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HomeMy WebLinkAbout10221974CITY COUNCIL MINUTES ITFf The Planning Commission, by a vote of 6 in favor (one absent) advises that the Commission has reviewed the Comprehensive Plan Zapact Report and recommends the planning options as recorded in its minutes of August 14, 1974, and August 20, 1974 Cliff Or- P(iLO (ILTO Special Meeting October 22, 1974 PAGE 5 0 0 499 10/22/74 October 22, 1974 The City Council of the City of Palo Alto met on this date at 7:30 p.m. in a epecial meetingre the .Comprehensive. Plan with Mayor Sher presiding. Present: 8eahrs, Comstock, Henderson, Pearson, Rosenbaum Sher, Clay, Pervald Absent; Norton MOTION; Mayor Sher moved, seconded by &raderson, .postponement of con- sideration of the minutes of the sheeting of September 23, 1974, until the end of the meetings en the Comprehensive Man. The motion passed on a unanimous vote. Ln havor one :cbaent) .advises that the :ensive Mayor Sher announced continued d liberations on the Comprehensive Plan. Option Set 4 having to do with lcwfine derate imeeme housing would be con- sidered at this session. following would be Option .Set 6 having to do with employment, which would probably necessitate au additional meetint. Mrs. Virginia M. Page, 2125 Wellesley, said in t finking about the problem or low and moderate income housing, it occurred to her that if she were one of the lucky ones and cued her own home, aha srooldea't be able to live in Palo Alto any more. Her husband and she bought their house 22 years aeo and are still making the nominal payments that the.G.i:. Bill required. Jseet Owens, 863 Morena, ewer of the Beard of Mid eninauJa Citizens for Pamir Housing, spoke for that organization and said they have already stated their convictions that the planning process mast preserve the city's ability to respond quickly to new state and federal assistance for housing. They have also told the Planning Commission their view that combinations of options in set 4 vill be necessary to reach the lowest income level; that land banking should be aggressively pursued and the subsidiary Housing Corporation be established. She said they are concerned- that Council is tending to determine very specifically relief the city will not do, rather then adopting positive directions for future action. There has been strong citizen support frequently er&essed over the past five years for the city to take actions that will slow the tranaf or ation of Palo Alto into a high income elitist community. )any residents ))articulariy chose to move into ae community that provided more variety than most. That it may be difficult to maintain that variety, makes it no less desirable. Specifically, the landing of Resolution 4723 must be atreugthened. Equity is beat achieved if the: same require me is are imposed on all developers. Sucre in negotiating with developers in the peat year and a half has undoubtedly been based on then developer's expectation of a stronger policy in the future. Under these circumutaecee, negotiation has produced 12 per -cent additional below rwarket priced unite in the femur detveelopm nts cited . in the *WI report. This, 5 0 0 10/22/74 See See however, is much less than 12 per cent of all housing units that have been produced in the city since adoption of Resolution 4125 because many pg. 665 developments had less than 20 units and to change in zoningor use in P -C was requested. The Comprehensive Plan must make clear the city's commit- ment to the concept that all developers have a responsibility in meeting the full range of needs in the housing market. The test question for this section of the Comprehensive Plan will be, will city policies and actions [male the city elegiblefor future federal, regional and state housing assistance -programs? la -lieu payments may be a useful way of making the requirements . that al]. developers contribute to increasing the supply of low and moderate income housing. If it does become a method of implementing these policies, it must not be allowed to compromise -the goal of scattering low/moderate housing throughout the city wherever new development can take place. Details are more appropriately worked out duriag discussion of specifle ordinances. So far as the Comprehensive Plan is concerned, in- pg. 665 lieu payments deserve further consideration. The staff minimal, analyzing the effect of density bonuses, demonstrates that in some cases a two -for - ore density bonus, under realistic circt+ stances, could -generate additional. Lelow market units. Since higher ratios that would provide more encourage- ment would also tend to increase density, they feel that two -for -one may be a realistic rate at present unless basic resi'1ent{aa1 de-asities are re- duced across the board. She continued that in last week's staff presentation, Council was given a very graphic demonstration of ehe housing problems in Santa Clara County at the present time. it is well known the price situation is at its worst in the North County, i.e., Palo Alto. Housing is a basic necessity that no one can do without. Six years of failure to meet the goals established in the 1958 Housing A_t have resulted in more overcrowding, greater wear and tear on the existing stock and more personal suffering. Because the problem has grown, governments must make greater efforts to solve it. Anne Witherspoon, 12'S Hamilton, of University and Crescent Park Association said that on September 23 she submitted a written report from the Association Board and reiterated the contr_ts regarding housing. She said they have a great deal of information now about housing starting with the interim housing report, the Fire Zone I report, the Impart Report, and hopefully soon, the 1975 census and the Fire Zone 1 survey. And since these options appeared in the impact report, the Uoueing_CQrporation proposal has been introduced and the Finance and Public Works Coamitsee has discussed land banking, the Policy and Procedures C tttee and the Council have dis- cussed the qualification criteria for renters of low/moderate income housing. Council, however, has walked all around the subject without really ever defining the probiea or coming to any conclusions much less developed a comprehensive prograe . She said when the Association discussed these options at their meeting and made that statement on September 23, they said that they weld like to see a survey made of ghat low/moderate income housing has been subsidized and unsubsidized in Palo Alto and at Stanford, and this would be a f irat step to pull together all this information The second step would be to determine what is a reasonable and feasible percentage of such housing in a city of Palo Alto's size. By putting the two figures together, any defictaucies could be seen and in what areas ---homes for young families, apart ta for the elderly, for students, etc. This is the only rational approach to take and it may not saatisfy those who fear Palo Alto viii never have enough reasonably priced housing to aicco odate all who want to live here, That problem is not unique to Palo Alto. She said Connell will have to zero in on whom they can help and to what extent. Once a goal is set and the problem clearly defined, a creative comprehensive housing action pro- gram can be'worked out using elements of the many proposals made so far. One advantage of looking very dispassionately at the overall picture and the ramifications of one program on the other, rather them pursuing each one separately, is that one begins to see areas of potential conflict among thee. One area which neither Coca it not the Pleneimg. Commission has really yet discussed in depth, but which all planners agree has a definite impact on housing quality and neighborhood character, is the ratio of rental verses 