HomeMy WebLinkAboutStaff Report 2302-10247.Rental Residential Vacancy Rate Determination for Three Plus Dwelling Units for 2022
1
7
7
5
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: May 1, 2023
Report #:2302-1024
TITLE
Rental Residential Vacancy Rate Determination for Three Plus Dwelling Units for 2022
RECOMMENDATION
This is an informational report and City Council action is not required.
EXECUTIVE SUMMARY
This report transmits the biannual reporting of the vacancy rates of three or more residential
rental units for December 2022. The vacancy rate is 1.16%. When the vacancy rate is less than
the 3% threshold, applications to convert residential rental units to ownership units through the
subdivision process are not eligible for consideration.
BACKGROUND
Planning staff prepares the Residential Vacancy Rate Determination Report twice a year to meet
the requirements of Palo Alto Municipal Code Section 21.40.040, Determination of Vacancy Rate
and Surplus. Section 21.40.0401 states the following:
”In April and November of each year, the director of planning and community
environment shall determine from the city utility meter records the vacancy rate and
the vacancy surplus, if any, within the city limits. New market-priced rental units
available to the general public, for which a certificate of use and occupancy has been
issued since the last vacancy survey, shall be added on a unit-for-unit basis either to
reduce the vacancy deficiency or to increase the vacancy surplus.”
All conversions involving a change in the type of ownership of three or more rental units are
subject to the provisions of this chapter. Vacancy surplus in this section of the Municipal Code is
defined as the number of rental units being offered for rent or lease in excess of the 3% vacancy
rate. No application for consideration of a tentative or preliminary parcel map for a subdivision
1 Municipal Code Chapter 21.40: https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-19994
1
7
7
5
created from a conversion may be filed with the city unless there is a vacancy surplus of 3% or
more as of the most recent determination pursuant to Section 21.40.040.
The purpose of this reporting effort is to seek a reasonable balance of rental and ownership
housing in the city in a variety of individual choices of tenure, type, price, and location of housing.
It is also to protect the supply of multi-family rental housing stock in the city for low- and
moderate-income families, and to reduce and avoid displacement of tenants, particularly seniors
and families.
ANALYSIS
Staff prepared this report per the directions provided in Municipal Code Section 21.40.040, using
the City of Palo Alto’s utility meter records to access the total number of “active” multi-family
apartments and to determine the percentage of “vacant” multi-family apartments.
In November 2020, the City’s Utility Department upgraded its old data recording system which
permitted address reconciliation between the Utility accounts database and the City’s GIS
address database creating a more accurate analysis. This cross-department effort created a link
between the two databases which facilitated a more accurate unit count focused on rental
multifamily utility accounts instead of all multifamily accounts. The collaboration successfully
identified most Utility accounts associated with 3+ rental units; however, for various reasons, not
all accounts could be identified (e.g., the GIS address may not exactly match Utility account
addresses on corner lots or address formatting discrepancies between the GIS address and Utility
account databases). Staff will continue to research discrepancies on a case-by-case basis to
further enhance both datasets.
As part of this reconciliation effort, staff recognized that rental multifamily properties could have
different types of utility accounts. There are instances where a property has one utility meter for
all rental units or individual unit accounts billed to the property manager or owner regardless of
unit occupancy. Additionally, staff found that some 3+ rental housing units’ individual utility
accounts have been ‘inactive’ or have not had a utility bill for some time and it is difficult to
determine whether the rental unit is vacant or no longer available to rent altogether.
Latest Vacancy Rate
For the December 2022 data reporting cycle, the multifamily rental vacancy number is 1.16%
percent. This number is significantly lower than the percentages reported before December 2020
but is about the same as the numbers reported after the system upgrade. Further details can be
found in Table 1.
Table 1: Average Annual Rental Vacancy Rates
1
7
7
5
Year Estimated
Housing Units2
Utility Accounts
Deemed “Vacant”
Estimated Vacancy Rate
(yearly average)3
2015 7,901 92 1.22%
2016 7,912 118 1.45%
2017 7,928 131 1.58%
2018 7,928 132 1.52%
2019 7,931 141 1.83%
2020 8,057 226 2.8%
2021 8,057 55 1.13%
2022 8,057 56 1.16%
FISCAL/RESOURCE IMPACT
Planning staff prepares this report biannually and there are no resource impacts.
STAKEHOLDER ENGAGEMENT
This is an informational report for the City Council and does not require any stakeholder
engagement.
ENVIRONMENTAL REVIEW
This project is exempt from environmental review under Section 15061 of the California
Environmental Quality Act Guidelines.
ATTACHMENTS
None.
APPROVED BY:
Jonathan Lait, Planning and Development Services Director
2 The U.S. Census Bureau Decennial Census 2010 data is used as a baseline for the total rental stock data
in Palo Alto and changes (addition or demolition) to the total rental dwelling unit stock are tracked by
staff biannually using the City of Palo Alto’s land use management system (Accela) to generate the
vacancy rate. Staff expected to update the baseline with the release of the 2020 Decennial Census;
however, the U.S. Census Bureau decided to discontinue the rental data point and staff will continue to
use the original methodology.
3 This percentage is the number of utility accounts deemed “vacant” divided by the utility accounts
sample size.