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HomeMy WebLinkAboutStaff Report 9341 City of Palo Alto (ID # 9341) City Council Staff Report Report Type: Action Items Meeting Date: 6/11/2018 City of Palo Alto Page 1 Summary Title: Initiative Measure to Reduce Office/R&D Cumulative Cap in Comprehensive Plan Title: Accept the City Clerk’s Report Certifying the Sufficiency of the Initiative Petition to Amend the Comprehensive Plan and Zoning Code to Reduce the Maximum Allowable New Office and R&D Development from 1.7 Million Square Feet to 850,000 Square Feet, Subject to Specified Exemptions; and Adopt a Resolution Placing the Initiative Petition on the November 2018 Ballot, or Adopt the Petition as an Ordinance Without Alteration, or Provide Other Direction to Staff From: City Manager Lead Department: City Clerk Recommendation Staff recommends that Council: 1. Accept the City Clerk’s Certificate of Sufficiency (Attachment A) of the Initiative Petition to Reduce the Office/R&D Development Cap (“Initiative Measure”) (Attachment B); and 2. Approve an ordinance (on first reading) amending the Comprehensive Plan and Title 18 (Zoning) of the Palo Alto Municipal Code, as proposed by the Initiative Measure, reduce the cumulative cap on office/R&D development to 850,000 square feet, and direct staff to place the ordinance on a future Council agenda for final adoption (second reading) by August 10, 2018; or 3. Direct staff to return at a later meeting with a resolution calling for an election to submit the Initiative Measure to the voters at the next General Municipal Election to be held on November 6, 2018; or 4. Provide other direction to Staff with respect to the Initiative Measure, including whether to prepare a City-sponsored ballot measure. Background On April 20, 2018, three Palo Alto residents submitted a notice of intent to circulate an initiative petition and explaining that the initiative, if adopted, would amend Palo Alto’s Comprehensive Plan and the Palo Alto Municipal Code to reduce the current citywide cap on new square feet of City of Palo Alto Page 2 office/R&D development by 50 percent (from the current cap of 1.7 million square feet to a new cap of 850,000 square feet), with certain exemptions, and to require voter approval to increase the new cap or add exemptions. The full text of the initiative is attached to this report as Attachment A. On May 22, 2018, the initiative sponsors submitted the petition with signatures to the City Clerk. On June 3, 2018, the Santa Clara County Registrar of Voters completed examination and verification of the signatures and determined that sufficient signatures were submitted to qualify the initiative for the ballot. Discussion Comprehensive Plan’s Existing Development Cap The City’s 1998 Comprehensive Plan included a cap on non-residential development of 3.2 million square feet in “monitored areas” of the City (Policy L-8). From the time of that plan’s adoption to 2014, approximately 1.5 million square feet of the development capacity was utilized, leaving 1.7 million square feet available. On November 13, 2017, the City Council adopted the current Comprehensive Plan (entitled “Comprehensive Plan 2030”) which updated the overall cap on non-residential development contained in the City’s 1998 Comprehensive Plan. The current plan updated this cap to 1.7 million square feet, reflecting the square footage remaining unallocated and undeveloped in 2015 of the original 3.2 million square feet. In doing so, the current plan also made two changes: it applied the cap to the entire city, excluding only the Stanford University Medical Center (SUMC) area, and it focused the cap on office/R&D uses so that for the first time, conversion of retail or warehouse space to office use counts as new office space under the cap. (Policy L-1.9) Summary of Initiative Measure The proposed initiative would amend Policy L-1.9 in the City’s Comprehensive Plan as well as descriptive text and implementation programs. The initiative would also insert regulatory language into the City’s Municipal Code (Zoning Ordinance). Each of these changes is briefly described below. Please see the attached initiative (Attachment A) for the specific text. Comprehensive Plan Amendments  The initiative would amend Policy L-1.10 in the Land Use & Community Design Element to reduce the 1.7 million square foot cap on new office/R&D development to 850,000 square feet, to eliminate a requirement for annual monitoring, to state that no additional exemptions are allowed beyond those already provided for medical, governmental, and institutional uses, and to state that the new cap may not be repealed or increased without a vote of the people until after December 31, 2030. City of Palo Alto Page 3  The initiative would delete Program L1.10.1 in the Land Use & Community Design Element, which contains a requirement to reevaluate the cap on new Office/R&D square footage when the amount of square footage reaches 67 percent of the allowed amount and to concurrently consider removal or changes to the cap and/or the amount of development permitted under the City’s zoning ordinance.  