HomeMy WebLinkAboutStaff Report 2401-2542CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, March 11, 2024
Council Chambers & Hybrid
5:30 PM
Agenda Item
15.Rental Residential Vacancy Rate Determination for Three Plus Dwelling Units for the 2nd
Half of 2023
City Council
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Planning and Development Services
Meeting Date: March 11, 2024
Report #:2401-2542
TITLE
Rental Residential Vacancy Rate Determination for Three Plus Dwelling Units for the 2nd Half of
2023
RECOMMENDATION
This is an informational report and City Council action is not required.
BACKGROUND
Planning and Development Services 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
determination. This rule is established in PAMC Section 21.40.040.
The purpose of this report 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
1 Municipal Code Chapter 21.40: https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-19994
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 second half of 2023, the multifamily rental vacancy number was 1.25% percent. This
number represents a decrease from the first half of 2023, but higher compared to the 2021 and
2022 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 (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 2.80%
2021 8,057 55 1.13%
2022 8,057 56 1.16%
2023
(1st half)8,057 56 1.39%
2023
(2nd half)8,057 68 1.25%
Staff prepared this analysis per PAMC 21.40.040 by using the City of Palo Alto’s utility meter
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.
records. These records indicated 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 using these records. Gaps in the utility meter
data exist due to the inconsistency of relationships between utility meters to owners and
tenants; however, it is the best available data and follows the methodology outlined in the
PAMC. Once the City’s rental registry is implemented, staff will evaluate whether a municipal
code update is warranted to include that information as a new or supplemental resource to
improve report accuracy.
FISCAL/RESOURCE IMPACT
There is no fiscal impact associated with this action.
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