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Home My WebLink AboutStaff Report 451-07TO: City of Palo Alto City Manager’s _ HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT DATE:CMR: 451:07 SUBJECT: APPROVAL OF RESPONSE TO ASSOCIATION OF BAY AREA GOVERNMENTS (ABAG) REGARDING 2007-2014 REGIONAL HOUSING NEEDS ASSESSMENT NUMBERS RECOMMENDATION Staff and the Planning and Transportation Commission (PTC) recommend that the City Council review and approve the draft letter (Attachment A) as part of the City’s appeal of the Association of Bay Area Governments (ABAG) Regional Housing Needs Allocation (RHNA) for Palo Alto and direct staff to transmit the letter to ABAG. BACKGROUND On July 19, 2007, ABAG’s Executive Board adopted the draft allocations for jurisdictions in the San Francisco Bay Area for the 2007 - 2014 RHNA cycle. Palo Alto was assigned a total draft allocation of 3,505 units, including 846 very low, 666 low, 786 moderate, and 1,207 above moderate income units. Jurisdictions had until September 18, 2007, to request revisions to their allocations. Palo Alto sent a letter to ABAG on September 13, 2007 requesting adjustments to the City’s assigned allocation based on several factors. In addition to requesting reassignment of units to serve Stanford’s growth to Santa Clara County, the City also had contested the population forecasts for Palo Alto and objected to the allocation methodology that penalizes jurisdictions that have implemented "smart growth" policies by assigning additional growth to transit-oriented areas where increased growth has already been factored. On September 26, 2007, City staff met with the Planning and Transportation Commission (PTC) to discuss the ABAG numbers, allocation methodology and Housing Element process. The City Council discussed the ABAG numbers at a study session on October 15, 2007 and indicated that the PTC should provide comments for inclusion in any appeal letter prior to Council review of a draft letter. The ABAG Executive Board met on November 15, 2007 and adopted the draft allocations, including the reassignment of the 645 units to Santa Clara County to account for Stanford’s growth as requested by the City. This resulted in a total allocation of 2,860 units to Palo Alto, including 690 very low, 544 low and 641 moderate and 985 above moderate income units. No other adjustments, however, were made to the City’s allocation by the ABAG Executive Board. PLANNING AND TRANSPORTATION COMMISSION REVIEW On November 28, 2007, the Planning and Transportation Commission discussed the draft letter prepared by staff (See Attachments B and C). The PTC recognized that it was unlikely that ABAG would further reduce the City’s allocation; however the PTC considered it very important that the City appeal the allocation and go on record citing the reasons why the allocation methodology, forecast data and process were flawed and why Palo Alto should not be expected to provide sites for over 2800 units in its Housing Inventory. The Commission identified several additional reasons (see Attachment D for a complete list) to include in the draft letter that support the City’s ongoing position that the assignment is unachievable. The PTC emphasized that the letter should indicate that the high cost to the City of providing housing and supporting services and facilities, such as schools, transit and parks, is an unfunded state mandate. The PTC was concerned that the City was being penalized for implementing "smart growth" policies during the last RHNA cycle when it exceeded its housing goals in two income categories and that Palo Alto should, at least, be credited with those additional units in this RHNA cycle. The Commission also requested that the letter confirm that the job growth anticipated with the proposed Stanford Shopping Center and Medical Facility expansion are included in the projected job growth and will not be included in future housing element job growth projections. A subcommittee of the PTC was appointed to work with staff to edit the draft appeal letter to include these additional cormnents. The PTC also encouraged Council to direct staff, as part of preparing the next Housing Element, to develop a City housing strategy that identifies achievable housing goals for the City, establishes understandable methodologies to meet these goals and includes an extensive public process for developing the housing strategy. The City has until January 15, 2008 to appeal the RHNA numbers. In early 2008, ABAG will hold a public hearing (date unknown) on any appeals regarding the assigned allocations. Based on state requirements, the final RHNA must be adopted by ABAG’s Executive Board prior to June 2008 and revised housing elements are due to the state by July 2009. RESOURCE IMPACT This letter contests the potential for additional resource impacts to the City. POLICY IMPLICATIONS The letter is consistent with Comprehensive Plan policies neighborhoods and adequate provision of services. that support conservation of ENVIRONMENTAL REVIEW The letter is not a project under the California Environmental Quality Act (CEQA). PREPARED BY: :porgno Chief Planning & Transt Official 2 DEPARTMENT HEAD: CITY MANAGER APPROVAL: Director of Planning & Community Environment EMILY ~A~ON" Assistant City Manager ATTACHMENTS: A. Draft letter from City of Palo Alto to ABAG B. Staff report to PTC for November 28, 2007 meeting C. Draft PTC minutes from November 28, 2007 meeting D. List of PTC Issues to Address in ABAG Letter ATTACHMENT A December 11, 2007 ABAG Executive Board c/o Henry Gardner, Secretary - Treasurer Association of Bay Area Governments P.O. Box 2050. Oakland, CA 94604-2050 DRAFT Dear Mr. Gardner: The City of Palo Alto thanks you for providing us with the opportunity to review and comment on the revised Draft Regional Housing Needs Allocation (RHNA), which was adopted by the ABAG Executive Board on November 15, 2007. The City acknowledges ABAG’s modification to Palo Alto’s RHNA to address the City’s Sphere of Influence circumstance with the County of Santa Clara and Stanford University. However, even with the reduction of 645 units, our City Council, the Plarming and Transportation Commission and staff have determined that the RHNA of 2,860 for Palo Alto is unachievable. Setting requirements that cannot be achieved threatens the credibility of important public institutions, and is simply an exercise in futility. Palo Alto has an extensive and long history of leading and implementing affordable housing in an area highly impacted by the high cost of housing. We were the first to implement inclusionary zoning in this region and Palo Alto Housing Corporation was established back in 1970 as a non-profit affordable housing provider. Although the City of Palo Alto has adopted zoning and programs supporting core concepts behind the allocation method such as smart growth, infill development, protection of open space and rural areas, restricting urban sprawl, and transit oriented development, there should be a reasonable expectation of success in meeting goals when assigning allocations to cities. Other factors also need to be taken into consideration such as essential infrastructure needs and service requirements. In addition to many other components of Palo Alto’s infrastructure already being at capacity, a critical factor for Palo Alto is the capacity requirements of the Palo Alto Unified School District. Currently the district is at capacity and the addition of students from 2,860 units cannot be accommodated with the current school facilities. Given that the school district is at capacity, and that there are not funds or lands for expansion that would be required to accommodate the allocation, these requirements would amount to an unfunded mandate for Palo Alto. As staff has indicated previously in transmittals to ABAG, the population and household growth projections for Palo Alto will not be realized. ABAG’s Projections 2007 assumes Mr. Henry Gardner Association of Bay Area Governments Page 2 of 4 a population growth rate of approximately 26 % during the next 27 years in our jurisdictional boundary, but the City of Palo Alto’s population has grown only by approximately 4.7% over the last thirty years. We understand that the methodology uses Sphere of Influence population projections but we believe that the population trend within our Sphere of Influence is proportional to the historic jurisdictional boundary population trends. Although the City has experienced a growth rate of approximately 8% during the last seven years, this has been a period when Palo Alto has constructed significant new housing development well in excess of historic averages and that rate cannot be sustained given Palo Alto’s limited land availability and redevelopment potential. Therefore, it’s very likely that the City’s population growth will remain far below ABAG’s projections since it will be very difficult for Palo Alto to continue the housing development it has experienced in the last seven years. During the last RHNA period, the City’s population growth was largely attributable to a single development of approximately !,000 units on the City’s only remaining vacant large residential site. This City’s housing growth occurred during a temporary period of substantial decline in the market for commercial development and increasing demand for housing. Taking this anomaly and extrapolating this into the future is not appropriate. By using its own overestimated Projections 2007 population numbers, the RHNA methodology compounds this error by assigning a 45% weight to the population projections that ABAG itself created. This logic appears circular in that the driver behind this growth appears to be the mandate from ABAGI Additionally, the City should receive credit in this RHNA cycle for the 1,036 units that were built during that last RHNA period that exceeded the City’s assigned allocation. The City exceeded its above moderate allocation by 1,282 units and its low allocation by 14 units with a deficit of 51 units in the very low category and 208 in the moderate category. Palo Alto has also protected and retained existing units that are more affordable and should receive further credit to offset the City’s RHNA requirements. The City also continues to oppose the inclusion of an additional Transit Oriented Development (TOD) factor in the allocation methodology to the extent that it would disproportionately assign housing to cities like Palo Alto that have shown a commitment to TOD, in effect penalizing cities that have developed smart growth policies. Additional growth requirements for built out cities like Palo Alto should be predominantly TOD housing, not the core ABAG allocation plus TOD housing. The emphasis of transit use in the methodology is unrealistic at least for Palo Alto. Transit at the University and California Avenue stations is used more efficiently by Mr. Henry Gardner Association of Bay Area Governments Page 3 of 4 commuters and not so efficiently by residents; many more people take transit TO Palo Alto than FROM Palo Alto. A greater concentration of jobs in the vicinity of transit will promote mass transit in Palo Alto more effectively than the concentration of housing. Furthermore, Palo Alto has been assigned additional units based on transit access from the San Antonio Avenue station. However, this station is located in and serves primarily Mountain View, not Palo Alto. Also, Caltrain only services the San Antonio Caltrain station only once per hour during rush hours further reducing its TOD effectiveness. Palo Alto has promoted smart growth in its Comprehensive Plan policies and its Pedestrian and Transit Oriented Development (PTOD) zoning all in the midst of VTA reducing bus services to Palo Alto neighborhoods and with little or no projected additional funding for transit to support the TOD aspects of RHNA. However, Palo Alto’s diligence and success in implementing smart growth policies appear to have led ABAG to assume that the City has no limit to further intensifying with infill development. Given the RHNA mandate to provide housing for all income levels, it is impossible for the City to provide the 1,875 units assigned for below market rate income levels. Palo Alto prioritized affordable housing as one of the City’s top five goals and built over 90 percent of the City’s very low and low income housing allocation for the last RHNA cycle. However, the current RHNA methodology uses 2000 Census income distribution data for allocating housing based on affordability, and does not reflect the City’s success in building affordable housing over the last seven years. Instead, the current methodology allocated more affordable housing to Palo Alto compared to the region as a whole. Additionally, due to the extraordinary cost of land in Palo Alto, all very low and low income rental housing that has been developed recently has required significant City subsidy. The cost of low and very low income projects in Palo Alto are averaging $400,000 to $500,000 per unit with the City subsidizing approximately 50% of the project cost. This is in large part due to the exorbitant land costs in Palo Alto which average $10 million an acre but have been as high as $16 million an acre. In order to develop the assigned 1,234 units of low and very low income housing under current funding conditions, the City would be expected to provide a subsidy of ap.proximately $245 to $310 million, which is clearly unrealistic and unattainable as the City struggles to maintain revenues adequate to support basic services to its residents and businesses. Given state subsidy restrictions, and because of the high land costs in Palo Alto, moderate income units are achieved only through the City’s inclusionary zoning program, which requires 15 - 20% affordabitity. As a result, approximately 70% of the ABAG allocation ~vould need to be subsidized by Palo Alto. In order to provide the assigned 641 moderate income level units, the City would have to develop 3,205 - 4,272 market rate units. The Mr. Henry Gardner Association of Bay Area Governments Page 4 of 4 high cost to the City of providing this housing as well as supporting services and facilities, schools, transit