose of the North Ventura coordinated area plan is to identify opportunities for transit-oriented housing and employment. I could anticipate there would be some employment. Is there a focus or an expectation, given especially Palo Alto's jobs/housing imbalance, that this is going to be an employment-rich area? Employment could, of course, mean retail as well as office. I just want to— what are we committing to with that language? Again, it's Packet Page 177; it's Attachment B, the first page of Attachment B, if that is more helpful to you. Ms. Gitelman: Thank you for that question, Council Member Holman. The vision of this grant application, as we were writing it, is—I hope this comes through—the idea that this area will be strengthened as a mixed-use neighborhood. It's sort of the neighborhood fabric and the uses there will be strengthened, will add some multifamily housing, retail, services. While we don't say office is prohibited or not preferred, we talk generally about commercial uses to encompass primarily retail and services but possibly some office uses. There certainly is no obligation in the grant. If you look at the resolution that we're proposing the Council adopt from the funding agencies, there's no commitment to any particular content for the plan. It's a commitment to the process. Council Member Holman: I did read the Resolution as well. My concern was what does MTC actually expect from this. Since it is near transit, are they expecting there to be employment near transit? TRANSCRIPT Page 25 of 93 City Council Meeting Transcript: 11/06/17 Ms. Gitelman: We did apply for a planning grant related to a mixed-use neighborhood. As you pointed out, that encompasses a variety of commercial uses as well as multifamily residential uses. Council Member Holman: The mix of which is at our discretion. A couple of other questions. This comes up quite often. The SOFA plan actually took so darned long. One of the major reasons for that was because … Vice Mayor Kniss: (inaudible) Council Member Holman: I really don't know. It took a few years actually, but we broke it in half. There was a SOFA I and SOFA II. A primary reason why it took so long was because we had a huge turnover of Planning Directors. We had something like four Planning Directors in that period of time. It was very herky-jerky. That was a major part of it. To be perfectly honest, the plan then disappeared for a year after it was completed. It just disappeared for a year before it came to the Council. Mr. Lait: If you look on the—excuse me, Council Member, for interrupting. If you look in the Resolution, there is a requirement that commits Hillary Gitelman to stay here through the duration of the program. Council Member Holman: Do we have that signed in blood? That does take me to another question. It would stand to reason—I just want to know if there is some kind of agreement that Sobrato won't come forward with any kind of proposal until this plan is completed. It would make sense that that would be contrary to the purpose of them putting money into this. Is there an agreement that they won't if, say, we get halfway through this and they don't like the way it's going? Ms. Gitelman: That is not an explicit part of this agreement. Although, as you point out, so far this has been a very collaborative effort. Our funding agreement with Sobrato is consistent with that goal of a collaborative planning process. There's no specific prohibition on an application being submitted. Council Member Holman: That makes me a little bit concerned. Like I say, they own the big chunk of this. What if they don't like what the working group's coming up with? I'm a little concerned about that. The funding amount of $138,000 for the environmental analysis, is that supposed to cover the whole environmental analysis for the whole area including Sobrato's holdings? It seems lite to me quite frankly for 39 acres. Ms. Gitelman: Thank you. That is lite, as you say. One of the things that is maybe not explicit in the grant proposal we made to VTA because they specifically said they would not cover the cost of environmental analysis is TRANSCRIPT Page 26 of 93 City Council Meeting Transcript: 11/06/17 that we're proposing as part of the planning effort to do a lot of the technical studies that will feed into the environmental analysis. We'll have a full traffic study as part of the planning effort. We'll have a financial analysis. We'll have urban design analysis. We'll learn about the hydrology and hazardous materials and other existing conditions that we have to deal with through the planning effort. Those reports will all be ready and available to us when we turn to the environmental analysis. Hopefully, the relatively modest amount of funding we have for that will be sufficient, given all the pre-work we will have done. Council Member Holman: Sounds good. The City's, at this point in time, except for extraordinary Staff effort not actually expecting to put any money into this, any capital into this. It's the Staff effort and endeavor which, of course, has a great value to it. Ms. Gitelman: That's right. I would only say what we tried to hint at in the report is the City will have to put in funds if this process takes longer than we expect or heads in a different direction. If a few years from now we're still working on it and the grant funds have been expended, then it will be on us to complete the project. Hopefully, that won't happen. Council Member Holman: Thank you for that. I would concur with colleagues who have said we need to include or should include the Boulware Park and the AT&T site in the area plan. I also would suggest that we ought to consider we extend to El Camino too. There are two reasons for that. Maybe not El Camino for the whole area but for at least part of the area. For instance, in the SOFA plan we did extend to Alma. There could have been some rationale for stopping at High Street or mid-block, but we extended to Alma. I would say in this occasion it's even more important to go to El Camino at least for some of the properties. If we want to create a pedestrian and bicycle-rich area, when something on El Camino is being proposed for redevelopment, we want to be able to include bicycle paths and pedestrian paths on those parcels as part of the redevelopment. To leave them out, to me, seems like a big omission. The other reason I would say is because—take a really, really good look at this. I think we're all pretty familiar with this area. The other reason some of these parcels go back a little ways, as you can tell from looking at this map. One of the first things that should be done in this area—it goes to what Bob Moss was saying—is to see if there's an historic district here. It has a very rich industrial—the Fry's building itself was a tomato cannery and does date back to the '20s. If you step back and look at that building, it has great possibilities for mixed use that would include housing. It's got some great possibilities. If we draw a boundary that's artificial and doesn't look at that context, I think we're really missing the boat for both of those reasons. Some will agree with me on both of those; some will agree with me at least on the TRANSCRIPT Page 27 of 93 City Council Meeting Transcript: 11/06/17 pedestrian and bicycle connections. We want those to El Camino. There's just no denying it. I can't imagine anybody would oppose that. Make sure I got all my points here. These are more like plan comments, but I'll just throw out a couple of comments. I won't take much time with this. The connections to schools, Vice Mayor Kniss mentioned that too. Bob Moss also mentioned that too. It isn't mentioned here, but I hope that a plan would include arts and entertainment features and factors. Those are the only things that I'm bringing up. I among others have been looking forward to doing this plan for a very long time. I'm really glad that we're commencing this. Thank you. Mayor Scharff: Council Member Kou. Council Member Kou: Everybody already asked all my questions, but then I thought of another one. Just one. On Page 180, the goals and objectives. I see a whole list of things here, but there isn't any parks or open space. I know that Vice Mayor Kniss just spoke about the AT&T—no, I'm sorry. That was Council Member Fine spoke about the AT&T site, that little patch of area. I don't think that's big enough for that neighborhood when this is developed. I'd hope that that is something that's added into this work plan, in particular open space and parks. Ms. Gitelman: Thank you, Council Member Kou, for that comment. Absolutely, we completely agree with you. That list that you see on Page 180 was really from the grant application, so that's what the funding agencies suggested. We responded to that, and we talked a lot about neighborhood fabric and infrastructure and open space and connections to the areas surrounding this plan area. I think we'll capture that. Council Member Kou: Thank you. Mayor Scharff: Council Member DuBois. Council Member DuBois: Overall, I think this is a great idea. To echo Vice Mayor Kniss, glad to see there will be a community working group. A project of this scale, it's really going to be needed to get the community input and community buy-in. The Ventura school site's an important childcare center for the City. It also acts as another park and community gathering place. When we do get into planning, we are going to have to really think about the need for a school. There's really not a lot of easy, safe routes to any of the existing elementary schools. I have a few questions about the Staff Report. It mentioned that a Code-compliant project could be 350 units. Could you describe what that would look like? What would it take to get 350 units in that lot? TRANSCRIPT Page 28 of 93 City Council Meeting Transcript: 11/06/17 Ms. Gitelman: Thank you, Council Member DuBois. I think that was just an expression of what the maximum unit count would be under the RM-30 zoning. It would really take a whole redevelopment of the site and all the existing buildings to accomplish that. I don't think anyone is proposing that at this point. Council Member DuBois: I'm just curious what it would look like. Did that number include all the recent State laws, bonus densities, and that kind of thing? Is that how you got there? Ms. Gitelman: It's really just simple math, 30 units to the acre times the site area. Council Member DuBois: You also mention NEPA because of the grant money. What impact would that have? Is that generally less impactful than CEQA? Ms. Gitelman: We're going to have to work through Caltrans on that. Caltrans generally acts as the lead even though they're a State agency on NEPA compliance. They have a process. Actually our transportation group is more familiar with that than the land use planners. These are transportation funds, so we'll go through that process. I can't tell you right now what it is. Normally, we would process this like a CEQA document, and it will be usable to a large extent for the NEPA compliance. Council Member DuBois: You mentioned a traffic study, doing it early. I would suggest maybe we do it closer to completion of the plan. I think it comes up many times that, by the time we get to this, the traffic study is 4, 5, 6 years old and is it really applicable anymore. I think it's just something to think about. Another comment. The Staff Report mentioned retention of existing, nonconforming uses. Can you explain what that is in this case? Ms. Gitelman: Sure. There's actually a unique provision in the Municipal Code about the nonconforming uses on the site. Because the site is zoned multifamily residential, the existing uses that include retail and some office uses—it's kind of a mix of uses in the existing buildings. Those are technically nonconforming. There's a section of the Code that allows them to remain in place and not … Council Member DuBois: Isn't that the point of a Coordinated Area Plan, that we would potentially change that? Ms. Gitelman: Certainly we will be looking at alternatives. I presume that some of them will include retaining the nonconforming uses, and some of them will look at transitioning those out. TRANSCRIPT Page 29 of 93 City Council Meeting Transcript: 11/06/17 Council Member DuBois: I thought the idea was to take a look at the whole area. I did have some quick comments on the map. This area is 39 acres. The Fry's site is 15 of it. I did have a question of how this came up. You answered that that is the PDA boundary. Would the EIR then be for the whole 39 acres? What if it ends up costing more than the $250,000? Ms. Gitelman: I think the City would have to make up the difference if we got into this and found it was going to cost more. My hope is that it won't and that we—part of it is our hope that we can do this in the time that's specified, the 18 months. If it takes longer than that and costs more, then we would have to come back to you and talk about how much additional is needed and whether it's worth the additional investment. Council Member DuBois: How did we determine that $250,000 was the right amount? Ms. Gitelman: That was just based on our expectation that we could do a lot of the work during the planning effort, all the technical studies that we would need ultimately for the environmental analysis, based on our experience. We hope that's going to work. Council Member DuBois: Did I hear you right, though, that you think it might be lite? Ms. Gitelman: I was responding to Council Member Holman. I think the number we set aside for environmental analysis is lite, but the reason is because we thought the planning study would encompass all the technical analysis. Council Member DuBois: You think the $250 should cover it? Ms. Gitelman: I hope the two together will make it work out. Council Member DuBois: I do appreciate Sobrato contributing the funding. I just want to point out it's likely in their interest. It's likely the plan would increase the value of the property and what could be built there. I had similar feedback on the map. I'd like to see it include the commercial stretch on Lambert, which is just to right of the existing map, and extend to Boulware Park. I guess we included Olive and the R-1 homes there because it's part of the PDA. As we go through this, we should pay attention to that and maybe protect that area. I think this is going to be interesting to go through this process. I know there's been a lot of interest in coordinated area plans. I'm curious to see how it goes. I am glad we have the community working group. Hopefully, we'll have some sensitivity to the context. The other thing I'd just like to say is I hope we can bring as much of a data-driven approach as TRANSCRIPT Page 30 of 93 City Council Meeting Transcript: 11/06/17 possible. The more we can bring out the facts and the assumptions and the constraints, the more likely it'll be that the neighbors and people around the City will buy into the process. I'd like to see us do that from the start. Thanks. Mayor Scharff: Council Member Tanaka. Council Member Tanaka: I want to thank Staff for this. It's always great to get grant money. Great job on that. I'm going to be brief because what I was thinking about has been said already. I just wanted to also support what Council Member Holman said about expanding the area all the way to El Camino. It makes a lot of sense. It looks a little bit gerrymandered or something when you look at the map. Definitely it should extend to El Camino, be a nice rectangle instead of a jagged edge like it is right now. That would make for a stronger plan than it is today. Thanks. Mayor Scharff: I just briefly had some questions and some comments. If we pass this tonight, the next step is Staff's coming back to us. First of all, it says direct Staff to return with possible grant agreement. I assume that goes on Consent probably or it comes as part of something else. That doesn't seem like much. What's the process Staff envisions? Mr. Lait: I'll take a first cut at this. Once this action happens tonight, we're going to send the agreement to VTA and get it approved on their end. Once we receive the agreement back for the Council's formal review, we'll schedule that for a meeting before the Council. We're also going to bring a discussion about the goals and the objectives and the schedule and the boundaries of the plan area. That would be one discussion. After that, at another meeting we'd have a conversation about the working group formation. Mayor Scharff: You're not going to put the working group discussion first. Mr. Lait: No. Mayor Scharff: It'll be goals, that? Mr. Lait: Right. We're going to be working in the background getting an RFP ready so that when we're ready to go with that we can launch that, get some feedback. Another meeting will be to present the response to that to the Council for selection of consultants. Mayor Scharff: How long do you anticipate until you get it signed and coming back for Council when we talk about boundaries? Don't we have to go back to them to increase the boundaries? How does that process work? TRANSCRIPT Page 31 of 93 City Council Meeting Transcript: 11/06/17 Mr. Lait: I think we're going to work with them. Based on the comments we've heard this evening, we're going to start that conversation with them to understand more fully what it is. As Director Gitelman noted, we do think there's some latitude in making some adjustments. We'll need to see if that extends to moving it to El Camino. If it does, then we'll report that back to the Council. Mayor Scharff: Basically you're going to go ask them how far we can move the boundaries, what's the latitude Council has in doing that. You'll come back, and we'll talk about the boundaries. How are you going to frame the goals conversation? What are you thinking there? Ms. Gitelman: Our thought was that we would craft some draft goals and objectives and a draft schedule for the Council's consideration, bring that back to you when we're ready to ask for the budget amendment and the approval of the grant agreement. Mayor Scharff: I actually think a draft schedule is really important. If this drags on too long, that's a real problem. I think that would be great. Eighteen months is a long time. I think it's going to take longer, but I'm hoping it's not longer than like 24 months. I think that's great. Are we allowed to adopt a schedule that's longer than 18 months? Ms. Gitelman: They're really asking us in this resolution to agree that we're going to meet that 18-month schedule. Mayor Scharff: The schedule will be 18 months. The question is if it slips, but the schedule will be 18 months. Ms. Gitelman: That's right. One of the questions is when does the schedule start, when does the 18 months start. We're suggesting it starts from the kickoff. Once we have goals and objectives and task force and consultants, then it starts. Mayor Scharff: We should have all of that in what, 3 months or 6 months or next week? Ms. Gitelman: We're assuming April-ish. Mayor Scharff: You're planning basically we'll have a couple of Council meetings, but this project's process should kick off in April. I think this is exciting. I'm glad we're moving forward. Like everyone else said, great job getting the money. Thanks to Sobrato for stepping up. All of those comments were made, and they're all correct. I've got to say I am staggered by the amount of money this costs. It's fascinating because a lot of people up here TRANSCRIPT Page 32 of 93 City Council Meeting Transcript: 11/06/17 once in a while talk about we should do a lot of coordinated area plans. I don't think we can afford to do a lot of coordinated area plans. At $900,000 a pop, that's fairly staggering. Thank you very much. I'm not going to do another round. I'm not going to do another round. Let's vote on the board. That passes unanimously. We are exactly on schedule now. MOTION PASSED: 9-0 9. PUBLIC HEARING/QUASI-JUDICIAL. 425 Portage Avenue: Council Review of an Approval of the Planning and Community Environment Director’s Determination to Authorize a Waiver From the Retail Preservation Ordinance. The City Council Will Approve, Deny or Modify the Director’s Determination. Environmental Assessment: Exempt in Accordance With the California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3). Mayor Scharff: If we could move on to the next item, which is 425 Portage. Jonathan Lait, Planning and Community Environment Assistant Director: Thank you. This next item is a hearing based on a request from the City Council. You may recall back in August there was an item on Consent noting the Director's determination for tentative approval of a request for a waiver from the Retail Preservation Ordinance. There are two waivers in the Ordinance. The one that the applicant is seeking is the alternative, viable, active use waiver, which was first established in the Retail Preservation Ordinance that was adopted earlier this year. The actions that are available to the Council tonight are to accept the Director's letter approving the waiver. You may modify it. You may deny it, or you may seek additional information from the applicant and continue it to another date. The subject property is not too far from the area that we were just discussing, but it was not shown on the boundary of the coordinated area plan. The property is zoned CS and was built in the early 1950s. The structure for the most part has been designed and used for warehouse-type uses. The most recent use, however, was the Pet Food Depot. That was established, I believe, first around 2010 or 2011 in a portion of the building, which was used for wholesale. It expanded into the rest of the building around 2012 without City permits. That portion of the building seemed to reflect a more retail-like use. Once the interim regulations on retail preservation came into effect, it sort of locked in retail or retail-like uses as the only permissive uses, even though it only had nine parking spaces onsite. Retail would have required much more. Again, just to reiterate, the City did not approve that retail expansion or establishment of that retail use. This map shows in the white the property boundaries for 425 Portage. There are a few properties located toward the rear, on the right of the map, but those are actually designated for the property shown in gray at TRANSCRIPT Page 33 of 93 City Council Meeting Transcript: 11/06/17 the bottom of the map, 435 Portage. 