1 5 f3 1 10/22/74 owner -occupied units in the city. What i3 the ideal ratio? What is a dangerous one? An option or a policy statement on this subject should be in the Comprehensive Plan. Or perhaps it should be one of the critical factors. If all housing programs tend to develop more and more rental housing at the expense of owner -occupied, then this ratio is unconsciously being affected without taking it into consideration. She said she has not yet heard discussion -in connection with rehabilitation or housing code enforcement of those very few houses that, are now.aysilable at "below market" price, because they.are rundown. If the Houaing Corporation pro- posal is implemented -to buy rehabilitatable houses for subsequent rental or sale, there will be competition in the market with the young families who can afford only those few paint brush specials in town but who are willing to put in a great deal of sweat equity into them'ir► order to be able to live in Palo Alto. In conclusion, she said she would urge the Council to take advantage of the comprehensive planning process to test each of the many housing proposals suggested so far against each other. against the critical factors, and against a survey demonstrated need, and sub- sequently determine the goal for low/moderate income -housing programs. Sarah Johnson, 1836 Hamilton, said she has lived in Palo Alto for eight years and there has been at least one new documentation of the need for low/moderate income housing every year that she has lived here. She supported option set 4 through option (e) and options (g) and (h). She said when she moved to this area, she chose the town of Palo Alto because it waa not a one -income, one -class town, but she feared that it is becoming that way. She asked that Council place priority in this new Comprehensive Plan, and make some sort of commitment to maintaining diversity to Palo Alto. That means standing by what they already have. She said she would like there to he some sort of flexibility in whatever is said about city policy toward low/moderate income housing, because she hopes that there will be something new coming out of the state or the federal government. Low and moderate income housing.doees.not belong separated from neighborhood character. It is a part of neighborhood character and neighborhood character is not glistening houses. Net_gbborhood character is a lot of different kinds of people being able to interact together ins lot of different situations. Larry Peterson, 1909 Hackett, Mountain View, related.the difficulty he had in findhng low/moderate income housing in Palo Alto. He said he found low income. housing off Colorado Avenue and he was very impressed with not only the architecture but the landscaping as well, however, his name was put on a waiting list end he was told it would take 18 months before he could get housing there. He said he was amazed that in his process of hunting for an apartment, the best places he had seen so far were the subsidised lour/ moderate income housing so far as architecture and landscaping. The com- mercial ones were atrocious, mostly made of concrete, swimming pools and high rents. As far as a person with a child* he is handicapped because most apartments are for adult living only. He asked Council to consider some of these variables and to be sensitive in providing for low cost housing. Tom Passell, 3825 Louis Road, Palo Alto, said the housing questions is a complex one and he would like to see Palo Alto add to its housing supply since they are so short of it, with approximately two and a half jobs per household. He said option 1(d) appealed to him to some extent. If the problem could . be solved of getting employees to their work rithout having them have a car in that lot, it would open up a vast amount of territory for residential uses. All those parking lots would house a large number of people, perhaps in mobile homes. Option 2(b,c,d) will be useful as the housing stock gets older; mays of keeping houses rehabilitated that are running down. La general, that'a because 50 per cent of Palo Alto's housing is lived in by people who don't own it. The owners arc wanting to maximize their return and do not want to put a ,lot of may into rehabilitation, but owners should be encouraged to do that. Option 2(e), to revise ordinances that discourage rehabilitation, is in order stove revisit- ordinances prevent sou people frost rehabilitating house's. Option 4(b). = and 4(c). require a 50'1 10/22/74 percentage of low/moderate income units in all new buildiagS and -he liked that. Option 4(f), continue the land hank program, is essential, because it preserves options on open land to a time in the future when those options for housing might be needed. Paul Puech, Land for People, said he was presenting.a_letter from the Palo Alto Chapter of the National Organ_ization.for Weuea as follows: "The National Organization for Women_is concerne4.that.the.Council be aware of the problem women and the.poor have in obtaining decent housing at a low/ moderate -cost. Twenty-six per cent of all heads of household in i'alo Alto are women. Many - have a low income - annd cousaqu eutly :finding- adequate housi zg is a problem. The Comprehensive - Plan can be an instrumental object in remedying that situation. A specific percentage of all new. buildings should be low and moderate income housing to guarantee win, among others, access to decent.housing.. Provision should be made for large families requiring over three bedrooms and for adequate area for children to p1ay.' This last sentence about the large families, is paralleling the Palo Alto Housing Corporation's recommendations to Council in the September 19 letter. They call it option 1(g) where they state: Encourage development of three and four bedroom units in order to provide housing for suitable families. Mr. Puech said. Land for People concurs with this kind of recommendation. Mayor Sher recalled that 1(g) had been adopted at the last special Council meeting on the Comprehensive Plan. Scott Carey, 180 University, said he would like to summarize the Chamber of Commerce's position. The options that require a developer or landowner to have a certain percentage of she density attributable to low and moderate cost horsing really misses the point. The problem of housing for the poor and moderate .tncone families is a city-wide problem. In fact, it is a regional and a national problem. These particular option sets that impose a mandatory requirement on the developer and, in effect, on the Iandow-nez, put the burden or supplying 'ow and moderate cost housing on the particular landowner or the developer. He said, as a developer, that the developer will simply pass costs on to the landowner. Therefore, these option sets impose a city, regional, or national problem upon the individual landowner within the City of Palo Alto. die said the Chambec supports the density bonus requirements. They are not sure whether the option sets that Council has before them tonight, which specifically set out a two -for -one bonus or some other mathematical bonus, are adequate. Hopefully, during the next process in dealing with the Comprehensive Plan, they will be able to give the city staff or this Council further input as to whether, in their re- search, and La their opinion, the density bonuses are adequate or more than adequate. He suggested Council might consider amending that option set to simply state that some density bonus be looked into by the staff and without specifying what the bonus is at this point. Finally, with respect to land banking, the Chamber has some problema with land banking because of the adverse effect on city revenues. Every time you land bank, you take that land off the tax rolls and it costs you more than the purchase