and parks, is an unfunded state mandate. There may also be insufficient water resources available to serve this additional population. Until there is state subsidy available for affordable units, identifying adequate sites to meet proposed RHNA housing for lower income levels in communities like Palo Alto will be a paper exercise. The City wants to go on record confirming that job growth anticipated with the proposed Stanford Shopping Center and Medical Facility expansions are included in ABAG’s projections for the City’s job growth for the 2007-2014 period, and the City will not be assigned these jobs a second time in a future RHNA regardless of those projects’ occupancy dates. Finally, much discussion has occurred about the impact of commute emissions on climate change. Palo Alto has just concluded a comprehensive climate change impact analysis. A significant finding of that report is that only 5% of Palo Alto’s C02 emissions are attributable to trips into Palo Alto. Consequently, the report indicates that even an additional 2,860 units with similar commuting characteristics would impact Palo Alto CO2 emissions by less that 0.1% or 1/1000th Palo Alto’s total CO2 The City urges ABAG to consider factors such as land costs and availability as well as community needs to provide adequate open space and essential services in developing a realistic RHNA. Given that there was no representative from the 250,000 residents of North Santa Clara County, we were not adequately represented on the Housing Methodology Committee and, therefore, unique factors prevalent in this area were not sufficiently considered in the ABAG allocations. If ABAG adopts more realistic and achievable RHNA allocation goals, this will enable cities to focus on actually providing adequate housing for a diverse population, a goal strongly supported by the City Counci! and the Palo Alto community. The City of Palo Alto appreciates your consideration of our appeal of the assigned allocation. Sincerely, Yoriko Kishimoto Mayor cc: Paul Fassinger, ABAG Research Director ATTACHMENT B PLANNING & 3 TRANSP OR TA TION DIVISION STAFF REPORT TO:PLANNING & TRANSPORTATION COMMISSION FROM: AGENDA DATE: SUBJECT: Julie Caporgno, Chief Planning & Transportation Official November 28, 2007 DEPARTMENT: Planning and Community Environment Review and Comment on Draft Letter Appealing ABAG Regional Housing Needs Allocation (RHNA) for Palo Alto RECOMMENDATION Staff recommends that the Planning and Transportation Commission (PTC) provide direction and comment to the City Council regarding additional issues and/or any other changes for inclusion in the draft letter (Attachment A) appealing the Association of Bay Area Governments (ABAG) Regional Housing Needs Allocation (RHNA) for Palo Alto. BACKGROUND On July 19, 2007, ABAG’s Executive Board adopted the draft allocations for jurisdictions in the San Francisco Bay Area by income category for the 2007 - 2014 RHNA cycle. Palo Alto was assigned a total draft al!ocation of 3,505 units, including 846 very low, 666 low, 786 moderate, and 1,207 above moderate income units. Jurisdictions had until September 18, 2007, to request revisions to their allocations. Palo Alto sent a letter to ABAG on September 13, 2007 requesting adjustments to the City’s assigned allocation based on several factors. On September 26, 2007, City staff met with the Planning Commission to discuss the ABAG numbers, allocation methodology and Housing Element process. The Commission requested an opportunity to provide input to the City Council prior to submittal of any future appeal of the allocation. The City Council discussed the ABAG numbers at a study session on October 15, 2007 (see Attachment B for a synopsis of that discussion). The Council indicated that the PTC should provide comments for inclusion in any appeal letter prior to Council review of a draft letter. ABAG staff responded to the City’s request to reduce its allocation on November 2, 2007 with the attached letter (Attachment C). In addition to requesting reassignment of units to serve City of Palo Alto Page 1 Stanford’s growth to the Santa Clara County, the City also had contested the population forecasts for Palo Alto and objected to the allocation methodology that penalizes jurisdictions that have implemented smart growth policies by assigning additional growth to transit-oriented areas where increased growth has already been factored. In the letter, the ABAG staff supported the reassignment of Stanford’s units; however, the ABAG staff did not believe that any other changes should be made related the Palo Atto’s allocation. The ABAG staff contended that the population forecasts are reasonable and based on regional growth policies which may conflict with local policy. ABAG staff further asserted that the allocation methodology was developed by a committee comprised of representatives from the nine county ABAG region representing the region as a whole. ’DISCUSSION The ABAG Executive Board met on November 15, 2007 and adopted the draft allocations which included the reassignment of the 645 units to Santa Clara County as requested by the City resulting in an allocation of 2,860 units to Palo Alto. No other adjustments, however, were made to the City’s allocation by the ABAG Executive Board. At the time of preparation of this staff report, the City has not yet received formal written communication from ABAG transmitting the Executive Board’s decision. Staff has prepared the attached letter restating the issues that have been raised over the past year contesting Palo Alto’s allocation. The November 28, 2007 PTC meeting provides an opportunity for the PTC to identify additional reasons to include in a draft letter for Council revie~v that support the City’s position that the assigrm~ent is unachievable. The City Council is scheduled to discuss the City’s response to ABAG at its December 10, 2007 meeting. The City has until January 15, 2008 to appeal the RHNA numbers. In early 2008, ABAG will hold a public hearing (date unknown) on any appeals regarding the assigned allocations. Based on state requirements, the final RHNA must be adopted by ABAG’s Executive Board prior to June 2008 and revised housing elements are due to the state by July 2009. Prepared by:Julie Caporgno, Chief Planning & Transportation Official Department/Division Head Approval:;, -~ ~_~k.~ ~ Curtis Williams, Assistant Director ATTACHMENTS: A. Draft letter from City of Palo Alto to ABAG B. City Council Study Session Synopsis, October 15, 2007 C. Letter from ABAG, dated November 2, 2007 City of Palo Alto Page 2 ATTACHMENT A DRAFT 11/28/07 December ! 1, 2007 ABAG Executive Board c/o Henry Gardner, Secretary - Treasurer Association of Bay Area Governments P.O. Box 2050 Oakland, CA 94604-2050 Dear Mr. Gardner: The City of Palo Alto thanks you for providing us with the opportunity to revie~v and comment on the revised Draft Regional Housing Needs Allocation (RHNA), which was adopted by the ABAG Executive Board on November 15, 2007. Palo Alto has an extensive history of supporting and implementing affordable housing in an area highly impacted by the high cost of housing. The City appreciates ABAG’s modification to Palo Alto’s RHNA to address the City’s unique Sphere of Influence circumstance with the County of Santa Clara and Stanford University; however, even ~vith the reduction of 645 units, an assignment of 2,860 units to Palo Alto is highly unrealistic. Both the City Council and the Planning and Transportation Commission have discussed the RHNA for Palo Alto and neither the Counci! or Commission find that the goal of providing sites to accommodate 2,860 unitsis potentially achievable. Although the City of Palo Alto supports the main concepts behind the draft allocation method such as promoting smart growth, infill and transit oriented development, protection of open space and rural areas, and restriction of urban spraw!, there should be a reasonable expectation of success in meeting goals when assigning allocations to cities. As staff has indicated previously in transmittals to ABAG, the population and household growth projections for Palo Alto cannot be realized. Projections 2007 assumes a population growth rate of over 26% by 2035 in our Sphere of Influence while the City of Palo Alto’s population has grown only by approximately 4.7% over the last 30 years. Although the City has experienced growth of 8% over the last seven years, this has been a period when Palo Alto has constructed significant new housing development well in excess of historic averages, at a rate that cannot be sustained given Palo Atto’s limited land availability and redevelopment potential. Therefore, it is very likely that the City’s population growth will remain far below ABAG’s projections since it will be very difficult for Palo Alto to continue the level of housing development it has experienced in the last 7 years, let alone provide over three times that growth. The City also continues to oppose the inclusion of an additional Transit Oriented Development (TOD) factor in the allocation methodology to the extent that it would disproportionately assign housing to cities like Palo Alto that have shown a commitment to TOD, in effect penalizing cities that have already developed smart growth policies. Mr. Henry Gardner Association of Bay Area Governments Page 2 of 2 DRAFT 11/28/07 More importantly, given the RHNA mandate to provide housing for all income levels, it is entirely unrealistic to expect the City to provide housing approaching the 1,875 units assigned for below market rate income levels. Due to the extraordinary cost of land in Palo Alto, all affordable rental housing that has been developed recently has required significant City subsidy. Construction costs for affordable projects in Palo Alto averages $400,000 to $500,000 per unit, with the City subsidizing approximately 50% of the project cost. This is in large part due to the extremely high land costs in Palo Alto, which range from $4 million to $16 million an acre. In order to develop the 1,875 affordable units under current funding conditions, the City would be expected to provide a subsidy of $375 to $500 million. Funding at that level is unrealistic and unattainable as the City struggles to maintain revenues adequate to support basic services to its residents and businesses. The City has periodically requested housing gants, but is generally ranked low due to the higher need in other communities. Unti! there is a State subsidy available for affordable units, identifying adequate sites to meet proposed RHNA housing for lower income levels in communities like Palo Alto will become a paper exercise. In conclusion, the City urges ABAG to consider factors such as land costs and availability as well as community needs to provide adequate open space and sufficient services in developing a realistic RHNA. IfABAG adopts more realistic and achievable RHNA allocation goals, this will enable cities to focus on actually providing adequate housing for a diverse population, a goal strongly supported by the City Council and the Palo Alto community. The City of Palo Alto appreciates your consideration of our appeal of the assigned allocation. Sincerely, Yoriko Kishimoto Mayor cc: Paul Fassinger, ABAG Research Director ATTACHMENT B The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:03 p.m. Present:Barton, Beecham, Cordell, Drekmeier, Kishimoto,Klein, Kleinberg, Mossar, Morton (arrived at 6:08 p.m.) STUDY SESSION Discussion of ABAG Regional Housing Needs Allocation for Palo Alto and Housing Element Requirements Steve Emslie, Director of Planning and Community Environment, gave a comprehensive presentation regarding the recent ABAG housing assignments to jurisdictions for the next Regional Housing needs Allocation (RHNA) period (December 2006 through June 2014). He explained the chronology of developing the allocations, the allocation process and summarized state housing element law and requirements for housing elements, including housing inventories, to meet state requirements. He also provided Council with an overview of the schedule for submission of housing elements to the State Department of Housing and Community Development. He described the allocation assigned to Palo Alto by various income levels and explained that the City was requesting a reduction in that allocation from ABAG based n two factors, the overall projected population growth for Palo Alto was too high for the next seven years and all new jobs and housing growth projected for Stanford in the next seven years were assigned to Palo Alto including development anticipated to occur under the County General Use Permit (GUP). Planning Commissioner Tuma gave a brief summary of the Planning and Transportation Commission’s discussion regarding the ABAG numbers. There were several public speakers providing pros and cons related to the City’s allocation and responsibility for providing its regional share of housing. Vice Mayor Klein and Council Members Morton and Cordell considered the numbers to be unachievable since it would require significant acreage to develop the numbers of units required under the allocation and given Palo AIto’s "built out" status it is not possible to find sufficient land to reserve for that number of units. Furthermore, they considered the addition of 2800+ units would result in adverse effects on Palo AIto’s quality of life particularly regarding school capacity and traffic congestion. Councilmember Kleinberg indicated her support for housing; however, she considered that the transportation infrastructure needed to support higher density housing should be in place before the housing is developed. Mayor Kishimoto recognized the need to address the RHNA assignment but considered that given Palo AIto’s status as a regional employment center and the high cost of land in Palo Alto that the City should explore ways of transferring units to other jurisdictions consistent with the ABAG process. Council Members 10/15/2007 3 Barton, Mossar and Beecham saw the RHNA assignment as a challenge to the community citing that it was Palo AIto’s responsibility to provide the requisite sites for future housing particularly given the City’s commitment