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2018-04-11 Planning & transportation commission Agenda Packet
_______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2.The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3.The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Planning & Transportation Commission Regular Meeting Agenda: April 11, 2018 Council Chambers 250 Hamilton Avenue 6:00 PM Call to Order / Roll Call Oral Communications The public may speak to any item not on the agenda. Three (3) minutes per speaker.1,2 Agenda Changes, Additions, and Deletions The Chair or Commission majority may modify the agenda order to improve meeting management. City Official Reports 1.Assistant Directors Report, Meeting Schedule and Assignments 2.Findings from the Downtown Cap Study Residential Analysis to Inform the Commission's Recommendations for Revisions to the Zoning Ordinance to Support Housing Affordability and Production, as Directed by the City Council in the Housing Work Plan Study Session Public Comment is Permitted. Five (5) minutes per speaker.1,3 Action Items Public Comment is Permitted. Applicants/Appellant Teams: Fifteen (15) minutes, plus three (3) minutes rebuttal. All others: Five (5) minutes per speaker.1,3 3.PUBLIC HEARING / QUASI-JUDICIAL. 305 N California Avenue [17PLN-00446]: Recommendation to the City Council on a Request for a Conditional Use Permit to Allow a Community Center Use at the First Baptist Church. Environmental Assessment: Exempt Per Sections 15301 and 15323 of the CEQA Guidelines. Zone District: R-1(10000) (Single Family Residential). For more information contact project planner Graham Owen at fbcapplication@cityofpaloalto.org. Approval of Minutes Public Comment is Permitted. Five (5) minutes per speaker.1,3 _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2.The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3.The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 4.March 14, 2018 Draft Planning & Transportation Commission Meeting Minutes Committee Items Commissioner Questions, Comments, Announcements or Future Agenda Items Adjournment March 14, 2018 Draft Minutes _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Palo Alto Planning & Transportation Commission Commissioner Biographies, Present and Archived Agendas and Reports are available online: http://www.cityofpaloalto.org/gov/boards/ptc/default.asp. The PTC Commission members are: Chair Ed Lauing Vice Chair Susan Monk Commissioner Michael Alcheck Commissioner Przemek Gardias Commissioner William Riggs Commissioner Doria Summa Commissioner Asher Waldfogel Get Informed and Be Engaged! View online: http://midpenmedia.org/category/government/city-of-palo-alto/ or on Channel 26. Show up and speak. Public comment is encouraged. Please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Commission Secretary prior to discussion of the item. Write to us. Email the PTC at: Planning.Commission@CityofPaloAlto.org. Letters can be delivered to the Planning & Community Environment Department, 5th floor, City Hall, 250 Hamilton Avenue, Palo Alto, CA 94301. Comments received by 2:00 PM two Tuesdays preceding the meeting date will be included in the agenda packet. Comments received afterward through 2:00 PM the day of the meeting will be presented to the Commission at the dais. Material related to an item on this agenda submitted to the PTC after distribution of the agenda packet is available for public inspection at the address above. Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329-2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. Planning & Transportation Commission Staff Report (ID # 9098) Report Type: City Official Reports Meeting Date: 4/11/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: City Official Report Title: Assistant Directors Report, Meeting Schedule and Assignments From: Hillary Gitelman Recommendation Staff recommends that the Planning and Transportation Commission (PTC) review and comment as appropriate. Background This document includes the following items: PTC Meeting Schedule PTC Representative to City Council (Rotational Assignments) Tentative Future Agenda Commissioners are encouraged to contact Yolanda Cervantes (Yolanda.Cervantes@CityofPaloAlto.org) of any planned absences one month in advance, if possible, to ensure availability of a PTC quorum. PTC Representative to City Council is a rotational assignment where the designated commissioner represents the PTC’s affirmative and dissenting perspectives to Council for quasi- judicial and legislative matters. Representatives are encouraged to review the City Council agendas (http://www.cityofpaloalto.org/gov/agendas/council.asp) for the months of their respective assignments to verify if attendance is needed or contact staff. Prior PTC meetings are available online at http://midpenmedia.org/category/government/city-of-palo-alto/boards- and-commissions/planning-and-transportation-commission. The Tentative Future Agenda provides a summary of upcoming projects or discussion items. Attachments: Attachment A: April 11, 2018 PTC Meeting Schedule & Assignments (DOCX) Draft Planning & Transportation Commission 2018 Meeting Schedule & Assignments 2018 Schedule Meeting Dates Time Location Status Planned Absences 1/10/2018 6:00 PM Council Chambers Regular Riggs, Waldfogel 1/17/2018 6:00 PM Council Chambers Special 1/31/2018 6:00 PM Council Chambers Regular 2/14/2018 6:00 PM Council Chambers Regular 2/28/2018 6:00 PM Council Chambers Regular Cancelled 3/14/2018 6:00 PM Council Chambers Regular 3/28/2018 6:00 PM Council Chambers Regular Riggs 4/11/2018 6:00 PM Council Chambers Regular 4/25/2018 6:00 PM Council Chambers Regular 5/09/2018 6:00 PM Council Chambers Regular Riggs 5/30/2018 6:00PM Council Chambers Regular 6/13/2018 6:00 PM Council Chambers Regular Riggs 6/27/2018 6:00 PM Council Chambers Regular 7/11/2018 6:00 PM Council Chambers Regular 7/25/2018 6:00 PM Council Chambers Regular 8/08/2018 6:00 PM Council Chambers Regular 8/29/2018 6:00 PM Council Chambers Regular 9/12/2018 6:00 PM Council Chambers Regular 9/26/2018 6:00 PM Council Chambers Regular 10/10/2018 6:00 PM Council Chambers Regular 10/31/2018 6:00 PM Council Chambers Regular Riggs 11/14/2018 6:00 PM Council Chambers Regular 11/28/2018 6:00 PM Council Chambers Regular 12/12/2018 6:00 PM Council Chambers Regular 12/26/2018 6:00 PM Council Chambers CANCELLED 2018 Assignments - Council Representation (primary/backup) January February March April May June Ed Lauing Susan Monk Doria Summa Przemek Gardias Michael Alcheck Billy Riggs Asher Waldfogel Michael Alcheck Przemek Gardias Susan Monk Ed Lauing Doria Summa July August September October November December Asher Waldfogel Ed Lauing Przemek Gardias Susan Monk Michael Alcheck Asher Waldfogel Billy Riggs Michael Alchek Asher Waldfogel Doria Summa Przemek Gardias Ed Lauing Subcommittees Draft Planning & Transportation Commission 2018 Tentative Future Agenda April 5, 2018 Draft-All Dates and Topics Subject to Change The Following Items are Tentative and Subject to Change: Meeting Dates Topics April 25, 2018 ADU Ordinance Revisions (Continued from March 28, 2018) 2017 Housing Element HCD Report Study Session Housing Work Plan: Discussion of Issues & Options for 2018 Comp Plan and Housing Ordinance 3225 El Camino Real Vesting Tentative Map (Deferred From March 28th) May 9, 2018 Review of 2019-2023 CIP for Comprehensive Plan Consistency Study Session on Traffic Safety and Operations Annual Report 2017 ADU Code Updates PTC Bylaws/Procedures Multi-Family Demand Rates 3877 El Camino Real: Tentative Map May 30, 2018 Study Session Housing Work Plan: Key Findings From an Analysis of Residential Parking Demand and Options for Revisions to Parking Requirements Eichler Zone Changes June 13, 2018 Study Session Housing Work Plan: Outstanding Issues and Framework for Ordinance PTC Training: Brown Act June 27, 2018 Study Session: StreetLight Trip Visualization Tool July 11, 2018 TBD July 25, 2018 TBD August 8, 2018 Housing Work Plan Draft Ordinance August 29, 2018 Housing Work Plan: Recommendation on Draft Ordinance Planning & Transportation Commission Staff Report (ID # 9118) Report Type: City Official Reports Meeting Date: 4/11/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: Downtown Development Cap Study: Residential Analysis Title: Findings from the Downtown Cap Study Residential Analysis to Inform the Commission's Recommendations for Revisions to the Zoning Ordinance to Support Housing Affordability and Production, as Directed by the City Council in the Housing Work Plan From: Hillary Gitelman Recommendation Staff recommends that the Planning and Transportation Commission (PTC) review information and analysis presented here to guide revisions in the zoning ordinance to encourage production of a diversity of housing types in appropriate locations, as specified by the Council referral of 2018 Housing Work Plan items. Background In 2012, the City Council directed staff to conduct a Downtown Development Cap Study to evaluate existing conditions, development trends, and parking and transportation needs in Downtown. Updated in 2017, and prepared by Dyett & Bhatia and Economic & Planning Systems, this Residential Analysis analyzes potential infill development capacity Downtown and identifies obstacles to redevelopment, including both physical and economic limitations. Although this study focused on the Downtown specifically—and was considered as part of the Comp Plan policies for Downtown—its findings may be useful for analysis of other districts as well, particularly California Avenue, El Camino Real, and other commercial mixed use areas of the city. Next Steps Findings from this study and potential revisions to the Zoning Ordinance will be discussed at the Commission’s subsequent meetings on the Council referral of Housing Work Plan items. The study is presented here to give the Commission ample time to review the results, but will not be discussed at the April 11, 2018 meeting. City of Palo Alto Planning & Community Environment Department Page 2 Report Author & Contact Information PTC1 Liaison & Contact Information Jean Eisberg, Consultant Planner Jonathan Lait, AICP, Assistant Director (415) 841-3539 (650) 329-2679 jean@lexingtonplanning.com jonathan.lait@cityofpaloalto.org Attachments: Downtown Development Cap Study: Residential Analysis (PDF) 1 Emails may be sent directly to the PTC using the following address: planning.commission@cityofpaloalto.org Downtown Development Evaluation Residential Capacity and Feasibility Analysis October 30, 2017 City of Palo Alto Prepared by City of Palo Alto Downtown Development Cap Study Table of Contents EXECUTIVE SUMMARY 1 1 INTRODUCTION 3 1.1 Report Purpose 3 1.2 Report Organization 4 2 RESIDENTIAL DEVELOPMENT CAPACITY 5 2.1 Existing Development 6 2.2 Existing Zoning 10 2.3 Housing Element Criteria and Sites 14 2.4 Potential Development Capacity Scenarios 16 2.5 Reallocation of Housing Units to Downtown Sites 25 3 RESIDENTIAL MARKET ASSESSMENT 28 3.1 Citywide Housing Trends 28 3.2 Residential Rental Market 31 3.3 For-Sale Housing Market 39 3.4 Financial Feasibility Analysis 54 4 KEY FINDINGS 63 4.1 Residential Site Assessment and Development Capacity 63 4.2 Residential Market Study and Pro Forma Analysis 64 4.3 General Conclusions 64 City of Palo Alto Downtown Development Cap Study City of Palo Alto Downtown Development Cap Study 1 Executive Summary This report provides a closer look at the Downtown Study Area’s potential to accommodate residential development, so that the City may more fully understand Downtown’s potential for housing in the context of the city overall and determine how to best support and encourage residential development in the Downtown core. Existing Development Regulations This report begins with an evaluation of existing zoning regulations, and the degree to which development is currently limited by these regulations. In general, the analysis finds that development is unlikely to be constrained by existing regulations. Less than one-third of Downtown residential development currently reaches the maximum height permitted; about 20 percent approaches the maximum FAR permitted; and less than 15 percent approaches the maximum residential density permitted. The report also finds that only a small percentage of Downtown parcels are subject to lot maximum coverage requirements, and about one-third are subject to setbacks. Development Capacity The Downtown Study Area currently contains 529 residential units. This report estimates a “theoretical development capacity” of up to 1,819 or 2,018 additional units that could potentially be developed Downtown, based solely on current density and FAR limits, respectively (and not accounting for actual physical or regulatory constraints). After factoring in actual site conditions (e.g., land and structures values, age of structures, and potential for parcel consolidation), the potential unit count drops by more than half—to just 252 to 441 additional units, depending on market conditions and how aggressively owners and developers redevelop sites. These findings indicate that the capacity for new residential development Downtown is restricted primarily by the fact that Downtown is fairly well built-out with existing high-value property development. Market Assessment and Financial Feasibility This analysis also looks at residential development trends in the city overall and in the Downtown. It provides a review of the market performance of existing residential products, and presents high-level residential real estate feasibility analysis that tests the economic viability of new housing development in the Downtown. It finds that current market trends do support higher density residential uses, but that ground-up new construction will need to support the high cost of construction as well as overcome the value of any existing use on the site. In sum, a ground-up project generally must at least double the existing density to overcome the high value of an existing use. City of Palo Alto Downtown Development Cap Study In addition, development is likely to be limited by parcel size and development standards that limit the buildable area and building size. Many multifamily residential development examples found in the market are located either on large parcels, or on parcels with fewer or less stringent development standards (setbacks, height, and upper-story step-backs, etc.). Identifying potential development opportunity parcels that also have low-density, low-value existing uses can prove challenging. Going forward, residential redevelopment projects likely will require: • assembly of smaller residential parcels; • redevelopment of nonresidential uses on larger sites; or • relaxed development standards to support multifamily residential development. If the City is interested in supporting increased residential infill development, particularly the redevelopment of existing uses Downtown, then strategies may include: • increasing allowable residential densities; • reducing parking requirements; • reducing building setbacks (in the SOFA RM-30, RT-35, and RT-50 districts); and/or • creating incentives for parcel assembly through zoning or other mechanisms. Residential Analysis 3 1 Introduction Phase I of the Downtown Development Cap Study for the City of Palo Alto presented background research and analysis of land use and development trends, parking, and economic conditions in Downtown Palo Alto as a way of evaluating the 1986 non-residential development cap policy. A final Phase I report, completed in December 2014, summarized non-residential development capacity, development potential and preliminary policy considerations. Residential uses were excluded from the original downtown development cap and consequently were addressed only briefly in the recently completed Phase I study. This study, a follow-up to that effort, focuses on residential development. It identifies the Downtown study area’s potential to accommodate additional residential development, both over the short- to medium-term and long-term horizon, to support vibrancy in the urban core as well as to promote the housing development goals of the City. 1.1 Report Purpose Residential uses are essential to sustaining a vibrant mixed-use neighborhood and to supporting the local commercial base. The City aims to encourage the development of residential units as Downtown properties are redeveloped; specifically, the City aims to support units near the Palo Alto Caltrain Station, to enable more residents to walk or bicycle to transit, Stanford University, and shopping destinations. This analysis assesses the potential of the Downtown study area to accommodate more residential development. It looks at existing land uses, zoning, and other factors that affect the likelihood of new residential development. The study includes a review of existing regulations pertaining to all types of residential uses as well as a review of potential housing sites identified by the 2015 –2023 Housing Element. Like the December 2014 Phase I study, this study examines both the “supply” perspective (how much residential development could, and is likely to, be built based on regulatory and physical factors) and a “demand” perspective (how much residential development the market will likely support and the specific types of housing that are financially feasible under current zoning and market conditions). The study concludes with a discussion of key findings and preliminary policy ideas that decision-makers may want to consider based on the analyses and conclusions presented here. City of Palo Alto Downtown Development Cap Study 1.2 Report Organization This report is organized as follows: • Chapter 2: Residential Development Capacity describes the capacity for new residential development, both at a theoretical maximum and at a more realistic level that considers a variety of constraining factors. • Chapter 3: Residential Market Assessment describes real estate market trends, conducts a financial feasibility analysis of residential development types, and examines development potential within the Downtown study area from a market perspective. • Chapter 4: Conclusions and Policy Considerations proposes potential policy ideas that decision-makers may wish to explore, based on the findings of this study and other analyses completed for the Downtown Development Cap effort. • Appendix A: Recent Residential and Residential Mixed-Use Projects (2006 – 2016) • Appendix B: All Proposed Projects • Appendix C: Housing Element Sites • Appendix D: Additional Project Profiles Residential Analysis 5 2 Residential Development Capacity Using the parcel-based database of existing land uses developed as part of Phase I of the Downtown Cap Study, this chapter maps and counts existing residential units within the Downtown study area, identifying the total units, and the total area in residential square feet, on each parcel. This chapter also identifies the total residential units and floor area theoretically possible under existing zoning, with the understanding that achieving this total is unrealistic due to a variety of development constraints. Where applicable, potential bonus density also is taken into account. This chapter identifies three possible scenarios of future residential build-out: the scenario identified in the 2015 –2023 Housing Element, and two additional scenarios (scenarios A and B) that the planning team has determined to be realistic scenarios, after accounting for a range of physical and regulatory constraints. In its assessment of potential housing sites, the planning team begins with the set of sites listed in the Draft Housing Element, then modifies the list of criteria to arrive at a broader range of estimates of the amount of housing that the Downtown study area could support. Data and Methodology Data collection is an essential part of the study, as it involves looking at far more than the available data on each parcel, its existing structures, and its land use and zoning regulations. For this study, Dyett & Bhatia and Economic & Planning Systems (EPS) together collected a range of information on each parcel, including physical constraints and qualitative observations about existing structures, to develop a more robust dataset. Using a variety of sources, the team tracked a broad range of information and observations about each parcel. These sources include: • The County Assessor’s Data; • Available maps and imagery, including GIS data, satellite images, and Google street view; • On-line directories, where property addresses are available; • Web-based real estate resources, including: − www.loopnet.com − www.propertyshark.com − www.prospectnow.com/property/santa-clara-ca − www.zillow.com − commercial-real-estate.findthedata.com • Information provided by Palo Alto staff; City of Palo Alto Downtown Development Cap Study • City of Palo Alto permit listings; and • On-line media reporting about development projects that are proposed or under construction. By factoring in a combination of parcel data, site conditions and improvements, and observations about feasibility and developability, the team visualized possible changes on each site and made an informed determination as to what combination of factors would most likely precipitate that change. 