price. There is also the feeling that when the city acquires land for land banking, they may or may not strike the best bargain. He added that the problem of housing for the poor and moderate incomes people is a very serious one. He said it is very easy to say let's simply shift the burden onto the landowner and hope he doesn't sue the City. He said he heard that the real problem with housing in this town might be that the rental stock is owned by absentee land- ovners and therefore, they'll let it run down and demand high rents. That's simply not true. There may be canes of absentee owners in and around the downtown area. The absentee owner probably lives in Menlo Park. This isn't really the problems. The problem is simply one of inflation, increased cost of construction, the increased costs of financing which simply adds to the cost of housing and anybody that builds a house to produce an income, if he's not going to live in it, has to have a return at least equal to the interest rate he is paying on his money. It's sim=ply mathematics to determine that the rental of that house is going to be quite high. The cost of a mortgage is one thing; but Mato the coat of reel property tares, the cost of maintenance, 5 a 3 10/22/74 and the other indirect costs are added, to rent that same unit, even to break even, will put that rent at a very high rate. Kay Philips, 3408 Cork Oak Way, spoke on behalf of the Board of Directors of the Midpeninsula YWCA. She said six years ago, the Midpeninsula YWCA first came before Council on behalf of housing. The issue was the Raven Enterprise proposal for low/moderate income housing at the old corporation yard. The YWCA Board of Directors had just voted support for the Raven Enterprise proposal and for further intensive and immediate study and action leading to increased-low/moderate income housing in Palo Alto. The date was October 28, 1968. She said the YWCA supported the formation of the Palo Alto Housing Corporation in 1969. They supported the inclusion of the Housing Element in the General Plan in 1969; the concept of scattered low/moderate income housing projects in 1970; the inclusion of a percentage of low/moderate income unite in regular housing development in 1970 and 71; and they supported efforts by the surrounding communities to seek solutions. Through their work with children and teens from East Palo Alto, youngsters and 14exican-American women from Mountain. View, and seniors from Census Tract 113„ she said the YWCA has shared intimately the problems of expensive housing and low incomes. They are constantly aware of the misunderstandings perpetuated by separating people into homogeneous neighborhoods. At a recent Board of Directors meeting they reaffirmed their commitment to a community that is diverse in race, age, income and educational attainment and they voted to make a statement at the hearing tonight to urge Council to reaffirm their commitment to this principle, and to include those options its a Comprehensive Plan that will make this possible. Mr. .Jim H. Chin, 727 Christine Drive, said he is for a certain percentage of low and moderate cost housing and he sees it as another form of affirmative action. Me said that the process of equalization is always a painful process, requiring sacrifices. Not everyone is going to gain. Just like affirmative action, when minority people are hired in firms, the non -minorities will love some jobs. He said he sees it as a moral obligation to provide housing for lour/moderate income people. Councilman Clay suggested Mr. Loui.a Goldsmith of the Housing Corporation join the staff at the table and be available for questions. Mayor Sher invited him to do so. Councilman Comstock, re Option Set 4, said the country is in the midst of probably one of the most severe, inflationary economic_ cycles it has seen. The economic conditions of this country have had a devastating effect on pcoduc.tiou of housing units nationwide as well as in Santa Clara County, thereby compounding. the problems associated with inflation, Governmental program a such as were operative several years ago to help settle this problem on a national basis through impoundment and other actions, have ceased to operate, thereby even further diminishing the ability to solve this problem. It is a very difficult time to try to speak to a subject like this. But he said it is important to think about that and to try to make a personal assessment of how lasting and enduring these currant circumstances are. Council would have very different feelings about some of these options if this discussion took place two or three years sago. Only two or three years ago these national housing programs were at work. Housing starts were runnthg at a much higher level; inflation was march less severe. If those conditions were present today, a lot more progress would be made toward solving these community needs.- Because this is a plan, a plan to look ahead in the community, some assumptions have to be made. They are very important in solving this problem. Can it be assumed, for example, that the current inflationary rates will go on for the next five, ten or fifteen years? He sea►d he hoped not. Can it be assumed that there will not be a resumption of either statewide or nationwide programa to provide financial assistance of production of what is called low/moderate income housing? He said he hoped See pg. 665 that would be the case Some speakers recently pointed out that in California, for maple, the State Legislature has passed several programs in this regard.-.. o 5 0 4 10/22/74 Both candidates for governor in the upcoming election have voiced support. There is reason to be optimistic there. Comments have been made that Palo Alto really can't provide a home for everyone who works here. There wouldn't be broad disagreement about that. The correlary is, of course, that Palo Alto cannot provide a job for everyone who wants to work here. Between those two, Council hopes here and in other parts of the Comprehensive Plan to strike some reasonable balance. While thinking ahead -and about what the historical context will be for the operations for some or all of these options --hopefully less inflation, more state and nationwide programs, lower interest rates, better control of construction costs --Council also ought to think about housing needs in tLe community at large. Clearly, the market place will in some degree always provide housing production for people who make a great deal of money. The groups for whom housing has been supplied to date covers a broad range of people, not just the elderly, the widows and the young singles, but a mixture of people. He said he hoped that everyone would remember that because it is afterall, not just the money and buildings, ultimately it is people and their needs. Palo Alto needs to try to meat the needs of low and moderate income people in the community for safe and healthy housing. What has been done to date under more favorable conditions, required a great deal of work on Palo Alto's part and an extraordinary amount on the part of organizations and individuals in the: community, and he thought that will continue to be the case. This entire Option Set 4 is here because there is an underlying policy commitment by the Council to attempt to meet this need in the community. The options that have been recc=miendd to Council are options, ideas, and proposals for cartying out that commitment. He said he would like to assure the speakers this evening that the underlying commitment is still there, and to encourage the Council to take that commit';ent and their own best judgment with an optimistic point of view and to look at ways to meet this commitment that sill be productive and effective in the community. Councilman Comstock continued that 4(g) is a recommended additional option prop c•sed by the Housing Corporation and 4(h) is discussed and referred to by Mayor Sher in his r.:,morandw, to Council. He said he would offer, one at a time, the options recommecded by the Planning Commission, as well as 4(g) and (h) . He said he could support all of them, but in the case of 4(d) he would suggest a modification. Ir. Option Set I, 1(b) under "Population,"• which consists of three parts, speaks to increasing or decreasing residential density limits,. There are three provisos: 1) density limits would not be increased in any R-i zones, 2) addressed itself to the holding capacity, and 3) was not accepted by the Council. He said he would like to take 3) which said, "only where such density increase would provide additional low/moderate incomehousing," and work it into 4(d). 