to sustainability and the need to respond to the global warming crisis. No action required. ORAL COMMUNICATIONS Mary Schaefer, 742 De Soto Drive, spoke regarding preparedness for flooding. Robert Moss, 4010 Orme St., spoke regarding reestablishing the graffiti program. Michael Maciorski, 17230 Grand Prix Way, Morgan Hill, spoke regarding his toxic waste complaint and he presented a petition for investigation into illegal termination and dumping of toxic waste into the Palo Alto City Landfill. Arthur Keller, 3881 Corina Way, spoke regarding high-speed rail to address global warming. SPECIAL ORDERS OF THE DAY 2.Vote and Appointment of Candidates to the Parks and Recreation Commission First Round of Voting for Parks and Recreation Commission Voting for Sean Cottle: Voting for Alex Panelli: DREKMEIER BARTON, BEECHAM, KISHIMOTO, KLEINBERG, MOSSAR Voting for Deirdre Crommie:BARTON, BEECHAM, CORDELL, DREKMEIER, KISHIMOTO, KLEIN, KLEINBERG, MORTON, MOSSAR Voting for Leon Leong:CORDELL, KLEIN, MORTON City Clerk Donna Rogers announced on the Ist ballot, Deirdre Crommie with 9 votes, and Alex Panelli with 5 votes were appointed to the Parks and Recreation Commission for a term ending April 30, 2010. Council Member Morton left the meeting at 8:15 p.m. 10/15/2007 4 ASSOCIATION OF BAY Representing City and Count:,, Governments of the San Rancisco Bay Area November 2, 2007 Mr. Steve Emslie Director, Planning and Community Development City of Palo Alto P.O. Box 10250 Palo Alto, California 94303 Subject: ABAG Response to Comments on the Draft RHNA Allocations Dear Mr. Emslie: Your letter to Henry Gardner regarding your jurisdiction’s draft RHNA allocation was for~varded to me fqr response. The City has asked the Executive Board to reduce its allocation by 645 dwelling units in recognition of the gowth at Stanford University that is within the City’s sphere, but is subject to County land use control. It appears that Palo Alto is in a unique situation. After a meeting with Palo Alto, the County of Santa Clara and Stanford University, staff has reviewed Palo Alto’s allocation. A portion of that allocation is related to existing jobs and expected growth at Stanford. The staff supports an adjustment of 645 units to the County for that reason. We will therefore recommend to ABAG’s Board that these units be reassigned to the County. We do not believe that any other changes should be made to Palo Alto’s allocation. The ABAG Executive Board adopted the Projections 2007 forecast at its November 2006 meeting. Projections 2007, as it has since 2003, contains assumptions based on regional policies that encourage growth in existing communities and near transit. These regiona! policies may, at times, be counter to local land use plans. In addition, ABAG’s Board adopted the final Regional Housing Need Allocation methodology for this cycle at its May 2007 meeting. Those decisions were made after a substantial amount of comment, discussion and advice from a Housing Methodology Committee. The HMC was made up of elected officials, senior staff and interested parties from around the region. In making its decision, the Executive Board tried to balance total unit responsibility and the responsibility providing affordable housing. Your comments will be part of the materials for the November Executive Board agenda, where ~ve expect this issue to be considered. If you have any other questions, please contact me at PaulF@abag.ca.gov, or 510-464-7928. Sincerely, Paul Fassinger Research Director cc: David Cortese, Henry Gardner Mailing Address: P.O. Box 2050 Oakland, California 94604-2050 Location:Joseph P. Bort MetroCenter 101 Eighth Street (510) 464-7900 Fax: (510) 464-7985 Oakland, California 94607-4756 info@abag.ca.gov ATTACHMENT C Planning & Transportation Commission Meeting November 28, 2007 Verbatim Minutes Excerpt REP OR TS FROM OFFICIALS/COMMITTEES Review and discuss draft letter to ABAG regarding appeal of Regional Housing Needs Allocation (RHNA) Ms. Julie Caporgno, Chief Planning and Transportation Official: Thank you Chair Holman. Tonight we have provided the Commission with a draft letter to ABAG regarding the Regional Housing Needs Allocation for your additional input and changes. This letter wil! be forwarded to Council. I just wanted to bring to your attention, and I hope you all received it, there were two errors in the draft letter in your packet and Staff has provided the revised letter at places with the changes highlighted. One was a decimal error and one was a cut and paste error. I caught them after the packet went out so I apologize for those errors. I will be brief with my presentation since we provided you with fairly extensive information regarding the ABAG allocation process at your study session last month. I just wanted to provide you with a synopsis of the allocation process and where we are in the process to provide hopefully some guidance for your comments on the letter. The ABAG Board approved the revised allocation that we had discussed with you at your study session. I provided you at your places a chart that shows that allocation, which was reduced by 645 units to account for the growth in Stanford’s unincorporated lands. The City has until January 15, 2008 to submit an appeal of a draft allocation. The Council is scheduled to discuss the al!ocations on December 10, 2007. ABAG will schedule appeal hearings early in 2008 and adopt a final al!ocation by June 2008. I just wanted to remind you, I know we talked about this at your previous meeting that there are two goals of the Regional Housing Needs Allocation. Number one is to increase the supply of housing within the nine Bay Area counties and the second is to ensure that local governments consider housing needs of all income levels. That second goal is why we were assigned the four different income levels of housing: very low, low, moderate, and above moderate. The income level allocation is based on a comparison between our 2000 Household Income Distribution and the 2000 Regional Household Income Distribution. Since Palo Atto’s income levels are higher than the regional average we were assigned additional lower income units than the regional average to address that need for lower income units in Palo Alto. The intent of this is to promote an equitable regional income distribution for all types of housing units. The information we have received from ABAG to date indicates that adjustments will be supported only for specific or unique situations. An example was the Stanford adjustment because it was representative of that type of situation where they recognize that we had a unique situation because the Stanford adjustment was due the area being outside of our incorporated area that they were attributing to us. Where something like impacts on schools will probably not be supported since wherever you put the housing will result in additional students and impact schools in that area. The nine county Bay Area region was assigned 214,500 units. Any units that are removed from Palo Alto must be reassigned by ABAG to another jurisdiction in the region. So that concludes our introductory comments and we are here to provide you with any additional direction or information that we can. Chair Holman: Commissioners? Commissioner Lippert. Commissioner Lippert: I have a question that has to do with the job/housing imbalance that we currently have. Does that in any way reflect on these numbers at all? What I am getting at here is that we have a current resident population that is around 65,000 people right now but we have a daytime population that is over 100,000 people. When you take into account the ABAG numbers or our revised number does it take into account that the people that would be moving to Palo Alto would in fact be actually working here or commuting elsewhere thereby reducing traffic if they were working here or does it take into account that we are actually going to be building more office space? So in fact, not only will we have that additional number of people living in Palo Alto but we will also have a larger number of people commuting to Pa!o Alto. Ms. Capor_.~jo: Actually it takes into account both. It takes into account the fact that there is an assumed additional employment that will be here by the year 20t4 as well as the existing employment. In the past when allocations have been assigned to us the previous methodology they used they just based it on the population growth that they assumed for a jurisdiction. In this particular methodology that they used for this Regional Housing Needs Allocation process they looked at both jobs and housing because of that very issue of the jobs/housing imbalance throughout the region. Chair Holman: Commissioner Tuma. Commissioner Tuma: You mentioned something in there towards the end of your presentation about it is unlikely that the impacts on schools would be an issue because no matter where you go you are going to impact the schools. Aren’t there jurisdictions within ABAG where there is in fact shrinking enrollment? I don’t completely understand why that couldn’t be taken into account as a factor because we are in the situation where we are bursting at the seams. I know there are others in the Bay Area where they are having declining enrollment. Ms. Caporgno: I think if we just said our schools are impacted and send them a letter that says that they would say well, there are a lot of jurisdictions that have that issue. Maybe there are some that don’t. I think if we were to partner with somebody, if we found a jurisdiction that did have a deficit of enrollment and wanted to take our units, wanted to work out an agreement with the City then ABAG wouldn’t have a problem. I don’t think just sending a letter saying it is going to affect our schools you need to transfer those units that would be a reason for them to of themselves say we are moving them here. The fact is that there may be other reasons why the jurisdiction doesn’t want to absorb those units plus it is not just a matter of units. They would have to also deal with the same problems that we outlined in the letter as far as the cost of land and the provision of the lower income units. It is not just a matter of finding units period but there are four different income categories. Commissioner Tuma: I can understand how the schools issue on its o~vn may not be enough to make the case but I have a number of comments this evening about how this is related to the schools. I think that that is a significant issue. We have enrollment growth issues in the school district here that certainly aren’t unique but probably are more exaggerated than they are in other areas. So while not on its own would it justify transfer I think it needs to be part of the puzzle and part of the argument that we are going to make. Ms. Caporgno: I wasn’t trying to dissuade you from including that in a letter I was just saying that I think given what we have heard from them we are probably not going to get the reallocation, the reassignment. I am not trying to say don’t include it but I was just trying to be kind of practical. I didn’t say that they necessarily wouldn’t do it just that I don’t think they would. Chair Holman: Curtis. Mr. Williams: I just want to add to that that I think it would be more effective if the school district sent a letter to ABAG or gave us a letter that we would attach. You and I were both at the meeting a month ago of the City School Committee and I am not sure, you might know better than I do, what the status of that is because I think that would be something we could certainly send along with our letter if such a letter is forthcoming. Commissioner Tuma: I do have some more comments or information about that. Was there a City School Liaison meeting this morning, and if so, was this letter discussed? When I got off the phone at 11:30 last night with the Assistant Superintendent that was the intent. Mr. Williams: I wasn’t at that meeting. I forgot to ask Steve what happened so I don’t know. Commissioner Tnma: They are very interested in commenting on and having their thoughts be a part of this letter because the other thing I think we all need to be reminded of is that while the 645 units have been moved out of Palo Alto they have not been moved out of Palo Alto Unified School District. So the District is back at the 3,500 number. The children that those 645 units produce will go to Palo Alto Unified School District. Chair Holman: Commissioner Sandas. Commissioner Sandas: I have a couple of questions related to Stanford and the impending development there in terms of the hospital and so forth. We are projecting lots of job growth from that increased development. I am just wondering all that development is on the Palo Alto part of Stanford so when we are begging ABAG to perhaps consider since there is so much job growth on Stanford property and we are asking them to take that into consideration when allocating between Santa Clara County and Palo Alto, I am just wondering if there is any other way that a tradeoff of some kind can be made. If in fact it works out that the Development Agreement with Stanford requires that they are going to put up X number of units of housing on their property in Santa Clara County that is still developable will we be able to receive some sort of or any more teeth in that? Is there any more room to negotiate? I guess you have already asked this question, which is why they have only taken away a few houses. Ms. Caporgno: We have thought about that. Since we haven’t gotten into the negotiations with Stanford yet it is premature to determine whether or not they would be agreeable. The County would have to be agreeable, Stanford would have to be agreeable to any sort of reduction of our units and the transfer into the County on Stanford lands. One of the problems with that is the timing of everything. The ABAG process is supposed to be completed in June 2008. We have been told by HCD that the way the legislation is written and the way the process has been envisioned is that it will be too late if we come forward at the end of this year with a transfer that they will already be in place. Now the possibility of the legislation being modified to allow something