HomeMy WebLinkAboutStaff Report 2312-2450CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, April 15, 2024
Council Chambers & Hybrid
5:30 PM
Agenda Item
13.Joint City Council and Planning and Transportation Commission Meeting to Adopt a
Resolution Amending the Comprehensive Plan by Adopting a Revised 2023-31 Housing
Element. California Environmental Quality Act (CEQA): The City Council adopted a
Revised Addendum to the Comprehensive Plan Final Environmental Impact Report on
December 18, 2023 that, in conjunction with the Comprehensive Plan Final EIR, fully
analyzes the impacts associated with adoption of the Revised 2023-2031 Housing
Element. Public Comments, Presentation
City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: April 15, 2024
Report #:2312-2450
TITLE
Joint City Council and Planning and Transportation Commission Meeting to Adopt a Resolution
Amending the Comprehensive Plan by Adopting a Revised 2023-31 Housing Element. California
Environmental Quality Act (CEQA): The City Council adopted a Revised Addendum to the
Comprehensive Plan Final Environmental Impact Report on December 18, 2023 that, in
conjunction with the Comprehensive Plan Final EIR, fully analyzes the impacts associated with
adoption of the Revised 2023-2031 Housing Element.
RECOMMENDATION
Staff recommends the following actions:
Planning and Transportation Commission:
1. Review the staff responses to the State Department of Housing and Community
Development (HCD) Comment Letter dated August 3, 2023 (Attachment C), as
incorporated in the revised 2023-31 Housing Element (Attachment A) and recommend
City Council adopt the Revised 2023-31 Housing Element.
City Council:
1. Direct staff to make any necessary changes to the Revised 2023-31 Housing
Element (Attachment A) and authorize staff to make minor revisions based on any
further non-substantive changes required by HCD.
2. Adopt a Resolution (Attachment B) making the findings required under CEQA and
Housing Element Law, and adopting the Revised 2023-31 Housing Element as an
amendment to the City’s Comprehensive Plan.
EXECUTIVE SUMMARY
This report summarizes changes to the Palo Alto Housing Element in response to comments
from the public and HCD, and documents compliance with State Housing Element Law.
On May 8, 2023, the Planning & Transportation Commission recommended and the City Council
adopted the 2023-31 Housing Element. On June 7, 2023, the City submitted the adopted 2023-
31 Housing Element to HCD for its second round of review. On August 3, 2023, the City received
a comment letter from HCD requesting additional information and revisions including:
•More data and local knowledge regarding past and current fair housing patterns and
trends to understand progress toward affirmatively furthering fair housing (AFFH);
•Expanded analysis of the site inventory to demonstrate viability and likelihood of
redevelopment; and
•Refined program commitments with shortened timelines and quantifiable outcomes for
implementation, including targeted efforts for AFFH in specific neighborhoods and
special needs groups.
In response to HCD comments, City staff and consultants revised the text of the Housing
Element (see redlined/highlighted edits in Attachment A). The HCD comment letter is provided
as Attachment C and a matrix summarizing how staff and consultants addressed these
comments is provided in Attachment D.
Staff is requesting that:
•First, the PTC review the staff responses to HCD comments, and recommend the City
Council adopt the amendments to the 2023-31 Housing Element with the proposed
responses.
•Second, the Council adopt a resolution making all findings required by State Housing
Element Law and adopting the Revised 2023-31 Housing Element, with any additional
revisions it deems necessary.
BACKGROUND
Overview
The Housing Element is the City’s plan to provide housing for its current and future residents. It
is the only element of the City’s Comprehensive Plan that requires certification by the State.
The Housing Element covers a period of eight years between 2023 and 2031. The deadline to
adopt a compliant Housing Element for the 6th Cycle Housing Element was January 31, 2023.
As part of the Housing Element, the City needs to plan for its “fair share” of housing for the
6th Cycle planning period. The City must plan for its regional housing needs allocation (RHNA)
of 6,086 units. In addition, the Element must include programs that increase housing
production in the City. Over the last three years, the City has evaluated and updated its draft
Housing Element for the 2023-31 planning period. A history of City events and actions is
available online at www.paloaltohousingelement.com.
Regional Housing Need Allocation (RHNA)
Per State law requirements, the Housing Element contains information about the City’s housing
needs, constraints to building housing, available housing sites, an explanation of City resources
for supporting housing development, as well as goals, policies and programs that will help
address the City’s share of regional housing needs as identified by the Association of Bay Area
Governments (ABAG). The City’s housing needs are quantified in the RHNA, which
includes housing targets at all income levels. As shown in Table 1, the minimum RHNA
requirement for Palo Alto in the 2023-31 planning period is 6,086 homes across four income
levels.
Table 1: City of Palo Alto 2023-31 RHNA Requirement
Income Level
Very Low
Income Low Income
Moderate
Income
Above
Moderate
Income Total
Area Median
Income (AMI)<50% AMI
50-80% of
AMI 80-120% AMI >120% AMI
Units 1,556 896 1,013 2,621 6,086
Housing Element Document Requirements
The Housing Element identifies and analyzes existing and projected housing needs and
establishes goals, policies, quantified objectives, and scheduled programs for the preservation,
improvement, and development of housing across income levels. It identifies areas in the City
where new housing may be built and estimates how many housing units could be built on
specific sites. Furthermore, it helps the City plan for future housing needs of all residents at all
income levels, including emergency shelters, special housing for the elderly, persons with
disabilities, large families, and unhoused residents.
The Housing Element contains several mandated sections including: Executive
Summary; Introduction; Housing Needs; Housing Resources; Housing Constraints; and Housing
Plan (includes Housing Element programs). Additionally, Appendix C in the Housing
Element contains the City’s analysis of Affirmatively Furthering Fair Housing (AFFH). AFFH is a
new State requirement that mandates each jurisdiction take meaningful actions to further fair
housing to overcome patterns of segregation and foster inclusive communities free from
barriers that restrict access to opportunity based on protected characteristics. The Housing
Element, including the site inventory and programs, must be reviewed through the filter of
AFFH requirements.
Housing Element Submittal to HCD
The City has twice submitted the 2023-31 Housing Element to HCD for its required review and
both times HCD has requested modifications. The City first submitted a draft of the 2023-31
Housing Element on December 23, 2022. HCD provided comments on March 23, 2023. The City
responded to these comments and the PTC subsequently recommended and the City Council
adopted the revised 2023-31 Housing Element on May 8, 2023. On June 7, 2023, the City
submitted this adopted 2023-31 Housing Element to HCD for their review. Although the City
believes its May 8, 2023 Housing Element substantially complies with all requirements of state
law, on August 3, 2023, the City received a comment letter from HCD requesting additional
modifications.
This current submittal includes all the required components of Housing Element Law and
responds to HCD’s comments as well as public comments received since the May June 2023
submittal. Comments from individuals and organizations are provided and summarized in
Appendix B of the Housing Element along with a description of how staff revised the Housing
Element in response to these comments.
ANALYSIS
HCD Comments & City Responses
In its August 3, 2023 letter, HCD determined that the City’s Adopted 2023-2031 Housing
Element addresses many statutory requirements, but expressed a perspective that revisions
were necessary to comply with State Housing Element law. HCD’s comments generally fell into
four chapters, which are highlighted in Table 2. Comments and the proposed revisions
(redlined/highlighted in Attachment A) are summarized below and detailed in the response
matrix in Attachment D.
Table 2: Summary of HCD Comments and City’s Revisions
HCD Comment Response
Affirmatively Furthering Fair Housing (AFFH) (Appendix C)
Provide more local data and knowledge
that complements State and federal data
sources (e.g., Census) and to explain
factors contributing to Racially
Concentrated Areas of Affluence (RCAA)
Expanded history of Palo Alto and specifically why
so much of the city is categorized as an RCAA.
Described changes in land use policy and
programs to overcome past patterns of RCAA and
inequities.
Analyze trends related to disparities in
access to opportunities (in housing and
beyond) and expand programs and
policies to address shortcomings.
Expanded analysis of disparities in access to
housing, schools, transit, jobs, and related
indicators and refined programs to improve equity
in access to opportunities. Expanded matrix to
document how specific Programs from Ch. 5
further fair housing; targeted programs to certain
geographic locations and special needs
populations to support fair housing.
Link sites inventory selection with
improvements to fair housing, especially
for low-income households.
Added discussion of the benefits of socio-
economic diversity; the GM/ROLM focus area
creates housing opportunities at all income levels.
Added matrix of selected Programs that address
fair housing and added geographic targeting to
focus resources in specific neighborhoods and/or
populations.
Resources/Site Inventory (Chapter 3)
Explain why selected sites are likely to
develop and at affordability levels
indicated in the Inventory.
Bolstered site criteria with data from precedent
projects from Palo Alto and surrounding
communities. Added building permit history,
revised status and affordability levels for pipeline
projects. Described recent rezonings associated
with Program 1.1.
Confirm conservative realistic capacity
assumptions and assess likelihood of
residential development in zones where
100% non-residential uses are allowed.
Emphasized increase in office vacancy rates and
reduction in new office starts and added more
site-specific analyses based on precedent projects.
Expand non-vacant sites analysis to
assess potential constraints to
redevelopment.
Expanded discussion of site suitability criteria and
examples of recent projects that exemplify those
criteria. Refined criteria and modified site
inventory to ensure that sites meet multiple
selection criteria.
Expand discussion of opportunities for
emergency shelters in ROLM(E) zoning
district.
Expanded discussion of recent redevelopment
trends in this zone.
Constraints (Chapter 4)
Study impacts on land use controls in all
zoning districts in the sites inventory.
Analyze impacts on other policies and
trends such as fees, timing, approval
certainty on ability to achieve maximum
densities.
Added site test analyses for remaining zoning
districts, and discussion of program
implementation to address potential impacts on
housing costs, feasibility, timing, and approval
certainty.
Analysis of cost and financial feasibility
related to permit procedures and
processing.
Expanded analysis of City fees and processing
procedures and timelines on project feasibility;
added examples of fees assessed on recent
projects; expanded discussion of Palo Alto’s fees
compared to nearby jurisdictions’ fees and the
difference between fees assessed on ADUs,
apartments, and condos.
Identify on- and off-site infrastructure
improvement requirements on housing
supply and affordability.
Added discussion of improvement requirements
related to subdivisions, building, zoning and public
works requirements.
Expand discussion of potential
constraints of Retail Preservation
Ordinance and Tree Protection Ordinance
on housing.
Updated analysis of Tree Protection Ordinance
based on recent changes and clarified Retail
Preservation Ordinance exemptions for most
housing sites (except Downtown, Cal Ave, El
Camino nodes)
Housing Programs (Chapter 5)
Clarify commitments to specific housing
outcomes and deliverables.
Refined commitments to specific outcomes and
timelines (not just studies). Focused dates on the
first half of the planning period, where feasible, to
maximize impact.
Complete sites analysis (see Sites
Inventory comments above), adding/
refining programs as needed, and clarify
compliance with Surplus Lands Act.
Expanded sites analysis as indicated above, and
confirmed compliance with Surplus Lands Act for
City-owned sites.
Specify commitments to removing
constraints to housing for persons with
disabilities.
Revised fee waiver programs and alternative
housing programs to reduce impact fees and
reduce processing timelines.
Complete fair housing analysis (see AFFH
comments above) and refine related
programs to affirmatively further fair
housing.
Expanded fair housing programs; added targeted
outreach and programming to specific
neighborhoods and special needs populations to
focus affordable housing opportunities, services,
and outreach
Updates to Chapter 3: Resources/Site Inventory
The revised Housing Element reflects several changes to the Site Inventory as a result of
proposed projects, HCD's comments and questions, and letters submitted by public
commenters. City staff and consultants re-analyzed the Site Inventory to ensure that sites were
viable as opportunity sites and that the realistic capacity analysis considered existing uses and
potential constraints. As a result, City staff removed several sites from the list that may be less
feasible during this planning cycle and added others that are more viable. A summary of
changes to the Site Inventory is provided in Table 3 (strikeouts indicate the previous totals).
Table 3: Changes to Palo Alto Site Inventory (May 2023 vs. April 2024), by Income Level
Very Low Low Moderate
Above
Moderate Total
RHNA 1,556 896 1,013 2,621 6,086
Credits
Entitled Units 133 108 144 82 100 23 490 239 867 452
ADUs 153 153 153 53 512
Remaining RHNA 1,270 1,295 599 661 760 837 2,078 2,329 4,707 5,122
Opportunity Sites
Planned Units 83 83 86 553 805
Multi-family Allowed 0 0 95 67 159 177 254 244
Rezone Completed 1,091 1,009 1,092 1,010 778 815 2,118 1,907 5,079 4,741
Subtotal 1,091 1,092 1,092 1,093 873 968 2,277 2,637 5,333 5,790
Total Units (Credits +
Opportunity Sites)
2,766 2,681 1,126 1,144 2,820 2,929 6,712 6,754
Total Unit Surplus 314 229 113 131 199 308 626 668
Total % Buffer 17 12%16 15% 10 13% 13%
Attachment E identifies specific sites, by address and APN, that have been added, modified, or
deleted from the Inventory since the previous version of the adopted Housing Element. In
addition to this list in Attachment E, staff and consultants have made several updates to the
Inventory to:
•Adjust the distribution of household income levels achievable on sites appropriate for
lower income households from 75% low income and 25% moderate income, to 80% low
income and 20% moderate income, to meet the RHNA and even out the buffer above
the RHNA for each income level. This threshold is still appropriate since the City has a
track record of developing 100% affordable projects.
•Correct errors in the Assessor and City database such as existing uses, floor area ratio,
and existing unit count.
•Moving proposed projects from pipeline of "entitled units” to "planned units” (see Table
3)
The Inventory in Appendix D of the Housing Element reflects the latest inventory, which meets
the RHNA across all income levels and provides a buffer of approximately 13% potential units
over the required RHNA.
Updates to Chapter 5: Programs
Building on HCD comments on the Programs, specified in Table 2, and working in collaboration
with HCD, City staff and consultants made several additional changes to Chapter 5: Programs to
optimize program implementation, strengthen implementation, and focus fair housing efforts.
City staff took a critical and realistic look at which programs would likely be most effective, in
light of available staff resources and budget for consultant resources. Based on feedback from
HCD, staff added geographic targeting objectives to relevant programs to focus program efforts
in specific neighborhoods and special needs populations to improve fair housing. Next, staff
proposed places to eliminate, consolidate, or revise programs accordingly. The most
substantive program changes proposed are as follows:
•Program 1.1 - Rezoning to Meet RHNA: Revised to increase density and related
standards on parcels associated with the new "El Camino Real Focus Area,” between
Page Mill Road and Matadero Avenue. The City Council adopted an ordinance
implementing Program 1.1 in December 2023, thereby meeting the statutory deadline
of January 31, 2024 to complete rezonings required to meet the RHNA.
•Program 3.3 - Streamlined Review for 100% Affordable Housing: Revised to simplify
process requirements for 100% affordable housing projects. While many such projects
will continue to utilize State streamlining bills, this will allow projects that are not
eligible for State streamlining an alternate (local) processing path. Program revisions
also establish priority processing of affordable housing projects, above other projects,
when it comes to staff resources and hearings, regardless of submission date.
•Program 3.6 - Expedited Project Review: Consolidated to focus expediting opportunities:
define pre-application advisory meetings with City staff and the ARB to get early
feedback; and allow streamlined review processing (i.e., one ARB study session) for
projects that meet objective standards.
•Program 4.1 - Replacement Housing: Revised to acknowledge new statutory
requirements that both residential and non-residential redevelopment projects replace
existing dwelling units.
•Program 4.5 - Labor Practices: Added program to develop a list of local labor unions and
apprenticeship programs on the City’s website and encourage developers and
contractors to hire local labor, based on prior Council direction.
•Program 6.6 - Fair Housing (San Antonio Area Plan): Added program component to
prepare an area plan for the San Antonio Road Corridor, including the ROLM/GM Focus
Area. This will include collaboration with local organizations and residents to facilitate
neighborhood planning that integrates housing with safe multi-modal transportation
and provides access to amenities, parks and open space, placemaking improvements,
and mitigations for environmental impacts.
•Global Changes: Added targeted efforts for program implementation to certain
neighborhoods and locations in the city as well as certain special needs population. This
geographic targeting is intended to focus affordable housing opportunities, services, and
outreach to further fair housing.
•Removed Programs:
o Lot Consolidation (formerly 1.6): This program was not needed because the City
was not relying on the lot consolidation program to meet the RHNA or reduce
constraints.
o Replacement Requirements (portion of 4.1): Based on recent changes to State
law, commercial projects must now replace existing protected dwelling units
that are being demolished. The removed program would have been largely
duplicative of the new state law.
o Funding Opportunities (formerly 5.2): Consolidated with a similar program; see
Program 2.1.
HCD Review
Staff met with HCD staff over a series of meetings in February and March 2024 to review draft
revisions in response to comments outlined in the August 3, 2023 HCD comment letter. City
staff believe the revised Housing Element (Attachment A) incorporates changes that fully
respond to the comments in HCD‘s August 2023 letter, and that it meets all statutory
requirements. Accordingly, staff believe the revised Housing Element is appropriate for
adoption and are hopeful that HCD will certify this version. Even in the absence of certification
from HCD, the City may still assert that both this version and the previously adopted Housing
Element are substantially compliant.
