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HomeMy WebLinkAbout2018-04-25 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 25, 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. Transmittal of the 2017 Annual Housing Element Report Prepared for City Council Review and Submitted to the State Housing and Community Development (HCD) Department Consent Calendar Public Comment is Permitted. Five (5) minutes per speaker.1,3 3. QUASI-JUDICIAL. 3225 El Camino Real [17PLN-00007]: Request for a Vesting Tentative Map to Subdivide a 29,962 Square Foot Parcel Into two Parcels Comprised of one Commercial Parcel and one Residential Parcel for Condominium Purposes. Environmental Assessment: Subdivision was Included in the Project Scope Outlined in the Initial Study Mitigated Negative Declaration (IS-MND) Prepared for the Associated Development Application (15PLN-00003); Approved by the Director of Planning & Community Environment on April 21, 2016. Zoning District: Service Commercial (CS). For More Information, Contact Phillip Brennan at phillip.brennan@cityofpaloalto.org (Deferred From March 28, 2018) _______________________ 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. 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 4.PUBLIC HEARING: Recommendation of an Ordinance to the City Council Amending Palo Alto Municipal Code Section 18.42.040 Pertaining to Accessory and Junior Dwelling Units. The Proposed Ordinance is Exempt from the California Environmental Quality Act (CEQA) Pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines Section 15061(b)(3). For More Information, Please Contact Clare Campbell at clare.campbell@cityofpaloalto.org. (Continued from March 28, 2018) 5.Public Hearing: Implementing the Council Housing Work Plan Referral: Discussion of Key Issues for the 2018 Comp Plan and Housing Ordinance Approval of Minutes Public Comment is Permitted. Five (5) minutes per speaker.1,3 6.March 28, 2018 Draft Planning & Transportation Commission Meeting Minutes Committee Items 7.North Ventura Coordinated Area Plan: Appointment of a PTC Commissioner to Serve on the NVCAP Working Group Commissioner Questions, Comments, Announcements or Future Agenda Items Adjournment March 28, 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 # 8791) Report Type: City Official Reports Meeting Date: 4/25/2018 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 25, 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 May 9, 2018  Review of 2019-2023 CIP for Comprehensive Plan Consistency  Study Session on Traffic Safety and Operations Annual Report 2017  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  3877 El Camino Real: Tentative Map  PTC Bylaws/Procedures 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 # 8693) Report Type: Study Session Meeting Date: 4/25/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: 2017 Housing Element HCD Report Title: Transmittal of the 2017 Annual Housing Element Report Prepared for City Council Review and Submitted to the State Housing and Community Development (HCD) Department From: Hillary Gitelman Recommendation This report simply transmits the City of Palo Alto 2017 Annual Performance Report to the California Department of Housing and Community Development and the Office of Planning and Research (Attachment A). No action is required or recommended. Report Summary The City has an adopted and certified Housing Element for the period of 2015 to 2023 and is required to prepare an annual progress report (APR) per Government Code Section 65400 detailing the City’s progress in implementing its housing element. The APR includes information on the jurisdiction’s regional housing needs allocation (RHNA), including the number of housing units permitted by income level, the status of programs in the housing element, and efforts to remove governmental constraints on housing. The APR must be submitted to the California Department of Housing and Community Development (HCD) and the Governor’s Office of Planning and Research (OPR) by April 1 of each year. With the passage of the 2017 housing package by the California legislature, the City is now required to hold a public hearing prior to submitting its APR, which was conducted by the City Council. As shown in the attached report, the City permitted 89 new dwelling units in 2017 in various income categories. Just over 37% of the way through the Housing Element planning period, we have permitted about 20% of the 1,988 units included in our RHNA. Background The Housing Element is one of the mandatory elements which must be included in the City’s Comprehensive Plan. The Housing Element provides goals, policies and actions that help the City plan for the housing needs for all segments of the City’s population. Housing Element law City of Palo Alto Planning & Community Environment Department Page 2 mandates that local governments adequately plan to meet the existing and projected housing needs of all economic segments of the community. The City is required to update its Housing Element per State Housing Element Law every eight years. The City’s current Housing Element for the period of 2015-2023 was adopted on November 10, 2014 and was certified by the California Department of Housing and Community Development (HCD) on January 20, 2015. The Housing Element can be found at the link provided here: https://www.cityofpaloalto.org/civicax/filebank/documents/37935. The Housing Element covers five key areas: 1) Analysis of existing needs, including the number of people living in substandard or overcrowded housing, people paying more for their homes than they can sustainably afford, people with special housing needs, and affordable units at risk of converting to market rate. 2) Analysis of projected needs, including the allocation of income-specific housing needs developed by the Association of Bay Area Governments (ABAG). 3) A site inventory where housing development is allowed, as well as supported by infrastructure and the environment. 4) Analysis of government controls on housing development. 5) Programs, policies and objectives that the City will adopt to assist the development of housing for different income and special needs groups, ensure equal housing opportunity, and preserve and improve the existing housing stock. Figure 1 below provides a summary of the main Housing Element components. Figure 1: Housing Element Components City of Palo Alto Planning & Community Environment Department Page 3 The City is required to update its housing element every eight years. If the deadline for certification is not met, there are significant penalties including having to have a certified housing element every four years. In addition, many State housing, transportation and infrastructure funding programs available to local governments require a certified housing element as one of the eligibility criteria. Additional penalties for not complying with the law can result from a successful legal challenge. In addition to costs (i.e. mandatory attorney’s fees), litigation may result in loss of local control over land use matters; as a penalty for non- compliance, the courts can strip cities of all permitting authority until HCD approves a legally sufficient Housing Element. The State’s sustainable communities law (known as SB 375) to reduce greenhouse gases contains further incentives for cities to submit compliant housing elements by conditioning key transportation grants to compliant elements and by extending the housing cycle for cities with certified elements. Discussion The Housing Element law is the State’s primary strategy to increase housing supply, choice and affordability. The housing element identifies the existing and projected housing needs of all economic segments of the community, including the homeless and persons with disabilities, and promotes a variety of housing types, including multifamily rental units, transitional and other types of supportive housing. The housing element also defines the policies and programs that the community will implement to achieve its housing goals and objectives developed to address its housing needs. It is important to note that Housing Element law only requires the City to provide residential zoning opportunities to accommodate its RHNA allocation. It does not require the City to approve or construct such housing. If the City fails to identify or make City of Palo Alto Planning & Community Environment Department Page 4 available adequate sites to accommodate its RHNA assignment, the City may be required to carry those units over into the next planning cycle, thus increasing the number of sites required to be identified in the upcoming cycle. Regional Housing Needs Allocation (RHNA) As part of the Regional Housing Needs Allocation (RHNA) process overseen by the Association of Bay Area Governments (ABAG), the City of Palo Alto was assigned a quantified goal of 1,988 units, which represents the City’s “fair share” of projected housing need for the 2015-2023 planning period, distributed among the following income groups: very low (345 units), low (346 units), moderate (278 units) and above moderate (587 units) income categories. See Table 1 below for the RHNA breakdown by income group. The City is required to prepare an annual progress report (APR) per Government Code Section 65400 on its progress and program status in implementing its housing element. The APR includes information on the jurisdiction’s progress in addressing its (RHNA), including the number or housing units permitted by income level, the status of programs in the housing element and efforts to remove governmental constraints. The APR must be submitted to the California Department of Housing and Community Development and the Governor’s Office of Planning and Research by April 1 of each year. The APR covers the City’s progress and status for the previous calendar year. The City will need to submit its 2017 APR by April 1, 2018. Table 2 provides a summary of the City’s progress in meeting its RHNA through 2017. The City’s Draft 2017 APR can be found in Attachment A. City of Palo Alto Planning & Community Environment Department Page 5 Goals, Policies and Programs The Housing Element contains a number of adopted programs that the City will need to implement during the Housing Element period. Table 1 below has a summary of the status of those programs that have a timeframe of completion within four years of Housing Element adoption or December 2018, as well as those that are ongoing. Of the 30 programs with specific timeframes for completion, 10 of those have been completed, 12 are underway and eight programs have not yet been completed. In addition, there are 43 ongoing programs in the Housing Element. Table C of Attachment A provides more detail on each of the Housing Element programs. Table 3: Status of Near Term Housing Element Programs (2014 -2018) and Ongoing Programs Status Housing Element Programs Number Completed H1.1.2; H2.1.4; H2.1.8; H2.1.9; H2.2.4; H2.2.6; H3.1.1; H3.5.2; H3.5.3 and H5.1.7 10 Underway H2.1.1; H2.1.7; H2.1.10; H2.1.11; H2.1.12; H2.2.1; H2.2.2; H2.2.7; H2.2.8; H3.3.4; H3.3.7 and H3.4.4 12 Not Completed H1.1.3; H2.1.3; H3.1.7; H3.1.12; H3.1.14; H3.6.1; H4.2.1 and H4.2.2 8 City of Palo Alto Planning & Community Environment Department Page 6 Ongoing H1.1.1; H1.2.1; H1.3.1; H2.1.2; H2.1.5; H2.1.6; H2.1.12; H2.2.3; H2.2.5; H2.3.1; H3.1.2; H3.1.3; H3.1.4; H3.1.5; H3.1.6; H3.1.8; H3.1.9; H3.1.10; H3.1.11; H3.1.13; H3.2.1; H3.2.2; H3.3.1; H3.3.2; H3.3.3; H3.3.5; H3.3.6; H3.4.1; H3.4.2; H3.4.3; H3.5.1; H4.1.1; H4.1.2; H4.1.3; H4.1.4; H4.1.5; H4.1.6; H5.1.1; H5.1.2; H5.1.3; H5.1.4; H5.1.5 and H5.1.6 43 Total 73 2017 Housing Bills The California Legislature passed 15 bills as part of a housing package on September 15, 2017. Many of the provisions in the housing package became effective on January 1, 2018. As a result of the passage of the 2017 Housing Package, there are now additional housing element reporting requirements. Per both SB 35 and AB 879, annual reporting requirements are now applicable to charter cities. Prior to the passage of AB 879, charter cities were not required to submit the APR, although the City did submit the APR on an annual basis. The report requires a discussion of the City’s progress towards implementing its housing element programs to meet its share of the RHNA. In addition, local jurisdictions are now required to hold a public hearing and accept public comment regarding the APR. The Draft 2017 APR will be presented to Council at a public hearing on March 5, 2018. HCD will use data reported by the City’s APR to determine if it is subject to the new SB 35 streamlining requirements on an annual basis. HCD has determined that the City is subject to SB 35 streamlining in 2018 for proposed housing developments with at least 50% affordability because the City has made insufficient progress toward their lower income RHNA (very low and low income). SB 35 allows housing developers to secure a streamlined (90-day) review process and significantly reduced parking requirements for qualifying projects. Environmental Review Review and submittal of the attached report is not a project requiring review under the California Environmental Quality Act (CEQA). Public Notification, Outreach & Comments The Palo Alto Municipal Code does not require notice of this public hearing be published in a local paper because it is a Study Session. As a courtesy, a notice of a public hearing for this discussion was published in the Palo Alto Weekly on February 16, 2018. City of Palo Alto Planning & Community Environment Department Page 7 Next Steps The draft 2017 Housing Element Annual Performance Report will be presented to the City Council at a public hearing to be held on March 5, 2018 and will be submitted to the California Department of Housing and Community Development prior to the April 1, 2018 deadline. The City will continue to work towards implementing the programs in the Housing Element and make progress in their RHNA numbers. Report Author & Contact Information PTC1 Liaison & Contact Information Eloiza Murillo-Garcia, Senior Planner Jonathan Lait, AICP, Assistant Director (650) 329-2561 (650) 329-2679 eloiza.murillogarcia@cityofpaloalto.org jonathan.lait@cityofpaloalto.org Attachments:  Attachment A: Draft 2017 Annual Performance Report (PDF) 1 Emails may be sent directly to the PTC using the following address: planning.commission@cityofpaloalto.org MEMORANDUM To: California Department of Housing and Community Development From: Eloiza Murillo-Garcia, Senior Planner Cc: Governor’s Office of Planning and Research City of Palo Alto City Council City of Palo Alto Planning and Transportation Commission Date: January 31, 2018 Re: 2017 Annual Housing Element Progress Report Attached is the City of Palo Alto’s 2017 Annual Housing Element Progress Report. The City completed its general plan update in November 2017 by adopting all new elements of the Palo Alto Comprehensive Plan (except for Housing). The Comprehensive Plan is available online at: https://www.cityofpaloalto.org/civicax/filebank/documents/62915. The City is now turning its attention to implementing ordinances, particularly focused on housing. Please contact me at (650) 329-2561 or by e-mail : eloiza.murillogarcia@cityofpaloalto.org should you have any questions. Department of Housing and Community Development ANNUAL HOUSING ELEMENT PROGRESS REPORT City or County Name: City of Palo Alto Mailing Address: 250 Hamilton Avenue Palo Alto, CA 94301 Contact Person: Eloiza Murillo-Garcia Title: Senior Planner Phone: 650-329-2561 FAX: 650-329-2154 E-mail: eloiza.murillogarcia@cityofpaloalto.org Reporting Period by Calendar Year: from 1/1/17 to 12/31/17 These forms and tables, (see sample – next page) must be submitted to HCD and the Governor’s Office of Planning and Research (OPR) on or before April 1, of each year for the prior calendar year; submit separate reports directly to both HCD and OPR (Government Code Section 65400) at the addresses listed below: Department of Housing and Community Development Division of Housing Policy Development P.O. Box 952053 Sacramento, CA 94252-2053 -and- Governor’s Office of Planning and Research P.O. Box 3044 Sacramento, CA 95812-3044 Attachment 1 page 1 of 5 - Low- Income Moderate- Income (11) Total Extremely Low-Income Units* (10) Total by income Table A/A3 ► ► 89 * Note: These fields are voluntary (9) Total of Moderate and Above Moderate from Table A3 ► ► ► ► ► ► 28 8928 8961 89 61 Above Moderate- Income Total Units per Project Deed Restricted UnitsEst. # Infill Units* See Instructions See Instructions 8 Housing without Financial Assistance or Deed Restrictions ANNUAL ELEMENT PROGRESS REPORT Housing Element Implementation (CCR Title 25 §6202 ) Jurisdiction City of Palo Alto Table A Annual Building Activity Report Summary - New Construction Very Low-, Low-, and Mixed-Income Multifamily Projects Housing with Financial Assistance and/or Deed Restrictions 67 Assistance Programs for Each Development Tenure R=Renter O=Owner Affordability by Household Incomes Very Low- Income 5a Reporting Period Date: 01/01/17 12 Housing Development Information Project Identifier (may be APN No., project name or address) Unit Category 5 Date: 12/31/17 34 Note below the number of units determined to be affordable without financial or deed restrictions and attach an explanation how the jurisdiction determined the units were affordable. Refer to instructions. Attachment 1 page 2 of 5 - ANNUAL ELEMENT PROGRESS REPORT Housing Element Implementation (CCR Title 25 §6202 ) Jurisdiction City of Palo Alto Reporting Period Date: 01/01/17 Date: 12/31/17 Table A2 Annual Building Activity Report Summary - Units Rehabilitated, Preserved and Acquired pursuant to GC Section 65583.1(c)(1) (3) Acquisition of Units Please note: Units may only be credited to the table below when a jurisdiction has included a program it its housing element to rehabilitate, preserve or acquire units to accommodate a portion of its RHNA whichmeet the specific criteria as outlined in GC Section 65583.1(c)(1) Low- Income TOTAL UNITS Activity Type (4) The Description should adequately document how each unit complies with subsection (c )(7) of Government Code Section 65583.1 6. Total Extremely Low- Income* Very Low- Income 0 1. Single Family 0(1) Rehabilitation Activity 0 Annual building Activity Report Summary for Above Moderate-Income Units (not including those units reported on Table A) * Note: This field is voluntary (5) Total Units by Income (2) Preservation of Units At-Risk Affordability by Household Incomes 117 0 117 117 Table A3 4. Second Unit2. 2 - 4 Units 3. 5+ Units 5. Mobile Homes Buena Vista Mobile Home Park preservation (Program H.3.1.8 - Housing Element 2015-2022)117 7. Number of infill units* Attachment 1 page 3 of 5 - ANNUAL ELEMENT PROGRESS REPORT Housing Element Implementation (CCR Title 25 §6202 ) Jurisdiction City of Palo Alto Reporting Period Date: 01/01/17 Date: 12/31/17 NOTES: (12 2nd du's (ADU's/JADU's, 5 New + 7 conversions), 147 SFR/ADU's BPermits Issued minus (-) 99 SFR/ADU's BPermits Demo = 48 net SFR/ADU for CYear 2017. 48 net SFR/ADU includes 5 new ADU's = 43 SFR's) 16 28 No. of Units Permitted for Above Moderate 12 43 61 * Note: This field is voluntary 6118 28No. of Units Permitted for Moderate Attachment 1 page 4 of 5 - ANNUAL ELEMENT PROGRESS REPORT Housing Element Implementation (CCR Title 25 §6202 ) Jurisdiction City of Palo Alto Reporting Period Date: 01/01/17 Date: 12/31/17 2019 NOTES: Non -Deed Restricted 'Moderate Units' includes new Apartment (for rent) units and ADU's'/JADU's) Non-deed restricted* 691 58 2021 2022 Year 6 8 20 2018 Permitted Units Issued by Affordability Year 4 2015 2016 Enter Calendar Year starting with the first year of the RHNA allocation period. See Example. Note: units serving extremly low-income households are included in the very low-income permitted units totals. 246 1,988 15 Remaining Need for RHNA Period ► ► ► ► ► Total Units ► ► ► Income Level RHNA Allocation by Income Level Non-deed restricted Low Deed Restricted Year 3 Above Moderate 278 3 Total RHNA by COG. Enter allocation number: 432 Year 8 2017 Year 5 Year 7 Year 1 23 Table B Regional Housing Needs Allocation Progress Very Low Deed Restricted Non-deed restricted Moderate Deed Restricted 14587 3 40 18 89 28 160 43 61 393 250 42 236 1,595 337 58 Year 9 648 374 Total Remaining RHNA by Income Level Total Units to Date (all years)Year 2 2014 Attachment 1 page 5 of 5 - ANNUAL ELEMENT PROGRESS REPORT Housing Element Implementation (CCR Title 25 §6202 ) Jurisdiction City of Palo Alto Reporting Period Date: 01/01/17 Date: 12/31/17 All programs reported in Table C are taken from the Housing Goals, Policies and Programs section of the City's 2015-2023 Housing Element, adopted on November 10, 2014 and certified on January 20, 2015 General Comments: TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H1 Goal ENSURE THE PRESERVATION OF THE  UNIQUE CHARACTER OF RESIDENTIAL  NEIGHBORHOODS H1.1 Policy Promote the rehabilitation of  deteriorating or substandard  residential properties using sustainable  and energy conserving approaches.  H1.1.1 Program Continue the citywide property  maintenance, inspection, and  enforcement program.  Continue to provide  services which promote  rehabilitation of  substandard housing. City Funds Planning &  Community  Environment;  Code  Enforcement Ongoing Ongoing program H1.1.2 Program Consider modifying development  standards for second units, where  consistent with maintaining the  character of existing neighborhoods.   The modifications should encourage  the production of second units  affordable to very low‐, low‐, or  moderate‐income households.  Consider modifying the  Zoning Code to provide  for additional second  units. General Fund Planning &  Community  Environment Conduct a study within  three years of adoption  of Housing Element to  assess the potential for  additional second units  with modifications to  the development  standards. Completed. Ordinance  adopted on May 8, 2017. H1.1.3 Program Provide incentives to developers such as reduced fees and flexible development standards to encourage the preservation of existing rental cottages and duplexes currently located in the R‐1 and R‐2 residential areas.   Preserve 10 rental  cottages and duplexes. City Housing funds Planning &  Community  Environment Explore incentives  within three years of  Housing Element  adoption Not yet completed. H1.2 Policy Support efforts to preserve multifamily housing units in existing neighborhoods.   H1.2.1 Program When a loss of rental housing occurs  due to subdivision or condominium  conversion approvals, the project shall  require 25 percent BMR units.  Provide 10 additional  affordable housing units  on sites where rental  housing will be lost. NA Planning &  Community  Environment Ongoing Underway ‐ there have not  been any projects subject to  this program to date. Status of  Housing Element Programs 2015‐2023 January 2018 Housing Element Program Status Page 1 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H1.3 Policy Encourage community involvement in  the maintenance and enhancement of  public and private properties and  adjacent rights‐of‐way in residential  neighborhoods.  H1.3.1 Program Create community volunteer days and  park cleanups, plantings, or similar  events that promote neighborhood  enhancement and conduct City‐ sponsored cleanup campaigns for  public and private properties.  Coordinate with the  City’s waste and  disposal hauler to  conduct a cleanup  campaign once a year  to promote  neighborhood clean‐up. City Housing Funds Public Works  Department Ongoing Ongoing program H1.4 Policy Ensure that new developments provide  appropriate transitions from higher  density development to single‐family  and low‐density residential districts to  preserve neighborhood character.  H2 Goal SUPPORT THE CONSTRUCTION OF  HOUSING NEAR SCHOOLS, TRANSIT,  PARKS, SHOPPING, EMPLOYMENT,  AND CULTURAL INSTITUTIONS H2.1 Policy Identify and implement strategies to  increase housing density and diversity,  including mixed‐use development and  a range of unit styles, near community  services.  Emphasize and encourage  the development of affordable and  mixed‐income housing to support the  City’s fair share of the regional housing  needs and to ensure that the City’s  population remains economically  diverse. Housing Element Program Status Page 2 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H2.1.1  Program To allow for higher density residential development, consider amending the Zoning Code to permit high‐density residential in mixed use or single use projects in commercial areas within one‐half a mile of fixed rail stations and to allow limited exceptions to the 50‐ foot height limit for Housing Element Sites within one‐quarter mile of fixed rail stations.  