The initiative would amend the text of the Land Use & Community Design Element to describe the initiative.  The initiative would amend Programs B1.1.1 and B7.2.1 in the Business & Economics Element to provide for consistency with modified Policy L-1.10.  The initiative would amend the Implementation Table in the Implementation chapter of the plan to reflect the changes to implementation programs in the Land Use & Community Design and Business & Economics Elements. Municipal Code Amendments  The proposed initiative would also add a new section 18.40.200 to the Municipal Code capping new square feet of office/R&D development consistent with the modified cap proposed in Land Use & Community Design Element Policy L-1.10. This section would also prohibit amendments or repeal of the new section until after December 31, 2030. Impacts of Initiative Measure There are a variety of factors that will influence office development in Palo Alto beyond the regulatory framework established by Council or through initiative. Regional demand for office growth and employment, housing affordability, cost of living and commute times are some considerations that will influence growth locally. While engaging regional organizations and participation in conversations to address regional housing and transportation challenges, the City has also implemented local programs to reduce single occupancy trips and vehicle miles traveled. Recent housing-related ordinances and ongoing policy initiatives are efforts that recognize a need to increase housing production based on current and planned land use development set forth in the recently adopted Comprehensive Plan. When preparing the Comprehensive Plan, several growth scenarios were studied, including scenario 5, which contemplated approximately 810,000 square feet of office development. An economic analysis was prepared that evaluated fiscal impacts to the city based on the different scenarios. The Council ultimately favored a blended scenario that anticipates more office development than scenario 5, however, some may find this analysis informative in their consideration of the impact of the proposed initiative; this document is available online: https://www.cityofpaloalto.org/civicax/filebank/documents/65394. City of Palo Alto Page 4 Additional economic study may be warranted to make more informed decisions, but no such analysis is available at this time. However, there is other information that may be useful. As noted above, the initiative would limit office/R&D development to 850,000 square feet starting with a January 2015 baseline and extending to a December 2030 horizon; this represents a 16-year period. Coincidentally, the city has 16 years’ worth of office/R&D data extending from 2001 to 2017. Attachment C provides a table that summarizes this data and is divided into the three geographic areas subject to the annual office limit cap (Downtown, California Avenue area, and along El Camino Real); the Stanford Research Park; and, a column that reflects other commercial areas not included in the previous categories. The data shows that the amount of office development has been inconsistent over the past 16 years. During times where housing production was more robust, the city saw big changes in the amount of office/R&D space converted to housing units and other land uses. Conversely, office development has also seen periods of rapid growth. Office/R&D development in areas subject to the annual office limit will be constrained to 50,000 square feet a year1. Lots in these areas tend to be smaller and are not likely to include large office development. East Meadow and East/West Bayshore could accommodate larger office development. It is also an area of the city that has seen the greatest net reduction in previously constructed office space. Stanford Research Park, based on current development standards, has approximately 850,000 square feet of office/R&D development potential as of July 2017, but over the past 16 years has averaged approximately 13,000 square feet of net new office development a year. Much of Stanford’s