425 does have access to the angled parking adjacent to the drive aisle and that are located on 435 Portage. Those are the nine spaces that are referenced in the Staff Report. To approve the waiver, the Council would find that retail or retail-like uses are not viable at this location; that the proposed use would support the zoning and Comprehensive Plan designations; that, even though there is no proposed use at this moment, what would be proposed is a use that is consistent, either permitted by right, or conditionally permitted in the Zoning Code—we think that finding would be able to be made—and that the proposed use would encourage pedestrian-oriented activity and connections. In the Director's letter, it was noted that this area does suffer a little bit from pedestrian- oriented design elements. If a future application were submitted for design review, that's something we'd be looking at a result of this waiver request to encourage more pedestrian connections. It is the applicant's responsibility to make the case for getting the waiver. That would be including any factual or legal basis for the claim. This is stipulated in our regulations, providing supporting documentation. The Code also establishes the types of examples that we would expect to see, including the 10-year tenant history and a map of the surrounding uses. The applicant has provided a list of information, including their property owner representative statements, a history of the prior tenants, a letter from the Pet Food Depot tenant, who had an operation that was at that location but later failed. There are comparable lease rates from other properties; that was slightly updated from your previous packet in August to now include identifying some streets. I know there was some comments or questions about the addresses not being included on that. For proprietary reasons, that was not included. You have the broker's advertising efforts, a list of tenant/broker inquiries—that's also reflected on this slide here as well—and some additional information about parking requirements as well as a map of surrounding land uses. That map is presented on the screen before you. The subject property is located in the center of the surrounding zoning and different land uses that are in the area. It's not devoid of retail or retail-like uses, but there are office spaces in the most immediate proximity. There's a commercial recreation, Equinox. The fitness is located nearby. There's down the street the recent mixed-use development that was approved by the City Council. Tonight, you're here to have a hearing on the matter and take action to approve, modify, or deny the waiver request. Your action is effective immediately unless it's continued. I believe the property owner's representatives are here to speak to the item. Mayor Scharff: First of all, I think we need to do Council disclosures because this is a quasi-judicial matter. I need to open the public hearing, and then I need to ask Council Members if they have any disclosures they'd like to make. Council Member Tanaka. TRANSCRIPT Page 34 of 93 City Council Meeting Transcript: 11/06/17 Public Hearing opened at 8:50 P.M. Council Member Tanaka: The applicant came to my office hours, I think, roughly a month or so ago. He talked about the history of the property, what happened. He didn't tell me anything that wasn't actually in the Staff Report, but it was interesting to know what happened. Mayor Scharff: I'll make a disclosure too. Me and Council Member Filseth visited the site and saw it. I think that's an important disclosure. I assume Council Member Filseth needs to make that same disclosure. Council Member Fine. Council Member Fine: I also visited the applicant at the site and saw the state of the building. Nothing that isn't in the report except for seeing the state of the facility. Additional, I used to shop at Pet Food Depot. Mayor Scharff: Council Member Holman. Council Member Holman: I may have been more enthusiastic about—I just visited the site; I didn't meet anybody there. I just visited the site. Mayor Scharff: Council Member Filseth. Council Member Filseth: The Mayor and I visited the site. It was interesting. Mayor Scharff: Vice Mayor Kniss. Vice Mayor Kniss: I visited the site. I also visited it last week as well, so apparently I'm getting very attached to it. Mayor Scharff: Council Member DuBois. Council Member DuBois: I was a long-term customer of Pet Food Depot, been there many times. Mayor Scharff: Council Member Kou. Council Member Kou: I was a customer at Pet Food Depot too. Mayor Scharff: Does the applicant—this is a quasi-judicial—normally does the applicant get 10 minutes to speak or what do we do here? Mr. Lait: This is the first time we've done one of these. I think that's what we were expecting. Mayor Scharff: I'll give the applicant 10 minutes to speak. TRANSCRIPT Page 35 of 93 City Council Meeting Transcript: 11/06/17 Lund Smith, Applicant: Good evening, Honorable Mayor, Vice Mayor, members of the City Council. I'm glad a lot of you visited the site; that's great to hear. I appreciate the opportunity to speak with you tonight about 425 Portage. I'm just going to go through some slides here and present you with what we've been battling this last 18 months in marketing the property. This first slide, as you can see and it sounds like all of you know—you've visited the site. It's essentially a 70-year-old corrugated metal shed. This is what it looks like in the interior of the space. It has no HVAC, has a swamp cooler, no insulation. This is what it looks like at the inside. I'll go to a zoomed-in shot of this as well, but this is the parking diagram for 425 Portage. 425 is this area right here in yellow. Down here is 435 Portage, which is an office building. There's an office building here, 3250, 3200 Ash, and then another office building over here. The parking that's specifically for 425 Portage is just these nine spaces that are shaded in blue. All of these other spaces that you see on this diagram here belong to 435 Portage. The reason why our parking is actually in the 435 Portage property line is that we have a shared driveway and parking arrangement with 435. That's why it looks like that. This is what it looks like more zoomed-in. This is a little hard to see, at least for me from here, but I'll try to highlight some of the main points here. This slide shows the parking requirements for all the different types of retail uses in the City of Palo Alto. The least intensive retail use requires 1 per 350 square feet, which translates into 24 parking spaces at our site. We have nine spaces. As Jonathan Lait mentioned, the City did not approve the previous tenant to operate retail from the location. I thought I would further elaborate that we actually, along with Pet Food Depot, when they took over the space in 2012, did meet with the City prior to them occupying the space at 425 Portage. They were specifically only given approval—we were there as well, so we heard this too—to move into this space based on warehousing and using the site for making deliveries. To quote from the Staff Report, retail services were never authorized by the City at this location and cannot have been approved based on the lack of onsite parking to support that land use. This is also the slide that Jonathan Lait showed you, but I'm just going to rehash the main points here. This map shows one of the other big challenges of our site. Lack of retail co-tenancy and poor visibility and access. We are sandwiched between other office buildings and do not have the visibility to bring customers in. To elaborate on our location and parking problem, I want to first draw an interesting comparison between the site over here, that was just approved a couple of weeks ago by the Council. This site, that was just approved by the Council, was a mixed-use project that had apartments above and retail on the bottom floor. The requirement for this site was 5 for 1,000 square feet of parking, which would translate into our site into about 43 or 44 parking spaces. Again, we have 9. We have some additional challenges that are not present on El Camino. We do not have vehicle traffic. We have lower foot traffic. We have poor visibility and access. We are not in a retail corridor, so TRANSCRIPT Page 36 of 93 City Council Meeting Transcript: 11/06/17 we cannot rely on foot traffic to bring customers in. This is an ad that we put in the Palo Alto Weekly. I'm posting this because it's interesting. This last week there was an article in the Palo Alto Weekly talking about how typical, greedy developers were trying to keep this space vacant, all the standard things that people like to say. Essentially, some have accused us of not advertising this space properly or suggesting that at a discounted price someone would take the space. Again, it's hard to see here. What the ad says is—this is a full-page ad that we put in the Palo Alto Weekly. I need to mention we put an ad in the Palo Alto Weekly multiple times. This is marketing the space at $1.75, which is at least 50 percent below market. As a matter of fact, I went through all the retail comps that my broker provided me, that have been done in Palo Alto for the last 3 years. This space is significantly cheaper than any space that was leased in Palo Alto in the last 3 years at a $1.75. Furthermore, for anyone who contacted us or our broker, we let them know we would be open to $1.50 a square foot rate or even lower for a longer- term deal. Still no one after visiting the site was interested in pursuing the deal any further. I'm going to lead a letter that our broker, Mike Halstead, from Cushman and Wakefield wrote, summarizing the challenges he's encountered over the last 18 months in marketing our space. He unfortunately could not be here tonight. This is to quote him: I wanted to start by saying thank you for the opportunity to lease your property on Portage. As I mentioned to you, I have received multiple calls and inquiries about the property over the last 18 months, but they have all stopped pursuing the deal once they visited the site. I know it was a pet food supply store for many years, but that was a rare case where a local tenant from around the corner had the need to relocate and basically kept the same customer base. The building with very limited parking is not going to work with the current condition of the building since it is a warehouse space versus a useful retail location. The lack of retail co-tenancy is also a real challenge as most retailers want to be right next to other retailers with adequate parking, retail signage, and the ability to see them from a commercial traffic corridor. Again, I thought I would end on this slide because it truly is a metal shed. In summary, we are unable to lease our space as retail because of extremely limited parking, poor location, and lack of infrastructure. We have been encouraged to come before you tonight to request this waiver by Hillary Gitelman and Jonathan Lait and because of our unique circumstance. This is why we're coming before you tonight. We respectfully request that you follow their recommendation and approve a waiver for our site. Any remainder of time, I'm happy to answer any questions. Mayor Scharff: Thank you. You will have—you actually get rebuttal time, if I recall, up to 3 minutes after the public speakers. At the moment, I have one public speaker, Becky Sanders. TRANSCRIPT Page 37 of 93 City Council Meeting Transcript: 11/06/17 Becky Sanders: I'm back. Becky Sanders, a resident of Ventura and also moderator of the Ventura Neighborhood Association. We had a meeting yesterday. I did get into a little panic when I saw that the applicant said that they have a proposed use that meets the criteria. Then, I heard Staff say that we don't know what that proposal is. I don't think they actually are meeting the criteria. I used to shop at Pet Food Depot as well, as did others in my neighborhood. For me, it was a fine store and location. That's for me, across from Equinox and near Fry's. I could do a bunch of things at the same time. Yesterday at our meeting, we discussed the issue. I have been empowered by the Venturans who attended that meeting to relay this to the Council. I thank you for hearing me. Given the erosion of ground-floor retail in Ventura, we do not favor granting waivers unless the applicant clearly meets Title XVIII, Chapter 40, Section 180 of the Municipal Code. We do not believe the applicant has demonstrated either of the two criteria, an unconstitutional taking of property or that the applicant has proposed a new use consistent with zoning and that encourages active pedestrian activity and connections. If the owner believes this is an unconstitutional taking, which I don't think they do, they should present considerable evidence and a strong legal argument. It is not clear that they could because they could rebuild this with ground-floor retail and housing above. If they instead intend to have a new use that meets the purposes of the zone and is pedestrian-oriented, the waiver request should spell that out, but it doesn't. We really need them to give us the proposed use before we grant the waiver. Also, the property's proximity to Fry's indicates that this will be a superior location for retail when the property is developed with all those potential customers moving in. Please do not permit the loss of valuable retail space when the applicant has not met the criteria and when there are already realistic and profitable options available to the owner for developing this space. Thank you very much, and I really appreciate your hearing me. Mayor Scharff: Thank you. Would the applicant like to say anything further? You don't have to; I just have to give you the opportunity. You have up to 3 minutes. Mr. Smith: Maybe just a clarification. We have not proposed a use for the site. Maybe that's in reference to 18 months ago there was a tenant who approached us as a private school that was interested. We never said that that's what it was going to be. Maybe that's part of the confusion about us coming in with a proposed use. We really just want to use the building. The building is a warehouse building, and so we're not proposing to do anything crazy. We can't lease it out as retail. I wish. If there's somebody who has retail right now, come and talk to me. I would love to lease it to somebody. It's just sitting there vacant. We want it to be something. We want it to be used, but no retailer is interested at all. TRANSCRIPT Page 38 of 93 City Council Meeting Transcript: 11/06/17 Public Hearing closed at 9:04 P.M. Mayor Scharff: We now return to Council for questions, comments, Motions, etc. I actually had a couple of questions I wanted to answer before. I'm looking at Packet Page 227. There's a reason for not pursuing questions. The gym, the personal training, or the Golden Road Brewing Company, it says significantly short of parking requirement. Is that the tenant who thought it was short of parking or did the City have a requirement that we weren't going to allow the Golden Road Brewing or a gym or personal training because it didn't have enough parking? Mr. Lait: This was the applicant's list. The City did not offer those statements. Mayor Scharff: If, for instance, any of these uses—if for instance a restaurant use came here, a gym use, would we allow that with such a small amount of parking? That's really my question. Mr. Lait: A restaurant would be infeasible. A gym, it would depend on the size and intensity of the operation. Mayor Scharff: It's 8,000 square feet. Mr. Lait: There are different types of—there's cross fit which takes a lot more space and has a different type of programming than a spinning class or whatever the contemporary equivalent is these days. I think it depends on the tenant. Mayor Scharff: How does that—could you explain to me how that works? Mr. Lait: The parking requirement is based on … I could look in the Code. The parking requirement for commercial recreation is—I forget. It's like 1 per something. I have to take a look at the Code. It's larger than what we would allow for the personal service or the yoga studio discussion that we've had before. We capped that size, I think, to 5,000 or 6,000 square feet to establish like a yoga studio. Otherwise, beyond that it becomes a commercial recreation. If you just give me a minute, I could take a look at the commercial standard. Mayor Scharff: I guess what I'm trying to get at is—this is the part that's confusing me. We're saying we want retail here, but I'm trying to figure if we're applying the City's retail parking standards to this. How does any retailer get to be within 8,000 feet unless we're in fact saying, "You're grandfathered in for retail, so you could have any retail." Mr. Lait: That's right. That's what we would be saying. TRANSCRIPT Page 39 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: You could have any retail? Mr. Lait: Yeah. We would allow a retail use to establish there. Even though they would be deficient for parking, we would consider it a nonconforming … Mayor Scharff: So we'd allow a restaurant? Mr. Lait: A restaurant is more intense than retail, so no. Let me clarify. It's extensive retail, which is a parking ratio of 1 space for every 350 square feet. Our retail requirement is 1 space for every 250 square feet. It's not even standard retail; it's like a furniture store, something like that, the antique store from earlier over more close to where we are. It's not even the same kind of intensity retail that we would allow in there, unless they came in and they got some kind of parking reduction or some kind of waiver from the parking. Mayor Scharff: We've grandfathered in retail. I know I'm belaboring the point, but I'm really trying to understand what actually—when we say we want it to be retail, I'm trying to understand what retail we would allow. What you're saying is that we'd only allow—regular retail is 1 per 350 square feet. Is that it? Mr. Lait: 1:250, yeah. Mayor Scharff: 1:250. We would allow any retail there that is 1:250. Is that correct? Mr. Lait: No. Let me restate that. 1:350 is really the standard that we're looking at because extensive retail is like a furniture store, big products, maybe not that many people. We have a different parking requirement for that. If I remember correctly, the pet food retail was kind of meeting the— they had a lot of storage area, wholesale type stuff. The retail we were looking at the time didn't strike us as a intensive retail use, but more of an extensive … Mayor Scharff: Is this in our Ordinance? Mr. Lait: Yeah, that terminology is. Mayor Scharff: When you have a retail in our current Retail Preservation Ordinance, we only allow a similar type retail back in. It has to meet the same parking requirements. Mr. Lait: Yes. If you propose a more intensive type of use and you don't have the parking, that's the rub in the Code. You need to be able to provide the parking. If you're proposing something that's more intensive, then you run TRANSCRIPT Page 40 of 93 City Council Meeting Transcript: 11/06/17 into that challenge. I think this goes on to support why Staff doesn't believe that this is supportive of a viable retail use. It was, one, never permitted to be there. It just went in. Mayor Scharff: I was going to get to that, the not permitted to be in. I remember—sometimes I think I'm just not remembering correctly. My recollection is when we passed the permanent Retail Preservation Ordinance, we actually put something in there that nonconforming retail uses would not be covered under this. I don't understand why this is covered under our Retail Preservation Ordinance. Mr. Lait: I can explain that. We had some examples in town where a retail use was established, but retail was never even identified as a permitted use for that zoning district. What we exempted in the Ordinance was if retail was established without City permits and was never even an allowed use in the first place (crosstalk). Mayor Scharff: Could we have City permits on this one? Mr. Lait: We don't have City permits on this one, no. Those are the ones that we exempted from the Ordinance. Here at this location with the CS zoning, retail is a permitted land use. A retail use could be established here, but it is—but for lack of the parking that exists there today, they wouldn't get an approval over at the counter to establish that retail use. Mayor Scharff: I think I understand. This strikes me—I just heard Council Member Wolbach say this sounds like Kafka. I tend to think there may be some truth to that. The issue here for me at least is I might be okay with continuing making this a retail use, but then we would have to say that we're waiving the parking requirements. You'd have to allow a broad range of retail uses, because this is a really challenging site for retail. Mr. Lait: I don't think that's the issue, though. What we've heard from the applicant is that retailers do not want the space because it has a lack of parking. Mayor Scharff: That's what I was trying to understand. Is it significantly short of parking requirement from the retailer or … Mr. Lait: They're not talking from a Code standpoint. They're talking from a physical ability for customers and employees to park there. Mayor Scharff: What I also heard from Staff is that if, for instance, the Golden Road Brewing Company wanted to move in, we would say no. TRANSCRIPT Page 41 of 93 City Council Meeting Transcript: 11/06/17 Mr. Lait: That's correct. What this (crosstalk). Mayor Scharff: If Coupa Café said they wanted to move in, we'd probably say no. Mr. Lait: If their warehousing inventory wanted to move in there, that would be fine. If they wanted to have a retail outlet there, that would be problematic based on the current site conditions and based on what the parking requirements are in the Code today. Mayor Scharff: I'm really posing this to my colleagues. I've heard what Staff's saying. What I'm saying is that it strikes me that this is the issue. We wouldn't allow any of these people to come in. We wouldn't allow the gym or the personal training. I realize there might be some small—if they basically took an 8,000-foot thing and said they're only going to use a small percentage of it for the parking. I think the question at least before us is are we going to loosen the parking requirements and allow actual retail to go here even though—or are we going to say no, this doesn't make sense. I just want to hear what my colleagues say. I don't think it can be that we can just keep it the way it is. I don't think that works. Vice Mayor