like that is another possibility but at this time it is probably unlikely that that could occur by June 2O08. Commissioner Sandas: Okay, that is unfortunate since we know where the density and job growth in our community is coming from. My second question is would you please remind me again what happens if we don’t comply with ABAG numbers? Ms. Caporgno: We would have a Housing Element that would be out of compliance and we would not be eligible for some state funding. It would be dependent upon what types of applications we would apply for. I think I mentioned last time that right now we have a $1.0 million grant that the City received that we are going to apply to the Alma Substation property for the redevelopment of that housing project. We wouldn’t receive that funding and there is also the possibility of litigation. There have been lawsuits filed against some jurisdictions that have Housing Elements out of compliance. There are several jurisdictions in the area that don’t have Housing Elements that are certified and they have been continuing development. Curtis, do you want to add anything? Commissioner Sandas: Well, let me just ask this other question. It seems like I am scheming here but what happens if you make your best effort to comply and by the end of the term you haven’t made it then what? If you are applying for grants with the attitude that you are complying what happens if you fail to comply? Ms. Caporgno: Well, I think you just have a Housing Element that is not certified. There are jurisdictions in this county and actually in San Mateo County there are several that don’t have Housing Elements that are compliant but several of them have completed the Housing Elements submitted to the state, the state just hasn’t certified them. There are a couple of jurisdictions that just haven’t finished an approved Housing Element. So if you make your best effort and it is not certified, if let’s say we can’t find sites for 2,860 units and the state decides they are not going to certify us that is the condition we wilt be in. Chair Holman: Commissioners, we have two members of the public who are here to speak. I’m sorry, Curtis? Mr. Williams: Could I just add on to that though a little bit? I think Staff and I think most of the Commission and Council is of the opinion that it is near impossible to create 2,860 units in that six or seven year period. What we would likely do is create a Housing Element and we would include in that all the constraints that we have been talking about as to why we couldn’t get to that number and we would put forth a program that we thought was the best possible effort that we could make and let that sort of speak for itself. If the HCD was not satisfied with that and if it took litigation to try to move that forward we may go that route or we may just proceed along like Julie said like all these other cities have done with Housing Elements that they thought was sort of their best shot and they haven’t been sued over that so we would do the best we can. So a lot of these issues that you brought up many of which will be in the letter would be taken and really drawn out in terms of the explanations and backgrounds and data for those as part of the Housing Element to further justify why we couldn’t reach this number but we do think we can reach these numbers. I also want to clarify you said what if at the end of the period we can’t it this number? The Housing Element is not a construction requirement it is a planning requirement. We have to show in the Housing Element that we have sites zoned and available for X number of units and a method to achieve the income levels. It is not something where they then come back in 2014 and measure how many we have actually constructed. Chair Holman: We do have two members of the public and I would like to go to them if Commissioners to my right would bear with that. The first speaker is Karen Sundback to be followed by Bob Moss. Ms. Karen Sundback. Palo Alto: I would like to thank Staff especially Julie for your fine work. I would also like to thank Commissioners for your continued attention on this issue. I do not support ABAG’s new housing allocations for Palo Alto. Presently we are in a very fragile housing market and I would like to encourage you to proceed with new housing with a great deal of caution and consideration. In the previous ABAG allocation that was years t 999 to 2005 we were among the seven cities in Santa Clara that fulfilled ABAG goals. Most of the other eight cities didn’t come close to achieving their goals. In fact of the nine Bay Area counties only Contra Costa met its goals. So if we do not fulfill these goals we will be joining the majority of cities and counties of ABAG. We did meet our previous ABAG goals and as a result we are now in the process of realizing how much we have to fortify our infrastructures and other support systems. On Monday we heard from Stanford Hospital and Children’s Hospital about how severely impacted we are and we are getting an idea as to how much work is required to upgrade our hospitals. The police station also known as the Public Safety Building built in 1967 needs upgrading. Our schools, as you have described. Also traffic on Arastradero, this has been a problem since 2007 and we still don’t have a solution for it and I am sure it will get worse with increased growth. Presently we have been adding houses faster than any other city in western Santa Clara County. In all of Santa Clara County we are the fourth fastest growing city. Presently our armual housing growth is 1.1 and ABAG wants to maintain it at about the same level, .9 percent for the next 20-plus years. We have our work cutout for us. We need to slow this rapid growxh and solve present problems. Once more I would like to thank Staff and Commissioners for your work and hope that you can help in this effort. Thank you. Chair Holman: Thank you very much for coming and speaking. Bob Moss. Mr. Bob Moss, Palo Alto: Thank you Chairman Holman and Commissioners. As you know I hold the ABAG system and the ABAG numbers in less than high regard. I think we should make some comments in the letter to correct some of the errors. The first of those errors is the assumption that the state population is going to grow by as much as 26 percent by 2035. Ain’t ever going to happen. We are going to run out of water in this state in about ten years. We are already seeing the significant loss of precipitation in the Sierra and within five to ten years we are going to wonder what happened to the water in the Colorado. The dams along the lower Colorado currently are between 40 and 50 percent full and they are not getting any fuller. So we are not going to have enough water to support that population. I would not be surprised if we actually lose population starting in 2030. So the figures are nonsense. Secondly, when we talk about the jobs/housing imbalance there is absolutely no accurate data on the number of jobs in Palo Alto, never has been. We don’t know because we don’t have a business license tax and so we don’t know how many people actually work here. Also, when you bring people in between 70 and 75 percent of them don’t work in Palo Alto. They work outside of Palo Alto and they commute. So they are talking about how we should have transit-oriented development. It is idiotic to say we should bring people in so that they live near the train station and then go out of town, and that is going to help our jobs/housing imbalance. No, it is not smart it is idiotic. I shouldn’t call them idiotic because that is being too generous. On the second page we talk about the high cost of property that $4.0 to $16 million an acre. We should also mention that Palo Alto has among the highest housing costs in the entire United States. That has been reported repeatedly by a number of commercial property and real estate developers, real estate companies. If you want to prove that you look every Saturday in the San Jose Mercury News in the Real Estate section they have a colurnn that talks about the sales in every zip code in San Mateo and Santa Clara County. It gives you the median cost of the house in the zip code and the cost per square foot. Zip codes 94301 and 94306 are never less than the top five for cost per square foot for those two areas. So that also is a very telling point. You don’t tell people you have to build lots of homes in an area where people can’t afford to live. That is not how you solve the jobs/housing imbalance that is not how you solve the jobs problem. Finally, the talk about how the state is not going to give us money. The state doesn’t have a pot to piss in. The state is taking money from every possible source. They are stealing money from the highway department funds. They have just been sued because they owe the education department, school districts all over the state, money that they are supposed to have been giving them. So when they say we aren’t going to give you any money they aren’t going to give us any money anyway they haven’t got any. Finally, they may sue us because we are not doing what they tell us we should do. There is a state constitutional section that says if the state imposes a requirement on a local government they have to pay for it. If they impose a requirement that we build housing they are going to have to pay for it. If they haven’t got anything to pay us with we don’t have to build it. Chair Holman: Thank you very much. Seeing no questions of the speakers I will close public testimony. Commissioner Burt, would you care to speak? Commissioner Burt: First I would like to thank Staff for the draft and the work they have done and how responsive they have been to the Commission’s comments. I would also like to emphasize that I think that even though as Curtis stated we may not get ABAG to budge further I think it is very important that all the strong points that we can make be established here for both trying to influence them, input from the Commission to the Council, and for future reasons for establishing that we had made these points in advance and they were perhaps not responded to properly by ABAG. So in that vein one of the things I wanted to ask about is my understanding is that Director Emslie had indicated in, I can’t remember which public forum, that the absence of the additional housing resulting from the Stanford Medical Center proj ects ABAG probably had overestimated out jobs growth. Is that essentially accurate? If we weren’t having Stanford Medical Center growth then ABAG’s anticipation of our jobs growth is overestimated? Ms. Caporgno: They had sent us numbers for both the population and job growth and the job growth didn’t seem that extraordinary. The population growth did and we had commented to them. Then when we found out about Stanford we also contacted them because there was some concern that okay, are they going to evaluate us and assume we need more jobs. When we had spoken to them, and Roland you might want to add because you were the one that actually talked to them, but my understanding is the way they look at it is so broad brushed that there were sufficient jobs in the area so it didn’t really make any difference Stanford being here or Stanford not being here. I don’t think that our jobs were so inflated that it allows Stanford, and if Stanford went away that we would have this excess in jobs. You might want to comment. Mr. Roland Rivera. Planner: That is basically right. When we told them about the Stanford Medical Center and the Stanford Shopping Center growth they said that was included in their projections. Commissioner Burr: Okay, so if it was included in their projections then that goes to my next point. This next Housing Element would be from 2007 to 2014, correct? I see a nodding so that is what is in the record. Isn’t the Stanford project development scheduled to be completed in 2015 ? Ms. Caporgno: A portion of the Medical Center is going to be completed earlier than that, right? Mr. Williams: There will be a portion of it completed by 2013 but the bulk of it is 2015 and there are some portions of it that are 2021 or 2022 for some of the clinic and School of Medicine space. Ms. Caporgno: Then the shopping center will be sooner than that. It will be within the 2014 timeframe. Commissioner Burt: So a major portion, and perhaps most of the impacts of the Stanford development would fall outside of the timeframe of this Housing Element. So if we accept and if ABAG is including those developments in this period and yet in fact the housing growth occurs in the next Housing Element period then ABAG in the next Housing Element period would count those against us a second time just as they did in this last Housing Element period we had an anomaly. We had our last major undeveloped land of the Sand Hil! properties and we exceeded our allotment. The fact that we added those housing units in that period has not given us any credit in this period. So if they are counting the jobs growth in each period and then coming up with a new mandate for housing based upon the jobs growth in that period we are risking getting dinged twice for the Stanford development. Ms. Caporgno: Roland you can add to this. I think when they said that they assumed and when he said they assumed the Stanford growth they didn’t know that Stanford was going to develop because the projections predated Stanford even announcing this to us. When we checked with them they said they weren’t going to extend it beyond what it was because they have made these kind of gross projections of jobs. They projected about 6,000 jobs. If the Research Park built out, which there is about 1.0 million square feet of growth potentia! in the Research Park, a considerable amount of those jobs would go there. I think that the 6,000 jobs could be absorbed in the city regardless of whether or not the medical facility and the shopping center expanded. So I think probably the City is actually getting a benefit. We may be exceeding the 6,000 if in fact they aren’t going to add anything because if in fact the Research Park developed and other development is going to occur in this seven-year period we are going to be adding jobs. So I think again they do it so broad