'fi tION: Councilman Comstock moved, seconded by Henderson, 4(b,c), the Planning Commission recommendation, as follows: Require a percentage of- low/moderate income units in all new buildings. See pg 665 'Tice Mayor Henderson spoke to Option 4(b,c) and :said that during this past few months, those who have worked hard to try to provide -Palo Alto with an acceptable workable housing program may be very disenthan e4 with the lack of action by the Council. He said he could not uriderstane how Council membe3a can unanimously approve policy statements and goals related to pro- viding housing in Palo Alto for people of all income levels, and then either flatly oppose the proposal that might help to fulfill such a policy, or so nitpick and water down these proposals until they are nothing. He felt the staff has picked up the weakness of this Council and such terms as "below sarkat value" rather than "low and moderate income," and "request" rather than "require" are being used. He said perhaps the Housing Element and all other glorious statements should be changed to state: provide housi:ig for upper middle and high income families specifically excluding the elderly, young families and any others whose income is below upper middle. _This would be much better than the present rather hypocritical approach to housing. 505 10/22/74 Option 4(b,c) is a good place to start. He said a couple of years ago, conversations with the City Attorney left him with a feeling of strong support for the Council's requiring a percentage of low/moderate income housing in all new buildings. Now he said he is being urged to say "request" rather than "require," and he has been given figures that show four projects in which an aggregate of 12 per cent low/moderate income units were obtained by request. That's only slightly over one-half of what was requested in Resolution 4725 and a half of what they would have gotten if they had had the fortitude to say "require." Haw many low/ moderate units have been built in the past couple of years in projects of less than twenty total units? He fele probably none. Also, if at this time a statement is made in the General Plan about requesting percentages of low/moderate income units, there will be very few developers who wi1l volunteer such units in the future. Maybe the Council isn't prepared to set specific percentage figures now but they should at least have a statement about requiring this percentage in all new buildings. AMENDMENT: Vice Mayor Henderson moved, seconded by Pearson, to amend the 4(b,c) motion to add after the words "in all new buildings," the following: 1) and condominium conversions, 2) and developments or conversions involving five or more units. Councilman Beahrs said he gas discouraged by the continued verbalizing about the problem and felt Mr. Carey had voiced a very pertinent point in asking who is going to pay for it? He said they all had a compassionate interest in people's needs and having been in need 3t one point in time himself, he person<.11y understood. 31ie problem is relative; it is not new; it is one of degree, but again the question is, who is going to pay for it? He said if there were any honest interest in this problem, it should go to a vote of the people; put up a general bond issue, and sub- sidiz` some housing in a serious manner. He doubted that there was that much charity or compassion in the aggregate in Palo Alto. This Council has not done positive things; they have done negative things such as taking out: 5,000 acres from development in the foothills which would depress the prices in this town by 50 per cent if developyent up there had been permitted. They had highly restrictive outlooks ort the use of property which accentuates the value of the land and denies developers an opportunity to succeed. He considered prices in Palo Alto 200 per cent above the surrounding towns and in the Ease Bay, again because of restrictive out- looks on land use. The staff's idea of a density bonus, which allows for more intensive use of land and cuts down the capital costs of land involved with housing. He felt they had been too restrictive in Palo Alto. On July 24, he had sent the Council a clipping from the San Francisco Examiner: "A sprawl of amity houses leaves space only for patches of grass, a few shrubs and isolated trees struggling to exist in an unfavorable environment" under a heading shoeing a multiple townhouse development with a combination of highrises, a type of development which they had refused to consider. The article continued, "One twelve -story highrine apartment building sur- rounded with townhouses" is a thoroughly beautiful development with open space which you don't get otherwise. One twelve -story highrise apartment building would house 108 two --bedroom units compared with 108 detached single family Mouser;, each on a 5,000 square foot lot that cosid range anywhere from $25,000 to $60,000 todtcy. He said single families living on such high cost land could not be subsidis=ed and were forced to go for intensified use of land. He felt they were indui gis.g themselves in a lot cf palaver as a Council and should put up or shut up. His suggestion was to have a bond issue and see what the public wants; if it were voted down, then the staff's recommendation would be the only alternative —a density bonus. He preferred that to mandating a percentage of low coat housing with each development. He said the general taxpayer in the comoznity should absorb the burden over- all rather than the person who bought in a complex because the developer wouldn't plan to go broke: over an interest in the community's problems. The perms buying the units, and there may be only four or five in a combination, couldn't subsidize; our of their small earnings the needs of 5 0 6 10/22/74 even one family, but the burden, put on the backs of 56,000 people, is a different story. He felt they should have the moral courage to approach it in that way. The only workable alternative in the option sets was a density bonus which meant changing philosophies and outlooks in the community, so they would have to go for redevelopment and not rehabili- tation. They would have to think in terms of more intensive use-_highrises, combinations with townhouses, etc. Councilman Rosenbajm said be felt what they were trying to do was take little steps in a number of ways in an effort to accomplish something. For their consideration at the moment, however, was the questions of condominium conversions. He questioned this aspect of attempting to require, where in the past the staff had attempted to negotiate to pro- vide some lower cost units. He said money has to buy something any.; in asking the developer to charge less, he is going to produce somewhat less of a unit, one that wouldn't have all the amenities a higher priced one would. On Arastradero, there are four duplex units which obviously didn't compare to the single family houses and this was one of the ways to go. When you have