Provide opportunities  for a diverse range of  housing types near  fixed rail stations. City Funds Planning &  Community  Environment Consider Zoning Code  amendments within  three years of Housing  Element adoption Underway (part of Comp  Plan implementation) H2.1.2 Program Allow increased residential densities  and mixed use development only  where adequate urban services and  amenities, including roadway capacity,  are available. Make sure that  adequate services are  available when  considering increased  residential densities. City Funds Planning &  Community  Environment Ongoing Ongoing H2.1.3 Program Amend the zoning code to specify the minimum density of eight dwelling units per acre in all RM‐15 districts. Consider amending the zoning code to specify minimum density for other multifamily zoning districts, consistent with the multi‐family land use designation in the Comprehensive Plan. To provide  opportunities for up  to10 additional dwelling  units on properties  zoned RM‐15 City Funds Planning &  Community  Environment Within three years of  Housing Element  adoption Not yet completed. H2.1.4 Program Amend the Zoning Code to create zoning incentives that encourage the development of smaller, more affordable housing units, including units for seniors, such as reduced parking requirements for units less than 900 square feet and other flexible development standards. Provide opportunities  for 75 smaller, more  affordable housing  units. City Funds Planning &  Community  Environment Within three years of  Housing Element  adoption Completed. Housing Element Program Status Page 3 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H2.1.5 Program Use sustainable neighborhood  development criteria to enhance  connectivity, walkability, and access to  amenities, and to support housing  diversity.  Increase connectivity  and walkability in new  development. City Funds Planning &  Community  Environment Ongoing Underway H2.1.6 Program Consider density bonuses and/or  concessions including allowing greater  concessions for 100% affordable  housing developments. Provide opportunities  for 100% affordable  housing developments. City Funds Planning &  Community  Environment Ongoing Underway H2.1.7 Program Explore developing a Transfer of Development Rights (TDR) program to encourage higher‐density housing in appropriate locations.  Create opportunities  for higher‐density  housing. City Funds Planning & Community  Environment Consider program  within two years of  Housing Element  adoption Underway (part of Comp  Plan Implementation) H2.1.8 Program Promote redevelopment of underutilized sites by providing information about potential housing sites on the City’s website, including the Housing Sites identified to meet the RHNA and information about financial resources available through City housing programs. Provide information  to developers about  potential housing sites. City funds Planning &  Community  Environment Post information on  website upon adoption  of Housing Element Completed. H2.1.9 Program Amend the Zoning Code to create zoning incentives that encourage the consolidation of smaller lots identified as Housing Inventory Sites and developed with 100% affordable housing projects. Incentives may include development review streamlining, reduction in required parking for smaller units, or graduated density when consolidated lots are over one‐half acre. Adopt amendments as appropriate. Provide information regarding zoning incentives to developers. Amend the Zoning  Code to provide  development incentives  to meet the RHNA. City funds Planning &  Community  Environment  Adopt amendments  within two years of  Housing  Element adoption Completed. Housing Element Program Status Page 4 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H2.1.10 Program As a part of planning for the future of El Camino Real, explore the identification of pedestrian nodes (i.e. “pearls on a string”) consistent with the South El Camino Design Guidelines, with greater densities in these nodes than in other areas. Explore the  identification of  pedestrian nodes. City Funds Planning &  Community  Environment Ongoing in conjunction  with the  Comprehensive Plan  update Not yet completed  (Underway). H2.1.11 Program Consider implementing the Pedestrian and Transit Oriented Development (PTOD) Overlay for the University Avenue downtown district to promote higher density multifamily housing development in that area. Consider PTOD for  University Avenue. City Funds Planning &  Community  Environment Within four years of  Housing Element  adoption, in  conjunction with the  Comprehensive Plan  update Not yet completed  (Underway). H2.1.12 Program Evaluate developing specific or precise plans for the downtown, California Avenue, and El Camino Real areas to implement in the updated Comprehensive Plan. Adopt plans for these areas, as appropriate. Evaluate developing  plans for downtown,  California Avenue, and  El Camino Real. City Funds Planning &  Community  Environment Ongoing in conjunction  with the  Comprehensive Plan  update Not yet completed.  (Proposed for inclusion as  an implementation program  in the Comprehensive Plan  Update) H2.2 Policy Continue to support the redevelopment of suitable lands for mixed uses containing housing to encourage compact, infill development. Optimize the use of existing urban services, and support transit use.  Housing Element Program Status Page 5 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H2.2.1 Program Implement an incentive program within three years of Housing Element adoption for small properties identified as a Housing Element Site to encourage housing production on those sites. The incentive eliminates Site and Design Review if the project meets the following criteria:  • The project has 9 residential units or fewer • A residential density of 20 dwelling units per acre or higher  • Maximum unit size of 900 square feet    Streamline processing  for identified Housing  Element Sites.  City Funds Planning &  Community  Environment Adopt program within  three years of Housing  Element adoption Site and Design Review  threshold has been  increased to 9 units. Two  additional bullet points to  be included in Comp Plan  ordinance. H2.2.2 Program Work with Stanford University to identify sites suitable for housing that may be located in the Stanford Research Park and compatible with surrounding uses.  Identify sites suitable  for housing to  accommodate  additional housing  units. City Funds Planning &  Community  Environment Identify sites within  three years of Housing  Element adoption Underway H2.2.3 Program Use coordinated area plans and other  tools to develop regulations that  support the development of housing  above and among commercial uses. Explore additional  opportunities to  encourage housing in  commercial areas. Planning &  Community  Environment Ongoing Ongoing ‐ North Ventura  Coordinated Area Plan  preparation to begin in  early 2018 Housing Element Program Status Page 6 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H2.2.4 Program As detailed in the Resources chapter of the Housing Element, the City of Palo Alto has committed to providing financial assistance towards the conversion of 23 multi‐family units to very low‐income (30‐50% AMI) units for a period of 55 years, and is seeking to apply credits towards the City’s RHNA (refer to Appendix C ‐Adequate Sites Program Alternative Checklist). The Palo Alto Housing Corporation (PAHC) approached the City for assistance in converting a portion of the 60 units at the Colorado Park Apartments, to be reserved for very low‐income households. The committed assistance will ensure affordability of the units for at least 55 years, as required by law.  By the end of the  second year of the  housing element  planning period, the  City will enter into a  legally enforceable  agreement for $200,000  in committed assistance  to purchase  affordability covenants  on 23 units at the  Colorado Park  Apartments. The City  will report to HCD on  the status of purchasing  affordability covenants  no later than July 1,  2018, and to the extent  an agreement is not in  place, will amend the  Housing Element as  necessary to identify  additional sites. City Housing funds Planning &  Community  Environment Ongoing Completed January 2016. H2.2.5 Progam The City will continue to identify more  transit‐rich housing sites including in  the downtown and the California  Avenue area after HCD certification as  part of the Comprehensive Plan Update  process and consider exchanging sites  along San Antonio and sites along  South El Camino that are outside of  identified “pedestrian nodes” for the  more transit‐rich identified sites. Explore additional  appropriate housing  sites. City Funds Planning &  Community  Environment Ongoing Part of Comprehensive Plan Housing Element Program Status Page 7 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H2.2.6 Program On parcels zoned for mixed use, consider allowing exclusively residential use on extremely small parcels through the transfer of zoning requirements between adjacent parcels to create horizontal mixed use arrangements. If determined to be appropriate, adopt an ordinance to implement this program. Consider transfer of  zoning requirements to  create horizontal mixed  use. City Funds Planning &  Community  Environment Within three years of  Housing Element  adoption Completed as part of  Program 2.1.9. H2.2.7 Program Explore requiring minimum residential densities to encourage more housing instead of office space when mixed‐use sites develop, and adopt standards as appropriate. Explore requiring  minimum densities in  mixed use districts. City Funds Planning &  Community  Environment Ongoing in conjunction  with the  Comprehensive Plan  update Not yet completed  (Underway). H2.2.8 Program Assess the potential of removing maximum residential densities (i.e. dwelling units per acre) in mixed use zoning districts to encourage the creation of smaller housing units within theallowableFloorAreaRatio(FAR), and adopt standards as appropriate. Assess removal of  maximum densities in  mixed use zoning  districts. City Funds Planning &  Community  Environment Ongoing in conjunction  with the  Comprehensive Plan  update Not yet completed  (Underway). H2.3 Policy Heighten community awareness and to  receive community input regarding the  social, economic and environmental  values of maintaining economic  diversity in the City by providing  affordable and mixed income higher  density housing along transit corridors  and at other appropriate locations. Housing Element Program Status Page 8 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H2.3.1 Program Maintain an ongoing conversation with  the community, using a variety of forms  of media, regarding the need for  affordable housing, the financial  realities of acquiring land and building  affordable housing, and the reasons  that affordable housing projects need  higher densities to be feasible  developments. Perform outreach on  affordable housing. City Funds Planning &  Community  Environment Ongoing Underway H3 Goal MEET UNDERSERVED HOUSING  NEEDS, AND PROVIDE COMMUNITY  RESOURCES TO SUPPORT OUR  NEIGHBORHOODS H3.1 Policy Encourage, foster, and preserve diverse  housing opportunities for very low‐,  low‐, and moderate income  households.  H3.1.1 Program Amend the City’s BMR ordinance to lower the BMR requirement threshold from projects of five or more units to three or more units, and to modify the BMR rental section to be consistent with case law related to inclusionary rental housing.  Provide opportunities  for four additional BMR  units. City Funds Planning &  Community  Environment  Amend BMR  Ordinance within three  years of Housing  Element adoption. Completed. Ordinance adopt Housing Element Program Status Page 9 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.1.2 Program Implement the BMR ordinance to  reflect the City’s policy of requiring:  a)      At least 15 percent of all housing  units in projects must be provided at  below market rates to very low‐, low‐,  and moderate‐income households.  Projects on sites of five acres or larger  must set aside 20 percent of all units as  BMR units. Projects that cause the loss  of existing rental housing may need to  provide a 25 percent component as  detailed in Program H 1.2.1. BMR units  must be comparable in quality, size,  and mix to the other units in the  development.  b)      Initial sales price for at least two‐ thirds of the BMR units must be  affordable to a household making 80 to  100 percent of the Santa Clara County  median income. The initial sales prices  of the remaining BMR units may be set  at higher levels affordable to  households earning between 100 to  120 percent of the County’s median  income. For projects with a 25 percent  BMR component, four‐fifths of the BMR  units must be affordable to households  Provide 10 affordable  units through  implementation of the  City’s BMR program. Developers Planning &  Community  Environment Ongoing –  implementation of  existing program Ongoing program H3.1.3 Program Continue implementation of the Below  Market Rate Program Emergency Fund  to prevent the loss of BMR units and to  provide emergency loans for BMR unit  owners to maintain and rehabilitate  their units.  Consider expansion of  program funds to provide financial  assistance for the maintenance and  rehabilitation of older BMR units. Use the BMR  Program Emergency  Fund to prevent the  loss of at least two  affordable units and  assist in maintenance  and rehabilitation of  at least four older  BMR units BMR Emergency  Fund Planning &  Community  Environment N/A Ongoing program,  preserved one BMR unit  in 2016 Housing Element Program Status Page 10 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.1.4 Program Preserve affordable housing stock by  monitoring compliance, providing  tenant education, and seeking other  sources of funds for affordable housing  developments at risk of market rate  conversions.  The City will continue to  renew existing funding sources  supporting rehabilitation and  maintenance activities.  Prevent conversion of  affordable housing to  market rate, and  renew funding  sources for  rehabilitation and  maintenance of  housing stock. City, CDBG funds Planning &  Community  Environment Ongoing Underway, in discussions  with property owners of  projects at risk of  conversion, including Lytton  Gardens, Terman  Apartments and Webster  Wood Apartments. H3.1.5 Program Encourage the use of flexible  development standards, including floor‐ area ratio limits, creative architectural  solutions, and green building practices  in the design of projects with a  substantial BMR component.  Increase opportunities  for BMR development  through use of flexible  development standards. City Funds Planning &  Community  Environment Ongoing Ongoing program H3.1.6 Program Require developers of employment‐ generating commercial and industrial  developments to contribute to the  supply of low‐ and moderate‐income  housing through the payment of  commercial in‐lieu fees as set forth in a  nexus impact fee study and  implementing ordinances.   Generate in‐lieu fees  to contribute toward  the creation of low‐  and moderate‐ income housing. City Housing Fund Planning &  Community  Environment Continue to regularly  update the commercial  in‐lieu fee. The commercial in‐lieu fee  was updated in June 2017. H3.1.7 Program Ensure that the Zoning Code permits innovative housing types such as co‐ housing and provides flexible development standards that will allow such housing to be built, provided the character of the neighborhoods in which such housing is proposed to be located is maintained.  Review the Zoning Code  and determine  appropriate  amendments to allow  innovative housing  types with flexible  development standards. City Funds Planning &  Community  Environment Consider changes to  the Zoning Code within  four years of Housing  Element adoption. Not yet completed. Housing Element Program Status Page 11 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.1.8 Program Recognize the Buena Vista Mobile  Home Park as providing low‐ and  moderate income housing  opportunities. Any redevelopment of  the site must be consistent with the  City’s Mobile Home Park Conversion  Ordinance adopted to preserve the  existing units. To the extent feasible,  the City will seek appropriate local,  state and federal funding to assist in  the preservation and maintenance of  the existing units in the Buena Vista  Mobile Home Park. Preserve the 120  mobile home units in  the Buena Vista Mobile  Home Park as a low and  moderate income  housing resource. City, State and  Federal Funds Planning &  Community  Environment Ongoing Mobile home park was  preserved in September  2017. H3.1.9 Program Continue enforcing the Condominium  Conversion Ordinance.  Maintain the rental  housing stock. City Funds Planning &  Community  Environment Ongoing Ongoing program H3.1.10 Program Annually monitor the progress in the  construction or conversion of housing  for all income levels, including the  effectiveness of housing production in  mixed use developments.  Provide information to  the City Council on the  effectiveness of City  programs. City Funds Planning &  Community  Environment Provide annual reports Ongoing program H3.1.11 Program When using Housing Development  funds for residential projects, the City  shall give a strong preference to those  developments which serve extremely  low‐income (ELI), very low‐income, and  low‐income households. Provide funding  opportunities for  development of  housing for Extremely  Low Income  households. City Housing  Development funds Planning &  Community  Environment Ongoing Ongoing program, housing  funds provided as needed  by housing projects. H3.1.12 Program Amend the Zoning Code to provide  additional incentives to developers who  provide extremely low‐income (ELI),  very low‐income, and low‐income  housing units, above and beyond what  is required by the Below Market Rate  program, such as reduced parking  requirements for smaller units, reduced  landscaping requirements, and reduced  fees. Provide incentives for  development of  housing for Extremely  Low Income  households. City Housing funds Planning &  Community  Environment Within three years of  Housing Element  adoption Not yet completed. Housing Element Program Status Page 12 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.1.13 Program For any affordable development  deemed a high risk to convert to  market rate prices within two years of  the expiration of the affordability  requirements, the City will contact the  owner and explore the possibility of  extending the affordability of the  development.  To protect those  affordable  developments deemed  a high risk to  converting to market  rate City Housing funds Planning &  Community  Environment Ongoing Underway, in discussions  with property owners of  projects at risk of  conversion, including Lytton  Gardens, Terman  Apartments and Webster  Wood Apartments. H3.1.14 Program Encourage and support the regional establishment of a coordinated effort to provide shared housing arrangement facilitation, similar to the HIP Housing Home Sharing Program in San Mateo County. Advocate among regional and nonprofit groups to establish the necessary framework. Meet with regional  groups and work to  establish a Santa Clara  Home Sharing Program City Housing funds Planning &  Community  Environment Within two years of  Housing Element  adoption Not yet completed. H3.2 Policy Reduce the cost of housing by continuing to promote energy efficiency, resource management, and conservation for new and existing housing.  H3.2.1 Program Continue to assist very low‐income  households in reducing their utility bills  through the Utilities Residential Rate  Assistance Program (RAP).  Provide assistance to  with utility bills to  800 low‐income  households. City Funds Palo Alto  Utilities  Department Ongoing Ongoing program Housing Element Program Status Page 13 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.2.2 Program Use existing agency programs such as  Senior Home Repair to provide  rehabilitation assistance to very low‐  and low‐income households. Provide rehabilitation assistance to 600 very low and low‐income households. CDBG and General  Fund Planning &  Community  Environment Ongoing Underway, CDBG funds  were allocated for a pilot  home repair program in  FY18 H3.3 Policy Support the reduction of governmental  and regulatory constraints, and  advocate for the production of  affordable housing.  H3.3.1 Program When appropriate and feasible, require  all City departments to expedite  processes and allow waivers of  development fees as a means of  promoting the development of  affordable housing.   Continue to reduce  processing time and  costs for affordable  housing projects. City Funds Planning &  Community  Environment Ongoing Ongoing program H3.3.2 Program Continue to exempt permanently  affordable housing units from any  infrastructure impact fees adopted by  the City.  Reduce costs for  affordable housing  projects. City Funds Planning &  Community  Environment Ongoing Ongoing program Housing Element Program Status Page 14 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.3.3 Program Promote legislative changes and  funding for programs that subsidize the  acquisition, rehabilitation, and  operation of rental housing by housing  assistance organizations, nonprofit  developers, and for‐profit developers.  Continue as an active  member of the Non‐ Profit Housing  Association of  Northern California to  promote legislative  changes and funding  City Funds Planning &  Community  Environment;  City Manager Ongoing Ongoing, active  membership in the Non‐ Profit  Housing Association. H3.3.4 Program Support the development and preservation of group homes and supported living facilities for persons with special housing needs by assisting local agencies and nonprofit organizations in the construction or rehabilitation of new facilities for this population.  Regularly review  existing development  regulations, and amend  the Zoning Code  accordingly to reduce  regulatory obstacles to  this type of housing. City & CDBG Funds Planning &  Community  Environment Amend Zoning Code  within three years of  Housing Element  adoption. Underway H3.3.5 Program Review and consider revising  development standards for second  units to facilitate the development of  this type of housing, including reduced  minimum lot size and FAR  requirements. Based on this analysis,  consider modifications to the Zoning  Code to better encourage development  of second units.  Complete study on  impact of revised  standards, and  consider Zoning Code  Amendments City Funds Planning &  Community  Environment,  City Council Ongoing Zoning code updates  completed March 2017. H3.3.6 Program Continue to participate with and  support agencies addressing  homelessness.  Continue City staff  participation in  prioritizing funding for  County‐wide programs. City, CDBG & HOME  funds Planning &  Community  Environment,  City Council Ongoing Ongoing program Housing Element Program Status Page 15 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.3.7 Program Prepare a local parking demand  database to determine parking  standards for different housing uses  (i.e. market rate multifamily,  multifamily affordable, senior  affordable, emergency shelters etc.)  with proximity to services as a  consideration. Adopt revisions to  standards as appropriate.  Determine parking  standards for different  residential uses. City Funds Planning &  Community  Environment Within four years of  Housing Element  adoption Underway, consultant has  been retained to complete  a parking study. H3.4 Policy Pursue funding for the acquisition, construction, and rehabilitation of housing that is affordable to very low‐, low‐, and moderate‐income households. H3.4.1 Program Maintain a high priority for the  acquisition of new housing sites near  public transit and services, the  acquisition and rehabilitation of  existing housing, and the provision for  housing‐related services for affordable  housing. Seek funding from all State  and federal programs whenever they  are available to support the  development or rehabilitation of  housing for very low‐, low‐, and  moderate‐income households Allocate CDBG  funding to acquire  and rehabilitate  housing for very low‐,  low‐, and moderate  income households. CDBG, State Local  Housing Trust Fund Planning &  Community  Environment Ongoing Ongoing program Housing Element Program Status Page 16 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.4.2 Program Support and expand local funding  sources including the City’s Housing  Development Fund, Housing Trust of  Santa Clara County, CDBG Program,  County of Santa Clara’s Mortgage  Credit Certificate Program (MCC),  or  similar program.  Continue to explore  other mechanisms to generate  revenues to increase the supply of low‐  and moderate‐income housing.  Increase the supply of  affordable housing  stock. City Housing  Development Fund,  Housing Trust of  Santa Clara County,  CDBG, Santa Clara  County MCC Planning &  Community  Environment Ongoing Ongoing program H3.4.3 Program Periodically review the housing nexus  formula required under Chapter 16.47  of the Municipal Code to fully reflect  the impact of new jobs on housing  demand and cost.  Continue to evaluate  the housing nexus  formula, and adjust  the required impact  fees to account for  the housing demand  from new  development. City Funds Planning &  Community  Environment Ongoing Housing nexus study  updated in 2016. Fees  updated in 2017. H3.4.4 Program The City will work with affordable  housing developers to pursue  opportunities to acquire, rehabilitate,  and convert existing multi‐family  developments to long‐term affordable  housing units to contribute to the City’s  fair share of the region’s housing  needs. Identify potential sites  for acquisition and  conversion and provide  this information to  developers. City Funds Planning &  Community  Environment Within three years of  Housing Element  adoption Ongoing program H3.5 Policy Support the provision of emergency shelter, transitional housing, and ancillary services to address homelessness. Housing Element Program Status Page 17 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H3.5.1 Program Continue to participate in the Santa  Clara County Homeless Collaborative as  well as work with adjacent jurisdictions  to develop additional shelter  opportunities.   