office/R&D development has redeveloped existing office space and added only incremental net new floor area over time. Over the past 16 years, when deducting office/R&D space converted to housing or other non- office uses, the city has seen about 240,000 square feet of net new office development. Decision-makers will want to consider the extent to which office/R&D deductions can be relied upon in the future. The largest conversions occurred in 2006 when Sun Microsystems was converted to the Oshmann Family Jewish Community Center (~390 KSF) and in 2014 with the demolition of the former Facebook headquarters (~323 KSF). The data in Attachment C shows that many years between 2001 and 2017 have resulted in some net reduction of office space. A couple other data points worth noting is that between 2001 and 2014, the city had a net increase in office/R&D of approximately 106,000 square feet, but between 2015 and 2017 had approximately 134,000 square feet of net new office/R&D development. Within the geographic boundaries of the recently adopted annual office limit, an average of 40,500 net new office/R&D floor area was added each year over the past 16 years. Based on the limited economic analysis available for this initiative and other challenges related to regional and national influences on office development in the city, it is difficult to assess the 1 The City’s ordinance allows unused office floor area to carry over for one year, which may result in more than 50,000 square feet of office development in some years. City of Palo Alto Page 5 potential impact to the city with the passage of the subject initiative or an alternative measure, if directed by Council. If one accepts that past trends and market fluctuations represent a reasonable barometer for future office/R&D growth – and that the city will continue to see over 350,000 square feet of office/R&D conversions over the next 16 years, conclusions can be made that suggest the initiative would not have a significant impact to the city. If, however, there are fewer office/R&D conversions or if the Stanford Research Park sees increased development over the next 16 years, the 850,000 square foot limit could be reached near or before the 2030 planning horizon. Professional economists could provide the Council with office/R&D development projections or a tailored analysis to Palo Alto. If Council is interested in this type of information, Council should direct staff to obtain it. A funding source would need to be identified. Council’s Options The Council’s options under the City Charter are to either adopt the measure as written, without change, or place the measure on the ballot for the next general municipal election (that is no sooner than 88 days from the date of the Clerk’s Certificate of Sufficiency). The next general municipal election more than 88 days from the date of certification is the election on November 6, 2018. The last day to place a matter on the ballot is August 10, 2018. The Council may request further information related to the initiative’s impacts, including fiscal impacts, but there would be no extension of time to determine whether to adopt or place the measure on the ballot. Under the Charter, the Council also has the option to submit to the voters an alternative or competing ballot measure that amends the proposed initiative. The Charter provides that if both the initiative and the City’s measure are passed by a majority of voters, the City’s measure would amend the initiative measure. The proposed initiative includes a provision that states that to the extent both measures are approved by a majority of voters, the measure receiving the greater number of votes would prevail. Further research will be needed to ascertain the effect if multiple measures related to office/R&D development in Palo Alto are approved by the voters, and ultimately, this issue may be resolved in court. Conclusion Sponsors of the initiative have obtained sufficient voter signatures to qualify the measure for placement on the ballot at the next general municipal election on November 6, 2018. The Council’s choices are to adopt the measure or to place it on the ballot, which it must do by August 10, 2018. Council may also direct staff to prepare an alternative measure for placement on the ballot. Council action to place such a measure on the ballot would also need to occur no later than August 10, 2018. City of Palo Alto Page 6 Environmental Review The potential actions in response to a voter-sponsored initiative are not a project under the California Environmental Quality Act (CEQA). Attachments:  