2.1 Existing Development The analysis of development capacity begins with an assessment of how much total residential area currently exists or is proposed in the Downtown study area. SELECTED PARCELS For this study, “Selected Parcels” include all those on which residential uses are permitted under current zoning, either as a single use or as part of a mixed-use development. Figure 2-1: Existing Zoning shows the zoning in the Selected Parcels of the Downtown Study Area. This includes all parcels in the study area, with the exception of PF (Public Facilities) parcels and PC (Planned Community) parcels designated as commercial only. Of the 367 parcels in the study area, 334, or about 91 percent, are in the set of Selected Parcels. EXISTING AND PROPOSED RESIDENTIAL UNITS Within the 334 Selected Parcels, there are currently approximately 529 existing or proposed residential units located on 47 parcels. Figure 2-2 identifies the current land uses on all of these 47 parcels, showing whether they are stand-alone residential developments or whether they are part of a mixed-use development. Figure 2-3 identifies the existing or proposed unit densities (in dwelling units per acre); and Table 2-1 tallies the unit count by zoning district. High Street Bryant Street Cowper Street Ramona Street Webster Street Emerson Street Waverley Street Alma Street Forest Avenue Everett Avenue Lincoln Avenue Homer Avenue Addison AvenueHamilton Avenue Channing Avenue Hawthorne Avenue Kipling Street Tasso Street Gilman StreetFlorence Street Lytton Avenue Kipling Street Bryant Street Hawthorne Avenue Ramona Street High Street Everett Avenue Webster Street Waverley Street Palo AltoCaltrain Station Palo AltoCity Hall Johnson Park Heritage Park Cogswell Plaza Lytton Plaza El Camino Park 0 0.1 0.20.05 MILES Source: City of Palo Alto, 2014; Dyett & Bhatia, 2016. Figure 2-1 Existing Zoning of Selected Parcels Selected Parcels: - Residential Districts (RM) - Residential Transition Districts (RT-30, RT-50) - Planned Community Districts (PC) designated for residential use or mixed use - Downtown Commercial Districts (CD-C, CD-N, CD-S) Public Parking Garage Public Surface Parking Primary Study Area CD-C CD-N CD-S PC-Residential PC-Residential Mixed Use RM-30 RT-35 RT-50 High Street Bryant Street Cowper Street Ramona Street Webster Street Emerson Street Waverley Street Alma Street Forest Avenue Everett Avenue Lincoln Avenue Homer Avenue Addison AvenueHamilton Avenue Channing Avenue Hawthorne Avenue Kipling Street Tasso Street Gilman StreetFlorence Street Lytton Avenue Kipling Street Bryant Street Hawthorne Avenue Ramona Street High Street Everett Avenue Webster Street Waverley Street Palo AltoCaltrain Station Palo AltoCity Hall Johnson Park Heritage Park Cogswell Plaza Lytton Plaza El Camino Park 0 0.1 0.20.05 MILES Source: City of Palo Alto, 2014; Dyett & Bhatia, 2016. Figure 2-2 Existing Land Use of Parcels with Existing/Proposed Residential Units Selected Parcels: - Residential Districts (RM) - Residential Transition Districts (RT-30, RT-50) - Planned Community Districts (PC) designated for residential use or mixed use - Downtown Commercial Districts (CD-C, CD-N, CD-S) Public Parking Garage Public Surface Parking Proposed/Under Construction Primary Study Area Residential Mixed Use (Commercial) Mixed Use (Commercial & Office) Mixed Use (Office) High Street Bryant Street Cowper Street Ramona Street Webster Street Emerson Street Waverley Street Alma Street Forest Avenue Everett Avenue Lincoln Avenue Homer Avenue Addison AvenueHamilton Avenue Channing Avenue Hawthorne Avenue Kipling Street Tasso Street Gilman StreetFlorence Street Lytton Avenue Kipling Street Bryant Street Hawthorne Avenue Ramona Street High Street Everett Avenue Webster Street Waverley Street Palo AltoCaltrain Station Palo AltoCity Hall Johnson Park Heritage Park Cogswell Plaza Lytton Plaza El Camino Park 0 0.1 0.20.05 MILES Source: City of Palo Alto, 2014; Dyett & Bhatia, 2016. Figure 2-3 Existing/Proposed Residential Density Selected Parcels: - Residential Districts (RM) - Residential Transition Districts (RT-30, RT-50) - Planned Community Districts (PC) designated for residential use or mixed use - Downtown Commercial Districts (CD-C, CD-N, CD-S) Public Parking Garage Public Surface Parking Proposed/Under Construction Primary Study Area 0 < 10 10 - 20 20 - 30 30 - 40 40 - 50 > 50 (Unit: du/ac) City of Palo Alto Downtown Development Cap Study Table 2-1: Existing Residential Units Current Zoning Total Parcels Parcels with Existing and Proposed Residential Units Total Existing and Proposed Residential Units CD 256 30 275 CD-C 238 27 238 CD-N 16 1 1 CD-S 2 2 36 PC 12 11 169 PC (Residential) 10 9 164 PC (Residential Mixed Use) 2 2 5 RM-30 2 2 26 RT 64 4 59 RT-35 54 3 9 RT-50 10 1 50 Total 334 47 529 Note: 1. In this study, a parcel with two zoning designations is treated as two separate parcels. Existing/Proposed residential units are counted where residential uses are located. Source: Dyett & Bhatia 2016; City of Palo Alto 2015 Figure 2-2 shows that 25, or about half, of all the parcels with residential uses are residential-only projects, and 22 parcels are a range of different mixes of uses. Figure 2-3 shows that the residential projects include a wide range of unit densities. These figures also show that of the 13 projects in the Downtown study area that are proposed or under construction, nine are residential or residential mixed-use projects (see Appendices A and B for more detail). 2.2 Existing Zoning Size of new development is regulated by zoning primarily through FAR; density; building height; lot coverage; and building setbacks.1 A review of existing development shows the following: • Of the 251 parcels with a building height limit of 50 feet, only 31 of those parcels (about 12 percent) approach that limit with buildings of four or more stories. • Of the 70 parcels with a building height limit of 35 feet, only 3 of those parcels (about 4 percent) approach the limit with buildings of three or more stories. • About 20 percent of all parcels currently have an FAR that approaches the maximum permitted FAR.2 1 Existing regulations are summarized in the Downtown Development Cap Evaluation Background Report: Development Trends, parking and Traffic (December 2014). 2 This figure includes parcels with an FAR that is 85 percent or more of the maximum FAR. Residential Analysis 11 • About 13 percent of all parcels with a specified maximum residential density currently have a residential density that approaches the maximum.3 • The buildout of 17 parcels is limited by maximum lot coverage requirements (all CD-S and CD-N parcels). • 63 parcels are limited by front, side, and rear setbacks (all RM-30, RT-35, and RT-50 parcels, located primarily in the SOFA area); and 16 parcels are limited by a front setback only (CD-N parcels, all located north of Lytton Avenue). These findings indicate that building height, FAR, and residential density may not be factors limiting development. However, lot coverage and small lot size combined with building setback requirements may limit residential development in some areas. For example, a typical RT-35 lot of 50 feet in width would be significantly limited by the required 15-foot front and side setbacks and 10-foot rear setback. Additionally, the GF combining district, which applies to 100 parcels along or near the University Avenue corridor, limits the amount of residential building area, as it requires active, pedestrian- oriented uses at the ground floor. This study presents two different approaches to determining the hypothetical number of residential units allowed by existing zoning, discounting the limitations described above. The first is based on the maximum allowed densities specified for each zoning district; and the second is based on the maximum residential FAR. These are described below. ESTIMATE BASED ON ALLOWABLE RESIDENTIAL DENSITIES Table 2-2 lists the maximum allowed densities for each zoning district within the selected parcels. Table 2-2: Maximum Allowed Residential Densities Zoning District Maximum Allowed Residential Density (du/ac) CD-C 40 CD-N 30 CD-S 30 PC N/A1 RM-30 30 RT-35 25-502 RT-50 25-502 1. Allowed residential density is determined on a project-specific basis. 2. Residential density bonuses are granted with a certain percentage of restricted affordable units; see Palo Alto Municipal Code Section 18.15. Source: City of Palo Alto 3 This figure includes parcels with a residential density that is 85 percent of more of the maximum density. City of Palo Alto Downtown Development Cap Study Table 2-3 translates the densities listed in Table 2-2 into potential additional residential units. To calculate the maximum allowed residential units within each zoning district, the maximum number of units on each individual parcel was first calculated and then rounded down to the nearest whole unit. Then, the maximum number of units on all parcels within each zoning district were added together. For the RT-35 and RT-50 districts, the zoning code does not specify maximum densities; however, the Palo Alto Housing Element specifies maximum allowed residential density and realistic capacity density ranges of 20-50 for both RT-35 and RT-50. The calculations presented here assume 35 and 50 du/ac, respectively. As maximum densities for projects on PC-designated parcels vary by project, Table 2-3 does not state potential units for these 12 parcels, which represent about 4.5 percent of all the selected parcels’ acreage. The potential additional residential units for each zoning district were then calculated by subtracting the existing residential units from the maximum allowed. However, where the number of existing units on any given parcel exceeded the maximum allowed, the potential for that parcel was determined to be zero. Excluding the PC parcels, the zoning code’s stated density ranges suggest that the selected parcels could theoretically accommodate approximately 2,018 units beyond what currently exists. However, the likelihood of these parcels all developing to their maximum residential density potential is low; this exercise merely illustrates the potential. Subsequent sections present various realistic development buildout scenarios. Table 2-3: Hypothetical Additional Residential Units by Maximum Density Zoning District Existing Maximum Allowed Residential Density (du/ac) Maximum Allowed Residential Units Potential Additional Residential Units1 Total Parcels Total Residential Units Total Lot Acreage CD-C 238 238 42.7 40 1,580 1,491 CD-N 16 1 3.0 30 77 76 CD-S 2 36 0.6 30 22 3 PC-Residential 10 164 2.5 -- -- -- PC-Residential Mixed Use 2 5 0.4 -- -- -- RM-30 2 26 0.4 30 18 0 RT-35 54 9 11.1 25-502 369 360 RT-50 10 50 2.4 25-502 118 88 Total 334 529 63.2 -- 2,1843 2,0183 Note: 1. Potential Additional Residential Units is 0 when Existing Residential Units ≥ Maximum Allowed Residential Units. 2. Residential Densities and Floor Area Ratio (FAR) calculations in Residential Transition zoning districts vary depending on the type of project. This calculation uses 35 du/ac for RT-35 and 50 du/ac for RT-50 as the maximum allowed residential density, consistent with the ranges stated in the Housing Element 3. Sum excludes PC parcels. Residential Analysis 13 ESTIMATE BASED ON ALLOWABLE RESIDENTIAL FAR In addition to maximum residential densities, the zoning code establishes maximum residential floor area ratios (FARs) for each zoning district within the selected parcels. Table 2-4 lists these standards, with and without TDR/bonus. Table 2-4: Maximum Allowed Residential FAR Zoning District Maximum Allowed Residential FAR Maximum Allowed Residential FAR (including TDR/Bonus) CD-C 1.0 2.0 CD-N 0.5 1.6 CD-S 0.6 1.6 PC1 -- -- RM-30 0.62 -- RT-35 1.15 1.15 RT-50 1.3 1.3 Note: 1. On a PC-designated parcel within an RT-35 or RT-50 district, the maximum allowed total FAR is 1.5 and 2.0 respectively; however, this does not occur within the study area. 2. Residential-only Maximum Allowed Residential FAR = Maximum Allowed Total FAR Table 2-5 translates the residential FARs listed in Table 2-4 into potential additional residential units. For these calculations, the base maximum allowed residential FAR was used—not the maximum with the bonus. To calculate the maximum allowed residential units within each zoning district, the maximum residential square footage of each individual parcel was calculated and then added together. Like in the analysis based on unit densities, the maximum allowed FAR for projects on PC-designated parcels varies by project, so Table 2-5 does not state potential areas or units for these parcels. The potential additional residential area in square feet was then calculated by subtracting the existing residential area from the maximum allowed. However, where the existing residential area on any given parcel exceeded the maximum area allowed, the potential for that parcel was determined to be zero. To translate that area into units, a maximum average unit size of 1,250 square feet was used. (While the zoning code does not state a maximum average unit size in the commercial districts, it does state a maximum average unit size of 1,250 square feet for RT districts.) Excluding the PC parcels, the zoning code’s stated maximum FARs suggest that the selected parcels could theoretically accommodate approximately 1,819 units beyond what currently exists. This figure is about 10 percent less than the estimate based on allowable unit densities. City of Palo Alto Downtown Development Cap Study Table 2-5: Hypothetical Additional Residential Area by Maximum Residential FAR Zoning District Existing Max Allowed Residential FAR Max Allowed Residential Sq Ft Potential Additional Residential Total Parcels Total Units Total Residential Sq Ft Total Lot Acreage Sq Ft1 Units 2, 3 CD-C 238 238 178,626 42.7 1.0 1,858,129 1,726,530 1,289 CD-N 16 1 2,700 3.0 0.5 65,151 63,041 46 CD-S 2 36 35,770 0.6 0.6 16,133 0 0 PC- Residential 10 164 194,275 2.5 -- -- -- -- PC- Residential Mixed Use 2 5 9,587 0.4 -- -- -- -- RM-30 2 26 25,717 0.4 0.64 14,709 0 0 RT-35 54 9 12,820 11.1 1.15 555,055 542,235 409 RT-50 10 50 63,185 2.4 1.3 135,980 101,854 75 Total 334 529 522,680 63.2 -- -- 2,433,6605 1,8195 Note: 1. Potential Additional Residential Sq Ft is 0 when Existing Residential Sq Ft ≥ Maximum Allowed Residential Sq Ft 2. The calculation uses 1,250 square feet as the average residential unit size. 3. Potential Additional Residential Units is 0 when Potential Additional Residential Sq Ft < 1,250 Sq Ft. 4. Maximum Allowed Residential FAR = Maximum Allowed Overall FAR 5. The sum excludes PC parcels. While the two approaches demonstrate the maximum residential capacity possible under the current zoning, they do not account for land use controls, site improvements, financial feasibility, market trends, or other variables. Nor do the approaches address the realistic residential capacity in mixed use developments where the total maximum FAR is limited. To provide a more realistic assessment of likely development capacity and buildout potential, the following sections consider the criteria of the 2015 –2023 Palo Alto Housing Element, and also provide two potential scenarios with expanded sets of housing opportunity sites. 2.3 Housing Element Criteria and Sites The next step in this analysis is to determine sites within the Selected Parcels that are most likely to accommodate any additional units for which there is a market. The analysis begins by mapping the set of potential housing sites identified in the 2015 –2023 Housing Element and listing the criteria used to generate this set. Table 2-6 lists the Housing Element’s criteria for identifying parcels suitable for residential or residential mixed-use redevelopment, per Chapter 3 of the Housing Element. Residential Analysis 15 Table 2-6: Housing Element Criteria Major Criteria (listed in 2015 –2023 Housing Element) Structure Age At least 20 years old (1995 or earlier) Lot Size Min. 10,000 square feet Unit Yield Min. 5 units A/V Ratio1 < 1.5 or >1.5 when land value is assessed artificially low2 Windshield Survey Underdeveloped residential/commercial sites that are 1 or 2 stories3. Underdeveloped commercial sites are defined as Class B office space structures or older buildings with wood construction. Minor Criteria (considered in Housing Element, but not listed)4 Historic Resource Exclude all historic and potentially historic resources (Historic categories 1 through 4; potential historic resources in SOFA) Existing Land Use Exclude proposed/under construction projects (or considered the as built condition when applying criteria) Zone Exclude PC District (one site: 550 Hamilton Ave) Lot Consolidation Include groups of smaller, adjacent lots (does not universally apply) Note: 1. A/V Ratio, or Assessed Value Ratio, expresses the ratio between the assessed value of structures or permanent improvements on a lot and the assessed value of the land. Lower A/V ratios typically indicate that a parcel may be underutilized. 2. Parcels under the same ownership for more than 10 years generally have a recorded land value far below their actual current land value. 3. These criteria were chosen based on the types of sites that had been redeveloped with mixed-use or residential projects within the past several years, as of the preparation of the 2015 –2023 Housing Element. 