HomeMy WebLinkAboutStaff Report 2306-16258.Rental Residential Vacancy Rate Determination for Three Plus Dwelling Units for the 1st
Half of 2023
City Council
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Planning and Development Services
Meeting Date: August 21, 2023
Report #:2306-1625
TITLE
Rental Residential Vacancy Rate Determination for Three Plus Dwelling Units for the 1st Half of
2023
RECOMMENDATION
This is an informational report and City Council action is not required.
EXECUTIVE SUMMARY
This report transmits the biannual report of the vacancy rates of three or more residential rental
units for May 2023. The vacancy rate is 1.39%. 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 (PAMC) 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 more than the 3% vacancy
rate. The City cannot accept tentative or preliminary parcel map applications for subdivisions
created from conversions unless there is a vacancy surplus of 3% or more as of the most recent
1 Municipal Code Chapter 21.40: https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-19994
determination. This rule is established in PAMC 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
For the first half of 2023, the multi-family residential rental vacancy rate was 1.39% percent. This
percentage represents a slight uptick compared to the 2021 and 2022 annual averages but is still
lower than the 2016 to 2020 annual averages. Further details can be found in Table 1.
Table 1: Average Annual Rental Vacancy Rates
Year Estimated Housing Units2 Utility Accounts
Deemed Vacant
Estimated Vacancy Rate
(Annual 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%
2023
(1st half)8,057 68 1.39%
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.
Staff prepared this analysis per PAMC 21.40.040 by using the City of Palo Alto’s utility meter
records. These records reveal the total number of “active” multi-family apartments and allow
staff to determine the percentage of “vacant” multi-family apartments. Utility accounts
associated with 3+ rental units were identified. However, staff recognized that rental multi-family
properties could have different types of utility accounts. For various reasons, not all accounts
could be identified; for example, addresses in different databases may not exactly match Utility
account addresses, due to location and formatting. There is not a 1-to-1 relationship between
estimated 3+ rental housing units and 3+ rental unit 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 unknown whether the rental unit is vacant or no longer available to rent
altogether. Accordingly, the data included in this analysis represents staff’s best-effort to address
these discrepancies.
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