The attached resolution for the City Council’s consideration also aims to provide some flexibility
as the Housing Element nears certification by HCD. Specifically, adoption of this resolution
would authorize City staff to:
1. Make non-substantive changes if requested by HCD as part of their formal review
without necessitating re-adoption of the Housing Element by the City Council.
2. Take additional actions to achieve certification. This may include rescinding the Revised
Housing Element from HCD’s formal review if doing so would cut down on HCD’s 60-day
review time and allow for a faster turnaround to make any substantive changes
requested by HCD.
Traffic Level of Service Analysis
While transportation level of service (LOS) is no longer a topic requiring analysis under the
California Environmental Quality Act (CEQA), it is still relevant to understanding potential
operational impacts (e.g., delay) and mitigations (e.g., stop signal and signal timing). In addition
to the CEQA analysis described below, Hexagon Transportation Consultants analyzed the
potential impacts of buildout of the Housing Element sites inventory, policies, and programs on
the City’s transportation service levels. This includes LOS for the roadway, as well as travel by
pedestrians, bicyclists, and transit users.
The Housing Element is an update to the City’s Comprehensive Plan; therefore, this analysis
examined transportation changes resulting from the updated Housing Element compared to
transportation service resulting from the Comprehensive Plan as a whole. Then, the analysis
determined whether there were any new or more severe impacts and whether additional
mitigations would be required. In short, LOS resulting from the Housing Element is generally
similar to what was identified in the Comprehensive Plan and Comprehensive Plan EIR in terms
of impacts and mitigations. The differences between the Comprehensive Plan EIR analysis and
the Housing Element analysis are primarily attributable to changes in the travel demand model
in the intervening years since the Comprehensive Plan EIR was completed and less to impacts
associated with the Housing Element.
The LOS results are summarized below and detailed in the memo in Attachment F:
•The Housing Element LOS analysis produces generally the same results as the previous
2030 Comprehensive Plan analysis. This is not surprising given the modest increase in
housing units compared to what was evaluated for the Comprehensive Plan and
alternatives in the Comprehensive Plan EIR.
•The Comprehensive Plan EIR analysis suggested that seven intersections could operate
at deficient LOS (D and E), as a result of implementation of the Comprehensive Plan. By
comparison, the Housing Element analysis finds a potential reduction in the number of
deficient LOS intersections, from seven to four, primarily because of updates to the
travel demand model and the change in vehicle miles travelled (VMT) policy (not due to
the Housing Element project per se)
•The Housing Element analysis suggests some potential reduction in transit use, increase
in biking and walking, and no substantive change in automobile use; again, these
potential changes are primarily due to changes in the travel model and VMT policy and
not attributable to the impacts of Housing Element implementation per se.
•The City must continue to implement Comprehensive Plan transportation policies (e.g.,
transportation demand management [TDM] measures) as mitigation measures for both
the Comprehensive Plan and the Housing Element update
Consequences for Non-Compliance
The deadline for Bay Area jurisdictions to adopt a compliant Housing Element was January 31,
2023. Consequences for noncompliance include jurisdictions facing the possibility of loss of
local housing land use discretion, housing grant ineligibility, and fines.
More recently, there has been statewide discussions about a “builder’s remedy” in the Housing
Accountability Act (HAA) and jurisdictions with non-compliant Housing Elements. In short, the
builder’s remedy refers to a provision of the Housing Accountability Act that restricts the ability
of a jurisdiction that does not have a compliant housing element to deny certain affordable
housing projects even if the projects are inconsistent with local zoning or general plan
regulations. Staff previously provided a discussion of the builder’s remedy on the Council’s
November 7, 2022 agenda.1 The City has received seven applications explicitly invoking the
“builder’s remedy” as of as of March 20, 2024. In the event the City adopts a Housing Element
and denies a housing project for non-compliance with local regulations prior to receiving
certification from HCD, a court would likely determine the adequacy of the City‘s Housing
Element.
TIMELINE
The Housing Element update process has been underway for three years. Table 4 shows the
significant milestones that have been achieved, leading up to preparation of this (third) version
of the Housing Element. Concurrent with the preparation of the Housing Element, the City has
1 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-
councilagendas-minutes/2022/20221107/20221107pccsm-amended-linked-q.a-2.pdf
already completed some of the programs, notably, adopting zoning changes to meet the City’s
RHNA (Program 1.1) and allowing by-right approval of non-vacant sites identified as
opportunity sites in the 5th and 6th cycle Housing Elements (Program 1.3).
Table 4: 2023-31 Housing Element Progress Milestones
Milestone Date
Formation of HE Working Group (HEWG)February 2021
PTC consideration of HE sites February 2022
Council approval of HE sites April 2022
PTC consideration of HE programs August 2022
Council approval of HE programs October 2022
Public Review HE released November 2022
HE #1 submitted to HCD for 90-day review December 2022
PTC consideration of draft HE (version #1)March 2023
HCD Comment letter #1 received March 2023
PTC & Council adoption of HE (version #2)May 2023
Adopted HE submitted to HCD for 60-day review June 2023
HCD Comment letter #2 received August 2023
PTC & Council consideration of Revised HE (version #3)April 2024
NEXT STEPS
If the City Council adopts the Revised 2023-2031 Housing Element, City staff will make any
required revisions to the Housing Element based on Council direction. The City then has 30 days
from adoption to submit the Housing Element to HCD; it is anticipated that HCD would review
the revised Housing Element within 60 days following submittal.
If HCD determines the City’s revisions address all the comments in the HCD review letter, HCD
may issue a “substantial compliance” letter to the City confirming compliance with the
requirements of state law. Alternatively, if HCD believes only minor revisions are required, it
may issue a letter stating that if the City revises the Housing Element as outlined in HCD’s
responses, the Housing Element substantially complies with the State Housing Element
requirements. Finally, if HCD believes significant revisions are required, it could simply issue
further comments without any indication regarding compliance with State law.
Staff believe the Housing Element document before the Council fully responds to all of the
comments in HCD’s August 3, 2023 letter and that it meets all statutory requirements.
Accordingly, staff believe the Housing Element is appropriate for adoption and anticipates HCD
will confirm its compliance with State law. As noted above, even in the absence of a substantial
compliance letter from HCD, the City may still assert that its Housing Element is substantially
compliant.
FISCAL/RESOURCE IMPACT
This action has no fiscal impact. However, the implementation of the Housing Element will
require significant staff or consultant resources to complete rezones, program implementation,
and prepare studies. Generally, all tasks will need to be completed within the first few years of
Housing Element adoption. This will involve greater staff resources and the use of consultants
for the studies. Budget requests related to these activities will be reflected in the annual
budget development process.
STAKEHOLDER ENGAGEMENT
The Housing Element update process included substantial public outreach and
engagement opportunities. The City formed the Housing Element Working Group (Working
Group), a 17-member group that advised the City Council with the Housing element update.
The Working Group represented a demographic cross-section of the City. The Working Group
included renters, affordable housing residents, seniors, persons of color, a representative from
the unhoused community, and an affordable housing developer.
There were other outreach efforts to educate the community about the Housing Element
update effort and to receive community input. In addition to the project’s webpage, the City
conducted an online survey with 430 respondents, hosted three community workshops and
held over 30 public meetings (includes Working Group, Council Ad-hoc, PTC, and City Council).
Additionally, staff had numerous presentations with civic groups, meetings and calls with
members of the public and developers to address questions and provide information.
Since the June 2023 draft Element, City staff has met with representatives from Palo Alto
Forward, in addition to property owners and developers. Appendix B of the Housing Element
provides a more detailed breakdown of each of the public meetings as well as summaries of
other community engagement efforts. City staff was also able to meet with its HCD reviewer
over a series of meetings in February and March 2024 to discussed proposed revisions in
response to HCD‘s comments.
The Palo Alto Municipal Code requires notice of this public hearing to be published in a
local paper. Notice of a public hearing for this project was published in the Daily Post on April 3,
2024, which is more than 10 days in advance of the meeting. Interested parties were sent the
public notice via electronic mail. Notice of the public hearing was also posted on the City’s
Housing Element website at www.paloaltohousingelement.com.
In addition, as required by State law, the attached revised draft Housing Element (and any
future revisions) must be made available for public review for at least seven days before any
action can occur. The minimum 7-day public review period for the revised Housing Element
starts on April 4, 2024 and concludes on April 15, 2024. The revised draft was available online
at www.paloaltohousingelement.com.
ENVIRONMENTAL REVIEW
The subject project has 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 City, acting as the lead agency,
has prepared an Addendum to the 2017 Palo Alto Comprehensive Plan Environmental Impact
Report (Comp Plan EIR) for the 2023-2031 Housing Element.
The City Council adopted a resolution that considered a revised Addendum to the Comp Plan
EIR on December 18, 2023, as part of the rezoning required to meet the RHNA and Program 1.1
of the Housing Element.2 This Addendum analyzed potential impacts of the updated Site
Inventory, including the El Camino Real Focus Area. Since the action in December 2023, a few
sites have been removed from the Site Inventory as a result of additional analysis, which
modestly reduces the total number of units that projected during the planning period and the
potential impact under CEQA. No further environmental review or action is required at this
time.
ATTACHMENTS
Attachment A: Clean and Strikeout/Underlined Draft 2023-31 Housing Element, April 2024
Attachment B: Draft Resolution to Adopt Housing Element
Attachment C: HCD Comment Letter, August 3, 2023
Attachment D: Matrix of HCD Comments and City Responses
Attachment E: Changes to Site Inventory (May 2023 vs. April 2024)
Attachment F: Transportation Level of Service Analysis
APPROVED BY:
Jonathan Lait, Planning and Development Services Director
2 https://paloaltohousingelement.com/wp-content/uploads/2024/02/Palo-Alto-Housing-Element_Revised-EIR-
Addendum_November-2023.pdf
Attachment A
Meeting Date: April 15, 2024
Clean and Strikeout/Underlined Draft 2023-31 Housing Element, April 2024
Please visit https://paloaltohousingelement.com/ to see both the clean and
strikeout/underlined versions of the draft document.
*NOT YET APPROVED* Attachment B
1
20240403_ay16
Resolution No. _____
A Resolution of the City Council of the
City of Palo Alto, Adopting A Comprehensive Plan
Amendment to Amend the 2023-2031 Housing Element
RECITALS
A. California Government Code Section 65300 et seq. requires every city and county in
California to adopt a General Plan, known in Palo Alto as its Comprehensive Plan, for
its long-range development, and further, to periodically to update that plan to reflect
current issues and conditions; and
B. On November 13, 2017, the City Council for the City of Palo Alto (City) certified a Final
Environmental Impact Report (EIR) for the City of Palo Alto Comprehensive Plan 2030
through Resolution No. 9720, made findings in relation to the Final EIR, adopted a
mitigation monitoring and report plan (MMRP), and adopted a statement of
overriding considerations through Resolution No. 9721 and adopted the City of Palo
Alto Comprehensive Plan 2030 through Resolution No. 9722; and
C. Government Code Section 65302 mandates that every city and county shall include a
Housing Element in its General Plan, and that the Housing Element be updated
regularly on a schedule set forth in the law to reflect current conditions and legal
requirements; and
D. State Housing Element Law (Government Code Sections 65580 et seq.) requires that
the City Council adopt a Housing Element for the eight-year period 2023-2031 to
accommodate the City of Palo Alto (City) regional housing need allocation (RHNA) of
6,086 housing units, comprised of 1,556 very-low income units, 896 low-income units,
1,013 moderate-income units, and 2,621 above moderate-income units; and
E. To comply with State Housing Element Law, the City has prepared the Housing
Element 2023-2031 (the Housing Element) in compliance with State Housing Element
Law and has identified sites that can accommodate housing units meeting the City’s
RHNA; and
F. As provided in Government Code Section 65350 et. seq., adoption of the Housing
Element constitutes a General Plan Amendment and also qualifies as a project under
the California Environmental Quality Act (CEQA); and
G. Pursuant to the provisions and requirements of CEQA and CEQA Guidelines Section
15164, the City as lead agency, prepared an Addendum to the 2017 Comprehensive
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Plan Final EIR (the Addendum) to analyze the potential environmental impacts
resulting from adopting the 2023-2031 Housing Element, which Addendum is attached
hereto as Exhibit E and incorporated by this reference; and
H. The Addendum analyzes the environmental impacts of the 2023-2031 Housing
Element and the Addendum, in conjunction with the 2017 Comprehensive Plan Final
EIR, is the environmental document upon which adoption of the 2023-2031 Housing
Element is predicated; and
I. As provided in Government Code sections 65352 – 65352.5 the City mailed a public
notice to all California Native American tribes provided by the Native American
Heritage Commission and to other entities listed; and
J. No California Native American tribe requested consultation; and
K. The City conducted extensive community outreach in multiple languages over the past
three years including at least fifteen meetings of the Housing Element Working Group,
eight meetings of the City Council Housing Element Ad Hoc Committee, two
community workshops, dissemination of a housing survey, numerous meetings with
special interest groups such as the Palo Alto Renters Association, Housing Choices,
Palo Alto Forward, and Ability Path, four meetings of the Planning and Transportation
Commission (PTC), three meetings of the City Council, and two joint meetings of the
PTC and City Council; and
L. In accordance with Government Code Section 65585 (b), on November 7, 2022, the
City posted the draft Housing Element and requested public comment for a 30-day
review period, and on December 23, 2022, after responding to public comments, the
City submitted the draft Housing Element to the State Department of Housing and
Community Development (HCD or Department) for its review; and
M. On March 8, 2023, the PTC held a duly and properly noticed public hearing to consider
a draft of the Addendum and the initial draft of the 2023-2031 Housing Element, and
unanimously recommended that the City Council adopt the draft 2023-2031 Housing
Element, subject to refinement following formal comment by HCD.
N. In February 2023, prior to receiving HCD’s formal findings regarding the draft Housing
Element, the City contacted HCD discuss preliminary comments on the adequacy of
the draft Housing Element; and
O. On March 23, 2023, the City received a letter from HCD, attached as Exhibit B to this
Resolution, providing its findings regarding the draft Housing Element, and based
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upon this, City staff and consultants revised the draft Housing Element to include
additional information and data; and
P. On April 27, 2023, the City published a revised draft Housing Element responding to
HCD’s findings and requested public comment on the draft; and
Q. On May 8, 2023, the PTC held a duly and properly noticed joint public hearing with the
City Council and recommended that the City Council adopt the Housing Element; and
R. On May 8, 2023, the City Council conducted a duly and properly noticed joint public
hearing with the PTC and adopted Resolution No. 10107, approving the Addendum,
repealing the 2015-2023 Housing Element, and adopting the 2023-2031 Housing
Element with minor revisions.
S. On May 30, 2023, the City posted the Adopted 2023-2031 Housing Element (“Adopted
Housing Element”), incorporating revisions directed by the City Council, to its website
for a period of seven days, in accordance with Government Code 65585.
T. On June 7, 2023, the City submitted the Adopted Housing Element to HCD and on
August 3, 2023, the City received a comment letter from HCD requesting additional
information and revisions to the Adopted Housing Element.
U. In Fall 2023 and Winter 2024, the City met with HCD and special interest groups to
discuss revisions to the Adopted Housing Element.
V. On November 13 and December 18, 2023, the City Council approved a Revised
Addendum to the Comprehensive Plan Final EIR (“Revised Addendum”) and adopted
Ordinance No. 5608, implementing the rezoning called for in the Adopted Housing
Element to accommodate the RHNA. The Revised Addendum analyzed potential
changes to the Adopted Housing Element’s Site Inventory as well as more expansive
rezoning than originally contemplated in the Adopted Housing Element.
W. On April 4, 2024, the City posted the Revised 2023-2031 Housing Element (“Revised
Housing Element”) to its website, in accordance with Government Code 65585.
X. On April 18, 2024, the PTC held a duly and properly noticed joint public hearing with
the City Council and recommended that the City Council adopt the Revised Housing
Element; and
Y. On April 18, 2024, the City Council conducted a duly and properly noticed joint public
hearing with the PTC, considered the Revised Addendum, and reviewed the Revised
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Housing Element along with all supporting documentation, including HCD’s findings
and the City’s responses thereto, the staff report and all attachments, and oral and
written public comments.
NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby finds that, based on
substantial evidence in the record:
1. The foregoing recitals are true and correct and are incorporated by reference into this
action.
2. The record of proceedings upon which the City Council bases its decision herein
includes, but is not limited to: (1) the Revised Addendum and the 2017 Comprehensive
Plan Final EIR including all appendices and attachments cited and/or relied upon
therein; (2) the staff reports, City files and records and other documents prepared for
and/or submitted to the City relating to the 2017 Comprehensive Plan Final EIR, the
Revised Addendum, and the Revised Housing Element; (3) the evidence, facts, findings,
and other determinations set forth in this Resolution; (4) the 2017 Comprehensive Plan;
(5) all studies, data, and correspondence submitted by the City in connection with the
Revised Addendum and the Revised Housing Element; (6) all documentary and oral
evidence received at public workshops, meetings, and hearings; (7) all other matters of
common knowledge to City decisionmakers, including City, state, and federal laws,
policies, rules, and regulations, reports, records, and projections related top
development within the City of Palo Alto and its surrounding areas. The location and
custodian of records is the City Clerk of the City of Palo Alto, 250 Hamilton Avenue, Palo
Alto, CA 94305.