4. Characteristics found in parcels that meet the “Major Criteria” but not chosen as Housing Element sites. Source: Palo Alto Housing Element, 2014. To determine the realistic capacity for units on the sites that satisfy the above criteria, the Housing Element determined a Realistic Capacity Density for each district, which reflects an average of 80 percent of maximum density allowed under zoning (see page 61 of the Housing Element). These figures, which take into account development trends, site constraints, and the potential for non-residential uses as part of mixed-use development, are listed in Table 2-7. Table 2-7: Housing Element’s Realistic Capacity Density Zoning District Maximum Allowed Residential Density (du/ac) Realistic Capacity Density (du/ac) CD-C 40 20 CD-N 30 20 CD-S 30 20 PC -- -- RM-30 30 20 City of Palo Alto Downtown Development Cap Study Table 2-7: Housing Element’s Realistic Capacity Density Zoning District Maximum Allowed Residential Density (du/ac) Realistic Capacity Density (du/ac) RT-35 25-50 25-301 RT-50 25-50 25-301 Note: 1. Realistic capacity for RT zoning districts is calculated based on development standards for mixed-use projects. Source: Palo Alto Housing Element, 2014. Using the criteria in Table 2-6 and the realistic capacity factors in Table 2-7, the Housing Element estimates 252 additional residential units on 48 parcels within the selected parcels. Those parcels are shown in Figure 2-4. With the exception of one parcel, on which there is one single-family house, there are currently no existing or proposed residential units located on the parcels identified. Appendix C includes information of the full set of Housing Element sites in Palo Alto. 2.4 Potential Development Capacity Scenarios This study aims to expand the selection of Downtown sites identified by the 2015 –2023 Housing Element. The study looks at a variety of site-specific data to determine how best to expand the criteria, and ultimately, the set of parcels considered to be opportunity sites for future residential and residential mixed-use development. The two scenarios described here begin with the entire set of parcels that were not already identified by the Housing Element, establish criteria for which parcels to include, and ultimately identify new sites that are then added to the Housing Element sites. Scenario A describes a set of criteria that expands the set of potential sites, while Scenario B describes a set that further expands the set of potential sites. SCENARIO A: LOW Scenario A expands the set of potential sites by raising the realistic residential capacity determined by the Housing Element. This adjustment is based on the density of various existing and proposed residential mixed use projects in the vicinity of the Downtown study area, as well as the fact that developers today may seek higher densities to further maximize their returns in the current economy, which otherwise favors office development. Table 2-8 summarizes the adjusted residential capacity density in Scenario A. High Street Bryant Street Cowper Street Ramona Street Webster Street Emerson Street Waverley Street Alma Street Forest Avenue Everett Avenue Lincoln Avenue Homer Avenue Addison AvenueHamilton Avenue Channing Avenue Hawthorne Avenue Kipling Street Tasso Street Gilman StreetFlorence Street Lytton Avenue Kipling Street Bryant Street Hawthorne Avenue Ramona Street High Street Everett Avenue Webster Street Waverley Street Palo AltoCaltrain Station Palo AltoCity Hall Johnson Park Heritage Park Cogswell Plaza Lytton Plaza El Camino Park 0 0.1 0.20.05 MILES Source: City of Palo Alto, 2014; Dyett & Bhatia, 2016. Figure 2-4 Realistic Residential Capacity of Housing Element Inventory Sites Public Parking Garage Public Surface Parking Proposed/Under Construction Primary Study Area Selected Parcels: - Residential Districts (RM) - Residential Transition Districts (RT-30, RT-50) - Planned Community Districts (PC) designated for residential use or mixed use - Downtown Commercial Districts (CD-C, CD-N, CD-S) 15 - 20 20 - 25 25 - 30 (unit: du/ac) Not Housing Element Inventory Sites Residential Density City of Palo Alto Downtown Development Cap Study Table 2-8: Scenario A: Adjusted Residential Capacity Zoning District Maximum Allowed Residential Density (du/ac) Realistic Capacity Density proposed by Housing Element (du/ac) Adjusted Scenario A Capacity Density (du/ac) CD-C 40 20 30 CD-N 30 20 25 CD-S 30 20 25 PC -- -- -- RM-30 30 20 25 RT-35 25-50 25-301 30 RT-50 25-50 25-301 40 Note: 1. Realistic capacity for RT zoning districts is calculated based on development standards for mixed-use projects. Source: Palo Alto Housing Element, 2014. Site Selection Table 2-9 summarizes the criteria and processes of site selection. First, after excluding the sites already identified by the Housing Element, Scenario A applies only a subset of the Housing Element’s criteria to the remaining 288 parcels: it includes sites with structures over 20 years old and those with an A/V ratio of less than 1.5. It then further excludes any historic and potentially historic buildings (Class 1 through 4); Class A offices; and Class B offices above 2 stories. This yielded 62 parcels. Next, Scenario A applies an additional set of criteria to the remaining parcels. It includes only the following parcels: • Parcels where the existing residential density is less than the adjusted capacity, as shown in Table 2-9. • Parcels that are not public parking facilities. • Parcels that are either over 10,000 square feet in size, or that could potentially become part of a 10,000-square foot site if consolidated with adjacent properties. • Total units yield per site is larger than or equal to 5 units. This set of criteria yielded a total of 23 additional parcels. However, considering the consolidated parcels as single parcels, Scenario A yields an additional 14 sites, and translates to a total of 106 units. Added to the 252 units on the sites identified in the Housing Element, this amounts to 358 units. The sites are mapped in Figure 2-5. Residential Analysis 19 Table 2-9: Criteria and Flowchart for Scenario A Procedure Remaining Parcels Total Unit Yield Flowchart 1. Selected parcels not identified by the Housing Element 288 -- 2. Apply partial HE criteria 61 -- 3. Apply new criteria 23 106 Individual large lots (>10,000 sq ft) 4 41 Small lots (<10,000 sq ft) with consolidation potential 19 65 Site Characteristics As shown in Figure 2-5, the additional parcels are mostly located near the edge of the study area, with a few along University Avenue. The existing uses of these additional parcels include commercial, office, and commercial-office mixed use. The zoning designations include CD-C, CD-N, RT-35, and RT-50. None of the parcels have existing residential units. Small lots identified in Scenario A may achieve a total of or more than five additional residential units per site through site consolidation with other small lots, large lots, Housing Element sites, or a combination of lot types. The potential site compositions are: • Small lots only: 5 sites (10 parcels); • Small lots + Housing Element sites: 6 sites (8 parcels); and • Small lots + large lots (not Housing Element sites): 1 site (1 parcel). High Street Bryant Street Cowper Street Ramona Street Webster Street Emerson Street Waverley Street Alma Street Forest Avenue Everett Avenue Lincoln Avenue Homer Avenue Addison AvenueHamilton Avenue Channing Avenue Hawthorne Avenue Kipling Street Tasso Street Gilman StreetFlorence Street Lytton Avenue Kipling Street Bryant Street Hawthorne Avenue Ramona Street High Street Everett Avenue Webster Street Waverley Street Palo AltoCaltrain Station Palo Alto City Hall Johnson Park Heritage Park Cogswell Plaza Lytton Plaza El Camino Park 0 0.1 0.20.05 MILES Source: City of Palo Alto, 2014; EPS, 2016; Dyett & Bhatia, 2016. Figure 2-5 Scenario A - Low Public Parking Garage Public Surface Parking Proposed/Under Construction Primary Study Area Selected Parcels: - Residential Districts (RM) - Residential Transition Districts (RT-30, RT-50) - Planned Community Districts (PC) designated for residential use or mixed use - Downtown Commercial Districts (CD-C, CD-N, CD-S) Housing Element opportunity sites >=10,000 sqft <10,000 sqft, with consolidation potential Additional Opportunity Sites Historic Designation* Housing Element Opportunity Sites * Includes category 1 to 4 projects on the Historic Building Inventory and projects deemed eligible for the NRHP. Palo Alto Caltrain 1/4 mile walking distance Residential Analysis 21 Density Bonus All sites in Scenario A may accommodate Very Low income to Low income households, as defined by the State density bonus law (California Government Code section 65915). If all Scenario A sites and all Housing Element sites in the Downtown study area were to be built out at the maximum permitted density, rather than the adjusted density, and receive a 35 percent density bonus by accommodating affordable units, 351 additional units would result. Adding these 351 units to the 252 units identified on the sites listed in the Housing Element and the 106 additional units in Scenario A yields a total of 709 new units. SCENARIO B: HIGH Scenario B expands the set of potential sites by adjusting the threshold of criteria used in the Housing Element. In Scenario B, parcels with A/V ratios less than 1.8 will be considered. Accounting for transit accessibility, a weighted increase of residential capacity and minimum yield residential unit are applied to selected parcels based on their distance to the Palo Alto Caltrain Station. Table 2-10 summarizes the adjusted residential capacity density in Scenario B. Table 2-10: Scenario B: Adjusted Residential Capacity Zoning District Maximum Allowed Residential Density (du/ac) Realistic Capacity Density proposed by Housing Element (du/ac) Adjusted Scenario B Capacity Density (du/ac) Within ¼ mile radius of Caltrain Station Outside of ¼ mile radius of Caltrain Station CD-C 40 20 40 30 CD-N 30 20 30 25 CD-S 30 20 30 25 PC -- -- -- -- RM-30 30 20 30 25 RT-35 25-50 25-301 35 30 RT-50 25-50 25-301 50 40 Note: 1. Realistic capacity for RT zoning districts is calculated based on development standards for mixed-use projects. Source: Palo Alto Housing Element, 2014. Site Selection Table 2-11 summarizes the criteria and processes of site selection. First, after excluding the sites already identified by the Housing Element, Scenario B applies a modified—but more aggressive— subset of the Housing Element’s criteria to the remaining 288 parcels: it includes sites with structures over 20 years old and those with an A/V ratio of less than 1.8. It then further excludes any historic and potentially historic buildings, Class A offices, and Class B offices above two stories. This yielded an additional 66 parcels. City of Palo Alto Downtown Development Cap Study Next, Scenario B applies the same set of additional criteria as Scenario A. This set of criteria yielded a total of 39 additional parcels. However, considering the consolidated parcels as single parcels, Scenario B yields an additional 25 sites, and translates to a total of 189 units. Added to the 252 units identified in the Housing Element, the scenario yields a total of 441 housing units. The criteria and process are summarized in Table 2-9 and the sites are mapped in Figure 2-6. Table 2-11: Criteria and Flowchart for Scenario B Procedure Remaining Parcels Total Unit Yield Flowchart 1. Selected parcels not identified by the Housing Element 288 -- 2. Apply partial & modified HE criteria 66 -- 3. Apply new criteria 39 189 Individual large lots (>10,000 sq ft) 5 68 Within ¼ mile 3 39 Outside ¼ mile 2 20 Small lots (<10,000 sq ft) with consolidation potential 34 130 Within ¼ mile 21 90 Outside ¼ mile 13 40 Site Characteristics As shown in Figure 2-6, the additional parcels are mostly located near the edge of the study area, with a few along University Avenue. The existing uses of these additional parcels include commercial, office, commercial-office mixed use, and one residential mixed use. The zoning designations include CD-C, CD-N, RT-35, and RT-50. The one residential mixed-use parcel accommodates one existing residential unit. High Street Bryant Street Cowper Street Ramona Street Webster Street Emerson Street Waverley Street Alma Street Forest Avenue Everett Avenue Lincoln Avenue Homer Avenue Addison AvenueHamilton Avenue Channing Avenue Hawthorne Avenue Kipling Street Tasso Street Gilman StreetFlorence Street Lytton Avenue Kipling Street Bryant Street Hawthorne Avenue Ramona Street High Street Everett Avenue Webster Street Waverley Street Palo AltoCaltrain Station Palo Alto City Hall Johnson Park Heritage Park Cogswell Plaza Lytton Plaza El Camino Park 0 0.1 0.20.05 MILES Source: City of Palo Alto, 2014; EPS, 2016; Dyett & Bhatia, 2016. Figure 2-6 Scenario B - High Public Parking Garage Public Surface Parking Proposed/Under Construction Primary Study Area Selected Parcels: - Residential Districts (RM) - Residential Transition Districts (RT-30, RT-50) - Planned Community Districts (PC) designated for residential use or mixed use - Downtown Commercial Districts (CD-C, CD-N, CD-S) Housing Element opportunity sites >=10,000 sqft <10,000 sqft, with consolidation potential Additional Opportunity Sites Historic Designation* Housing Element Opportunity Sites * Includes category 1 to 4 projects on the Historic Building Inventory and projects deemed eligible for the NRHP. Palo Alto Caltrain 1/4 mile walking distance City of Palo Alto Downtown Development Cap Study Small lots identified in Scenario B may achieve a total of or more than three additional residential units per site within ¼ mile walking distance from Caltrain, or five outside of ¼ walking distance from Caltrain, through site consolidation with other small lots, large lots, Housing Element sites, or a combination of lot types. The potential site compositions are: • Small lots only: 19 sites (25 parcels); • Small lots + Housing Element sites: 5 sites (6 parcels) • Small lots + large lots (not Housing Element sites): 1 site (1 parcel); and • Small lots + large lots (not Housing Element sites) + Housing Element sites: 1 site (2 parcels) Density Bonus All sites in Scenario B may accommodate Very Low income to Low income households, as defined by the State Density Bonus Law (California Government Code section 65915). If all Scenario B sites and all Housing Element sites in the Downtown study area were to be built out at the maximum permitted density, rather than the adjusted density, and receive a maximum of 35 percent density bonus by accommodating affordable units, 368 additional units would result. Adding these 368 units to the 252 units identified on the sites listed in the Housing Element and the 189 additional units in Scenario B yields a total of 809 new units. PARKING CALCULATION Table 2-12 identifies the required parking for the additional residential development in each development capacity scenario using the City’s current requirement of 1.25 parking spaces per 1- bedroom unit, and guest parking of 1 space plus 10 percent of total number of units per site. Where site compositions include Housing Element sites, guest parking is calculated as 10 percent of the total units yielded from all non-Housing Element parcels. All calculations resulting in fractional units are rounded up to the next whole number. Table 2-12: Required Residential Parking by Scenario Site Composition Number of Parking Space Required Scenario A Scenario B Resident Parking 106 189 Including Housing Element sites 22 35 Not including Housing Element sites 84 154 Guest Parking 25 58 Including Housing Element sites 6 8 Not including Housing Element sites 19 50 Total 131 247 Residential Analysis 25 The realistic amount of required parking spaces will vary based on the number of bedrooms per housing unit and the total number of units accommodated on each site. The calculation also does not account for the required parking spaces for non-residential uses in each development. Considering the high market value of housing and an overall shortage of parking facilities in Downtown, most of the parking spaces will likely to be accommodated by subterranean parking structure on-site. The pro forma analysis in Chapter 3.4 provides a closer look at the financial feasibility of housing developments with different parking configurations. Density Bonus and Parking Reduction According to the State density bonus law (California Government Code section 65915), the City shall not require a vehicular parking ratio exceeding 0.5 space per bedroom for any development that is within one-half mile of a major transit stop and that includes the maximum percentage of Low- or Very Low income units allowed through density bonus. While neither scenario proposes development capacity to exceed the maximum allowed density (except when a density bonus is included), it is important to consider the potential of reducing parking requirement in a transit- oriented, multi-modal environment in Downtown Palo Alto. 2.5 Reallocation of Housing Units to Downtown Sites After developing the potential development capacity scenarios in Downtown Palo Alto, the study assessed whether these Downtown sites can accommodate units previously allocated outside of Downtown in the Housing Element, specifically those allocated in the San Antonio/South El Camino Real area. By accommodating these units in Downtown, more residents would be able to take advantage of the transit system, bicycle facilities, civic amenities, and the pedestrian-oriented environment in Downtown. Additionally, as most parcels in the Downtown Study Area are within a half-mile radius from the Caltrain Station, housing development with affordable units may receive additional parking requirement relief as stated in the State density bonus law. The following criteria are used to identify existing Housing Element sites eligible for unit re- allocation to Downtown: • Parcels that are within quarter-mile distance from El Camino Real and San Antonio Avenue; • Parcels that are not within Downtown Cap Study, SOFA II CAP, and California Avenue PTOD areas; and • Parcels that are outside of half-mile radii of Caltrain Stations (Palo Alto, California Avenue, and San Antonio stations). Using the above set of criteria, 75 sites (parcels) are selected in the San Antonio/South El Camino Real area, which translates to a total of 774 units, as determined by the Housing Element. Figure 2-7 shows the selected Housing Element sites with the above criteria. E m b a r c a d e r o R d Oregon Expressway Middlefield Road Alma St University Ave Waverley St W ebster St San Antonio Ave El Camino Real El C a m in o R eal C h arlst o n R d Page Mill Rd Arastrander Rd Matadero Ave Park Blvd May Bell Ave California AveStandord Ave Middlefield Road Oxford Ave College Ave Alma St STANFORD UNIVERSITY PALO ALTO Palo Alto California Avenue San Antonio Source: City of Palo Alto, 2014; Dyett & Bhatia, 2016. Figure 2-7 Housing Element Sites Eligible for Unit Re-allocation to Downtown Sites Downtown Primary Study Area City Boundary 0 0.4 0.80.2 MILES 1/4 Mile from Caltrain Stations 1/2 Mile from El Camino Real Housing Element Sites Eligible Not Eligible Residential Analysis 27 The additional capacities yielded in Scenario A and Scenario B can accommodate approximately 14 and 24 percent, accordingly, of the total units eligible for re-allocation to the Downtown. In situations where all sites receive the maximum density bonus of 35 percent through provision of affordable housing, the percentage may be increased to 59 and 72 percent, accordingly. City of Palo Alto Downtown Development Cap Study 3 Residential Market Assessment This Residential Market Assessment considers the historical market performance and potential for residential uses, primarily multifamily and mixed-used projects, to better understand potential for housing development in the Downtown. The assessment commences with an overview of citywide housing trends then focuses in on the Downtown market. The review of the Downtown housing market includes an evaluation of the market performance of existing residential products, including a range of multifamily projects developed over recent decades. The market data are used to inform a high-level residential real estate feasibility analysis that tests the economic viability of new housing development in the Downtown. 