Continue City staff  participation as  members of the  Collaborative’s CDBG  and Home Program  Coordinators Group. City, CDBG & HOME  funds Planning &  Community  Environment,  City Council Ongoing Underway, continued  participation in regional  CDBG/housing collaborative  efforts. H3.5.2 Program Amend the Zoning Code to clarify distancing requirements for emergency shelters, stating that “no more than one emergency shelter shall be permitted within a radius of 300 feet.”   Amend the Zoning Code  to clarify distancing  requirements for  emergency shelters. City Funds Planning &  Community  Environment Adopt amendments  within one year of  Housing Element  adoption Completed. H3.5.3 Program Amend the Zoning Code to revise definitions of transitional and supportive housing to remove reference to multiple‐family uses, and instead state that “transitional and supportive housing shall be considered a residential use of property and shall be subject only to those restrictions that apply to other residential dwellings of the same type in the same zone.” Amend the Zoning Code  to revise transitional  and supportive housing  definitions. City Funds Planning &  Community  Environment Adopt amendments  within one year Completed. H3.6 Policy Support the creation of workforce housing for City and school district employees as feasible.  H3.6.1  Program Conduct a nexus study to evaluate the creation of workforce housing for City and school district employees.    Create the opportunity  for up to five units of  workforce housing. City of Palo Alto  Commercial Housing  Fund Planning &  Community  Environment Conduct a study within  four years of adoption  of the Housing  Element. Not yet completed. H4  Goal PROMOTE AN ENVIRONMENT FREE OF DISCRIMINATION AND THE BARRIERS THAT PREVENT CHOICE IN HOUSING. H4.1 Policy Support programs and agencies that  seek to eliminate housing  discrimination. Housing Element Program Status Page 18 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H4.1.1 Program Work with appropriate State and  federal agencies to ensure that fair  housing laws are enforced, and  continue to support groups that  provide fair housing services, such as  the Mid‐Peninsula Citizens for Fair  Housing Continue to  coordinate with State  and federal agencies  to support programs  to eliminate housing  discrimination, and  provide financial  support for fair  housing services. City Funds Planning &  Community  Environment Ongoing Underway ‐ The City  contracts with Project  Sentinel to provide fair  housing services. H4.1.2 Program Continue the efforts of the Human  Relations Commission to combat  discrimination in rental housing,  including mediation of problems  between landlords and tenants.  Continue to provide  mediation services  for rental housing  discrimination cases. City Funds Human  Relations  Commission,  Planning &  Community  Environment Ongoing Underway ‐ The City  contracts with Project  Sentinel to provide  mediation services. H4.1.3 Program Continue implementation of City’s  ordinances and State law prohibiting  discrimination in renting or leasing  housing based on age, parenthood,  pregnancy, or the potential or actual  presence of a minor child.  Implement existing  ordinances regarding  discrimination City Funds Planning &  Community  Environment Ongoing Ongoing program H4.1.4 Program Continue the City’s role in coordinating  the actions of various support groups  that seek to eliminate housing  discrimination and in providing funding  and other support for these groups to  disseminate fair housing information in  Palo Alto, including information on  referrals to pertinent investigative or  enforcement agencies in the case of fair  housing complaints.  Continue to provide  funding and other  support for these  groups to  disseminate fair  housing information  in Palo Alto. City Funds, Human Services Resource Allocation Process (HSRAP) Office of Human  Services Ongoing Uderway ‐ The City  contracts with Project  Sentinel to provide fair  housing services. Housing Element Program Status Page 19 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H4.1.5 Program Heighten community awareness  regarding and implement the  Reasonable Accommodations  procedure for the siting, funding,  development, and use of housing for  people with disabilities. Continue to provide  information to  residents on  reasonable  accommodation  procedures via public  counters and on the  City’s website. City Funds Planning &  Community  Environment Ongoing Ongoing program H4.1.6 Program Continue to implement the Action Plan  of the City of Palo Alto’s Community  Development Block Grant (CDBG)  Consolidated Plan and the Analysis of  Impediments to Fair Housing Choice.  Provide for increased  use and support of  tenant/landlord  educational  mediation  opportunities as  called for in the CDBG  Action Plan and the  Analysis of  Impediments to Fair  Housing Choice. CDBG funds,  General Fund Planning &  Community  Environment Ongoing Ongoing program. H4.2 Policy Support housing that incorporates  facilities and services to meet the  health care, transit, and social service  needs of households with special  needs, including seniors and persons  with disabilities. H4.2.1 Program Ensure that the Zoning Code facilitates the construction of housing that provides services for special needs households and provides flexible development standards for special service housing that will allow such housing to be built with access to transit and community services while preserving the character of the neighborhoods in which they are proposed to be located. Evaluate the Zoning  Code and develop  flexible development  standards for special  service housing. City Funds Planning &  Community  Environment Evaluate the Zoning  Code within three  years of adoption of  the Housing Element. Not yet completed. Housing Element Program Status Page 20 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H4.2.2 Program Work with the San Andreas Regional  Center to implement an outreach  program that informs families in Palo  Alto about housing and services  available for persons with  developmental disabilities.  The  program could include the  development of an informational  brochure, including information on  services on the City’s website, and  providing housing‐related training for  individuals/families through  workshops. Provide information  regarding housing to  families of persons with  developmental  disabilities. General Fund Planning &  Community  Environment Develop outreach  program within three  years of adoption of  the Housing Element. Not yet completed. H5 Goal REDUCE THE ENVIRONMENTAL IMPACT OF NEW AND EXISTING HOUSING. Housing Element Program Status Page 21 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H5.1 Policy Reduce long‐term energy costs and improve the efficiency and environmental performance of new and existing homes. H5.1.1 Program Periodically report on the status and  progress of implementing the City’s  Green Building Ordinance and assess  the environmental performance and  efficiency of homes in the following  areas:  ‐ Greenhouse gas emissions  ‐ Energy use ‐ Water use (indoor and outdoor) ‐ Material efficiency ‐ Stormwater runoff ‐ Alternative transportation Prepare reports  evaluating the  progress of  implementing the  City’s Green Building  Ordinance. City funds,  Development fees Planning &  Community  Environment,  Building  Division Ongoing Ongoing program H5.1.2 Program Continue providing support to staff and  the public (including architects, owners,  developers and contractors) through  training and technical assistance in the  areas listed under Program H5.1.1.  Provide educational  information regarding  the City’s Green  Building Ordinance. City funds,  Development fees Planning &  Community  Environment,  Building  Division Ongoing Ongoing program Housing Element Program Status Page 22 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H5.1.3 Program Participate in regional planning efforts  to ensure that the Regional Housing  Needs Allocation targets areas that  support sustainability by reducing  congestion and greenhouse gas  emissions. Provide a regional  framework for  sustainability in  creating new housing  opportunities  through the City’s  Regional Housing  Mandate Committee. City Funds Planning &  Community  Environment Ongoing Ongoing program H5.1.4 Program Review federal, State, and regional  programs encouraging the  improvement of environmental  performance and efficiency in  construction of buildings, and  incorporate appropriate programs into  Palo Alto’s policies, programs and  outreach efforts.  Continue to update  regulations for  environmental  sustainability. City Funds Planning &  Community  Environment,  Public Works &  Utilities Ongoing Ongoing program H5.1.5 Program Enhance and support a proactive public  outreach program to encourage Palo  Alto residents to conserve resources  and to share ideas about conservation. Provide up‐to‐date  information for  residents regarding  conservation through  educational  brochures available at  City Hall and posted  on the City’s website. City Funds Planning &  Community  Environment,  Public Works &  Utilities Ongoing Ongoing program H5.1.6 Program Provide financial subsidies, recognition,  or other incentives to new and existing  homeowners and developers to achieve  performance or efficiency levels  beyond minimum requirements. Continue to recognize  homeowners and  developers who  incorporate  sustainable features  beyond what is  required by the  Green Building  Ordinance. City Funds Planning &  Community  Environment Ongoing Ongoing program Housing Element Program Status Page 23 of 24 Revised January 31, 2018 TABLE C: Program Implementation Status Goal/Policy/Program Description Plan Objective Funding Source Responsible Agency Time Frame Status H5.1.7 Program In accordance with Government Code Section 65589.7, immediately following City Council adoption, the City will deliver to all public agencies or private entities that provide water or sewer services to properties within Palo Alto a copy of the 2015‐2023 Housing Element.   Immediately following  adoption, deliver the  2015‐2023 Palo Alto  Housing Element to all  providers of sewer and  water services within  the City. City Funds Planning &  Community  Environment Within one month of  adoption of the  Housing Element Completed. Housing Element Program Status Page 24 of 24 Revised January 31, 2018 Planning & Transportation Commission Staff Report (ID # 8982) Report Type: Action Items Meeting Date: 4/25/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: 3225 El Camino Real: Vesting Tentative Map Title: QUASI-JUDICIAL. 3225 El Camino Real [17PLN-00007]: Request for a Vesting Tentative Map to Subdivide a 29,962 Square Foot Parcel Into two Parcels Comprised of one Commercial Parcel and one Residential Parcel for Condominium Purposes. Environmental Assessment: Subdivision was Included in the Project Scope Outlined in the Initial Study Mitigated Negative Declaration (IS-MND) Prepared for the Associated Development Application (15PLN-00003); Approved by the Director of Planning & Community Environment on April 21, 2016. Zoning District: Service Commercial (CS). For More Information, Contact Phillip Brennan at phillip.brennan@cityofpaloalto.org (Deferred From March 28, 2018) From: Hillary Gitelman Recommendation Staff recommends the Planning and Transportation Commission (PTC) take the following action(s): 1. Recommend approval of the Vesting Tentative Map to the City Council, based on findings and conditions. Report Summary Applicant proposes a Vesting Tentative Map to subdivide a 29,962 square foot (sf) lot into two vertically arranged parcels; Parcel 1 (the “commercial parcel”), would include retail and office space and four apartments, and Parcel 2 (the “residential parcel”) would include four residential condominiums. The subdivision map would facilitate the construction of a previously approved (15PLN-00003) 29,249 sf mixed-use development project located in the Service Commercial (CS) zoning district. The project will replace the existing 7,000 sf, one-story City of Palo Alto Planning & Community Environment Department Page 2 commercial retail building originally constructed in 1959 (non-historic) and occupied most recently by longtime retail tenant Footlocker. Draft findings and conditions are included with this report; see Attachment B. Background Project Information Owner: John Vidovich Architect: BKF Engineers Representative: John Hanna Legal Counsel: John Hanna Property Information Address: 3225 El Camino Real Neighborhood: Ventura Lot Dimensions & Area: 149.81 feet x 200 feet (29,962 sf; or ~0.69 acres) Housing Inventory Site: No Located w/in a Plume: Yes; California Olive-Emerson Plume Area Protected/Heritage Trees: Yes; four (4) London Planes in the abutting right-of-ways Historic Resource(s): No Existing Improvement(s): 7,000 sf; one-story commercial building; built 1959 Existing Land Use(s): Commercial (Retail) Adjacent Land Uses & Zoning: North: CS (Office) West: CS (Retail) East: CS (Retail) South: CS; RP (Hotel; Office) Special Setbacks: No Aerial View of Property: City of Palo Alto Planning & Community Environment Department Page 3 Source: Google Earth Land Use Designation & Applicable Plans/Guidelines Zoning Designation: Service Commercial (CS) Comp. Plan Designation: Service Commercial (CS) Context-Based Design: Yes; PAMC Section 18.16.090 Downtown Urban Design: Not Applicable SOFA II CAP: Not Applicable Baylands Master Plan: Not Applicable ECR Guidelines ('76 / '02): Yes; both the El Camino Real Guidelines and South El Camino Design Guidelines Proximity to Residential Uses or Districts (150'): Not Applicable Located w/in AIA (Airport Influence Area): Not Applicable City of Palo Alto Planning & Community Environment Department Page 4 Prior City Reviews & Action ARB: The associated development project (15PLN-00003) was recommended for approval by the ARB on February 18, 2016, https://www.cityofpaloalto.org/civicax/filebank/documents/51103 for the staff report. Project Description The applicant requests approval of a Vesting Tentative Map to create two parcels comprised of one commercial parcel, including four apartments, and one residential parcel for condominium purposes not to exceed four residential condominiums. This subdivision application would facilitate the construction of a previously approved 29,249 sf mixed-use development project (15PLN-00003). As shown in Figure 1, Parcel 1 (“Commercial Parcel”) would include the below- grade garage, surface-level parking lot, the retail/office buildings, the four (4) rental apartment units to be located on the second-floor of Building A, and the earth and the airspace around and above the project. Parcel 2 (“Residential Parcel”) would include the four (4) for-sale condominiums located on Building A’s third- and fourth floors (i.e. two-story units) and the Condominium Building Common Area. The proposed map can be found under Attachment F. Figure 1: Cross-Section View of Proposed Parcels Access to both parcels will be provided from a single driveway off of Portage Avenue that will serve the surface parking area and lead to the below-grade parking garage. The approved development project provides 20 surface parking spaces, five of which double as the required City of Palo Alto Planning & Community Environment Department Page 5 loading zone during off-peak hours; and 54 parking spaces in the below grade garage for a total of 74 spaces. The required parking for this project is 75 spaces. The project received a 1 percent parking reduction as approved by the Planning Director per the provisions of PAMC Section 18.52.050, resulting in a reduced total required parking count of 74 spaces. No reserved or dedicated parking is permitted for either the residential units or retail/office use as conditioned by the Architectural Review approval; all spaces will be available as shared parking. Easements related to the joint use utility facilities, elevator and stairs, trash room, and storm water treatment and maintenance equipment areas are indicated in general form on the proposed map (see Attachment F). The aforementioned easements, as well as others necessary for access, surface parking, garage, structural support, and sewer and drainage are further defined in the draft Combined Condominium Declaration and Covenants, Conditions and Restrictions, provided in Attachment G. Provided below is a summary table that corresponds to the section detail in Figure 1 and further defines how the buildings’ uses will be organized and divided between the two parcels. Table 1: Approved Building Use Organization Building A (4-Story Building) Building B (2-Story Building) Commercial Residential Commercial Residential Third/Fourth-Floors (Parcel 2) None Four (4) “for sale” 4-bedroom condominium units Second-floor (Parcel 1) None Four (4) 2- bedroom rental units 1,826 sf office None First-Floor (Parcel 1) 6,513 sf retail None 2,061 sf retail None Requested Entitlements, Findings and Purview: The following discretionary applications are being requested and subject to PTC purview:  Subdivision (Vesting Tentative Map): The process for evaluating this type of application is set forth in Title 21 of the Palo Alto Municipal Code and Government Code Section 66474. Palo Alto Municipal Code Section 21.12.090 requires the Commission to review whether the proposed subdivision complies and is consistent with the Subdivision Map Act (in particular Government Code 66474), Title 21 of the Palo Alto Municipal Code, the Palo Alto Comprehensive Plan, and other applicable provisions of the Palo Alto Municipal Code and State law. The Commission’s recommendation is forwarded to the City of Palo Alto Planning & Community Environment Department Page 6 City Council for final approval. The findings to approve a Subdivision are provided in Attachment B. Analysis1 Consistency with Application Findings The necessary findings for approval of the Vesting Tentative Map are contained in State law and incorporated into Title 21 of the Municipal Code. Under the Subdivision Map Act, the PTC must recommend and Council must make a series of “reverse” findings to justify approval. If the findings cannot be made, the subdivision must be approved. In particular, under Government Code Section 66474, the PTC shall recommend denying a Tentative Map if it makes any of the following findings: a) That the proposed map is not consistent with applicable general and specific plans. b) That the design or improvement of the proposed subdivision is not consistent with applicable general and specific plans. c) That the site is not physically suitable for the type of development. d) That the site is not physically suitable for the proposed density of development. e) That the designs of the subdivision or the proposed improvements are likely to cause substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat. f) That the design of the subdivision or type of improvements is likely to cause serious public health problems. g) That the design of the subdivision or the type of improvements will conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision. Some relevant factors are discussed below and a detailed review of the proposed project’s consistency with applicable Title 21 findings has been performed and can be found in Attachment B. Neighborhood Setting and Character The subject lot measures 149.81 feet wide by 200 feet deep, totaling 29,962 square feet (sf). The property is located in the CS zoning district at the southeast corner of El Camino Real and Portage Avenue, and is bound by commercial uses that share the CS zoning designation to its north, west, and east. Directly to its south, across El Camino Real, is Hotel Parmani (CS zoning district) and Communications & Power Industries (Research Park zoning district). The subject lot does not share its property lines with another zoning district. 1 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 7 The relatively flat lot is presently devoid of any landscaping on-site and is completely paved over for parking that served the 7,000 sf commercial building to be demolished. There are four street trees (all London planes, two on El Camino Real and two on Portage Avenue) within the pedestrian rights-of-way adjacent to the project site that will be preserved. The subject site is part of a developed and urbanized area along El Camino Real, which is a major arterial road and commercial corridor. Zoning Compliance2 As noted in this report, the subdivision application is tied to a previously approved development application (15PLN-00003) that was deemed compliant with the applicable zoning regulations set forth in the CS zoning district. A Design Enhancement Exception (DEE) that requested a 47 percent build-to-line, or 3 percent (4.9 foot) reduction from the required 50 percent build-to-line along El Camino Real and 1 percent (equating to one parking space) parking reduction that reduced the required parking total to 74 spaces were included as part of the approved application. As such, the proposed subdivision application is consistent with the development standards of the Service Commercial (CS) zoning district. The CS district does not prescribe minimum lot width, depth, and area for parcels. A detailed review of the proposed project’s consistency with applicable zoning standards has been performed and summarized in a table provided in Attachment C. Consistency with the Comprehensive Plan, Area Plans and Guidelines3 The proposed Vesting Tentative Map is consistent with the Comprehensive Plan, in that the site is designated as “Service Commercial” land use category and will be developed in a manner consistent with land uses (i.e. multiple-family, retail, and office land uses) permitted in the CS zoning district. The subdivision map will facilitate the redevelopment of a parcel within the City’s urban service area which is consistent Policy L-1.1 of the Comprehensive Plan. The associated mixed-use development to be constructed on the lot would create new residential units that add to the housing inventory, as well as retail and office space that provide multi-benefits in terms of employment opportunities and services for the community which is consistent with Policy L-1.5. Consistencies with other Comprehensive Plan policies are included in Attachment B of this report. Multi-Modal Access & Parking The project site is within the vicinity of Barron Park Elementary, Terman Middle School and Gunn High School. Although this segment of El Camino Real is not a designated Safe Routes to School, it is considered a walking route to get to these facilities. 2 The Palo Alto Zoning Code is available online: http://www.amlegal.com/codes/client/palo-alto_ca 3 The Palo Alto Comprehensive Plan is available online: http://www.cityofpaloalto.org/gov/topics/projects/landuse/compplan.asp City of Palo Alto Planning & Community Environment Department Page 8 A public access easement will be dedicated with the proposed Final Map to the City for an additional 4.5 feet of sidewalk between the property line and back-of-walk along the El Camino Real frontage to provide a 12 foot wide sidewalk. As the surface lot and below-grade garage are both in the Commercial Parcel, the required parking for the Residential Parcel is provided by easement. Because the Architectural Review approval required shared parking without the use of dedicated or reserved spaces, the easement provides a non-exclusive right to parking in any of the available parking spaces. Environmental Review The subject project was included as part of the project scope outlined in the Initial Study – Mitigated Negative Declaration (IS-MND) prepared for the associated development application (15PLN-00003) that was 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. The IS-MND was circulated between for public review beginning December 4, 2015, through January 8, 2016, and approved by the Director of Planning and Community Environment on April 21, 2016. The Initial Study prepared for the project determined that there would be significant impacts that require mitigation measures to reduce them to a less than significant level. These include mitigations for protection for nesting birds and appropriate construction methodology to prevent soil vapor intrusion into the structure. The Final IS-MND is provided in Attachment E of this report. The development application and this vesting tentative map include conditions that will ensure implementation of these mitigation measures. 