HomeMy WebLinkAbout1996-12-09 City Council (13)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL 4
FROM:CITY MANAGER DEPARTMENT: Planning and
Community Environment
DATE:December 9, 1996 CMR:497:96
SUBJECT:901-909 ALMA STREET, BMR AGREEMENT FOR MIXED USE
PROJECT WITH FOUR RENTAL UNITS
REQUEST
This report addresses the issue of the required Below Market Rate (BMR) component for an
application to rezone property at 901-909 Alma Street from CD-S(P) to Planned Community
(PC) District for a 15,683 square-foot, four-story, mixed-use project with four apartment
units and 4,425 square feet of office use.
RECOMMENDATION
Staff recommends that the City Council adopt the attached ordinance on second reading,
including the revised BMR requirement of an in-lieu payment of $34,790.
POLICY IMPLICATIONS
The revised BMR agreement is consistent with Housing Element Program 13 that requires
in "Housing Developments of three or more units, not less than 10 percent of the units should
be provided at below market rates to low’- and moderate-income families," and the BMR
Rental Guidelines as amended and adopted by Council on September 8, 1986 that allow for
a single lump sum in-lieu payment.
DISCUSSION
At the November 4, 1996 City Council meeting, the Council approved the mixed-use project
at 901-909 Alma Street, with a provision that the BMR agreement be revised to reflect a
higher rental value of the four proposed apartment units. The revised payment was to be
CMR:497:96 Page 1 of 3
included in the Ordinance to be adopted on second reading. The original BMR agreement
was based on the comparable sales value of the four rental units utilizing recent sales of
apartment buildings in the downtown area and anticipated rents of $1,200 to $1,400. The
unit values and rents were estimated based on general knowledge and recent appraisals of
Palo Alto Housing Corporation (PAHC) properties. No formal appraisal of the value of the
rental portion of the project was prepared. The value of each of the rentals was set at
$160,000. Utilizing the City-imposed multiplier of 3.5 percent for a four-unit project, this
resulted in a fee of $22,400.
Because the units are very large for one-bedroom units (approximately 1,200 square feet) and
due to the recent sharp increase in rents in Pato Alto, the Council requested that staff
reexamine the value per unit on an expected higher rent. City staffand PAHC staff consulted
further with our real estate advisors and had further discussions with the applicant. The
applicant has proposed that the per-month rental of each unit be estimated at $1,750 (see
attached letter). Based on the comparisons provided staffand the variations in the units, staff
recommends accepting the $1,750 per month figure. Using a Gross Rent Multiplier (GRM)
of 12, which is based on the average for six recent sales in Palo Alto, a per-unit value of
$252,000 results. Using a cap rate of 6 percent, based on the average of the same six sales,
a per-unit value of $245,000 results. The average value is $248,500. The 3.5 percent BMR
multiplier for a four-unit project results in a fee of $34,790. The applicant has agreed to
fulfill the BMR requirement for the project by paying this in-lieu fee.
ALTERNATIVES
The Council could amend the BMR requirement based on a higher or lower estimated rent.
For each $50 the rent is changed, the fee would change by $994. For example, an estimated
rent of $2.000 per month would result in an in-lieu fee of $39,760.
FISCAL IMPACT
The fee will increase the residential housing in-lieu fund by $34,790.
ENVIRONMENTAL ASSESSMENT
An environmental assessment was prepared for the project and was approved by the Council
on November 4. 1996. The revision to the BMR agreement does not modify the assessment.
ATTACHMENTS
Ordinance
Letter from Douglas Ross. dated November 25, 1996
CMR:497:96 Page 2 of 3
CC: Douglas Ross, Douglas Ross Construction, Inc.
PREPARED BY: James E. Gilliland, Assistant Planning Official
DEPARTMENT HEAD REVIEW:
KENNETH R. SCHREIBER
Director of Planning and
Community Environment
CITY MANAGER APPROVAL:
FLEMING
City Manager
CMR:497:96 Page 3 of 3
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING SECTION 18 . 08 . 040 OF THE PALO ALTO
MUNICIPAL CODE (THE ZONING MAP)TO CHANGE THE
CLASSIFICATION OF PROPERTY KNOWNAS 901-909 ALMA
STREET FROM CD-S(P) TO PC
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION i.
(a) The Planning Commission, after a duly noticed public
hearing held September ii, 1996, and the Architectural Review
Board, upon consideration at its meeting of August i, 1996, have
recommended that Section 18.08.040 (the Zoning Map) of the Palo
Alto Municipal Code be amended as hereinafter set forth.