3.1 Citywide Housing Trends HOUSING STOCK AND PERMITTING According to the US Census Bureau’s American Community Survey, there are approximately 28,000 housing units in the City of Palo Alto, about 60 percent of which are owner-occupied and about 40 percent of which are occupied as rental units.4 Approximately 67 percent of the city’s dwelling units are single-family homes, while about 16 percent of units are in small- to mid-size apartment or condominium buildings (2-19 units), and 17 percent are in large buildings with 20 or more units.5 While only about a third of the city’s housing is in a multifamily format, housing growth in Palo Alto has been more heavily weighted toward multifamily homes overall since 1980. Residential permit data indicate that since then, nearly 60 percent of citywide permits for new units have been in multifamily structures.6 Despite a 35-year trend in which multifamily housing permitting exceeded single family permitting in Palo Alto, shown in Figure 3-1 below, multifamily permitting in Palo Alto has dropped off dramatically in recent years. Looking back over time, the multifamily market has exhibited numerous cycles of activity, with periods of high growth followed by lulls. The 35-year peak for multifamily permitting in Palo Alto occurred in 1999, when approximately 675 units were permitted in a single year. Similar to recent trends, that banner year was followed by a year in which zero multifamily permits were issued. 4 American Community Survey 2014 5 Ibid. 6 U.S. Department of Housing and Urban Development, Building Permits Database Residential Analysis 29 Figure 3-1: Housing Permit Trend in Palo Alto 1980-2014 U.S. Department of Housing and Urban Development, Building Permits Database Between 2009 and 2014, with overall permitting down in the wake of the national financial crisis, multifamily permits accounted for less than 20 percent of the total. Even in 2014, with a much improved economy, only four multifamily permits were issued, an indication that constraints on development likely are limiting supply. This recent decline in multifamily permitting does not appear to be attributable to waning market demand. Neighboring cities have seen significant multifamily permitting in recent years. For example, the City of Mountain View permitted an average of approximately 400 units per year between 2011 and 2014. Neither Menlo Park nor East Palo Alto experienced notable multifamily permitting over the past 10 years (Figure 3-2). 0 100 200 300 400 500 600 700 19 8 0 19 8 1 19 8 2 19 8 3 19 8 4 19 8 5 19 8 6 19 8 7 19 8 8 19 8 9 19 9 0 19 9 1 19 9 2 19 9 3 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 Nu m b e r o f H o u s i n g P e r m i t s Time Multifamily Single Family City of Palo Alto Downtown Development Cap Study Figure 3-2: Multifamily Permitting Source: HUD Single family permitting in Palo Alto over the past few years has been somewhat more steady, remaining fairly consistent with the historical average of 75 units per year. As illustrated in Figure 3-3 below, Palo Alto has permitted between 50 and 200 single family permits per year over the past 10 years, largely keeping pace with the City of Mountain View and both Menlo Park and East Palo Alto. 0 100 200 300 400 500 600 700 19 9 0 19 9 1 19 9 2 19 9 3 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 Nu m b e r o f M u l t i f a m i l y H o u s i n g P e r m i t s Time Palo Alto Mountain View Menlo Park East Palo Alto Residential Analysis 31 Figure 3-3: Single-Family Permitting Source: HUD 3.2 Residential Rental Market Market data concerning the 14 major apartment complexes (50 units of more) indicate that across 2,750 units the average rent in Palo Alto is $3,239 per month (2015 data) for an 868 square foot apartment, approximately $3.73 per square foot per month. These units were built between 1930 and 2001, with an average age of about 48 years. Average rents citywide are up about nine percent in the past year (4Q2014 – 4Q2015), while studio apartment rents are up 23 percent over the same period. Looking back four years, citywide average rents are up about 36 percent, with studio apartment rents up 59 percent. 7 Vacancy in the major apartment complexes is less than five percent. Only one significant (50+ unit) apartment building in the city has traded during the past four years. Formerly “Park Towers,” the 90-unit Mia building at 535 Everett sold in 2014 for $36.5 million ($405,555 per unit; $795 per square foot). The building is outside of the Downtown Primary Study Area, but nearby. 7 RealAnswers 4Q2015 0 50 100 150 200 250 300 19 9 0 19 9 1 19 9 2 19 9 3 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 Nu m b e r o f S i n g l e -Fa m i l y H o u s i n g P e r m i t s Time Palo Alto Mountain View Menlo Park East Palo Alto City of Palo Alto Downtown Development Cap Study Available data from CoStar Group identify 310 multifamily rental units in the Downtown Primary Study Area. Of these, available data reveal that 157 units in two projects are designated affordable. The 50-unit 801 Alma is an affordable project completed by Eden Housing in 2013. Other notable apartment complexes in Downtown Primary Study Area include Alma Place, which includes 107 affordable units built in 1998. The most significant market rate rental building in the Downtown Study Area is the historic Hotel President Apartments, which consists of 75 market rate apartments. Just outside the Downtown Primary Study, the Marc (located at 501 Forest Ave.) and Mia apartment building offer additional examples of the market potential for Downtown rental housing. RENT TRENDS Since 2010, multifamily rental rates in Palo Alto have generally kept pace or exceeded neighboring communities, as illustrated in Figure 3-4 below. According to Zillow, median rents reported citywide in Palo Alto are currently over $4,200 per month, up from approximately $2,600 per month in 2011, a 60+ percent increase over that five year period. Residential Analysis 33 Figure 3-4: Multifamily Apartment Rent Trend by City Source: Zillow Rent Index $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 20 1 0 - 1 1 20 1 1 - 0 3 20 1 1 - 0 7 20 1 1 - 1 1 20 1 2 - 0 3 20 1 2 - 0 7 20 1 2 - 1 1 20 1 3 - 0 3 20 1 3 - 0 7 20 1 3 - 1 1 20 1 4 - 0 3 20 1 4 - 0 7 20 1 4 - 1 1 20 1 5 - 0 3 20 1 5 - 0 7 20 1 5 - 1 1 Re n t P e r U n i t Time Palo Alto Menlo Park Mountain View East Palo Alto City of Palo Alto Downtown Development Cap Study While comprehensive rent data were not available for the Downtown Primary Study Area specifically, EPS analyzed the rent trends for the zip codes in and around the Downtown Area. The 94301 zip code encompasses the majority of the Downtown Primary Study Area and lies completely within the Palo Alto city limits, but also extends northwest nearly to Highway 101 and southeast to the Oregon Expressway. However, noting this imperfect proxy for the Downtown Primary Study Area, the zip code level date provides an effective comparison of rental trends specifically impacting the Study Area. As shown below in Figure 3-5, the 94301 zip code average rental rates have consistently exceeded neighboring zip codes since 2010 and has experienced approximately 50 percent increase in average rents over the past two years. Average rents in the 94301 are now approximately $4,500 per month, which is above Palo Alto in aggregate as well as above all neighboring zip codes. Residential Analysis 35 Figure 3-5: Multifamily Apartment Rent Trend by ZIP Code Source: Zillow Rent Index $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 20 1 0 - 1 1 20 1 1 - 0 3 20 1 1 - 0 7 20 1 1 - 1 1 20 1 2 - 0 3 20 1 2 - 0 7 20 1 2 - 1 1 20 1 3 - 0 3 20 1 3 - 0 7 20 1 3 - 1 1 20 1 4 - 0 3 20 1 4 - 0 7 20 1 4 - 1 1 20 1 5 - 0 3 20 1 5 - 0 7 20 1 5 - 1 1 Re n t P e r U n i t Time 94301 94305 94306 94025 City of Palo Alto Downtown Development Cap Study DOWNTOWN PROJECT PROFILES As noted at the beginning of this section, there are 14 major apartment buildings (50 units or more) spread throughout Palo Alto. Three of these major apartment projects are located within the Downtown Study Area and are profiled in greater detail below. The Marc 501 Forest Avenue Palo Alto, CA 94301 Year Built: 1965 118 Units 12 Stories 98,830 Square Feet Unit Type Count Size (SF) Monthly Rents Mo. Rent PSF 1 Bed / 1 Bath 70 675 $3,710 - $4,885 $6.08 2 Bed / 2 Bath 44 945 $3,710 - $4,885 $5.56 2 Bed / 2.5 Bath 4 2,500 $7,920 - $14,500 $4.05 Total / Average 118 837 $4,735 $5.65 Notes: The Marc sold in 2006 for $50 million ($424,000 per unit, $506 per square foot). Photo Credit: Pacific Urban Residential Communities Residential Analysis 37 Mia 535 Everett Avenue Palo Alto, CA 94301 Year Built: 1964 90 Units, 6 Stories 45,900 Square Feet Unit Type Count Size (SF) Monthly Rents Mo. Rent PSF Studio 45 420 $2,375 - $3,000 $6.15 Studio 45 600 $2,825 - $3,600 $5.14 Total / Average 90 510 $2,833 $5.56 Notes: Mia sold in 2014 for $36.5 million ($405,555 per unit; $795 per square foot). All apartments are furnished. Photo credit: realtor.com City of Palo Alto Downtown Development Cap Study President Hotel Apartments 488 University Avenue Palo Alto, CA 94303 Year Built: 1930 75 Units 6 Stories 27,500 Square Feet Unit Type Count Size (SF) Monthly Rents Mo. Rent PSF Studio 50 250 $1,100 $4.40 Studio 20 550 $1,900 - $2,400 $3.76 1 Bed / 1 Bath 5 800 $3,000 3.75 Total / Average 90 366 $1,484 $4.05 Notes: Historic Inventory building. Photo Credit: City of Palo Alto Residential Analysis 39 3.3 For-Sale Housing Market Minimal development of for-sale residential housing has occurred Downtown recent years, largely owing to the lack of undeveloped land. Given the paucity of recent projects, this for-sale assessment seeks to identify housing projects developed in and around the Downtown over recent decades. The data gathering exercise focused on major projects, but also identified examples of smaller infill projects and mixed-use projects as well. The for-sale assessment commences with a review of home price trends in the marketplace, then focuses in on the Downtown. PRICE TRENDS Residential properties in the City of Palo Alto and the Downtown area in particular trade at a significant premium over similar homes in the broader market area. As shown in Figure 3-6 below, the median price of a condominium in Palo Alto is about $1.4 million, as compared with about $1.2 million in Menlo Park, $1.0 million in Mountain View, and $600,000 in East Palo Alto. As shown in Figure 3-7 below, the median price of single family homes in Palo Alto is about $2.7 million, versus $2.1 million in Menlo Park, $1.7 million in Mountain View, and $620,000 in East Palo Alto. Since June 2011, prices for condominiums in Palo Alto are up 99 percent, while prices for single family homes are up 109 percent. The rate of price escalation has been similarly strong throughout the region, though East Palo Alto pricing has increased at a greater rate due to a relatively low starting price basis. City of Palo Alto Downtown Development Cap Study Figure 3-6: Condominium Home Price Trend by City Source: Zillow Home Value Index Figure 3-7: Single-Family Home Price Trend by City Source: Zillow Home Value Index $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 19 9 6 - 0 4 19 9 6 - 1 2 19 9 7 - 0 8 19 9 8 - 0 4 19 9 8 - 1 2 19 9 9 - 0 8 20 0 0 - 0 4 20 0 0 - 1 2 20 0 1 - 0 8 20 0 2 - 0 4 20 0 2 - 1 2 20 0 3 - 0 8 20 0 4 - 0 4 20 0 4 - 1 2 20 0 5 - 0 8 20 0 6 - 0 4 20 0 6 - 1 2 20 0 7 - 0 8 20 0 8 - 0 4 20 0 8 - 1 2 20 0 9 - 0 8 20 1 0 - 0 4 20 1 0 - 1 2 20 1 1 - 0 8 20 1 2 - 0 4 20 1 2 - 1 2 20 1 3 - 0 8 20 1 4 - 0 4 20 1 4 - 1 2 20 1 5 - 0 8 Co n d o m i n i u m H o m e P r i c e Time Palo Alto Menlo Park Mountain View East Palo Alto $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 19 9 6 - 0 4 19 9 6 - 1 2 19 9 7 - 0 8 19 9 8 - 0 4 19 9 8 - 1 2 19 9 9 - 0 8 20 0 0 - 0 4 20 0 0 - 1 2 20 0 1 - 0 8 20 0 2 - 0 4 20 0 2 - 1 2 20 0 3 - 0 8 20 0 4 - 0 4 20 0 4 - 1 2 20 0 5 - 0 8 20 0 6 - 0 4 20 0 6 - 1 2 20 0 7 - 0 8 20 0 8 - 0 4 20 0 8 - 1 2 20 0 9 - 0 8 20 1 0 - 0 4 20 1 0 - 1 2 20 1 1 - 0 8 20 1 2 - 0 4 20 1 2 - 1 2 20 1 3 - 0 8 20 1 4 - 0 4 20 1 4 - 1 2 20 1 5 - 0 8 Sin g l e -Fa m i l y H o m e P r i c e Palo Alto Menlo Park Mountain View East Palo Alto Residential Analysis 41 ZIP code data reveal more localized home price variation, including providing a better sense of the residential price trend in an around the Palo Alto Downtown. The 94301 ZIP code area, which includes Downtown Palo Alto, has achieved higher condominium price points than the citywide average. Furthermore, condominiums in the 94301 area have experienced a 97 percent increase in average sales prices since June 2011. By comparison, single family sales in Downtown Palo Alto are exceeded only by those in Atherton, an extremely high-priced single-family community just north of Palo Alto. However, it should be noted that on a price per square foot basis, Downtown Palo Alto exceeds Atherton sales. The graphs and maps below (Figures 3-8 – 3-11) illustrate the strength of the residential market in and around Palo Alto, and especially the strength of Downtown Palo Alto in comparison to neighboring communities. City of Palo Alto Downtown Development Cap Study Figure 3-8: Condominium Home Price Trend by ZIP Code Source: Zillow Home Value Index Figure 3-9: Condominium ZIP Code Map $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 19 9 6 - 0 4 19 9 6 - 1 2 19 9 7 - 0 8 19 9 8 - 0 4 19 9 8 - 1 2 19 9 9 - 0 8 20 0 0 - 0 4 20 0 0 - 1 2 20 0 1 - 0 8 20 0 2 - 0 4 20 0 2 - 1 2 20 0 3 - 0 8 20 0 4 - 0 4 20 0 4 - 1 2 20 0 5 - 0 8 20 0 6 - 0 4 20 0 6 - 1 2 20 0 7 - 0 8 20 0 8 - 0 4 20 0 8 - 1 2 20 0 9 - 0 8 20 1 0 - 0 4 20 1 0 - 1 2 20 1 1 - 0 8 20 1 2 - 0 4 20 1 2 - 1 2 20 1 3 - 0 8 20 1 4 - 0 4 20 1 4 - 1 2 20 1 5 - 0 8 Co n d o m i n i u m H o m e P r i c e Time 94301 94305 94306 94025 94303 Residential Analysis 43 Figure 3-10: Single-Family Home Price Trend by ZIP Code Source: Zillow Home Value Index Figure 3-11: Single-Family Home ZIP Code Map $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 19 9 6 - 0 4 19 9 6 - 1 2 19 9 7 - 0 8 19 9 8 - 0 4 19 9 8 - 1 2 19 9 9 - 0 8 20 0 0 - 0 4 20 0 0 - 1 2 20 0 1 - 0 8 20 0 2 - 0 4 20 0 2 - 1 2 20 0 3 - 0 8 20 0 4 - 0 4 20 0 4 - 1 2 20 0 5 - 0 8 20 0 6 - 0 4 20 0 6 - 1 2 20 0 7 - 0 8 20 0 8 - 0 4 20 0 8 - 1 2 20 0 9 - 0 8 20 1 0 - 0 4 20 1 0 - 1 2 20 1 1 - 0 8 20 1 2 - 0 4 20 1 2 - 1 2 20 1 3 - 0 8 20 1 4 - 0 4 20 1 4 - 1 2 20 1 5 - 0 8 Sin g l e -Fa m i l y H o m e P r i c e Time 94027 94301 94305 94306 94025 94303 City of Palo Alto Downtown Development Cap Study Downtown Residential Sales A sample of residential transaction data from the Downtown Palo Alto vicinity reveals that recent sales commonly have been well over $1,000 per square foot, with a number of recent transactions between $1,200 and $1,600 per square foot. Figure 3-12 presents condominium and townhome sales data for the Downtown vicinity, including transactions occurring from 1980 through January 2016.8 Figure 3-12: Condominium and Townhome Transactions in the Vicinity of Downtown (Price Per Square Foot) Source: Redfin.com 8 If a single property has transacted multiple times, only the most recent sale is reported by Redfin and presented here. $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 1980 1982 1985 1988 1990 1993 1996 1999 2001 2004 2007 2010 2012 2015 Pr i c e P e r S q u a r e F o o t Time Residential Analysis 45 PROJECT PROFILES The following project profiles provide a brief overview for a selection of the for-sale multifamily product types found in and around Downtown Palo Alto. These particular projects were selected to reflect a range of development types, use mixes and densities. The analysis relies on the project profiles included here to inform the development prototypes tested in the Financial Feasibility Analysis (Section 3.4). The project profiles provide important information concerning density, height, land use mix, and parking. Where data are available, building attributes are provided including number of units, year built, number of stories, and how the project provides parking. While all of the projects summarized below (Figure 3-13) are located in Downtown Palo Alto, note that not all are strictly within the Study Area boundary. Additional project profiles are provided in Appendix D. Figure 3-13: Summary of For-Sale Multifamily Projects in Downtown Palo Alto Project Name Number of Units Year Built Number of Stories Parking Forest Plaza 35 1981 5 Subterranean 621-649 Forest 21 1974 2 Subterranean Weatherly at University Park 30 2004 4 Subterranean 800 High Street 60 2006 4 Subterranean City of Palo Alto Downtown Development Cap Study Forest Plaza 165-185 Forest Avenue 685 High Street Palo Alto, CA 94301 Year Built: 1981 35 Units 5 Stories Ground Floor Commercial Subterranean Parking Figure 3-14 Transactions at Forest Plaza Source: Redfin $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 1/1/1980 6/23/1985 12/14/1990 6/5/1996 11/26/2001 5/19/2007 11/8/2012 Pr i c e P e r S q u a r e F o o t Time Residential Analysis 47 621-649 Forest 621-649 Forest Avenue Palo Alto, CA 94301 Year Built: 1974 21 Units 2 Stories Subterranean parking Figure 3-15 Transactions at 621-649 Forest $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 1/1/1980 6/23/1985 12/14/1990 6/5/1996 11/26/2001 5/19/2007 11/8/2012 Pr i c e P e r S q u a r e F o o t Time City of Palo Alto Downtown Development Cap Study Weatherly at University Park 315 Homer Palo Alto, CA 94301 Year Built: 2004 30 Units 4 Stories Subterranean parking Figure 3-16 Transactions at Weatherly at University Park $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 1/1/1980 6/23/1985 12/14/1990 6/5/1996 11/26/2001 5/19/2007 11/8/2012 Pr i c e P e r S q u a r e F o o t Time Residential Analysis 49 800 High Street 800 High Street Palo Alto, CA 94301 Year Built: 2006 60 Units 4 Stories Figure 3-17 Transactions at 800 High Street $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 1/1/1980 6/23/1985 12/14/1990 6/5/1996 11/26/2001 5/19/2007 11/8/2012 Pr i c e P e r S q u a r e F o o t Time City of Palo Alto Downtown Development Cap Study OTHER NOTABLE PROJECTS In addition to the project profiles highlighted in the section above, EPS evaluated relatively recently completed infill developments that were successfully brought to market on small or irregular parcels or in areas that required a mix of uses. The following four projects identify product typologies that could be replicated or modified to fit existing redevelopment sites within the Study Area. Brief descriptions of each development are provided below. Note that two of the development types (the mixed-use condominium over commercial and linear townhome project) help inform the prototypes used for the feasibility analysis. 