an existing apartment building, it didn't seem a feasible thing to suggest that some of those units cost less than the other units as they ail started out the same way. If they went to all the private homeowners in the community and suggested that whenever they sell their home, they take 20 per cent of the profit they made on that house and contribute it to a fund for the provision of low/moderate income housing, that would be comparable and, of course, there would be objections. Most of the housing in the community is single family with ar inflated price and those who have the homes benefit. The same wo:Ad be true of the person who owned an apartment. Given that the structure is already there, he didn't think they could add this sort of requirement. He would oppose it. Councilman C particular, 4 for .low/ dera could be so co lay said if they were looking at condominium conversions in (b,c) would do more to restrict conversions than to provide to income housing. He didn't think anything structured now vented so he would oppose it. Councilman Berwald questioned whether this concept in the ,unendment and the main motion might be unconstitutional taxation and that persone might take it to court. Whether it was just inadvisable at the least, or un- constitutional at the worst, it seemed to him unjust. It didn't seem the term hypocritical could be applied to the Council hers as he felt they were all sincere in expressing their views about housing, but he wondered if this were a just requirement. Mayor Sher asked Dennis DeCuir, Assistant City Attorney, regarding the legality of making this requirement apply to conversions. Mr. DeCuir replied that an argument could legitimately be made to this requirement. He said that they might have same difficulty in defending that. With respect, however, to the proposal to require some percentage, during the discussions on the Fire Zone I proposal, the Attorney's office had opined that they did believe they could support a requirement which was attached to a development of twenty or more units. They stand by that opinion. They haven't changed it. They had pointed out recently, however, in dis- cussions with members of the Fling Department staff, that because of the practices potential for as injunction and also in view of the limited aiwmt of Land which has potential for development, the inflationary tip and the speed with which de e1opment might take place should the require- ment be enjoined, the land could disappear. For that reason, the Attorney's office suggested that some thought be given to considering what has been termed "should" rather than a "trmust" approach. However, they did state it was their legal opinion that they could ultimately sustain a requirement applied to a development of twenty or more units. Vice Mayor Henderson responded to the comparison of condominiva convey .ton8 to sale of a private home. On cored relum conversion, the majority of the 1 5 0 7 10/2i/74 original tenants, perhaps low/moderate income tenants, lose their homes in favor of the condominium purchaser. He said this was far different from a private home ownership where the present owner is by choice selling See pg. 665 his home and not putting many renters out. He thought in many cases where low/moderate income people are being put out of their homes, there should See pg. 665 be some requirement to provide a little of this in the conversion process. Councilwoman Pearson said it seemed very little was happening; they attempt to do things and they are voted down, which was discouraging. It was easy to get a broad platitude passed such as the Housing Element stating that they really want low/moderate housing in Palo Alto and diverse kinds of citizens living here. In the -final analysis, however, nothing has been done. When you ask who is going to pay for the mixture of low/moderate housing in a condominium, it was her feeling that the developer should pay, particularly if a bonus were given. This was the kind of ordinance she and Councilman Comstock introduced -in 1969. She was concerned with Councilman Beahrs' suggestion to put it to a vote and find out what the people will do, because then he said it would lose; this was what he really wanted to happen and he didn't really want low/moderate income housing in Palo Alto. Additionally, every time the Council had anitem on the agenda to support any state or federal legislation which.would fund low/moderate income housing in a city like Palo Alto, Counci1ir n Beahrs refused to support it. Mayor Sher asked that remarks be general and not be specifically addressed to individuals. Councilman Beahrs agreed and said that Council had taken 6,000 acres out of land development in this community and they have $41 million in damages claimed and six lawsuits against them. They have spent hundreds of thousands of dollars defending those lawsuits as only a start. If they had permitted reasonable development in that area, they would have had lower housing costs in Palo Alto; they would not have had the problem of subsidy; they would not have had the agonizing litigation. He asserted he was the only one who voted against that policy and regarded the policy as a huge mistake. He resented being pinpointed on this problem because he felt realistic in his outlook re the economic problems involved. The amendment failed cn the following vote: AYES: Henderson, Pearson NOES: Beaters, Clay, Berwald, Comstock, Rosenbaum, Sher ABS ': Norton Mayor Sher said that taking into account Mr. OeCuir's opinion regarding fire or more units and taking into account the percentage itself was not specified in the main motion, he felt perhaps.it was a mistake to tie down specifically the number of units at this point. AMEN: Mayor Sher moved, seconded by Beahrs, an rassuerent to 4(b,c) to add after the words "in all new buildings" the words "of more than a certain number of units (to be determined) ." Vice Mayor Henderson said this was again making no statament- for the General Plan. He felt it was time to set a given minimum number of units, that twenty units as a minimum would not produce very such housing. He asked Mt. DeCuir if a requirement for low/moderate income . u is - in all new con- atruct.ion s illegal. The response was thatit was not. Vice Mayor IIISee Henderson commented that the Attorney's office in the_past had not had pg. 665 total agreement with that opinion, Councilwoman Pearson geld this was just another statement and staff could spend another year studying it and they are not producing low/moderate housing. 5 0 8 10/22/74 Councilman Beahrs said Council was not guaranteeing anything but they were asking for one more lawsuit. Councilman Comstock said he felt they should give direction to the Planning Commission and consultants for the next course of study. They should define the options they would be studying. He hoped if they had any reservations about any of the options or that they might have some work involved in de- fending them, they would at this point send the to the Planning Commission and consultants. The options will rise or fell on their merits, which will be a combination of matters and will determine whether they will produce housing more effectively than some other option and whether, ultimately, out.of these four or five passed, one or two should -perhaps -be carried all the way through to the actual Plan. Mayor Sher said regarding the amendment he proposed, that the Planning Commission recommendation was a percentage of low/moderate-income units in all new buildings with no statement at this time as to what that per- centage was to be; it was left uncertain; it mould have to be determined See pg. 666 in the future. I was only certain as to what projects it would apply. ---all new buildings. The Henderson amendment, changing the Planning