3. Based on the record of proceedings as a whole, the City Council finds that the potential
environmental impacts of the Revised Housing Element were fully analyzed in the
Revised Addendum. Changes to the Revised Housing Element since the Revised
Addendum was prepared and approved in November 2023 consist of a small reduction
in projected housing units during the planning period, reducing any potential impacts.
The City Council further makes the following findings and declarations:
a. That the Revised Housing Element represents only incremental change over the
conditions studied in the 2017 Comprehensive Plan Final EIR.
b. The MMRP adopted in conjunction with the 2017 Comprehensive Plan included
all mitigation measures necessary to mitigate the most impactful scenarios
contemplated in the 2017 Comprehensive Plan EIR.
c. None of the conditions described in CEQA Guidelines Section 15162 calling for
the preparation of a Subsequent EIR or Supplemental EIR are present, as set
forth in the Revised Addendum.
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d. Any modifications to the Revised Housing Element directed by the City Council
on April 18, 2024 do not change the conclusions of the Revised Addendum and
the 2017 Comprehensive Plan Final EIR.
e. The Revised Addendum has been prepared in accordance with CEQA and the
State CEQA Guidelines and reflects the independent judgment of the City as lead
agency.
f. All mitigation measures included in the MMRP for the 2017 Comprehensive Plan
Final EIR will continue to be required, as part of the adoption of the Revised
Housing Element.
4. Based on the record of proceedings as a whole, the City Council makes the following
findings and declarations regarding the Revised Housing Element, as shown in Exhibit A
to this Resolution, incorporated herein:
a. Adoption of the Revised Housing Element is in the public interest. The Revised
Housing Element promotes the production of the City’s share of regional housing
need for all segments of the community, which is in the interest of the City, the
region, and the state.
b. The Revised Housing Element is internally consistent and consistent with the rest
of the Comprehensive Plan. As an integrated set of goals, policies, programs, and
timelines, and quantified objectives, the Revised Housing Element does not
approve any specific development projects; it acknowledges land use and zoning
changes that will be required and therefore it creates no inconsistencies with the
Comprehensive Plan.
c. The Revised Housing Element was developed through diligent effort by the City
to achieve public participation of all segments of the community, as described in
Chapter 1 of the Revised Housing Element.
d. The Revised Housing Element substantially complies with all requirements of
Housing Element Law, as provided in Government Code 65580 et seq., and
contains all provisions required by State Housing Element Law. A detailed
analysis of the Adopted Housing Element was provided in Exhibit D to Resolution
10107; the amendments contained in the Revised Housing Element are
consistent with and augment the statutory compliance demonstrated in that
analysis.
5. Based on substantial evidence in the record, including, but not limited to, the analyses
provided in Chapters 3 and 4 of the Revised Housing Element, the City’s experience with
the redevelopment of non-vacant and commercially developed sites for housing, strong
expressed interest from property owners and developers, and the numerous policies
and programs in Chapter 5 of the Revised Housing Element aimed at reducing
constraints to housing development and otherwise increasing housing supply, the
existing uses on the non-vacant sites identified in the site inventory to accommodate
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the RHNA are likely to be integrated with new residential uses or discontinued during
the planning period and therefore do not constitute an impediment to planned
residential development on the site during the planning period.
6. As required by Government Code Section 65585(e), the City Council has considered the
findings made by the Department of Housing and Community Development included in
the Department’s letter to the City dated August 3, 2023, consistent with Government
Code Section 65585(f), and as described in Exhibit C to this Resolution, incorporated
herein, the City Council has changed the Housing Element in response to the findings of
the Department to align with HCD’s interpretation of the requirements of State Housing
Element Law. However, based on the findings set forth in Paragraph 3, and on the
record as a whole, including the analysis provided in Exhibit D to Resolution 10107, the
City Council finds that modifications requested by HCD to achieve certification in its
August 3, 2023 letter and in future letters are not necessary to substantially comply with
the requirements of state law.
7. The Revised Housing Element is adopted as the Housing Element of the City of Palo Alto
Comprehensive Plan for the 2023-2031 planning period.
8. The City Council intends to complete the HCD review process to obtain HCD certification
and hereby directs and authorizes the Director of Planning and Development Services:
a) to file all necessary material with the HCD for the Department to find that the Revised
Housing Element is in conformance with its interpretation of State Housing Element
Law; b) to make all non-substantive changes to the Revised Housing Element to make it
internally consistent or to address any non-substantive changes or amendments
requested by the Department to achieve certification; and c) to take all other actions
necessary to achieve certification.
9. The Director of Planning and Development Services is hereby directed to ensure that the
Revised Housing Element, including any additional amendments, is posted to the City’s
website, and a link emailed to all individuals and organizations that have previously
requested notices, at least seven days prior to submission to HCD.
10. The Director of Planning and Development Services and City Clerk are hereby directed to
distribute copies of the Housing Element in the manner provided in Government Code
Sections 65357 and 65589.7.
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11. This Resolution shall become effective upon adoption by the City Council.
INTRODUCED and PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
____________________________ ____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
____________________________ ____________________________
Assistant City Attorney City Manager
____________________________
Director of Planning and
Development Services
Exhibit A: Revised 2023-2031 Housing Element
Exhibit B: HCD Finding Letter, dated August 3, 2023
Exhibit C: Response to HCD Findings
Exhibit A
Not included in this draft for brevity. To be replaced with Attachment A to Council Report
#2312-2450, as revised.
Exhibit B
Not included in this draft for brevity. To be replaced with Attachment C to Council Report 2312-
2450.
Exhibit C
Not included in this draft for brevity. To be replaced with Attachment F to Council Report 2312-
2450
STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY GAVIN NEWSOM, Governor
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT DIVISION OF HOUSING POLICY DEVELOPMENT 2020 W. El Camino Avenue, Suite 500 Sacramento, CA 95833 (916) 263-2911 / FAX (916) 263-7453 www.hcd.ca.gov August 3, 2023
Jonathon Lait, Planning Director Department of Planning and Development City of Palo Alto
250 Hamilton Avenue, Fifth Floor
City of Palo Alto, CA 94301 Dear Jonathon Lait:
RE: City of Palo Alto’s 6th Cycle (2023-2031) Adopted Housing Element
Thank you for submitting the City of Palo Alto’s (City) housing element, which was adopted May 8, 2023 and received for review on June 7, 2023. Pursuant to Government Code section 65585, subdivision (h), the California Department of Housing and
Community Development (HCD) is reporting the results of its review. HCD considered comments from Palo Alto Moving Forward and the League of Women Voters; pursuant to Government Code section 65585, subdivision (c). The adopted housing element addresses many statutory requirements described in
HCD’s March 23, 2023 review; however, additional revisions will be necessary to comply with State Housing Element Law (Gov. Code, § 65580 et seq). The enclosed Appendix describes the revisions needed to comply with State Housing Element Law. For your information, pursuant to Assembly Bill 1398 (Chapter 358, Statutes of 2021), as the
City failed to adopt a compliant housing element within 120 days of the statutory deadline (January 31, 2023), Program 1 (Maintain Sites) to rezone 4,511 units to accommodate the regional housing needs allocation (RHNA) and Program 1.3 (Sites Used in Previous Housing Cycle) must be completed no later than one year from the statutory deadline. Otherwise, the
local government’s housing element will no longer comply with State Housing Element Law,
and HCD may revoke its finding of substantial compliance pursuant to Government Code section 65585, subdivision (i). Please be aware, if the City fails to adopt a compliant housing element within one year from the statutory deadline, the element cannot be found in substantial compliance until rezones to accommodate a shortfall of sites pursuant to
Government Code section 65583, subdivision (c), paragraph (1), subparagraph (A) and
Government Code section 65583.2, subdivision (c) are completed. Several federal, state, and regional funding programs consider housing element compliance as an eligibility or ranking criteria. For example, the CalTrans Senate Bill
(SB) 1 Sustainable Communities grant, the Affordable Housing and Sustainable
Jonathon Lait, Planning Director Page 2
Communities program, and HCD’s Permanent Local Housing Allocation consider
housing element compliance and/or annual reporting requirements pursuant to
Government Code section 65400. With a compliant housing element, the City meets housing element requirements for these and other funding sources. HCD appreciates the commitment and cooperation the housing element update team
provided during the update and our review. We are committed to assisting the City in
addressing all statutory requirements of State Housing Element Law. If you have any questions or need additional technical assistance, please contact Irvin Saldana, of our staff, at Irvin.Saldana@hcd.ca.gov.
Sincerely,
Melinda Coy
Proactive Housing Accountability Chief Enclosure
City of Palo Alto’s 6th Cycle (2023-2031) Adopted Housing Element Page 1
August 3, 2023
APPENDIX CITY OF PALO ALTO The following changes are necessary to bring the City’s housing element into compliance with Article 10.6 of the Government Code. Accompanying each recommended change, we cite the
supporting section of the Government Code.
Housing element technical assistance information is available on HCD’s website at https://www.hcd.ca.gov/planning-and-community-development/hcd-memos. Among other resources, the housing element section contains HCD’s latest technical assistance tool,
Building Blocks for Effective Housing Elements (Building Blocks), available at
https://www.hcd.ca.gov/planning-and-community-development/housing-elements/building-blocks and includes the Government Code addressing State Housing Element Law and other resources.
A. Housing Needs, Resources, and Constraints 1. Affirmatively further[ing] fair housing in accordance with Chapter 15 (commencing with
Section 8899.50) of Division 1 of Title 2…shall include an assessment of fair housing in
the jurisdiction. (Gov. Code, § 65583, subd. (c)(10)(A).)
Racially Concentrated Areas of Affluence (RCAA): As mentioned in HCDs previous letter, the element provided a limited analysis of factors contributing to RCAA’s. While the element was revised to include a few general statements, the analysis should be
revised to include local data and knowledge, and other relevant factors. For example,
the element could examine past land use practices, investments, and quality of life relative to the rest of the City and region and then formulate appropriate programs to promote more inclusive communities and equitable quality of life. For example, the City should consider additional actions (not limited to the Regional Housing Needs Allocation (RHNA)) to promote housing mobility and improve new housing opportunities
throughout the City. Disparities in Access to Opportunity: While the element was revised to include Table (C-6) on (P.C-48) the element must analyze these data points for trends and patterns
throughout the City, and any concentrations or coincidences with other components of the
fair housing analysis. A complete analysis should revise and or provide additional policies and programs that meet the need of each of the components mentioned above. Disproportionate Housing Needs Including Displacement: While the element was
revised to include additional analysis on displacement risk for areas defined as sensitive
communities, the element must provide additional analysis on local and regional patterns for overcrowding, overpayment, and substandard housing including any identified trends and coincidence with other components of the fair housing assessment. In addition, the element briefly mentions persons experiencing
homelessness, but should provide additional information on the need, including, impacts
and patterns within the City. For instance, the element should examine disproportionate impacts on protected characteristics (e.g., race, disability) and patterns of need,
City of Palo Alto’s 6th Cycle (2023-2031) Adopted Housing Element Page 2
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including access to transportation and services. HCD will provide additional guidance
under a separate cover. Identified Sites and Affirmatively Furthering Fair Housing (AFFH): While the element was revised to include an analysis on site location and isolation by income group, the element
must still relate site selection to all components of the fair housing assessment. In
addition, the element should include additional information on how sites will improve fair housing conditions. For example, the element mentions the isolation of lower-income units in the Research; Office and Limited Manufacturing (ROLM) zone; however, the element provides minimal information on how this zone improves fair housing.
Local Data and Knowledge and Other Relevant Factors: As noted in the prior findings, the element must supplement the analysis and complement state and federal data with local data and knowledge to capture emerging trends and issues, including utilizing knowledge from local and regional advocates, public comments, and service providers.
Contributing Factors: The element identifies many contributing factors to fair housing issues but must prioritize these factors to better formulate policies and programs and carry out meaningful actions to AFFH.
2. An inventory of land suitable and available for residential development, including vacant
sites and sites having realistic and demonstrated potential for redevelopment during the
planning period to meet the locality’s housing need for a designated income level, and
an analysis of the relationship of zoning and public facilities and services to these sites.
(Gov. Code, § 65583, subd. (a)(3).)
Progress Towards the RHNA: As you know, the City’s RHNA may be reduced by the number of new units built since June 30, 2022; however, the element must demonstrate the affordability of units in the planning period is based on actual sales price, rent level, or other mechanisms ensuring affordability (e.g., deed restrictions). Table 3-2 on (P.3-5)
was revised to include the anticipated affordability of entitled and proposed
developments and the element provides some information about past trends to demonstrate the likelihood these units will move from entitlement to building permits. In order to demonstrate the likelihood that the units will be built in the planning period the analysis must consider any barriers to development, phasing, anticipated build-out
horizons, market conditions, and other relevant factors to demonstrate their availability
in the planning period. For example, the element could apply past success rates to the projects listed on Table 3-2. Realistic Capacity: As mentioned in HCDs previous letter, realistic capacity assumptions
are generally conservative and based on existing or recently approved residential
development within the City and the surrounding region. While development trends can be used to support realistic capacity assumptions, the element must still include an analysis that accounts for existing land use and site improvements. Based on a complete analysis, the element may need to revise current realistic capacity assumptions. In
addition, while the element provides some analysis on the likelihood of residential
development in zones where 100 percent nonresidential uses are allowed (P. 3-25), the analysis is unclear as to how and if existing policies incentivize residential development
City of Palo Alto’s 6th Cycle (2023-2031) Adopted Housing Element Page 3
August 3, 2023
in nonresidential zones. Finally, the element should commit to a mid-cycle assessment of
residential development in zones that allow 100 percent nonresidential uses. Based on the results of this assessment, the City may need to identify additional sites to meet the RHNA. Nonvacant Sites: As mentioned in HCDs previous letter, the element provides several factors that demonstrate the redevelopment potential of nonvacant sites, including, current
and past development trends, improvement to land value ratios, existing use vs zone use,
age of structure, floor area ratio (FAR), proximity to transit, TCAC/HCD designations, and community interest. While the element now includes some information on current market demand, the element must still include an analysis addressing HCDs previous finding on the suitability of nonvacant sites. The analysis must address nonvacant sites related to
existing uses that may constitute an impediment to additional residential development,
past experiences converting existing uses to higher-density residential development, existing leases or contracts that would perpetuate the existing use or prevent additional residential development or other relevant information to demonstrate the potential for redevelopment such as expressed owner and developer interest. Based on a complete
analysis, the element may need to add or revise programs to facilitate redevelopment. In
addition, please refer to Palo Alto Moving Forward’s July 14, 2023, (P.12) letter for additional information on several data errors identified in the element related to nonvacant sites. Finally, if the housing element relies upon nonvacant sites to accommodate more than 50 percent of the RHNA for lower-income households, the housing element must
demonstrate that the existing use is not an impediment to additional residential
development in the planning period (Gov. Code, § 65583.2, subd. (g)(2).). This can be demonstrated by providing substantial evidence that the existing use is likely to be discontinued during the planning period (Gov. Code, § 65583.2, subd. (g)(2).
Electronic Sites Inventory: For your information, pursuant to Government Code section
65583.3, the County must submit an electronic sites inventory with its adopted housing element. The County must utilize standards, forms, and definitions adopted by HCD. Please see HCD’s housing element webpage at https://www.hcd.ca.gov/community-development/housing-element/index.shtml#element for a copy of the form and
instructions. The County can reach out to HCD at sitesinventory@hcd.ca.gov for
technical assistance. Zoning for a Variety of Housing Types (Emergency Shelters): While the element was revised to include an analysis on the suitability of the City’s ROLM(E) zone to meet the
City’s unsheltered need, the element must be revised to include an analysis of potential
reuse and redevelopment opportunities in this zone. 3. An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the types of
housing identified in paragraph (1) of subdivision (c), and for persons with disabilities as
identified in the analysis pursuant to paragraph (7), including land use controls, building
codes and their enforcement, site improvements, fees and other exactions required of
developers, and local processing and permit procedures... (Gov. Code, § 65583, subd. (a)(5).)
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Land Use Controls: As mentioned in HCDs prior review, the element must identify and analyze the impact of all relevant land use controls as potential constraints on a variety of housing types in all zones that allow residential uses. While the element now analyzes most zones, the City’s CC, CS, and CD-N zones must still be analyzed. In
addition, the element must also provide an analysis that addresses any impacts on cost,
supply, housing choice, feasibility, timing, approval certainty, and ability to achieve maximum densities and includes programs to address any identified constraints. Currently, the element seems to rely on several factors such as the City’s Housing Incentive Program (HIP) and Senate Bill 478 to reach maximum densities. While the
HIP can be a great tool for development, the City must demonstrate that current land-
use controls facilitate housing without the use of this tool. Finally, the element should link development standards used in recent projects (P.3-13-19) to current land-use controls.