brush that it is not specific and I don’t think they will count it against us the second time in the next RHNA period. Commissioner Burr: Let me just offer two comments on that. That may be the case but first I don’t think it is at all a given that the entire million square feet of the Research Park is going to be built out in the next period. So this assumption of 6,000 jobs aside from Stanford it may be possible but I don’t think that we should allow that assumption to be a basis for ABAG’s allocation. Secondly, if their allocation is so broad brushed that it could either throw in or throw out such an enormous project, the largest development project in Palo Alto history, and it doesn’t even impact their allocation then what kind of absurd math are they using? Ms. Caporgno: I think that is probably the better approach because when we told them that they said oh, 3,000 jobs, not a big deal. That is basically what you were told. So I think that is probably the approach. I don’t think we are going be penalized in the next period but I think it is very general. Then what it does is there is a very general look in projections but those projections then come back to be very specific when they are doing this allocation. Commissioner Burt: So then let me loop back to another related broad issue. I actually went back and listened a second time to the City Council webcast on this subject in their study session because there seemed to be some assumptions by some of the Council Members that this methodology was really refined and thought through carefully and somehow scientifically derived. Everything that we have heard as a Commission seems to refute that and that these numbers are almost pulled out of thin air in some cases. So first I think it is very important for this to be clarified for our City Council because the City Council needs to have the same factual basis for their decision-making. If you have some Council Members that are acting on blind faith that ABAG has derived these numbers through some very advanced methodology that is just not transparent to us common people then I think it needs to be clarified if that is not the case. Chair Holman: If we could stay with questions and maybe move to the next speaker and then come back? Commissioner Burt: Okay. I will have more questions but I will let it pass for the moment. Chair Holman: Commissioner Keller. Commissioner Keller: To follow up on some of the things that soon-to-be Council Member Burt mentioned is the issue of the reasons for putting items in the letter. First I would like to say that I appreciate the work that Staff has done on this and even though it may have been stressful in terms of our study session I certainly learned a lot and I think it was a very valuable experience. Chair Holman: We are staying with questions here. Commissioner Keller: Okay. I think there was a lot that came out of that and I appreciate that. So what I am wondering is in terms of reasons for putting things in the letter. One reason, which I have heard you say, is that you put things in the letter because ABAG will act on them. Might there be other reasons that you would put things in the letter in order to establish a public record of reasons? Will there be other justifications for doing that? Could you explore whether there are? Ms. Caporgno: I don’t understand the last question. Commissioner Keller: What I am wondering is are there reasons for putting justification for the numbers being calculated erroneously, are there reasons for putting it in the letter beyond whether ABAG acts on them? In other words, is it justification for putting it in the letter because it expands the public record on why we are doing what we are doing? Ms. Caporgno: I think that would be fine. The reason I was stressing ABAG acting on it because I think obviously we would like to see the numbers reduced but if it is something from a standpoint of the City wanting ~/o make a statement why we feel that the numbers are not going to be achievable, and I tried to put some of that into the letter, I think that is pertinent. What I was also trying to relay to you is that there is probably not going to be an accomplishment on our part in the sense of getting a reduction. It is just going to be something that wilt make us feel better because we have identified flaws in the allocation process and issues for us. Commissioner Keller: Is there a chance that if ABAG ignores what we say and says this is your allocation and I am sticking to it or ABAG is sticking to it that putting things in the letter will if we fail to meet these targets that the public wilt look at this letter and say well the City Council did their best and here is why. Would the letter have a benefit of doing that? Mr. Williams: I think it would. What you started out with was that what we put in the letter is what we think ABAG might act on. Let me clarify that I don’t think ABAG will act on that either. So these are generally things that we know that they discuss on a regular basis is some of these issues. So it is in sort of a normal communication mode between agencies and ABAG to discuss the type of things we have laid out. We have seen before that they just blow off things like school issues and some of these other things. I do think that points have been made and I think it is justified in that we are seeing this time, so it isn’t as critical as previously, but this time we are seeing that we are really up against numbers that are not achievable, that there is a potential for litigation out there, that it makes sense to bolster our case as much as we can regardless of whether ABAG, and we doubt that they will change one unit based on this, but it does establish a City position and it does give us then a little something to refer back to if down the line we are either in litigation or we try to argue with HCD over the validity of the Housing Element. We can look back and say we brought all these things out to A_BAG back then and so we think it is justified. I think our suggestion to you is for you to recommend what you would like to put in the letter and if we think there is something out of line we will let you know that but otherwise we will tx--y to capture those items. My suggestion would be to try to be as succinct as we can with those things but realizing that there needs to be some bit of explanation of each one. Commissioner Keller: Being succinct is not my long suit. In terms of the estimate of how many jobs there are in Palo Alto the US Government does a decennial census and I believe the last one of those was in 2000. An interesting thing happened between 2000 and now and that is the stock market collapsed, there was an Intemet boom that burst, and I am wondering the extent to which the ABAG predications of how many jobs we have now and how many jobs we have in the future is based on data from 2000 that has no basis in reality for today. Ms. Caporgno: They have adjusted numbers to reflect the dot.com bust. They do their projections every two years and so they did reflect in Palo Alto, any city that has jobs that are related to the dot.com industry, they adjusted those numbers. It still is very, very broad brush in general. I think what I was trying to convey to Commissioner Burr is that the bedrock for what we have are the projections and then they developed this very probably pretty complex and precise methodology that they applied but the foundation are these very general numbers. So then when you apply them you get dinged. They had a percentage of housing and a percentage of jobs, percentage near transit, and those are what they looked at as far as applying the methodology but it was always applied to these first assumed population growth and employment growth figures. Commissioner Keller: Now in terms of the assumed population growth I assume that that is in part based on our existing land use policies. I understand that in the last couple of years our land use policies changed dramatically to limit conversion of commercial properties and manufacturing properties to residential properties. I am wondering the extent to which ABAG’s assessment of how much Palo Alto can and should grow is based on obsolete information of what our zoning permits. At one point in time our zoning basically said that we could put housing anywhere. Ms. Caporgno: They would have that information but also as they indicated in a letter that you received that was attached to your Staff Report says, °’contains assumptions based on regional policies that encourage growth in existing communities and near transit." These regional policies may at times be counter to local land use policies. So even if we change them to reduce that development potential the fact that we have three transit stations and we are in an urbanized area and that we have a lot ofjobs I don’t think that would make a big difference in the way they assign those jobs and housing units. Commissioner Keller: I will follow up with the transit stations in a moment but let somebody else speak. Chair Holman: Curtis. Mr. Williams: I just wanted to suggest that while I know it is an item of extreme interest that there is a !ot of this we talked about last time too as far as the basis for the numbers and all that. It is 10:15 and we have a letter in front of you. I have heard from some of you about some of your suggestions. I think they are fine suggestions and I guess I would hope that relatively quickly here we could get into making those suggestions to the letter rather than trying to go back and sort of reconstruct what ABAG was thinking with their projections, etc. Chair Holman: Commissioner Tuma. Commissionei" Tuma: To that end, to follow up on a comment that both Commissioner Burt and Commissioner Keller made about the Stanford jobs issue I think we very specifically should call that issue out in this letter. Whatever likelihood it is or not that seven years from now Roland is off doing the Iditarod or something and we can’t reproduce the comments that he got from them we want it documented that they have said that those jobs are in this allocation. So I think that very specifically needs to go in here so that we don’t get hit on the backend as Commissioner Burt was expressing. The other question that may lead to a specific thing that needs to be documented here is that we have talked about the financial ramifications of trying to develop 1,875 affordable units. Do we have a projection as to how many market rate units it would take under our formulas for us to produce 1,875 affordable units? In other words, looking at the 15 percent BMR. I know that this topic was raised by at least one City Council Member that the number of units that it would take to meet these units based on the affordable formula is some astronomical number. So I think if that is the case we need to document that as well. Ms. Caporgno: We can insert something. Cutis and I talked about this a little bit. I lumped everything together. The 1,875 are below market rate so they are moderate as well as low and very low. Our moderate income level units come from the BMR program so we could break that out and it would just go into a little bit more depth but that would be fine to break that out. It will reduce the 1,875 and the $37.5 million to $50 million. It will reduce that somewhat. There aren’t really state subsidies for moderate rate housing. So the only way we have been getting them is through the BMR program. Commissioner Tuma: What I am trying to get at here is I think that we need to convey back to them that by giving us an allocation of X the reality is that in order to get we would have build a lot more than X. Mr. Williams: What we have done historically, as Julie has mentioned, is the very low and low tend to come from these projects that the nonprofits help build. We actually did pretty well on that in the last cycle. The moderate tends to be the one that we don’t get and one of the reasons is that we rely on our inctusionary housing requirements. So we have an allocation here of 641 moderate units. If at best we are getting 20 percent BMR and in many cases we don’t we only get 15 percent because the site isn’t big enough. But if we got 20 percent that means five times 641 means over 3,000 or 3,200 something like that total units, market rate and moderate of which 20 percent would equal the 641 moderate units. So that is the kind of thing it sounds like you would like us to say that we would have to create more even apart from the low and very low numbers here we would have to create 3,000 units more than our total allocation just to get our moderate percentage. Commissioner Tuma: Right. I think it puts a little more meat on the point that you guys do make in the letter, which is that if we are going to put something together and say that it really should be achievable. This is another example of how this simply isn’t achievable. Just one more point that I think needs to be made is that it doesn’t look like we are talking here, and maybe it is already in the record and doesn’t need to go in again. I can’t remember all the previous letters. It doesn’t look like we are getting any credit for where we exceeded our previous allocations. Unless that is already captured somewhere I think we need to make that point again. If they are not going to give us that credit it should at least be on the record that we have exceeded those numbers before and that is another reason why we don’t think we should have to hit these numbers. I also think that it is something that the public really needs to understand. We are feeling the effects of having done that yet we are not getting credit for it. Chair Holman: Commissioner Lippert. Commissioner Lippert: Just to sort of reiterate what Commissioner Tumajust said, I look up to the wall there and I see the second banner down, affordable/attainable housing, and those were City Council’s priorities from I think as long as four years ago when I joined this Commission. I really think that if we have to make one particular point in this letter that the numbers for the below market rate housing units for the moderate housing units be the numbers that we are really focused in on. The rest of it while