Commission recommendations, leaves the percentage uncertain and,to be determined in the next phase of the Comprehensive Plan process. but makes specific what projects it would apply to ---those having five or more -units —and changes what the Planning Commission has done, making it more restrictive. He said the Planning Coemaission has never had an opportunity to consider that See pg. 666 and the might very well not agree. He felt his motion was zo have both of those factors worked out, and when it has been worked through, the See pg. 666 percentage might be five, it night be six or three or ten. The amendment passed on the following vote: AYES: Beahrs, Clay, Comstock, Rosenbaum, Sher NOES: Berwald, Henderson, Pearson ABSENT: Norton The Comstock metion, as amended, "Require a percentage of low/moderate income units in all new buildings of more than a certain number of units (to be determined)" was then considered. Councilman Beahrs said he would support Option 4(b,c) but it would not produce any housing in Palo Alto and it it was again a platitude. Councilman Clay said he would oppose it because he thought it did great disservice to 4(g), which they had already decided .if the non-profit housing corporation subcorporation was set up, would go ro the voters with a revenue bond request. He felt this would make it very difficult. Councilmen Berwald said his issue was with the word "require" and he would oppose it because there didn't seem to be any evidence that by imposing this mandate there would be eny increase in housing. That was the issue, not that they didn't want a good mix of housing. Fe referred to the Tanner Report given to them by Naphtal.i Knox, Director of Planning, as being something he disagreed with and which should be examined to determine the validity. He gave an example, from his twn research, that the cost of rental.► hes not gone tip es mmeh as the cost of housing for sale. The cost of a_?. houses for gale has probably exceeded all other housing cost infla- tionary increases. He referred to the statement that the condominium oar makes a big profit upon conversion and puts renters out of their homes, whereas the R-1 property owner would actually be a larger gainer of profit. He said a year ago, Mir.. Walter Harrington made some suggestions about redefining that a housing unit is, tying the number of bedrooms to the number of square feet of land and providing incentives in the for of 509 10/22/74 reducing the parking required in the downtown areas and having the owner pay an in -lieu fee instead of providing parking in areas where there was a parking district, such payment to go to provide low/moderate income housing. The Council had asked the staff to respond to that. He felt it would be timely for staff to review those suggestions. His logic was that through incentives, they probably could get more housing than with require- ments, which could drive out capital investment in housing in Palo Alto. The Tanner Report offered that one reason for lack of sufficient low/moderate income housing in Palo Alto was construction costs. He said another reason housing has gone up was becaur:e of inflationary factors, one being excessive government expenditures and a variety of very unsuccessful schemes including the Acorn Project in Oakland, and the Martin Luther King Project in San Francisco. These did not give decent and law cost housing to the people. The sigh cost of housing had been matched, not only by higher interest rates but matched by unparalleled subsidy programs. He said there were a number of other incentives they should look at. Finally, he referred to Councilwoman Pearson's statements that the situation was very depressing, nothing happened unless they forced it to happee and very little happened except platitudes. He said they have done quite well without forcing people. They didn't force Joe Erlich and his group to build the limited dividend housing, they didn't force the owners of Webster block to sell their property to the city at a very fair price, they didn't force Stanford to agree to build Frenchman's Terrace, they didn't force the developers on San Antonio Road, they didn't force Colorado Park, and they didn't force the church at Lytton to build housing. Mere are a number of people, including the Housing Corporation, the churches, individual architects, educators, etc,, who want to do this job. He disagreed strongly with the approach of requiring. He said that the City Attorney had said even bbS though the Council believes they could defend this, they were still wary of it. He ur;,ed his colleagues to vote against the word "req:lire" and substitute "encourage.' Mayor Sher referred to his memo of October 17 suggesting the new option 4(h) dealing with in --lieu payments and said that he had some reservations about the 4(b,c) approach which would require the developer to provide the units. Today in Palo Alto, builders of multiple -units build ownership developments--condominiums--and the cost of those are out of reach of most low/moderate income persons. He had more confidence in the in --lieu pay- ment approach as a prospect of being more flexible, being applied univer- sally, and they could use the proceeds to prcduce rental housing of .a sort that does meet the federal guidelines. It is a new coecept, however, taking study in the next phase of the Comprehensive Plan, therefore they don't know whether they will have it or not. He thought they should stay with the approach that has been developed. The motion, as amended, re 4(b,c) passed on the following vote: AYES: Comstock, Henderson, Pearson, Rosenbaum, Sher NOES: Beahrs, Berwald, Clay ABSENT: Norton MOTION: Councilman. Comstock moved, seconded by Pearson, 4(d) to provide a density bonus on a t -to -one basis in selected areas where the environ- ment will not be adversely affected midi such density increase will provide for additional low/moderate income units. Councilman Comstock noted 4(d) was basically the Planning Commission recommendation plus his addition of the words, "and such density increase will provide for additional low/moderate income units." Mayor Sher reminded the Council members that in the Impact Report when reference was made to "density bonus," it explicitly states "in return for 5 1 0 10/22/74 a percentage of low/moderate units" so perhaps that concept was clearly understood as part of the concept of the density bonus. The motion was not really changing the intent of the Planning Commission recommendation. Councilmen Beahrs said this was the only sound proposal before them from an economic standpoint. Re said they were always up against the policy of their restrictive land use, evidenced by the fact of their problems with the federal subsidy programs to the point they had to go for a piggy- back effort. This again was tokenism. State and -federal agencies are not going to put their money down where we have extravagantly inflated land values, largely due to artifical restrictions which we ourselves have instituted. This was the problem. Councilman Berwald asked staff to comment on the feasibility in 4(d) of adding some language that would say to the staff that they were not talking about a density bonus on a two -to -one unit basis but they were talking about a density bonus in terms of bedrooms or increasing the square feet of housing or land space. They should re -define a housing unit --a studio apartment is not a two -bedroom unit. Mr. Knox displayed a slide re the two -to -one bonus. He said that under Option 4(b), four below -market units should be provided in a development which totaled twenty units. Under Option 4(d), for every two units added above the zoning maximum, one unit would have to be priced below market, If it is assur.d that inthis example twenty unit3 is the maximum allowable on