Local Processing and Permit Procedures: The element was revised to include a
discussion on the City’s processing and permit procedures for potential constraints on approval certainty and timing. However, as mentioned in HCDs prior review, an analysis of cost and financial feasibility is required. Finally, the City relies on processes such as the City’s expedited review process to mitigate timing constraints on approval certainty.
While this process can be useful, only projects that adhere to base development
standards qualify. As mentioned above, the City should analyze development standards used in recent projects to better understand the effectiveness of the City’s expedited review process. Based on a complete analysis, the City may need to add or revise programs to address constraints on local processing and permit procedures.
On/Off-Site Improvements: As mentioned in HCDs previous letter, the element must identify subdivision-level improvement requirements, such as minimum street widths (e.g., 40-foot minimum street width) and analyze their impact as potential constraints on housing supply and affordability.
Local Ordinances: The element now analyzes the City’s Inclusionary Housing ordinance, Tree ordinance, Short Term Rental ordinance, and Retail Perseveration ordinance (RPO). However, the element must provide additional analysis on the City’s RPO and Tree ordinance. Specifically, how units that are not exempt from the RPO
(along California Avenue) will develop. In addition, the element mentions the Tree
ordinance has been identified as a potential constraint on Accessory Dwelling Units (ADUs). Given this finding, the element must analyze this ordinance as a potential constraint on a variety of housing types. Finally, the element mentions the City’s Tree ordinance will not apply to state mandated ADUs. The element should be revised to
include this language in a program with a specific date of completion early in the
planning period.
B. Housing Programs
1. Include a program which sets forth a schedule of actions during the planning period,
each with a timeline for implementation, which may recognize that certain programs are
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ongoing, such that there will be beneficial impacts of the programs within the planning
period, that the local government is undertaking or intends to undertake to implement
the policies and achieve the goals and objectives of the Housing Element... (Gov. Code,
§ 65583, subd. (c).)
As mentioned in HCDs previous letter, programs must have a specific commitment to
housing outcomes and deliverables. While the element revised several programs, many programs include conducting a “study” prior to additional program commitment. HCD recognizes that program implementation may require a study; however, the element must make firm commitment to program outcomes upon the completion of the study or
identify additional programmatic goals or actions that lead to housing outcomes.
Programs to revise may include but are not limited to the following: Program 1.6 (Lot Consolidation) Program 2.1 (Affordable Housing Development) Program 3.1 (Fee Waivers and Adjustments) Program 3.4 (Housing Incentive Program (HIP)) Program 3.5 (Accessory Dwelling Unit (ADU) Facilitation) Program 3.6 (Expedited Project Review)
4.2 (Housing and Neighborhood Preservations) Program 6.2 (Family Housing and Large
Units) Program 6.5 (Alternative Housing) Program 6.6 (Fair Housing) Finally, Programs (1.3), (1.5), (1.6), (2.1), (3.3), (3.4), (3.5), (3.6), (6.3), (6.5) and (6.6) will need to be revised with either refined commitment or timing. HCD will provide
additional guidance under a separate cover.
2. Identify actions that will be taken to make sites available during the planning period with
appropriate zoning and development standards and with services and facilities to
accommodate that portion of the city’s or county’s share of the regional housing need
for each income level that could not be accommodated on sites identified in the
inventory completed pursuant to paragraph (3) of subdivision (a) without rezoning, and
to comply with the requirements of Government Code section 65584.09. Sites shall be
identified as needed to facilitate and encourage the development of a variety of types of
housing for all income levels, including multifamily rental housing, factory-built housing,
mobilehomes, housing for agricultural employees, supportive housing, single-room
occupancy units, emergency shelters, and transitional housing. (Gov. Code, § 65583,
subd. (c)(1).) As noted in Finding A2, the element does not include a complete site analysis;
therefore, the adequacy of sites and zoning were not established. Based on the results
of a complete sites inventory and analysis, the City may need to add or revise programs to address a shortfall of sites or zoning available to encourage a variety of housing types.
In addition, Program 1.4: (City-Owned Land Lots) should clarify that all City-Owned sites
will comply with Surplus Land Act (SLA). In addition, and as mentioned in HCDs previous letter, the element will need to commit to numerical objectives, including affordability, aligned with assumptions in the inventory, and a schedule of actions to facilitate development. A schedule of actions may include coordination with appropriate
entities, including potential developers, disposition of the land, zoning, funding,
facilitating other entitlements, and issuing permits. Finally, this program should identify
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and make alternative sites with zoning of equivalent capacity and density by a specified
date if sites are not made available by a date early in the planning period. 3. Address and, where appropriate and legally possible, remove governmental and
nongovernmental constraints to the maintenance, improvement, and development of
housing, including housing for all income levels and housing for persons with
disabilities. The program shall remove constraints to, and provide reasonable
accommodations for housing designed for, intended for occupancy by, or with
supportive services for, persons with disabilities. (Gov. Code, § 65583, subd. (c)(3).)
As noted in Finding A3, the element requires a complete analysis of potential
governmental constraints. Depending upon the results of that analysis, the City may need to revise or add programs and address and remove or mitigate any identified constraints. In addition, the element should be revised as follows:
• Program 3.4 (Program 3.1 Fee Waivers and Adjustments): The Program should specifically commit to reducing impact fees comprehensively and not limit the scope of the program to park fees.
• Program 6.5 (Alternative housing): The Program should commit to actively mitigating
costs related to impact fees on alternative housing. 4. Promote and affirmatively further fair housing opportunities and promote housing throughout the community or communities for all persons regardless of race, religion,
sex, marital status, ancestry, national origin, color, familial status, or disability, and other
characteristics... (Gov. Code, § 65583, subd. (c)(5).) As noted in Finding A1, the element must include a complete analysis of AFFH. The element must be revised to add goals and actions based on the outcomes of a complete
analysis. Actions must have specific commitment, milestones, geographic targeting and
metrics or numeric objectives and, as appropriate; must address housing mobility enhancement, new housing choices and affordability in high opportunity areas, place-based strategies for community preservation and revitalization, and displacement protection.
Programs requiring revisions include but are not limited to the following, Program 1.4 (City-Owned Land Lots) Program 1.6 (Lot Consolidation) Program 2.1 (Affordable Housing Development) Program 3.5 (Accessory Dwelling Unit Facilitation) Program 3.7 (Conversion of Commercial Uses to Mixed Use Development) Program 4.1
(Replacement Housing) Program 4.2 (Housing and Neighborhood Preservation)
Program 5.1 (Preservation of At-Risk Housing) Program 5.2 (Funding Opportunities) Program 6.1 (Housing for Person with Special Needs) Program 6.2 (Family Housing and Large Units) Program 6.3 (Missing Middle) Program 6.4 (Homeless Program) Program 6.5 (Alternative Housing) and Program 6.6 (Fair Housing). Finally, based on a
complete analysis, additional program and policy action may need to be included.
Draft HCD Response to Comments Matrix (April 2024)
HCD Comment, by Chapter City Response to Comment Chapter/Section
Appendix C: Assessment of Fair Housing
1. Affirmatively further[ing] fair housing in accordance with Chapter 15 (commencing with Section 8899.50) of Division 1 of Title 2…shall include an assessment of fair housing in the jurisdiction.
(Gov. Code, § 65583, subd. (c)(10)(A).)
Racially Concentrated Areas of Affluence (RCAA): As mentioned in HCDs previous letter, the
element provided a limited analysis of factors contributing to RCAA’s. While the element was
Additional analysis was added detailing the
historical past discriminatory practices that likely C.7 Local Knowledge/ Local History,
C.4 RCAAs/ Local Trends,
revised to include a few general statements, the analysis should be revised to include local data contributed to RCAAs in the city. Information was C.8 Other Relevant Factors/ City-Driven
and knowledge, and other relevant factors. For example, the element could examine past land added to the local history subsection. Discussion Initiatives,
use practices, investments, and quality of life relative to the rest of the City and region and then was added the city's trends of RCAA and how the C.9 Site Inventory/ Sites by Areas of
formulate appropriate programs to promote more inclusive communities and equitable quality City is taking initiative initiatives that promote Integration and Segregation
of life. For example, the City should consider additional actions (not limited to the Regional
Housing Needs Allocation (RHNA)) to promote housing mobility and improve new housing
opportunities throughout the City.
affordable housing and a more inclusive
community, and working to overcome past
patterns that contribute to RCAAs.
Disparities in Access to Opportunity: While the element was revised to include Table (C-6) on
(P.C-48) the element must analyze these data points for trends and patterns throughout the
The Assessment of Fair Housing topics related to C.5 Disparities in Access to Opportunity/
disparities in access to opportunities include Transit/ Education/Economic and
City, and any concentrations or coincidences with other components of the fair housing analysis. further analysis on the data provided in Table C-6. Employment/ Healthy Indicators
A complete analysis should revise and or provide additional policies and programs that meet the Patterns in opportunity access by race/ethnicity
need of each of the components mentioned above.and poverty in the city and within the region are
discussed in further detail for each of the identified
fair housing topic.
Disproportionate Housing Needs Including Displacement:While the element was revised to Additional discussion on the local trends, patterns, C.6 Disproportionate Housing Needs,
include additional analysis on displacement risk for areas defined as sensitive communities, the and overlap of fair housing issues, including Including Displacement/ Housing Cost
Burden/ Substandard Housing/
Homelessness/ Overcrowding/ Displacement
Risk/ Housing Tenure
element must provide additional analysis on local and regional patterns for overcrowding,
overpayment, and substandard housing including any identified trends and coincidence with
other components of the fair housing assessment. In addition, the element briefly mentions
persons experiencing homelessness, but should provide additional information on the need,
including, impacts and patterns within the City. For instance, the element should examine
disproportionate impacts on protected characteristics (e.g., race, disability) and patterns of
need, including access to transportation and services. HCD will provide additional guidance
under a separate cover.
displacement has been added throughout
Appendix C. A new table with homeless counts
within the City of Palo Alto and additional
discussion has been added to the Homelessness,
Local Trends subsection. Analysis on
disproportionate impact on certain groups and the
overlap with special housing needs (including race
and disability) has been added where applicable
and specifically to Housing Cost Burden,
Homelessness, and Displacement sections.
Identified Sites and Affirmatively Furthering Fair Housing (AFFH): While the element was revised Discussion was added on how the site selection
to include an analysis on site location and isolation by income group, the element must still contributes to improved housing conditions,
relate site selection to all components of the fair housing assessment. In addition, the element including number of units allocated, and the
should include additional information on how sites will improve fair housing conditions. For
C.9 Site Inventory, Total Units by Resource
Area/ Sites by Area of Integration and
Segregation/ Sites by Disproportionate
components of fair housing. Discussion was added Housing Needs/ Sites by CalEnviroScreen
example, the element mentions the isolation of lower-income units in the Research; Office and regarding sites located in the GM and ROLM zone. Score
Limited Manufacturing (ROLM) zone; however, the element provides minimal information on
how this zone improves fair housing.
HCD Comment, by Chapter City Response to Comment Chapter/Section
Local Data and Knowledge and Other Relevant Factors: As noted in the prior findings, the Analysis and history about Palo Alto provided by C.7 Local Area Knowledge, Local History/
element must supplement the analysis and complement state and federal data with local data the City has been added into the Local Knowledge Community Engagement,
and knowledge to capture emerging trends and issues, including utilizing knowledge from local section, including local history, recent housing C.8 Other Relevant Factors, City Driven
and regional advocates, public comments, and service providers. production, and discussion on the emerging trends Initiatives
and issues in the city, and recent initiatives the City
is implementing in order to overcome past
patterns.
Contributing Factors: The element identifies many contributing factors to fair housing issues but Contributing factors are categorized and prioritized Appendix C: Assessment of Fair Housing;
must prioritize these factors to better formulate policies and programs and carry out meaningful with corresponding programs in Table C-11. The Contributing Factors
actions to AFFH.table has been updated as needed following
revisions to the Housing Plan as pertains to AFFH.
Ch. 3: Housing Resources and Opportunities
2. An inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning
period to meet the locality’s housing need for a designated income level, and an analysis of the relationship of zoning and public facilities and services to these sites. (Gov. Code, § 65583, subd.
(a)(3).)
Progress Towards the RHNA: As you know, the City’s RHNA may be reduced by the number of The project status and affordability level for the Chapter 3: Housing Resources;
new units built since June 30, 2022; however, the element must demonstrate the affordability of entitled and proposed development projects listed 3.3 RHNA Credits, Entitled Developments/
units in the planning period is based on actual sales price, rent level, or other mechanisms
ensuring affordability (e.g., deed restrictions). Table 3-2 on (P.3-5) was revised to include the
in Table 3-2 have been updated. Additional
analysis on building permit history and success
Table 3-2
anticipated affordability of entitled and proposed developments and the element provides some rates was included.
information about past trends to demonstrate the likelihood these units will move from
entitlement to building permits. In order to demonstrate the likelihood that the units will be
built in the planning period the analysis must consider any barriers to development, phasing,
anticipated build-out horizons, market conditions, and other relevant factors to demonstrate
their availability in the planning period. For example, the element could apply past success rates
to the projects listed on Table 3-2.
HCD Comment, by Chapter City Response to Comment Chapter/Section
Realistic Capacity: As mentioned in HCDs previous letter, realistic capacity assumptions are
generally conservative and based on existing or recently approved residential development
Additional analysis has been added to the Realistic Chapter 3: Housing Resources;
Capacity section to further discuss representative 3.6 Suitability of Residential Opportunity
within the City and the surrounding region. While development trends can be used to support sites. The representative sites analysis now
realistic capacity assumptions, the element must still include an analysis that accounts for includes a list of sites from each area of the city
existing land use and site improvements. Based on a complete analysis, the element may need and an explanation as to the realistic capacity of
to revise current realistic capacity assumptions. In addition, while the element provides some the sites and how development would be
Sites, Vacant/ Developer Interest, Surface
Parking, Vacant Buildings, Faith Based
Institutions/ Single-Story Buildings/
Improvement-to-Land Value Ratio/ Age of
analysis on the likelihood of residential development in zones where 100 percent nonresidential supported in these zones. Additionally, sites were Structure/ Increased Unit Potential/ Existing
uses are allowed (P. 3-25), the analysis is unclear as to how and if existing policies incentivize removed/adjusted per public comments. The Uses// Sites Used in Previous Planning Period,
residential development in nonresidential zones. Finally, the element should commit to a mid- realistic density was based on pipeline and regional 3.7 Site Inventory Strategy,
cycle assessment of residential development in zones that allow 100 percent nonresidential
uses. Based on the results of this assessment, the City may need to identify additional sites to
meet the RHNA.
trends. Land use controls were analyzed for each 3.8 Adequacy of Residential Site Inventory in
zoning district where the 5th cycle Sites Inventory Meeting RHNA
was developed; 11 of 16 were developed with
residential uses. Rationale was included for the
strategy applied, along with programs created to
facilitate residential development in these zones.
Nonvacant Sites: As mentioned in HCDs previous letter, the element provides several factors Additional site selection criteria was added and Chapter 3: Housing Resources and
that demonstrate the redevelopment potential of nonvacant sites, including, current and past discussed, giving more reasoning as to how non-Opportunities; 3.6 Suitability of Residential
development trends, improvement to land value ratios, existing use vs zone use, age of
structure, floor area ratio (FAR), proximity to transit, TCAC/HCD designations, and community
interest. While the element now includes some information on current market demand, the
element must still include an analysis addressing HCDs previous finding on the suitability of
nonvacant sites. The analysis must address nonvacant sites related to existing uses that may
constitute an impediment to additional residential development, past experiences converting
existing uses to higher-density residential development, existing leases or contracts that would
perpetuate the existing use or prevent additional residential development or other relevant
information to demonstrate the potential for redevelopment such as expressed owner and
developer interest. Based on a complete analysis, the element may need to add or revise
programs to facilitate redevelopment. In addition, please refer to Palo Alto Moving Forward’s
July 14, 2023, (P.12) letter for additional information on several data errors identified in the
element related to nonvacant sites.
vacant sites were selected, including criteria that Opportunities, Site Selection Criteria/ Existing
must be met for non-vacant sites to be included in Uses/ Table 3-11 Existing Uses on
the sites inventory. Additional analysis on existing Opportunity Sites, 3.7 Site Inventory
use of nonvacant sites has been added.Strategies
Finally, if the housing element relies upon nonvacant sites to accommodate more than 50
percent of the RHNA for lower-income households, the housing element must demonstrate that
the existing use is not an impediment to additional residential development in the planning
period (Gov. Code, § 65583.2, subd. (g)(2).). This can be demonstrated by providing substantial
evidence that the existing use is likely to be discontinued during the planning period (Gov. Code,
§ 65583.2, subd. (g)(2).
HCD Comment, by Chapter City Response to Comment Chapter/Section
Electronic Sites Inventory: For your information, pursuant to Government Code section 65583.3, Sites inventory will be submitted electronically with N/A
the County must submit an electronic sites inventory with its adopted housing element. The
County must utilize standards, forms, and definitions adopted by HCD. Please see HCD’s housing
element webpage at https://www.hcd.ca.gov/communitydevelopment/housing-
element/index.shtml#element for a copy of the form and instructions. The County can reach out
to HCD at sitesinventory@hcd.ca.gov for technical assistance.
subsequent submissions of the Housing Element.