it is important I think is really on the periphery of things. It is really those numbers that are the most important, and we have to stress that those numbers are ones that are really doable in this community, and that we are not just blowing smoke at them. Chair Holman: Commissioner Sandas. Commissioner Sandas: One of the things that concerns me is we are spending good brain cells and Staff time and so forth in rewriting this letter to stress a number of points for the record so that our community can see it, our Council can be a part of it, we are putting our best foot forward, and I think that is fabulous. What I am hearing Julie say is it almost like no matter what we say their mind is made up. We are stuck with these figures that we cannot possibly comply with, that we can’t possibly meet. So not having any legal background or experience I heard Curtis mention lawsuit as though the City can be sued somehow through ABAG or the state for not complying. I feel like we are being squeezed unfairly. That strikes me that there has to be some sort of legal means to undo this rather than begging ABAG who is just standing there stiff and stubborn about this. Don’t we have any legal means, Mr. City Attorney that we can pull out of our back pockets to help this situation along? Mr. Larkin: There are limited ~ounds for appealing the ABAG numbers and it is an uphill battle but certainly there are things that we can do. I think Curtis has outlined some of them, which is to do our best to come up with a Housing Element that is compliant recognizing that we are not going to make it. That provides us some basis to overcome a challenge to our Housing Element. We are certainly open to doing whatever we need to do to protect the City’s interests but it is an uphill battle. Commissioner Sandas: Well, what confuses me is that ABAG is an association and I am not quite clear what their authority is. You have been explaining this but as an association? Mr. Larkin: We wouldn’t be subject to a suit from ABAG but it would be either the state or a private housing advocacy group or a developer that would sue. It wouldn’t be ABAG itself that we would be subject to a lawsuit from. Ms. Caporgno: I was the one who said there was a possibility of being sued but I think when Curtis mentioned litigation he was talking about there may be some litigation that the City sues because of the fact of getting these allocations. It wasn’t that we were going to be sued. Commissioner Sandas: I misinterpreted that. I just heard "sued’ and I thought well, how could we do that? Mr. Williams: I know that Steve and Gary Baum have had some conversations already about what avenues are out there and that is something that we will be looking at if there is a way that we could challenge. It probably would be in conjunction with a number of other cities that have similar types of objections. I wouldn’t presume that at this point. Commissioner Sandas: Also the ABAG representation too or the lack of it coming from our end of the county. Chair Holman: Another opportunity for Palo Alto to be on the forefront of a movement, perhaps. I have a couple of things. Is Staff looking for a motion because I have a feeling we are going to have numerous comments and we could make a motion and then people amend it many times? Mr. Williams: I think would be great. Yes, we do need to have a motion and then a list here of what it is you want to add to the letter. Chair Holman: Great. Then I will ask just a couple of questions and then pass it back to Commissioner Burt. We can go Commissioner Burt, Commissioner Keller, Commissioner Garber one more time and then get a motion on the floor and get it amended as I am sure will happen. There are a lot of assumptions by ABAG and they are not alone that smart growth will prohibit building outside of a certain area. Absent an urban growth boundary is there any evidence that that really does happen? As I said before, we are not Portland, we don’t have an urban growth boundary, there is no restriction on however much they build in Holtister or Turlock or Fresno, just because we build more housing units here but it is a presumption that is made. Mr. Williams: Julie is looking for something that she found. I know I have seen studies and what they are saying is more that pressure in the outlying areas on farmland or whatever are reduced if you take essentially the same number of units and put them in a higher concentration infill situation but I don’t know that there is anything that says that you are going to guarantee certainly not that specific areas are left alone or the extent to which they are truly protected or the phasing of development is extended for a period of time. I don’t have those at hand. I didn’t have a chance to look at it. I think Julie had some opportunity. Chair Holman: Before you respond Julie, if I could pose two questions. Is there any evidence that that is an effect? The other is a secondary aspect of that which is given the housing prices in Palo Alto is that even less of an effect? In other words, if you are building a million dollar house here it is another housing unit or even our affordable housing units are expensive. You have to make a lot of money to be able to afford them. So given that high level it seems to me even more counterintuitive that we would be preventing housing being built in the outer regions. Ms. Caporgno: We found some articles but I don’t know if it actually gets at the issue you are raising but we did try to find some articles that support that infill development does work in preventing sprawl, etc. We brought them here, one is from Green Belt Alliance, some information from ABAG, which probably isn’t necessarily go to be this but they did some case studies and some other kind of documents that are supposed to be essential documents on the fundamentals of smart growth, kind of the beginnings of that. So I would be glad to send out or email these to the Commission or you have them to look at. I don’t think you probably want me to go through those tonight. They are available and Karen I can give them to you if you want to look at them. Chair Holman: I think if you could send them to the Commissioners. I would be interested to know too are they situational? Commissioner Burt. Commissioner Burt: A couple of things. One, I would like to follow onto Commissioner Tuma’s comment on the schools. I believe that there is record in the press and in the public record that it is not just that some districts are seeing declining school populations. I believe most districts in the area are seeing declining school populations. Palo Alto’s is seeing a rapid growth in school population. Many of those districts that are seeing declining have much more available land than Palo Alto does and they are going to have even more available schoo! land because they are experiencing surplus school sites. Palo Alto is virtually completely built out, we have no available school sites, and we are seeing rapid school population growth. I think that difference is an important one to make. Chair Holman: Commissioner Burt, your comments are good. I think Commissioner Tuma is ready to make a motion and those could just be added to the motion if that would be agreeable to you. Unless you have more questions? Commissioner Burt: No, I don’t have more questions. So if you would prefer to go about it that way that is fine too. Chair Holman: Otherwise I think we would be stating them twice. Commissioner Burt: Sure. Chair Holman: Do you have a question, Commissioner Keller? Commissioner Keller: Yes. I understand the argument for BMR units in terms of diversity in Palo Alto. What I am wondering is what evidence is there that building a BMR unit means that people are traveling from Tracy or Turlock or someplace like that? Do we know where people are moving from when they are moving into BMR units? Ms. Caporg~o: For our BMR program you either have to live or work in Palo Alto. That is one of the requirements and if we don’t have anybody that is eligible on that list that lives or works in Palo Alto currently then we take somebody from the outside but I think that rarely happens. Commissioner Keller: For the people who work in Palo Alto and move into a BMR unit where were they living before? Are we saving a commute from Tracy into Palo Alto because a BMR person moved from there to a BMR unit that we built in Palo Alto? What is the reduced commute? I hear a lot about greenhouse gases from building housing. Well, from the BMR units what is the actual reduction in greenhouse gases from people that are commuting from further distances that are now living in Palo Alto and working in Palo Alto as a result of the BMR units? Mr. Williams: I don’t think we can answer that tonight. That is a broad issue. We would need to have a separate study session probably on it to get into it. We will look for studies and see because I know there have been some. Do we keep track of where the people come from? Is that something we can look back on for our program? Ms. Caporgno: We would have to check with Palo Alto Housing Corporation because they are the ones who oversee the list but they would have that information I am sure. I don’t know how far back we would be able to go to ascertain that but we should be able to get at least some years back. Commissioner Keller: It would be helpful if you could get that data because I actually like understanding an argument and getting real data to address it rather than guesses. Ms. Caporg-no: I don’t want to prolong tonight’s session but just to follow up on that given the fact that we built a lot of below market rate units recently we should have quite a bit of data available even if we don’t have data that goes back very far we should have a reasonable amount of data available now. Commissioner Keller: One last question. Do we have data on the income distribution of jobs within Palo Alto compared to the income distribution of jobs within Santa Clara County versus the Bay Area to compare with this chart? It might make sense to say that if we are producing very few low-income jobs then we might not produce as much low- income housing compared to places that produce a lot more low-income jobs. It seems that rather than it being based on the fact that we have a lot of high income housing now it would make sense to think in terms of the jobs mix if part of the reason for having housing is because our jobs/housing imbalance should be based on the kind of jobs we produce. Do you understand what I am saying? So it would be helpful to actually have that comparative data for both Palo Alto and the county to be able to understand that better. Chair Holman: Commissioner Tuma, motion? If I might, this is going to be long I am sure. So I am not going to make a point of catching every note. So I am going to rely on Staff to track the motion. Commissioner Tuma. MOTION Commissioner Tuma: Okay, and I am going to make the motion in a way that is intended to be open to amendments. I would move that that Planning and Transportation Commission recommend to City Council to make the following additions and/or changes and inclusions to the draft letter appealing the ABAG RHNA for Palo Alto. First, that we specifically address the issue of the impact of including the Stanford jobs in this go-round’s allocation. Second, that we raise the issue of the impact on schools in a district like Palo Alto where we are growing quickly. Third, that we request once again credit for the housing that we built that was in excess of our previous allocations. Fourth, that we indicate what we believe the actual number or range of numbers of units that we would have to build in order to meet the numbers that they have allocated specifically looking at the low and moderate income units. One final item that I would like to make a part of the motion which we haven’t talked about before but I would like us to in the last sentence of the first full paragraph on page one to modify the language there that currently says, °"Although the City of Palo Alto supports the main concepts behind the draft al!ocation method," I would like to be modified to possibly say that we are in support of some of the concepts behind the allocation method, but I don’t support many of the concepts that they have put into the allocation method. So I would like that language softened as we!l. SECOND Commissioner Burt: I will second. Chair Holman: Commissioner Tuma, do you need to speak to your motion? You don’t have to. Commissioner Tuma: I know I don’t have to but there is one component of it I am going to speak to and probably unsurprising to everybody in this room, and that is the schools component. I think we have to make sure that everybody involved the school district, ABAG, the residents of our city, and surrounding cities understand that this is simply not an option from a Schools perspective. Whether it goes to some of the comments that Mr. Moss was making that if the state is going to require these things of us then they are going to need to find a way to build more schools and support the kids in our district. The concept that we would try to build anything close to this without some outside funding for schools or some other way to fund the schools, and I am sure these argument apply to other pieces of infrastructure, but this wi!l crush the crown jewel in my opinion of this city, which is our school district. We simply can’t support that. Chair Holman: Commissioner Burt, would you care to speak to your second or make amendments or both? Commissioner Burt: I will make just a couple of amendments and then I would like to reserve an option to speak not to amendments but provide additional comments later. First, would Staff be amenable to a subcommittee of the Planning Commission working with Staff to work on the final drafting of the letter? Mr. Williams: I think that would be fine just with the caveat that this is going to the Council on December 10 so we don’t have a lot of time. It wil! have to be in the packet by the end of next Wednesday to do that. Commissioner Burt: Okay. Second, in addition to the schools as critical as they are I think we can’t overlook that for every 1,000 people we are