260 Homer Avenue and 819 Ramona Street Photo Credit: Menlo Equities A five-story, mixed-use office and residential project with a steel structure over concrete podium, the building includes a parking structure with 3 levels above grade and two levels subterranean. The first two above grade levels consist of commercial office space and the third level features residential units. Residential units sold for prices ranging from $4 million to $5.5 million (~ $1030 to $1560 PSF) between 2010 and 2012. Residential Analysis 51 The Hamilton The Hamilton is located at 555 Byron Avenue and was developed in 1997 as senior condominiums. Condominiums sold for between $500-750 per square foot between 2005 and 2007. Lytton Park Located on a 9,500 square foot, narrow parcel that included a single story apartment building with 8 units prior to redevelopment, 559 Lytton Avenue was built in 2013. The developer elected to build 4 townhomes in 2 structures. Units include two tuck-under parking spaces each and very high-end finishes. Units have sold for between $1,200 and $1,400 per square foot in 2013. City of Palo Alto Downtown Development Cap Study 455 Forest Avenue Similar to the project on Lytton profiled above, 455 Forest Avenue includes 4 townhome unit located between Cowper Street and Waverly Street. The project includes approximately 9,975 square feet for gross building area on a 10,000 square foot lot. The prior use was a rooming house with a lower FAR though precise square footage for the prior use was not available at the time of this analysis. 265 Lytton Ave Photo Credit: DES Architects 265 Lytton was constructed in 2012 and features two stories of commercial retail office with the top floor containing 4 residential units. The total square footage of the project is 37,800 The project retained the historic two-story Tinney building and a mature oak tree mid-block on Lytton, with the newly constructed building wrapping around the existing structure and tree in an L-shape, providing an interior courtyard. The project includes 31 parking spaces located in a Residential Analysis 53 subterranean garage. Residential units sold for between $1,100 and $1,500 per square foot in 2011 prior to completion of the project. 135 Hamilton Ave Photo Credit: Keenan Land Company Located on a previously vacant, approximately 10,000 square foot lot at the corner of High Street and Hamilton Avenue, the mixed-use project includes a total of 28,085 square feet of rentable/saleable space spread between three floors of retail and Class A office and two residential units located on the top floor. The residential units total approximately 3,000 square feet each. The project includes three levels of underground parking. City of Palo Alto Downtown Development Cap Study 3.4 Financial Feasibility Analysis This study relies on an illustrative pro forma financial analysis to evaluate the potential feasibility of new residential and mixed use real estate development projects in Downtown Palo Alto. The pro forma analysis approximates the cash-flow (i.e., costs and revenues) of prototypical projects to evaluate land value and redevelopment potential.9 The analysis finds significant value associated with buildable Downtown sites, particularly where large-parcel/site-efficient projects may be developed. The pro forma analysis provides an illustration of redevelopment potential in the Downtown. By comparing the estimated value of a hypothetical development site (which including an existing building) to the estimated value of new, higher-density buildings (residential and mixed use), the analysis evaluates the range of density and allowable uses that may be needed to justify full, ground-up redevelopment of an existing building. While the existing residential projects profiled in the section above (additional existing for-sale multifamily projects are profiled in Appendix A) in and around Downtown Palo Alto are often located on larger parcels, the reality is that such sites are rare or nonexistent today. Sites zoned for residential uses commonly are relatively small and restrict projects to low development densities. Furthermore, many sites currently contain existing dwelling units. With the observed site supply challenges providing context for analysis, EPS conducted two financial feasibility comparisons, as described below. 1. The first comparison tests whether the development value generated by a diversity of multifamily prototypes is sufficient to overcome the existing value of a single family home. In other words, is the land value generated from new residential development sufficient to overcome the existing value of a residential site, which includes the value of both improvements and land. As noted above, single family home parcels typically are not large enough to support these prototypes. Therefore, the analysis assumes land is assembled and land value and existing value estimates are reported and compared on a per-acre basis. 2. The second methodology compares these same prototypes with sites made up of parcels that are not currently occupied by residential uses and provide sufficient acreage to support new multifamily development. These test sites reflect actual development sites identified Downtown. While the comparison reflects a change of land use (and could involve potential entitlement challenges not captured by the analysis), the exercise provides examples of actual sites that could potentially support new residential and mixed-use products. Both feasibility comparisons are provided in more detail below. 9 Residual Land Value is a common feasibility metric that considers the market value of a built project and subtracts out the total cost of development (excluding land) to estimate land value. Residential Analysis 55 COMPARISON ONE: RESIDENTIAL AND MIXED-USE REDEVELOPMENT OF EXISTING RESIDENTIAL USES In this test, the hypothetical existing building considered in the pro forma analysis is a 2,500- square-foot single family residential building on a 5,000 square foot parcel with average rent of $6.00 per square foot. The value of this existing building is estimated at about $2.45 million (about $980 per square foot), as shown in Table 3-15 and detailed in Table 3-16. Table 3-15 also summarizes the resulting value estimates for four distinct redevelopment alternatives, as a basis for comparing the likelihood of various intensification scenarios. Because the residential prototypes considered require larger parcels (than the 5,000 square foot single family home lot), it is important to note that parcel assembly and/or redevelopment of larger parcels with varying existing uses likely would be required. For the purposes of this analysis, residential land value is compared to existing residential value on a per-acre basis. Assuming parcel assembly is achievable, the per-acre value hurdle associated with the existing residential uses likely is on the order of $21.34 million (i.e., $2.45 million home value multiplied by 8.7 units per acre). Redevelopment of existing single family structures with an 80,000 square foot residential apartment building appears financially attractive, with the new development supporting approximately $25 million per acre in land value. However, the financial viability of redevelopment is less likely when the replacement project is a lower density product such as the prototype garden apartment studied, which is estimated to support less than $20 million in per- acre land value. Table 3-15 Summary of Pro Forma Scenarios The first feasibility comparison test analysis considers new development of a prototypical 80,000- square-foot apartment building with structure subterranean parking on a 50,000 square foot parcel. The analysis assumes rent of $6.50 per square foot per month. In this example, pro forma analysis of the new building suggests a residual land value of about $28.2 million or about $24.5 Pro Forma Scenario Lot Sq. Ft.Building Sq. Ft. (BGA)FAR Total Per Acre Total Per Acre Existing Residential 5,000 2,500 0.3 $2,450,000 $21,344,400 N/A N/A Multifamily Apartment 50,000 80,000 1.6 $79,200,000 N/A $28,160,000 $24,530,000 Commercial/Condo Mixed Use Building 17,000 25,000 1.5 $26,630,000 N/A $10,560,000 $27,070,000 Garden Apartment 30,000 30,000 1.0 $32,090,000 N/A $13,720,000 $19,920,000 Linear Townhome 10,000 8,000 0.8 $10,550,000 N/A $5,510,000 $24,000,000 Land ValueProject Value City of Palo Alto Downtown Development Cap Study million on a per-acre basis, greater than the per acre total value of the existing building of approximately $21.3 million (see Figure 3-17-17).10 In cases where the residual land value of the new project is greater than the total value of the existing property, there is economic rationale for the current owner to redevelop the property or sell the property to a developer (recognizing, however, that property owners have a variety of investment goals as well as non-financial motivations). In the second feasibility test, we evaluate the potential value of a 25,000-square-foot mixed-use project with subterranean parking. The analysis assumes an average commercial rental rate of $6.75 per square foot per month and four for-sale residential units valued at $1,600 per square foot. In this example, the analysis estimates the value of the mixed-use project at nearly $27 million, with a residual land value per acre of about $27.1 million. In this test, the combination of high commercial rents, high condominium price points, and densification from 0.3 FAR to 1.5 FAR, the residual land value exceeds the per acre value of the existing residential uses (see Figure 3-18). In the third test, we evaluate the potential value of a 30,000-square-foot garden apartment-style residential project with subterranean parking. The analysis assumes an average rent of $6.50 per square foot per month. In this example, the analysis estimates the value of the project at about $32.1 million, with a residual land value of about $19.9 million per acre. However, despite the increase in FAR (0.3 FAR to 1.0 FAR) and high residential rents, the addition of 0.7 FAR (over the existing single-family use) is insufficient to achieve residual land value that exceeds the value of the existing single family use (see Figure 3-19). This primarily is due to the relatively low density of the garden apartment prototype, the high cost of construction, and the high hurdle value associated with the existing residential uses. In the fourth feasibility test, we evaluate the potential value of a 10,000-square-foot, four-unit townhome project with “tuck under” parking. The analysis assumes market pricing averages $1,600 per square foot. In this example, the analysis estimates the value of the project at approximately $10.6 million, with per-acre residual land value of about $24 million. In this example, despite the relatively modest increase in FAR (0.3 FAR to 0.8 FAR), the high value of the project and modest cost, primarily due to the cost of parking, are sufficient to exceed the value of the existing use (see Figure 3-20). Given analytical assumptions that run proportionally with site development intensity (FAR), the pro forma analysis is generally scalable. That is, the study finds that in general a developer may be willing to buy existing, functional residential buildings and demolish them to construct new higher-value buildings that are three to four times the size of the original structure. However, as shown in the garden apartment prototype example, despite a tripling of FAR, the residual land value is insufficient to overcome the value of the existing residential use. The hypothetical cash flow analyses presented here are designed as illustrative examples and are based on highly-generic, prototypical projects. Actual development outcomes on specific sites will 10 Note that the capitalization rate for a new building is assumed to be lower than an existing building, due to the risk of obsolescence associated with the older structure. Residential Analysis 57 vary widely depending on a variety of unique and unknown factors, including but not limited to the entitlement process, property attributes (e.g., size, condition, geometry, and location), ownership considerations, existing uses, and other factors. Table 3-16 Valuation of Hypothetical Existing Residential Building DEVELOPMENT PROGRAM ASSUMPTIONS Site (Square Feet)5,000 FAR 0.50 Gross Building Area (Square Feet)2,500 Rentable Area (Square Feet)100%of GBA 2,500 BUILDING VALUE Gross Potential Rent (FS)$6.00 per SF/Month $180,000 Gross Revenue $180,000 Operating Expenses $1.50 per SF/Month -$45,000 Net Operating Income $135,000 Income Capitalization 5.50%Capitalization Rate $2,454,545 Building Value $2,454,545 City of Palo Alto Downtown Development Cap Study Figure 3-17 Residual Land Valuation of Hypothetical New Apartment Building DEVELOPMENT PROGRAM ASSUMPTIONS Site (Square Feet)50,000 Residential Units 80 Gross Building Area (Square Feet)1,000 SF per Unit 80,000 Rentable Area (Square Feet)85%of GBA 68,000 Parking Spaces 1.00 per Unit 80 BUILDING VALUE Gross Potential Rent (FS)$6.50 per SF/Month $5,304,000 Losses to Vacancy 5.0%of GPR -$265,200 Other Revenue (Parking)$50 per Space/Month $48,000 Gross Revenue $5,086,800 Operating Expenses $10,000 per Unit -$800,000 Net Operating Income $4,286,800 Building Value 5.25%Capitalization Rate $81,653,333 Disposition Cost 3.0%of Building Value -$2,449,600 Net Building Value $79,203,733 DEVELOPMENT COSTS Construction Costs Basic Site Work $40 per site SF $2,000,000 Building Direct Cost $275 Cost/SF (GBA)$22,000,000 Parking Direct Cost $75,000 per Space $6,000,000 Total Construction Cost $30,000,000 Soft Costs Architecture and Engineering 10.0%of Construction Cost $3,000,000 Entitlement $20 Cost/SF (GBA)$1,360,000 Other Professional Services 5.0%of Construction Cost $1,500,000 Permits and Fees $50 Cost/SF (GBA)$3,400,000 Taxes and Insurance 2.0%of Construction Cost $600,000 Financing 4.0%of Construction Cost $1,200,000 Total Soft Costs $11,060,000 Developer Costs Marketing/Leasing 3.0%of Hard and Soft Costs $1,231,800 Developer Fee (overhead)3.0%of Hard and Soft Costs $1,231,800 Developer Contingency 5.0%of Hard and Soft Costs $2,053,000 Total Developer Costs $4,516,600 Total Development Cost $45,576,600 LAND VALUE Developer Return Requirement 12%of Development Cost $5,469,192 Residual Land Value $352 per square foot (GBA)$28,157,941 $24,531,198 per acre Residential Analysis 59 Figure 3-18 Residual Land Valuation of Hypothetical New Commercial/Condo Mixed-Use Building DEVELOPMENT PROGRAM ASSUMPTIONS Site (Square Feet)17,000 Building Footprint 12,000 FAR 1.5 Gross Building Area (Square Feet)25,000 Residential Square Footage 7,200 Commercial Square Footage (less Res. Amenity)16,800 Rentable Area (Square Feet)90%of GBA 15,120 Parking Spaces 23 BUILDING VALUE Residential (Four Units)$1,600 per SF $10,240,000 Commerical $6.75 per SF/Month (FS)$1,224,720 Losses to Vacancy 5.0%of GPR -$61,236 Other Revenue (Parking)$50 per Space/Month $12,480 Gross Revenue $1,175,964 Operating Expenses $1.50 per SF/Month -$272,160 Net Operating Income $903,804 Building Value 5.25%Capitalization Rate $27,455,314 Disposition Cost 3.0%of Building Value -$823,659 Net Building Value $26,631,655 DEVELOPMENT COSTS Construction Costs Basic Site Work $40 per site SF $680,000 Building Direct Cost Residential Component $285 Cost/SF (GBA)$2,052,000 Office Component $240 Cost/SF (GBA)$4,032,000 Parking Direct Cost $75,000 per Space $1,710,000 Total Construction Cost $8,474,000 Soft Costs Architecture and Engineering 10.0%of Construction Cost $847,400 Entitlement $20 Cost/SF (GBA)$500,000 Other Professional Services 5.0%of Construction Cost $423,700 Permits and Fees $50 Cost/SF (GBA)$1,250,000 Taxes and Insurance 2.0%of Construction Cost $169,480 Tenant Improvements $40 Cost/SF (GBA)$672,000 Financing 4.0%of Construction Cost $338,960 Total Soft Costs $4,201,540 Developer Costs Marketing/Leasing 3.0%of 10-yr. lease value/unit sale $656,245 Developer Fee (overhead)3.0%of Hard and Soft Costs $380,266 Developer Contingency 5.0%of Hard and Soft Costs $633,777 Total Developer Costs $1,670,288 Total Development Cost $14,345,828 LAND VALUE Developer Return Requirement 12%of Development Cost $1,721,499.41 Residual Land Value $423 per square foot (GBA)$10,564,327 $27,069,534 per acre City of Palo Alto Downtown Development Cap Study Figure 3-19 Residual Land Valuation of Hypothetical New Garden Apartment DEVELOPMENT PROGRAM ASSUMPTIONS Site (Square Feet)30,000 Residential Units 30 Gross Building Area (Square Feet)1,000 SF per Unit 30,000 Rentable Area (Square Feet)90%of GBA 27,000 Parking Spaces 1.00 per Unit 30 BUILDING VALUE Gross Potential Rent (FS)$6.50 per SF/Month $2,106,000 Losses to Vacancy 5.0%of GPR -$105,300 Other Revenue (Parking)$100 per Space/Month $36,000 Gross Revenue $2,036,700 Operating Expenses $10,000 per Unit -$300,000 Net Operating Income $1,736,700 Building Value 5.25%Capitalization Rate $33,080,000 Disposition Cost 3.0%of Building Value -$992,400 Net Building Value $32,087,600 DEVELOPMENT COSTS Construction Costs Basic Site Work $40 per site SF $1,200,000 Building Direct Cost $240 Cost/SF (GBA)$7,200,000 Parking Direct Cost $75,000 per Space $2,250,000 Total Construction Cost $10,650,000 Soft Costs Architecture and Engineering 10.0%of Construction Cost $1,065,000 Entitlement $20 Cost/SF (GBA)$540,000 Other Professional Services 5.0%of Construction Cost $532,500 Permits and Fees $50 Cost/SF (GBA)$1,350,000 Taxes and Insurance 2.0%of Construction Cost $213,000 Financing 4.0%of Construction Cost $426,000 Total Soft Costs $4,126,500 Developer Costs Marketing/Leasing 3.0%of Hard and Soft Costs $443,295 Developer Fee (overhead)3.0%of Hard and Soft Costs $443,295 Developer Contingency 5.0%of Hard and Soft Costs $738,825 Total Developer Costs $1,625,415 Total Development Cost $16,401,915 LAND VALUE Developer Return Requirement 12%of Development Cost $1,968,230 Residual Land Value $457 per square foot (GBA)$13,717,455 $19,917,745 per acre Residential Analysis 61 Figure 3-20 Residual Land Valuation of Hypothetical New Linear Townhome DEVELOPMENT PROGRAM ASSUMPTIONS Site (Square Feet)10,000 Residential Units 4 Gross Building Area (Square Feet)2,000 SF per Unit 8,000 Saleable Area (Square Feet)85%of GBA 6,800 Parking Spaces 2.00 per Unit 8 BUILDING VALUE Residential Revenue $1,600 per SF $10,880,000 Building Value $10,880,000 Disposition Cost 3.0%of Building Value -$326,400 Net Building Value $10,553,600 DEVELOPMENT COSTS Construction Costs Basic Site Work $40 per site SF $400,000 Building Direct Cost $270 Cost/SF (GBA)$2,160,000 Parking Direct Cost $50,000 per Space $400,000 Total Construction Cost $2,960,000 Soft Costs Architecture and Engineering 10.0%of Construction Cost $296,000 Entitlement $20 Cost/SF (GBA)$136,000 Other Professional Services 5.0%of Construction Cost $148,000 Permits and Fees $50 Cost/SF (GBA)$340,000 Taxes and Insurance 2.0%of Construction Cost $59,200 Financing 4.0%of Construction Cost $118,400 Total Soft Costs $1,097,600 Developer Costs Marketing/Leasing 3.0%of Hard and Soft Costs $121,728 Developer Fee (overhead)3.0%of Hard and Soft Costs $121,728 Developer Contingency 5.0%of Hard and Soft Costs $202,880 Total Developer Costs $446,336 Total Development Cost $4,503,936 LAND VALUE Developer Return Requirement 12%of Development Cost $540,472 Residual Land Value $689 per square foot (GBA)$5,509,192 $23,998,039 per acre City of Palo Alto Downtown Development Cap Study COMPARISON TWO: RESIDENTIAL AND MIXED-USE REDEVELOPMENT OF OPPORTUNITY SITES In order to better test the potential for redevelopment of existing uses with new residential and mixed-use projects Downtown, EPS selected two opportunity sites on which prototype projects might be developed. This test provides another perspective on residential development feasibility. The first site selected is located on University Avenue and is approximately 17,000 square feet. The existing structure is approximately 17,000 square feet in rentable building area and is used as commercial retail. The pro forma analysis comparison assumes the site would be redeveloped as a commercial/condominium residential mixed-use building with 