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 March 16, 2018, which is 12 days in advance of the meeting. Postcard mailing occurred on March 14, 2018, which is 14 in advance of the meeting. Public Comments As of the writing of this report, no project-related, public comments were received. Alternative Actions In addition to the recommended action, the Architectural Review Board may: 1. Approve 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. City of Palo Alto Planning & Community Environment Department Page 9 Report Author & Contact Information PTC4 Liaison & Contact Information Phillip Brennan, Associate Planner Jonathan Lait, AICP, Assistant Director (650) 329-2493 (650) 329-2679 phillip.brennan@cityofpaloalto.org jonathan.lait@cityofpaloalto.org Attachments:  Attachment A: Location Map (PDF)  Attachment B: Draft Record of Land Use (DOCX)  Attachment C: Zoning Comparison Table (DOCX)  Attachment D: Applicant's Project Description (PDF)  Attachment E: Initial Study - Mitigated Negative Declaration (Final) (DOTX)  Attachment F: Project Plans (DOTX)  Attachment G: Combined Condominium Declaration and Covenants, Conditions and Restrictions (Draft) (DOTX) 4 Emails may be sent directly to the PTC using the following address: planning.commission@cityofpaloalto.org 1B 1C 1A 1 2A Fry's Electronics 705.1' 1133.4' 47.9' 150.0' 199.7' 149.7' 65.6' 149.7' 65.7' 199.7' 50.0' 199.7' 50.0' 199.7' 50.0' 199.7' 50.0' 50.0' 150.0' 50.0' 150.0' 49.9' 150.0' 49.9' 150.0' 166.4' 32.5' 1.9' 108.2' 6.6' 270.2' 100.0' 149.8' 150.0' 149.8' 150.0' 100.0' 40.0' 149.7' 200.0' 49.9' 150.0' 199.7' 10.0' 49.9' 150.0' 49.9' 150.0' 49.9' 200.0' 50.0' 200.0' 198.3' 100.0' 199.7' 98.9' 148.9' 71.4' 179.8' 75.8' 114.9' 105.3' 199.4' 98.2' 50.0' 55.3'60.7' 93.6' 55.0' 113.0' 60.7' 28 75.0' 60.0'93.6' 144.3' 58.1' 68.3' 590.8' 182.6' 705.1' 50.0' 55.3' 69.7' 87.8' 90.0' 100.0' 40.0' 100.0'50.0' 199.7' 276.0' 100.0' 242.1' 29.5' 54.7' 26.3' 49.9' 200.0' 50.0' 200.0' 107.5'156.8' 2.0' 126.4' 127.0' 38.9' 109.3'5 63.7'6.3' 85.0' 9 15.7' 75.0' 100.9'100.9' 65.0' 100.8' 65.0' 90.0' 100.8' 80.0' 15.7' 90.6' 35.0' 120.0' 156.8'86.7' 61.8' 109.3' 137.0' 116.5 116.5' 55.4'116 55.4' 554 105.0' 120. 50.0' 56.0' 120.0' 120.0' 50.0' 120.0' 50 120.0' 50.0' 120.0' 35.0' 120.0' 35.0' 45.0' 105.0' 50.0' 105.0' 50.0' 105.0' 50.0' 105.0' 50.0' 105.0' 50.0' 105.0' 50.0' 105.0' 50.0'105.0' 50.0' 87.2' 112.2' 44.1' 15.5' 96.1' 120.0' 50.0' 120.0' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 65.7'119.7' 65.7' 139.5' 50.0' 139.5' 50.0' 139.6' 50.0' 139.6' 50.0' 109.8' 570.4' 119.7' 50.0' 119.7' 50.0' 136.1' 50.0' 138.1' 50.0' 18.5' 100.0' 19.8' 100.0' 119.7' 50.0' 119.7' 50.0' 139.5' 50.0' 139.5' 50.0' 66.9' 200.0' 66.9' 200.0' 233.0' 332.5' 120.6' 151.0' 231.7' 137.6' 158.7' 39.0' 88.7' 78.0' 7.3' 49.2' 4 49.2' 116.5 49.2' 116.5' 49.2' 116.5' 49.2' 116.5' 49.2' 116.5' 49.2' 116.5' 49.2' 116.5' 65.7' 134.7' 134.7' 115.6' 134.7' 115.6' 51.1' 19.6' 127.3' 50.3' 132.6' 50.0' 119.6' 50.6' 127.3' 132.6' 50.1' 136.1' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 50.0' 134.7' 134.7' 50.0' 134.7' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 134.7' 50.0' 50.0' 50.0' 150.0' 0' 150.0' 119.7' 65.7' 119.7' 65.6' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 50.0' 119.7' 50.0' 119.7' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 50.0' 119.7' 50.0' 119.7'50.0' 119.7' 50.0' 119.7' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 119.7' 50.0' 47.9' 150.0' 47.9' 150.0' 95.7' 150.0' 95.7' 150.0' 95.7' 150.0' 95.7' 150.0' 200.0' 72.6' 200.0' 72.6' 134.7' 115.6' 134.7' 115.7'134.7' 115.7' 134.7' 115.6'134.7' 115.6' 134.7' 115.6'134.7' 115.6' 134.7' 115.6'134.7' 115.6' 134.7' 115.7'134.7' 115.7' 134.7' 115.7' 317.0' 216.1' 375.4' 208.0' 310.8' 365.7' 706.6' 498.2' 526.6' 375.4'216.1' 4.0' 60.0' 54 105.0' 50.0' 221.4' 221.4' 76.2'105.0' 76.4' 186.2' 186.2' 159.0' 159.0'159.0' 159.0' 98.0' 98.0'159.0'159.0'159.0' 159.0' 24.6' 24.6' 77.9' 77.9'159.0' 159.0' 91.7' 91.7' 129.8' 129.8' 51.2' 50.0' 129.8' 129.8' 129.8' 51.4' 50.0' 308.6' 308.5' 206.0' 206.5' 95.8' 110.0' 40.0' 148.7' 51.0' 51.0' 148.7' 200.0' 200.0' 200.0' 200.0' 150.0' 150.0' 99.8' 99.8' 199.7' 199.7' 199.7'100.0' 165.4 85.1 34.6 150.0' 50.0' 100.0' 50.0' 100.0' 149.7' 149.7' 149.7' 115.7' 165.7' 100.0'50.0' 85.1 199.7' 149.7' 250.0' 151.5' 275.2' 14.4' 108.7' 108.7' 52.8' 52.8' 98.8' 67.2' 166.4'166.4' 30.0' 30.0' 18.0' 18.0' 275.2' 185.2' 190.0' 275.0' 275.0' 275.0' 275.0' 275.0' 119.5' 119.5' 119.5' 119.5' 119.5' 119.5' 119.5' 119.5' 119.5' 119.5' 50.0' 50.0' 50.0' 50.0' 50.0' 50.0' 50.0' 50.0' 50.0' 50.0' 50.0' 50.0' 250.0' 250.0' 20.0' 20.0' 78.5'78.5' 605.7' 605.7' 78.5' 69.7'1000.0' 14.0' 100.0' 100.0' 100.0' 100.0' 51.6' 97.2' 9.4'1 72.1' 5.8' 105.0' 87.2'75.0' 212.7' 128.4' 86.7' 69.1' 49.2' 394.5' 394.5' 472.3' 472.3' 327.5' 53.4' 27.4' 366.1' 14.6'62.6'75.0' 2 50.0' 0' 150.0' 95.8' 164.9 199.7 EL CAMINO REAL FERNANDO AVE LAMBERT AVENUE EL CAMINO REAL HANSEN WAY EL CAMINO REAL HANSEN WAY LAMBERT AVENUE ASH STREET BIRCH STREET PARK BOULEVARD ACACIA AVENUE PORTAGE AVENUE OLIVE AVENUE PEPPER AVENUE ASH STREET D AMINO REAL LANE 66 IN O REAL EL CAMINO REAL EL CAMINO REAL RM-15 C CS(H) PC-2952 PF RM-30R-1 CS G M CS CS CS RP CS(AD) CS S(D) This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend Project Site 0'250' 3225 El Camino Real Vesting Tentative Map17PLN-00007 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 2015 City of Palo Alto ccampbe, 2015-11-20 14:37:02 (\\cc-maps\gis$\gis\admin\Personal\Planning.mdb) 1 ATTACHMENT B ACTION NO. 2018-XX DRAFT RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR 3225 EL CAMINO REAL: VESTING TENTATIVE MAP, 17PLN-00007 (JOHN VIDOVICH, APPLICANT) At its meeting on [DATE], 2018, the City Council of the City of Palo Alto (“City Council”) approved the Vesting Tentative Map for the development of a two-lot subdivision project making the following findings, determinations and declarations: SECTION 1. Background. A. On January 5, 2017, John Vidovich applied for a Vesting Tentative Map for the development of a two (2) parcel subdivision project (“The Project”). B. The project site is comprised of one existing lot (APN No. 132-38-042) of approximately 29,962 square feet. The site contains one existing commercial structure. Commercial land uses (office and retail) are located adjacent to the lot to the north, west and east. To the project’s south, across a major arterial road (El Camino Real), are hotel and office land uses. C. Following staff review, the Planning and Transportation Commission reviewed the project and recommended approval on March 28, 2018, subject to conditions of approval. SECTION 2. Environmental Review. The City as the lead agency for the Project has determined that the project is subject to environmental review under provisions of the California Environmental Quality Act (CEQA) under Guideline section 15070, Decision to Prepare an Initial Study-Mitigated Negative Declaration (IS-MND). An environmental impact assessment was prepared for the project and it has been determined that there is potential for significant impacts that would require mitigation measures to reduce them to a less than significant level. These include mitigations for protection for nesting birds and appropriate construction methodology to prevent soil vapor intrusion into the structure. The IS-MND was made available for public review beginning December 4, 2015, through January 8, 2016, and approved by the Director of Planning and Community Environment on April 21, 2016. The Environmental Impact Assessment and Negative Declaration are contained as Attachment J in the February 18, 2016, Architectural Review Board Staff Report (ID #6508). SECTION 3. Vesting Tentative Map Findings. A legislative body of a city shall deny approval of a Parcel Map, if it makes any of the following findings (California Government Code Section 66474). The City Council cannot make these findings for the following reasons: 2 1. That the proposed map is not consistent with applicable general and specific plans as specified in Section 65451: The site is consistent with the Comprehensive Plan as described below. 2. That the design or improvement of the proposed subdivision is not consistent with applicable general and specific plans: The Project is consistent with the following Comprehensive Plan policies: Policy L-1.1: Limit future urban development to currently developed lands within the urban service area […] The Project site is located within the urban service area and the Project is consistent with this policy by continuing the reuse of land within this area; and Policy L-1.5: Encourage land uses that address the needs of the community and manage change and development to benefit the community. The Project would facilitate the construction of a mixed-use commercial and residential development that would create eight new residential units, ground-floor retail and office space that maximizes the lot’s utility to the benefit of the surrounding community; and Policy L-2.2: Enhance connections between commercial and mixed-use centers and the surrounding residential neighborhoods by promoting walkable and bikeable connections and a diverse range of retail and services that caters to the daily needs of residents. The Project provides a 4.5 foot public access easement along the El Camino Real street frontage to accommodate a 12 foot wide sidewalk that will serve to enhance the pedestrian environment. Additionally, 10 short-term bicycle parking facilities are provided in front and behind the plaza area (an additional 10 long-term bike lockers are provided in the below-grade parking garage) which encourages active modes of transportation such as bicycling; and Policy L-4.2: Encourage street frontages that contribute to retail vitality in all Centers. Reinforce street corners in a way that enhances the pedestrian realm or that form corner plazas. Include trees and landscaping. The approved development project associated with the subdivision Project provides a highly visible and substantial open plaza with pedestrian-friendly amenities such as seating areas, decorative pavers and planters that will visually engage and promote activity within the development. 3. That the site is not physically suitable for the type of development: The Project site is suitable for mixed use development; it is comprised of one large relatively flat lot in a commercial corridor along a major arterial road (El Camino Real) in the Service Commercial (CS) zoning district. The lot would be subdivided into two parcels; one 25,121 square foot (sf) commercial parcel and one 7,377 sf residential parcel for condominium purposes not to exceed four (4) residential condominium units. There is no required minimum site area, width, or depth for mixed-use developments in the CS zoning district. A public access easement will be dedicated with the Final Map to the provide an additional 4.5 feet of sidewalk between the front property line and back of walk along the El Camino Real frontage to create a 12 foot effective sidewalk width. The Project site would allow for eight multi-family residential units as permitted for mixed-use developments in the CS zoning district. 3 4. That the site is not physically suitable for the proposed density of development: The project would create eight multi-family residential units which compliant with the maximum allowable residential density as calculated for the total site area (30 DU/acre = 20 DU). See Palo Alto Municipal Code Section 18.16.060 – Table 4 (3). 5. That the design of the subdivision or the proposed improvements are likely to cause substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat: As conditioned in the Final IS-MND approved by the Director of Planning and Community Environment on April 21, 2016, the Project will not cause environmental damage or injure fish, wildlife, or their habitat, in that property is currently developed and not adjacent to sensitive habitat areas. 6. That the design of the subdivision or type of improvements is likely to cause serious public health problems: An environmental analysis identifies a few potentially significant impacts related to the associated development project’s improvements that would require mitigation measures to reduce them to a less than significant level. These include mitigations for protection for nesting birds and appropriate construction methodology to prevent soil vapor intrusion into the structure as reported in the Final IS-MND approved by the Director of Planning and Community Environment on April 21, 2016. 7. That the design of the subdivision or the type of improvements will conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision. In this connection, the governing body may approve a map if it finds that alternate easements, for access or for use, will be provided, and that these will be substantially equivalent to ones previously acquired by the public. This subsection shall apply only to easements of record or to easements established by judgment of a court of competent jurisdiction and no authority is hereby granted to a legislative body to determine that the public at large has acquired easements for access through or use of property within the proposed subdivision. The design of the subdivision will not conflict with any easements for access through or use of the property. A public access easement will be dedicated with the Final Map to the provide an additional 4.5 feet of sidewalk between the front property line and back of walk along the El Camino Real frontage to create a 12 foot effective sidewalk width. SECTION 4. Vesting Tentative Map Approval Granted. Vesting Tentative Map Approval is filed and processed in accordance to PAMC Section 21.13.020 and granted by the City Council under PAMC Sections 21.12 and 21.20 and the California Government Code Section 66474, subject to the conditions of approval in Section 7 of this Record. 4 SECTION 5. Final Map. The Final Map submitted for review and approval by the City Council shall be in substantial conformance with the Vesting Tentative Map prepared by John Koroyan titled “Vesting Tentative Map For Condominium Purposes,” consisting of eight (8) pages, stamped as received April 6, 2018, except as modified to incorporate the conditions of approval in Section 6. A copy of the Vesting Tentative Map is on file in the Department of Planning and Community Environment, Current Planning Division. Prior to the expiration of the Vesting Tentative Map approval, the subdivider shall cause the subdivision or any part thereof to be surveyed, and a Final Map, as specified in Chapter 21.08, to be prepared in conformance with the Vesting Tentative Map as conditionally approved, and in compliance with the provisions of the Subdivision Map Act and PAMC Title 21 and submitted to the City Engineer (PAMC Section 21.16.010[a]). SECTION 6. Conditions of Approval. Planning Division 1. ALLOWED FAR. The total FAR allowed for Parcels 1 and 2 shall not exceed the FAR that would be permitted if the parcels were merged (i.e. total FAR shall be based on the land area of 29,962 square feet). For purposes of FAR, Parcels 1 and 2 shall not enjoy additional rights nor be subject to additional limitations compared to a single parcel on the site. 2. REQUIRED SETBACKS. All setbacks shall be based on a vertical plane extending from the perimeter property lines of the total site. 3. PARKING FOR PARCEL 2. The required eight (8) parking spaces plus associated guest parking, as required by PAMC 18.52, for Parcel 2 shall be provided for on Parcel 1. Related easements will be required to access said parking, as further described in the CC&Rs dated March 13, 2018. 4. MITIGATION MONITORING AND REPORTING PROGRAM. Mitigation Monitoring and Reporting Program (MMRP), prepared for this project in compliance with the California Environmental Quality Act (CEQA), shall be incorporated by reference as conditions of approval. The applicant shall comply with all specified mitigation measures in the timelines outlined in the project’s MMRP. Prior to requesting issuance of any related demolition and/or construction permits, the applicant shall meet with the Project Planner to review and ensure compliance with the MMRP, subject to the satisfaction of the Director of Planning of Planning and Community Environment. 5. ESTIMATED IMPACT FEE. Development Impact Fees, currently estimated in the amount of $886,930.13, per PAMC 16.61.040, shall be paid prior to the issuance of the related building permit. 5 Building Division 6. All occupancy separations, rated shafts and easements shall be constructed and maintained per the draft of the COMBINED CONDOMINIUM DECLARATION AND COVENANTS, CONDITIONS AND RESTRICTIONS dated March 13, 2018. Public Works Engineering Department 7. As the subdivision into two parcels is proposed, both proposed parcels will need to be in compliance with MRP 2.0 Provision C.3. Compliance with this requirement will be verified prior to Building permit issuance. 8. The property owner shall provide a public access easement for the additional dimension of sidewalk between the property line and back of walk and/or building edge to create a 12’ free and clear sidewalk. Applicant shall plot and label the public access easement on the Final Map. 9. Off-site improvements such as curb and gutter, sidewalk replacement, street tree replacement and/or new street trees, street lights, utility upgrades or street resurfacing, striping are typically required with subdivisions. Since the proposed projects are part of subdivision, applicant(s) shall be aware that off-site improvements such as those listed above will be required. At a minimum plans provide an Off-site improvement Plan set that show new curb, gutter and sidewalk along the project frontages to be removed and replaced, full street width resurfacing (grind and overlay) will be required, new street trees, striping, all off-site utility upgrades. Applicant shall meet with Urban Forestry to evaluate if a new street tree can be planted along the project frontages. 10. Provide closure calculations and cost estimate for the off-site improvements described above. 11. Subdivision Improvement Agreement is required to secure compliance with condition of approval and security of improvements onsite and offsite per PAMC Section 21.16.220. AS PART OF THE FINAL MAP PROCESS 12. The Final Map shall include CITY ENGINEER STATEMENT, CITY SURVEYOR STATEMENT, BENEFICIARY STATEMENT, DIRECTOR OF PLANNING AND COMMUNITY ENVIRONMENT STATEMENT and CITY CLERK. 13. The City of Palo Alto does not currently have a City Surveyor we have retained the services of Siegfried Engineering to review and provide approval on behalf of the 6 City. Siegfried will be reviewing, signing and stamping the Final Map associated with your project. 14. In effort to employ the services of Siegfried Engineering, and as part of the City’s cost recovery measures, the applicant is required to provide payment to cover the cost of Siegfried Engineering’s review. 15. Our intent is to forward your Final Map to Siegfried for an initial preliminary review of the documents. Siegfried will then provide a review cost amount based on the complexity of the project and the information shown on the document. We will share this information with you once we receive it and ask that you return a copy acknowledging the amount. You may then provide a check for this amount as payment for the review cost. The City must receive payment prior to beginning the final review process. 16. Provide electronic copies of the documents provided. PRIOR TO FINAL MAP RECORDATION 17. Submit wet signed and stamped mylar copy of the Final Map to the Public Works for signature. Map shall be signed by Owner, Notary and Surveyor prior to formal submittal. 18. Signed Subdivision Improvement Agreement and Security Bonds as described per PAMC 21.16.230 PRIOR TO ISSUANCE OF A BUILDING PERMIT OR GRADING AND EXCAVATION PERMIT 19. Final Map shall be recorded with County Recorder. Utilities Electrical Engineering 20. The applicant shall grant the City the easement to access the transformer that will serve the new buildings. Public Works Department – Recycling 21. The property manager shall be required to move the bins out of the trash enclosures located in the below-grade garage to the curb for pick-up. 22. The bins housed in the trash enclosures located in the below-grade parking garage shall be moved to the curb for pick-up either by the property manager or will be required to pay the hauler for pull-out services. 7 Housing/BMR 23. Below Market Rate (BMR) Housing Requirement: This project’s total BMR requirement is 0.60 units. When the BMR requirement results in a fractional unit, an in-lieu payment to the Residential Housing Fund may be made for the fractional unit instead of providing an actual BMR unit, except that larger projects of 30 or more units must provide a whole BMR unit for any fractional unit of one-half (0.50) or larger. 24. The applicant shall provide an in-lieu payment as specified in Section 16.65.060. The fractional in-lieu fee shall be paid prior to issuance of any building permits for the project; provided, however, that prior to issuance of the first building permit for the project, the applicant may elect to provide one additional inclusionary unit instead of paying the fractional in-lieu payment. 25. All BMR units constructed under this condition shall be in conformance with the City’s BMR Program rules and regulations. A BMR Agreement in a form acceptable to the City Attorney for the 0.60 BMR units shall be executed and recorded prior to final map approval or building permit issuance, whichever occurs first. Failure to comply with the timing of this condition and any adopted BMR Program rules and regulations shall not waive its later enforcement. 26. The applicant is hereby notified, as required by Government Code § 66020, that the approved plans, these conditions of approval, and the adopted City fee schedule set forth in Program H3.1.2 of the City of Palo Alto Comprehensive Plan constitute written notice of the description of the dedications, reservations, amount of fees and other exactions related to the project. As of the date of project approval, the 90 day period has begun in which the applicant may protest any dedications, reservations, fees or other exactions imposed by the City. Failure to file a protest in compliance with all of the requirements of Government Code § 66020 will result in a legal bar to challenging the dedications, reservations, fees or other exactions. SECTION 7. Term of Approval. 