the site under the zoning ordinance and a density bonus provision would not provide for a total of more than 120 per cent of the zoning maximum, then the twenty unit site would be allowed four additional units (twenty per cent above the zoning maximum). Of these four units, two would be market priced units and two would be below market. Total development for the site would then equal twenty-four units, of which eighteen were marked priced and six were priced below market. He said staff has tested the two -to -one system and they believe it would be economically feasible and would provide a sufficiently high profit level so that developers would be motivated to produce the extra units. He indicated that in the staff report, they said they wanted to study other ratios because there were some questions as to whether two -to -one was the best basis. In regard to using bedrooms or units, staff thought it best to task about units, be -- cause unite provide for households and households are people. He noted that under the density bonus provision, the low/moderate units provided would be similar to the market rate units. Thus, if the 41-'velopment consisted of four -bedroom units, the low/moderate units provided would be four -bedroom units. The essence of the provision was that the low/moderate units provided would have the same charect risti.cs and the same number of bedrooms as the other units in the development. This had happened at Channing Place, at the Greenhouse, and to some extent at San A1n2oe Councilman Berwald explained his thought that there might be more units for people if on a piece of land there could be built a certain number of bedrooms and that there could be a certain square footage of building for square footage of property. He recognized the culprit could he the over- abundance of R-1 high-priced homey and the objective was to get a mix of lower income units. The way to get a mix of lower income units, was to enable the developer to put in, with or without subsidy, a larger number of smaller unfits which would fit the young singles, the young married families, and the elderly persons. He didn't want to foreclose that idea is Option Set 4 by approval of Option 4(d), although he was entirely for it. Dr. Claude Gruen, consultant, explained that 4(d) would increase the number of units that would be built; it Was clear that 4(b) couldn't do that. Research on this concept indicated that generally speaking if a builder were allowed to build one a u. unit, he could reduce rental of some other unit or that unit about $80 below what it would be on the market because he would not be adding any land costs to chat unit, only construction costs. i 5 1 10%22/74 Therefore, getting that extra unit could bring the rent for that one unit down to $220. If a second extra unit were allowed, again there would be just the construction cost and no land cost plus a;iother $80 worth of rental decrease which could either be spread across several units or be assigned to that one unit. Councilman Rosenbaum asked Councilman Comstock if he had an objection to deleting "en a two -to -one basis" from the motion. Councilman Comstock replied that he would then be interested in how staff would interpret that or whether they would go as far as five -for -one. From the information received, two -for -one seemed about correct to him. He felt that without some sort of reference, it would be quite unclear where Council stood. Councilman Rosenbaum asked staff how they would view the specification of two -to -one as opposed to leaving it as one of the things to be specified, and Mr. Knox replied that they tested the two -to -one on the basis that the maximum number of units that would be allowed would be 20 per cent over current density. As he understood Councilman Comstock, he would not be fixing the 20 percent but he would be fixing the two -to -one so that left one parameter open for them to work with. If they had neither the 20 per cent no: the two -to -one, it would be wide open for future discussion and staff could give it further study. AMENDMENT: Councilman Rosenbaum moved, seconded by Berwald, to take out the words "on a two -to -one basis" and substitute the words "(on a basis to be chosen)" in Option 4(d). Planning Commission Vice Chairman Anne Steinberg answered the question as to why the Commission changed the original wording of the option as found in the 1mpa:_t Report. She said the Commission was fairly reluctant to go for the uhole concept of the density bonus. Actually, the hording they passed is not exactly the same as the Councilmen had before thew. the actual wordiag approved the concept of a density boars but didn't exactly tie it down to a specific. ratio. The Commission was fairly reluctant to go any farther than a two -to -one basis. The Coulmission probably accepted this option only because it had the sentery e, 'here the environment will rot be adversely affected," Mayor Sher interpreted that to mean that the bonus would not be automatic to an applicant but there would be a determination made based on all the factors affecting that particular project. Councilman Beahrs felt Councilman Rosenbaum's criticism was completely in order, that they want to preserve as vouch flexibility as they possibly could. Mr. Goldsmith commented on density bonus and said in some cases it wasn't much use if it was already too dense from the standpoint of families. He said he thought of the density bcnus as being great for the developer but the people living in the project may not care for it very much, particularly if they are larger families with a lot of children. It may not necessarily be a good environment for the people living in it. One mistake in low income housing gaga building there in highrise form and they' rapidly became highrise ghettos. The amendment failed on the following vote: AYES: Beahrs, lierwald, Clay, Rosenbaum HOES: Comstock, Henderson, Pearson, Sher ABSENT: No r ton The sri.ain motion re 4(d) passed on the following vote: AYES: - Berwvaid, Clay, Comstock, Henderson, Pearson, Rosenbaum, Sher RCM: Beahrs ABSENT: Norton 5 12 10/22/74 MOTION: Councilman Comstock moved, seconded by Henderson, 4(e) basically as recommended by the Planning Commission: Explore alternative local financial assistance programs, with special emphasis given to rentals." AMENDMENT: Councilman Berwald moved to add after the word "rentals" the words "and incentives to increase the supply of lower priced housing." The motion to emend failed for lack of a second. Councilman Beahrs said he was concerned that there were no limits indicated on the ultimate budgetary costs to the city. He maintained the electorate was entitled to a vote where substantial outlays were concerned. Tokenism involving $50,000 was one thing, but to go into it by subsidizing 2,000 people, would involve big money to the point where the taxpayer should have a specific vote. The motion passed on the following vote. AXES: Clay, Comstock, Henderson, Pearson, Rosenbaum, Sher NOES: Beahrs, Berwald ABSENT: Norton MOTION: Councilman Comstock moved, seconded by Pearson, 4(f) as recom- mended by the Planning Commission as follows: Continue the land bank program for those parcels most practical for housing development for 1o4 moderate income families and for the elderly. The motion passed unanioousiy. M0L1ON: Councilman Comstock moved, seconded by Pearson, 4(g) as recomvended by the Housing Corporation as follows: Establish a non-profit organization whose principal goal is to assist in the provision and preservation of Jcw/ moderate housing. Vice Mayor Henderson said he wished to go beyond that to see a statement of continuation of support for the present Palo Alto Housing Corporation. SUBSTITUTE MOTION: Vice Mayor Henderson moved, seconded by Beahrs, as follows: Continue