Zoning for a Variety of Housing Types (Emergency Shelters): While the element was revised to Discussion on redevelopment trends in the GM and Chapter 3: Housing Resources and
include an analysis on the suitability of the City’s ROLM(E) zone to meet the City’s unsheltered ROLM zones was substantially expanded. Site Opportunities; Amendments to the
need, the element must be revised to include an analysis of potential reuse and redevelopment criteria and representative sites were included to Comprehensive Plan and Zoning Code/ROLM/
opportunities in this zone.provide justification for sites in the Site Inventory. Table 3-6 Previous VS. New Development
Standards for Opportunity Sites, by
Residential and Mixed-Use New
Districts/Table 3-7 Existing vs. Proposed
Development Standards for Opportunity Sites
and Focus Areas (GM and ROLM Districts);
Chapter 4: Housing Constraints;
4.2 Governmental Constraints, Zoning for a
Variety of Housing Types - Analysis of Land
Use Controls
Ch. 4: Housing Constraints
3. An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the types of housing identified in
paragraph (1) of subdivision (c), and for persons with disabilities as
identified in the analysis pursuant to paragraph (7), including land use controls, building codes and their enforcement, site improvements, fees and other exactions required of developers, and
local processing and permit procedures... (Gov. Code, § 65583, subd. (a)(5).)
Land Use Controls: As mentioned in HCDs prior review, the element must identify and analyze Additional discussion was added on the City’s
the impact of all relevant land use controls as potential constraints on a variety of housing types Housing Incentive Program, Workforce Housing
in all zones that allow residential uses. While the element now analyzes most zones, the City’s Overlay and State Density Bonus Law. Additional
Chapter 4: Housing Constraints; 4.2
Governmental Constraints, Zoning for a
Variety of Housing Types - Analysis of Land
CC, CS, and CD-N zones must still be analyzed.analysis of City's land use controls for the CD-N, CC, Use Controls
In addition, the element must also provide an analysis that addresses any impacts on cost,
supply, housing choice, feasibility, timing, approval certainty, and ability to achieve maximum
densities and includes programs to address any identified constraints. Currently, the element
CS zones was added, including figures for model
residential development and an analysis on
potential constraints. Discussion on the
seems to rely on several factors such as the City’s Housing Incentive Program (HIP) and Senate implementation of Programs 3.1 and Programs 3.7
Bill 478 to reach maximum densities. While the HIP can be a great tool for development, the City was added to address potential impacts on housing
must demonstrate that current land use controls facilitate housing without the use of this tool. costs, feasibility, timing, and approval certainty.
Finally, the element should link development standards used in recent projects (P.3-13-19) to
current land-use controls.
HCD Comment, by Chapter
Local Processing and Permit Procedures: The element was revised to include a discussion on the Added additional analysis into the fee discussion
City’s processing and permit procedures for potential constraints on approval certainty and including a fee comparison table of neighboring
City Response to Comment Chapter/Section
Chapter 4: Housing Constraints; 4.2
Governmental Constraints, Zoning for a
timing. However, as mentioned in HCDs prior review, an analysis of cost and financial feasibility jurisdictions. An example feasibility case study on Variety of Housing Types - Analysis of Land
is required. Finally, the City relies on processes such as the City’s expedited review process to the 850 W. Bayshore Rd. Project was included to Use Controls
mitigate timing constraints on approval certainty. While this process can be useful, only projects further the conclusion that permit processing costs
that adhere to base development standards qualify. As mentioned above, the City should and impact fees to address infrastructure
analyze development standards used in recent projects to better understand the effectiveness improvements can be absorbed by development
of the City’s expedited review process. Based on a complete analysis, the City may need to add projects.
or revise programs to address constraints on local processing and permit procedures.
On/Off-Site Improvements: As mentioned in HCDs previous letter, the element must identify
subdivision-level improvement requirements, such as minimum street widths (e.g., 40-foot
minimum street width) and analyze their impact as potential constraints on housing supply and following: HUD's study of Subdivision
Expanded the analysis of on/off site improvement Chapter 4: Housing Constraints; 4.2
standards including discussions regarding the Governmental Constraints, On/Off-Site
Improvement Standards
affordability.Requirements, City regulations in accordance with
Title 16 (Building Code) and Title 18 (Zoning Code),
and Title 18 (Zoning Code) examples of on-site and
off-site improvements, when on and off site
improvements are typically implemented in the
City, Street improvements and regulations under
Subdivision Ordinance, Section 21.20.240, and
public improvement standards and how these
standards typically compare to nearby jurisdictions.
Local Ordinances: The element now analyzes the City’s Inclusionary Housing ordinance, Tree
ordinance, Short Term Rental ordinance, and Retail Perseveration ordinance (RPO). However,
the element must provide additional analysis on the City’s RPO and Tree ordinance. Specifically, further refined to waive its applicability to sites
how units that are not exempt from the RPO (along California Avenue) will develop. In addition, listed in the Site Inventory except for 21 sites
Discussion regarding Program 3.4 (HIP), which
requires the retail preservation requirement be
Chapter 4: Housing Constraints; 4.2
Governmental Constraints, Design Guidelines
and Objective Design Standards
the element mentions the Tree ordinance has been identified as a potential constraint on
Accessory Dwelling Units (ADUs). Given this finding, the element must analyze this ordinance as nodes along El Camino Real. Additionally, Program
a potential 3.4 requires a reduction to the amount of retail or
located within the strategic retails/pedestrian
constraint on a variety of housing types. Finally, the element mentions the City’s Tree ordinance retail-like floor area that must be replaced.
will not apply to state mandated ADUs. The element should be revised to include this language Added discussion on the Tree Protection Ordinance
in a program with a specific date of completion early in the planning period.including recent changes the City made in June
2023 to codify the Tree Protection Ordinance to be
exempt State-mandated ADUs from the ordinance.
Furthermore, the City is preparing amendments to
the Ordinance to provide more flexibility in how
tree protection requirements can be mitigated.
HCD Comment, by Chapter City Response to Comment Chapter/Section
Ch. 5: Housing Plan
1. Include a program which sets forth a schedule of actions during the planning period, each with Actions were expanded out across all programs
a timeline for implementation, which may recognize that certain programs are ongoing, such
Chapter 5: Housing Plan;
including revising timelines so that implementation Program 2.1 (Affordable Housing
that there will be beneficial impacts of the programs within the planning period, that the local phases were more defined and finalization dates Development)
government is undertaking or intends to undertake to implement the policies and achieve the were included. Dates are focused on the first half Program 3.1 (Fee Waivers and Adjustments),
goals and objectives of the Housing Element... (Gov. Code,§ 65583, subd. (c).)of the planning period where feasible.
Verbiage in programs have been adjected to be
more actionable, for example, language such as
Program 3.2 (Monitor Constraints to
Housing),
Program 3.4 (Housing Incentive ProgramAs mentioned in HCDs previous letter, programs must have a specific commitment to housing
outcomes and deliverables. While the element revised several programs, many programs
include conducting a “study” prior to additional program commitment. HCD recognizes that
program implementation may require a study; however, the element must make firm
commitment to program outcomes upon the completion of the study or identify additional
"study" or "consider" were changed to be definitive (HIP)),
commitments with more precise timelines. All
programs listed in this comment were revised to
establish more definitive action items, further
Program 3.5 (Accessory Dwelling Unit (ADU)
Facilitation)
Program 3.6 (Expedited Project Review),
Program 6.3 (Middle Housing Program),
Program 6.5 (Alternative Housing), Program
6.6 (Fair Housing)
programmatic goals or actions that lead to housing outcomes. Programs to revise may include explain commitments where needed, and
but are not limited to the following: Program 1.6 (Lot Consolidation) Program 2.1 (Affordable
Housing Development) Program 3.1 (Fee Waivers and Adjustments) Program 3.4 (Housing
Incentive Program (HIP)) Program 3.5 (Accessory Dwelling Unit (ADU) Facilitation) Program 3.6
(Expedited Project Review) 4.2 (Housing and Neighborhood Preservations) Program 6.2 (Family
Housing and Large Units) Program 6.5 (Alternative Housing) Program 6.6 (Fair Housing)
timeframes were revised to be earlier in the
planning process with very concise timeframes.
Finally, Programs (1.3), (1.5), (1.6), (2.1), (3.3), (3.4), (3.5), (3.6), (6.3), (6.5) and (6.6) will need to
be revised with either refined commitment or timing. HCD will provide additional guidance
under a separate cover.
HCD Comment, by Chapter City Response to Comment Chapter/Section
2. Identify actions that will be taken to make sites available during the planning period with Additional action items were added where Chapter 5: Housing Plan;
appropriate zoning and development standards and with services and facilities to accommodate applicable to identify the availability of sites with Program 1.1 Adequate Sites Program,
that portion of the city’s or county’s share of the regional housing need for each income level
that could not be accommodated on sites identified in the inventory completed pursuant to
paragraph (3) of subdivision (a) without rezoning, and to comply with the requirements of
Government Code section 65584.09. Sites shall be identified as needed to facilitate and
encourage the development of a variety of types of housing for all income levels, including
multifamily rental housing, factory-built housing, mobile homes, housing for agricultural
employees, supportive housing, single-room occupancy units, emergency shelters, and
transitional housing. (Gov. Code, § 65583, subd. (c)(1).)
appropriate zoning and development standards as Program 1.4 City-Owned Land Lots,
well as access to services and facilities. An example Program 6.2: Family Housing and Large Units
of this includes Program 1.1 where a discussion of
the El Camino Real focus area was included to
showcase available sites with access to services
and facilities while also accommodating affordable
housing. Upon completion of the site inventory,
programs were refined where applicable to reflect
any new updates to unit numbers, zone changes
etc.As noted in Finding A2, the element does not include a complete site analysis; therefore, the
adequacy of sites and zoning were not established. Based on the results of a complete sites
inventory and analysis, the City may need to add or revise programs to address a shortfall of
sites or zoning available to encourage a variety of housing types.
Verbiage was added to comply with the Surplus
Land Act by using the streamlined provisions for
affordable housing dispositions under Government
Code Section 37364.
In addition, Program 1.4: (City-Owned Land Lots) should clarify that all City-Owned sites will
comply with Surplus Land Act (SLA). In addition, and as mentioned in HCDs previous letter, the
element will need to commit to numerical objectives, including affordability, aligned with
assumptions in the inventory, and a schedule of actions to facilitate development. A schedule of
actions may include coordination with appropriate entities, including potential developers,
disposition of the land, zoning, funding, facilitating other entitlements, and issuing permits.
Finally, this program should identify and make alternative sites with zoning of equivalent
capacity and density by a specified date if sites are not made available by a date early in the
planning period.
3. Address and, where appropriate and legally possible, remove governmental and Programs were revised to comprehensively reduce Chapter 5: Housing Plan;
nongovernmental constraints to the maintenance, improvement, and development of housing, impact fees by completing and implementing
including housing for all income levels and housing for persons with disabilities. The program economic studies to convert existing development Program 2.1 (Affordable Housing)
Program 3.1 (Fee Waivers and Adjustments),
shall remove constraints to, and provide reasonable accommodations for housing designed for, impact fees that are applied on a per unit basis to a
intended for occupancy by, or with supportive services for, persons with disabilities. (Gov. Code, per square foot basis for all types of housing
§ 65583, subd. (c)(3).)including housing for persons with special needs.
Program 2.1 was revised to commit to reducing
impact fees and promote affordable housing.
Additional constraints such as processing timelines
and streamlining were revised to expedite project
application processes with an emphasis on
As noted in Finding A3, the element requires a complete analysis of potential governmental
constraints. Depending upon the results of that analysis, the City may need to revise or add
programs and address and remove or mitigate any identified constraints. In addition, the
element should be revised as follows:
• Program 3.4 (Program 3.1 Fee Waivers and Adjustments): The Program should specifically
commit to reducing impact fees comprehensively and not limit the scope of the program to park affordable housing.
fees.
• Program 6.5 (Alternative housing): The Program should commit to actively mitigating costs
related to impact fees on alternative housing.
HCD Comment, by Chapter City Response to Comment Chapter/Section
4. Promote and affirmatively further fair housing opportunities and promote housing throughout Timelines were revised to focus the Chapter 5: Housing Plan; Program 1.4 (City-
the community or communities for all persons regardless of race, religion, sex, marital status,
ancestry, national origin, color, familial status, or disability, and other characteristics... (Gov.
Code, § 65583, subd. (c)(5).)
implementation of program objectives within the Owned Land Lots), Program 1.6 (Lot
first half of the planning period in order for Consolidation), Program 2.1 (Affordable
programs to be more effective for identified target Housing Development), Program 3.5
audiences. Furthermore, Program 6, Fair Housing (Accessory Dwelling Unit Facilitation),
was revised to contain firmer commitments with Program 3.7 (Conversion of Commercial UsesAs noted in Finding A1, the element must include a complete analysis of AFFH. The element
must be revised to add goals and actions based on the outcomes of a complete analysis. Actions the objective of being more effective for targeted to Mixed Use Development), Program 4.1
must have specific commitment, milestones, geographic targeting and metrics or numeric
objectives and, as appropriate; must address housing mobility enhancement, new housing
choices and affordability in high opportunity areas, place based strategies for community
preservation and revitalization, and displacement
communities identified in the Assessment of Fair (Replacement Housing), Program 4.2
Housing.(Housing and Neighborhood Preservation),
Program 5.1 (Preservation of At-Risk
Housing), Program 5.2 (Funding
protection.Opportunities), Program 6.1 (Housing for
Person with Special Needs), Program 6.2
(Family Housing and Large Units), Program
6.3 (Middle Housing Program), Program 6.4
(Homeless Program), Program 6.5
(Alternative Housing) and Program 6.6 (Fair
Housing).
Programs requiring revisions include but are not limited to the following, Program 1.4 (City-
Owned Land Lots) Program 1.6 (Lot Consolidation) Program 2.1 (Affordable Housing
Development) Program 3.5 (Accessory Dwelling Unit Facilitation) Program 3.7
(Conversion of Commercial Uses to Mixed Use Development) Program 4.1
(Replacement Housing) Program 4.2 (Housing and Neighborhood Preservation) Program 5.1
(Preservation of At-Risk Housing) Program 5.2 (Funding Opportunities) Program 6.1 (Housing for
Person with Special Needs) Program 6.2 (Family Housing and Large Units) Program 6.3 (Missing
Middle) Program 6.4 (Homeless Program) Program 6.5 (Alternative Housing) and Program 6.6
(Fair Housing). Finally, based on a
complete analysis, additional program and policy action may need to be included.