(b) The City Council, after due consideration of the
recommendations, finds that the proposed amendment is in the public
interest and will promote the public health, safety and welfare, as
hereinafter set forth.
SECTIQN 2. Section 18.08.040 of the Palo Alto Municipal
Code, the "Zoning Map," is hereby amended by changing the zoning of
certain property known as 901-909 Alma Street (the "subject
property") from "CD-S(P) Commercial Downtown Pedestrian Shopping
Combining District" to "PC Planned Community." The subject
property is shown on the map labeled Exhibit "A," attached hereto
and incorporated herein by reference.
SECTION 3. The City Council hereby finds with respect to
the subject property that:
(a) The site is so situated, and the uses proposed for
the subject property are of such characteristics that the
application of general districts or combining districts wil! not
provide sufficient flexibility to allow the proposed mixed use
development, or for a development on this site that is compatible
with the mix of uses, density and design of the surrounding
neighborhood. Specifi~ally, while the CD-S(P) District permits
mixed residential and nonresidential use, it does not provide the
flexibility for developing a mixed use project on a small lot,
consistent with the character of predominantly service commercial
areas such as Alma Street. The project design, which positions
residential units above the Alma Street arterial corridor, serves
to improve the quality of the residentia! living spaces and
provides a more substantial building along Alma Street, consistent
with the Downtown Urban Design Guide. While the CD-S(P) District
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allows office and residential projects as permitted uses, the
required provisions for developing residential uses within this
district make it difficult to design a mixed use project which is
compatible with the land uses and development pattern of the
surrounding neighborhood, particularly along Alma Street. Adoption
of the PC District for this project would permit the necessary
flexibility in floor area, common usable open space, and off-street
parking requirements so that.a compatible, vertically integrated,
mixed use project can be built on a relatively small lot.
(b) The project will result in public benefits not
otherwise attainable by application of general districts or
combining districts, as follows:
(i)The project design, which positions
residential units above the Alma Street arterial corridor, provides
an attractive, substantial building along Alma Street, consistent
with the policies of the Downtown Urban Design Guide. The
intersection of Channing Avenue and Alma Street is identified as an
"Auto Entry" to the Downtown. The Guide suggests varying building
heights along Alma Street "to create a mini-skyline along the
western edge to anchor the downtown," and further suggest that
buildings along Alma Street should be designed as "four sided"
because they will tend to be taller than other buildings and will
be visible from mnay elevated locations. The design of the project
furthers these policies.
(ii) The application of the PC District standards
as proposed would result in public benefits by providing desirable
street improvements along Alma Street and Channing Avenue in the
vicinity of the project. These street improvements would be
beneficial to the neighborhood and community at large in that they
will help to increase pedestrian activity in the area. The
improvements consist of a special sidewalk treatment consisting of
integral colored concrete paving along the Channing Avenue and Alma
Street frontages, and a 1,786 sq. ft. pedestrian plaza facing
Channing Avenue that includes raised planters, public seating, and
new street trees and other landscaping. These improvements would
not all be made available through deve!opment of the site under the
CD-S(P) District regulations.
(iii) The project will incorporate original art
work, as approved by the Public Art Commission and the
Architectural Review Board, which will be visible to the public.
(iv) The applicant will resurface the portion of
the alley adjacent to the site.
(c) The uses permitted and the site development
regulations applicable within the district are consistent with the
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Palo Alto Comprehensive Plan, and existing and potential uses on
the project site, adjoining sites, and within the general vicinity.
Specifically, the project would be consistent with the following:
(i) Housing Element. PrQgr~m ~ -"In areas
adjacent to the Downtown shopping area, maintain single-family and
duplex areas and have multiple-family housing close to shops and
offices." The four proposed apartment units would provide an
opportunity for employees of downtown businesses to live within
easy walking distance of their jobs.
(ii) Housing Element, Policy 6 -"Maintain at least
the present number of multiple-family rental units while working to
increase the overall supply of rental housing." The project would
increase the overall supply of rental housing by four units.
(iii) Housing Elem~nt0 Policy 14 and Emplo_vment
Policy 2 - "Support the mixing of residential uses in commercial
and industrial areas" and "encourage the construction of more
housing primarily on or near industrial and commercial sites. " The
project would not only provide four additional housing units in a
commercial area, but would provide a mix of office and residential
uses on the same site.