Kniss. Vice Mayor Kniss: I'll get into the other sites in a minute. I'm telling you this is like Cinderella's sister trying to get into that glass slipper. We keep trying and trying. On this page that Greg has just referenced, which is 227, there are 10 or 11, 12 people who have looked at this and attempted to rent it or at least to have it in some way fit what their needs were. We're hearing that didn't happen. Having said that, I am going to move the Staff recommendation, that we accept the Director's decision approving the subject waiver request. Council Member Fine: Second. MOTION: Vice Mayor Kniss moved, seconded by Council Member Fine to accept the Director’s decision approving the subject waiver request. Mayor Scharff: Would you like to speak to your Motion? Vice Mayor Kniss: Yes, I would. There are two or three other sites on Alma that have frustrated me no end. I'm thinking after this we'll probably hear from them. They have slightly different needs and slightly different concerns. What we're saying is we have a site that many people have visited. The price has been lowered. For $1.50 a square foot, that's about—Greg is good on this one. $1.50 a square foot on El Camino, that's pretty reasonable. Wouldn't you agree? You would think people would be flocking there. Then, we say, "Yes, that's a great idea, but you don't meet our parking requirements." I TRANSCRIPT Page 42 of 93 City Council Meeting Transcript: 11/06/17 think this one is a relatively easy one to make a decision about. I support the recommendation. Mayor Scharff: Council Member Fine, you're second. Council Member Fine: Thank you, Mr. Mayor. Just to start out at a high level. I voted against the expansion of the Retail Preservation Ordinance Citywide because it was specifically intended to address core retail issues along University Avenue, which had been worked out through a consortium of residents, business owners, the City, and the Chamber of Commerce to apply to the University Avenue district. Expanding those rules to the entire City, in my opinion, doesn't make sense. This building is a case in point. A couple other reasons why I think you should support this waiver or at least support the Director's decision on this waiver. The City never approved a retail tenant here. In a funny way, this one just got caught up because somebody started selling wares out of their warehouse. That's probably not a good basis for us to essentially freeze retail in place. Two, it's a Quonset hut. It literally is a metal shed. It's not the most attractive or useful retail building. Three, it has poor access and visibility, not even to mention the parking. It has poor co- tenancy in that there aren't nearby retail operations which generate new business for it. As the Mayor and Council Member Wolbach were joking about in his Kafkaesque comments, this is a really weird site. We've got nine parking spots, but we're not going to permit anything there anyway unless we grant a variance. At the same time, as the Vice Mayor points out, there have been 12 businesses which have been interested but don't bite because there isn't enough parking. I'd also like to point out that in Exhibit 8 on Page 232, you can read a letter from the former owners of the Pet Food Depot, where they say that the owner cut their rates multiple times to support them there. They were still unable to maintain their business. What I worry about if we deny this waiver is that we're just going to have an empty metal Quonset hut for a while. I don't think that helps our City. This is clearly a subpar retail location, and we should grant the waiver. I hope you all support that. Thank you. Mayor Scharff: Council Member Holman. Council Member Holman: I have a couple of questions, a couple or three questions. I said I'd visited the site, and I did. I also went around there. There are signs at the Equinox site that say there's parking there for 425 Portage. That's not addressed in the Staff Report nor is it addressed in any of the documentation that we have. It's pretty clear, it seems, that there's parking for 425 Portage at the Equinox site. Can someone address that? Mr. Lait: Not from Staff. I'm not aware of a parking arrangement between 425 Portage and Equinox. Maybe the applicant or the owners … TRANSCRIPT Page 43 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: Would you like the applicant to address it? Council Member Holman: Sure. Mayor Scharff: Come on up. Heather Young, Architect: Good evening, Council Members. I'm Heather Young, a local architect. I was the architect for 435 Portage. 435 Portage and 455 Portage do indeed have parking spaces in the garage at 440 Portage, which is across the street. 425 Portage does not have any Equinox parking associated with it. They're two different property owners, two different parcels. I'm very confused about Equinox parking at 425 Portage. Council Member Holman: No, no, no. Just the opposite. There's parking available at Equinox for 425. I'm looking at a photo that says guests of the following addresses may use this facility. It clearly says—it lists 405, 425, 440 Portage. It's signage that's on that property. Ms. Young: I will reach out to the property managers of 440 Portage because several years ago 425 Portage was owned by the same property owners. That sign may have been overlooked in the transaction. Again, I do not believe that is current at all. Council Member Holman: I don't know what to make of that. There are a number of signs that are posted that say this. I don't know what to make of it. Mr. Smith: This isn't meant to be comical. Have any of you ever met the previous owner of Pet Food Depot, Harry? It actually explains a lot, what you just said. He would chew out people all the time for parking in his parking lot. I know for certain that there's not shared parking arrangements. Perhaps it's an old sign. Harry would complain to me all the time about people parking in 425 Portage and walking over to Equinox. It actually does honestly help explain a lot in my mind. The sign should not be there. There's only nine parking spaces allocated to 425 Portage. Council Member Holman: I think I saw a member of the public who also wanted to speak. If we give the applicant an opportunity to respond to my question, it seems like we should allow a member of the public to respond to the question as well. I thought I saw a hand wave over there. Did I or did I not? I did. Ms. Sanders: Becky Sanders again. It just sounds like there's a little bit of confusion here. Maybe not quite ready to make the decision, possibly continue TRANSCRIPT Page 44 of 93 City Council Meeting Transcript: 11/06/17 to a date forward to investigate the parking and get some clarification here. I just feel very unsatisfied with what's going on right now. Thank you. Council Member Holman: Thank you. I'm going to ask the hard questions, I guess. One of the prospective client inquiries was Coupa Café for a warehouse and café. There's been a situation, I guess you could say, at another address about a Coupa Café warehouse. That would be an allowed use here, a warehouse would. Mayor Scharff: Council Member Holman, it wouldn't be an allowed use. Council Member Holman: I thought warehouse would because warehouse doesn't need much parking. Warehouse is what was there before. Mayor Scharff: That's why they were forced for a retail waiver, so they could do warehouse. Right now we're saying it has to be retail. Council Member Holman: That's right. They're warehouse, not retail. The other thing is—thank you for that. That's right. The other thing is whoever said this, I think they're right. This is abutting basically the Fry's planning area, the Ventura area. There's lots of opportunity for this property in the future. I know that's not now; it's the future. The other question is for the City Attorney. There's no indication of what the property owners would do with this property if we granted the waiver. Is the granting of the waiver a discretionary action so we could ask for some kind of constraints on the property in exchange for the discretionary approval of a waiver? Mr. Lait: Yes, I think you can impose some conditions. Just so we're clear, what the applicant is proposing to do is—they want to re-establish the warehouse use. Council Member Holman: I'm sorry. Say that again please. Mr. Lait: They want to re-establish a warehouse use. That's the interest. They had a warehouse. Pet Food Depot came in, got captured under the ordinance as retail. They're not able to rent it out for retail or anything even less than that, not because of Code necessarily—though, that is a restriction— but because the people who are visiting the site want nothing to do with the site. They don't like the parking arrangement. They don't like the building. They don't like the improvements that need to be made. As I'm understanding it from the applicant's request, they can't even go back to the low-intensity warehouse use because the ordinance is preventing them from doing that. They're just seeking relief from the ordinance to re-establish and maintain a warehouse-type use in the building. Any other use is going to require more TRANSCRIPT Page 45 of 93 City Council Meeting Transcript: 11/06/17 parking than they have onsite most likely. A furniture store would be great if they can go there, but they're not getting that tenant. Council Member Holman: I still need to do some thinking about this one. Thanks. Mayor Scharff: Council Member DuBois: Council Member DuBois: I too am still confused about the parking. I'm looking at Packet Page 224, which matches what was in the Staff Report the last time this came to us. It shows the nine parking spots along the building. The presentation tonight showed another nine spots across the parking lot, so it looked like 18 parking spots. Could you explain that, Jonathan? If you guys see on Page 224, there are nine spots along the building and in the back. On this slide, there are nine other spots across from the building. Mr. Lait: The diagram that you're looking at on 224 shows parallel parking along this side right here. You've got—I don't know how many spaces that is. It's a handful, three or four parking spaces around here. This is now angle parking that they're showing here on this diagram, so they can get more parking spaces in this area. The diagram that you're looking at also shows looks like five parallel parking spaces along the side of the building. Council Member DuBois: Three more in the back or four more. Mr. Lait: There's the three more in the back. Council Member DuBois: On the side there. Mr. Lait: I'm sorry? Council Member DuBois: It looks like four spots here. Mr. Lait: It's actually three. There's one that's a planter. That's not a spot; that's dirt there. Here's a spot. One, two, three other parking spaces there. As I'm understanding from applicant testimony, in part for redevelopment of 435 Portage, an arrangement was made or memorialized that had the ingress for both buildings be located from 425 Portage, kind of shared access here for fire safety but also for ingress and egress one-way travel. As you come through Portage, you either turn up toward the Fry's site area or down. They have eliminated these spaces here. They've made these spaces angle parking. Together, that's the resultant number of spaces that exist. We can't do parking here along the side of the building anymore because of the drive aisle requirements. Council Member DuBois: This is a change from the previous report. TRANSCRIPT Page 46 of 93 City Council Meeting Transcript: 11/06/17 Mr. Lait: This is the change from this diagram. Council Member DuBois: It's a double-lane road. Can it be a single-lane road with 18 parking spots? Mr. Lait: The challenge is the backup distance. When you back out of these angle parking spaces, there's a minimum distance required that would bump into the parallel parking spaces. Council Member DuBois: I also noticed across the street there are multiple signs that say there's parking for 425 in the garage, basically all over the garage. It's not just one sign; it's not an old sign. It looks pretty new. Mr. Lait: I was out there, and I didn't see that. I apologize for not picking up on that. I'm looking on Google, and I don't see where that is necessarily. Council Member DuBois: It feels like it'd be feasible to get about 20 parking spots. I'd also ask—after 70 years and under an Ordinance like this, wouldn't there be an expectation that the property owner would upgrade the space? To say there's no air conditioning or heating is a reason it can't be retail after 70 years, is that really reasonable? Mr. Lait: There's no Code provision for that. I think that gets to their investment in the property, how attractive it is made to—how much money they want to put into a building that's that old to provide those kinds of amenities. I think the type of warehouse use that was there before didn't require probably heat or air the way that (crosstalk). Council Member DuBois: Not that we would require it, but it's not considered a taking if they can't rent it without it. It's up to them to improve it. Mr. Lait: There's nothing requiring them to install that, but there's also nothing prohibiting them from doing that either. Council Member DuBois: I am curious about—I'm glad the architect's here. I did watch 435 Portage, which was also a warehouse. It got raised up in the air. They put in parking underneath, and it got converted to an office. Did the City permit that project? They must have, right? Mr. Lait: I hope so, but I've not done the permit history research on that. Council Member DuBois: You can see there's a massive amount of parking there. Apparently there's parking across the street as well. Maybe this is a question for Genotti. I don't really see a lot of commercial retail space advertised in the Palo Alto Weekly. I don't know. That's not really a question, I guess. Marketing it there didn't seem to be a good place to put it. We did TRANSCRIPT Page 47 of 93 City Council Meeting Transcript: 11/06/17 build in exceptions to the Ordinance. I do think there are places to consider exceptions, but I do think we want more affordable retail. We're not looking for just Class A retail. It's like we talk about affordable housing; I think we need affordable retail. This is certainly Class B or Class C as it exists. I don't think that really is cause for an exception. We just passed a large housing project very close to this place. We just talked about the Fry's plan tonight. I think it's going to be a very attractive location for retail. There's retail on El Camino. There's Fry's there today. Looking at that list on Page 227, this is exactly the kind of more affordable retail. An art gallery, a brewing company, a Planet Granite, those would all be exciting additions, even Samsung as a retail showroom. Again, there's no air conditioning. I would think it would be worth air conditioning to land some of those kinds of tenants. I'd expect after 70 years that some improvements would be warranted. I'm also troubled a little bit—I remember the whole discussion about nonconforming retail. I'm troubled with the idea that we would not protect nonconforming retail, but we're protecting nonconforming office. It seems to go one direction, which is conversion of retail. I personally feel the bar needs to be pretty high. I think there are ways to get parking at this spot, but I would also argue that the findings in the ordinance we're not doing either of those. A, this is not an unconstitutional taking; and b, there's not been proposed an alternative viable use that promotes pedestrian activity. I just don't see it meeting those findings for an exception. I would make a Substitute Motion that we deny the Director's determination and that we would allow—this is a change—retail use or a warehouse use, but only those two uses. Mayor Scharff: Is there a second? Council Member Holman: I'll second. SUBSTITUTE MOTION: Council Member DuBois moved, seconded by Council Member Holman to modify the Director’s determination to allow retail, retail- like, or warehouse uses. Mayor Scharff: Second by Council Member Holman. Do you want to speak to your Motion? Council Member DuBois: Just to re-emphasize that if this truly wants to be a warehouse, I think we could allow it to be a warehouse. I think it's going to be an awesome location for retail. We just passed a really interesting mixed- use project with a lot of housing and office close by. What I don't want to see is that we grant the exception, it gets raised up in the air and converted into an office. That's why I added the ability to make it a warehouse as well. I do think we need to enforce our Retail Ordinance. TRANSCRIPT Page 48 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: I just want to ask Staff as a point of—if we're allowed to do this. This seems like we're granting the waiver but also saying you can do retail. Council Member DuBois: The difference is it's not the full CS use. Mayor Scharff: Right, it's not the full CS. I wasn't sure if we could do this under our Code. I'm just raising it before we go down this path. Mr. Lait: Let me just take a look here at the decision. The Code just sets forth the—this is a waiver or an adjustment. It allows the Director or Council on a hearing like this to either support the waiver request or an adjustment. I have some confusion as to the motion and whether it's allowing warehousing and retail. If that's the case, that's what they want. They want warehouse. Council Member DuBois: That's fine. Mr. Lait: It's not like a Conditional Use Permit that would run in perpetuity for the land. If they ever did want to redevelop the site, they would have … Mayor Scharff: They'd have to put ground-floor retail on it. Mr. Lait: They would have the requirements of the CS district to comply with. Council Member DuBois: That's why I'm saying deny the Director's determination, so it'd still be under the Retail Ordinance, but we'd allow an exception for warehouse. Mr. Lait: Okay. I think that's permissible. I think you can grant a waiver or an adjustment so that a warehouse use would be permissible, otherwise retail or retail-like. I think that'd be fine. I don't know what the applicant is saying behind me, but I think—with the … Mayor Scharff: I just wanted to make clarification with the Staff because I was watching the confused looks. I just wanted to make sure we were. Council Member Holman, would you like to speak to your second? Council Member Holman: Yeah. I think Council Member DuBois convinced me. I think he made some really good points and appreciate the adjustment aspect of this. Just to be clear with Staff, if this property were redeveloped, the Retail Ordinance would apply, but it would be adjusted so it could be either retail or warehouse. Staff's talking, so I don't know if they're going to hear the question. Mayor Scharff: Are you finished Council … TRANSCRIPT Page 49 of 93 City Council Meeting Transcript: 11/06/17 Council Member Holman: They were talking so they couldn't hear the question. Mr. Lait: I'm sorry. Council Member Holman: It's okay. I just want to be clear that if the property was redeveloped with this Motion at play, if they redeveloped, it would be governed by the Retail Preservation Ordinance except the retail component could be either retail or warehouse. That's, I think, the intention of this motion. Do we need to include that language in this Motion? Mr. Lait: I believe that is the intention. If there's any clarification needed, I'd certainly support that. What I'm hearing is the property would be subject to the Retail Preservation Ordinance with the exception that a warehouse use would be a permitted land use. Council Member Holman: Yeah. Perhaps we should, Council Member DuBois, clarify the Motion that this goes with a future redevelopment, should that happen. Mr. Lait: I'm sorry. With respect to the future redevelopment, though. Council Member Holman: That's what I was asking the question about. Mr. Lait: Yes, that's right. For future redevelopment, they would be subject to—I guess this is a question for the Council. If you want that same square footage that exists there now, which is some 8,000 square feet or so, to be incorporated in a future redevelopment, that would be captured under the Ordinance the way that it is today. They'd have to re-establish that or come back and ask for a waiver from that provision as well. We wouldn't require that typically for a warehouse use. You're saying, as I understand it, you're going to grant them a waiver to do warehouse there, but if they redevelop it, they still have to have some kind of retail or retail-like use in the redevelopment. Council Member Holman: It could be a combination retail and warehouse. Mr. Lait: I think that's within your purview certainly. Council Member Holman: Council Member DuBois, do you think we should … Council Member DuBois: I think Staff's pretty clear. I think it's fine the way it is. TRANSCRIPT Page 50 of 93 City Council Meeting Transcript: 11/06/17 Council Member Holman: What we send out there goes into the record. Our intentions go into the record. If you're okay with it the way it is and Staff's clear about future redevelopment given this Motion. Mr. Lait: It's clear in my mind what you're saying. I could restate it if there's a need for that. Council Member Holman: Maybe we'll just restate it for the record too. If the property should redevelop, the Retail Preservation Ordinance would apply with the adjustment that retail could also include warehouse use. Mr. Lait: Retail, retail-like, and warehouse would be permitted uses on any redevelopment. Without redevelopment, warehouse can be re-established on the site. Council Member Holman: Absolutely. That's clear. Mayor Scharff: Council Member Wolbach. Council Member Wolbach: Looking at this kind of catch 22. It is Kafkaesque if we don't allow them to establish retail in an area where we've required that they establish retail. The substitute motion is a reasonable adjustment, which is allowed under our Ordinance, that would allow another use of the site, which is more in keeping with what the site is. It's a warehouse. I will support the substitute motion. Mayor Scharff: I'm just going to speak briefly to it. I think it's an intriguing thing. I'm really concerned about the redevelopment aspects of this. 8,000 square feet is a large retail use frankly for that ground floor. If you were to redevelop the site, it's a small parcel. How much is it? Mr. Lait: I think it's 14,000. Mayor