25,000 square feet of saleable/rentable building area. Despite site intensification, the residual land values generated by the new mixed-use project are only slightly higher than the existing building value. The analysis assumes the existing use is valued at $650 per square foot. The outcome of the analysis is attributable to the high value associated with existing uses in this location as well as the parking requirements in the redeveloped structure (the existing use does not currently have on-site parking). Figure 3-21 presents the results of opportunity site testing. The second opportunity site tested assumes a parcel assembly of three small- to mid-size parcels to create a 30,000 square foot development parcel. The existing uses on the site include low intensity commercial with surface parking. The total existing building square footage of the second opportunity site (aggregate across three parcels) is approximately 19,000. As shown in Figure 3-21, the garden apartment prototype generates higher residual land values than the value the existing uses. This result occurs despite the finding that the garden apartment prototype generates the lowest per-acre land value of the four residential prototypes assessed (see Figure 3- 15). This outcome is largely attributable to the existing uses present within the second opportunity site are relatively low intensity (single story buildings and surface parking). However, it also should be noted that the parcel assembly and/or permitting for residential uses for this site could pose significant development challenges and require significant entitlement costs. Figure 3-21 Case Study/Opportunity Site Analysis Case Study/Opportunity Sites Site Square Footage Building SF Building Value per SF Building Value Land Value Existing Development #1 17,000 16,000 $650 $10,400,000 Commercial/Condo Mixed Use 17,000 25,000 $1,098 $26,630,000 $10,560,000 Existing Development #2 30,000 19,000 $650 $12,350,000 Garden Apartment 30,000 30,000 $1,103 $32,090,000 $13,720,000 Residential Analysis 63 4 Key Findings 4.1 Residential Site Assessment and Development Capacity The first section of this report aims to identify the potential to add residential units, in addition to Housing Element’s projection, in the Downtown study area through comprehensive site-based analyses. Ultimately, the analyses should help determine the maximum possible opportunity sites for new residential mixed-use projects, and further accommodate the projected population growth in both Downtown and the City of Palo Alto. Analyses in this chapter find the following: • Realistic Development Capacity under Current Zoning. Scenarios A and B show a rather limited development capacity in downtown – 17 and 22 percent, respectively, of the theoretical capacity determined by zoning. Eligible sites, however, dropped by roughly 80 percent after excluding sites with high AV ratio, high-value office buildings, and historic/potentially historic buildings, among other factors. Small lot sizes also limit the development potential of the remaining parcels. This indicates that Downtown capacity is restricted primarily by the fact that Downtown is fairly well built-out with existing high-value property development. • Development Capacity and Provision of Affordable Housing. Scenarios A and B may yield 457 and 557 units, respectively, if both the existing Housing Element sites and additional sites identified by the development scenarios achieve the maximum density bonus by including affordable housing. However, many factors, including construction cost, financing, market demand, and site constraints, will ultimately determine whether it is physically and financially feasible to include affordable units on each site. • Parking. The total parking requirement for the additional housing units in Downtown varies greatly based on the number of bedrooms per unit and the total number of units included on each site. Most sites, restricted by lot size and configuration, will likely have to provide parking in an underground structure, or take advantage of State Density Bonus Law parking requirements, which impacts project feasibility because of its cost. • Development Capacity Relative to Housing Element Sites in San Antonio Area. Even when more liberal parameters are applied, the Downtown study area does not have enough sites to accommodate the housing units currently allocated to the San Antonio/South El Camino Real area in the City’s most recent Housing Element. This is the case even if it is assumed that sites take advantage of the State Density Bonus. City of Palo Alto Downtown Development Cap Study 4.2 Residential Market Study and Pro Forma Analysis The second section of this report focuses on the residential market in Downtown Palo Alto. It begins with a look at citywide trends and the City’s strength relative to neighboring communities, then turns to the Downtown study area. The analysis includes an evaluation of the market performance of existing residential products, including a range of multifamily projects developed over recent decades. The market data are then used to inform a high-level residential real estate feasibility analysis that tests the economic viability of new housing development in the Downtown. Specifically, this study evaluates the range of product types, densities, and allowable uses that may be needed to justify full, ground-up redevelopment of an existing building. Key findings from this analysis include: • Overcoming Existing High Values. Downtown Palo Alto features a mix of uses at varying densities with very few remaining vacant parcels. While the pro forma analysis indicates that current market trends do support higher density residential uses, ground- up new construction will need to support the high cost of construction, and also, due to the limited land supply, the value of an existing use. The findings from this analysis indicate that a ground-up project generally must at least double the existing density to overcome the high value of an existing use. In the pro forma analyses, residential developments exhibiting the greatest financial feasibility typically had FARs greater than 1.0. Currently, allowable FAR for residential development in the Downtown ranges from 0.5 (in the CD-N district) to 1.3 (in the RT-50 district). • Importance of Parcel Size and Development Standards. Many multifamily residential development examples found in the market are located either on large parcels, or on parcels with fewer or less stringent development standards (setbacks, height, and upper- story step-backs, etc.). Identifying potential development opportunity parcels that also have low-density, low-value existing uses can prove challenging. Supporting this notion, most of the significant residential projects Downtown were developed in the 1960s through the 1980s. Going forward, residential redevelopment projects likely will require assemblage of smaller residential parcels, redevelopment of nonresidential uses on larger sites, or relaxed development standards to support multifamily residential development. 4.3 General Conclusions The planning and real estate work conducted as part of this study suggests that a key limitation to the construction of new, residential and residential/mixed-use projects in Downtown Palo Alto is not a lack of market demand but rather a dearth of supply of suitable redevelopment sites. While sites in the Downtown, developed at their theoretical maximum under current zoning, have substantial capacity, realistic capacity (based on a range of physical site characteristics and existing uses) is considerably lower. The combination of limiting physical characteristics, the large hurdle of overcoming the value of existing uses, and the strength of competing uses (specifically for office space) makes significant residential development in Downtown Palo Alto a challenge. If the City is interested in supporting increased residential infill development, particularly the redevelopment of existing uses Downtown, then strategies may include increasing allowable Residential Analysis 65 residential densities; reducing parking requirements; and/or reducing building setbacks. On large sites with low-density existing commercial uses, these measures may help to overcome high land values and provide sufficient financial incentive for the real estate development community to invest in new residential projects, given current market conditions. Creating incentives for parcel assembly through zoning or other mechanisms would also help overcome one of the large barriers to housing construction in Downtown Palo Alto. The City should not rely on the Downtown area to absorb the housing units currently associated with the San Antonio/South El Camino Real area, at least as long as current economic conditions continue to place a premium on office development Downtown. Increasing allowable density/FAR for residential projects would improve Downtown’s potential residential capacity, but site constraints would persist, as described above. Palo Alto should actively support housing development in as many locations citywide as is feasible and appropriate, while letting various districts in the city continue to foster mixed use development near transit that will improve the balance of housing, jobs, and commercial opportunities for residents and workers. City of Palo Alto Downtown Development Cap Study This page intentionally left blank. DYETT & BHATIA Urban and Regional Planners 755 Sansome Street, Suite 400 San Francisco, California 94111 415 956 4300 415 956 7315 Planning & Transportation Commission Staff Report (ID # 8981) Report Type: Action Items Meeting Date: 4/11/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: 305 N. California Avenue First Baptist Church Community Center CUP Title: PUBLIC HEARING / QUASI-JUDICIAL. 305 N California Avenue [17PLN-00446]: Recommendation to the City Council on a Request for a Conditional Use Permit to Allow a Community Center Use at the First Baptist Church. Environmental Assessment: Exempt Per Sections 15301 and 15323 of the CEQA Guidelines. Zone District: R-1(10000) (Single Family Residential). For more information contact project planner Graham Owen at fbcapplication@cityofpaloalto.org. From: Hillary Gitelman Recommendation Staff recommends the Planning and Transportation Commission (PTC) take the following action(s): 1. Recommend the City Council find the proposed project exempt from the California Environmental Quality Act (CEQA) in accordance with Sections 15301 and 15323 of the CEQA Guidelines; and 2. Recommend approval of the proposed Conditional Use Permit to the City Council based on findings and subject to conditions of approval. Background The First Baptist Church was established at this location in the late 1940s. Over the intervening decades residents report that the church held weekly worship services, as well as other life cycle events, such as weddings. Residents and the current pastor have reported a decline in the church’s congregation in more recent years. At the same time, residents report an increase of other events and activities. The New Mozart School, a for-profit organization, held music classes at the subject site for several years, but is now conducting its business on El Camino Real, following a code enforcement effort to abate the use. A non-profit organization, iSing, offers music education for girls in grades 1 through 12. There are psychotherapist offices City of Palo Alto Planning & Community Environment Department Page 2 providing mental health care to teens and adults. The City is also aware of a variety of other uses and singular and regular events, such as Tuesday Night Tango, offices of the Peninsula Peace and Justice Center, and weekly dinners of the Peninsula Macrobiotic Community, among others, that have occurred on the site. The applicant reports, and this notion is supported by others in the faith-based community, that these activities are an extension of a contemporary church use today. Residents, however, see these activities as more akin to a commercial operation disrupting the peace and quiet enjoyment of their residential neighborhood. From the City staff’s perspective, there is recognition that there may be a need to revisit the Municipal Code’s church definition in the future, but much of the recent activity occurring at the subject site does not comport with what is presently defined as a church in the Municipal Code. Other religious institutions are following this application and have concerns about how the outcome may affect their current operations. Staff’s approach to this application has been to balance these varied interests. This approach focusses on the First Baptist Church, its site conditions, history, and neighborhood setting, which are unique to this church and not precedent-setting for other religious organizations in the city. Many of the activities taking place at the church do benefit the community by providing ancillary mental health services, encouraging and building confidence in young people, and providing a place for secular public gathering. However, it is also clear that an unregulated approach toward managing these and other uses negatively impact nearby residents, create safety concerns for bicyclists, and contribute to motorist frustration. Accordingly, last year, the City issued a notice of violation to the church (as property owner) and other secular tenants located on the property that, in accordance with the Municipal Code, these uses did not meet the definition of a church and, therefore, were not permitted land uses. This action caused many tenants to leave the subject property and served as the impetus for the First Baptist Church to file an application for a community center. A community center requires a conditional use permit, which is a discretionary application that could allow some of the existing services and uses to continue. Staff is aware that some residents do not favor this approach and have argued that a community center is not appropriate at this location and that no activity beyond the church use should be allowed. The commission may also hear from many users of the facility who have benefited from these programs and would like to see them continue. Discussion A church is defined in the Municipal Code as “a use providing facilities for regular organized religious worship and religious education incidental thereto, but excluding a private educational facility. A property tax exemption obtained pursuant to Section 3(f) of Article XIII of the Constitution of the State of California and Section 206 of the Revenue and Taxation Code of the State of California, or successor legislation, constitutes prima facie evidence that such use is a church as defined in this section”. City of Palo Alto Planning & Community Environment Department Page 3 Community center is defined as “a place, structure, area, or other facility used for and providing religious, fraternal, social and/or recreational programs generally open to the public and designed to accommodate and serve significant segments of the community”. To address the land use activity that does not fall within the city’s church definition, the applicant seeks a conditional use permit to classify and permit these other uses and activities as meeting the community center definition. The applicant’s request in included in Attachment D, and includes maximum hours of operation of 9:00 AM to 10:00 PM, Sunday through Thursday, and 9:00 AM to 11:00 PM, Friday and Saturday, and a maximum attendance for daily group activities of 50 people, exclusive of special events. The purpose of a conditional use permit, per the zoning code, is to provide for uses and accessory uses that are necessary or desirable for the development of the community or region but cannot readily be classified as permitted uses in individual districts by reason of uniqueness of size, scope, or possible effect on public facilities or surrounding uses. A conditional use permit is a discretionary application. It may be approved, conditionally approved or denied based on required findings. These findings include the following: Neither the director, nor the city council on appeal, shall grant a conditional use permit, unless it is found that the granting of the application will: (1) Not be detrimental or injurious to property or improvements in the vicinity, and will not be detrimental to the public health, safety, general welfare, or convenience; (2) Be located and conducted in a manner in accord with the Palo Alto Comprehensive Plan and the purposes of this title (Zoning). Typically, the Director of Planning and Community Environment reviews these applications administratively and issues a decision that can be appealed to the PTC for a recommendation and final action by the City Council. However, in accordance with the Municipal Code (18.40.170), the Director may defer action on any application as they deem appropriate. Given the amount of public interest and strong feelings from those interested in this project, the Director has opted to defer this project to the City Council. The PTC will conduct a public hearing and forward a recommendation to the Council. The First Baptist Church is located at the northeast corner of Bryant Street and North California Avenue in the Old Palo Alto neighborhood. The neighborhood is residential in character, with many lots in the surrounding area exceeding 10,000 SF of lot area. The church is located on a lot with 37,067 square feet of lot area and is located adjacent to two two-story single family residences and a daycare enter. The church was constructed in phases, with the sanctuary constructed in 1948, and the fellowship hall wing constructed in 1953. City of Palo Alto Planning & Community Environment Department Page 4 The church consists of a 2,000 SF sanctuary and a 1,900 SF fellowship hall, and these two buildings are connected by a 5,300 SF two-story hyphen with supporting office and meeting space. The church, based on municipal regulations, is a legally non-complying facility as the main church building lacks a conditional use permit as well as the required number of parking spaces. (8 spaces are provided, whereas a church of this size would require 71 spaces if constructed today) This noncomplying facility designation simply means that the church was established before the zoning code required churches to obtain a conditional use permit or comply with minimum on-site parking requirements.1 The church use may continue and is not regulated by the subject conditional use permit application to establish a community center. However, the operation and use of the community center may be affected by church operations. For instance, as discussed later in this report, to address concerns related to parking or intensity of use, the hours of operation for a community center use could be limited such that it does not overlap with any organized religious worship or religious education. The site is accessed from North California Avenue and has a one-way drive aisle and parking lot abutting the eastern property line. The drive aisle leads to the rear of the site, and then makes a 90-degree turn towards Bryant Street, which is the point of exit. The drive aisle also provides access to a land-locked parcel formerly owned by the church that is now used by a day care center, which has three parking spaces and, by way of an easement, uses the church’s driveway for access. The church and owner of the land locked parcel have an agreement that the church may use these three parking spaces when the day care center is not