(iv) Housing Element. Program 19 "In housing
developments of three or more units, not less than 10 percent of
the units should be provided at below market rates to low- and
moderate-income families." The project will be required to pay an
in-lieu fee which will be used to provide additional BMR housing in
the City.
(v) Housing Element. Program 32 States in part
that the City should "evaluate any disincentives which discourage
residential use on land zoned for commercial and industrial use,
and if necessary, eliminate or mitigate such disincentives. " The
PC zone change process is being used to accommodate the proposed
mixed use project, which includes residential use on commercially
zoned property.
(vi) Urban Design, Program ~$ - "Create mini-parks,
pedestrian malls, promenades, open space, and areas where
pedestrian would have right-of-way over automobiles." The project
includes a 1,666 sq. ft. pedestrian plaza fronting on Channing
Avenue that includes a raised planter, public seating and new
landscaping.
(d) The parking and loading plan for the project, which
includes twenty-three (23) vehicular parking spaces, one fewer than
would otherwise be required, is feasible and adequate given the
design of and permitted uses for the site, and justifies
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961204 lac 0080354
modification of the requirements of Chapter 18.83 with respect to
number of parking spaces. Relevant data has been presented by the
project applicant to support the modification, in that the office
portion of the project and the residential units will not have peak
parking demands at the same time. Therefore, reduction of the
required parking by one space is appropriate.
$~CTION 4. Those certain plans entitled "901 Alma, a Mixed
Use Development for Douglas Ross" prepared by Columbus
Architecture,Interiors.Planning, dated March 21, 1996, approved by
the Architectural Review Board on August i, 1996, with revisions
dated August 29, 1996, together with revised landscape plan dated
September i0, 1996, copy on file in the Planning Division office,
and to which copy reference is hereby made, are hereby approved as
the Development Plan for the subject property, pursuant to Palo
Alto Municipal Code section 18.68.120. Said Deve!opment Plan is
approved for the following uses, and subject to the following
conditions:
(a) Permitted Uses. The permitted uses shall be limited
to a mixed use project which includes approximately 4,425 sq. ft.
of office use and four residential units.
(b)
allowed.
Conditional Us@..S.No conditional uses shall be
(c) Site Development Regulations. All improvements and
development shall be substantially in accordance with the approved
Deve!opment Plan and the Conditions of Project Approval adopted by
the City Council in conjunction with approval of this ordinance.
The following~ site development regulations establish rules for
modifications or additions to any building, accessory structure or
landscaping on the subject property. Definitions of terms used
shall be in accordance with Chapter 18.04 (Definitions) of Title 18
(Zoning) of the Palo Alto Municipal Code:
Once the project has been constructed consistent with the
approved Development Plan, any exterior changes to the buildings or
any new construction not specifically permitted by the Development
Plan or by these site development regulations shall require and
amendment to this Planned Community Zone.
(d) Parking and Loading Reqfuirements. The parking and
loading requirements governing the subject property shall be in
accordance with the approved Development Plan, on file with the
Department of Planning and Community Environment and as amended in
accordance with this section. The following requirements shall
apply to the project and shall be reflected in amendments made to
the Development Plan and approved by the Director of Planning and
Community Environment prior to issuance of building permits:
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(i)Bicycle parking spaces, in the number and
type required under Chapter 18.83 of the PAMC, shall be provided on
the site.
(e) D@ve!opmen% Schedul@. Construction of the project
shall commence on or before July i, 1997, and shall be completed
and ready for occupancy on or before September i, 1998.
(f) Special Requirements.The following special
conditions and requirements shall apply to the project. These
requirements shall be reflected in amendments made to the
Development Plan and approved by the Director of Planning and
Community Environment prior to issuance of building permits:
(i)P_Z]Z~]~£[i. This project was approved in
part on the basis that it will incorporate original art, visible to
the public, as a public benefit of the project. The exact nature
and location of the aft will be determined by the City’s Public Art
Commission (PAC), applying the standards set forth in PAMC
2.26.040. The art shall be approved by the PAC prior to issuance
of building permits for the project, and shall be fully installed
by the date of initial occupancy of the project.
(ii) BMR Requirements. In conformance with the
City’s Below Market Rate (BMR) requirements (Program #13, Housing
Element, Pa!o Alto Comprehensive Plan), a lump sum payment in-lieu
of provision of BMR housing shall be paid to City for deposit in
the Housing Reserve Fund. This payment shall be
which was calculated based on a rentialimarket value of
$160,000248,500 for each of the four residential units in the
project, applying a rate of 3.5% times market value. The payment
is due to City prior to occupancy of any of the residential units.