Scharff: 14,000. I'm just trying to figure out—I think what we're doing is without—what we're doing on the fly is we're saying we may be making it impossible to redevelop the site. We're about to push into a coordinated area plan. I think I heard people saying they wanted to include this site in the coordinated area plan. I think that's what I heard when we were doing that. I think I could support this with the exception of—it's too much ground-floor retail frankly to carry over into redevelopment. The problem is I hate to do this on the fly. I don't know what the right number of amount of retail would be. It really should be—how much frontage does this have? Vice Mayor Kniss: Frontage? Mayor Scharff: Frontage on the street. I can't … TRANSCRIPT Page 51 of 93 City Council Meeting Transcript: 11/06/17 Male: (inaudible) Mayor Scharff: That's what I thought. It seemed really … Even if you had a 100-foot back, which is a lot for retail, it's too big for retail to keep the whole retail on the site in a redevelopment. I would amend the motion that—I'll offer an amendment. If the site is redeveloped, we only require a reasonable amount of retail to be determined at that point. Council Member Wolbach: (inaudible) Mayor Scharff: The way this works, Cory—Staff was really clear. That's why Council Member Holman wanted to put it in the motion. Council Member DuBois said it's not necessary because Staff already understands it. This would apply to redevelopment. The more I think about it, I think I would just make an amendment that says if the site is redeveloped, the Retail Preservation Ordinance does not apply. Council Member DuBois: Can you explain that? We have a ground-floor Retail Preservation Ordinance, but if you redevelop a building it doesn't apply. Is that what you're saying? Mayor Scharff: Yes. I'm not so sure if we redevelop this site as part of the plan we're looking at—what did we call it? The specific plan that we're looking at. Are we really saying right now that you need 8,000 square feet of retail? I think it's way too much. Council Member DuBois: Why don't we just say that that's part of the specific plan process rather than to specify … Mayor Scharff: What if they want to redevelop it before that? Mr. Lait: Nothing would prevent the applicant from seeking another waiver request too. That's an option. Council Member Fine: I'll second this. AMENDMENT: Mayor Scharff moved, seconded by Council Member Fine that, if the site is redeveloped, the Retail Preservation Ordinance would not apply. Mayor Scharff: The Retail Preservation Ordinance … Before I do that, I'm going to actually hear from the applicant, what the applicant would like to— has some comments. I saw them come up. Mr. Smith: I think what you've proposed sounds great. It lets us lease the building today for what it is, a warehouse. If we're to develop it at some point in the future, then we're still going to have to come back to you with a project. TRANSCRIPT Page 52 of 93 City Council Meeting Transcript: 11/06/17 It's going to be hopefully something that's consistent with what the Fry's site has going on. It's going to be good for the whole area. We're totally open to that idea. Mayor Scharff: You're happy if I make that amendment. You're not happy with the Substitute Motion or are you happy with the Substitute Motion? Mr. Lund: We're not happy with the Substitute Motion. Like you said, we're locked in to probably not being able to redevelop this site because the retail size is too big. In my mind, it doesn't help adjust to what's happening around us. As you know, in the next 18 months you're going to be studying the Fry's site, studying what's going on there. If there's a new development that's coming from us, we need to make sure we're consistent with what's happening in the neighborhood. I like the amendment to the motion because that gives us and you flexibility in the future because we're going to have to come before you to present whatever it is the new development is. Mayor Scharff: I'll stick with my Amendment. Adrian, you want to speak to your second? Council Member Fine: Sure. I think the Amendment is somewhat helpful on a somewhat poor Substitute Motion overall. The nature of retail is changing around the world, and we're not going to get the retail we want by thinking about hypotheticals and overly legislating what we want in every single building. We can have hypotheticals about how many parking spots they should have and whether they can park in the garage across the street or not, about how big the frontage is, about whether they're going to redevelop or not. I think that's actually outside the discussion we're having tonight. Furthermore, I'd really just put the question to this Council, are we literally going to legislate the retail use of every single property across this City, because that's what we're doing with this point. We're trying to decide whether a 50-foot-wide building with 8,000 square feet and nine parking spots can support a brewery, a restaurant, a rock climbing gym, or a candy shop. I don't think any of us are smart enough to figure that out. That said, I think the Mayor's amendment does give the property owner some ability to use the site currently and in the future to redevelop it, which is one of their property rights. I'll be voting for the amendment and then voting against the substitute motion, and then hopefully we can move to the main motion and approve the Director's waiver. Mayor Scharff: Council Member Wolbach. Council Member Wolbach: I'm looking at the Substitute Motion, which I actually thought allowed us to give enough flexibility to the applicant to return to the use that they previously had, which we heard from Staff was what the TRANSCRIPT Page 53 of 93 City Council Meeting Transcript: 11/06/17 point of the waiver request was. This would then continue into the future. I also know that we're thinking about doing a coordinated area plan in the area, which might allow for something totally different. That's the point of coordinated area plans. I don't see this amendment as really necessary in order to achieve the goals we're looking for here. I don't think it's important at this point to dictate what will or won't be in something after it's been redeveloped. If it gets redeveloped, especially if there are new developments going on around the corner, if there's a coordinated area plan, there's more foot traffic in the area, there's more retail in the area. It is possible this will be a more viable site for retail in the future. I think the substitute motion gives the applicant the chance to return it to retail if they want to including if they redevelop it, they'll have the opportunity to keep it as retail or as a warehouse. I don't see the need for the amendment. I won't be supporting it, but I'll be open to persuasion if others or if the maker or seconder of the amendment want to help me understand why they think it's necessary. I'm sorry I'm not understanding it. Mayor Scharff: Council Member Kou. Council Member Kou: As I'm sitting over here, I'm starting to feel like we're customizing a use for this particular property with the Amendment, especially when do we have retail preservation. Yes, I hear Council Member Fine saying that retail is changing. However, we have an entire community over there that does need some sort of retail or community-serving type of business there. I would disagree with that. The waiver, Mr. Lait, just goes for now. My question is when it's redeveloped, the waiver still stands or does it go away and it changes back to CS zoning. Whatever they develop have to fall into the CS zone and retail still … Mayor Scharff: My Amendment makes it go back to CS zoning. That's the difference. That's what my Amendment does. Otherwise, what happens is the Retail Preservation Ordinance continues. When they redevelop the property, they have to do a warehouse or retail. No one redevelops a property to build a warehouse. They frankly don't. Council Member Kou: That's what I'm trying to understand. It goes back to CS zoning, and there's still the retail that has to be incorporated into this new building if they redevelop. Mr. Lait: Not based on the way the Amendment to the Substitute Motion is arranged. If redeveloped, they would just need to meet the requirements of the Zoning Code, which allows for a variety of uses. Council Member Kou: Say that again. TRANSCRIPT Page 54 of 93 City Council Meeting Transcript: 11/06/17 Mr. Lait: The applicant is requesting a waiver from the Retail Preservation Ordinance, which would make that Ordinance not apply to this property. Council Member Kou: It's for … Mr. Lait: It's for this specific property. Council Member Kou: It's for the current building … Mr. Lait: For the property, for 425. Council Member Kou: For the property as it is now. Mr. Lait: No. They're asking for a waiver. They want to be free of having to provide, retain retail or retail-like uses on the property. They're coming to the Council and they're saying, "We don't want the Retail Preservation Ordinance to apply to us," for these reasons that they've identified. That's the ask. The Motion on the floor is to grant that—the previous Motion. The substitute Motion is now saying—it says deny here, but I think we might want to talk about what that word is because it sounds like you are approving a waiver or an adjustment to allow warehousing to take place on the property. That would subject the property to the Retail Preservation Ordinance as the substitute motion was articulated. The amendment to the substitute motion now removes the application of the Retail Preservation Ordinance from the property. It grants the opportunity to go back to warehousing. It allows it to be retail. In redevelopment, it would not be required to retain the 8,000 square feet of warehouse or retail based on the motion that's on the floor right now. Council Member Kou: However, the Substitute Motion would not allow them during redevelopment to continue with their retail? Does the waiver carry on? Mr. Lait: If the Amendment fails and the Substitute Motion passes, the property owner would be subject to the Retail Preservation Ordinance but would have the opportunity to add warehouse and wholesale—that's the definition in the Code—to its list of uses. Basically you're granting one additional land use that could take place. Council Member Kou: In the CS zoning, does it require retail? If they redevelop and it falls back into CS, does it require retail on the first floor? Mr. Lait: There's a variety of uses that are required or permitted, I should say, permitted or conditionally permitted. If they want to do office, there's a set of other provisions that come in for office because replacing retail with office has some other standards. There are probably a number of alternatives TRANSCRIPT Page 55 of 93 City Council Meeting Transcript: 11/06/17 that could be developed. I don't know that I'm prepared to speak all the different ways the site could be redeveloped. Council Member Kou: I guess my main concern is that if we remove the Retail Preservation Ordinance under the amendment, when the applicant redevelops and the retail preservation is not there and they redevelop under the CS zoning, potentially they may not include the retail. Mr. Lait: That's correct. Council Member Kou: I got it. I have another question. In the Staff Report, Page 238, which was Council Member DuBois' questions back in August. Question Number 2, the response here says the subject property has three parking spaces located at the rear of the lot and available to 935 Portage. I guess you're meaning to say 435 Portage. Why would they … Mr. Lait: That's right. Council Member Kou: There are portions of parking spaces located on the subject property that are leased to other nearby tenants. Why would they be leasing it to nearby tenants? Mr. Lait: Thank you. The response does incorrectly put a nine where there should be a four on each of those examples. We're talking about the neighboring property. If we look at the screen, these are the three properties that are onsite today. These are the ones that have been through a private arrangement leased to 935, as I understand it, which is this property here. On one hand, I might have some concern with that, except that when you look at how many parking spaces could be provided on 925, you still end up with a net benefit of at least one space by this parking arrangement that they have here. It's kind of improved the conditions. Even if they give these three to an adjacent property owner, they're picking up these nine spaces here on that adjacent property. They're actually picking up a net space of one. They've got an agreement. For the details of that, you'd have to ask the property owner about the arrangement. From a planning standpoint, I was thinking about that. In the end, they're getting more parking spaces for 425 than they would have gotten otherwise. I didn't dwell to much more on that. Council Member Kou: If it's lacking parking spaces for retail, then having even the three that is leased to someone else just doesn't make sense. Mr. Lait: Right, except they're gaining by having these angled parking on 935. These angled parking spaces are on the adjacent property. They're not on 925; they're on 935. They're parking on the neighbor's side. I know it's a TRANSCRIPT Page 56 of 93 City Council Meeting Transcript: 11/06/17 little confusing. These angled spaces are all on 935 Portage. 925 has access to them. Council Member Kou: In the diagram that Council Member DuBois had shown—I forget what page it was. Mr. Lait: That does not reflect … Council Member Kou: That was the previous type of parking that they had, parallel parking, along their building? Mr. Lait: I have not observed it in that condition. Maybe the architect could speak to that prior arrangement. They actually gain a space with this layout as opposed to the one that the broker was using in their advertising. Council Member Kou: Just one more thing. Beth, could you put up the picture? The garage that Council Member Holman was talking about with the signs, I think that's one of the confusion I have too when I'm driving into the garage. There's a big sign in there that does say Portage Avenue parking facility with a mapping system. It specifically states—let me just have Beth put it up. Mr. Lait: Mayor, if I may while we're waiting for that to show up. To the maker of—to Council Member DuBois, on the substitute motion I'm wondering if that might want to tweak to some degree to say approve a waiver to allow retail, retail-like and warehouse uses. I think that's the category of uses that we're talking about. The Retail Preservation talks about retail and retail-like. The way it's drafted now would preclude a yoga studio or something like that. Council Member DuBois: (inaudible) Mr. Lait: Or modify the Director's determination to allow retail, retail-like, and warehouse uses. Council Member DuBois: Basically you're adding retail-like to the list. Mr. Lait: And changing the word "deny" to "modify" and adding retail-like. Council Member DuBois: As long as modify is clear that it's still under the Retail Ordinance. Mr. Lait: Right. Mayor Scharff: That's okay with the seconder? TRANSCRIPT Page 57 of 93 City Council Meeting Transcript: 11/06/17 Council Member Holman: Yeah. I think it's even clearer to say to deny the Director's determination but amend the retail requirement to include warehouse use. Mayor Scharff: I actually think it's less clear to me (inaudible) modify the Director's determination (inaudible). Council Member DuBois: I think I'm okay with the language Staff proposed. I actually had a comment on the Amendment if we're still talking about the Amendment. Council Member Holman: We need to get the language on the board right for the Substitute Motion. Mayor Scharff: (inaudible) Council Member Holman: We're back to where we were before, I think, as opposed to what Staff suggested. I'm good with that. Mayor Scharff: (inaudible) Council Member Kou: I was just asking about the signage under the Equinox parking lot. I think it states pretty clearly that 425 Portage, both Suites A and B, gets parking in there. I was just wondering how many parking spaces are in there for 425 Portage. Ms. Young: Council Member Kou, thank you for your question. Heather Young again. Thank you also for pointing out this sign. Council Member Holman, I'm assuming this is the sign you were referring to earlier? Council Member Holman: Yeah, that looks right. Ms. Young: Actually, I'm surprised to see that. That is a typo. It should be 455 Portage for those locations. I appreciate that this is very confusing. The properties on Portage were for many years owned by a single family, the Silva family. Five or 6 years ago, two of the properties on El Camino were exchanged with 425 Portage. It doesn't matter. This sign is not correct. 425 Portage as part of the 435 Portage development very clearly had its parking spaces for its warehouse use, which was only the eight parking spaces. As Assistant Planning Director Lait commented, to support the retail-like use that was not permitted by the City but being utilized, the property owner at 435 Portage agreed to the configuration of the parallel parking to support that retail component. The three parking spaces that you were talking about at the other end, that are on 425 Portage, are in fact four for 435 because the parallel spaces at 435 Portage were being utilized for 425 Portage. That Kafka TRANSCRIPT Page 58 of 93 City Council Meeting Transcript: 11/06/17 reference just gets worse and worse and worse. 425, 35, and 55 Portage were all built at the same time, and they've got a fire lane access issue. It's worse than you would want to know. Everyone's trying to do the right thing. I will talk to the owner of the garage; we'll get the sign corrected. There are only nine parking spaces associated with 425 Portage. Council Member Kou: You can see why it's so confusing. Ms. Young: I absolutely can see why. Council Member Kou: We've been looking at this lot and looking at the parking spaces, counting parking spaces, and then go into the garage and seeing—it's not just one sign. It's all over, all over the garage. Ms. Young: Thank you for bringing that to my attention. I will bring that to the owner's attention. Council Member Kou: Thank you for clarifying. Mr. Smith: Maybe we can ask the owner to give us ten more parking spaces. That would be great. Council Member DuBois: Go ahead. Mayor Scharff: Council Member DuBois. Council Member DuBois: I do think we need to get to the housing memo, probably the most important item of the night. What I heard from Staff was if they redevelop, they have to come to us anyway. They can ask for anything at that time. This seems really premature to remove retail today. If they have a redevelopment project, they can ask for a waiver. We aren't legislating per building. That's kind of the point of the Retail Ordinance. We have ground-floor protection to avoid legislating per building. I really think this amendment just nullifies the substitute motion. You just knock down the shed, and then there's no retail protection. I agree with where Council Member Wolbach started. It's just not really necessary at this time. It can happen if they redevelop. If they really want to do a warehouse today, they can do a warehouse, but we're encouraging retail. Mayor Scharff: I have two other lights. I have Council Members Fine and Holman. I'm happy to let you speak if you want. If you don't want to speak, I think we're pretty close to … Council Member Holman: Mine's an old light. TRANSCRIPT Page 59 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: Let's vote on the Amendment. That fails on a 5-4 Motion with Council Members Kniss, Scharff, Tanaka, and Fine voting yes. AMENDMENT FAILED: 4-5 Fine, Kniss, Scharff, Tanaka yes Mayor Scharff: Now, we get back to the Substitute Motion. Can we vote on the Substitute Motion? The Substitute Motion passes on a 6-3 basis with Council Members DuBois, Kou, Wolbach, Filseth, Tanaka, and Holman voting yes. That ends that item. Thank you. SUBSTITUTE MOTION PASSED: 6-3 Fine, Kniss, Scharff no 10. Adoption of Annual Amendments to the Employment Agreements Between the City of Palo Alto and Council Appointed Officers (City Manager, City Attorney, City Auditor and City Clerk). Mayor Scharff: The next item is Item Number 10. Do we have a Staff Report? Ed Shikada, Assistant City Manager: We don't have a report. Happy to respond to questions if the Council would like. Mayor Scharff: We have one public speaker then. Deb Goldee, if you'd like to come speak. Deb Goldee: Any time housing is on the agenda, I'm going to be here. Mayor Scharff: It's not housing. We're speaking on the City-Appointed Officers compensation. You can come speak to housing after that. Item 12, we are now on Item 12. Sorry, Item 10. I'm getting confused here. Item 10. I will move the recommended Motion. Vice Mayor Kniss: Second. MOTION: Mayor Scharff moved, seconded by Vice Mayor Kniss to approve and authorize the Mayor to execute the following contract amendments for Council Appointed Officers: A. Amendment Number Seven to Employment Agreement between the City of Palo Alto and James R. Keene; and B. Amendment Number Five to Employment Agreement between the City of Palo Alto and Molly S. Stump; and C. Amendment Number Three to Employment Agreement between the City of Palo Alto and Harriet M. Richardson; and D. Amendment Number Three to Employment Agreement between the City of Palo Alto and Beth D. Minor. TRANSCRIPT Page 60 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: There we go. Vice Mayor Kniss: Vote. Mayor Scharff: We're not going to vote just yet. I wanted to speak a little bit to this. I think there's some confusion in the community about it. I actually did get a bunch of emails on this. A couple of things I think are really important to say. First of all, the raises that are here are basically $55,000 total in the entire General Fund for all four employees. We have a policy at the moment, rightly or wrongly. The way it works is that all management employees, professionals, receive normally a COLA that they receive, which everybody gets. There are merit increases that occur. That merit increase is between 1 percent and 2 1/2 percent. Basically, we do a merit rating of our management professional employees. For instance, if you get a 5 rating, you tend to get a 2 1/2 percent increase, a 4 you get 1 1/2, a 3 meets expectations, you get a 1 