1. Vesting Tentative Map. All conditions of approval of the Vesting Tentative Map shall be fulfilled prior to approval of a Final Map (PAMC Section 21.16.010[c]). Unless a Final Map is filed, and all conditions of approval are fulfilled within a two-year period from the date of Vesting Tentative Map approval, the Vesting Tentative Map shall expire and all proceedings shall terminate. An extension of time may be granted by the city council after recommendation of the planning commission, upon the written application of the subdivider, prior to the expiration of the Vesting Tentative Map approval, or any previous extension granted. Such extension(s) shall be subject to the maximum limitations set forth in the Subdivision Map Act. 8 PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: _________________________ ____________________________ City Clerk Director of Planning and Community Environment APPROVED AS TO FORM: ___________________________ Deputy City Attorney PLANS AND DRAWINGS REFERENCED: Those plans prepared by John Koroyan titled “Vesting Tentative Map for Condominium Purposes,” consisting of eight pages, stamped April 6, 2018. ATTACHMENT C ZONING COMPARISON TABLE 3225 El Camino Real, File No. 17PLN-00007 Vesting Tentative Map Table 1: COMPARISON WITH CHAPTER 18.16 (CS DISTRICT) Regulation Required Existing Proposed Minimum/Maximum Site Area (1) None 29,962 sf (0.69 acres) 29,962 sf (0.69 acres) divided into two parcels on different horizontal planes Minimum/Maximum Site Width (1) None 149.81 feet 149.81 feet Minimum/Maximum Site Depth(1) None 200 feet 200 feet Maximum Residential Density (2) 30 units per acre 0 8 Front Yard Setback (El Camino Real) 0’-10’ to create an effective 8’-12’ effective sidewalk width N/A 4.5’ setback to provide 12’ wide effective sidewalk Rear Yard Setback None N/A 10 feet Interior Side Yard Setback None N/A 0 feet Street Side Yard Setback (Portage Avenue) 5 feet N/A 5 feet Build-to-Lines 50% of frontage built to setback on El Camino Real N/A 47%; complies with requirement via approved DEE(3) 33% of side street built to setback on Portage Avenue 56% of side street built to setback 1. Mixed-Use developments in the CS zoning district do not have specified site area, depth, or width requirements; see PAMC Section 18.16.060 – Table 4 2. Residential density determination is based upon the total site area, irrespective of the percent of the site devoted to commercial use; see PAMC Section 18.16.060 – Table 4(3) 3. Design Enhancement Exception granted with the approved development application (15PLN-00003) to allow a 3% (4.9 feet) build-to-line reduction to 47%. Table 2: CS ZONING DISTRICT PARKING REQUIREMENTS Use (gross square feet) Number of Vehicle Spaces Retail (9,035 sf) 1 space/200 sf = 45.2 Office (2,949 sf) 1 space/250 sf = 11.8 Residential (eight 2+ bedroom units) 2 spaces/unit = 16 Residential Guest Parking 1 + 10% of units = 1.8 Total Required 75 spaces Approved 1% Parking Reduction(4) (1) Total Proposed Parking Spaces 74 spaces 4. Director’s Parking Reduction granted with the approved development application (15PLN-00003) to allow a 1% (or 1 vehicle space) reduction from the required 75 spaces. Attachment E Initial Study –Mitigated Negative Declaration Hardcopies of project plans are provided to Board members. These plans are available to the public online and/or by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review Project plans online: 1.Go to: www.cityofpaloalto.org/gov/depts/pln 2.On the left hand side click “Development Proposals” 3.In the drop down window click “Pending Projects” 4.Scroll to find “3225 El Camino Real” and click the address link 5.On this project specific webpage you will find a link to the Initial Study – Mitigated Negative Declaration and other important information Direct Link to Project Webpage: https://www.cityofpaloalto.org/news/displaynews.asp?NewsID=4207 Attachment F Project Plans Hardcopies of project plans are provided to Board members. These plans are available to the public online and/or by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review Project plans online: 1.Go to: www.cityofpaloalto.org/gov/depts/pln 2.On the left hand side click “Development Proposals” 3.In the drop down window click “Pending Projects” 4.Scroll to find “3225 El Camino Real” and click the address link 5.On this project specific webpage you will find a link to the Project Plans and other important information Direct Link to Project Webpage: https://www.cityofpaloalto.org/news/displaynews.asp?NewsID=4207 Attachment G COMBINED CONDOMINIUM DECLARATION AND COVENANTS, CONDITIONS AND RESTRICTIONS Hardcopies of project plans are provided to Board members. These plans are available to the public online and/or by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review Project plans online: 1.Go to: www.cityofpaloalto.org/gov/depts/pln 2.On the left hand side click “Development Proposals” 3.In the drop down window click “Pending Projects” 4.Scroll to find “3225 El Camino Real” and click the address link 5.On this project specific webpage you will find a link to the Combined Condominium Declaration and Covenants, Conditions and Restrictions and other important information Direct Link to Project Webpage: https://www.cityofpaloalto.org/news/displaynews.asp?NewsID=4207 Planning & Transportation Commission Staff Report (ID # 9129) Report Type: Action Items Meeting Date: 4/25/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: ADU Ordinance Revisions Title: PUBLIC HEARING: Recommendation of an Ordinance to the City Council Amending Palo Alto Municipal Code Section 18.42.040 Pertaining to Accessory and Junior Dwelling Units. The Proposed Ordinance is Exempt from the California Environmental Quality Act (CEQA) Pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines Section 15061(b)(3). For More Information, Please Contact Clare Campbell at clare.campbell@cityofpaloalto.org. (Continued from March 28, 2018) From: Hillary Gitelman Recommendation Staff recommends that the Planning and Transportation Commission (PTC) take the following action(s): 1. Find the proposed draft ordinance exempt from the provision of CEQA pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines Section 15061(b)(3); and 2. Recommend to the City Council adoption of an Ordinance (Attachment A) with the amendments listed below that modify Palo Alto Municipal Code Section 18.42.040, Accessory and Junior Accessory Dwelling Units: a. For detached ADUs, basements shall not be permitted in the required rear yard setback; b. For detached ADUs, no projections shall be allowed to encroach into a required setback (maintain six feet clear from rear property line); and c. For the bonus lot coverage and floor area provisions, modify the language to include residences that received a building permit prior to January 1, 2017. City of Palo Alto Planning & Community Environment Department Page 2 Background This is a continued discussion from the March 28, 2018 PTC meeting where proposed revisions to the existing Accessory Dwelling Units (ADU) and Junior Accessory Dwelling Units (JADU) regulations were presented for review and action. The PTC reviewed the nine staff recommended modifications listed below and expressed general support for all items, with the provision of three clarifying amendments (noted below). 1. Clarify that ADUs may be established in all zoning districts that permit single-family use. 2. Clarify that the setbacks for detached ADUs apply to the basement level. a. PTC Amendment: Basements shall not be allowed in the required rear yard setback. b. PTC Amendment: No projections shall be allowed to encroach into the required setbacks (maintain six (6) feet clear to rear property line). 3. Clarify the bonus lot coverage and floor area to apply to existing homes constructed as of January 1, 2017. a. PTC Amendment: Allow homes that received building permit approval (but not constructed) prior to January 1, 2017 to be eligible for the lot coverage and floor area bonus. 4. Clarify that detached ADUs are not subject to the maximum 50% rear yard coverage. 5. Reduce the height limit for detached ADUs located within identified Eichler tracts. 6. Clarify that the replacement parking provisions also apply to JADUs. 7. Allow replacement parking to be located within driveways located in a street-side setback. 8. Allow existing driveways to be expanded to accommodate replacement parking. 9. Clarify when accessory structures may be rebuilt to comply with technical building codes when converting to a new ADU. The March 28, 2018 PTC staff report is included as Attachment B and provides additional details and discussion of the above items. The draft meeting minutes are available online: https://www.cityofpaloalto.org/civicax/filebank/documents/64591. Discussion Continued Discussion Items There are two remaining discussion topics that were deferred to this meeting that would complete the review of the staff identified items. These are the Council directed discussions on how to make ADUs available to low and moderate income households, and options to address illegally established ADUs. Please see the attached staff report for details. Other Discussion Items Identified by the PTC City of Palo Alto Planning & Community Environment Department Page 3 At the March 28, 2018 PTC meeting, several commissioners had additional comments and suggestions for amendments to the ADU regulations. It was agreed that once the review of the staff identified amendments were fully discussed, the PTC would take up a discussion on the other items identified by the PTC. For purposes of this discussion, Commissioner Alcheck provided his written comments that are included as Attachment C. Public Notification, Outreach & Comments This is a continued item to a date certain and does not require additional noticing by publication. This item is included on the PTC agenda that was made available to the public and posted on the City’s website on April 19, 2018, for the PTC’s April 25th regular meeting. Next Steps The City Council is expected to consider the updated ADU ordinance in June and provide direction as to next steps on the two policy discussion items and any additional PTC recommendations. Alternative Actions In addition to the recommended action, the Planning and Transportation Commission may: 1. Recommend adoption of the draft ordinance to the City Council with modifications. 2. Recommend denial of the draft ordinance. Report Author & Contact Information PTC1 Liaison & Contact Information Clare Campbell, AICP, Senior Planner Jonathan Lait, AICP, Assistant Director (650) 617-3191 (650) 329-2679 clare.campbell@cityofpaloalto.org jonathan.lait@cityofpaloalto.org Attachments:  Attachment A: Ordinance Amending Requirements of ADU and JADU (PDF)  Attachment B: PTC Staff Report w/o Attachments, March 28, 2018 (PDF)  Attachment C: Commissioner Alcheck's Proposed ADU Ordinance Revisions (PDF) 1 Emails may be sent directly to the PTC using the following address: planning.commission@cityofpaloalto.org 1 March 2018 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Title 18 (Zoning) of the Palo Alto Municipal Code to Amend Requirements Relating to Accessory Dwelling Units and Junior Accessory Dwelling Units The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Section 18.42.040 (Accessory and Junior Accessory Dwelling Units) of Chapter 18.42 (Standards for Special Uses) of Title 18 (Zoning) of the Palo Alto Municipal Code (“PAMC”) is amended to read as follows: 18.42.040 Accessory and Junior Accessory Dwelling Units The following regulations apply to zoning districts where accessory dwelling units and junior accessory dwelling units are permitted. (a) Accessory Dwelling Units (1) Purpose The intent of this section is to provide regulations to accommodate accessory dwelling units, in order to provide for variety to the city's housing stock and additional affordable housing opportunities. Accessory Dwelling Units shall be separate, self- contained living units, with separate entrances from the main residence, whether attached or detached. The standards below are provided to minimize the impacts of accessory dwelling units on nearby residents and throughout the city, and to assure that the size and location of such dwellings is compatible with the existing or proposed residence on the site and with other structures in the area. (2) Applicable Zoning Districts The establishment of an accessory dwelling unit is permitted in the following zoning districts when single family residential is a permitted land use: Single-Family (R-1), including subdistricts; Two Family Residential (R-2); Residential Estate (RE); Two Unit Multiple Family Residential (RMD); Open Space (OS); Multiple Family Residential (RM); and Planned Community (PC). (2)(3) Minimum Lot Sizes A. In the R-1 district and all R-1 subdistricts, RE district, R-2 district, and RMD district, and properties zoned Planned Community (PC) where single-family residential is an allowed use, the minimum lot size for the development establishment of an accessory dwelling unit is 5,000 square feet. B. In the OS District, the minimum lot size for the development establishment of an accessory dwelling unit is 10 acres. (34) Setbacks and Daylight Plane 2 March 2018 A. Except as otherwise provided in this section, accessory dwelling units shall comply with the underlying zoning district’s setbacks, including daylight plane requirements. B. Notwithstanding subsection (iA) above, no setback shall be required for an existing garage that is converted to an accessory dwelling unit, except as provided in subsection (a)(56) below. C. In districts permitting second story accessory dwelling units, a setback of five feet from the side and rear lot lines shall be required for an accessory dwelling unit constructed above a garage. (45) Lot Coverage/Floor Area Ratio A. An accessory dwelling unit shall be included in the lot coverage and floor area ratio FAR requirements applicable to the parcel. B. Exceptions: i. Lot Coverage. When the development establishment of an accessory dwelling unit on a parcel with an existing single family residence, which was legally permitted and existing as of January 1, 2017, would result in the parcel exceeding the lot coverage requirement, the accessory dwelling unit shall not be included in the calculation of lot coverage applicable to the property, so long as the parcel meets the underlying zoning district’s minimum lot size requirement or is substandard by no more than ten percent (10%) of the underlying zoning district’s minimum lot size requirement. ii. Basements FAR. In the R-1 district and all R-1 subdistricts, basement space used as an accessory dwelling unit, or portion thereof, shall not be included in the calculation of floor area for the entire site, providing the measurement from first finished floor to grade around the perimeter of the building is no more than three (3) feet. iii. Additional Floor AreaR. When the development of a new one-story accessory dwelling unit on a parcel with an existing single family residence, which was legally permitted and existing as of January 1, 2017, would result in the parcel exceeding the maximum floor area ratio, an additional 175 square feet of floor area above the maximum amount of floor area otherwise permitted by the underlying zoning district shall be allowed. This additional floor area shall be permitted only to accommodate the development of the accessory dwelling unit and shall not be applied to the primary residence. (56) Conversion of Space in Existing Single Family Residence or Existing Accessory Structure Notwithstanding the provisions of subsections (a)(23), (a)(34), (a)(45), (a)(78) and 3 March 2018 (a)(89), in the R-1 district and all R-1 subdistricts, the RE, R2, RMD and OS districts, and properties zoned RM or Planned Community (PC) where single-family residential is an allowed use, an aAccessory dDwelling uUnit shall be permitted if the unit is contained within the existing space of a single-family residence or an existing accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety, and if the accessory dwelling unit conforms with the following: i. For the purposes of this subsection (6), the portion of the single-family residence or accessory structure subject to the conversion shall be legally permitted and existing as of January 1, 2017. ii. Notwithstanding the allowance in this section, only one accessory dwelling unit or junior accessory dwelling unit may be located on any lot subject to this sectionConversion of an accessory structure to an accessory dwelling unit may require rebuilding or substantial renovation to comply with the California Code of Regulations Title 24, as adopted by the City of Palo Alto. In such instances, and where the existing accessory structure does not comply with applicable accessory dwelling unit development standards in the zoning district, the structure may be renovated or rebuilt, provided that: A. If the existing structure does not comply with the applicable development standards for accessory dwelling units in the zoning district, the renovated or rebuilt structure shall not increase the degree of non-compliance, such as increased height or size, or further intrusion into required setbacks; B. The renovated or rebuilt structure provides a minimum three foot setback from any interior side and rear lot lines, and 16 foot setback from any street side property line, if applicable; and C. The renovated or rebuilt structure shall comply with subsection (a)(7), below, pertaining to privacy requirements. D. Nothing in this subsection (a)(6)(ii) shall restrict or prevent a renovated or rebuilt structure from being designed to achieve or improve compliance with the development standards applicable to an accessory dwelling unit in the zoning district. iii. No new or separate utility connection shall be required between the accessory dwelling unit and utility service, such as water, sewer, and power. iv. The accessory dwelling unit shall comply with the provisions of subsections (a)(67), (a)(910), and (a)(1011). v. New floor area may be added to a space converted in accordance with this subsection (a)(6) and shall comply with the all regulations set forth in subsection (a), including but not limited to setbacks, maximum accessory dwelling unit size, and height. 4 March 2018 (67) Privacy Any window, door or deck of a second story accessory dwelling unit shall utilize techniques to lessen views onto adjacent properties to preserve the privacy of residents. These techniques may include placement of doors, windows and decks to minimize overview of neighboring dwelling units, use of obscured glazing, window placement above eye level, and screening between the properties. (78) Additional Development Standards for Attached Accessory Dwelling Units A. Attached accessory dwelling units are those attached to the main primary dwelling. All attached accessory dwelling units shall be subject to the additional development requirements specified below. B. Attached unit size counts toward the calculation of maximum house size. C. Unit Size: The maximum size of an attached accessory dwelling unit living area, inclusive of a habitable basement, shall not exceed 600 square feet and shall not exceed 50% of the proposed or existing living area of the primary existing dwelling unit. The accessory dwelling unit and any covered parking provided for the accessory dwelling unit shall be included in the total floor area for the site, but the covered parking area is not included in the maximum 600 square feet for attached unit. Any basement space used as an accessory dwelling unit or portion thereof shall be counted as floor area for the purpose of calculating the maximum size of the accessory unit. D. Maximum height (including property in a special flood hazard zone): One story and 17 feet, or no taller than the primary residence at the area of attachment if located in an Eichler Tract identified in the adopted Palo Alto Eichler Neighborhood Design Guidelines. However, in the RE District attached aAccessory dDwelling uUnits may be two stories and 30 feet. In the OS zoneDistrict, attached Aaccessory Ddwelling Uunits may be two stories and 25 feet. E. Separate Entry Required for Attached Units: A separate exterior entry shall be provided to serve an accessory dwelling unit. F. Except on corner lots, the accessory dwelling unit shall not have an entranceway facing the same lot line (property line) as the entranceway to the main dwelling unit unless the second entranceway is located in the rear half of the lot. Exterior staircases to second floor units shall be located toward the interior side or rear yard of the property. G. If covered parking for an accessory dwelling unit is provided in the RE zone, the maximum size of the covered parking area for the accessory dwelling unit is 200 square feet. (89) Additional Development Standards for Detached Accessory Dwelling Units 5 March 2018 A. Detached accessory dwelling units are those detached from the main primary dwelling. All detached accessory dwelling units shall be subject to the additional development standards specified below. B. The maximum size of the detached accessory dwelling unit living area, inclusive of a habitable basement, shall be 900 square feet. i. The accessory dwelling unit and any covered parking shall be included in the total floor area for the site, but the covered parking area is not included within the maximum 900 square feet for detached unit. ii. Any basement space used as an accessory dwelling unit or portion thereof shall be counted as floor area for the purpose of calculating the maximum size of the accessory unit. C. Maximum height (including property in a special flood hazard zone): one story and 17 feet, or one story and 12 feet, if located in an Eichler Tract identified in the adopted Palo Alto Eichler Neighborhood Design Guidelines. D. Setbacks: nNotwithstanding subsection (a)(34)(iA), a detached accessory dwelling unit may be located in a rear yard, but must maintain a minimum setback of six feet (6’) from the interior side and rear property lines and sixteen feet (16’) from a street side yard. No portion of a building may encroach into a daylight plane beginning at a height of eight feet (8’) at the property line and increasing at a slope of one foot (1’) for every one foot (1’) of distance from the property line. These requirements shall also apply to a basement level, as applicable. E. If covered parking is provided for an accessory dwelling unit in the RE District, the maximum size of covered parking area for the detached accessory dwelling unit is 200 square feet. F. There shall be no windows, doors, mechanical equipment, or venting or exhaust systems located within six feet of a property line. G. A detached accessory dwelling unit shall not be subject to the requirement that no more than 50% of the required rear yard be covered by structures in the R-1, R-2, RE and RMD zoning districts. (910) Additional Requirements for All Accessory Dwelling Units A. Sale of Units: The Aaccessory dwelling unit shall not be sold separately from the primary residence. B. Short term rentals. The accessory dwelling unit shall not be rented for periods of less than 30 days. C. Number of Units Allowed: Only one accessory dwelling unit or junior accessory dwelling unit may be located on any residentially zoned lot. 6 March 2018 D. Existing Development: A single-family dwelling shall exist on the lot or shall be constructed on the lot in conjunction with the construction of the accessory dwelling unit. E. Occupancy: The owner of a parcel proposed for accessory dwelling use shall occupy as a principal primary residence either the primary dwelling or the accessory dwelling, unless both the primary dwelling and the accessory dwelling are rented to the same tenant and such tenant is prohibited from sub- leasing the primary dwelling or the accessory dwelling. F. Prior to issuance of a building permit for the accessory dwelling unit, the owner shall record a deed restriction in a form approved by the city that: includes a prohibition on the sale of the accessory dwelling unit separate from the sale of the single-family residence; requires owner-occupancy consistent with subsection (a)(910)(vE) above; does not permit short-term rentals; and restricts the size and attributes of the accessory dwelling unit to those that conform with this Ssection 18.42.040. G. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. H. Street Address Required: Street addresses shall be assigned to all accessory dwellings to assist in emergency response. I. Street Access: When parking is provided, the accessory dwelling unit shall have street access from a driveway in common with the main residence in order to prevent new curb cuts, excessive paving, and elimination of street trees, unless separate driveway access is permitted by the director upon a determination that separate access will result in fewer environmental impacts such as excessive paving, unnecessary grading or unnecessary tree removal, and that such separate access will not create the appearance, from the street, of a lot division or two-family use. J. For properties listed in the Palo Alto Historic Inventory, the California Register of Historical Resources, the National Register of Historic Places, or considered a historic resource after completion of a historic resource evaluation, compliance with the appropriate Secretary of Interior’s Standards for the Treatment of Historic Properties shall be required, as determined by the Planning Director. K. No protected tree shall be removed for the purpose of establishing an accessory dwelling unit unless the tree is dead, dangerous or constitutes a nuisance under Section 8.04.050. Any protected tree removed pursuant to this subsection shall be replaced in accordance with the standards it in the Tree Technical Manual. L. Except as modified by this Section 18.42.040, the accessory dwelling unit shall conform to all requirements of the underlying zoning district, any applicable combining district, and all other applicable provisions of this Title 18. 7 March 2018 (1011) Parking A. No additional parking shall be required for accessory dwelling units. B. If an accessory dwelling unit replaces existing required covered parking, replacement spaces shall be provided. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, any required replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit. To comply with this requirement, uncovered or tandem spaces may be provided on existing driveways within the required front and street side yards; and covered parking and mechanical automobile parking lifts may be located in required side and rear yard setbacks in compliance with Section 18.40.050. , including, but not limited to, within the front setback if on an existing driveway, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. All new parking spaces and structures shall comply with development standards of the underlying zoning and the applicable parking design standards in Chapter 18.54, except as provided below:. i. The Director shall have the authority to modify required replacement parking spaces by one foot in width and length upon finding that the reduction is not detrimental to public health, safety or the general welfare. ii Existing front and street side yard driveways may be enlarged to the minimum extent necessary to comply with the replacement parking requirement above. Existing curb cuts shall not be altered except when necessary to promote public health, safety or the general welfare. (b) Junior Accessory Dwelling Units (1) Purposes: This Section provides standards for the establishment of junior accessory dwelling units, an alternative to the standard accessory dwelling unit. Junior accessory dwelling units will typically be smaller than an accessory dwelling unit, will be constructed within the walls of an existing single family structure and requires owner occupancy in the single family residence where the unit is located. (2) Development Standards. Junior accessory dwelling units shall comply with the following standards: A. Number of Units Allowed: Either one accessory dwelling unit or one junior accessory dwelling unit, may be located on any residentially zoned lot that permits a single-family dwelling except as otherwise regulated or restricted by an adopted Coordinated Area Plan or Specific Plan. A junior accessory dwelling 8 March 2018 unit shall only be located on a lot which already contains one legal single- family dwelling. B. Size: A junior accessory dwelling unit shall not exceed 500 square feet in size. C. Lot Coverage/Floor Area Ratio: i. A junior accessory dwelling unit shall be included in the calculation of lot coverage and FAR floor area ratio applicable to the property. ii. A primary residence lot with a junior accessory dwelling unit shall be permitted to develop an additional 50 square feet of floor area above the maximum amount of floor area otherwise permitted by the underlying zoning district. This additional area shall be permitted to accommodate the junior accessory dwelling unit. D. Owner Occupancy: The owner of a parcel proposed for a junior accessory dwelling unit shall occupy as a principal primary residence either the primary dwelling or the junior accessory dwelling. Owner-occupancy is not required if the owner is a governmental agency, land trust, or housing organization. E. Sale Prohibited: A junior accessory dwelling unit shall not be sold independently of the primary dwelling on the parcel. F. Short term rentals: The junior accessory dwelling unit shall not be rented for periods of less than 30 days. G. Location of Junior Accessory Dwelling Unit: A junior accessory dwelling unit shall be created within the existing walls of an existing primary dwelling, and shall include, at a minimum, the conversion of an existing bedroom. H. Separate Entry Required: A separate exterior entry shall be provided to serve a junior accessory dwelling unit, with an interior entry to the main living area. A junior accessory dwelling may include a second interior doorway for sound attenuation. I. Kitchen Requirements: The junior accessory dwelling unit shall include an efficiency kitchen, requiring and limited to the following components: i. A sink with a maximum waste line diameter of one-and-a-half (1.5) inches, ii. A cooking facility or appliance which does not require electrical service greater than one hundred and twenty (120) volts, or natural or propane gas, and iii. A food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit. 9 March 2018 J. Parking. No additional parking is required beyond that required at the time the existing primary dwelling was constructed. Any required parking displaced with the establishment of a junior accessory dwelling unit shall be restored in compliance with Section 18.42.040(a)(11)(B). K. Fire Protection; Utility Service. For the purposes of any fire or life protection ordinance or regulation or for the purposes of providing service for water, sewer, or power, a junior accessory dwelling unit shall not be considered a separate or new unit. L. Deed Restriction. Prior to the issuance of a building permit for a junior accessory dwelling unit, the owner shall record a deed restriction in a form approved by the city that includes a prohibition on the sale of the junior accessory dwelling unit separate from the sale of the single-family residence, requires owner-occupancy consistent with subsection (b)(2)(ivD) above, does not permit short-term rentals, and restricts the size and attributes of the junior dwelling unit to those that conform with this section. SECTION 2. Any provision of the Palo Alto Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 4. The Council finds that the adoption of this Ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines sections 15061(b), 15301, 15302 and 15305 because constitute minor adjustments to the City’s zoning ordinance to implement State law requirements related to accessory dwelling units as established in Government Code Section 65852.2, and these changes are also likely to result in few additional dwelling units dispersed throughout the City. As such, it can be seen with certainty that the proposed action will not have the potential for causing a significant effect on the environment. SECTION 5. This ordinance shall be effective on the thirty-first date after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: 10 March 2018 NOT PARTICIPATING: ATTEST: __________________________________ __________________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________________ __________________________________ Assistant City Attorney City Manager __________________________________ Director of Planning & Community Environment Planning & Transportation Commission Staff Report (ID # 9059) Report Type: Action Items Meeting Date: 3/28/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: ADU Ordinance Revisions Title: PUBLIC HEARING: Recommendation of an Ordinance to the City Council Amending Palo Alto Municipal Code Section 18.42.040 Pertaining to Accessory and Junior Dwelling Units. The Proposed Ordinance is Exempt from the California Environmental Quality Act (CEQA) Pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines Section 15061(b)(3). For More Information, Please Contact Clare Campbell at clare.campbell@cityofpaloalto.org. From: Hillary Gitelman Recommendation Staff recommends that the Planning and Transportation Commission (PTC) take the following action(s): 1. Find the proposed draft ordinance exempt from the provision of CEQA pursuant to Public Resources Code Section 21080.17 and CEQA Guidelines Section 15061(b)(3); and 2. Recommend to the City Council adoption of an Ordinance (Attachment A) amending Palo Alto Municipal Code Section 18.42.040, Accessory and Junior Accessory Dwelling Units. Report Summary On May 8, 2017, City Council adopted Ordinance No. 5412 amending Title 18 (Zoning) of the Palo Alto Municipal Code to implement the new State requirements related to Accessory Dwelling Units (ADU) and Junior Accessory Dwelling Units (JADU). These new regulations have eased the development requirements for ADUs for property owners and support the creation of additional, more affordable, housing units. With the implementation of the new regulations, the City has seen a significant increase in the number of ADU permits filed. In 2017, 31 ADU applications were submitted for review, whereas in previous years, the City had an average of 4 ADUs reviewed each year. City of Palo Alto Planning & Community Environment Department Page 2 Although the local regulations have only been in effect for nine months, staff has encountered some challenges implementing the current code and has prepared proposed revisions to try to address these concerns. This report also discusses Council direction to make ADUs available to low and moderate income households and options to address illegally established ADUs. The following is a list of the proposed ADU code revisions: 1. Clarify that ADUs may be established in all zoning districts that permit single-family use 2. Clarify that the setbacks for detached ADUs apply to the basement level 3. Clarify the bonus lot coverage and floor area to apply to existing homes constructed as of January 1, 2017 4. Clarify that detached ADUs are not subject to the maximum 50% rear yard coverage 5. Reduce the height limit for detached ADUs located within identified Eichler tracts 6. Clarify that the replacement parking provisions also apply to JADUs 7. Allow replacement parking to be located within driveways located in a street-side setback 8. Allow existing driveways to be expanded to accommodate replacement parking 9. Clarify when accessory structures may be rebuilt to comply with technical building codes when converting to a new ADU Additionally, there are a few other minor clarifications to correct references and improve readability. Background In October 2015, the City Council approved a Colleagues Memo that directed the PTC to review the Palo Alto Municipal Code (PAMC) related to ADUs and recommend strategies to increase production of these units. Following this, the PTC conducted two Study Sessions in January and July 2016 (reports #6462 & #6944), just prior to the State of California adopting ADU and JADU1 legislation in September 2016. In response to the new state ADU regulations, the City prepared a draft ordinance to incorporate the mandatory state requirements and some optional provisions with the existing local regulations. The PTC reviewed the ordinance on November 30, 2016 (report #7368) and made recommendations. In March 2017, the City Council held its first public hearing on ADUs (report #7517) and discussed in-depth the ordinance, making substantial revisions. On April 17, 2017, the Council adopted the ADU ordinance with further refinements (reports #7921 & #8048), which became effective on June 8, 2017. The City Council also directed staff to provide a quarterly report on ADU permits and to conduct a Study Session with the PTC to analyze the results of the ordinance, which was done on December 13, 2017 (meeting minutes) and January 10, 2018 (report #8773 & meeting minutes). 1 The establishment of Junior Accessory Dwelling Units (JADU) as a permitted use was not required by state law and was left to the discretion of the local jurisdiction. With the local adoption of the ADU regulations in April 2017, the City Council allowed for these JADU units in Palo Alto. City of Palo Alto Planning & Community Environment Department Page 3 Prior to the implementation of the City’s ADU ordinance, the State regulations that became effective on January 1, 2017 governed all ADU permit applications submitted for review in the City. Once the City’s ordinance became effective on June 8, 2017, all ADU permit applications not already approved were subject to the new local regulations. In total, the City has reviewed 38 ADU applications since the State and local regulations were implemented. In 2017, the City received 31 permits to establish ADUs, which is far beyond the average of four units per year that the City has historically been getting. We can see that the new ADU regulations have been very successful in encouraging development of this housing type. As part of the ADU code update process, staff has set up a project webpage (http://cityofpaloalto.org/gov/depts/pln/advance/accessory_dwelling_units_regulations_updat e.asp ) to provide current information to the public. Updated State Regulations Effective January 2018 In 2017, the City adopted comprehensive regulations related to ADUs to conform to state law that became effective on January 1, 2017. Subsequently, the state Legislature passed two additional bills AB 494 and SB 229, signed by the Governor in September 2017, clarifying the previously adopted ADU legislation. On February 26, 2018, the City Council adopted Ordinance #5430 that included modifications to remain consistent with state law and minor clarifications. The changes are summarized below: State law was revised to clarify that an ADU may be constructed on sites with either an existing or proposed single-family dwelling. With respect to ADUs established through conversions of space within an existing single- family home or an existing accessory structure, the state legislation required that such conversions be allowed in any zoning district where single-family residential is an allowed use. The changes above were previously reviewed by the PTC and adopted by the City Council by Ordinance #5430. The draft ordinance included with this report reflects those changes. Staff is aware that other ADU-related amendments are being considered by the State legislature in another pending bill SB-831 (https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB831). Staff will address those changes if they are approved. Discussion Staff has reviewed over 30 applications and has had many more conversations with property owners regarding ADUs and it is from this experience that staff is recommended the attached ordinance. It should be noted that the local ADU regulations have been in place for a short City of Palo Alto Planning & Community Environment Department Page 4 time, and as more time passes and more projects are reviewed, staff will be able to provide additional feedback and analysis of the ADU provisions, but it is clear that recent changes have increased the interest and production of ADUs locally. Proposed Amendments Many of the proposed code clarifications identified below were considered by the PTC in two recent Study Sessions in January 2018 and December 2017. There are some discussion items from the Study Sessions that have not been included in the draft ordinance, including:  refining the definition of ADUs;  removing the owner-occupancy requirements;  adding an opt-out provision; and,  prohibiting the siting of ADUs in front of the home. These items have been removed from consideration because staff does not believe, based on public and commissioner comments, that there is not a compelling need for a change. Since the PTC reviewed conceptual changes to the ADU regulations, the make-up of the commission has changed and many of the comments received offered different perspectives on how to address the identified issues. There was a suggestion for an ad hoc committee to participate in the drafting of a new ordinance, but one was not ultimately formed. Based on the foregoing, staff sought to advance language that would help address some administrative challenges and improve the effectiveness of the ordinance. Prior PTC comments are available and previously linked in this report. The section below summarizes the issue and how it is addressed in the ordinance. 1. Clarify that ADUs May be Established in All Zone Districts that Permit Single-family Use The current regulations are not as clear as they can be with regards to identifying which zoning districts allow for development of ADUs and JADUs. The code generally refers to allowing these units in zones that permit single-family uses for attached and detached ADUs and for JADUs. To eliminate ambiguity, staff proposes adding language that identifies all the applicable zones that allow single-family development, and therefore, allows for ADUs and JADUs when a single- family use is established. 2. Clarify Setbacks Requirements for Detached ADUs Basements Detached ADUs may be permitted in required rear and interior side yards. ADUs may also have basements. It has been unclear, however, based on other basement zoning restrictions in the code, whether or to what extent a detached ADU basement may encroach into a required yard. The proposed amendment clarifies that a basement may be located under the building footprint of the detached ADU structure and must maintain the minimum setbacks that apply to the detached ADU (i.e., maintain six feet clear from all interior and side property lines). City of Palo Alto Planning & Community Environment Department Page 5 3. Clarify Bonus Lot Coverage and Floor Area Provisions Apply to Existing Homes Constructed prior to January 1, 2017. The general intent of providing bonus lot coverage and floor area is to give some development flexibility for existing developed sites that may be at or near the related maximums allowed. With these bonus provisions, the additional lot coverage needed for an attached or detached ADU would be 100% exempt for many properties, and up to an additional 175 sq. ft. of floor area would be allowed. Below is the existing language from the code: 18.42.040(a)(4) Lot Coverage/FAR A. An accessory dwelling unit shall be included in the lot coverage and FAR requirements applicable to the parcel. B. Exceptions: i. Lot Coverage. When the development of an accessory dwelling unit on a parcel with an existing single family residence would result in the parcel exceeding the lot coverage requirement, the accessory dwelling unit shall not be included in the calculation of lot coverage applicable to the property, so long as the parcel meets the underlying zoning district's minimum lot size requirement or is substandard by no more than ten percent (10%) of the underlying zoning district's minimum lot size requirement. ii. Basement FAR. In the R-1 district and all R-1 subdistricts, basement space used as an accessory dwelling unit, or portion thereof, shall not be included in the calculation of floor area for the entire site, providing the measurement from first finished floor to grade around the perimeter of the building is no more than three (3) feet. iii. FAR. When the development of a new one-story accessory dwelling unit on a parcel with an existing single family residence would result in the parcel exceeding the maximum floor area, an additional 175 square feet of floor area above the maximum amount of floor area otherwise permitted by the underlying zoning district shall be allowed. This additional area shall be permitted only to accommodate the development of the accessory dwelling unit. The code specifically states that these bonuses are given when development of an ADU is on a site “with an existing single-family residence.” Staff believes this takes into consideration that existing developed lots that previously were unable to establish an ADU, but now can, may have insufficient area to accommodate the accessory unit. The bonus allows flexibility for existing conditions to promote this housing alternative. New construction has a variety of options to plan for and design an ADU on the lot and is not as constrained by existing improvements, floor plans, or other accessory structures that may be located on a lot. The scenario that staff has encountered is that property owners who are building completely new homes also want to take advantage of these bonuses. Many new homes maximize permitted floor area and the interest for additional floor area sets forth a two-step process whereby someone can build a new home and receive final approve, thus becoming an ‘existing home’, and then file plans for an ADU and an additional 175 square feet. Clearly this is a policy discussion that requires balancing the need for housing while preserving neighborhood City of Palo Alto Planning & Community Environment Department Page 6 character. By establishing a clear date by which existing homes can take advantage of these bonus is one approach toward clarifying what is understood to be the Council’s intent when drafting the language and eliminates a time consuming and bureaucratic two-step process to achieve additional floor area. PTC Study Session Comments: Three commissioners were in favor of applying the bonuses to existing and proposed homes and two commissioners were in favor of only allowing it for existing homes (where ‘existing’ would need to be defined). There was also a suggestion to eliminate the bonus altogether (01/10/2018). 4. Clarify that Detached ADUs are Not Considered Accessory Structures Subject to the Maximum 50% Rear Yard Coverage The R-1, R-2, RE, and RMD development standards require that no more than 50% of a required rear yard be covered by accessory structures [e.g. PAMC 18.12.080(b)(6)]. There has been some debate as to whether ADUs are subject to this provision, which if it were, could be problematic for some property owners. Existing (and retained) garages along with other accessory structures located on a parcel could restrict a new detached ADU from being established on some properties. Since ADUs are not accessory structures, but rather accessory dwelling units, staff has not applied this 50% cover restriction. The proposed code amendment reinforces this perspective and makes clear the standard does not apply for ADUs. 5. Reduce the Height Limit for Detached ADUs Located Within Identified Eichler Tracts On January 18, 2018, at a community meeting regarding the draft Eichler Guidelines, staff received input regarding reducing the height of ADUs in Eichler tracts. The current ADU height limit for a detached unit is 17 feet and one story. The eaves of a one-story Eichler home are low due to the slab-on-grade construction that was used; typical one-story Eichler homes are nine to 11 or 12 feet tall. Limited follow up discussion took place with the Historic Resources Board (HRB) in meetings on January 25 and February 22, 2018, which resulted in a recommendation that ADUs should not exceed the height of the primary home on the lot. There are 31 identified single family Eichler Tracts that contain approximately 2,700 properties. The proposed ordinance includes new height restrictions of 12 feet for detached ADUs and that attached ADUs be no taller than the primary residence at the area of attachment. The intent of the lower height limit is to reflect the size and type of construction typical of these properties, respect neighborhood character and preserve the sense of openness and privacy enjoyed by residents in these tracts. 6. Clarify that the Replacement Parking Provisions Also Apply to JADU Development A JADU is only permitted within the existing building envelope of the primary dwelling unit, and must, at a minimum, utilize one existing bedroom. It could be possible that a JADU incorporates a portion of a garage for the new living unit. In this circumstance, the current provisions are not clear about the requirements for replacement parking for the primary residence if all or a City of Palo Alto Planning & Community Environment Department Page 7 portion of the garage was utilized for the JADU. To address this, staff recommends that the replacement parking provisions for ADUs also be applied to JADUs. Specifically, this approach requires any required covered parking be re-established on site, but, consistent with State law, gives the owner flexibility as to how to provide that required parking space in terms of location and whether it is covered or uncovered. Similar to the city’s local provision for ADUs, JADUs by State law do not require any parking. 7. Allow Replacement Parking to be Located Within Driveways Located in a Street-side Setback State law specifies that required replacement parking (i.e. for the primary home) may be “located in any configuration” on the subject property. The existing regulations allow replacement parking to be located in the front yard setback on an existing driveway as an uncovered space. In the case of corner lots, the code is silent on allowing parking in the street side setback. Many corner lots have just the one driveway located on the street side and allowing replacement parking in this location on a driveway would be a reasonable accommodation for these types of lots. Staff suggests that replacement uncovered parking be allowed in the street side setback similar to what has been permitted for the front yard setback. 8. Allow Existing Driveways to be Expanded to Accommodate Replacement Parking As mentioned above, the current provisions allow required replacement parking for the primary dwelling unit to be located within an existing driveway located within the front yard setback. In the review of ADU permits, the issue of allowing existing driveways to be expanded to accommodate replacement parking has been raised. In the R-1 district, the code allows driveways (and walkways) to be established providing the front yard remains 60% permeable. It is staff’s recommendation that existing driveways in the front yard, and not street side yards, be allowed to expand to accommodate replacement parking only, when done in association with the establishment of an ADU or JADU. 9. Clarify when accessory structures may be rebuilt to comply with technical building codes when converting to a new ADU Staff has encountered ADU proposals that included the conversion of existing non-habitable space (e.g. garage, accessory building, etc.) that had a legal non-complying element, such as a setback encroachment; and these types of conversions are permitted with the ADU regulations. The issue that has emerged is that during the permit review process, it comes to light that the legal non-complying structure is not structurally sound and cannot be converted to an ADU, as- is. To be building code compliant, the non-complying structure must be demolished and rebuilt. The general zoning rule is that once a legal non-complying structure is removed, all new construction must be code compliant (Section 18.70.100(b) Noncomplying facility – Replacement). City of Palo Alto Planning & Community Environment Department Page 8 The general intent of the ADU code was to allow the conversion of existing structures to create living units, including the conversion of legal non-complying structures. But, the circumstance of requiring existing non-complying structures to be rebuilt (retaining the non-compliance) to accommodate the new units was not fully considered. At the PTC Study Session, the options discussed initially were at the opposite ends of the spectrum, where at one end all new rebuilds, regardless of circumstance, should be fully zoning compliant, and at the opposite end, allow reconstruction of non-complying structures, or portions thereof, to be rebuilt retaining the non-complying condition. Where the need to rebuild existing accessory structures has been presented to staff, a decision was made to allow reconstruction. The proposed ordinance continues to advance this concept but also includes some specific parameters to ensure there is no enlargement to the degree of any non-conforming standard and requires a minimum three-foot setback from interior side and rear property lines. City Council Follow-up Discussion Items At the March 7, 2017 Council meeting regarding the ADU regulations, Council directed staff to return in 2018 with additional information regarding the two issues below. These issues were briefly discussed at the PTC Study Session. Options to Make ADUs Available to Moderate or Low Income Residents City Council directed staff to explore further the possible options to make ADUs accessible to moderate or low income residents, seniors, people with disabilities, or public employees. This type of program reflects the larger concern regarding the lack of affordable housing in Palo Alto and the greater Bay Area. Staff continues to seek PTC feedback for options on how best to implement such a policy. One consistent comment staff hears from interested parties is that the development impact fees to establish an ADU are too high, nearly $10,000 per unit. These fees have been a concern for many wanting to construct ADUs, but are assessed to support city services, parks, libraries and other programs that benefit the community, including residents of an ADU. For some property