The provisions of this condition f.(ii) have been
negotiated between the City and the project applicant, and are set
forth in that letter from the Di~ecto~
Envi~o~ent u=~=u August~, ±~’~96,=~±=~u ...............and=~==u ............totgre appi i cant to the Cityi!i~s !iliAssiistantiiiiiili<Planning iiiii0fifiiciia!liii!i:i:mn dated
November 25 9x~, 1996. In the event of conflict between the
9m~ms-~--~@ November 25, 1996 letter and this Ordinance, the terms of
this Ordinance shall prevail.
(iii) Improvement Plans. Final plans, including
complete lighting and photometric plans; detailed landscaping and
irrigation plans encompassing on-and off-site plantable areas, with
additional landscaping provided in the proposed.parking court,;
final plans for the public artwork; building materials and colors,
including the glass, roof deck material, mullion details and the
proposed cementious board and proposed signage shall be reviewed
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and approved by the ARB prior to issuance of building permits. The
applicant shall reconsider the proposed parking court material
(asphalt) and the design of the building entry on Channing Avenue.
All utility meters, lines, transformers, backflow preventers,
electrical panel switchboards, and any other required utilities
shall be shown on the final plans and shall show that no conflict
will occur between the utilities and landscape materials and shall
be screened in a manner which respects the building design and
setback requirements. The plans shall incorporate the improvements
described in Sections 3(b) (ii) and 3(b) (iii) of this Ordinance.
(v)Mi%igatiQn measures and Q~her cQndi%ion$.
In addition to the Conditions of Approval adopted by the City
Council in conjunction with approval of this Ordinance, the project
shall incorporate the mitigation measures presented in the
Environmental Impact Assessment (96-EIA-12) for the project, on
file with the Department of Planning and Community Environment.
SECTION 5. The Council finds that this project, as
mitigated, will not have a significant environmental effect.
SECTION 6. This ordinance shall be effective on the
thirty-first day after the date of its adoption.
INTRODUCED:
PASSED :
AYES:
NOES :
ABSTENTIONS :
ABSENT :
ATTEST:APPROVED:
City Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
Mayor
City Manager
Director of Planning and
Community Environment
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CONSTRUCTION OFFICES ~ 001
November 25, 1996
James E. Gillilar;d
Assistant Planniug Official.
City of PaiD Alto
250 Hamilton Avenue
Paid Alto, CA 94301
Re: 909 Alma Street- BMR In Lieu Fee
FAX 415 329-2240
,.rrr OSS
Dear Jim:
Per our recent discussions, at the request of City Council you have reviewed the In Lieu
Fee calculations and have proposed an increase from $ 22,400. to approximately
$ 40,000. which means the value of the units has inoreased from an initial value of
$160,000. to a ~evised value of $ 280,000. The pdmary issue in determining the fee is
the apartment rental rate.
In checldng other properties nearby, I have found the following rents for 1 bedroom 1 bath
apartments:
Hawthorne Apartments
275 Havtthorne Avenue
96 Units $ 975.Pool & spa
Forest-Iowers ! 18 Units $1,090.Pool & spa
501 Fon.~st Ave $1,330.Exercise facility
Case R~.~al Apts 35 Units $1,700.Pool
360 For,.~st Ave Community room
Oak Creek 759 Units $1,885.
16000 £and Hill $ 2,035.
Pools, tennis courts
Racquetball, exercise
facility, corn rooms
The rental rate.’; listed above average $1,502.50 ( $9,015. divided by 6 ). These rates
are closer to your odginal rental survey. The 909 Alma project is unique and has
advantages and disadvantages compared with other units in the area. On the plus side
the units are larger and new. On the negative side three of the apartments face Alma
which is a bus~ street, the area is transitional with several industrial uses nearby, there
are no commor area improvements such as a pool, exercise facility or community room.
It is important ~,~ note that the rental rates on several of these propertiess have increased
15% since Ap#l of this year.
In the interest c~ compromise and to minimize delays to issuance of the building permit,
I would sugge.~t that we use an average rental rate per unit of $1,750. per unit and
establish the w~lue of the apartments based upon this rental rate. This would put the in
lieu fee somewhere in the middle of your eadier caJculation and your most recent.
Please review .~nd contact me to discuss in more detail.
Sincerely,