percent. This is the way the management professional employees are compensated in Palo Alto. The way raises for our Council-Appointed Officers, the four that are before you, used to work is that they would automatically get the COLA, and then we would give a merit increase. We decided several years back to be much more transparent. By being much more transparent, you now see the entire thing, and our Council-Appointed Officers do not get a COLA anymore. They don't get an automatic raise. They have to come to the Council, and we evaluate them. We say to ourselves what should we give them. It's clearly very transparent. Before we made that change, you would have seen, for instance, instead of a 5 percent raise, you would have just seen a 2 1/2 percent raise. You wouldn't have seen the 5 percent raise. I think that was an important change to make. I think it shows the community what people are actually getting a raise on. Now, I do think it's really important to say that our Staff that we have is a really excellent Staff. Our Council-Appointed Officers are doing a great job. I think we all think that our City Manager, Jim Keene, is one of the best city managers in the country and does a great job. Likewise, I'd say our City Attorney Molly Stump is probably the premier city attorney in the entire Bay Area. I think they're doing a great job. I think Beth Minor, our Clerk, is also doing a fantastic job. I'm really proud of the way they're doing. Likewise with our Auditor. I think they've earned these raise. I think they totally deserve them. I am proud that we're giving these raises. I think it's really important that we as a City treat our employees fairly and the way you'd want to be treated as an employee. I think that's really important. If we don't act that way—I don't think people necessarily understand that. One of the other things we need to look at—I got a bunch of letters that say the Governor only makes $200,000. That may be true. Our police officers make more than that some of the time. In fact, a lot of the time our police officers make more than that. Salaries are what they are when we look at them and what the market is. It's always a TRANSCRIPT Page 61 of 93 City Council Meeting Transcript: 11/06/17 problem between retention, hiring people, and what the cost of labor in the Bay Area is. Our City Manager is not the highest paid city manager. Santa Clara just went out and is now paying their city manager—I forget the exact number, but I think it's like $337,000; whereas, our City Manager after this raise will only be making $313. I would say our City Manager is far better. I'll get in trouble for that, but that's probably true. I just wanted to say that I'm proud to support this. I'm proud of our Staff. I appreciate the efforts they've really put in. Vice Mayor Kniss. Vice Mayor Kniss: I would certainly underscore that. Perhaps the one other aspect of this we should mention is that we meet and spend a great deal of time evaluating our employees. This is not anything casual. We do an actual email exchange of information, and we did that during the summer. We come back and go over the performance year to year to year. It is as carefully thought out a process as we could use at the City. Just to reassure people, our employees—although, it sounds like a lot when it gets in the paper. I went back and did some research over the weekend. We're kind of in the middle of the pack. If anyone really is curious about it, I'd be pleased if they would Google it, Google the city managers. You'll see that we're hardly front and center. I'll be supporting this, especially since I seconded it. Mayor Scharff: Seeing no other lights, if you want to vote on the board. Council Member Tanaka. Council Member Tanaka: I acknowledge the work that Staff has done and what the CAOs have done. I understand the Mayor's and the Vice Mayor's perspective. We got an incredible outcry from the community. I don't know exactly how many letters, but it's a lot. It's a whole packet of letters. I didn't see a single letter in there that says this is great, do the increase. I think it's important to listen to the community. The community has spoken here that this is something which there's a lot of concern about in the City. I'm concerned because the community is concerned about this. The other thing is I was riding back from Silicon Valley@Home last week from the meeting I had with the Assembly Members. I was carpooling back with Lenny, who's on the City Council for Mountain View. I asked him how much did Mountain View give in terms of a raise. He said, "We didn't give any raises this year. We gave a raise last year. We don't give a raise every year, and this year we didn't give a raise." I said, "Really? We're giving a raise this year. Don't you give a raise every year?" He said, "No, we don't." I was actually surprised by that. I do have a question for Staff. I asked this to Staff before and never got an answer. It's a $50,000 increase in terms of today's dollars, in terms of budgetary dollars. What does that mean in terms of pensions going forward? It's not just what you pay today. It's also—correct me if I'm wrong. There's only one Staff member so I'm going to ask our Acting City Manager. TRANSCRIPT Page 62 of 93 City Council Meeting Transcript: 11/06/17 What does that mean in terms of—this money, this extra $50K, employees get a certain percentage of that, like 80 percent, 90 percent, some percentage of that for the rest of their life. Is that correct? Mr. Shikada: I think what you're perhaps referring to would be how that translates ultimately into a pension. Am I correct? Council Member Tanaka: Yeah. How much money are they—I think the $50,000 is deceiving because it's saying what you're getting for this budget year. It's not saying what you're going to get next year. You still get that 50K, so this year and next year that's $100K. If you get the pension, pensions you get for the rest of your life. Correct or your wife's life? Mr. Shikada: I understand that this question did come up previously. I wasn't directly involved. I do understand that the response was given back to the Council, so the Council did consider this as a part of their discussion. Council Member Tanaka: I never saw the response; that's why I'm asking now. Mr. Shikada: That was a part of Council discussion and part of Council's deliberation. That said, we're really not set up to be able to provide an individualized analysis of how that translates into an annuity going forward largely because it makes some assumptions of people's life expectancy post-retirement as well as choices they'll make at the time of retirement in terms of how survivorship benefits work and a number of other factors. Council Member Tanaka: Let's just do some simple math here. Let's say it's a $50,000 increase for all these employees. Let's say when they retire, they live for another 30 years, which is not unexpected these days because people do live a lot longer now. Let's say they get 90 percent of that. That's $45,000. Over 30 years, that'll be $1.3 million. What this is costing the City is not $50,000; it's $1.3 million. This $50,000 increase is a $1.3 million expense to the City. Mr. Shikada: Council Member, I think those assumptions are wildly extreme. Council Member Tanaka: Why don't you show me your assumptions? Mr. Shikada: Again, I have not gone through that math and am not prepared to do that this evening. I do, nonetheless, believe that the factors you just suggested are at the extreme. Council Member Tanaka: What would you change? TRANSCRIPT Page 63 of 93 City Council Meeting Transcript: 11/06/17 Mr. Shikada: Not prepared to get into the math on the spot. Again, it does make a number of demographic assumptions that are really both inappropriate at applying a categorical system to individuals as well as really getting into very specific, individualized, personal choices people make. Council Member Tanaka: The other concern I have is—the meeting that the Council discussed this, I actually really wanted to attend. I tried to call in, but both the City Attorney and the City Clerk basically said I couldn't attend this—couldn't call this meeting because it wasn't properly posted. That's another reason why I'm not supportive of this rate. I look at the community outcry on this. I look at how much it's going to cost us in the long term. I think it's excessive. Mayor Scharff: If we could vote on the board. That passes on an 8-1 Motion with Council Member Tanaka voting no. MOTION PASSED: 8-1 Tanaka no 11. Approval of a Contract With Nichols Consulting Engineers, Chtd. (NCE) in the Amount of $191,300 for the Sidewalk Assessment Study to Determine Next Steps Following the Completion of the Sidewalk District Cycle for Capital Improvements Program Project PO-89003 (Continued from October 23, 2017). Mayor Scharff: Now, we're on to my favorite subjects, sidewalks. Ed Shikada, Assistant City Manager: Brad, feel free to correct me if I'm incorrect. I believe basically this was originally agendized as a Consent Calendar item, and Council Members suggested this be pulled off Consent and brought forward for actions. Unless Staff wants to make a presentation, we'll just standby for any specific questions. Mayor Scharff: I will move that we—the Staff recommendation. MOTION: Mayor Scharff moved, seconded by Council Member DuBois to approve and authorize the City Manager or his designee to execute Contract No. C18168777 with Nichols Consulting Engineers, Chtd. (NCE) in an amount not-to-exceed $191,300 for the Sidewalk Assessment Study including $173,800 for basic services and $17,500 for additional services for the Sidewalk Assessment Study, Capital Improvement Program project PO- 89003. Mayor Scharff: Seconded by Council Member DuBois. I'm just briefly going to say I read the Staff Report. It seems pretty reasonable to me. If the TRANSCRIPT Page 64 of 93 City Council Meeting Transcript: 11/06/17 Council Members who pulled it want to talk about it, if not we could just vote. I'm not seeing any lights. Council Member Kou. Council Member Kou: I don't have any objections to this. It's just that there was a public member who had brought this up. Just trying to understand. If we go and have a new criteria, then is it going to—the sidewalks that were not inspected or were not surveyed from the 44 percent that has not been replaced, are we still going to go back and take care of those or are those going to be part of the new criteria in the survey so it's extended out and it's not fair then because certain neighborhoods had their sidewalks replaced where there's still portions that are not replaced? Brad Eggleston, Public Works Assistant Director: I have to say that the change that Mr. Borock pointed out, that was made to the standards, is so far back in the past that there was no one in the department with institutional memory of that. Really what we're trying to do at this point is do a survey of the City and assess what's really the best going forward. I would also say that I think those standards as applied in the field by our engineering Staff are somewhat subjective. We're not out there actually surveying the sidewalks for exact slopes. Another thing I'd add is even with whatever criteria we've been using, residents are very happy. We don't get phone calls of people saying, "You came through my neighborhood and repaired the sidewalks. Why didn't you repair this 1 inch lift?" That just doesn't happen. We're just trying to find the best path forward here and be as efficient as possible. Mr. Shikada: I was simply going to add that based on my experience with other cities, the City of Palo Alto really has the most proactive, aggressive sidewalk repair program, really unlike any other city that I'm aware of. It is extremely proactive and quite frankly very generous in taking responsibility for making the repairs that in many other cities are treated as private property owner responsibilities. As such, I think Palo Alto should really be proud of this program. Council Member Kou: Thank you. I just thought we need to keep your life exciting so you can come in at—what time is it right now—to answer this question. Mr. Eggleston: We appreciate that. Mayor Scharff: (inaudible) Council Member Holman: This Staff Report does help break out what the cost is for, what it's applied to on Page 3 of the Staff Report. I do have a question though. It says NCE will inspect 20 percent of each of the 23 sidewalk districts to identify types and locations of sidewalk distress … What that leads me to TRANSCRIPT Page 65 of 93 City Council Meeting Transcript: 11/06/17 is if they're doing 20 percent—this is going to sound like a disconnect. I walk around town, and I think our sidewalks are largely safe. I think the City Staff is pretty darn responsive when there is something turned in that's there's a safety issue here. I think the City's quite responsive to that. The complaint I've had for a very long time is that our sidewalks, both in residential and Downtown, are checkerboards. Here there's a piece of newer concrete, so it's almost white. Here's another piece of concrete, and it's gray. Here's another piece of concrete that's the older concrete so its tan. We have this hodgepodge, and … Mr. Shikada: We call it patina. Council Member Holman: That's not patina. That's not patina. The biggest example that causes me unhappiness is I go to Mountain View and walk down Castro. The street is seamless in terms of its color. It's all the same unless there is a particular treatment in front of a building. Our University Avenue has patches around a meter. It's got breaks here and different colors here and there. It's an embarrassment quite frankly. I don't know what you have to say about that, regarding this contract. I find it in the neighborhood streets as well. There's no consistency even within a neighborhood or within a block. I don't know what you have to say with that. I'm sorry to be so cranky about it, but it's just—can't help coming from a design background. It's a real annoyance to me. What can you say about that and how this is going to be different, if it is going to be different? Go from there. Mr. Eggleston: I guess I'd say that Holly Boyd, who's our senior engineer and who actually manages the sidewalk program, could speak to this in more detail than I can. We have specifications for the coloration of concrete that's used in the sidewalk work. Of course, that's addressing issues going forward. It's not the intent of this study to be analyzing the different colors or shades of sidewalk and making recommendations to replace sidewalk based on those factors. Council Member Holman: What I'm getting at is the replacements seem to be so small that they don't integrate with anything else. I could say we do have specifications for the concrete we use now, but it just exacerbates the inconsistency and disjointedness, if you will, in compatibility with the rest of the sidewalk that's already in place. Mr. Shikada: Council Member, I think ultimately it comes down to cost and the context of other priorities that the City has. Certainly it could be a follow- up discussion based on the order of magnitude costs that come back from the work that's ahead. I will tell you, though, as we look at a variety of other infrastructure needs throughout the City, we would in all likelihood be TRANSCRIPT Page 66 of 93 City Council Meeting Transcript: 11/06/17 recommending that the City's funds be placed elsewhere rather than extending the length of sidewalk that's replaced in order to maintain an aesthetic or perhaps to reduce the aesthetic contrast that we'll see on one sidewalk panel versus another. Council Member Holman: I can appreciate we all have to pick and choose and prioritize where we spend our monies. I do have the perspective—I don't think I'm alone in this—that we are not looked on favorably in terms of what our sidewalk conditions are. I'll leave it at that. I don't mean by condition meaning unsafe; I'm talking about the aesthetic. Mayor Scharff: If we could vote on the board. That passes unanimously. MOTION PASSED: 9-0 12. Colleagues' Memo Regarding Zoning Updates to Encourage Diverse Housing Near Jobs, Transit, and Services. Mayor Scharff: (inaudible) Colleagues' Memo. I actually have some public speakers. The way we typically do this is we allow one of the colleagues to introduce it; I go to the public; and then we come back. Council Member Fine. Council Member Fine: Thank you, Mr. Mayor, and thank you all for your time tonight. I'll just start off by talking a little bit about who I am and what I want and then what I'm hoping to get and hear from you all tonight. I'm a young Palo Altan. I'm a young Councilperson. I'm a young professional. I'm looking for solutions to our City's housing issues and also our regional housing issues. I also want this Council to respond to our community's number one concern, which is housing. We have heard it over and over and over again in many different ways, whether it's affordable housing, whether it's transit-oriented housing; whether it's rental housing. When I take a broad view of our City, I don't think we as a Council or previous Councils have done enough to respond to that. Tonight, I'm asking for your support to move this memo forward but to continue having a sustained conversation about how Palo Alto can be an inclusive, diverse, and multigenerational City. In this Colleagues' Memo, I'm glad to have the support of the Vice Mayor and Council Member Wolbach. Thank you very much for your ideas and for your support on this. We've heard loud and clear from the community that housing is a top priority. These proposals are focused on creating more below market rate and market rate housing in the least impactful areas, for example, near transit, jobs and services. This is the most environmentally and socially responsible way to add new housing. In no way does this proposal change the housing targets in our Comprehensive Plan or our Housing Element, but it does chart a path to begin producing new housing that is more affordable, less dependent on cars, and better positioned for our future. It's also responsive to the fact that our TRANSCRIPT Page 67 of 93 City Council Meeting Transcript: 11/06/17 community, to put it frankly, is fed up with office development. I want us to move away from more office development Downtown towards more housing. This Memo does allow the community, Staff, PTC, and this Council to have a discussion and weigh the various issues, which I'm asking us to look at. Parking, affordability, density, location, those are all tradeoffs we're going to have to make one way or the other, and I want us to begin balancing those and figuring out what are the costs, what are the benefits, and what are our responsibilities as a Council. This proposal does not change or circumvent the height limit or the public process, but it does include continued input from the community, PTC, Staff, and Council. We've begun to address some of the impacts of office growth. We've begun some serious work on transportation issues in this community. Now, it's time for us to start on housing. I believe this is a responsible and equitable approach to begin addressing our jobs/housing imbalance. Our community's been clear about this need to shift towards housing policy, and this Memo is a first step in that direction. I'm asking for your support. Mr. Mayor, I don't know if you'd like me to make a motion at the moment or wait until after public comment. Mayor Scharff: I will come back to you after public comment. We should listen to the public first. Council Member Fine: Thank you. Absolutely. Thank you very much. Mayor Scharff: Chris Robell to be followed by Deb Goldee. Chris Robell: Hi. My name is Chris Robell. Thank you, Council Members, for the opportunity to speak to you. I think we all acknowledge that there is certainly an imbalance between housing and jobs in the area. Clearly the assertion that more affordable housing makes sense is a logical conclusion. I would request that we look at a second goal as well, in addition to affordable housing. Specifically, in addition to the impacts of overflow parking and traffic that any policy might have, at least as important is the aesthetics, the streetscape, the community design, and what my daughter calls the overall charm of Palo Alto. I really don't think we want to lose that; that's what I call what makes Palo Alto special. I really think the Memo needs to include a balanced approach that considers both of these elements, affordable housing but preserving the community design elements that we have today. That can be done through two approaches. One is financially incenting. What Council Member Fine said is the BMR housing, the below market housing, encouraging that while discouraging and disincenting the office space activity. On the other hand, I don't think we need—it's clear we're not going to build our way out of this problem either. The balance would help, but on the other side I feel very strongly we should not be changing zoning or hasten the approval process as contemplated in the Memo for new developments. The impacts of any new TRANSCRIPT Page 68 of 93 City Council Meeting Transcript: 11/06/17 development are going to last for decades. We have to ask ourselves what city do we aspire to be? Mountain View between San Antonio on El Camino and Alma, the high rises and skyscrapers, do we want that? I don't think so. Do we want to be like Los Altos and Saratoga? I've been very involved benchmarking—what does Los Altos look like for zoning, what does Saratoga look like—with my home years ago. They're much more stringent than we are on terms of zoning and IR and even IR guidelines than we are. Benchmarking would help to some extent. We would look at those cities and say we do want to be like them. I do not think—I've talked to dozens of residents—we want to have in general bigger buildings, bigger footprints, larger FAR, floor area ratios, close setbacks like the grocery outlet, and taking a BMR unit and going right up to 50 feet when it otherwise would be something like 30 feet in an RM-40 or 30 zone. Lastly, hastening the approval process is something we should be really cautious about and not pursue without continuing the IR process and, if anything bolstering that. My finally point. I really want to make sure that we have community involvement. That's absolutely critical. This is something we'll live with for decades, the buildings that we would have. Before any action is taken, I actually