Table A: Changes to Housing Element Sites Inventory (May 2023 vs April 2024) – Multifamily Housing Allowed
Status Site Address/Intersection Assessor Parcel Number
General Plan Designation
Zoning Designation
Parcel Size (Acres)
Lower Income Capacity Moderate Income Capacity Above Moderate Income Capacity Total Capacity
DELETED 435 TASSO ST 120-03-025 CC CD-C (P) 0.33 0 10 0 10
ADDED 3200 PARK BLVD. 132-32-042 MF RM-30 0.28 0 11 10 21
ADDED 3200 PARK BLVD. 132-32-036 LI GM 0.17 0 1 6 7
ADDED 3200 PARK BLVD. 132-32-043 MF RM-30 1.38 0 8 18 26
ADDED 486 HAMILTON AVE 120-16-008 CC CD-C (P) 0.12 0 0 4 4
ADDED 231 GRANT AVE. 132-31-074 MISP PF 1.39 17 50 43 110
ADDED 660-680 UNIVERSITY AV, 511 BYRON ST. 120-03-042 MF RM-15 0.14 5 0 11 16
ADDED 660-680 UNIVERSITY AV, 511 BYRON ST. 120-03-043 MF RM-15 0.15 5 0 11 16
ADDED 660-680 UNIVERSITY AV, 511 BYRON ST. 120-03-044 MF RM-15 0.3 10 0 23 33
ADDED 739 SUTTER AVE 127-35-200 MF RM-15 0.38 0 0 4 4
ADDED 525 E. CHARLESTON RD. 132-06-039 MISP PF 0.78 50 0 0 50
ADDED 800 and 808 SAN ANTONIO RD 147-03-038 CS CS 0.43 0 8 29 37
ADDED 800 and 808 SAN ANTONIO RD 147-03-043 CS CS 0.45 0 8 31 39
ADDED 420 ACACIA AV. 132-38-072 MF RM-30 1.3 2 0 14 16
ADDED 702 CLARA DR 127-35-023 MF RM-15 0.3 0 0 0 0
ADDED 3128, 3150-3160 EL CAMINO REAL 142-20-035 CS CS 1.19 36 0 143 179
ADDED 3128, 3150-3160 EL CAMINO REAL 142-20-054 CS CS 0.75 23 0 90 113
ADDED 3128, 3150-3160 EL CAMINO REAL 142-20-055 CS CS 0.29 9 0 35 44
ADDED 3128, 3150-3160 EL CAMINO REAL 142-20-079 CS CS 0.19 6 0 23 29
ADDED 3128, 3150-3160 EL CAMINO REAL 142-20-080 CS CS 0.11 3 0 13 16
ADDED 300 LAMBERT AV 132-37-075 CS CS 0.32 0 0 45 45
Table B: Changes to Housing Element Sites Inventory (May 2023 vs April 2024) – Rezoned to Accommodate Shortfall Housing Need
Status Site Address/Intersection Assessor Parcel Number
General Plan Designation
Zoning Designation
Parcel Size (Acres)
Very Low-Income Low-Income Moderate-Income
Above Moderate-Income
Total Capacity
DELETED 320 SAN ANTONIO RD 147-09-069 MF;RO RM-30 0.76 8 9 0 7 24
DELETED 530 LYTTON AV 120-03-070 CC CD-C 0.67 7 8 0 6 21
DELETED 3040 PARK BL 132-32-036 LI GM 0.17 0 0 0 6 6
DELETED PARK BL 132-32-042 MF RM-30 0.28 0 0 8 0 8
DELETED PARK BL 132-32-043 MF RM-30 1.38 15 16 0 13 44
Status Site Address/Intersection Assessor Parcel Number
General Plan Designation
Zoning Designation
Parcel Size (Acres)
Very Low-Income Low-Income Moderate-Income
Above Moderate-Income
Total Capacity
DELETED NITA AV 147-09-056 RO ROLM 1.25 18 18 0 14 50
DELETED 4113 EL CAMINO REAL 132-46-116 CN CN 0.21 0 0 0 6 6
DELETED MAYBELL AV 137-24-045 CN RM-20 0.56 4 4 0 3 11
DELETED 4170 EL CAMINO REAL 137-24-046 CS CS 1.01 11 12 0 10 33
DELETED 1066 E MEADOW CIR 127-10-050 RO ROLM 2.15 52 53 0 45 150
DELETED 1053 E MEADOW CIR 127-10-081 RO ROLM 1.6 39 39 0 34 112
DELETED 1036 E MEADOW CIR 127-10-094 RO ROLM 3.06 75 75 0 64 214
DELETED 3128 EL CAMINO REAL 142-20-035 CS CS 1 0 0 0 140 140
DELETED 3128 EL CAMINO REAL 142-20-079 CS CS 0.11 0 0 0 2 2
DELETED 3128 EL CAMINO REAL 142-20-080 CS CS 0.12 0 0 0 2 2
DELETED 550 HAMILTON AV 120-04-005 CC PC 1.32 14 15 13 0 42
DELETED 980 MIDDLEFIELD RD 120-05-077 MF PC 0.51 5 6 5 0 16
DELETED 300 LAMBERT AV 132-38-061 CS CS 0.33 0 0 10 0 10
DELETED 3150 EL CAMINO REAL 142-20-054 CS CS 0.75 8 9 7 0 24
DELETED 808-814 SAN ANTONIO RD 147-03-043 CS CS 0.44 0 0 0 7 7
DELETED 330 BRYANT ST 120-65-002 MF RM-30 0.13 0 0 0 3 3
DELETED 305 LYTTON AV 120-14-101 CC CD-C 0.23 0 0 0 7 7
MODIFIED PASTEUR DRIVE + 1100 WELCH RD 142-03-038 RO RM-40 4.2 0 0 0 159 212 158
MODIFIED PASTEUR DRIVE + 1100 WELCH RD 142-05-032 RO RM-40 4.2 0 0 0 158 213 159
MODIFIED 4224 EL CAMINO REAL 167-08-037 CS CS 0.63 7 7 0 4 20 18
ADDED 3398, 3400, 3490 EL CAMINO REAL 137-08-072 CS CS 3.6 15 15 0 120 115
ADDED 4015, 4017 FABIAN WAY 127-15-048 LI GM 0.34 0 0 23 0 23
ADDED 3977 FABIAN WAY 127-37-004 LI GM 0.38 0 0 26 0 26
ADDED 3963 FABIAN WAY 127-37-006 LI GM 0.41 0 0 28 0 28
ADDED 3997 FABIAN WY 127-37-003 LI GM 0.28 0 0 19 0 19
ADDED 2100-2200 GENG ROAD 008-02-035 RO ROLM (E)(D)(AD) 5.5 0 0 175 0 175
ADDED 3265 EL CAMINO REAL 132-38-020 CS CS 0.17 0 0 0 44 44
ADDED 3305 EL CAMINO REAL 132-39-059 CS CS 0.52 6 6 0 4 16
ADDED 960 SAN ANTONIO RD 147-01-106 LI GM 0.69 19 19 0 10 48
ADDED 3160 W BAYSHORE RD 127-36-030 RO ROLM 3.2 90 89 0 45 224
Technical Memorandum
Date: December 21, 2023
To: Ms. Karly Kaufman, Rincon Consultants, Inc.
From: At van den Hout
Subject: Palo Alto Housing Element: Impact on Level of Service, Transit, Bike, and Pedestrian Travel
Introduction
Hexagon Transportation Consultants, Inc. has completed an analysis to evaluate the transportation impact
of the Palo Alto Housing Element Update on intersection level of service (LOS) and on transit-, bicycle-, and
pedestrian travel. The proposed Housing Element would amend the City of Palo Alto’s 2030 Comprehensive
Plan by replacing the current Housing Element with the proposed 2023-2031 Housing Element. In addition
to evaluating these metrics for the Housing Element, these measurements for Scenario 6 of the City’s
Comprehensive Plan were also analyzed.
Intersection Level of Service
The same intersections included in the transportation section of the Comprehensive Plan were studied. The
intersections were evaluated by generating turning movement volumes with the updated Palo Alto Travel
Forecasting Model (Palo Alto model) and then using those volumes in the TRAFFIX software to determine
the intersection’s LOS under each scenario. Intersection LOS was analyzed for the following scenarios:
• Existing Conditions: This scenario presents the same existing traffic conditions reported in the Palo
Alto Comprehensive Plan Update: Analysis of Additional Scenarios, dated January 23, 2017.
• Comprehensive Plan (2030) Conditions: This scenario includes the proposed land uses assumed for
Scenario 6 reported in Palo Alto Comprehensive Plan Update: Analysis of Additional Scenarios,
dated January 23, 2017. The traffic volumes were developed with the old Palo Alto Model created
in 2013. Scenario 6 contains 6,000 additional housing units and 8,868 new jobs.
• Comprehensive Plan (2031) Conditions: This scenario also includes the proposed land uses assumed
for Scenario 6 of Palo Alto’s Comprehensive Plan. The traffic volumes were developed with the
updated Palo Alto Model created in 2023. Scenario 6 contains the same 6,000 additional housing
units and 8,868 new jobs.
• Housing Element (2031) Conditions: This scenario includes the proposed land uses assumed in the
2023-2031 Housing Element. The Housing Element has 6,860 additional housing units. The housing
opportunity sites include approximately 500,000 square feet of existing commercial development
that would be demolished and replaced with new housing. The 500,000 square feet of commercial
development, which is equivalent to about 1,643 jobs, were removed from the land use database,
resulting in a net increase of 7,225 new jobs.
Study Intersections
The 18 intersections included in the analysis are listed below and shown on Figure 1. These intersections
were selected by City staff as a reasonable representation of Palo Alto’s road network by incorporating
major streets in different parts of the city.
Alma
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Embarca
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Mountain View
PaloAlto
Menlo Park
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280
101
82
X = Study Intersection
LEGEND
Palo Alto Housing Element
Figure 1
Study Intersections
Palo Alto Housing Element: Impact on Level of Service, Transit, Bike, and Pedestrian Travel December 21, 2023
Page | 3
1. I-280 Northbound Off-Ramp and Sand Hill Road (Menlo Park)
2. Middlefield Road and Charleston Road
3. Middlefield Road and San Antonio Road (CMP)
4. Alma Street and Charleston Road
5. El Camino Real (SR 82) and Embarcadero Road/Galvez Road (CMP)
6. El Camino Real (SR 82) and Page Mill Road/Oregon Expressway (CMP)
7. El Camino Real (SR 82) and Arastradero Road/Charleston Road (CMP)
8. El Camino Real (SR 82) and San Antonio Road (CMP; Mountain View)
9. Foothill Expressway/Junipero Serra Boulevard and Page Mill Road (CMP)
10. Foothill Expressway and Arastradero Road (CMP)
11. El Camino Real (SR 82) and Sand Hill Road/Alma Street (CMP)
12. Charleston Road and San Antonio Avenue (CMP)
13. University Avenue & El Camino Real, northbound ramps (CMP)
14. University Avenue/Palm Drive & El Camino Real, southbound ramps (CMP)
15. Middlefield Road and University Avenue
16. Middlefield Road and Embarcadero Road
17. Middlefield Road and Oregon Expressway (CMP)
18. Embarcadero Road and East Bayshore Road
Traffic conditions at the study intersections were analyzed for the weekday AM and PM peak hours of
traffic. The AM peak hour of traffic is generally between 7:00 and 9:00 AM, and the PM peak hour is
typically between 4:00 and 6:00 PM. It is during these periods that the most congested traffic conditions
occur on an average day.
Vehicle Level of Service (LOS) is a qualitative description of operating conditions ranging from LOS A, or
free-flow conditions with little or no delay, to LOS F, or jammed conditions with excessive delays. The VTA
CMP guidelines dictate using the 2000 Highway Capacity Manual (HCM) methodology to analyze
intersections. Palo Alto uses the same process for its intersections. The 2000 HCM operations method
evaluates signalized intersection operations on the basis of average control delay time for all vehicles at the
intersection. This method is applied using the TRAFFIX software. Since TRAFFIX is also the CMP-designated
intersection level of service evaluation software, the City of Palo Alto employs the CMP default values for
the analysis parameters.
The City of Palo Alto’s LOS standard for signalized non-CMP intersections is LOS D or better. For CMP
intersections, the City’s standard is LOS E or better. The LOS definitions for signalized intersections are
shown in Table 1. Levels of Service D and E are typical at intersections in many urban areas where a high
volume of vehicles pass through an intersection physically constrained by adjacent existing structures.
City of Palo Alto Definition of Adverse Intersection Operational Effects
Adverse operational effects on signalized intersections are based on the City of Palo Alto and CMP level of
service standards. According to the City of Palo Alto and CMP level of service standards, a development is
said to create an adverse operational effect on traffic conditions at a signalized intersection if for either
peak hour, one of the following conditions occurs:
1. The level of service at the intersection drops below its respective level of service standard (LOS D or
better for local intersections and LOS E or better for CMP intersections) when project traffic is
added, or
Palo Alto Housing Element: Impact on Level of Service, Transit, Bike, and Pedestrian Travel December 21, 2023
Page | 4
2. An intersection that operates below its level of service standard under no-project conditions
experiences an increase in critical-movement delay of four (4) or more seconds, and an increase in
critical volume-to-capacity ratio (v/c) of one percent (0.01) or more when project traffic is added.
The exception to this threshold is when the addition of project traffic reduces the amount of average
control delay for critical movements. In this case, the threshold is when the project increases the critical v/c
value by 0.01 or more.
City of Menlo Park Definition of Adverse Intersection Operational Effects
The intersection of I-280 Northbound Off-Ramp and Sand Hill Road (#1) is located in Menlo Park.
The following thresholds are from the City of Menlo Park’s TIA Guidelines, and compliance with local
policies was evaluated based on these thresholds.
1. A project is considered potentially noncompliant with local policies if the addition of project traffic
causes an intersection on a collector street operating at LOS “A” through “C” to operate at an
unacceptable level (LOS “D,” “E” or “F”) or have an increase of 23 seconds or greater in average
vehicle delay, whichever comes first. Potential noncompliance shall also include a project that
causes an intersection on arterial streets or local approaches to State controlled signalized
intersections operating at LOS “A” through “D” to operate at an unacceptable level (LOS “E” or “F”)
or have an increase of 23 seconds or greater in average vehicle delay, whichever comes first.
2. A project is also considered potentially non-compliant if the addition of project traffic causes an
increase of more than 0.8 seconds of average delay to vehicles on all critical movements for
intersections operating at a near-term LOS “D” through “F” for collector streets and at a near-term
LOS “E” or “F” for arterial streets. For local approaches to State controlled signalized intersections,
a project is considered to be potentially non-compliant if the addition of project traffic causes an
increase of more than 0.8 seconds of delay to vehicles on the most critical movements for
intersections operating at a near-term LOS “E” or “F.”
For signalized intersections involving two state routes, the proposed project is considered potentially non-
compliant with local policies if for any peak hour:
1. The level of service degrades from an acceptable LOS D or better under existing conditions to an
unacceptable LOS E or F under existing plus project conditions, and the average delay per vehicle
increases by four seconds or more, or
2. The level of service is an unacceptable LOS E or F under existing conditions, and the addition of
project trips causes an increase in the average control delay at the intersection by four seconds or
more.
City of Mountain View Definition of Adverse Intersection Operational Effects
The intersection of El Camino Real (SR 82) and San Antonio Road is located in Mountain View (#8). Adverse
operational effects at signalized intersections are based on the City of Mountain View’s level of service
standards. A development is said to create an adverse operational effect on traffic conditions at a signalized
intersection if for either peak hour, one of the following conditions occurs:
Palo Alto Housing Element: Impact on Level of Service, Transit, Bike, and Pedestrian Travel December 21, 2023
Page | 5
1. The level of service at the intersection drops below its respective level of service standard (LOS D or
better for all local intersections and LOS E or better for CMP and expressway intersections) when
project traffic is added, or
2. An intersection that operates below its level of service standard under no-project conditions
experiences an increase in critical-movement delay of four (4) or more seconds, and an increase in
critical volume-to-capacity ratio (v/c) of one percent (0.01) or more when project traffic is added.
The exception to this threshold is when the addition of project traffic reduces the amount of
average control delay for critical movements, i.e., the change in average control delay for critical
movements is negative. In this case, the threshold is when the project increases the critical v/c
value by 0.01 or more.
Table 1
Signalized Intersection Level of Service Definitions Based on Average Control Delay
Source: Transportation Research Board, 2000 Highway Capacity Manual (Washington, D.C., 2000), p.10-16.
Level of
Service Description
Average Control
Delay Per
Vehicle (sec.)
Signal progression is extremely favorable. Most vehicles arrive during the
green phase and do not stop at all. Short cycle lengths may also contribute
to the very low vehicle delay.
10.0 or lessA
B
Operations characterized by good signal progression and/or short cycle
lengths. More vehicles stop than with LOS A, causing higher levels of
average vehicle delay.
10.1 to 20.0
Higher delays may result from fair signal progression and/or longer cycle
lengths. Individual cycle failures may begin to appear at this level. The
number of vehicles stopping is significant, though some vehicles may still
pass through the intersection without stopping.
20.1 to 35.0C
This level of delay is considered unacceptable by most drivers. This condition
often occurs with oversaturation, that is, when arrival flow rates exceed the
capacity of the intersection. Poor progression and long cycle lengths may
also be major contributing causes of such delay levels.
greater than 80.0F
The influence of congestion becomes more noticeable. Longer delays may
result from some combination of unfavorable signal progression, long cycle
lengths, or high volume-to-capacity (V/C) ratios. Many vehicles stop and
individual cycle failures are noticeable.
35.1 to 55.0D
This is considered to be the limit of acceptable delay. These high delay
values generally indicate poor signal progression, long cycle lengths, and
high volume-to-capacity (V/C) ratios. Individual cycle failures occur frequently.
55.1 to 80.0E
Palo Alto Housing Element: Impact on Level of Service, Transit, Bike, and Pedestrian Travel December 21, 2023
Page | 6
Intersection Level of Service Results
The results of the LOS analysis are summarized in Table 2. The Table shows the LOS results for the Existing,
2030 Comprehensive Plan (CP), 2031 Comprehensive Plan (CP), and the 2031 Housing Element Update
(HEU). The level of service analysis under existing conditions shows that, relative to the city of Palo Alto and
Santa Clara County Congestion Management Program (CMP) level of service standards, all intersections
except the intersection of I-280 northbound ramps and Sand Hill Road (#1) are operating at acceptable
levels of service. The intersection of I-280 NB Ramps/Sand Hill Road operates at LOS F, which is below the
LOS standard, with 114.5 seconds of average delay during the AM peak hour. The intersection of Foothill
Expressway and Page Mill Road (#9), which is a CMP intersection, operates at LOS F with 189.7 seconds of
average delay during the PM peak period. This LOS F is below the Palo Alto and CMP standard.
Table 2
AM and PM Peak Hour Level of Service Results at Study Intersections
Avg.Avg.Avg.Avg.
Peak Delay Crit.Delay Crit.Delay Crit.Delay Crit.