open. (typical day care center hours are Monday-Friday, 7:30 AM – 5:30 PM) Today, based on current code, the church would require 71 parking spaces, which is based on a ratio of 1 person for every 4 person capacity (occupancy). For open gathering spaces without fixed seating, the Building Code provides for 1 occupant for every 7 square feet. The sanctuary is approximately 2,000 square feet, thus providing a maximum of 285 occupants. However, in 1953, the owner received approval of a use permit and variance to construct the fellowship hall. No additional parking was required at that time because the fellowship hall was ancillary and supportive of the church and its congregants would use one or the other buildings, but not both at the same time. Because the church was established before parking was required and the only expansion that occurred was the ancillary fellowship hall, no on-site parking was ever required. Since then, however, the codes have changed and now the site is noncomplying for 63 parking spaces. Provided there is no intensification of use, no additional parking is required. One measure of intensification relates to the occupancy allowances for the church, and more specifically, the sanctuary. If the church does not exceed those limits as they existed when the church became noncomplying, no additional parking will be required. Similarly, if the community center use, if approved, does not exceed those occupancy limits and does not occur at the same time of religious worship or religious education, staff concludes no additional parking should be 1 A use permit was granted in 1953 to allow construction of the later fellowship hall wing, along with a variance from the 35 foot rear yard setback. City of Palo Alto Planning & Community Environment Department Page 5 required for the community center. Included in this report as Attachment C is a chronology of parking information, requirements, dates and relevant code sections. For information purposes, staff has concluded that the maximum occupancy limit of the sanctuary is 285 persons. For background, and relevant to the discussion, the City is in the process of implementing its Pedestrian and Bicycle Master Plan. A neighborhood traffic safety and bicycle boulevard project is underway on several local streets to reduce vehicle speeds and prioritize pedestrian and bicycle safety. Intersection improvements, including a roundabout, new crosswalks, and red curbs are planned at the adjacent Bryant Street and North California Avenue. This phase of the plan, however, was recently put on hold and it is unclear at this time when implementation of these intersection improvements will commence. Nonetheless, residents are concerned about how these future improvements, combined with the past or planned activity at the community center, would exacerbate traffic and parking problems in the area. Analysis2 Residents over the past several years have complained of excessive noise, traffic, parking congestion, safety concerns, lack of adequate site management, and poor city enforcement, among other concerns, associated with the First Baptist Church. This section expands on these topics and illustrates how the proposed conditions are intended to address these concerns. It is expected that through public testimony and PTC and Council deliberation, these conditions will be adjusted to achieve an appropriate balance, and rely on an expectation that some amount of community center activity is desirable at this location. Land Uses Defined and Permitted One of the challenges residents experience is the unpredictability of events, the lateness and frequency at which the events occur, and the perceived lack of appreciation for the expected standards that reflect the residential neighborhood in which the church is located. As noted earlier, this conditional use permit does not regulate the church. Religious worship and religious education may continue as it has in the past. The use permit, as proposed, does define the types of community center events that can occur on-site. Specifically, Condition 1 in the draft record of land use action (Attachment C) provides that meetings and events sponsored or used by non-profit organizations; rehearsals, programs and performances by non-profit musical groups; and, ancillary counseling and psychotherapy uses, may be permitted. This condition would prohibit for-profit entities from using the facilities, and reflects the desire to keep commercial land uses out of this residential neighborhood while also promoting events that benefit the broader community. This list also includes psychotherapy uses as ancillary uses to the community center, but Condition 3 limits 2 The information provided in this section is based on analysis prepared by the report author prior to the public hearing. Planning and Transportation Commission in its review of the administrative record and based on public testimony may reach a different conclusion from that presented in this report and may choose to take an alternative action from the recommended action. City of Palo Alto Planning & Community Environment Department Page 6 the number of therapists at one time on the premises to no more than three individuals. Other conditions described below add further standards regulating the frequency and operation of these events. Duration, Time and Intensity of Community Center Events Condition 2 limits the hours of operation to 10:00am through 7:30pm seven days a week, but includes an exception for psychotherapy offices which, because of the low intensity of the use, may begin at 9:00am. A complete closure requirement ensures no one affiliated with any community event may be on the premises past 8:00pm. Condition 10 limits the occupancy of all community events at any given time to fifty (50) people. Community Event Related Noise Several conditions are recommended to address noise. There is a long history of complaints about noise, which is exacerbated by various tenants opening windows and doors during performances or events. The windows are opened, principally, in the fellowship hall and portions of the building hyphen abutting two adjacent residential neighbors. The open windows provide ventilation because the fellowship hall lacks a heating, ventilation and air condition system (HVAC) system. Conditions 8 and 9 address this concern by requiring the windows and doors to remain closed during community center events. These conditions also require non- operable double pane windows to be installed where double pane windows do not presently exist. Finally, there is a requirement that an HVAC system be installed. These conditions relate to the fellowship hall and building hyphen; the property owner is given until August 1st to implement these changes. Other noise-related conditions prohibit amplified music, require compliance with the city’s noise ordinance, and prevent community center events from occurring outdoors (Conditions 6 and 7, respectively). These conditions, combined with limits on occupancy and hours of operation are expected to reduce noise-related disturbances. Event Coordinator / Neighborhood Contact One complaint made by several neighbors is that some of the events lack on-site management, and that this exacerbates the issues related to pick-up/drop off and parking. Furthermore, the lack of management also prevents momentary nuisances, such as noise, from being handled in a timely fashion. Conditions 4 and 5 address this issue by requiring the property owner to establish a dedicated phone line that will be answered by someone either affiliated with the property owner or the community center event taking place. This point of contact would be responsible for ensuring that any neighbor complaints are responded to immediately. The property owner would also be required to notify the neighbors of the point of contact information within sixty days of the approval of the use permit. Pick Up / Drop Off and Loading The noncomplying on-site parking condition does cause spill-over onto neighboring streets when events and activities exceed the parking lot’s capacity. Additionally, the existing drive aisle is narrow; parents picking up and dropping off children often forgo driving onto the site City of Palo Alto Planning & Community Environment Department Page 7 and instead load directly from the street curb. Staff has received several comments regarding this loading activity and concerns about safety for cyclists on North California Avenue. Both North California Avenue and Bryant Street in the vicinity of the site are designated Safe Routes to School paths and are used by students at Jordan Middle School and Palo Alto High School in particular. While requiring such loading activity to occur on-site may be a best practice, some neighbors have indicated such an option would only exacerbate other nuisance issues, such as noise and may result in additional motorist and cyclist conflicts on Bryant Street. As a temporary measure to address this issue, the City’s Transportation Division has installed signage outside of the church to prohibit stopping during school commute hours. Staff recommends with Condition 13 of this CUP that the loading/no-stopping signage and striping be extended onto the Bryant Street frontage of the site. Additionally, staff recommends a schedule of staggered pick-up and drop-off times to prevent sudden surges of vehicle traffic and queueing near the site. Additionally, for all community center tenants with regular events, Condition 14 requires a traffic management plan be reviewed and approved by the Planning Director. Special Events Staff acknowledges that there may be some types of events, such as occasional musical performances, where a higher attendance or extended hours of operation may be desired by tenants and, if properly regulated, not detrimental to the neighborhood. Condition 15 is intended to allow for these types of special events with a Temporary Use Permit (TUP). Any event requesting a TUP would be required to file an application with the Planning Department at least 45 days prior to the event. Staff recommends that a maximum of six such TUP applications may be filed each calendar year, with no more than two such applications in a given month. Neighborhood notification would be required prior to these larger events. Enforcement A common concern raised among the neighbors is that enforcement of any conditional use permit on the site, should one be approved, may be difficult given the history of prior violations. Condition 17 reaffirms that a violation of any of these conditions is subject to citations as set forth in the administrative penalty schedule. Such penalties include escalating fines for repeat violations, including a second fine equal to 150% of the original fine and third and subsequent fines equal to 200%. Additionally, Condition 16 affirms the Director’s authority to make changes to the conditions of approval at a noticed public hearing if they are not adequately protecting the surrounding neighborhood. Environmental Review The subject project has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. Specifically, the project is exempt from CEQA per Section 15301 and 15323 of the CEQA Guidelines. The project involves a change in use at an existing City of Palo Alto Planning & Community Environment Department Page 8 facility and involves no physical expansion of the church structure, and therefore is eligible for a Class 1 (Existing Facilities) exemption. Additionally, the project involves regulation of the normal operation of an existing facility for public gatherings, and there is a history of the facility being used in a similar fashion for more than three years. As a result, the project is eligible for a Class 23 (Normal Operations of Facilities for Public Gatherings). Public Notification, Outreach & Comments The Palo Alto Municipal Code requires notice of this public hearing be published in a local paper and mailed to owners and occupants of property within 600 feet of the subject property at least ten days in advance. Notice of a public hearing for this project was published in the Palo Alto Weekly on 03/30/2018, which is 14 days in advance of the meeting. Postcard mailing occurred on 03/28/2018, which is 12 days in advance of the meeting. Public Comments Staff, the PTC, and the City Council have received many public comments on the application from neighbors, church tenants, and congregants. Generally, most comments regarding the proposed community center use express concerns about parking, bicycle and pedestrian safety on and near the site, and noise emanating from the fellowship hall. Some supportive comments express support for the church’s application for a community center, while other supportive comments express reservations over the need for such an application. The public comments received as of the writing of this report are included in Attachment G. Staff has met with the interested parties on several occasions in order to gather feedback on the application and explain the use permit process. A community meeting attended by approximately 50 people was held by staff at the Jordan Middle School on March 7, 2018. The church hosted a meeting with church staff, congregants, and tenants which was attended by staff on March 14, 2018. Additionally, a meeting organized by residents was attended by staff on March 23, 2018. Alternative Actions In addition to the recommended action, the Planning and Transportation Commission may: 1. Recommend approval of the project with modified findings or conditions; 2. Continue the project to a date (un)certain; or 3. Recommend project denial based on revised findings. Report Author & Contact Information PTC3 Liaison & Contact Information Graham Owen, Associate Planner Jonathan Lait, AICP, Assistant Director (650) 329-2552 (650) 329-2679 graham.owen@cityofpaloalto.org jonathan.lait@cityofpaloalto.org 3 Emails may be sent directly to the PTC using the following address: planning.commission@cityofpaloalto.org City of Palo Alto Planning & Community Environment Department Page 9 Attachments: Attachment A: Draft Record of Land Use Action (DOCX) Attachment B: Location Map (PDF) Attachment C: Chronology of City Requirements and Site Planning (DOCX) Attachment D: FBC Application Materials (PDF) Attachment E: Emailed Public Comments (PDF) Attachment F: Mailed Public Comments (PDF) Attachment A Page 1 of 5 Draft ACTION NO. 2018-____ RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR 305 N. CALIFORNIA AVENUE: CONDITIONAL USE PERMIT (17PLN-00446) On XXXXXX, 20XX, the Council of the City of Palo Alto approved the Conditional Use Permit application for a community center at the First Baptist Church located in the R1(10,000)Zoning District, making the following findings, determination and declarations: SECTION 1. Background. The City Council of the City of Palo Alto (“City Council”) finds, determines, and declares as follows: A. An application for a conditional use permit to allow a community center on the site was submitted on November 14, 2017. B. Planning Staff referred the application to the Planning and Transportation Commission (Commission) for a recommendation to the City Council. C. The Commission reviewed and recommended approval of the Project on April 11, 2018. The Commission’s recommendations are contained in CMR #XXXX and the associated attachments. SECTION 2. Environmental Review. The proposed project has been determined to be Categorically Exempt per section 15301 (Existing Facilities) and 15323 (Normal Operations of Facilities for Public Gatherings) of the California Environmental Quality Act Guidelines. SECTION 3. Conditional Use Permit Findings Conditional Use Permit approval is based on the findings indicated under PAMC Section 18.76.010: 1. The proposed use, at the proposed location, will not be detrimental or injurious to property or improvements in the vicinity, and will not be detrimental to the public health, safety, general welfare, or convenience. The proposed Community Center use is a conditionally permitted use in the R1(10,000) zoning district. The church building that would contain the community center use is located at the corner of N. California Avenue and Bryant Street, and is surrounded by low-density single family dwellings. The current and previous uses of the church have created concerns among many neighbors about nuisance issues, including noise, vehicle circulation and queueing, passenger loading, and parking spill-over onto neighboring blocks. The conditions of approval for the project seeks to address these issues by limiting the hours of operation, the number, frequency, and type of events, and enforcing ongoing performance standards for events of a certain size. These performance standards include the requirement to have a designated point of contact for all events that can troubleshoot issues and handle complaints in a timely manner, and the requirement that new windows and HVAC be installed in the fellowship hall in order to mitigate sound. With adherence to these conditions of approval, the use will not be conducted in a manner that will be injurious to property or improvements in the vicinity or be detrimental to the public health, safety, Attachment A Page 2 of 5 and general welfare, or convenience. 2. The proposed use will be located and conducted in a manner in accord with the Palo Alto Comprehensive Plan and the purposes of the Zoning Ordinance. The subject site is designated Single Family in the Comprehensive Plan. The subject property is zoned R1(10,000) This zoning allows Community Centers as a conditionally permitted use. The CUP allows the City to review the proposed use at this location to assure that it maintains operations that are compatible with the zoning district and other existing neighborhood uses. With adherence to conditions of approval, the use will be located and conducted in a manner consistent with the Comprehensive Plan and Municipal Code, including the Noise and Zoning Ordinances. SECTION 4. Conditions of Approval. 1. COMMUNITY CENTER EVENTS. For purposes of this use permit, any use, activity, event or similar function located on the subject property that is not directly related to organized religious worship or religious education shall constitute a community center event. Only the following community center events shall be permitted on the subject property, subject to the conditions specified in this use permit: a. Meetings and events sponsored or used by non-profit organizations b. Rehearsals, programs and performances by non-profit musical groups c. Ancillary counseling and psychotherapy offices 2. HOURS OF OPERATION. Community center events shall not occur at the same time and shall be separated by at least fifteen (15) minutes from any organized religious worship or religious education. Community center events shall only occur between 10:00am and 7:30pm seven days a week, except that ancillary counseling and psychotherapy may occur as early as 9:00am and regardless of any organized religious worship or religious education. All individuals attending or affiliated with any community center event shall vacate the premises no later than 8:00pm nightly. 3. COUNSELING AND PSYCHOTHERAPY OFFICES. A maximum of three individual counselors or psychotherapists shall be permitted at any time as an ancillary use to the church and community center. 