Attachment A: Certificate of Sufficiency of Initiative Petition  Attachment B: Initiative Measure entitled “Palo Alto Reduced Office R&D Development Cap Initiative”  Attachment C: Office Development From 2001 - 2017 County of Santa Clara Registrar of Voters 1555 Berger Drive, Bldg.2 San Jose. CA 95112 Mailing Address: P.O. Box 611360, San Jose, CA 95161-1360(4oa) 299-VOTE (8683) a66-43O-VOTE (a6a3) FAX: (4OA) 994-7314 www.sccvote.org June 3, 2018 Ms. Beth Minor, City Clerk City of Palo Alto 250 Hamilton Ave. Palo Alto, CA 94301 RE: Palo Alto Office RID CAP Dear City Clerk Minor: The petition submitted to our office on May 23,2018 contained a raw Pursuant to your request and based on six percentum of the number 02 signatures at the last general municipal election for the city of Palo Alto, the petition needs valid signatures to pass Your jurisdiction requested that the Registrar of Voters' Office conduct a full count of signature verification in an attempt to reach 2,407 valid signatures.The Registrar of Voters' Office verified the necessary number of signatures filed in accordance with Elections Code Section 91 1S. The signature verification resulted in the verification of 2,695 signatures of the 3,102 signatures submitted, with 2,430 signatures found valid. Please contact us to make arrangemensts to pickup your petition. lf you have any questions concerning this matter, please feel free to contact our office at (408) 282-3009. Sincerely, . J Saenz, El upervisor ll Voter Registration Division County of Santa Clara Attachments: Clerk's Certificate to lnitiative Petition Petition Result Breakdown Report Statistics Summary Report Statistics Detail Report Board of Supervisors: Mike \ /asserman, George Shirakawa, Dave Cortese. Ken Yeager, Liz Kniss Count¡, Executir¡e: Jeffrey V. Smith ÃE Santa Clara County Registrar of Voters CLERK'S CERTIFICATE TO INITIATIVE PETITION l, SHANNON BUSHEY, Registrar of Voters of the County of Santa Glara, State ofCalifornia, hereby certify: That the'City of Palo Alto Reduced Office/R&D Development Cap" lnitiative measure has been filed with this office on May 23,2019. That said petition consists of 102 sections; That each section contains signatures purporting to be the signatures of qualified electors of this county; That attached to this petition at the time it was filed was an affidavit purporting to be theaffidavit of the person who solicited the signatures, and containing the dates between which the purported qualified electors signed this petition; That the affiant stated his or her own qualification, that he or she had solicited the signatures upon that section, that all of the signatures were made in his or herpresence, and that to the best of his or her knowledge and belief each signature to that section was the genuine signature of the person whose name it purports to be; That after the proponent filed this petition I verified the required number of signatures by examining the records of registration in this county, current and in effect at the respective purportive dates of such of signing, to determine what number of qualified electors signed the petition, and from that examination I have determined the following facts regarding this petition: 1. Number of unverified signatures filed by proponent 9,102 2. Number of signatures verified 2.69s a. Number of signatures found SUFFICIENT 2.430 b. Number of signatures found NOT SUFFICIENT 265 1. NOT SUFFICIENT because DUPLTCATE 31 lN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal this 3rd day of June, 2018. Shannon Bushey Reg By: Dep ts uty JOBD83 of oters Petition Resu/f Breakdown Signatures Required Raw Count Sample Size Sigs Checked Sigs Not Checked Sigs Valid Sigs Invalid Duplicated Non-duplicate lnvalids Percent of Sigs Checked 90.2% 9.8% 1.0 % 9.0 % 2407 3,102 3,102 2,695 407 2,430 265 31 234 Percent ol Sample Size 13.1% 78.3% 8.5% 1.0 % 7.5% Approved NotReg OutOfDist Duplicate RegLate RegDiffAdd Cantldntfy NoResAdd NoSig PrintedSig SigNoMatch NotCompBySignr lnv Approved Not Registered Out of District Signed more than once Registered Late Registered at a Different Address Cannot ldentify No Residence Address Given No Signature Printed Signature Signatures Don't Match Not Completed by Signer lnvalid-See Doc 2,430 121 10 31 b 52 2 14 1 1 22 3 2 90.2% 4.5% 0.4% 1.2% 0.2% 1.9 % 0.1% 0.5% 0.0% 0.0 % 0.8% 0.1% 0.1% Pages Processed Total Checked Uncorrected Valid Duplicate Adjustment Estimated Valid 102 2695 2430 0 2430 100.0 % 86.9 % 78.3 % 112.0 % 101.0 % 78.3 % 101.0 % Min Required (95%): 2296.7 Min Required to pass Based on Sample (1'10%): 2647.7 PCMR0'12 - Petition