supposed to have two acres of parkland. That is a significant acreage that simply isn’t readily available in the’ community and would have a tremendous cost to boot but the availability is not there. Third, I would like tO make the point I think we have talked about the likelihood from everything we can read as to the methodology that ABAG has used and how they came up with it that not only are we not getting credit for what we did from 1999 to 2006 in exceeding our allocation it appears that we actually are being penalized. We had never been allocated anywhere near this kind of allocation size in the past. The suggestion seems to be given ABAG’s allocation method that they can use their own expectation of housing growth as a basis to allocate housing demands on a community, that they have looked at our recent history and projected forward an expectation that we could continue at that pace. I think we need to make the strong point here that we had an anomaly in our housing ~owth in the last seven years for two principle reasons. One was that we had our last major undeveloped medium density land, the Sand Hill Stanford West Apartments that were built in that last housing period. That was an historic development that we cannot repeat. There is no comparable land available in Palo Alto for that housing. The second one was this very unusual anomaly where we had a crash in commercial real estate values, a continued appreciation in residential, and we had zoning that allowed residential to be built in commercial lands which has been since adjusted. Those two things caused this big jump in housing far exceeding anything that we had had in 40 years. It certainly appears that ABAG has assumed that we can simply continue those trends and they were instead anomalies. So it is not just we aren’t getting credit I think their basis for the allocation essentially we are being penalized for them. Another thing is I think we should emphasize something that Commissioner Keller had brought up at the last meeting. That is that the entire premise... Chair Holman: Commissioner Burt, are you wanting to add some of these as amendments to the motion to be included? Commissioner Burt: Yes, this should be as part of the letter. Chair Holman: So all of the points that you just mentioned? Commissioner Burt: Yes, in some form or another leaving that open to the discretion of the subcommittee and Staff how to do that in a moderately concise way. Chair Holman: Thank you for the clarification, please continue. Commissioner Burr: So Commissioner Keller had made the point that a primary benefit of transit stations and densifications around transit is not necessarily derived from having housing adjacent to the transit it can be more so from having jobs adjacent to the transit. I thought about his comments and his comparison to Manhattan. At first I thought gee, what does Manhattan have to do with us? The more I thought about it when we have jobs in offices we are at four residents per 1,000 square feet. When we have housing we are less than half of that. So the trip reduction that occurs as a result of having high-density jobs adjacent to transit is far greater in automobile trip reduction than there is from having housing density. The proof already exists in the imbalance of transit use to Palo Alto. We have far more people who are coming by transit to Palo Alto to work than are leaving to go to their jobs. So I think there is a fundamental flaw in that premise as well and I think we should make that point. Finally, to the extent that climate change is part of the basis for the ABAG allocation of housing in in~ll, I appreciate that there are other rationales that are used and that have legitimacy, but to the extent that CO2 emissions are part of their consideration we now have our climate change report that was delivered to the Council on Monday. It is striking how strongly it refutes the assumptions that many of us had made including at least three of our Council Members that there was a strong correlation to our CO2 impact from the commute trips. In fact it appears that we have five percent of our total carbon emissions according to our own report attributable to commute from outside the city. If we had this housing allocation and if we stayed with approximately 20 percent of the residents working in the city, which is our present ratio, we would have a reduction in our CO2 emissions from avoiding those commutes of .05 percent. That is one two- thousandth of our CO2 emissions. It is barely even measurable. It is not a factor whatsoever. From a cost/benefit standpoint it is probably one of the worst expenditures we could make toward reducing CO2 emissions. It is astronomical in the cost of building the affordable housing for that purpose. There may be other valid purposes but it is certainly not CO2 emissions and we need to correct the record and the data now is there to support that. I think that is good for now. Chair Holman: Commissioner Tuma, while they are made as statements you include all of those in your motion? Commissioner Tuma: I do, yes. Chair Holman: Okay. Commissioner Lippert, did you have amendments to add? Commissioner Lippert: I am in support of the motion the way it has been stated with exception of really the school comments. The school comments I think are debatable. There are a couple of points I would like to make associated with those. The first one is that I honestly believe that the school sites that we currently have are underutilized. Part of it is that we do lease out a number of school sites in Palo Alto that could be reopened and reused as school sites. If you were to apply our own development regulations, which we are not allowed to do, to school sites you would be able to see that in fact we could increase the density of those schools. Now where do the monies for those improvements to those schools come from? Well they come from the developer fees on housing. So as we see us trying to make the ABAG numbers or an increase in housing density they are going to be building school infrastructure that accommodates those additional housing units. Now the current demo~aphic trend I believe is going in the opposite direction, which is that we are seeing a shrinking population. I am not going to debate the whole school premise but there are other ways of thinking about it that are not within our purview to make those statements. I think that it is within the purview of the school district to try to make a case for the increase school numbers if they are realistic. Chair Holman: Commissioner Keller, amendments? Commissioner Keller: First I do not associate myself with Commissioner Lippert’s comments. I have with me today’s Palo .4lto l/Veekly, which states latest stats predict 14th elementary school which is the only other school in the flatland that is available to reopen, one of them being Garland which is the 13th school that is already in the process of being opened, and the 14th being the small elementary school over by Cubberly. That is Greendale. I also read a statement from here it says, °~This figure exceeded [Lapcoff and G!oberly’s] prior high prediction for enrollment by 17 or almost an entire classroom." I will also point out the subtitle of this, which is very interesting, ~°But Numbers Don’t Entirely Account for New Housing, school officials say." I have had discussions with some School Board Members who state that they have a problem with saying don’t build housing because the School Board is effectively required to educate every possible student who lives in the district. Therefore it is not clear that they are able to do that. So let me get to some amendments. The first thing is I would like to amend one of Commissioner Tuma’s amendments where he stated the range of numbers for market rate housing or how many market rate housing units you need to build based on the low and moderate, it is actually just the moderate because the moderate is what you get from the inclusionary zoning. The low and very low is actually built through other means and that is the City’s job. Mr. Williams: We understood that. Commissioner Tuma: That is fine. Commissioner Keller: Okay, thank you. The second thing is we should specifically call out that is an un-funded mandate by the State of California for us to build housing for which there are costs to the City and school district. I think that puts us on very strong legal ground. The next issue is there is no representation from our portion of the county with respect to the housing allocation committee or the HMC, Housing Methodology Committee. Third, the skew of housing allocation with respect to Palo Alto compared to the county and compared to ABAG as a whole is unrealistic considering Palo Alto’s mix of jobs and the cost of land. Mr. Williams: Can you slow down just a second and say that one again? Commissioner Keller: The skew of housing allocation towards very low, low, and moderate and a disproportionate amount of that in comparison to the Santa Clara County figures and the ABAG figures are unrealistic considering the mix of jobs in Palo Alto and the cost of land in Palo Alto. The next issue is that in order for people to use the vaunted transit stations on Caltrain located in Palo Alto they need to either live nearby for which we have enacted a Pedestrian Transit Oriented Zone. They need to take transit which VTA has continually cut making it harder and harder for our residents to get to the Caltrain. Or they need to drive or bicycle. Most of them will drive and there is a limited amount of parking space available at these transit stations. The next issue is that the San Antonio Train Station should not be considered a train station for the purposes of ABAG allocation because of the fact that very few trains during rush hours stop at the San Antonio Train Station. Therefore, it is essentially as if the train station didn’t exist. It should not add to the mix. Chair Holman: I am going to stop there just for a second because you have added now five and I want to check in with Commissioner Tuma to see if you are in agreement with all the additions that have been made so far. Commissioner Tuma: Right up until the last one, which has to do with the San Antonio Train Station, I am not necessarily in disagreement but rather just wanting some clarification or information from Staff as to whether in fact there are not very many stops during rush hour at the San Antonio Station or at least get Staff reaction. This is the one so far I am not quite sure I am in agreement with. Mr. Williams: I am not so sure about the number of stops, etc., and the boardings but the issue from our standpoint, which we would tend to agree with is that it is Mountain View basically, and within the 2,000-foot radius part of that is Palo Alto we essentially are considered to have three stations. Although that station really serves Mountain View a lot more than it serves Palo Alto. So I think that is the way we would sort of frame that. Commissioner Tuma: Okay, then I am good with all of the Keller amendments thus far. Mr. Butt? Commissioner Burt: Yea. Commissioner Keller: I will reserve any further amendments for another go around. Chair Holman: Okay, Commissioner Sandas? No? Okay. Commissioner Oarber. Vice-Chair Oarber: I don’t think I have any amendments. I am liking everything I hear. I am supportive of the conversation in general. I do have comments but I do not think that they are amendments. Potentially they could be a separate motion but I suspect they are just comments at the end. Thank you. Chair Hotman: Commissioner Keller, did you have more amendments? Commissioner Keller: Yes. I think it is worthwhile pointing out that fewer than four percent of the people who work within the City of Palo Alto actually live outside the nine Bay Area counties and therefore the idea that people are commuting from long distances to Pa!o Alto is not the case. Of that four percent half of those are coming from Santa Cruz County and I think that is a useful thing to add. I am not sure how to phrase this. I think it is worthwhile questioning the methodology where ABAG picks a number for the 45 percent, which is the housing growth category that they get to choose that feeds into how much housing we need to build. It is sort of like a self-fulfilling prophecy and that methodology is flawed and not based on reality. So the idea of basing the predication where the biggest factor is a plug number they get to choose seems faulty. Chair Holman: Commissioner Tuma. Commissioner Tuma: All those are acceptable. I would just say maybe one other way to characterize the last one which is one that Council talked about too is just that it becomes a very sort of circular calculation. Chair Holman: If you would accept that circular calculation as a part of your amendment I think that might be more acceptable to Commissioner Tuma. Commissioner Keller: I am happy with however it is worded as long as it is in there in an appropriate way. Chair Holman: Commissioner Burt, are you okay with those? Commissioner Burt: Yes. Commissioner Keller: It seems to me there are a couple of things going on here. One is the concept and I will paraphrase what Commissioner Burt says, as no good deed goes unpunished. I will paraphrase what Commissioner Sandas says as don’t confuse me with the facts my mind is made up. Chair Holman: So it sounds like you have completed your amendments? Commissioner Keller: Yes. Chair Holman: Okay. I have I think four. Ms. Caporgno: Can I just add one thing? The one comment that Commissioner Keller raised about the fewer than four percent in Palo Alto commute from outside the ABAG area, I don’t know if that is really justifiable here because what they are talking about is assigning 215,000 units to the ABAG area. So we are not looking at in commuting or out commuting from the ABAG region. So if you want to include something to that effect I don’t think you probably want to go outside the ABAG area but you might want to say there are very few that commute - I mean the Palo Alto commute radius is very limited or something. Commissioner Keller: The reason I want to put it in there is because part of the reason that they are basically forcing ABAG