4. POINT OF CONTACT. The property owner is responsible for establishing and maintaining a dedicated phone line that shall be answered by someone affiliated with the church or other entity using the premises for any community center event purposes who will immediately respond to in- person complaints and complaints made by phone for any concerns related to noise, parking, or other neighborhood disturbances. This contact information shall be provided in any community event advertising, websites, and any neighborhood notification. The point of contact shall be located on-site at all times there is a community center event. A point of contact is not required for ancillary counseling or psychotherapy related uses. 5. NEIGHBORHOOD NOTIFICATION. Within sixty (60) days of this approval, the property owner Attachment A Page 3 of 5 shall prepare and distribute a notice to neighbors within 600 feet of the subject property advising occupants of the point of contact information in the above condition and to provide a copy of these conditions of approval. A new notice shall be mailed within five (5) days, in a manner consistent with this condition, for any change to the dedicated point of contact phone number. 6. AMPLIFIED MUSIC. Amplified music is prohibited during community center events. 7. NOISE. All community center events shall comply with the City’s noise ordinance, Palo Alto Municipal Code Chapter 9.10. All community center events shall occur indoors. 8. WINDOWS. Prior to August 1, 2018, the property owner shall replace all windows in the fellowship hall with non-operable double paned windows. Existing operable double pane windows may remain provided the windows remain closed during any community center event. 9. HVAC. Prior to August 1, 2018, the property owner shall install an appropriately sized heating, ventilation and air conditioning system for the fellowship hall. 10. OCCUPANCY. The maximum number of people attending or affiliated with any community center event, except for counseling and psychotherapy uses, collectively, at any time, shall not exceed 50 persons. 11. PARKING. All parking spaces on the subject property shall be made available for people affiliated with community center events. 12. DROP OFF AND PICK UP. The property owner and community center event point of contact shall ensure community center event attendees and affiliates do not block or otherwise impede the free movement of bicyclists, pedestrians, and motorists traveling on the public right of way and shall ensure motorists associated with the community center event are not parking or stopping in areas where such action is prohibited. Community center events greater than 32 persons shall be staggered from any other event by 15 minutes to allow sufficient time between events and to facilitate access at drop off and pick up locations. 13. CURB SITE LOADING ZONES. A five (5) minute passenger drop off and pick up loading zone shall be established at the street frontage adjacent to the subject property along California Avenue and Bryant Street and signs installed at appropriate locations posting the following restrictions, subject to approval from the City’s Chief Transportation Official: Passenger Loading and Unloading Monday through Friday 10am through 8:00pm, except during no stopping times. During the school year, no stopping Monday, Tuesday and Thursday from 3:00pm through 4:00pm; Wednesday from 1:30pm to 4:15pm; and Friday 12:30pm – 4:00pm. Street parking permitted all other times The property owner shall pay for street signs and curb painting as required by this condition. Attachment A Page 4 of 5 14. TRAFFIC MANAGEMENT PLAN. Tenants with regular or reoccurring community center events shall prepare a traffic management plan for review and approval by the Director of Planning and Community Environment. The plan shall document the tenant’s compliance with the applicable traffic, parking and loading-related conditions; efforts the tenant will take to inform event attendees and participants of these regulations through program registration, websites, emails or other media; promote carpooling; and, other efforts to promote the quiet enjoyment of the surrounding residential tenants and property owners. 15. SPECIAL EVENTS. In addition to community center events authorized by these conditions of approval, applications for up to six (6) temporary use permits may be filed each calendar year to allow for community center events that exceed the permitted hours of operation or occupancy limitations set forth in these conditions. Such applications must be filed with the Planning and Community Environment Department no less than 45 days prior to the event. No more than two (2) temporary use permit applications shall be granted during the same month. The Director’s determination to approve, conditionally approve, or deny the application shall be based upon Palo Alto Municipal Code Section 18.42.050. 16. COMPLIANCE WITH CONDITIONS OF APPROVAL. The applicant shall at all times be in compliance with the conditions of approval and documentation describing the community center’s operation. If community center operations result in unanticipated impacts that negatively impact the general welfare, the Director of Planning and Community Environment may impose additional conditions to mitigate those impacts. Any changes by the Director to this approval or imposition of new or modified conditions shall be in writing and subject to the city’s appeal procedures for conditional use permits. 17. ENFORCEMENT. Any violation of the conditions of approval may be assessed fines set forth in the administrative penalty schedule. 18. APPLICATION FEES. Within sixty (60) days of approval, the property owner shall pay the City of Palo Alto application fees for the processing of this conditional use permit, unless a fee waiver has been authorized in writing in compliance with the City’s municipal fee schedule. 19. EFFECTIVE DATE. These conditions shall become effective immediately upon approval by the City Council. Any existing community event tenant shall have sixty (60) days from the date of approval to demonstrate compliance with all applicable conditions of approval. 20. INDEMNITY: To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City for its actual attorneys’ fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. 21. USE AND OCCUPANCY PERMIT. A valid Use and Occupancy permit issued by the Building Attachment A Page 5 of 5 Department is required for the Community Center use. SECTION 5. Term of Approval. Conditional Use Permit Approval. In the event the actual change in use is not commenced within twelve months of the date of council approval, the approval shall expire and be of no further force or effect, pursuant to Palo Alto Municipal Code Section 18.77.090 PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: _________________________ ____________________________ City Clerk Director of Planning and Community Environment APPROVED AS TO FORM: ___________________________ Senior Asst. City Attorney 63.7' 105.4' 81.0' 89.1' 24.8' 70.2' 105.0' 60.5' 105.4' 60.0' 105.0' 60.0' 105.0' 60.0' 105.0' 60.0' 105.0' 60.0' 105.0' 60.0' 105.0' 80.0' 105.0' 80.0' 105.0' 50.0' 105.0' 50.0' 105.0' 71.5' 105.0' 49.0' 22.3' 91.6' 50.0' 103.9' 105.0' 81.4' 22.3' 91.6' 60.0' 105 103.9' 107.8' 121.7' 50.2' 125.9' 5 125.9' 50.2' 13 0.0' 50.0' 130.0' 50.2' 13 4.2' 50.0' 134.2' 64.2' 139.5' 64.0' 9.1' 59.4' 12 1.7' 82.0' 141.0' 82.0' 141.0' 82.0' 106.5' 82.0' 106.5' 27 8.9' 105.3' 0' 75.0' 150.0'50.0' 50.0' 112.5' 50.0' 112.5' 50.0' 112.5' 50.0' 112.5'42.3' 112.9' 52.3' 112.5' 107.5' 94.0' 99.1' 94.4' 99.1' 56.2' 50.0' 112.5' 139.4' 247.5' 247.5' 57.5' 247.5' 57.5' 247.5' 139.5' 248.4' 16 0.0' 247.5' 247.5' 92.3' 82.1' 52.3' 60.2' 60.4' 52.5' 87.4'87.4' 112.5' 50.0' 112.5' 2200 2230 2260 2257 2277 310 2299 2301 2203 365 355 375 2220 2180 280 252 2225 255 292 26 2266 305 275 349 2175 2161 100 2183 2185311 NORTH CALIFORNIA AVENUE B R Y A N T This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Building Roof Outline Underlying Lot Line abc Easement abc Lot Dimensions abc Zone District Labels Tree First Baptist Church Site 0' 77' First Baptist Church 305 N California Avenue CITY O F PALO A L TO I N C O R P O R ATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2016 City of Palo Alto gowen, 2018-03-29 17:33:31 (\\cc-maps\Encompass\Admin\Personal\Planning.mdb) Attachment C – Chronology of City Requirements and Site Planning Site Access and On-site Parking The site is accessed via a curb cut on North California Avenue that leads to a one-way drive aisle and parking lot abutting the eastern property line. The drive aisle leads to the rear of the site, and then makes a 90-degree turn towards Bryant Street, which is the point of exit. The parking lot and drive aisle also provide access and parking for a land-locked parcel at 311 California Avenue (previously addressed as 2185 Bryant Street), which contains a day care facility. The subject site contains eight parking spaces, one of which is reserved for the pastor and the other for a psychologist who rents an office in the church building. Three additional spaces are provided on the adjacent day care site, which was previously controlled by the church but is now separately owned. The church has a license agreement with the day care center governing the shared use of the parking spaces on the day care site which allows the church to use the day care spaces when the day care is closed. This brings the total number of spaces that could be associated with the community center use to eleven. Existing Parking Non-compliance The church was constructed in 1948, which is prior to the City’s adoption of off-street parking requirements for such uses. Ordinance 1324, which was adopted by Council in 1951, established churches as a conditionally permitted use. Ordinance 1382, adopted by Council on February 11, 1952, amended the zoning ordinance to require a conditional use permit for churches located on sites of less than 40,000 sf of lot area and, additionally, to require 1 parking space for each five (5) seats which may potentially be provided in the main room of a church. The fellowship hall was constructed in 1953, and the City Council approved a Use Permit for the hall subject to the current vehicular egress pattern and a Variance to the 35-foot rear yard setback that was required at the time. The fellowship hall was intended to serve as an ancillary room to be used at a separate time from the sanctuary, and accordingly, no additional parking was required or provided with the construction of the fellowship hall. Chapter 18.52 of the Municipal Code provides the parking and loading requirements for various land uses. A community center use requires a minimum of 1 parking space for “every 4-person capacity”, which is based on the occupancy load as determined by the Building Code. Seating for the sanctuary for the church was previously arranged in pews, which provided seating for approximately 386 people. The pews have since been removed, and the sanctuary now contains movable chairs that can fit different arrangements. The sanctuary is approximately 2,000 square feet in floor area, yielding a maximum occupancy of approximately 285 people. Should a church with a sanctuary capacity of 285 people be proposed under the current provisions of the Municipal Code, a total of 71 spaces would be required. Chapter 18.52.040 of the Municipal Code provides that for any change of occupancy that would increase the number of required parking spaces, the additional parking shall be required only for such addition, enlargement, or change, and not for the entire building or use. As a result, if the community center use does not present an increase in the occupancy of the building relative to the church use, the new use would be consistent with the zoning code’s provisions for parking. The draft conditions include an occupancy restriction that ensures the community center use does not cause the building to exceed the current occupancy limit. Overall We value our neighborhood and our neighbors and we very much want to be a good neighbor. We are aware of the concerns of some of our neighbors. We share those concerns. Consideration of appropriate partners to share our space regularly has included size of the group along with noise, parking, and traffic that will be generated. Given what we have heard from our concerned neighbors, we are quite willing to give additional consideration to those concerns in scheduling further use of the building. We also value all the partners who share our space with us. We believe they reflect the mission of the church and are of great benefit to the city. We work closely with our partners to accommodate their use of the church facility. We have guidelines for use of the facility, which we do all that we can to enforce. When we have difficulties with partners that we cannot resolve, we do not renew leases or contracts. We can cite several instances in which we moved programs and activities out of the building because they were not a good fit. We have limited space we can make available to partners as well as limited hours, so we consider carefully whether an activity or organization is compatible with those limitations and with our neighborhood. Noise The primary concerns about noise seem to come from use of the church’s Fellowship Hall, Patio, and lawn. Currently, these areas are primarily used by iSing Silicon Valley Girlchoir several late afternoons/early evenings a week on a regular, ongoing basis. In addition, there are occasional events – dances, parties, receptions, meals, meetings, retreats, etc. – both during the day and in the evening. Because we recognize that our neighbors have concerns about noise, we have already gotten estimates for air-conditioning the Hall so the windows and doors can be kept closed when noise-generating activities are going on. We are also open to considering the installation of double-paned windows, if that will help. On the second floor of our Educational Wing, where the New Mozart School operated, we worked with our near neighbor on Bryant Street to resolve noise concerns. We installed air-conditioning in those rooms and he paid for double-paned windows. When we had difficulties with the teachers adhering to our expectation that the windows in these rooms would be kept closed during lessons, we bolted the windows shut. So we have a track record of working with willing neighbors who come to us directly with their concerns to address those concerns. While we believe that noise generated by iSing is, for the most part reasonable and expectable for groups of children learning and playing, the directors of the program are open to considering modifying their activities to lessen the noise. The grounds of the church building have a rich and long legacy of being the “playground” of the neighborhood. It seems to us that most of the activities on the church grounds are reasonable and acceptable. However, if neighbors have concerns about noise that exceeds that and will share those concerns with us, we are willing to work with them to address those concerns. Parking The city allowed this building to be built in 1947 with the current amount of parking. We can only assume that the city considered street parking to be adequate for a congregation of 600 to 700 members at that time and subsequently. This parking arrangement was affirmed in 1953 when the congregation completed its original design by adding the Fellowship Hall. In the early 1970s, when the church owned the property at 349 North California Avenue, we were denied permission by the city to turn that lot into additional parking. In 2016/17, when the city re-paved and re-striped North California Avenue, along with many of our neighbors, we raised concerns about the loss of parking. We were told at the time by Josh Mello, Chief Transportation Official, that there was plenty of parking within 2 blocks of the church. This was after the city had done an on-site inspection of parking and traffic at our site. If this is true, we can certainly work with our partners to encourage their participants to park appropriately and legally and walk to the church building. One drastic idea that has had some discussion is the possibility of turning part or all of our lawn into diagonal street parking to accommodate additional cars. However, it is our strong belief that parking is rarely a problem around the church. The vast majority of the time, there is plenty of street parking available. Of course, there are occasional events and activities which draw larger crowds and use much of the available parking around the church. Traffic While it is probably true that there has been an increase in traffic in the neighborhood, we do not believe that we are the sole cause or that it is a dramatic increase. It’s our experience that most drivers on both Bryant and North California navigate those streets with reasonable speed and respect for traffic rules, especially given a general awareness that these are major bicycle routes. It is true that there are scofflaws who do not obey the rules or drive appropriately. Of course, this could be observed on any street in the city at a given time. We recognize that when both the New Mozart School and iSing were beginning classes soon after school got out, there were times of congestion as parents dropped off and picked up their children. This congestion would be significantly compounded when the phalanx of students from Jordan Middle School poured down North California Avenue after school. Again, it is our observation that this convergence took about 15 minutes, after which traffic patterns went back to “normal.” Now that New Mozart School has left the building, iSing has adjusted its hours, and the city has created a drop off zone in front of the church, these incidences of congestion are rare and traffic flows much better. We continue to believe that the creation of a traffic circle at the corner of North California and Bryant is a bad idea. While there may be data to demonstrate that, generally, traffic circles are “traffic calming” in areas with high volume bicycle traffic, we believe that this does not account for the way the middle school students come pouring down North California 3 and 4 abreast. That, coupled with the tendency of many cyclists to ignore the rules of the road (especially blowing through stop signs) will make a traffic circle at this particular intersection a hazard rather than a help. In regard to parking and traffic generally, iSing, our largest partner, has worked diligently to alter patterns around the church during their classes and activities. They have sent notices to their parents outlining the difficulties and instructing their parents to obey the traffic and parking rules. They have even posted their staff curbside to direct their parents and insure they are following the rules. In addition to trying to help enforce the rules, they have also encouraged their students to walk, cycle, or carpool to lessen traffic and the need for parking/idling. Bicycle Safety We do wonder what might be done, especially at Jordan Middle School, to help the student cyclists learn and obey the rules pertaining to bicycles on public streets. Can the city find ways to work with the school as well as parents and students to help them understand the risks to themselves and the problems they cause in the neighborhood when the disregard the “rules of the road”? Police Presence More than one person has suggested that some well-placed and timely policing of the neighborhood, including the issuance of citations, would help motorists and cyclists understand how important it is for them to obey traffic and parking rules. In addition, those tickets might add to the city coffers to help cover the cost of such policing.