think a vote amongst the community, if there is something as extreme as a zoning change, given that this is going to last for decades. Thank you very much. Mayor Scharff: Thank you. Deb Goldee to be followed by Stephen Levy. Deb Goldee: I do not want Palo Alto to look like Los Altos or Saratoga. They're bedroom communities. I like vibrant communities that are full of intelligence and culture. That's what I would like Palo Alto to be. I am here and I'll speak on any—any time housing is on the agenda, you'll see me. I've been here for 54 years. To say what's happened with Palo Alto being irresponsible in terms of creating housing for people is beyond appalling. I would like to encourage you to do everything you can. You guys are way behind on this issue. Thank you. Mayor Scharff: Thank you. Stephen Levy to be followed by Jeff Levinsky. Stephen Levy: I was at your January Retreat and so pleased—I too have been here for 54 years—to hear that housing is a priority. I speak in support of the exploration. It's way too soon to be debating what the exploration will find. I'm a member of Silicon Valley@Home and of Leslie's Kitchen Cabinet. I speak in support of the letter you received from Pilar on behalf of our region's premier affordable and middle income housing organization. I'm a member of the League of Women Voters' Board and speak in support of the letter you got from our Board in support of the exploration that the three Council Members have put forth. I'm a member of Palo Alto Forward and certainly speak in favor and support of the more than 250 petitioners that Eric and TRANSCRIPT Page 69 of 93 City Council Meeting Transcript: 11/06/17 Sandra brought before you from north and south, old and young, renters which was something missing on the CAC that I served, of different income, affluent and more challenged. I certainly hope that we don't judge the answers tonight but that we proceed with the exploration. The issues that the three Council Members brought forward are exactly the issues being discussed by the committee to house the Bay Area, CASA. They're right in the mainstream of thought. I don't know where we're going to end up, but we need for the Staff and the community to be able to discuss the options that make your priority at the January Retreat real. We can't do that without exploring all of the issues that Council Members Fine, Kniss, and Wolbach brought forward. I speak in support of the motion to explore those issues. Mayor Scharff: Jeff Levinsky to be followed by Grant Dasher. Jeff Levinsky: Good evening, Mayor Scharff and Council Members. Many of us have been asking for serious action to address the jobs/housing imbalance, and the Colleagues' Memo looks in the right direction. I hope you will strengthen it considerably so that it's likely to deliver real progress. First, there's great skepticism that providing incentives to developers will lower home prices $1. It's not a matter of supply and demand because it's one of the most desirable communities in the country. Demand grows here just as fast as the supply. Please require that any new benefits that the City offers developers are tied to actual reductions in rents and purchase prices. Otherwise, this is just an unfortunate waste of time and will only further enrich developers without making real progress. Similarly, few in Palo Alto believe reduced parking will work. We have enough under-parked offices, apartment buildings, and shopping centers already. To create yet more under-parked buildings with no demonstrated way to protect nearby streets is simply wrong. There has yet to be any project in Palo Alto I'm aware of whose parking is adequately monitored. The Mayor's letter regarding the Stanford GUP even acknowledges this, pointing out that Stanford despite claiming to minimize car usage just has its employees and students parking in our own neighborhoods, and they don't appear in the campus car counts. It does no good to say, "Residents won't need cars; they can use transit," when Caltrain is already at capacity and expected to remain so even after scheduled improvements. Finally, every time you allow more offices to go up, you make the job/housing imbalance worse. A majority of you unfortunately voted to relax the office cap when instead you could have redirected office growth to housing. Look around the City at the incredible lost opportunities. The large new Visa building on Sherman could have been all residential. Everything else on that block is, so why not it? The Bank of America being torn down on El Camino could have been replaced by residences and some retail, which is what is already next door to it. Instead, we keep building more offices year after year after year. Every new office building in Palo Alto is a lost opportunity for TRANSCRIPT Page 70 of 93 City Council Meeting Transcript: 11/06/17 housing. The Colleagues' Memo is a step, but it's a small step. It ignores the major policy shifts that could make a true difference. Please roll up your sleeves and insist new incentives truly produce lower housing prices rather than higher developer profits; that parking reductions only occur when monitoring is in place; and that we stop building offices when what we need are homes. Thank you. Mayor Scharff: Grant Dasher to be followed by Stephanie Munoz. Grant Dasher: Hi. I'll be brief tonight. I think there will be plenty of opportunities to talk about this. I want to say that I personally support everything in the Colleagues' Memo. As I understand it, it's really important that we address this issue. There will be lots of opportunity to debate the details going forward. The point I wanted to make is one that I don't think has been mentioned enough in these housing debates, which seems to look at everything in isolation. There's this argument that's often made around supply and demand not applying because demand is infinite in Palo Alto. I'm sure that demand is very strong in Palo Alto, but this is a regional problem. It's not a local problem. If we build units in Palo Alto that shift people from Menlo Park to Palo Alto, even if it doesn't make it affordable for a teacher to live in Palo Alto, maybe it makes them affordable for them to move from Fremont to East Palo Alto. If you look at the issue regionally, you can reduce the traffic impacts of people having to move around the Bay Area by building housing even if it's not directly immediately affordable to someone who's trying to be a service worker in Palo Alto. I really hope as we go into a detailed housing process some of our analysis looks at the issue regionally so we can understand that we're part of a much bigger community. People commute all over this community. If we view everything in a little isolated sandbox, we're never going to be able to make effective housing policy decisions. I'll obviously be up here a lot more times in the future talking around details, around specific policies and stuff, but I'm very excited to see this community stepping forward into this housing issue more substantially. I look forward to seeing what's happening. Thank you so much for everyone prioritizing this issue regardless of your policy views. Mayor Scharff: Stephanie Munoz to be followed by Bob Moss. Stephanie Munoz: Good evening, Council Members, Mayor Scharff. Basically I agree with Jeff Levinsky that we have too many offices for the number of houses we have. Unless you will enlist the help of the people who want to put the offices up and building houses where there are workers, you can't succeed. I think there is room for some under-parked residences, if you had them specially restricted to elderly seniors who are not allowed to drive and you cluster them in hotel-like buildings in which people would have a private room TRANSCRIPT Page 71 of 93 City Council Meeting Transcript: 11/06/17 and bath and other co-housing facilities like a pool table and hot tub and a proper kitchen, especially if you have it combined with something like subsidized Federal lunch program like La Comida. That would be really ideal. Of course, it would have to be on a car line or something, or you could possibly have a shuttle. The best would be a car line. Your main problem is the space. There just isn't that much space. I believe you have to be realistic. Sure, you're going to get some points for trying. That's nice. You have to acknowledge that people are helping themselves. If they are going to be housed in a car, help them be housed in a car. Make a place for the car to be like nighttime in the garages. Put in showers and things. I don't see that there's a place for everybody that is not housed now to be in a single-family home or even in a 600-square-foot apartment building. If people have a home in an RV, make a place for that RV or in whatever, a packing crate. Help them help themselves. We do have a capitalistic economy. The money, I don't think, is going to come from Washington to build all the actual apartment and houses that you want to have. You've got to keep—especially women, you have got to keep people out of the cold at night. You've just got to do it. Thanks. Thank you. Bob Moss: Thank you, Mayor Scharff and Council Members. We've been agonizing about the jobs/housing imbalance for decades. This is not news. You may not be aware of it, but 40 years ago the jobs/housing ratio was 3:1. We survived. The problem is not building more housing per se; it's building affordable housing. Housing in Palo Alto, the median housing price is the highest in the country for any city that has both housing and commercial properties. Over $2.6, approaching $2.7 million per house. The problem is how do we make them affordable. One of the problems is we don't have very much space to build on. There's an old saying: buy land, they ain't making any more of it. I can count something like five vacant sites for multifamily housing in Palo Alto. We have a fundamental problem that the developers are not using the resources they could. For example, it's legal—it's been legal for at least 30 years—to build housing on the upper floors in retail zones, for example along El Camino. I can think of perhaps five sites along El Camino from Adobe Creek to Page Mill that have been redeveloped with housing on upper floors in the last 30 years. The rest of the properties are just sitting there. If we really want more housing built, what we should be doing is concentrating on requiring housing on the upper floors in retail zones along El Camino, California Avenue, Downtown. How do we do that? I'm not sure what the best of way of leveraging our resources are. I think that's something we should be looking at very closely. Maybe we can put in some sort of penalty for people who have the opportunity to develop housing in the upper floors and don't do it over a period of time. I don't know how that would work, and I don't know if we'd have legal problems doing it. It ought to be something we could consider. Another possibility would be giving—if somebody comes TRANSCRIPT Page 72 of 93 City Council Meeting Transcript: 11/06/17 in with significant amounts of housing, especially low income housing, give them a 5 or 10 percent density bonus or reduce their costs, reduce their rates of paying something to the City. Without having something active, if you just sit there and wait for the developers to come up and do it, nothing's going to happen. We have to figure out some way of making it work. I'll be honest; I can't give you an answer that I think is really going to be successful. I can just give you suggestions we can try. Mayor Scharff: Thank you. Now, we return to Council. Council Member Fine. Council Member Fine: Thank you, Mr. Mayor. Happy to answer questions or comments from colleagues. For the time being, I'll just put a Motion out there. It's roughly the first sentence of the recommendation. Beth, I think I sent it to you a little bit earlier. It's quite short. I'm just asking my colleagues to recommend that we refer this Memo to Staff to return to Council with a work plan outlining the process, priorities, and Staff resources to study and implement the proposals listed in the discussion section and other relevant recommendations to support the objectives. Council Member Wolbach: Second. MOTION: Council Member Fine moved, seconded by Council Member Wolbach to recommend our colleagues refer this memo to Staff to return to Council with a Work Plan outlining the process, priorities, and Staff resources to study and implement the proposals listed in the Discussion Section (and other relevant recommendations to support the Objectives). Mayor Scharff: Would you like to speak to your Motion? Council Member Fine: Thank you, Council Member Wolbach. I understand there are some issues in here that may be contentious going forward, things like parking, things like new density. We should have those discussions. For the time being, what I'm asking is for us to direct Staff just to work out a work plan that we'll be able to list the issues, prioritize them, and let us know what are the different balance points, what are the different resources we'll have to commit to these various issues, whether it is looking at expanding something like pedestrian/transit-oriented development zone, whether it is looking at car-lite housing or parking maximums and minimums, whether it is looking at increased housing floor area ratio to support more housing Downtown. This is just a start. I expect each and every one of those issues to have a fruitful discussion on this Council. I think it's about time for us to step up to the plate. I'd really appreciate all of your support for this. Mayor Scharff: Council Member Wolbach. TRANSCRIPT Page 73 of 93 City Council Meeting Transcript: 11/06/17 Council Member Wolbach: First, I actually just want to respond to some of the comments that I've heard about this, some of the concerns people have raised. They're legitimate concerns. I'm glad people have raised them. I just want to point out a couple of things. I'm just going through these. First, people have raised concerns about parking and parking impacts. Actually what we're trying to do here is look for ways that the new housing that will be added in Palo Alto can have the least parking impact, the least car impact rather than more car impact. That's what we're trying to do. That's why we're trying to start a conversation about how we get there. On questions of the process, we are not proposing eliminating any public process. We're proposing getting rid of our Architectural Review or anything like that. When it comes to the question of affordability, we are really just looking to steer future housing towards the low to mid-range instead of just the highest of the high range, which is what we've been seeing a lot of new housing unfortunately. As far as the amount, because some people have seen this as an attempt to add lots and lots of new housing in Palo Alto, those battles have been fought. We are about to wrap up our Comprehensive Plan. The amount of housing that we're going to be adding in Palo Alto between now and 2030 is less than 5,000 units. This is really just a question of what kind of units do we want those to be. Do we want them to be big? Do we want them to be super expensive? Do we want them to bring a lot of cars or do we want them to be more reasonably priced, more reasonably sized, and ideally have less of a parking and traffic impact? On questions of the schools, although smaller units may still produce some students, they're less likely to produce as many students as larger units. Of course, there's nothing in here that says we should reduce our school impact fees or anything like that. Regarding the 50- foot height limit, we are very careful to not suggest changing the City-wide height limit. There is nothing about changing that in this Memo. As far as aesthetics, no proposed changes. I have heard it said that—even one speaker tonight did say we're not going to build our way out of this problem, but that's exactly what we need to do. Just like climate change, we're never going to address it unless everybody teams together to reduce carbon output. We're never going to solve the housing crisis in urban areas of this country, including the Bay Area, unless cities ban together to produce more housing. Yes, address the other side of the balance. That's why we've instituted a very rigorous office cap. That's why we have the highest affordable housing impact fees in the region on new office development. Some people think we should do more. We're not trying to be radical here. We're trying to just present some of the things that have talked about in urban planning studies and in our community, things we've talked about and heard from people in the community. We're just trying to move forward some of those discussions including some that are contemplated in the Comprehensive Plan. I did like Bob Moss' ideas. I just want to make a couple of other comments. I do want to point out a couple of specific things that are in the Memo for those who TRANSCRIPT Page 74 of 93 City Council Meeting Transcript: 11/06/17 haven't had a chance to read it. Besides talking about floor area ratio and exploring how we can be more flexible on parking and the number of units per acre, there's a whole section on increasing affordable housing, actually below market rate housing. There's a suggestion that we implement a no net loss policy so that when housing is redeveloped we can preserve nonconforming cottage clusters and prevent loss of existing housing. I know that Council Member Holman has raised this as a concern many times. I share that concern, and we made sure to include that in this Memo. A lot of us have talked about wanting to see what Mr. Moss was talking about, more retail on the ground floor with housing above it. We're specifically calling that out as something we want to explore here and encourage and find ways to encourage more of that or even maybe require it. There's a call out also to move forward with implementing some of the housing ideas that have been contemplated in the Comprehensive Plan. Beyond that, we're also open to other ideas that our colleagues, that the PTC, that the community has. We really are just trying to move this forward. Just to kind of reiterate—actually a couple of other things. Mountain View is looking to add at least three or four times as much housing in the next few years compared to what Palo Alto's adding. They're not that much bigger than us right now. We are not proposing changing our plan. Again, we've fought those battles. We've worked out a compromise. We're going to add less than 5,000 housing units. This is really just about figuring out the details of our plan. We're not changing our plan; we're just figuring out the details and figuring out what kind of housing we're going to add. This is really about looking at some of our existing policies that seem to encourage development of offices and luxury housing at the highest end of the market range that happen to be accompanied by a lot of cars. We think the proposals in this Memo open a conversation about which of those policies we might want to tweak so that we can encourage more below market rate and reasonably priced market rate housing and fewer cars. The questions we should think about are: do we want more offices or more housing; do we want only ultra-high-end housing or a more diverse mix with more below market rate in particular; and also do we want new housing to encourage people to drive or instead should our zoning encourage people to walk, bike, and take transit. Mayor Scharff: Council Member DuBois. Council Member DuBois: Thanks. There's a lot to like here. I support the Memo. I think you guys identified many of the issues. It's a good list. I do have one big issue with it, though. I don't think it goes far enough, and I'm serious. I think you left out some important considerations. It's perhaps a mirror opposite of the housing Memo we discussed a few weeks ago. It focuses just a little too much on just new development without as much consideration for existing residents. Some of the items in your Memo are TRANSCRIPT Page 75 of 93 City Council Meeting Transcript: 11/06/17 already in our new Comp Plan. Like you said, we've talked about a lot of them. We've talked about changing mixed use to retail/residential, maybe conversion of some office FAR to housing. I thought some of the ideas are vague, and I appreciate that you're asking for a work plan. I would hope that we could start to use more data in our decisions. That's where the community gets hung up sometimes. Ideas around more FAR, the question is going to be how much and where. Car lite, how lite and where, and how's that going to interact with RPPs. I think that's going to be an important discussion. Allowing additional height, it's going to be the same question, how much and where. I don't see any Planning Staff here right now, so I'm not sure if our comments will get incorporated. In the work plan, I'll be looking for data to define things like more affordable housing. Ideally, we could do that in terms of average income, similar to the way below market is defined. We need real data on car usage. We hear a lot of anecdotal stories about people using less cars. Hopefully we can see that in some data. We need real data on parking behaviors in suburbs like Palo Alto. The public speaker's comment about benchmarking is useful too. We've had a discussion about community indicators. Again, that's what the community's trying to get to. Let's try some of these things, but let's measure it, let's see how it's going. I do think when Staff comes back with the work plan, we should see—we're going to have a discussion about all these new State laws. We really need to understand the interaction of the State laws. Council needs to answer the policy questions before we send it to our Boards and Commissions. There's a role here for the PTC. There's a role for the ARB, depending on the programs. I am going to propose some amendments. The biggest change I want to suggest is that we think about a few programs that keeps existing housing used as housing. I've said this before; I think some of you have heard. I really think it needs to be added to the list. You're talking about a work plan that would be prioritized. What's missing from the list is discussion about Airbnb and short-term rentals. Again, it's equivalent probably to the largest housing project we would do, probably larger than the Fry's site if we address it properly. We should consider incentives