owners, it may be worthwhile to deed restrict their ADU as affordable housing for a period of time (for example 10 years) in exchange for reduced or waived impact fees. In such circumstances, a property owner may be less interested in generating rental income and more interested in providing independent living facilities for a relative with disabilities or aging parents. For others, reducing or waiving the impact fees would not likely be a sufficient motivator to deed restrict the ADU to a certain income level. The City of Pasadena recently implemented this kind of a program. Another possible approach would be to partner with an organization that can provide financing in exchange for affordability. As an example, Housing Trust Silicon Valley, a local non-profit organization based in San Jose, is currently developing a pilot program that would provide low- cost flexible loans to homeowners for the purpose of constructing an ADU in exchange for their agreement to rent the units at affordable costs to low- and middle-income earners. The City of Palo Alto Planning & Community Environment Department Page 9 Housing Trust’s funding “will be used to make capital loans to homeowners — who can easily spend $100,000 or $200,000 on ground-up construction of an ADU. But the Housing Trust also intends to create an educational outreach program — involving classes, workshops and technical assistance — to help homeowners navigate the ADU process.”2 The partnership option ideally would place responsibility of the program management on the agreeable non- profit organization. Given sufficient staff and financial support, the City could also offer technical and educational assistance. For example, the city could develop prototype designs for ADUs that can be readily utilized for the permit process and can be approved more expeditiously. Strategies for Legalizing Illegally Constructed ADUs As with the item above, on March 7, 2017 Council directed staff to return in 2018 with options and discussion of mechanisms to bring existing unpermitted ADUs into compliance, including when existing ADUs do not meet the new standards. There are a few cities in the bay area that have implemented protocols to legalize illegal ADUs. These cities include San Francisco, Santa Cruz, and Oakland. Generally, the units are required to be building code compliant for all health and safety concerns, and then special consideration was given to other non-complying development standards (e.g. setbacks, height, lot coverage, etc.). Staff has considered what could be an appropriate method to review and support the legalization of unpermitted ADUs. The City currently has a Home Improvement Exception (HIE) process that could be utilized for this legalization purpose. The City would require that the unit be compliant with all life safety standards as required by the building codes and then, on a case-by-case basis, review the existing zoning conditions to determine what is appropriate for the project. Other than the size limitation, the Director would have the discretion to waive development standards using the HIE review process to accommodate legalization of the unit, providing it is deemed safe for habitation. The overall objective would be to allow an ADU that is safe for habitation and would not be considered a nuisance. Such programs, however, can create other challenges and should be considered carefully. Illegal units that cannot meet building codes or are not approved through a city process would have to be removed and existing tenants would be displaced. It may be that illegally established ADUs may cost too much to be structurally upgraded resulting in further displacement. Then there is the question of how to implement a program. The Council would need to consider whether these units are addressed on a case by case basis when brought to the city’s attention, or if there is a brief amnesty period where owners of illegal units could seek permits to legalize these units. Again, not all units would likely be approved. And, the administrative time 2 The Mercury News “Bank funds ‘granny’ units project in affordable housing experiment for San Jose, L.A.” October 9, 2017: http://www.mercurynews.com/2017/10/09/an-affordable-housing-experiment-for-san-jose-and- los-angeles-bank-funds-pilot-project-to-help-build-granny-units/ City of Palo Alto Planning & Community Environment Department Page 10 establishing and following through on such a program would be significant. Presumably, building permit and HIE review fees would cover the cost of staff time, but this would take time away from processing other applications. Staff welcomes other feedback from the PTC to forward to the City Council on both of these policy issues above. Environmental Review The proposed code amendments have 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 proposed amendments have been determined to be exempt from further environmental review pursuant to CEQA Guidelines Section 15061(b)(3) (Review for Exemption) because the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment, and it can be seen with certainty that there is no possibility that the activity in question may have a significantly effect on the environment. The ordinance is also exempt under Public Resources Code Section 21080.17 that applies to local ordinances implementing State regulations related to accessory dwelling units. Public Notification, Outreach & Comments The Palo Alto Municipal Code requires notice of this public hearing be published in a local paper at least ten day in advance. Notice of a public hearing for this project was published in the Palo Alto Weekly on March 16, 2018. For the discussion in this report, staff did send out a notification email to an established group of interested parties and the meeting was noted on the City’s ADU project webpage. Next Steps Upon recommendation from the PTC, staff will forward the staff recommended ordinance with agreed upon changes to City Council for review. In instances where a majority of the PTC has a different recommendation from staff, that viewpoint will be represented in the staff report along with implementing language for the Council’s consideration. Only one ordinance, however, will be presented to the Council, which is anticipated to occur in June. Alternative Actions In addition to the recommended action, the Planning and Transportation Commission may: 1. Recommend adoption of the draft ordinance to the City Council with modifications. 2. Continue the discussion to a future PTC hearing with the expectation that a recommendation to the City Council would be forwarded that time. City of Palo Alto Planning & Community Environment Department Page 11 Report Author & Contact Information PTC3 Liaison & Contact Information Clare Campbell, AICP, Senior Planner Jonathan Lait, AICP, Assistant Director (650) 617-3191 (650) 329-2679 clare.campbell@cityofpaloalto.org jonathan.lait@cityofpaloalto.org Attachments:  Attachment A: Ordinance Amending Requirements of ADU and JADU (PDF) 3 Emails may be sent directly to the PTC using the following address: planning.commission@cityofpaloalto.org Wednesday, April 18, 2018 ADU ORDINANCE REVISIONS FOR DISCUSSION AT PTC HEARING Prepared by Michael Alcheck, in numerical order. -Section 1, (a), 9, B - Basement Square Footage Calculation. •I recommend that Council allow basement square footage in detached ADU’s to not be included in the calculation of total square footage. -At our last hearing, we spent considerable time discussing whether a basement under an ADU be allowed and concluded that it could be but not within the rear setback. We then recommended that while ADU’s may be built within the 20’ standard rear setback, any basement space beneath an ADU not be permitted within that 20’ setback. -So, now that we’ve essentially restricted basement development to the area where it is already permitted by the building department (i.e. within all current setbacks), why would we now begin “counting” that basement square footage if we don’t count the same square footage for basements in single family home development. -The key point here is consistency should matter. Now that we’ve restricted basements under ADU’s to the same areas where single family homes can have basements, there is no logic in counting basement square footage against the total allowed since we don’t do the same for single family home basements. -Section 1, (a), 9, D & F - Setbacks & Window Placement. •I recommend that Council add language to this section restricting the placement of windows on the rear lot line facing wall of an ADU more than 7’ above grade. -The point of this suggested change is that the only place where our code used to restrict buildings but will now allow them under this ordinance is in the rear 20’ setback. So in light of this change, I would suggest that windows of an ADU that lies within the 20’ rear setback and which also face the rear lot line be restricted in height to the current height limit of fences under the code, which is 7’ tall. I believe this will address some of the privacy concerns that residents have regarding ADU’s being placed in what once non-buildable area (the rear setback). -Section 1, (a), C - Maximum Height •I recommend that Council strike the language restricting height to 12’ in Eichler Tract areas subject to Eichler Neighborhood Design Guidelines. -The design guidelines have not yet been adopted. Furthermore they are voluntary. Referencing them here is problematic as a result. If this height limitation is of interest to residents in the areas subject to the design guidelines, it should be included in the design guidelines instead. -Section 1, (a), 10, L: Deed Restriction Requirements. •I recommend Council strike out section L regarding the staff proposed deed restrictions. There are three parts to the deed restriction requirement and ALL OF THEM are unnecessary and superfluous. 1 Wednesday, April 18, 2018-Part 1: It is already not legal to sell an ADU separately from the sale of the single family residence under our existing municipal code because you may not sell part of a parcel. A subdivision of the existing parcel would need to occur first. It is not enough that staff simply wants this or thinks its a good idea, we need to reign in the amount of hurdles and random paperwork necessary to be approved for an ADU. -Part 2 - short term rental limitation. In the same Subsection 10, paragraph B already makes it illegal to rent accessory dwelling units for periods of less than 30 days. Requiring the additional recording of such a deed restriction is unnecessary and would suggest that neighbors have the private right of suing their neighbors in court to enforce a deed restriction that arguably benefits them. This isn’t the way our legal policies should be applied. If the City is intent on restricting short term rentals, the City should develop an enforcement program to ensure compliance. The deed restriction is redundant and the additional paperwork unnecessary, but most problematic is the notion of neighbors being put in the position of having to enforce rules themselves through costly legal action against other neighbors. -Part 3 - acknowledgment that the size and attributes of the ADU conform with the ordinance. This is literally the definition of redundant. If the ADU plans have to be submitted to the planning and building department than the “approved plans” and subsequent “approved final permit” are the acknowledgment that the ADU’s size and attributes conform with the ordinance. This paragraph is utterly meaningless because if someone has approved plans and after building their ADU has received a building inspection sign off then they are by definition in conformance with the ordinance. -Section 1, (a), 10, E & Section 1, (b), 2, D: Owner Occupancy. •I recommend that Council strike out paragraph E entirely. -This language is attempting to put into law anti-renter policy. Allow yourself for a minute to imagine that an older couple rents a home in Palo Alto and as they age in their rental home they begin to evaluate the idea of hiring a care taker. They then determine that they wish to hire a care taker and part of the compensation provided includes housing the care taker in the empty ADU in the backyard. This would be illegal under this paragraph and its not clear why the City wishes to restrict such a situation. -We need to understand the motivation for restrictions and then appreciate that broad restrictions like this one will result in limitations that we may not want. I think the preference for owners over renters has not been justified by staff and until then shouldn’t be a part of this ordinance. -Finally, what is a “housing organization” which is a non-defined term in Section 1, (b), 2, D. Such an entity is exempt from the requirement and appears to have no legal definition. -Section 1, (a), 10, G: Fire Sprinkler Requirements. •I recommend that Council strike out paragraph G entirely. -Any new structure that is built that would otherwise require the installation of fire sprinklers should not be exempt from such requirements. This should be a no brainer. I understand the motivation for it would reduce the cost of construction, but in lieu of what we just witnessed in Santa Rosa and Napa, I think we must be vigilant about the installation of fire sprinklers because they significantly reduce the likelihood of death and destruction as a result of fire.2 Planning & Transportation Commission Staff Report (ID # 9068) Report Type: Study Session Meeting Date: 4/25/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: Key Issues for Implementing the Council Housing Work Plan Referral Title: Public Hearing: Implementing the Council Housing Work Plan Referral: Discussion of Key Issues for the 2018 Comp Plan and Housing Ordinance From: Hillary Gitelman Recommendation Staff recommends the Planning and Transportation Commission (PTC): 1. Review key issues to be addressed in the zoning code to encourage production of a diversity of housing types in appropriate locations, as specified by the Council referral of 2018 Housing Work Plan items 2. Provide input to staff to be synthesized in a framework for an ordinance for the PTC’s consideration at a future meeting Report Summary The Background section of this report provides context for the local and regional housing crisis. In short, incomes are not aligned with the cost of housing (rent and sale prices) in Palo Alto, such that local workers cannot afford to live in the city. So far, the City is not on track to meet its housing goals in the current Regional Housing Needs Allocation (RHNA) cycle. The Council’s adopted Housing Work Plan seeks to reverse this trend and provide opportunities for housing production, affordability, and preservation. The Discussion section of this report analyzes the current Zoning code standards for their potential effects on housing production, including how:  Development standards in mixed use districts prioritize office and hotel development over housing development  Commercial retail/mixed use requirements present challenges to housing developers  Layers of regulations may be constraining unit yield on individual sites City of Palo Alto Planning & Community Environment Department Page 2  A detailed study of Downtown infill potential revealed that high costs, floor area ratio (FAR) and lot coverage requirements, and the fact the remaining sites Downtown are small, are constraining housing development  The current design review and entitlement process adds time, cost, and uncertainty to housing development This section also includes a series of questions for the Commission’s consideration to weigh the tradeoffs and options associated with the issues described above and the Comprehensive Plan policies/Council referral items. Finally, the report presents key issues and general strategies for how to address these issues and implement the zoning revisions raised by the Council: 1. Streamline the approval process 2. Address development constraints 3. Increase residential densities 4. Provide applicants with more flexibility Background Housing Crisis. Housing affordability is a huge issue in Palo Alto, where the median rent for a two bedroom apartment is $3,500, the median sale price for a condo is $1.65 million, and the median sales price for a single family home is $3.07 million. By comparison, the average Palo Alto Unified School District teacher earns $110,191 per year, according to PAUSD; likewise, the average City of Palo Alto employee salary is $110,048 annually, as stated in the Work Plan. These figures suggest that many community-based workers need access to below-market rate (BMR) housing if they can consider Palo Alto as a place to live. Housing Work Plan. On February 12, 2018, the City Council approved a Housing Work Plan, which outlines steps to implement the City’s vision and adopted policies and programs for housing production, affordability, and preservation. The Work Plan synthesizes policies and programs from the adopted Comprehensive Plan, adopted Housing Element, and a City Council colleagues’ memo. The Work Plan describes the City’s progress towards the housing production goals at various income levels (i.e. RHNA) in its Housing Element, and the City’s progress towards the housing projections developed during preparation of the updated Comprehensive Plan. In both cases, the City is far behind where it should be in order to meet its goals, as shown in Table 1. The approved Housing Work Plan indicates that action is needed to spur the production of housing. Table 1: Summary of City Housing Goals Source Goal Progress as of December 31, 2017 Timing # Units Units % of Goal Housing Element (Affordable Units) 2014-2023 1,401 143 10% Housing Element 2014-2023 1,988 393 20% City of Palo Alto Planning & Community Environment Department Page 3 (Total Units) Comprehensive Plan Projections 2015-2030 3,545-4,420 353 +10%(1) Note: (1) The Housing Work Plan estimates that the City will have to increase its rate of housing production to approximately 300 units per year to achieve the Comprehensive Plan projection. Source: Palo Alto Draft Housing Work Plan & Updated Information, April 2018 For more detailed information about the Work Plan, see the materials below: February 5, 2018 City Council Staff Report and Draft Housing Work Plan: https://www.cityofpaloalto.org/civicax/filebank/documents/63054 February 12, 2018 (as continued) City Council Action Minutes: https://www.cityofpaloalto.org/civicax/filebank/documents/63659 Council Referral to PTC. The Council referred the following specific items to the PTC for a 2018 zoning amendment ordinance:1 2018 COMPREHENSIVE PLAN/HOUSING ORDINANCE (from the approved Draft Housing Work Plan, as amended by the February 12, 2018 Council motion) 2.4. Provide incentives and remove constraints for multifamily housing in the Downtown (CD-C), Cal Ave., (CC(2)/PTOD) and El Camino Real (CN and CS) districts 2.4.1. Review and revise development standards (e.g., landscaping, open space) 2.4.2. Consider eliminating dwelling unit densities and relying on FAR and average unit sizes 2.4.3. Review and revise permitted uses and use mix (e.g., allow 100% residential w/retail) 2.4.4. Review and revise level of permitting and site plan review requirements 2.4.5 Allow parking reductions based on TDM plans and on payment of parking in-lieu fees for housing (Downtown and Cal Ave.). Review and update as necessary the TDM Ordinance to include additional metrics , goals, and enforcement 2.4.6. Convert some non-residential FAR to residential FAR 2.4.7. Remove any constraints to special needs housing (Program H4.2.1) 2.4.8. Increase housing Floor Area Ratio (FAR) 2.5. Support multifamily housing in the RM districts: 2.5.1. Consider establishment of minimum densities in all RM zones 2.5.2. Allow redevelopment (replacement) of existing residential units on sites that are nonconforming because of the number of units or FAR 2.6. Provide incentives and remove constraints in all zoning districts: 2.6.1. Adjust parking requirements to reduce costs (based on parking study); identify the 1 In addition to the items listed here, the Council asked staff to work with the PTC on a response to SB 35, the “by right” housing bill, which staff would like to defer until after the PTC’s input and recommendation on zoning changes to stimulate housing. Also, please note that the City Council referred other Housing Work Plan items, such as changes to the City’s inclusionary housing requirements, to the Policy & Services Committee rather than the PTC. City of Palo Alto Planning & Community Environment Department Page 4 appropriate amount of parking for various housing types and locations, taking into account parking mitigations Additionally, the Council’s adopted Work Plan outlined objectives for a 2019 Ordinance. These elements are likely to be referred to the PTC toward the end of this calendar year so that they may be addressed in 2019. 2019 COMPREHENSIVE PLAN/HOUSING ORDINANCE (from the approved Draft Housing Work Plan, as amended by the February 12, 2018 Council motion) 2.7. Consider changes to TDR Ordinance to increase its use for residential FAR/density 2.8. Review and revise allowed uses and permit requirements (i.e., by right, use permits) for smaller units, co-housing, etc., in all zoning districts 2.9. Develop protections for cottages and duplexes in the R-1, R-2, and RM-15 districts and consider zoning changes to allow additional cottage clusters, duplexes, and fourplexes where appropriate 2.10. Review PTOD and Village Residential zoning overlay process to remove constraints/complexity, and expand usage 2.11. Explore excluding underground FAR from parking requirements in the R-1* *This item was added during the Council motion without a timeline for adoption; staff recommends including it in the 2019 ordinance, along with other items affecting low-density districts. In addition to the zoning revisions, the PTC is also contributing to the Housing Work Plan (and helping implementation of the Comp Plan and Housing Element programs and policies) through its recent review of the Affordable Housing Overlay, Workforce Housing, and Accessory Dwelling Unit Ordinances. To focus the Commission’s time over the next series of meetings, tonight’s meeting will address the 2018 Ordinance items, with the exception of parking (referral #2.6.1) which will be discussed May 30th. The Commission will provide feedback to staff on strategies for zoning revisions over a series of three meetings and a recommendation to the Council by the end of September. This timeline ensures that an ordinance may be considered for adoption by the Council during this calendar year. Discussion This section discusses how the City’s current zoning code is or is not supporting housing production, in the context of the Council’s Work Plan referral items. Staff is asking the Commission to provide direction on strategies which will inform revisions to the Downtown (CD-C), California Avenue (CC(2)/PTOD)2, El Camino Real (CN, CS), and Multiple-Family Residential (RM) zoning districts. 