Result Breakdown Printed: 5131 12018 9:'1 8:214M Page 1 of 1 JobDtS tiþ of Palo Alts Reduced Office/R&D Development tap lnitiative JobDt3 City of Palo Alto Office RID Cap CiÇ of Palo Alto Fstiiinrr Å,hbr:.h:bffifi3 tity nt Pnln Altn üffiem Hlü rinp Fetitiun l*JcmË:nhÑt3 tit-y nf FmJn Altn Rwrlunsd Ëffinæ/R,$n ñuvËlnpment üap lnitiative Ststur: üistri*t:tiç nf Ëmlm Altn l$ffiii*iþ,*"m**ili Va$u'ææ T $u,ruËy üu,*,*ti*n'g R,nw Ëarn,ple t'Jt¡rll nf S'ipx FJ u m, :lsl nt t,h e *kË t{: üg'}æs s,*$sn* *,1üä ä,1ü,ä äfiË$ süî Siüis Ënun$ fäiid in $amplx: äSäü ä,i6u t$ith*rnwn: ü üup SitE Ëaun#: 31 0ther lnvali#: ä34 Sigr* :FnunS I'Jut Valiff in Snrnpls: åË$ FerËËnt öf'veliü æ luJut,t'lbsr Ëcu,nd vslídJNunnnsr in $,wmpre Un**¡refrn# Tats,l Va,liü a Hnw.tnunt * ,pËrffint nf Vsli# ä,uplinnte.&i$nature Factnr a Haw Ë,r,u,ntJ$ümpln Slx.a üup S,ig,Weight x üuÊ Sig Fector' (ü,up,$ip Fxn{nr - 1 } üup $iü Åü.$u*tmcnt s üuF Sig Weìght * þlumþer nT'äuB, ff#s Tstal Vâli* Bansd on the Ëampte * Uneorreetgd Tütal Valiü - Þup Sig A*,¡ustment fteEr+ttE T.Ë,å$ü ä4åü, I ü ü ä43t Tntel,rjnli* Fmsns run the,,Ës,mpls ,ä4,3,ü, Required Valid ,þdini mu:rn Req'uirs$ fg$Eeþ Mlnitnunn lfüli'* Rnqiuir*# ta' Fa*s baseff nn äam,BlË {1 I üW} ü, ü, ü Office and Research and Development  Floor Area From 2001 ‐ 2017 CALENDAR YEAR CalAve Downtown El Camino Real SRP Other Areas TOTAL/YEAR 2001                       2,980                      42,720                      22,600                    115,000                               ‐                     183,300  2002                       1,510                        8,998                               ‐                       32,433                        1,191                      44,132  2003                              ‐                                 ‐                                 ‐                             511                            492                        1,003  2004                              ‐                                 ‐                                 ‐                          3,687                               ‐                          3,687  2005                     28,180                      56,760                        6,185                    100,000                  (106,897)                    84,228  2006                       6,996                      30,119                               ‐                          5,700                  (391,852)                (349,037) 2007                       3,240                               ‐                                 ‐                                 ‐                     (15,442)                  (12,202) 2008                              ‐                       10,535                               ‐                                 ‐                     (66,000)                  (55,465) 2009                       1,754                      30,372                               ‐                                 ‐                                 ‐                       32,126  2010                     60,273                               ‐                       33,979                               ‐                                 ‐                       94,252  2011                              ‐                       15,286                               ‐                       61,745                        5,690                      82,721  2012                     23,127                      48,356                               ‐                     138,998                          (162)                  210,319  2013                     18,871                      72,347                               ‐                       11,571                    (40,565)                    62,224  2014                     32,576                      14,908                               ‐                   (322,860)                             ‐                   (275,376) 2015                     29,672                       (9,720)                             ‐                       47,141                               ‐                       67,093  2016                     37,931                            517                        2,932                               ‐                                 ‐                       41,380  2017                              ‐                       12,889                          (150)                    12,613                               ‐                       25,352  TOTAL/AREA 247,110                 334,087                 65,546                   206,539                 (613,545)                239,737