to support the Palo Alta Housing Corporation whose principal goal is to assist in the provision and preservation of low/ 665- moderate housing, and establish an additional non-profit organization bbb whose purpose would be to acquire, preserve and manage housing at the lowest cost levels possible in a financially self-supporting program. Mr. GoldamiS said the Housing Corporation can -continue to do all sorts of things while the new corporation that they had proposed would have quite specific jobs to do. It might very well require different people on its board with different kinds of expertise needed for the acquisition, development and operation of housing. The substitute motion lakes good sense and he hoped the new corporation could be going long before the Comprehensive Plan would be completed. The substitute motion passed unanimously. MOTION: Mayor Sher moved, seconded by Comstock, 4(h) as follows: Include in the Comprehensive Plan's Housing Element the ouUinee end au appraisal of the feasibility of a process that would• permit or require developers to make payments to be used to provide low/moderate income housing, in lieu of providing leas/moderate income units in their developments. Mayor Sher said he wished staff to review the concept of in -lieu payments in the next phase of the Comprehensive Plan. He hoped the in -lieu payment proposal would prove feasible because he thought it had the potential to 5 J. 3 [0/2;x/74 0 See pg. 666 solve some of the problems that they have encountered in connection with the direct requirement of provision of low/moderate income units in nets developments. Particularly, it could work in with the option they had just approved regarding the: non-profit corporation to acquire housing to be rented. The piggyback housing program could be helped by it. Rental housing is the type that best serves the needs of disadvantaged persons in the housing market. Councilman Beahrs said this was a valiant try with the best of intentions, however, he expressed skepticism. He labeled it as a one-time discriminatory tax on those who acquire property. Councilman Comstock felt the staff and consultant's immediate consideration would be the basis on which the in -lieu payments would be collected, as well as figuring out where would be the best place to use the payments. He said his concern was that the concentration of low/moderate income housing in any one part of the community would have to be monitored. Mayor Sher said justification for the option was stated in the October 10 staff memo. Land available for housing, especially in Palo Alto, is a scarce commodity. There is an imbalance in the relationship of income groups who can obtain that housing. At the time Resolution_ 4725 was adopted, 20 per cent of the owner -occupied housing stock in Palo Alto fell in the category of low/moderate. Therefore, any housing construction that includes less than 20 per cent Iow/uoderate units woul.d further imbalance the proportion of low/moderate units available and this contributes to a problem. That is the justification for requiring those persons to help solve the problems in one fashion or another. There is a bill in the California Legislature which would permit cities to require a percentage of low/moderate units in new housing developments. It is not a ;novel Idea at this level of government. Councilman Berwald said he would support it since it was not a requirement but a study of the feasibility. He asked staff if it were broad enough to enable them to do a study. Perhaps incentives would be a better: way to encourage developers to make in -lieu payments. Mr. Knox responded that incentives were covered in 4(d) with dea.sity bonus. Requirements were covered in 4(b) and (h). It would take a combination of requirements and incentives. Hr. Knox said he was interested in any low/moderate income housing incentive proposals Councilman Berwald cared to send him. The motion passed unanimously. MOTION: Vice Mayor Henderson moved, seconded by Peareon, an option 4(1) as follows: Encourage and participate in low/moderate income housing program financed by other levels of government and provide additional. city aubsidy programs to cover situations where high costs .in Palo Alto require supplemental funds. Vice Mayor Henderson said he would even go to the point of encouraging state and federal officials to come up with such programs and then when the programs are developed at the other levels, the city would participate to the fullest extent possible. Councilman Beaters thought it more appropriate for the Subcorporation to undertake this type of program and administer it. Mr. Goldsmith responded that there seed to be two ideas embodied in 4(1). They sight be treated separately. The first would be one of the objectives of the new subcorporatlon In that they view it as being x multi -purpose organization able to use funds from apy source for below market housing. The second part was a kind of an omnibus thing. it seemed a separate subject. Mayor Sher said he intended to separate the motion into two parts for the vote. 5 1 4 10/22/74 Chairwoman Pearson said she supported the motion and felt it important to put into the General Plan an interest in other funding and programs from federal and state agencies. Under the second part, she'referred to several kinds of subsidies —the piggyback program, which started out with $100,000 and finally to $25,000 or $50,000, and the land at Lytton Gardens. It is also a subsidy when they ,support the Housing Corporation. These were the kinds of things necessary on a. city level. The first part of 4(1) passed on the following vote: AYES: Comstock, Henderson, Pearson, Rosenbaum, Sher NOES: Beahrs, Clay ABSTAIN: Berwald ABSENT: Norton The second part of 4(i) failed on the following vote: AYES: Comstock, Henderson, Pearson, Rosenbaum NOES: Beahrs, Berwald, Clay, Sher ABSENT: Norton Mayor Sher asked Mr. Knox to give the presentation on Option Set 6 at that time. The consideration of that set would be at the next meeting. Mr. Knox presented Option Set 6 as outlined in CNR:584:4 dated October 24, 1974. Anne Steinberg said that at the public meetings held by the Planning Commissioe there was more response to this set of options than anything else in the Impact Report, and residents supported control of industrial expansion. With continuation of the present policies, 73,200 jobs are projected for 1990, an increase of 45Z --'an extra 22,900 jobs. This by itself is a substantial increase, but nowhere near the potential employ- ment capacity --estimated at 201,000. Option 1(d) attempted to deal with both reducing industrial development and at the same tinge with providing more residential zoning. Any option to reduce density in industrial areas would minimize the expansion of Palo Alto's regional.role as an employment center. Residents of Palo Alto have expressed their unwillingness to make the sacrifices necessary for such a role. Staff proposals to explore the pos,fbility of reviving current L -M -S zones to more clearly reflect the present use of land is in line with the Commission's recommendations. Use of F -C zoning might be an alternative approach. She concluded that Option 6(d) was added as an incentive in the hope that solutions to transportation and housing might be worked out in a cooperative spirit by the city and major employers. Mayor Sher invited the public to address them on Option Set 6 at the next special meeting set for Monday, October 28, 1974, at 7:30 p.m. MOTION: Mayor Sher moved, seconded by Henderson, to set October 28, 1974 as as the reeting ante to conclude the options. The motion paeaed on the following vote: AYES: Berwald, Comstock, Henderson, Rosenbaum, Sher NOES: Beahrs, Clay, Pearson ABSENT: Norton 5 1 5 10/22/74 The meeting adjourned at 11:20 p.m.