to avoid empty houses. These are existing houses that are just not being used. We need to consider renter protections to protect against a 50-percent rent hike. We should talk about things like mediation. These are just important aspects that would balance it out a little bit. When we had that discussion a couple of weeks ago, I think Council Member Wolbach talked a bit about the idea of renter protections being part of the picture. Mayor Scharff: Renter protections are not agendized tonight. They were agendized a few weeks ago, and we voted on that. Council Member DuBois: Council needs to evaluate the priorities and the work plan when it comes back to us and the timeframe for these initiatives. I want to propose some separate amendments for the makers to consider as friendly TRANSCRIPT Page 76 of 93 City Council Meeting Transcript: 11/06/17 amendments. I'm going to do them individually so you can pick and choose. I would include—Motion 1 is to include consideration in the work plan of a short-term rental Ordinance. Council Member Fine: One of the things we've tried to do in here is explore, scope, things like that. I think you make a good point. At a high level, yes, you're right this is focused more on the future growth of the City in a way. We haven't focused quite as much on existing or (inaudible) long time. I would be willing to accept something to explore the scope of Airbnb incidences and ghost houses, to use that term. I think that's absolutely acceptable. Council Member DuBois: That was my second Amendment. I was going to do it separately. It would come back to be discussed as a relative priority with the other items, but to explore a short-term rental Ordinance and to explore incentives to minimize empty houses. Council Member Fine: I would accept those two. I want to see it written out. Council Member Wolbach: I just want to see it written down. Council Member Fine: Just one quick question. I think we do have a short- term rental Ordinance, no less than 30 days. Molly Stump, City Attorney: That's our existing—it's the distinction between a business. A hotel is 30 days and under. Our existing Zoning Code does not allow operation of a business, except very limited home business, in the residential zones. We have interpreted our Code to not allow short-term rentals. Council Member Fine: Does that mean Airbnb is illegal? Ms. Stump: We respond to complaints and do Code enforcement actions. In the R-1 neighborhoods, short-term rentals are not legal. Council Member Fine: Council Member DuBois, I'm wondering if you can be a little more specific about what you want out of a short-term rental Ordinance. Council Member DuBois: I think we've discussed it with Staff in the past. I've discussed it with Molly. There are a lot of other cities that have policies about owner-occupied rentals and periods of time. There's certainly a lot of it going on. We just aren't able to enforce the current situation. Ms. Stump: As we understand it, the Planning Department would be able to include this in one topic that they'd be able to describe to the Council, the length of time and the Staff required to have this conversation with the Council and with the community. It is a community outreach discussion about if we TRANSCRIPT Page 77 of 93 City Council Meeting Transcript: 11/06/17 were going to have a different types of regulation, would we want to have a complete prohibition, allow it entirely, or do what many communities have done, which is define certain types of activities that are permissible and others that are not. Council Member Fine: I think that's fair. It may be to strengthen some of the rules we have. Council Member DuBois: The third one—I left it purposely vague—would be to also explore increased renter protections. Council Member Fine: That, I'll just tell you flat out at the moment, I won't be willing to accept. As the Mayor mentioned, we did have that discussion. As I said at that meeting, it may be something we should come back to. It's such a big topic, it should be a separate Memo. Council Member DuBois: Appreciate that. There are lot of big topics on this list, so I don't think that's necessarily a fair criticism. Council Member Wolbach: Can I actually weigh in on this? Mayor Scharff: He said no. He said no, you can't. Council Member Wolbach: (inaudible) Council Member Fine: I said yes to the first amendment there. Mayor Scharff: You haven't said yes to the first amendment. Is that it? Council Member Wolbach: Yeah. I was just going to suggest that each of those would add a lot to what's already going to be a long work plan. I think they're all worth having conversations about. They should be moved in a separate Memo. I might be very supportive of that. I don't think they need to be added to this Memo. Mayor Scharff: You're not accepting any of them? Council Member Wolbach: I'm not accepting any of them as part of this Memo but would be interested in discussions as appropriate for those. Council Member Holman: I would second. Council Member DuBois: Second which one? Council Member Holman: I would second the Amendments. You have two of Amendments up there. TRANSCRIPT Page 78 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: You can't make two Amendments at the same time. You could put them in one Amendment. Council Member DuBois: No, I'd like to do the first one. I'd like to maybe come back and make a second Amendment. Council Member Holman: I would second the first amendment, but I would like one word changed please. That is to change "exploration of short-term rental Ordinance and incentives to minimize empty houses" to "means to minimize empty houses." Council Member DuBois: Say that again. Council Member Holman: Change the word "incentives" to "means to minimize." Council Member DuBois: I just have a question. If I move this, Council Member Fine, are you still accepting it, would you be the second? Council Member Fine: I would rather have Council Member Holman be the second at the moment. I want to hear from my colleagues. Council Member DuBois: That's fine. AMENDMENT: Council Member DuBois moved, seconded by Council Member Holman to include in the Work Plan exploration of a short term rental Ordinance and means to minimize empty houses. Mayor Scharff: Would you like to speak further to that Amendment? It doesn't mean you have to. Council Member DuBois: I'm going to speak shortly. To Council Member Wolbach's concerns, it's a very long work list. I think the idea is for Staff to come back with a work plan and priorities. There's an opportunity to say this should be considered, but maybe it's not top of the list. I would rather see the comprehensive look. I think it would be nice to look at all these housing things in a work plan. Mayor Scharff: Council Member Holman. Council Member Holman: Just briefly to the Memo itself and then I'll have some other comments later. Just to the Memo itself, there are a lot of things here to support. I have one or two concerns about it. There is so much in the Memo that we either need to focus or we need to be inclusive. We need to go one way or the other. I mean this respectfully. With the laundry list that's in the Memo, we're going to come back with a plan and going to TRANSCRIPT Page 79 of 93 City Council Meeting Transcript: 11/06/17 prioritize those. With the things that are left out, such as short-term rental Ordinance and addressing the ghost houses that are often referred to, it's really missing a huge aspect of what the community wants addressed and how we can make housing that exists be used as housing. If we want to have something that's popular and addresses the breadth of issues that the community is concerned about and can get behind, it's really important to include these things. Mayor Scharff: I'm going to speak briefly to the Amendment. This Memo does have a lot of things in it. One of the things I liked about the original motion is it's going to come back with the Staff prioritization, Staff use of resources. I don't view this meeting as one where we throw in everything and the kitchen sink. I appreciate Council Member Wolbach focusing. I actually agree with Council Member Holman that focusing in is probably the right thing. That's what Council Member Fine and Council Member Wolbach are doing. What they have put down is a bunch of items. They've asked Staff to review those items. Staff can come back and say some of these items are going to move the needle, some may not, some are going to take a lot of Staff resources, some are low-hanging fruit. All of that is really useful. I will not be supporting this. It's not that I don't think we need to actually have the discussion on Airbnb. I think we do. I also think there's a bunch of stuff that is in the Comprehensive Plan itself. If you all remember, there is now a list of work plan items that we probably need to do too. Staff is planning on coming back with those additional as well. We don't want to have a long laundry list of items like we do in the Comp Plan that don't get done. What we want to do is focus in. Council Member Wolbach and Fine have made a number of important suggestions. I will not be supporting this amendment. Let's see. Vice Mayor Kniss. One other thing before I leave this, we do have time on tomorrow night's schedule. This is an important topic. I think we should go to maybe 11:30, maybe midnight. Vice Mayor Kniss: I'm not staying 'til midnight. Mayor Scharff: I'm just trying to say I don't want to cut the conversation off, but we do have an opportunity to not stay here all night. I'm thinking if we're going to have 12 Amendments that we're now going to vote on. Vice Mayor Kniss. Vice Mayor Kniss: What I think is really important—Tom, I admire your reaching out to look at the short-term rental Ordinance, which is one we've discussed at least twice before. The means to minimize empty houses is really complicated. Some cities have taken it up. They've figured out how to do it. There have been fines and so forth. I think that's a very complicated one. Both of these should be looked at but not in light of what we've suggested TRANSCRIPT Page 80 of 93 City Council Meeting Transcript: 11/06/17 tonight. That looks at housing in such a different way, both the short-term rentals, which means the house is already there, and to minimize empty houses again means the house is already there. I see this as moving more toward creating housing, which is, to take this back a year, what everyone who ran last year promised was housing. It was not one person that didn't— not only that it was called affordable housing. Maybe each one of us means something different by affordable housing, but I see this memo as really going after affordable housing and looking at ways that we can deal with special populations in our community, whether it's workforce or seniors or whomever it might be. We need to look at what the needs are of the whole community, and they differ pretty dramatically. We've talked for years about trying to get near transit. We've tried it; it hasn't been very successful. That's an area I'd particularly like to see. Good amendment, but I hope it comes back in another forum because I can't support it in this forum, with this Memo. Mayor Scharff: I guess we're all talking to the Amendment. Council Member Wolbach. Council Member Wolbach: Now that we've got the Amendment in front of us, I'll speak to it briefly. Right now Airbnb is illegal in Palo Alto. The only thing a short-term rental ordinance would do is maybe make it easier to have Airbnb than currently. Back in 2015, we had our first Council discussion about short- term rentals like Airbnb. We asked Staff to come back the next year. We never had that conversation. I would like to see that conversation come back. That is not really the focus of this Memo. I don't think it needs to be here. I don't think it'll add any more housing to Palo Alto, to make it easier for people to have Airbnbs. As far as means to minimize empty houses, that's really important, and I will support that. I don't think it needs to be in this Memo also. I again would probably support a Colleagues' Memo that brought that forward. Mayor Scharff: Council Member Fine. Council Member Fine: No, I guess I'll just concur with my other co-authors on this and not support the Amendment. Mayor Scharff: Let's vote on the board on the Amendment. The Amendment fails on a 5-4 vote. AMENDMENT FAILED: 4-5 DuBois, Filseth, Holman, Kou yes Mayor Scharff: Council Member DuBois, you still have the floor. Council Member DuBois: I think I'm done. TRANSCRIPT Page 81 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: Council Member Holman. Council Member Holman: I'm a little flummoxed because I'm not understanding how, if we're looking at housing issues—just briefly. If we're looking at housing, why we would want a separate Colleagues' Memo to bring forward these other housing issues. It seems like if we're looking at housing, we should be looking at housing. I'm a little frustrated by that. There's something else that—I was thinking about this. The Memo really got me to thinking about something as have the Comp Plan discussions of late. There's a lot of use of the term "more affordable market rate housing." I have no idea what that means. I have no idea how that would be accomplished. There's nothing by definition that satisfies that. I started thinking about something that I'd like you to try on for size. Staff will think about this and come back with something, hoping that you all will accept it. Think about housing that really is affordable and yet market rate, but has some constraints to it so that it makes it more affordable. Small doesn't necessarily equate to affordable. We have demonstrated—I think Council Member Filseth said recently that a one-bedroom new unit in Mountain View is $3,000. That's pretty stiff. Imagine what a two-bedroom rents for. I was thinking about how we identify BMR housing. If it's not BMR, it's market rate. There's just no getting around that. The BMR levels, whether it's low income, really low income, moderate, whatever, they're based on a percentage of AMI, average monthly income in Santa Clara County. If we're going to change some of the zoning to convert office FAR to housing FAR, what if we asked Staff to look at how we could require units to be 120—I should say one more thing. The moderate income is 80-100 percent of the AMI. What if we had Staff investigate how we could get units created that are 120-160 percent of AMI? They wouldn't literally be BMR units. They wouldn't satisfy that definition, but we would have some way of quantifying what they would market for, if you will. That way we might be able to put some parameters around market, affordable, housing to address the needs of our middle income and work-class housing. I'm going to ask for an Amendment to evaluate developing a predictable affordable market rate standard such as 120-160 percent of Santa Clara County AMI. I look to the maker. Council Member Fine: I agree with you that we do use the term "more affordable market rate housing," and it is confusing. I disagree that it means nothing. I do think it means something, and your example of if a one bedroom's $3,000, what's a two-bedroom. A two bedroom is going to be more because it's more square footage, and that's actually the market at play. When we do use the term "more affordable market rate housing," it's largely about housing charges. I just quickly looked up—I was trying to think of another commodity that might make sense. I was thinking wine bottles. If you only sell green, 750ml wine bottles, they're going to go for a lot. TRANSCRIPT Page 82 of 93 City Council Meeting Transcript: 11/06/17 Sometimes people want magnums, sometimes people want half bottles, sometimes people want box wine, sometimes people just want a cup of wine. Part of the effort here is provide different options, whether it is smaller units, units where the parking has been decoupled, units above retail, near transit that essentially allow a bit more flexibility in the price pressures so that you can get quote/unquote more affordable market rate housing. That's a long way of saying for the moment, I won't accept this but happy to hear from other colleagues. I think this does speak to Council Member DuBois' point, however, about a data-driven approach to this so that we can benchmark these things. That will be an important discussion to have as we go forward. I don't think this amendment gets to it. Council Member Holman: I'd like to, if I could, just respond to a comment. There is nothing that indicates to me that decoupling parking and those savings to a developer are going to translate to less expensive units. There's no requirement, there's no threshold, there's no linkage. Council Member Fine: There's actually a startup which does exactly that, allowing you to rent off your parking spots on the market. That's decoupling, and you're earning money from it. Mayor Scharff: Council Member Holman, are you … Council Member Holman: I'm looking for a second for my Amendment. This is again for Staff to look into seeing if this is workable. Mayor Scharff: Going once, going twice … Council Member Kou: Second. AMENDMENT: Council Member Holman moved, seconded by Council Member Kou to include in the Work Plan evaluation of developing a predictable affordable market rate standard such as 120-160 percent of Santa Clara County Area Median Income (AMI). Mayor Scharff: Do you need to speak further? Council Member Holman: Council Member Fine did say this, and Council Member DuBois has spoken to this earlier. If we're looking for something that's data driven, something that we can quantify, something that's predictable, this is one thing we could explore that could get to that. Mayor Scharff: Council Member Kou. Council Member Kou: This is a good way to start defining what that affordable market rate amount is that everybody talks about. The Memo is good. There's TRANSCRIPT Page 83 of 93 City Council Meeting Transcript: 11/06/17 a lot of justifying that it needs to do. There are some things that we have to look at. The word affordable is so misused that we need to figure out what exactly do you guys really mean by affordable market rate. If we know that in this location our prices for a one-bedroom is close to the $3,000 or $3,100— in the news, it's already stated that Mountain View, San Francisco and Redwood City is one of the highest rents for the one-bedroom/one bath, and they've been building the most. I really would like to find out what does affordable market rate mean. That's something that I would like to see on the work plan if you guys are really talking about affordability. Mayor Scharff: I'll just briefly say I'm going to vote against the Amendment. I understand the sentiment. It's a fairly interesting sentiment, but I don't quite see that it's necessarily the right standard. I'm not sure where we're going with the idea of developing a standard with this. Let's vote on the amendment. Vice Mayor Kniss: No, let me say one thing. Mayor Scharff: I didn't see you put your light on. Vice Mayor Kniss: Let me add one thing to this. As I said, a year ago everyone ran on affordable housing. I'd like to know what was meant by affordable housing then. Someone must have had something in mind that they were looking for in particular. In addition to that, we have four or five local groups that develop affordable housing. Ask Candace Gonzales, ask somebody else, ask them from Eden, ask them from Bridge, what does affordable housing mean to them. Us looking for a definition of affordable housing based on whatever is interesting, but I have a very strong feeling that this is already well defined out there. You do not get the government credits, the tax credits, and so forth if you can't define what your affordable housing is. Interesting idea, but I think the answers already exist. Council Member Holman: Can I suggest—it doesn't. This is … Mayor Scharff: It's not a debate. I'm sorry. Council Member DuBois. Council Member DuBois: I'm reading this. I don't think you're proposing these numbers. You're saying that as an example. I just think it's a shame that we're having a series of 5-4 votes. These are some sincere ideas. The concept, as I understand it here, Vice Mayor Kniss, is yes, there are definitions for BMR at different levels. We're talking about above BMR. Do we start to talk about some definitions for different categories above BMR? If we start to look at non-luxury housing, what does that mean? I find these amendments to be suggestions for study. I'm disappointed that we're just falling into 5-4 camps on these kinds of issues. TRANSCRIPT Page 84 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: Council Member Wolbach. Council Member Wolbach: No thanks. Mayor Scharff: Let's vote on the Amendment. That fails on a 5-4 vote with Council Members DuBois, Kou, Filseth, and Holman voting yes. AMENDMENT FAILED: 4-5 DuBois, Filseth, Holman, Kou yes Mayor Scharff: Council Member Filseth. Council Member Filseth: Thanks very much. For me, the previous one was pretty much a knife edge because I like the sentiment, but I agree with the Vice Mayor that trying to define a standard tonight or even asking Staff to develop a standard is maybe not the right place. The focus, the recognition that there is a tranche of people that are important and that make too much money to qualify for traditional BMR housing but maybe not enough to buy on the open market is an important idea. Some of it's captured in the Memo. There's some good stuff in the Memo. Some of the things were maybe a little more speculative. It's good that we're going to come back with the work plan before we proceed to actually implement things. One thing that I thought was interesting was if you look at Menlo Park, the Facebook expansion. As part of the deal with Menlo Park, Facebook has committed a fairly large amount of money for a variety of things in the City of Menlo Park. One of them is they have earmarked $430,000 in rent assistance for what they called community- based workers. Their examples are teachers and city staff and things like that. That's a good idea. It's more focused and more results oriented than trying to define a standard and stuff like that. If we did something like that in Palo Alto—I mean explore housing strategies to assist community-based workers such as PAUSD and City Staff to reside in Palo Alto—that would be a good thing for Staff to explore too. If there's interest on Council, I'd like to propose that as a friendly