#Intersection Hour (sec)LOS V/C (sec)LOS V/C (sec)LOS V/C (sec)LOS V/C
1 AM 114.5 F 1.269 162.4 F 1.454 141.1 F 1.376 142.0 F 1.379
PM 27.0 C 0.939 54.5 D 1.078 44.4 D 1.028 44.6 D 1.029
2 AM 47.6 D 0.660 49.0 D 0.701 52.7 D 0.848 51.8 D 0.844
PM 39.8 D 0.695 53.9 D 0.932 45.2 D 0.864 45.5 D 0.876
3 AM 48.9 D 0.668 49.1 D 0.727 52.4 D 0.808 52.8 D 0.814
PM 39.0 D 0.789 42.6 D 0.879 46.2 D 0.884 46.8 D 0.883
4 AM
PM
5 AM 46.1 D 0.729 57.7 E 0.908 52.0 D 0.849 52.8 D 0.871
PM 42.5 D 0.824 70.9 E 1.055 54.4 D 0.962 54.2 D 0.963
6 AM 62.7 E 0.819 67.6 E 0.880 72.8 E 0.956 71.7 E 0.948
PM 52.4 D 0.910 77.8 E 1.078 71.5 E 1.036 69.2 E 1.029
7 AM 35.3 D 0.663 37.5 D 0.756 43.3 D 0.880 43.7 D 0.888
PM 47.7 D 0.841 63.3 E 0.993 62.8 E 0.994 65.4 E 1.007
8 AM 40.5 D 0.768 48.9 D 0.905 49.8 D 0.933 50.8 D 0.942
PM 54.0 D 0.816 94.2 F 1.077 63.9 E 0.928 64.8 E 0.931
9 AM 55.7 E 0.909 69.7 E 0.993 69.6 E 0.994 69.6 E 0.995
PM 189.7 F 1.064 306.4 F 1.182 287.6 F 0.918 285.2 F 1.151
10 AM 48.7 D 0.276 51.1 D 0.481 50.8 D 0.463 50.7 D 0.463
PM 57.0 E 0.849 133.5 F 1.280 90.8 F 1.105 93.6 F 1.118
11 AM 22.7 C 0.452 23.0 C 0.534 23.2 C 0.509 23.5 C 0.510
PM 36.5 D 0.651 38.3 D 0.836 37.1 D 0.720 36.9 D 0.717
12 AM 48.4 D 0.729 51.3 D 0.814 55.4 E 0.843 55.9 E 0.857
PM 42.0 D 0.844 44.0 D 0.859 58.3 E 1.006 62.6 E 1.030
13 AM 22.5 C 0.666 34.0 C 0.887 24.5 C 0.755 23.7 C 0.732
PM 32.4 C 0.619 33.6 C 0.815 33.1 C 0.645 33.3 C 0.637
14 AM 20.9 C 0.424 19.2 B 0.534 21.7 C 0.483 22.1 C 0.483
PM 24.9 C 0.487 22.3 C 0.566 26.8 C 0.549 27.3 C 0.554
15 AM 27.0 C 0.609 29.5 C 0.746 34.0 C 0.767 33.9 C 0.763
PM 27.5 C 0.512 28.2 C 0.670 30.0 C 0.617 30.4 C 0.635
16 AM 50.3 D 0.583 62.9 E 0.828 67.5 E 0.852 65.5 E 0.835
PM 36.6 D 0.607 40.0 D 0.758 43.8 D 0.775 44.0 D 0.783
17 AM 42.8 D 0.754 57.9 E 0.899 74.3 E 1.054 78.4 E 1.075
PM 42.9 D 0.688 64.5 E 0.907 67.2 E 0.928 68.8 E 0.947
18 AM 31.6 C 0.682 56.4 E 0.929 31.0 C 0.739 31.4 C 0.767
PM 40.3 D 0.702 52.3 D 0.892 51.8 D 0.878 52.3 D 0.879
Notes:
* Denotes CMP intersection
BOLD indicates substandard level of service
BOLD indicates noncompliance based on thresholds in the City of Menlo Park's TIA Guidelines, or adverse operational effects according to Cities of Mountain
View and Palo Alto level of service standards.
Existing
2030
Comprehensive
Plan (CP)
2031
Comprehensive
Plan (CP)
2031 Housing
Element Update
(HEU)
Embarcadero Rd & E. Bayshore Rd
San Antonio Rd & Charleston Rd *
El Camino Real NB Ramps & University Ave *
Middlefield Rd & Charleston Rd
Middlefield Rd & San Antonio Rd *
Alma St & Charleston Rd
El Camino Real & Embarcadero Rd/Galvez St *
El Camino Real & Page Mill Rd/Oregon Expy *
El Camino Real & Arastradero Rd/Charleston Rd *
This intersection is the subject of a separate study
El Camino Real & San Antonio Rd (Mtn View)*
Foothill Expy/Junipero Serra Blvd & Page Mill Rd *
Foothill Expy & Arastradero Rd *
El Camino Real & Alma St/Sand Hill Rd *
I-280 NB Off-Ramp & Sand Hill Rd (Menlo Park)
El Camino Real SB Ramp & University Ave/Palm Dr *
Middlefield Rd & University Ave
Middlefield Rd & Embarcadero Rd
Middlefield Rd & Oregon Expressway *
Palo Alto Housing Element: Impact on Level of Service, Transit, Bike, and Pedestrian Travel December 21, 2023
Page | 7
As shown in Table 2, most intersections are projected to have longer average delays under future
conditions than under Existing Conditions. Intersection traffic operations between the 2031 CP and the
2031 HEU are projected to be very similar, which was expected since the future development assumptions
are similar. While the 2031 HEU includes 686 more housing units, it also assumes 500,000 square feet less
commercial development. The 500,000 square feet of commercial development would be demolished and
replaced with housing. Therefore, the 2031 HEU would generate more housing trips but fewer commercial
trips. The following summarizes the number of intersections that would have a substandard LOS in at least
one of the peak hours:
• Existing: 2 intersections
• 2030 Comp Plan: 6 intersections
• 2031 Comp Plan: 4 intersections
• 2031 HEU Plan: 4 intersections
Compared to the traffic analysis conducted for the 2030 Comprehensive Plan, based on the new forecasts,
the El Camino Real (SR 82) and San Antonio Road (#8) and the intersection of Embarcadero Road and East
Bayshore Road (#18) would no longer cause an adverse operational effect on traffic conditions under the
2031 Comprehensive Plan and 2031 HEU scenario. These intersections would continue to operate at
acceptable conditions. The following Intersections would have an adverse operational effect on traffic
conditions in all future scenarios during at least one peak hour.
• I-280 Northbound Off-Ramp and Sand Hill Road (#1)
• Foothill Expressway/Junipero Serra Boulevard and Page Mill Road (CMP) (#9)
• Foothill Expressway and Arastradero Road (CMP) (#10)
• Middlefield Road and Embarcadero Road (#16)
The City of Palo Alto’s 2030 Comprehensive Plan identified mitigation measures to improve traffic
operations at these intersections. These transportation improvements were found to be unfeasible, and the
impacts were determined to be significant and unavoidable. However, some mitigation measures included
in the Comprehensive Plan Update that could not be addressed with the Palo Alto model would help in
reducing the traffic impact for the identified intersections.
Impact on Transit Ridership
The Palo Alto model was used to forecast transit trips under existing conditions and under each future
scenario. Table 3 presents the number of boardings made on different transit service providers and the
number of transit trips that begin and/or end in Palo Alto, i.e., trips entirely within Palo Alto, trips that start
in Palo Alto and end in another jurisdiction, and trips that begin in another jurisdiction and end in Palo Alto.
The table shows that the total transit boardings for the 2031 Comprehensive Plan and the 2031 HEU are
projected to be 8,690 and 9,126 fewer than the boardings forecasted for the 2030 Comprehensive Plan,
respectively. These changes in future transit ridership are attributable to several factors, primarily the
updates made to the Palo Alto model and also revisions to the regional land use and demographic forecasts
made by ABAG, resulting in different travel patterns and changes in the mode of travel.
Palo Alto Housing Element: Impact on Level of Service, Transit, Bike, and Pedestrian Travel December 21, 2023
Page | 8
Table 3
Existing (2015) and Future Daily Transit Boardings, Trips To, From, and Within Palo Alto
The 2030 Comprehensive Plan concluded that none of the future scenarios would increase demand beyond
the current or planned capacity of the transit network. Since transit ridership for the 2031 HEU and for the
2031 Comprehensive Plan is less than for the 2030 Comprehensive Plan, the 2031 HEU would not cause a
potential impact related to the transit system.
Impact on Bicycle and Pedestrian Travel
Mode share refers to the percentage of trips made by each of the primary modes of transportation: Driving
Alone, Shared Ride, Taking Transit, Bicycling, and Walking. The Palo Alto model calculates the mode split
based on input factors taken from survey data or other sources that have been validated. Table 4 presents
the total number of daily person trips made in Palo Alto under existing conditions and under each of the
planning scenarios. The table includes all trips beginning and/or ending in Palo Alto, i.e., trips that start and
end in Palo Alto, trips that begin in Palo Alto and end in another jurisdiction, and trips that start in another
jurisdiction and end in Palo Alto.
Table 4
Mode Share for Palo Alto Daily Person Trips
Transit Service 2015
Existing
2030
Comprehensive
Plan
2031
Comprehensive
Plan
2031
Housing
Element
CalTrain 12,767 24,061 22,928 23,066
VTA Bus 6,700 17,151 13,056 13,645
VTA LRT 610 1,958 1,733 1,875
SamTrans 2,056 5,188 3,736 3,525
Stanford Shuttles 7,418 10,628 13,686 13,298
CalTrain Shuttles 3,477 7,231 8,027 8,142
Palo Alto Shuttles1 1,937 3,519 --
BART, Muni and Other 5,199 9,900 7,344 7,395
Total 40,164 79,636 70,510 70,946
Transit Trips 25,478 50,560 42,851 42,339
Boardings/Trip 1.58 1.58 1.65 1.68
1 Palo Alto shuttle service was discontinued in 2020.
Mode Trips % Share Trips % Share Trips % Share Trips % Share
Drive Alone 324,513 58.7%379,739 58.5%357,039 56.1%360,774 56.3%
Shared Ride 130,437 23.6%142,710 22.0%148,056 23.3%151,628 23.6%
Transit 25,478 4.6%50,560 7.8%42,851 6.7%42,339 6.6%
Bike 26,717 4.8%20,927 3.2%33,278 5.2%32,876 5.1%
Walk 45,535 8.2%55,537 8.6%55,288 8.7%53,655 8.4%
TOTAL 552,680 100.0%649,474 100.0%636,512 100.0%641,273 100.0%
2031 HEU2031 CompExisting2030 Comp
Palo Alto Housing Element: Impact on Level of Service, Transit, Bike, and Pedestrian Travel December 21, 2023
Page | 9
The table shows slightly lower drive-alone and transit mode shares, but higher shared-ride shares for the
2031 Comprehensive Plan and the 2031 HEU compared to the 2030 Comprehensive Plan. The model
estimated a significant increase in bike mode shares compared to the 2030 Comprehensive Plan. This
increase is primarily caused by the updates made to the Palo Alto model, which was recalibrated against
more recent data that showed higher bicycle travel within the City of Palo Alto. Note that the walk and bike
mode shares for the 2031 HEU are slightly lower than for the 2031 Comprehensive Plan because most of
the residential growth of the Comprehensive Plan is planned in the downtown area and along El Camino
Real, while most of the HEU development is located near US-101, which is further away from
complementary land uses such as shopping, dining, and socializing, and that area has poorer access to
transit service and bike facilities.
The Comprehensive Plan concluded that none of the scenarios would impede the development or function
of planned pedestrian or bicycle facilities and that it assumed the implementation of all improvements
included in the City’s Bicycle + Pedestrian Transportation Plan. Although the model showed that the 2031
HEU would increase the number of bicycle trips by about 11,950 (or 57 percent) compared to the 2030
Comprehensive Plan, the HEU would not create more demand than could be met by existing or planned
facilities. Planned infrastructure improvements such as upgrades to existing grade-separated Caltrain
crossings at California Avenue and University Avenue to improve pedestrian and bicycle facilities, as well as
a new pedestrian/bicycle, grade-separated Caltrain crossing in South Palo Alto and grade separation of all
Caltrain crossings, would improve the quality and safety of bicycle and pedestrian travel significantly. In
addition, the City would continue to implement its adopted Bicycle + Pedestrian Transportation Plan, and
concept area plans in the California Avenue area would guide new bicycle and pedestrian improvements.
Bicycle and pedestrian facilities will continue to be upgraded to current accessibility and design standards in
accordance with policies in the Bicycle + Pedestrian Transportation Plan and in the Comprehensive Plan
Update.
From:slevy@ccsce.com
To:Council, City; Planning Commission
Subject:revised HE
Date:Monday, April 15, 2024 11:11:21 AM
Attachments:PA-POLI-letter to PACC and PTC re Revised Housing Element 2024-04-14.pdf
CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links.
Dear Council and PTC members,
Previously staff has counted ADUs as for the above moderate income level.
In the new HE ADUs are spread among all 4 income groups, which means that most are for
low and moderate income residents.
This is an admirable goal but
1) I see no evidence that current units are so affordable and hear many comments from
council and others that they are not
2) I see no policies/incentives in the HE that would reduce ADU costs toward making themaffordable, itself a tough challenge
3) And as the attached letter from John Kelley, with deep experience in ADU design and
construction, points out, the city currently has
policies that constrain affordable ADU development.
I support John's call to further revise the HE before submitting to address these challenges
unless council instead chooses to reclassify them as for
the above moderate income group.
Stephen Levy
TO: Palo Alto City Council (City Council) and Planning & Transportation
Commission (PTC)
RE: Recommendations re Agenda Item #13, “Joint City Council and Planning
and Transportation Commission Meeting to Adopt a Resolution Amending
the Comprehensive Plan by Adopting a Revised 2023-31 Housing
Element [etc.]” and Comments re Staff Report 2312-2450 (Staff Report)
DATE: April 14, 2024
FROM: John Kelley
RECOMMENDATION
City Staff have improved the prior version of the 2023-2031 Housing Element
(Housing Element) in important ways, but the PTC and the City Council should
direct City Staff to make further changes in the revised Housing Element prior to
adopting it and delivering it to the California Department of Housing and
Community Development (HCD).
DISCUSSION
1. ADUs Play a Crucial Role in the City’s Housing Element
The City relies heavily on accessory dwelling units (ADUs) in attempting to meet
its RHNA. For example, when comparing the “ADUs” row with the “Total Unit Surplus”
row in Table 3-27, “Adequacy of Residential Site Inventory,” of the revised draft “Palo
Alto Housing Element 2023-2031 (Redlined),” 1 for both (a) the combination of the “Very
Low-Income” and the “Low-Income” columns and (b) the “Moderate Income” column,
one can see that the “ADUs” values exceed the “Total Unit Surplus” values. Thus, if the
City fails to produce very low-income, low-income, and moderate-income ADUs to the
extent predicted, much of the “buffer” may disappear, the City may fail to satisfy its
RHNA. Accordingly, assessing the City’s constraints on ADU production is vital in
analyzing the sufficiency of the Revised Redline Housing Element.
2. The City’s ADU Projections Still Ignore Important Constraints
The City relies on ABAG’s technical guidance for estimating the future distribution
of ADUs by income category based on actual Palo Alto production figures from
2019-2021. 2 Yet the ABAG technical memo articulates its own limits: “ABAG conducted
2 https://abag.ca.gov/sites/default/files/documents/2022-03/ADUs-Projections-Memo-final.pdf , RRHE, p.
3-8.
1 “Revised Redline Housing Element” or “RRHE,”
https://paloaltohousingelement.com/wp-content/uploads/2024/04/Palo-Alto-Housing-Element-1.pdf , p.
3-72.
1
an analysis of ADU affordability and concluded that in most jurisdictions , the following
assumptions are generally applicable.” 3 “Generally applicable,” however, does not
necessarily mean “applicable in Palo Alto” (especially if one considers the “Palo Alto
premium,” among other things). Thus, in assessing the RRHE, one must scrutinize the
unique constraints that Palo Alto imposes on ADU production. 4
A. Impact Fees
Since an earlier draft of the Housing Element was submitted to the HCD in 2022,
the City Council again raised the impact fees imposed on 750+ sf ADUs. 5 Today the
FY2024 facial — essentially “MSRP,” because proportionality discounts apply to such
ADUs — total of Community Center, general government, library, park, and public safety
facilities fees for “Single Family” in Palo Alto totals $76,385, more than $3,000 greater
than the base, $72,562 figure discussed in the RRHE. 6 Because Palo Alto changed
both the categories used to calculate impact fees and the magnitude of the fees, 7 their
effects were not reflected in 2019-2021 baseline ADU production figures that the City
has relied upon in its RHNA projections. 8 Furthermore, as applied especially to ADUs,
8
https://www.paloaltoonline.com/news/2021/04/15/palo-alto-hikes-development-impact-fees-for-first-time-in
-20-years Compare the figures on RRHE, p. 3-8.
7 Staff report for 4/20/2021 meeting , p. 8
6 FY2024 Fee Schedule, p. 65, and RRHE p. 4-64. Please note: in the RRHE, a range of values is
provided, “$72,562 - $302,362.” See pgs. 4-63 – 4-64 for a discussion of how the $302,362 figure is
calculated. The City acknowledges that such “larger projects involving detached single-family
homes…..are rare….” RRHE p. 4-64. (Perhaps ADU impact fees could even exceed the “MSRP.”).
5 “ADOPTED MUNICIPAL FEE FISCAL YEAR SCHEDULE 2024,” “Impact & In-Lieu Fees,” “Development
Impact Fees - Residential,” (FY2024 Fee Schedule)
( https://www.cityofpaloalto.org/files/assets/public/v/1/administrative-services/city-budgets/fy-2024-city-bud
get/adopted/fy24-muni-fee-book-final.pdf , p. 65.