to build all this housing is because if we don’t build it here we will be building it in the Central Valley. The consideration is that we are not contributing to that problem because according to the 2000 Census 333 people commute to Pa!o Alto from the entire county that contains Tracy. Mr. Williams: I had a comment on that same issue. I am bit uncomfortable saying this primarily because there are just about as long commutes within the ABAG area as there are to Modesto and Tracy. We are talking about the far reaches of Sonoma County. We are talking about some good distances. So if the philosophy is that you are shortening the distance of the commute I don’t think just saying outside the nine county ABAG area is necessarily compelling. I understand the point, it is useful, but in the list of all of these things I think that is pretty arguable whether it is outside the ABAG area or not. In conjunction with what Julie said about looking at what is attributed by the state to the ABAG area in terms of housing and ABAG taking that and trying to spread it out they are not trying to take housing from outside the area and put it inside. Chair Holman: Commissioner Burr. Commissioner Burt: Curtis, just as a follow on I actually have heard on numerous occasions that the rationale for this infill housing is in fact to prevent the extreme commuting from the Central Valley to the Bay Area. Even though your point is valid that there are significant commutes that do occur within the nine Bay Area counties a fundamental argument that has been made by ABAG members and some of our Council Members is that our obligation is to mitigate the commutes from the Central Va!ley. Mr. Williams: Maybe that statement was made. I wouldn’t put it that way. I think it is mitigating long commutes but I don’t think it is necessarily from the Central Valley. If you want to put it in there that is fine I think it is not nearly as compelling as these other reasons. I am just trying to avoid getting into the situation where we are trying to throw everything and the kitchen sink in. We want to be defensible but we also want to be compelling in each one of these reasons but it is your decision. Chair Holman: Okay. I have four to add. One of them is akin to what Commissioner Keller said. The Housing Allocation Committee, I think what Commissioner Keller said was that there was no representation from Palo Alto. What I would say is the makeup of the Housing Allocation Committee was disproportionate. Their considerations were not just that there was no one in Palo Alto there was no one in the county. Some of the other counties that have lower development rates had disproportionately heavy representation and they are the ones that were making decisions for us. So I think it is important to put that the makeup of the Housing Allocation Committee was disproportionately misrepresentative of those communities that would be most affected. The second one I would add is that and I might look for some help for wording on this but that ABAG doesn’t consider protections for existing housing units. I think that is lacking. We have talked about circuitous arguments I think that is self-defeating policy. Yes, Curtis. Mr. Williams: Could I clarify that? That is HCD, the state, which makes that determination. ABAG doesn’t make any determinations as to whether it is protections or not that is the state that reviews the Housing Element ultimately. If they accepted that then the ABAG numbers wouldn’t have to change and we would get credit for conserving housing which is another goal of the Housing Element but you don’t get any credit towards your numbers on it. So I don’t know if you would still want to include that here because it is not really towards ABAG’s allocation issue it is going toward how HCD what they count and don’t count as fulfilling those numbers. Ms. Caporgno: HCD gives ABAG these numbers based on the amount of growth that HCD thinks California is going to experience and then how much is going to go in each of these different areas. So the big picture is that the Department of Finance does some calculations and determines what they think the population of California is going to be in 2014. Then it is attributed to the different Councils of Government and then the Councils of Government have to allocate it to the jurisdictions within their area. Chair Holman: Let me ask this then, and this will help me decide whether to continue with this as an amendment. If the Housing Allocation Committee were to be proactive in addressing this situation or this lack of consideration to HCD might it have an effect or do we have any way of knowing? Mr. Williams: We don’t really know. It is something that would have to make its way through the state process. If the Allocation Committee recommended something to HCD that they look at it differently but HCD would apply this statewide. So it is not like they would just apply it to the ABAG area one way and to other jurisdictions differently. They would have a consistent. Chair Holman: I guess considering that ABAG seems to have a lot of weight to throw around I would like to actually include it because I think it is a serious matter and one where we could actually protect a number of housing units instead of losing housing units as we do now with our cottage courts and such. I am sure we are not the only community in that regard. There are legal limitations as to how it could be done. I think ifABAG used its authority and its weight to try to promote that we might get somewhere faster. Would Commissioner Tuma accept that? Commissioner Tuma: I am a little concerned that we are beginning to dilute ourselves. If we are getting into an area here that ABAG really doesn’t have any control over and we are making this argument with respect to ABAG I am a little concerned that we are going to begin to lose I don’t know if credibility is the right word but just become as if we are just trying to complain about everything. I completely agree with your point. I wholeheartedly agree with it. I am just not convinced that this letter to ABAG is the right place for it. I am certainly willing to be persuaded. Chair Holman: Commissioner Keller. Commissioner Keller: Let me suggest this way of handling it. A Place to Call Home, which is ABAG’s document with the housing allocation numbers in the first place mentions a point that below market rate housing or as they refer to it as very low, low, moderate kind of stuff is at risk. A way to put it is that we don’t get credit for retention of housing and steps we take to retain the moderate and low income and very low income housing that we have even though the retention of the housing or prevention of its !oss is actually a lot cheaper than building new such housing. Chair Holman: I like the way it is worded but it is still the same issue because it is still HCD. Commissioner Tuma. Commissioner Tuma: The one thing that Commissioner Keller just did for me anyway is he did tie it back into ABAG in a way in that he is addressing an issue that they raised in their document. So it is fine by me. Chair Holman: Okay. Commissioner Butt. Commissioner Burt: Yes. Chair Holman: Okay. Then one other point is that without the assurance for funding for transit assigning housing near transit but we have no assurance for the funding for the transit. So I think that is something that needs to be taken into consideration. Commissioner Tuma. Commissioner Tuma: I would agree with that and I think that probably can be lumped in under the heading of an un-fi.mded mandate. Does that make sense? Chair Holman: Yes it does. Commissioner Burr. Commissioner Burt: Yes. Chair Holman: The last one is the question that I asked earlier. This one also is one that I don’t know what documentation we can find to support this but it has to do with the urban growth boundary, the whole smart growth conjecture. Does that apply to Palo Alto? So I might just leave it that simply and see what Staff can come up with. Mr. Williams: I am extremely reluctant to say that we have a Comprehensive Plan that is filled with smart growth principles. So I think we need to tackle that at a different level and venue. Chair Holman: Well in terms of urban growth boundary is what I am referring to, the absent one. We don’t have one. Mr. Williams: Right. The urban growth boundary doesn’t apply to us. If you wanted to say we have no control over what happens in the hinterlands because Palo Alto doesn’t control that area and doesn’t have authority to impact urban growth boundary. Chair Holman: That is fine with me because that is what I was getting at anyway. Smart growth has that as one component of it but it is because we don’t have any control over the hinterlands if you will. So would you be okay with that being included? Mr. Williams: I guess so. Chair Holman: Commissioner Tuma? Commissioner Tuma: Sure. Chair Holman: Commissioner Burt? Commissioner Burr: Yes. Chair Holman: So that is it for me. So you have our long laundry list. Commissioner Burr you had suggested perhaps a subcommittee to work with Staff. How did you want to characterize that? Commissioner Burt: Just if the Chair would like to appoint perhaps a two-member subcommittee to work with Staff on crafting this letter. Chair Holman: I would actually suggest Commissioner Tuma and Commissioner Burt if you two are agreeable. Commissioner Burt: Okay. Chair Holman: And Staff is agreeable to that? Ms. Caporgno: Actually Staff welcomes that. Chair Holman: I am presuming that since I am not seeing any objections that the other Commissioners are comfortable with that. Mr. Williams: We will send you the Word version. Chair Holman: Okay. So seeing no other comments, questions or additions we are ready to vote on the motion. I am sorry, Commissioner Keller. Commissioner Keller: I would like to make a comment on the way that ABAG seems to do their math. It reminds me of this quick story about h~ring an accountant. What happens is you hire an accountant and you say what is two and two? The accountant says four. You say, sorry. The next guy comes up, what is two and two? The accountant says, four. Sorry. The next guy comes you say what is two and two? The accountant says what do you want the answer to be? That seems to be the way that ABAG comes up with their numbers. Chair Holman: Commissioner Burt. Commissioner Burt: I just had some other quick comments that are outside of the motion. Is the correct time to give them? First I want to make sure that it is clarified for the record something that seems to have been confused by some members of the public, seeing some comments on Pa!o Alto Online, and even some members of the Council that the Commission and the Staff have never proposed no growth. We are talking about the difference between a very high growth level and what would still be an aggressive growth level. The moderate level would still be a very aggressive one for Palo Alto especially by historic comparisons. The Staff and this Commission were who recommended to Council the creation of the Smart Growth District of the PTOD zone in California Avenue. So we have embraced those best principles of smart growth. Second, we don’t have an oppommity to go into it in depth tonight but one of the things that I think may be an antiquated basis for some of ABAG’s methodology is the assumption of a correlation between economic growth and jobs growth. The greater Silicon Valley area is experiencing and has been experiencing an economic growth that far exceeds its jobs growth. I suspect strongly that the projections on jobs growth are based upon an antiquated pattern of a greater correlation between economic growth and jobs growth than exists today and is likely to exist in the future. I don’t think we are going to have the population and the jobs growth that they are projecting. Finally, a point was made earlier about the infill development and how it works. The other factor while infill development works in many circumstances I suspect that it works far less effectively when there is a very disparate cost between the housing in the infill and the housing in an outlying area. If you have a small condo that costs $t.0 million in Downtown Palo Alto and you compare it to a three or four bedroom home that costs $400,000 or $500,000 in an outlying area you are not going to induce people at fair market rate to come and live in that infill as an alternative choice very often. If there is a smaller gap, if you pay the same price for a condo as you might for a home then maybe some of the people are goirlg to choose to say wel!, I will live in a smaller housing unit closer to a Downtown. I think when you get this kind of huge gap between what we have in Palo Alto and the outlying areas then those principles don’t apply as well. Thanks. Chair Holman: I will give a big ~hear, hear’ to that one. Commissioner Keller. Commissioner Keller: As a corollary to what Commissioner Burt said I don’t think any of us say that we shouldn’t build any housing in particular there is probably a need for more housing for seniors as Palo Alto grays. In particular with respect to Stanford and we talk about Stanford as being a regional facility and I heard people on Monday from all over the area saying great somebody from Saratoga, somebody from Menlo Park. If Stanford University Hospital is a regional facility then let’s see some of those communities step up and supply some of the housing for that regional facility. MOTION PASSED (7-0-0-0) Page 2 estimated reduction of less than 1% of greenhouse gas emissions since less than 4% of Palo Alto workers live outside of the nine-county ABAG area. The high cost to the City of providing for housing and supporting services and facilities, such as parkland and schools, is an unfunded mandate by the State; o Methodology does not account for protection and retention of existing more affordable units to offset RHNA requirements. 10.The City of Palo Alto has no authority to control what happens in outlying rural and open space areas so there is no effective smart growth strategy implementation. 11.Representation on HMC was disproportionate among the cities and counties resulting in no representation from north Santa Clara County.