amendment as well. Mayor Scharff: You need to actually say what your Amendment would be. Council Member Filseth: It would be explore strategies—housing obviously would be a part of it, but you might go a different direction, subsidies or something like that—to assist community-based workers such as PAUSD and City Staff to reside in Palo Alto. Mayor Scharff: Do you accept the Amendment? Council Member Fine: Again, I'd like you to find a seconder, which I assume you probably will. TRANSCRIPT Page 85 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: I second it. AMENDMENT: Council Member Filseth moved, seconded by Mayor Scharff to include in the Work Plan exploration of strategies to assist community based workers such as PAUSD and City Staff to reside in Palo Alto. Mayor Scharff: Speak to your Motion. Council Member Filseth: I think I've already spoken to it. Mayor Scharff: I think this is very much in the spirit of the Colleagues' Memo. It captures what Council Member Holman was trying to get to a little bit in getting that in a way where we have a defined group of people. That's starting at a smaller place, and we could make that work. When Staff comes back with a priority list, then we'll see if we decide to move forward with this or what we move forward with. This is definitely something we've talked about here on this group for a while. There has tended to be strong support in the past for—I guess it's a good term to use—community-based workers. That's what they were using in Menlo Park? Council Member Filseth: That was their term in Menlo Park. Mayor Scharff: That's an interesting term. I will support this. Council Member Wolbach. Council Member Wolbach: I want to put this in the context of the other Amendments we've been talking about. Whether you talk about the three Ps of preserve, protect, produce or you talk about the three-legged stool that I talk about of supply, targeted units, renter protections, the goal of this Memo—we were trying to keep it focused—was not to address every housing issue. We've got a Housing Element in our Comprehensive Plan, and the Land Use Element of the Comprehensive Plan has a lot of things in it. I just checked. It's Program L-3.2.1 that talks about short-term rentals, and we did say other housing-related implementation programs from the Comprehensive Plan Update. Short-term rentals might sneak in there anyway. The goal of this Memo really is on the production side, the preserve, protect, produce. This is mostly on the producing side including some protection. That's why we have the thing about no net loss when something's redeveloped. This is a good amendment because there is a lot of effort in the region and some things moving forward to actually produce some teacher housing. We were just talking recently in relation to the Comprehensive Plan about producing housing on publicly owned lands, especially if that's going to be used for something like teacher housing. That's important to explore. I will accept this Amendment as reluctant as I am to accept any Amendment tonight. Obviously you know that. I'll go with this one. TRANSCRIPT Page 86 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: Council Member DuBois. Council Member DuBois: This is a step in the right direction. I'm going to support it. Will we lose our community workers that aren't working for a public agency? Hospital staff, other kinds of service workers. The idea of people at a median income too high for BMR but not high enough to get full market rate is still a great idea. This is just peeling off a small portion of that. The previous amendment was a little more inclusive. Mayor Scharff: Council Member Fine. Council Member Holman. Council Member Holman: I would like this Amendment to not be focused on just PAUSD and City Staff. PAUSD fine rather than City Staff. If we want the community to come along with us because of a prior action we took tonight, we'd have better acceptance in the community if this wasn't City Staff. It would be community workers instead of City Staff or something of that nature. Mayor Scharff: It's not limited. That's the way I read it. I read it as "such as." Council Member Filseth: My intent was not to put a hard limit on it. Council Member Holman: I will support this. I agree it's something that isn't currently included. The example that was given, I hope this isn't just based on a financial package that's going to be finite. The way Facebook happened is because we had a very large—Menlo Park had a very, very large development that happened. They were able to get an exchange for that development, a housing fund if you will for these workers. We don't have that unless it's Stanford GUP. We have no control over that because it's—we can maybe influence it, but we have no control over it. If it's only looking at a financial package that will expire as will Menlo Park's agreement with Facebook, what happens after that? How do we get it? What would be genesis of it? What would be the funding mechanism? What happens after it expires if we could get it? I hope this is not—I don't think it is, but I just want to make sure it's not focused just on a funding mechanism that would subsidize the housing. I'm glad you made. I'll support it. I do have that concern. Mayor Scharff: If we could vote on the Amendment. Did you have your light on? You didn't have it on before. You just put it on seconds ago. I looked down to vote, and you put it on. It's fine. I'm happy to have you speak. Council Member Tanaka: In principal, I'm not really disagreeing with this. The one concern I do have is—I'm looking at the list of stuff here. It's a great list. As was discussed earlier, it's a very challenging list. It's yet another idea to a list of ideas that we have already. My main concern here is are we trying TRANSCRIPT Page 87 of 93 City Council Meeting Transcript: 11/06/17 to do too much. We're piling a lot of stuff on. In fact, I was going to propose that we focus this a little bit more to actually get some traction. To try to get all this really happening is going to be extremely challenging. There's Nirvana, and then there's reality. I'm worried that if we try to stuff too much in here, this will be like another Comp Plan. It'll take forever. I'm a little bit concerned about how much we are trying to attempt to do versus really focusing on maybe the ones that we can come to common agreement on and focus on those and making those happen. A lot of these are maybe—this one in particular is interesting, but there's a lot of other great ideas in this as well. I don't know how many more we want. I'm not necessarily in favor of having— I'm more interested in trying to focus this down and get something really happening versus shooting for the sky on this. Mayor Scharff: Let's vote on the Amendment. The amendment passes on a 7-2 vote with Council Members Tanaka and Fine voting no. AMENDMENT PASSED: 7-2 Fine, Tanaka no Council Member Filseth: Do I still have the floor? Mayor Scharff: If you want the floor, yeah. Council Member Filseth: Can I make a couple of other comments? Mayor Scharff: Yes. Council Member Filseth: I don't have another Amendment by the way. I had a couple of comments on the Colleagues' Memo itself. It really took the right direction in focusing on the issue of cost and affordability. One of the things that we do is we quote this 2016 survey a lot on what's important to people in Palo Alto. In fact, what it comes out with is not housing per se but the cost of housing. That's this 76 percent says it's a serious or very serious problem. There's potentially multiple different housing issues. Some people think there are economic implications and stuff like that, which actually ends up much lower down. The cost issue is the one that rises to the top. This Memo gets that right. As we proceed, we need really to keep our eye on the ball and look for programs that are going to go after the cost issue. The second one is I see this some in our dialog. It crops up in the Memo as well. There's a vibe of a regional housing problem and all these other cities are moving forward, and we're lagging behind. I don't think we're giving ourselves enough credit on this issue. Clearly we have a big cost problem in town. On the regional housing issue, we should feel better than we sometimes seem to. Specifically, I don't think we always give ourselves enough credit for what radical step the office cap is. Let me explain, but think about it. If you exclude Stanford for the moment, the 50,000 square feet a year translates to 3,000 new jobs in TRANSCRIPT Page 88 of 93 City Council Meeting Transcript: 11/06/17 15 years, the timeframe of the Comp Plan. Even just our existing long-term trajectory produces that much housing over the same time period. In fact, the preferred scenario produces as many as 4 1/2 thousand housing units. What that means is, to first order—just bear with me a second—there is a bit of a handwave here because it is more complicated. Here in Palo Alto arguable we are actually providing as much housing as is needed for our entire nonresidential expansion. In other words, our marginal jobs/housing ratio going forward is arguably one, possibly even less than one. Obviously, there's some more complexity involved in this. I don't think other cities come anywhere near that. For example, consider our next door neighbors. We talked about the Facebook expansion a little bit. 6,500 jobs with 1,500 housing units and 1.75 million square feet of office space, that will increase the Mid-Peninsula housing shortage by almost 5,000 housing units. You add onto that the Menlo gateway project, which is 750,000 square, and there's a further increase in that shortage of another 2 or 3,000 units. It's going to be very difficult for them to build their way out of that. My point is if you only look at supply—all these cities look that way. If you consider both supply and demand—this is both a supply and demand problem—then Palo Alto looks like the leader in this, not a laggard. That's because we have taken action on the demand side, which nobody else has done, which has a big impact. The amount of square feet you need for housing is much higher than the amount of square feet you need per person for a job. We should be proud of that. We don't give ourselves enough credit for the regional impact of that. It's innovative because nobody else is doing it, and it's effective. If everybody else did what we've done, if everybody else got their marginal jobs/housing ratio down to one, the regional problem would be getting smaller instead of bigger. We ought to give ourselves credit for that. Thanks. Mayor Scharff: Thank you for that. Let's vote on the board on the main Motion. Council Member Holman: (inaudible) Mayor Scharff: Haven't you spoken? Council Member Holman: (inaudible) Mayor Scharff: How did you make Amendments to the main Motion? How would you make Amendments to the main Motion if you didn't speak to it? Council Member Holman: I have not spoken to the main Motion other than to make an Amendment or second somebody else's Amendment. Mayor Scharff: I'll let you speak, but I need to be clear. The way this normally works is you get one round. You made Amendments. Normally, I let people TRANSCRIPT Page 89 of 93 City Council Meeting Transcript: 11/06/17 finish making Amendments. You then make comments. That's normally why I viewed you as having spoken to this. If there was some confusion, I'm going to let you speak. Council Member Holman: When you're making an Amendment, you're speaking to the Amendment. You're not speaking to the main Motion. Mayor Scharff: When you're done, you usually go back to it. Council Member Holman: I have a question for Staff. Could I get a clarification, something I've been thinking about. As part of the Density Bonus Law, have we clarified or changed our Code such that the FAR bonus has to be developed as housing? Ms. Stump: I recall discussing the issue and the application of that in various projects. It came up maybe 18 months ago. I'm not recalling at this late hour exactly what the status of that is under our Code. We are scheduled to come back to you in September to talk about the new set of housing requirements at the State level. There were 15 bills that were passed this season. In that context, I can pass onto the Planning Director that we should update you on that item. Council Member Holman: That would be great. There are a lot of things—I appreciate the authors of the Colleagues' Memo for bringing this forward. There are some very good things in it. We have missed the mark by not being a little more inclusive in some of the things that we're considering. If we want to bring the community along and make this more of a community endeavor, some of the things that weren't accepted this evening should have been accepted. Council Member Tanaka was right; it was one of the thought that I had. If we don't focus, we should be more inclusive. If we're going to look at the range of things that the Memo starts to address, then we need to be more inclusive or focus in. I also am really concerned about the Staff workload that is going to create if we don't focus in. We have a coordinated area plan for the Ventura site that we're undertaking. I'm not saying we shouldn't do this because of that, but I am concerned about—when we talked about renter protections, one of the big reasons for not pursuing that was because of the Staff workload. We ought to be consistent in our dialog and send a consistent message to Staff and to the public about what our priorities are and how we determine those priorities. I don't think we always do that. That said, I will vote for the motion because there are some very good things in here. Those are concerns and inconsistencies that we demonstrate to the community. Mayor Scharff: Council Member Tanaka. TRANSCRIPT Page 90 of 93 City Council Meeting Transcript: 11/06/17 Council Member Tanaka: I haven't really spoken to the main Motion. In general, it's well written. It's trying to address a big problem. For that, I applaud the authors of this. As I spoke before, one of my concerns is the scope. It seems like we're trying to do a heck of a lot here. There's two particular areas which I'm going to see if these could be friendly amendments that we could perhaps reduce the scope a bit. The first area is around BMR housing, affordable housing. I seem to remember we had some—I think it was Candance came to speak when we actually talked about should we require more BMR housing. When she came to speak to us, she was concerned that if you—it wasn't just her but some of the affordable housing advocates were concerned that if you mandate too much BMR, it disincentivizes building at all because it's too much of a cost to the project. For me, if we—we already have an existing BMR housing program. If we just get housing built, that will get BMR housing. I'm concerned that if we tilt the scale too much, you make it too onerous to build—even BMR housing wouldn't be built. This is something that I've heard from some of the housing advocates. I want to make a friendly amendment that for the affordable housing section we don't tinker with that piece because we have something already. If we get more housing in there, this will come along automatically. We don't have to tip the scale so hard that a developer is not going to want develop at all. Also, there's a lot already here. Council Member Fine: Thank you, Council Member Tanaka. I agree with you this is a lot here. Just to respond to that. One of the things that is really important and we worked with Staff about this is to come back with a work plan. I'll be honest. I fully do not expect all of these issues to fly in the long run. Staff might tell us some of them are pie in the sky, some of them are way too much work for us to get done, some of them are being done in the Comp Plan. We'll have to pick and choose at that point. Around this issue of affordability, I agree with you that there is a tipping point. For example, in San Francisco, I think they've upped it to 25 percent in some of the districts, and it has effectively shut down development. We do not want to get that. That's why I'm asking for an economic analysis to look at 15-20 percent. It may be 16 percent. 15 percent may be right. It could be 18.5. I don't know. For the moment, I'm not going to accept the amendment to remove that piece. That's really important for our community. Mayor Scharff: Council Member Tanaka, I haven't spoken to the Motion. I was just going to say I agree with you and Council Member Holman about the focusing in. What I appreciated about the original motion was that it talked about prioritizing. When Staff comes back to us, that'll be the time to take out some of these things and say that's not—I actually agree with you, but I think we'll have that priority. They'll say it's this much work to do this. There's a bunch of stuff. TRANSCRIPT Page 91 of 93 City Council Meeting Transcript: 11/06/17 Council Member Tanaka: My main concern on this is that we've had experts in affordable housing tell us that they're worried if you crank that up too much … My second point here is on the car-lite housing. In principle, the nature of cars and parking is changing a lot. One of the things that's going to be really important is to get buy-in from the community. I've actually gotten quite a bit of feedback on this particular item. I'm trying to think of how do we—I realize we're just exploring here. I'm trying to think of how do we frame this in a way to get community buy-in. Most of the other things in this Memo most of the people will buy into. This one item might cause quite a bit of backlash. That's something I'm concerned about. I don't have specific language. I'm hoping that maybe somebody can figure this out. I am concerned about that one because I've heard some pointed comments about it. Council Member Wolbach: Just to speak very briefly to that one. In the sub- bullet point about car-lite housing, where we say explore car-lite housing with reduced or eliminated off-street parking requirements, as a potential—this is not in the motion, but this is the kind of thing we were thinking about as we drafted this. Let's say there's a below market rate housing development going in especially in an area like Downtown, where you've got an RPP. We know anecdotally—we should do the research to get the hard numbers, but we've heard anecdotally that the parking requirements and the actual parking usage … Council Member Tanaka: Council Member Wolbach, I'm with you on this, but I'm concerned … Council Member Wolbach: I'm responding to your comment because you said you wanted to know if—I'm not smarter than you, but you did invite somebody to explain it, so I'm just going to explain it. We do know that our BMR housing tends to use, at least anecdotally, less parking requirements. If a BMR developer, for instance, said, "We want to try building a development for BMR housing in Downtown, and we want to have fewer than the normal number of parking units required, but our residents won't get RPP permits, so they're not going to take up parking on the street. They won't have anywhere to park but in the limited spaces in the building." They give Caltrain and VTA passes to all the residents and a couple of Zip cars. This is saying that's worth exploring. That's it. Council Member Tanaka: I think there's enough good in there I'm still going to support it. As this progresses forward, this one item, if we don't address it well, we're going to get a lot of community involvement on this, which is good. We want to get buy-in. Council Member Wolbach: Agreed. TRANSCRIPT Page 92 of 93 City Council Meeting Transcript: 11/06/17 Mayor Scharff: Council Member Fine, I'm not calling on you, but I saw your light. You spoke already. Council Member Kou, you didn't speak to the main Motion, you said. Council Member Kou: I like everything, but I did want to add an Amendment, if I might. It's mostly to do with the parking, what Council Member Tanaka said. I have a great concern about these things too in terms of what the community has been saying. We've received enough letters on other subjects where traffic congestion and parking is a big issue. I would like to see— especially because we're really depending on TDMs and TMA so much, I would like to add an amendment where you come back and show us what it looks like to have effective TDM measures and how do we ensure that there is measurements in place to make sure that they do work. I really haven't seen any TDMs come through or them being measured, so it'd be nice to have that. Council Member Fine: Contrary, we have actually seen a number of TDM projects working. Our TMA came to us a few months ago with some pretty good results, not perfect but moving in the right direction. This is interesting, but I am actually in a way more interested in TDM for office projects rather than the housing side of things. I'm not going to accept this. It's more in the transit realm. Mayor Scharff: Going once, going twice, three times, no second. AMENDMENT: Council Member Kou moved, seconded by Council Member XX to direct Staff to report to Council on how the City would have effective Transportation Demand Management (TDM) measures in place. AMENDMENT FAILED DUE TO THE LACK OF A SECOND. Mayor Scharff: With that, I think everyone has spoken to the Motion. I don't need to speak to the Motion other than to say a lot of good things in here. I will speak to it briefly. When this comes back to us, my understanding is Staff's going to prioritize this. At that point, we will do what a lot of people seem to be concerned about in terms of the focusing. That passes unanimously. Congratulations. MOTION AS AMENDED PASSED: 9-0 Inter-Governmental Legislative Affairs None. TRANSCRIPT Page 93 of 93 City Council Meeting Transcript: 11/06/17 Council Member Questions, Comments and Announcements Mayor Scharff: Council Members' Questions, Comments. Council Member DuBois. Council Member DuBois: Just super quick. It was the third Veterans event tonight. I just wanted to say that each year it's been getting better and better. I would really urge my colleagues to attend. It's really interesting to hear veterans speak. We had a 100-year-old veteran today. He was a tank commander in the Battle of the Bulge. Very interesting. Thanks, Greg, for hosting that today. Mayor Scharff: Thank you to Council Member Holman who originally started this process. The meeting's adjourned. Adjournment: The meeting was adjourned at 11:55 P.M.