2 The Zoning Ordinance allows for application of the PTOD overlay within the California Avenue area, east of the Caltrain tracks, through a rezoning request. Note that this report analyzes current and potential standards for the combined CC(2)/PTOD district, and not the base CC(2) district. City of Palo Alto Planning & Community Environment Department Page 5 Zoning Regulations Overview – How Ordinances Create Incentives and Disincentives Zoning regulations can support the development of desired projects by streamlining the permit process and providing flexibility in development standards or additional density for those uses. Conversely, zoning can be used to discourage the types of uses that a community does not want. A discretionary review requirement, layers of development or performance standards, impact fees, or site improvement requirements may provide disincentives for an undesirable use by adding time, costs, or conditions to a project. These issues are explored below, as they relate to current development standards in selected commercial/mixed-use districts (see Table 2). In summary, between the high costs of construction, high land values, length and uncertainty in the review process, and layers of design and development standards, the City is not seeing many housing applications. Issue #1: Current Code Prioritizes Office and Hotel Development over Housing The City’s commercial district regulations create some bias toward development of non- residential uses, in particular hotels, over residential uses. While this makes sense— historically, the City’s neighborhood centers and corridors were primarily commercial in nature—the character of these places has changed over time and, in turn, the City has evolved its policies. The recently adopted Comprehensive Plan identifies the Downtown, California Avenue, and El Camino Real districts as appropriate locations for multifamily and residential mixed use development because of their commercial amenities and proximity to transit. However, the commercial district regulations do not yet reflect this policy change. For example, the CD(C) (Downtown) regulations offer more generous standards for non- residential uses (e.g., office): no setback or coverage restrictions; no mixed use requirement; and no open space requirement. Each of the commercial districts—CD(C), CC(2), CN and CS—allow the highest FAR values for hotels (2.0 vs. 0.5 or 1.0 for residential or other non-residential, such as office). The CN and CS districts similarly apply less restrictive development standards (e.g., no landscaping or open space requirements) for non- residential uses, compared with residential mixed use development standards. Moreover, exclusively residential projects are prohibited in the CN, CS, and CC districts. Not surprisingly, the CS district has seen a greater number of hotel rooms than multi-family housing units in recent years. Since 2014, a total of 482 hotel rooms were approved or are pending on CS district sites on El Camino Real or San Antonio Road, compared with 168 In the CS District, hotels are permitted 2.0 FAR, while residential uses are permitted only 0.6 FAR. This discrepancy has provided an incentive for hotel development in the district. City of Palo Alto Planning & Community Environment Department Page 6 multifamily housing units on CS sites.3 While hotels present benefits in the form of tax revenue without substantial spending (e.g., public safety, schools, and traffic), they may be unintentionally supplanting opportunities for residential development. Issue #2: Commercial Mixed Use Requirements Challenge Housing Developers Residential uses are generally only permitted as part of mixed use developments in the Downtown, California Avenue, and many places along El Camino Real. This presents a challenge to affordable and market-rate housing developers who are not in the retail business— from both a financial standpoint (their financing often does not include commercial development) and physically (they are less equipped to implement the mechanical, electric, and plumbing needs of restaurant and retail uses, and accommodate multiple occupancy categories). Moreover, when 100% residential uses are permitted in the code, they are constrained by more rigorous development standards. In the CD-C district, exclusively residential uses are allowed on Housing Element opportunity sites; however, they must conform with the development standards for the RM districts, which are much more stringent and therefore reduce the developable area of the site. Issue #3: Layers of Regulations Constrain Unit Yield Layers of development standards make interpreting the City’s code complicated and reduce the development “envelope” available on a site. While most regulations are based on reasonable community desires (e.g., providing access to light, air, and landscaping), in combination they have the drawback of constricting the developable site area. This is illustrated in Table 2 which reports the extent of design standards that apply in each relevant zoning district. Table 2: Existing Development Standards, by Commercial Zoning District Standard CD-C (Downtown) CC(2)/PTOD (Cal Ave.) CN District (El Camino) CS District (El Camino) 3 Hotels: 294 hotel rooms were approved at 744 San Antonio Road; 89 hotel rooms proposed a 4256 El Camino Real; and 99 hotel rooms proposed at 3200 El Camino Real. Multi-family unit approvals: 2500 El Camino Real Stanford Housing Project (70 units), 3159 El Camino Real Mixed Use (48 units); 441 Page Mill Road (16 units); 3225 El Camino Real Mixed Use (8 units); 3877 El Camino Real (6 units); 3001 El Camino Real (20 units). 801 Alma was originally conceived to include ground- floor retail. However, the financing and logistics proved too complicated; ultimately, a 100% residential project was approved and constructed. Questions for the Commission: Where should mixed use development be prioritized? Where could 100% residential uses be permitted? City of Palo Alto Planning & Community Environment Department Page 7 Standard CD-C (Downtown) CC(2)/PTOD (Cal Ave.) CN District (El Camino) CS District (El Camino) Maximum Intensity (FAR) Commercial 1.0 0.25-0.35 0.5 0.4 Residential 1.0 1.0 0.5 0.6 Subtotal Mixed Use 2.0 1.25 1.0 1.0 Hotel FAR 2.0 2.0 2.0 2.0 Bonus and/or TDR 1.0 0.5 N/A N/A Total Maximum FAR 3.0 1.5 0.9 1.0 Residential Density (du/acre) 40 40 (50 w/BMR units) 15 (20 for Housing Element sites) 30 Height (feet) 50 40 (or 50 w/ BMR units or hotels) 40 50 w/in 150’ of res. zone 40 n/a 35 35 Abutting RM-40 or res. PC 50 n/a 35 50 Daylight Plane Identical to most restrictive abutting residential zone If adjacent to R-1 or R-2 zone, or Caltrain ROW Identical to most restrictive abutting residential zone Identical to most restrictive abutting residential zone Minimum Setbacks (feet) Front 0 0 0-10 0-10 Rear 10 (res. only) 0-20 10 (res. only) 10 (res. only) Interior 0 0-6 0-10 0-10 Street Side 0 0-5 5 5 Build to Lines n/a n/a 50% of frontage 33% of side street 50% of frontage 33% of side street Maximum Lot Coverage 100% n/a 50% 50% Minimum Landscaping 20% n/a 35% 30% Usable Open Space (sq. ft./dwelling unit) 200 (<5 units) 150 (6+ units) 200 (<5 units) 100 (6+ units), or less w/BMR units 20 (<5 units) 150 (6+ units) 20 (<5 units) 150 (6+ units) This issue is most acute in the El Camino Real districts, CN and CS, which have a long list of required standards—lot coverage, landscaping standards, setbacks, daylight planes, height transitions, etc. The CN and CS districts limit coverage to 50%, including a 35% and 30% landscaping requirement, respectively. While certain accommodations may make sense for Snapshot of Landscape Coverage Requirements - Although the CD-C and CC(2)/PTOD districts do not specifically limit lot coverage, they do require 20% landscape open space coverage, which acts as a lot coverage limit. While landscaping has environmental and aesthetic benefits, it also prevents applicants from taking advantage of other generous standards provided by these districts (e.g., zero lot lines). Snapshot of Open Space Requirements - As shown in Table 2, the CN, CS, and CC(2)/PTOD districts identify tiered standards for open space based on the size of the residential project, with a substantial jump between small and larger projects. The CD-C district tiers the standards inversely, with a larger standard for smaller projects, for reasons that are not clear. City of Palo Alto Planning & Community Environment Department Page 8 adjacencies to residential uses (i.e., daylight plane requirements), as written this standard limits the developable envelope. These layers of regulations (as well as allowable residential FAR) may be one of the reasons why the City rarely sees applications for development in the El Camino Real districts. Moreover, the El Camino Real sites are often small in size—development regulations may reduce the net developable area to the point that it is financially and/or physically infeasible to develop. A property owner may be better of maintaining and collecting rent on an existing low intensity use. One of the key purposes of the Housing Element (Policy H4.2.1) is to remove constraints to special needs housing. The text box below identifies the current code’s limited opportunities for flexibility and incentives for special needs populations. Issue #4: Lessons from Downtown: Small Sites, High Costs, FAR and Coverage Requirements Constrain Housing Production Dyett & Bhatia and Economic & Planning Systems prepared an economic report (see Attachment #1) during the Comp Plan update process to determine the capacity for infill development in Downtown Palo Alto and to identify the 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. What the City is Doing Now to Remove Constraints to Special Needs Housing:  Small lot consolidation program offers reduced parking requirements for units <500 sq. ft., which may correspond to housing for special needs populations  Emergency shelters for the homeless permitted in the ROLM(E) district, east of Highway 101  Reasonable accommodation provisions allow exceptions to setback, lot coverage and FAR to accommodate disabilities  Revisions to State Density Bonus Law now applies to housing for transitional foster youth, disabled veterans, and homeless  The CD-C (Downtown) zone exempts disability related remodels from counting toward floor area, up to 500 sq. ft. per site. Questions for the Commission: Which development standards are most important in each district? Which could be relaxed in each district? Question for the Commission: What incentives could be provided for 100% BMR projects and projects that include units for persons with physical or developmental disabilities? City of Palo Alto Planning & Community Environment Department Page 9 Major findings are shown in the text box below, shedding light on the challenges for the City’s remaining harder-to-develop smaller sites and for all development in the context of high land values, high construction costs, and constraining development standards (namely, FAR and coverage). FINDINGS FROM THE DOWNTOWN CAP STUDY - INFILL RESIDENTIAL ANALYSIS  Confirms known trends: Rental and sales prices are high; multi-family housing starts have been low; Downtown is fairly built-out; but, opportunity is there for development.  Site conditions present challenges to infill redevelopment: The report identifies 529 existing dwelling units in Downtown, and estimates that up to 1,819 or 2,018 additional units could theoretically be developed Downtown, based solely on current density and FAR limits. After factoring in actual site conditions (e.g., land and structure values, age of structures, and potential for parcel consolidation), the potential unit count drops precipitously—to just 252 to 441 additional units, depending on market conditions and how aggressively owners and developers redevelop sites.  Incentives are not aligned for redevelopment: Current market trends support higher density residential uses. However, ground-up new construction would need to support the high cost of construction, as well as overcome the value of any existing use on the site. The report concludes that a ground-up project generally must at least double the existing residential density/intensity to overcome the high value of simply maintaining and earning income from an existing use.  Development limited by parcel size and floor area/coverage: Development is likely to be limited by parcel size and development standards that limit the buildable area and building size (specifically, FAR and lot coverage; existing height limits do not appear to be reducing attainable density). Many multi-family 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.).  Report Recommendations: As a result, residential redevelopment projects likely will require assembly of smaller residential parcels, redevelopment of nonresidential uses on larger sites, or relaxed development standards to support multi-family residential development. This could be achieved through: o Encouraging State Density Bonus Law projects that support increases in density and relief from development standards, in exchange for providing affordable housing o Increasing allowable residential densities; reducing parking requirements; and/or reducing development standards and increasing coverage or floor area, especially on smaller sites. o Creating incentives for parcel assembly through zoning or other mechanisms. To take these findings a step further, consider how the code currently regulates density in two ways: residential density (dwelling units/acre) and intensity (FAR). As shown in Figure 1, residential density can be an imperfect metric on which to consider a project’s potential impact. City of Palo Alto Planning & Community Environment Department Page 10 FAR values can be more easily illustrated and compared between projects to demonstrate the relationship between total floor area and the site area, and the resulting massing. Figure 1: Residential Density vs. FAR Residential Density Floor Area Ratio (FAR) Hypothetical 1-Acre Project Senior Housing Student Housing  50 units  Studios and 1-bedrooms  50 bedrooms = 50 units/acre  10 units  5-bedroom suites  50 bedrooms = 10 units/acre (Source: City of Seattle Land Use Code) Residential density values vary based on the number of units and do not reflect the unit size or number of bedrooms in each unit. Equal FAR values can appear as very different massing and height configurations, but are independent of unit count and bedroom sizes. Issue #5: Multiple Review Processes Add Time and Uncertainty Whether a use is permitted through an administrative (staff-level) approval or a public review process can present an incentive or disincentive to its development. The public review process provides opportunities for community input and feedback from decision-makers, but also adds time, expense, and uncertainty from the perspective of applicants, which may affect their decision to pursue a development in Palo Alto. Currently, residential mixed use projects in Downtown and El Camino Real (in the CD-C, CN, and CS zones) require Site and Design Review which includes design review by the Architectural Review Board (ARB) and PTC, who each make a recommendation to the Council. This process requires at least three meetings, though five meetings are typical for substantial projects. Applicants can expect this process to take 18 months; then, they can start the building permit review process. One exception to this procedure is for residential mixed use Residential Design Review Process Downtown and El Camino Real (CD-C, CN, CS):  Mixed use projects with 9 or fewer units: Architectural Review w/ ARB  All other projects: Site & Design Review w/ ARB, PTC, and Council California Avenue (CC(2)/ PTOD) 2-step: 1. Rezoning to PTOD: PTC and City Council review and approval to establish limits on allowable or required uses, and intensity. 2. Major architectural review w/ ARB City of Palo Alto Planning & Community Environment Department Page 11 projects with nine or fewer units, which only require Architectural Review by the ARB (at least one meeting, though three meetings are typical for substantial projects). Around California Avenue, if a property owner wants to increase the intensity of a CC(2) site and pursue the PTOD overlay, first they must undergo a rezoning to define the uses and intensities, which is reviewed and approved by the PTC and Council. Concurrently, the ARB conducts architectural review of the project design. At a minimum, there are three public meetings though again, realistically, five meetings could be expected. Only two applicants have sought out this rezoning since its inception in 2006—perhaps as a result of the potential for a lengthy and uncertain process. Strategies for Addressing the Council Referral There are a variety of ways to revise the Zoning Ordinance to support housing production and implement the Comp Plan and Housing Element policies and meet the intent of the Council referral item. These strategies reveal the desires of the community and suggest tradeoffs that the Commission will need to consider, such as the value of landscaping vs. housing units vs. the potential for shadows, etc. Staff recommends grouping the Council referral item into four overarching strategies. Potential implementation measures are described in the sub-bullets for the Commission’s consideration. 1. Streamline the approval process  Consider tradeoffs of the dual Architectural Review and Site & Design Review process  Consider making PTOD a floating zone that does not required separate legislative action 2. Address development constraints  Be strategic about where retail is required vs. where 100% residential is acceptable  Confront tradeoffs: identify which development standards are most important, by district; where should standards differ and where can they align across districts 3. Increase residential densities Question for the Commission: What types of projects should be eligible for by right approval or streamlined review? Potential Zoning Revisions According to initial stakeholder conversations, making just a couple modifications to the code—removing residential density and reducing parking requirements, in particular-- could allow projects to build out with a few additional units. On typical mid-sized sites (10,000 sq. ft.), these changes could allow a designer to fit 4 to 5 units in a small apartment building that fits in contextually with surrounding uses, rather than 3 units in separate buildings. Although these units would not necessarily represent subsidized BMR housing, by their design they may be affordable to lower or moderate income households. City of Palo Alto Planning & Community Environment Department Page 12  Consider whether to provide increased FAR outright or in exchange for certain amenities that can be codified in the code (e.g., open space, lot consolidation, on- site renewable production) 4. Provide applicants with more flexibility  Identify when to provide incentives (i.e., in exchange from what types of projects, lot consolidation, amenities, etc.) Table 3 summarizes each of the implementation strategies with the corresponding ordinance components listed in the City Council’s referral. Notably, all of these strategies are either explicitly called for or supported by policies and programs in the Housing Element and Comp Plan. Table 3: 2018 Comp Plan and Housing Production Ordinance, by District and Key Issue Key Issue Downtown (CD-C), Cal Ave., (CC(2)/PTOD), and El Camino Real (CN and CS) Zones (1) RM Districts All Zoning Districts A. Streamline Processes  2.4.4: Review and revise level of permitting and site plan review required n/a n/a B. Remove Development Constraints  2.4.3: Review and revise permitted uses and use mix (e.g., allow 100% residential w/retail)  2.4.1: Review and revise development standards (e.g., landscaping, open space)  2.4.7: Remove constraints to special needs housing in particular (based on Housing Element Program H4.2.1) n/a 2.6.1: Adjust parking requirements to reduce costs (based on parking study); identify the appropriate amount of parking for various housing types and locations, taking into account parking mitigations (2) C. Amend Residential Densities  2.4.2: Consider eliminating dwelling unit densities and relying on FAR and average unit sizes  2.4.5: Convert some non-residential FAR to residential FAR  2.4.8: Increase housing FAR in the Downtown, Cal Ave, and El Camino Real areas 2.5.1: Consider establishment of minimum densities n/a D. Provide Flexibility  2.4.5: Allow parking reductions based on TDM plans and on payment of parking in-lieu fees for housing (Downtown and Cal Ave.). Update the TDM Ordinance to the extent that it does not already include metrics of measurements, accomplishments, and enforcement; include these metrics 2.5.2: Allow redevelopment (replacement) of existing residential units on sites that are nonconforming because of the number of units or FAR n/a City of Palo Alto Planning & Community Environment Department Page 13 Key Issue Downtown (CD-C), Cal Ave., (CC(2)/PTOD), and El Camino Real (CN and CS) Zones (1) RM Districts All Zoning Districts (1) Numbers refer to Council Referral Item # (2) Parking will be addressed at the Commission’s May 30, 2018 meeting. Source: Palo Alto Planning & Community Environment, April 2018 Environmental Review The City Council certified a Final EIR on November 13, 2017 to analyze potential impacts associated with the Comprehensive Plan. The 2018 Ordinance will be evaluated pursuant to the California Environmental Quality Act (CEQA) once a draft is prepared. It is anticipated that the Ordinance will be consistent with the Comprehensive Plan and its Final EIR. If needed, an Addendum to the EIR would be prepared to address any new or unaniticpated impacts. At this time, no substantially greater or more severe impacts are anticipated and no development is proposed, beyond what is allowed by the Comprehensive Plan. Public Notification, Outreach & Comments Staff has reached out to architects, developers, and others who regularly use the City’s zoning ordinance to get their perspectives on these options as well, and will be prepared to share that input at a future meeting. The following groups have been contacted; staff will provide an update on any feedback received at the public hearing. (Names in boldface have been scheduled or completed.) 1. Architarian Design 2. Bentall Kennedy 3. David Baker Architects 4. Eden Housing 5. FGY (Fergus, Garber, Young) Architects 6. Golden Gate Homes LLC 7. Hayes Group 8. Lighthouse Public Affairs 9. Lytton Gardens/Covia 10. Mid Pen Housing 11. Palo Alto Housing 12. R&M Properties 13. Sobrato Organization 14. Summerhill Homes 15. SV@Home 16. Thoits Brothers 17. TOPOS Architects 18. Young & Borlik Architects City of Palo Alto Planning & Community Environment Department Page 14 Next Steps Staff will consolidate feedback received from tonight’s meeting to inform the ordinance framework. Staff will return next month for a discussion focused on parking. An anticipated timeline for development of the ordinance is provided in the table below. (Please note that at the Commission’s suggestion, staff moved the Community meeting to an earlier date. However we were unable to move it ahead of the June 13 meeting with the PTC because of the desire to reflect the PTC’s input on the ordinance framework in the community discussions. This is consistent with the Council’s direction to hold the meeting when there is an opportunity for the community to respond to draft contents of a proposed ordinance.) Table 4: Anticipated Timeline Meeting Type Topic Date PTC Study Session Review objectives for housing work plan and city council direction March 14 (completed) PTC Study Session Overview of issues, including key findings from an analysis of residential capacity in Downtown April 25 (Tonight’s Meeting) PTC Study Session Parking, including key findings from an analysis of residential parking demand May 30 PTC Study Session Framework for ordinance June 13 Community Meeting Present and receive feedback on ordinance framework Week of June 25th PTC Hearing Review Draft Ordinance August 8 PTC Hearing (continued, if needed) Recommendation on Draft Ordinance (as revised) August 29 Report Author & Contact Information PTC4 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 Cap Study - Residential Analysis (PDF) 4 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 # 9186) Report Type: City Official Reports Meeting Date: 4/25/2018 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: NVCAP Working Group Update Title: North Ventura Coordinated Area Plan: Appointment of a PTC Commissioner to Serve on the NVCAP Working Group From: Hillary Gitelman Recommendation Staff recommends the Planning and Transportation Commission (PTC) review the update on the North Ventura Coordinated Area Plan and appoint a commissioner to serve on the Working Group. Background The City Council initiated the preparation of a Coordinated Area Plan for the North Ventura Area, consistent with the City’s recently adopted Comprehensive Plan in November 2017. Policy L-1.7 states that coordinated area plans should be used to guide development in areas of Palo Alto where change is anticipated. The associated program, L4.10.1, specifically calls for the preparation of a plan for the North Ventura and surrounding California Avenue area for a walkable neighborhood with a mix of uses, including multi-family housing. On March 5, 2018, the City Council directed staff to solicit applications for a 14 member working group (and two alternates) to advise staff, boards/commissions, and the City Council during the planning process. The City Council identified selection criteria for the working group and indicated that three of the 14 voting members would be appointed representatives of the PTC, Architectural Review Board and the Parks and Recreation Commission. The City Council is scheduled to make the appointments at their April 30, 2018 meeting. The City Council approved preliminary goals, objectives, schedule and boundaries can be found on the following webpage: https://bit.ly/2INrx2qc. The approved selection criteria are as follows:  (3) Residents: live within the planning area boundaries or the greater North Ventura neighborhood;  (2) Residents: live within the greater Ventura neighborhood;  (2) Residents: live within Mayfield; City of Palo Alto Planning & Community Environment Department Page 2  (2) Business Owners: work or own a business within the planning area boundaries or nearby (mix of small and larger businesses);  (1) Property Owner;  (1) Resident: live within Barron Park;  (1) Planning & Transportation Commission (PTC) Member;  (1) Architectural Review Board (ARB) Member; and  (1) Parks and Recreation Commission Member The NVCAP working group is anticipated to meet monthly between June 2018 and December 2019. The tentative timeline anticipates that the first quarter will be for scoping and data collection. The working group will begin to review draft materials starting in the fall 2018 and through 2019. Council review of the draft materials would follow and start in the first quarter of 2019. The project should be substantially complete by December 2019. The working group will review all materials and provide recommendations. The result of their recommendations would then go to City Council (following ARB, PRC, PTC review) for their consideration. The PTC Chair has the authority to appoint a willing commissioner. The purpose of this discussion is for the Chair to receive input from those that are interested in serving in this capacity. Report Author & Contact Information PTC1 Liaison & Contact Information Elena Lee, Senior Planner Jonathan Lait, AICP, Assistant Director (650) 617-3196 (650) 329-2679 elena.lee@cityofpaloalto.org jonathan.lait@cityofpaloalto.org 1 Emails may be sent directly to the PTC using the following address: planning.commission@cityofpaloalto.org