4 Until recently, Palo Alto’s Tree Ordinance, PAMC Chapter 8.10, “TREE AND LANDSCAPE
PRESERVATION AND MANAGEMENT,”
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-65934#JD_Chapter8.10 , was
among the most important, Palo-Alto-specific constraints on ADU production. At the City Council meeting
on April 1, 2024, the City Council considered a Staff Report incorporating an important finding from the
City Attorney:
During passage of the tree ordinance updates in January, staff confirmed during the Council
Questions that based on CAO analysis of PAMC Chapter 18.09, the updated Title 8 and
applicable state law, the tree ordinance would not apply to stand alone Table 1 ADU’s .
Staff Report 2403-2809,
https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=4688&meetingTemplateType=2&
compiledMeetingDocumentId=9485 , p. 1 (emphasis added). (Since this statement was attributed to the
City Attorney’s Office, it is assumed that the City will follow that guidance and no longer apply the Tree
Ordinance to what are, in effect, statewide exemption ADUs.) Attachment A, the ordinance proposed by
City Staff, was amended at the April 1, 2024 meeting. See the video of the April 1, 2024 meeting,
https://www.youtube.com/watch?v=s2PxdunJHco , beginning at approximately 6:06:59.
3 https://abag.ca.gov/sites/default/files/documents/2022-03/ADUs-Projections-Memo-final.pdf , p. 1
(emphasis added).
2
the City’s impact fee structure is (a) inequitable, for multiple reasons, only one of which
is discussed in the RRHE, and (b) a significant impediment to production of ADUs, a
point not addressed in the City’s RRHE financial feasibility analysis. Pgs. 4-64 - 4-65.
The City itself acknowledges that the basic, per-unit fee architecture is
inequitable, but it promises to make amends:
In accordance with state law, fees for ADUs are only charged on ADUs larger
than 750 square feet, and are charged in proportion to the fee that are or would
be assessed on the primary unit. Because Palo Alto has historically charged
per-unit fees for residential development, this has led to some inequitable results,
as the fees for an ADU will depend not only on the size of the ADU, but also on
the size of the primary unit, with higher fees required under state law when the
primary unit is smaller. To avoid this scenario, the City will implement Programs
3.1 and 3.5 to convert fees to a per square foot calculation. 9
That is a step in the right direction but remains insufficient to correct past and continuing
harms. This promise lacks a specific deadline, but Program 3.1 refers to December
2024. RRHE, p. 5-15. Still, that program omits some of the impact fees identified
above, is not offered as a specific condition for present acceptance of the RRHE, and
offers nothing to those previously saddled with inequitable housing impact fees to obtain
permits for ADUs in Palo Alto. The City should:
● not submit a further revised Housing Element to the HCD until the current
per-unit system is replaced;
● immediately place a moratorium on charging new impact fees for ADUs until
such a new system is adopted; and, after its adoption,
● recalculate the impact fees for any ADU built after the revised fee schedule was
first adopted in April, 2021, refunding the difference between the previously
charged fees and those that would have been due under the new system to
homeowners.
Even with such changes, however, the City would only be addressing one half of the
inequities built into its current impact fee structure as applied to ADUs.
In the FY2024 Fee Schedule at p. 65, the phrases “Single Family” and “per unit”
tell only a partial story. The City asserts that “the burden of housing costs is being more
equitably distributed across project types,” pg. 4-65, but the discussion in the
“DEVELOPMENT IMPACT FEES AND IN-LIEU FEES'' section, RRHE pgs. 4-63 – 4-65,
9 RRHE p. 4-64.
3
fails to make clear that, as currently implemented, “Single Family” and “per unit”
essentially mean “brand new single-family on a vacant parcel.” This implicit meaning of
the fee schedule language is noteworthy given the City’s observation that there is a
“lack of vacant land in Palo Alto.” RRHE pgs. 4-64. It is inequitable to impose impact
fees on ADUs that vary with the size of the primary dwelling on a parcel — such that a
person with an 800 sf house might have to pay $76,385 to build an 800 sf ADU,
whereas a neighbor with a 3,200 sf house would only pay a quarter of such fees to build
an identical 800 sf ADU. But a far more fundamental inequity becomes evident when
one compares single-family homes and ADUs.
● Instead of building an 800 sf ADU, the hypothetical homeowner with an
800 sf house could instead add 2,400 sf to the house, but since there was
a pre-existing home on the lot, Palo Alto would not currently charge
$76,385 in impact fees, nor indeed any of the park or other impact fees
detailed above, on that home addition, even though it would be three
times the size of the 800 sf ADU alternative.
● If the hypothetical neighbor, with a 3,200 sf house, had the capital and the
desire, the neighbor might “scrape” the entire existing house, rebuild at or
above grade 3,200 sf more luxuriously, and then add a basement, perhaps
2,400 sf in size, and, again, not pay any impact fees.
The City may “implement Program 3.1 Fee Waivers & Adjustments ” before New Year’s
Eve 2024, RRHE pgs. 4-65, but this does not appear to include a commitment to alter
the fundamental discrimination in Palo Alto’s impact fee architecture as implemented:
the City privileges substantial additions to and even complete “scrapes” of single-family
homes, while seeking to shift the vast majority of all housing impact fees to new ADUs,
apartments, condominiums, and townhomes. Palo Alto’s impact fees are, in essence,
housing taxes on smaller, non-R-1 dwellings. Such taxes constrain ADU production.
As HCD has recognized, 10 one of the merits of ADUs as a housing production
strategy is their low costs. This “lower denominator” means that the impact fees charged
by Palo Alto constitute an outsized percentage of costs for ADUs. As a corollary, the
financial feasibility analysis offered by the City, RRHE pgs. 4-64 - 4-65, is not applicable
to ADUs. Rather than building four dozen townhomes, a Palo Alto homeowner may
only be seeking to build a single 800 sf ADU. Adding even tens of thousands of dollars
to an ADU project may make it significantly less attractive to an individual homeowner,
who generally would have lower access to capital than the developer of 48 townhomes.
Even without reaching the full $76,385 amount, many homeowners with smaller homes
10 “ACCESSORY DWELLING UNIT HANDBOOK UPDATED JULY 2022” (“HCD 2022 ADU
Handbook”)( https://www.hcd.ca.gov/sites/default/files/docs/policy-and-research/ADUHandbookUpdate.pdf
), p. 4.
4
will end up being charged $25,000, $30,000 or even more in “Planning Impact Fees''
before they can receive a building permit for an ADU from the City. Not everyone in
Palo Alto can put $25,000 on a credit card or send an e-check for $30,000 to the City.
Thus the architecture of City’s housing impact fees — already heavily disadvantaging
ADUs — further privileges more economically advantaged homeowners. The City’s
financial feasibility tests will be cold comfort for many homeowners building ADUs.
The burden of the City’s impact fees on ADUs — whether $25,000 or $75,000 —
will also affect the City’s ability to meet its RHNA, particularly for more affordable
housing. This is especially true given the current interest rate environment. If one were
able to obtain — which could be quite difficult — a 30-year fixed mortgage at 7% to
build an ADU, $30,000 in marginal fees paid to Palo Alto would translate into an
approximately $200 greater monthly payment. 11 $200 per month translates into a sizable
percentage of the 1- and even 2-person rents described in “TABLE 2-18 MAXIMUM
AFFORDABLE HOUSING COSTS, SANTA CLARA COUNTY, 2021” for the “Extremely
Low Income,” “Very Low Income,” “Low Income,” and even “Median Income rental limits.
RRHE pg. 2-39. Thus the the City’s reliance on ADUs to meet its affordable housing
goals is incoherent if not completely inconsistent:
● while relying on ADUs to provide a significant percentage of its more affordable
units, and while knowing that any such tax will constitute a relatively larger
proportion of project costs in comparison with, for example, R-1 developments,
the City nonetheless taxes ADU production; and
● Program 3.1 does not appear to commit the City to correcting the taxation
disparity between new smaller housing units — ADUs, apartments, etc. — and
new additions to or “scrapes” of single-family homes.
Both the magnitude and the architecture of Palo Alto’s impact fees significantly
constrain ADU production, particularly production of more affordable ADUs.
B. Utilities Policies
City of Palo Alto Utilities (CPAU) policies further constrain ADU production.
While the UAC may take up this issue at some point in the future, at present the City
follows what is, in essence, a “one-parcel, one service” policy in R-1 neighborhoods.
This means that, for example, electrical, water, and sewer services for a primary
11
https://www.google.com/search?q=mortgage+calculator&oq=mortga&gs_lcrp=EgZjaHJvbWUqDQgAEAA
YgwEYsQMYgAQyDQgAEAAYgwEYsQMYgAQyDQgBEAAYgwEYsQMYgAQyBggCEEUYPDIGCAMQR
Rg8MgYIBBBFGD0yBggFEEUYPDIGCAYQRRhBMgYIBxBFGEGoAgCwAgA&sourceid=chrome&ie=UTF
-8
5
dwelling and an ADU (or JADU) on the same lot will be provided and billed under one
CPAU account. If a homeowner is seeking to build and rent an ADU (or JADU), this can
cause several types of problems.
● Tiering problems. If a utility’s prices are tiered based on consumption (for
example, higher per unit rates above one or more thresholds), then two
households on a single account will be billed at a marginally higher rate than they
would be billed on two separate accounts.
● Overhead and collections problems. Even with sub-metering equipment, a
homeowner renting an ADU will be left with the tasks of calculating charges,
billing, and receiving payment.
● Fundamental capital cost problems, especially with electrical services. Many
existing single-family homes in Palo Alto have existing 100A or 200A electrical
services. Adding even an 800 sf ADU may, based on the normal electrical load
calculation methods followed by CPAU at present, and especially if a homeowner
is seeking to build an all-electric ADU, result in approximately 100A (or more) of
additional electrical load. While other techniques may be used, if one simply
seeks to increase one’s electrical service capacity, present CPAU forms and
policies can result in the need for an application to increase the existing electrical
service to 400A, even though some of this capacity is not necessarily needed for
the ADU. Such an electrical upgrade, including both the fees charged by CPAU
and those charged by a contractor, can sometimes cost $10,000 or more.
● “Loser lottery.” That first $10,000 cost may not be the biggest cost. CPAU may,
in addition, determine that there is not sufficient capacity in its local distribution
system for a new 400A service, in which case an ADU applicant may have “won”
a “loser lottery”: CPAU may determine that, because the ADU would exhaust
local distribution capacity, the ADU applicant should bear the cost of, for
example, upgrading a transformer, or, sometimes, even having also to place a
large pedestal for new CPAU-owned electrical equipment in the applicant’s front
yard. 12 The “winners” of such a “loser lottery” might have to pay tens of
thousands of additional dollars to CPAU.
Returning to the prior mortgage cost analysis, all of these costs might add another $70,
$140, $210, or more in monthly costs to an ADU project, further undermining its
potential to help the City meet its housing affordability goals.
Other policies could and should be adopted by the City.
12 Requiring such payments and siting equipment on a homeowner’s land as conditions for obtaining a
building permit may be quite improper, e.g., as requiring a “public benefit” from a building permit applicant.
6
● CPAU could and should give homeowners building ADUs the option — as
determined solely by the homeowner, and at the homeowner’s expense — to
build a new ADU (or JADU) with its own utilities, particularly electrical and water
utilities. The homeowner should decide if such capital investments make sense.
● CPAU could and should bear the costs of maintaining its own distribution capacity,
a n issue that will probably return to the City Council in other contexts (e.g., future
deliberations regarding S/CAP and electrical infrastructure).
● CPAU could and should move more quickly in accepting, working with, and even
supporting alternative means of calculating electrical loads under the NEC.
With such changes, the City would begin to eliminate some of the most important
constraints on ADU, and especially affordable ADU, housing production resulting from
current CPAU policies.
C. Permitting Policies
Government Code sub-section 66314(a) allows a local agency to designate
areas in which ADUs may be permitted based on “on the adequacy of water and sewer
services and the impact of accessory dwelling units on traffic flow and public safety.” 13
Government Code sub-section 66317(c) provides: “No local ordinance, policy, or
regulation, other than an accessory dwelling unit ordinance consistent with this article
shall be the basis for the delay or denial of a building permit or a use permit under this
section.” 14
Despite these and other limits on which types of considerations a local agency
may consider in reviewing an ADU permit application ministerially, the City routinely
routes ADU permit applications to multiple departments whose reviews are not
specifically authorized under the California statute, including, Urban Forestry, Electrical
Utilities, and the gas portion of WGW Utilities. Individualized reviews of ADU permit
applications by such departments, particularly involving non-objective standards,
frustrate the ministerial ADU permit application process. The City’s routinely subjecting
14
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=1.&title=7.&part
=&chapter=13.&article=2 . (formerly Government Code sub-section 65852.2(a)(7), see
https://codes.findlaw.com/ca/government-code/gov-sect-65852-2/https://codes.findlaw.com/ca/governmen
t-code/gov-sect-65852-2/ ).
13
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=1.&title=7.&part
=&chapter=13.&article=2 .
(formerly Government Code sub-section 65852.2(a)(1)(A), see
https://codes.findlaw.com/ca/government-code/gov-sect-65852-2/https://codes.findlaw.com/ca/governmen
t-code/gov-sect-65852-2/ ).
7
ADU applications to such reviews is another way in which it constrains ADU production,
delays ADU permit issuance, and increases costs to those seeking to build ADUs.
D. Disavowing HCD’s AFFH Tools
The HCD has provided tools for determining whether certain types of ADUs are
allowed in particular areas. The “Affirmatively Furthering Fair Housing Data and
Mapping Resources” is an example of one such tool. 15 Using it, one can identify, for
example, “High Quality Transit Stop Areas” within Palo Alto: 16
16
https://affh-data-and-mapping-resources-v-2-0-cahcd.hub.arcgis.com/datasets/636e3f917b3445929f4aa0
647afc4085_2/explore?location=37.436345%2C-122.134573%2C12.94
15 https://affh-data-and-mapping-resources-v-2-0-cahcd.hub.arcgis.com/
8
Such a map should allow one, before filing an ADU building permit application, to
determine with precision whether one can build, for example, an 18’ detached ADU on
one’s property. See PAMC 18.09.030, Table 1, fn. 5. 17 Despite the availability of such
tools, Palo Alto appears not to recognize their accuracy, and appears to base its
determination of such areas based on its own compilation of data, which may well be
inadequate and incomplete.
Failing to acknowledge and accept the legitimacy of such HCD-provided AFFH
tools is another significant constraint on ADU production, because it makes it more
difficult, more expensive, and more time-consuming to determine whether one can build
the type of ADU that one might seek to build in Palo Alto; even more unfortunately, it
can result in an incorrect determination of whether a particular design is permissible.
3. Compounding Effects and Cumulative Financial Metrics
Extremely high and inequitable impact fees, costly utilities policies, onerous
permitting practices, and disavowal of recognized AFFH tools are all, when considered
individually, significant constraints on ADU production and especially on production of
more affordable ADUs in Palo Alto. Considering them collectively compounds and
multiplies deleterious effects, further reducing the likelihood of the RRHE being
sufficient to meet Palo Alto’s RHNA mandates.
● Regulatory uncertainty, such as that caused by the City’s failure to acknowledge
HCD-provided AFFH tools may keep an ADU project from ever commencing.
Knowing that friends or neighbors in other parts of Palo Alto can build 18’
detached ADUs (e.g., over an existing detached garage) may set an expectation
for prospective ADU applicants that cannot be verified at the outset of a project.
● Prospective ADU applicants that live in smaller homes and that may also be less
capital advantaged may be dissuaded from building larger ADUs when they can
spend the money in better ways simply by adding onto their existing houses
without incurring enormous impact fees. Why let the City charge $50,000 or
$75,000 for an 800 sf ADU when the same overall budget might support an extra
bedrooms or even more in a 900 sf or larger addition?
● How much will it actually cost, over the lifetime of an ADU, to pay higher marginal
electrical and water service rates with single accounts for both primary dwellings
and ADUs? Who will bear that financial risk?
● Would one decide not to build an all-electric ADU or even drop a project if CPAU
failed to pay the costs for upgrading a transformer in its distribution plant?
17 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-76751
9
● Who, indeed, would ever want to be the grand-prize “winner” in a “loser lottery,”
having to pay $10,000, $20,000, or even more to install a 400A electrical service,
with the special bonus of housing a CPAU transformer in one’s front yard?
● Why should there be any review by Urban Forestry, Electrical Utilities or gas
utilities of 800 sf or smaller ADUs? Why are such reviewing departments in Palo
Alto also sometimes the very last to approve an ADU application, delaying what
is supposed to be a maximum 60-day, completely objective, and
ascertainable-in-advance, ministerial review process?
● Obtaining an ADU building permit from any local agency in California should be
quick, easy, and inexpensive. Those are not the adjectives that many
homeowners who have built, or who would like to build, ADUs in Palo Alto would
use to describe the City’s permitting processes. Instead, as a result of other City
policies and practices, those seeking to build ADUs and other residential
dwellings often come face-to-face with the “Palo Alto Premium,” the implicit
surcharge that contractors and others may impose for working in Palo Alto.
All of these effects, especially when considered in combination, take their
cumulative toll, particularly on production of more affordable ADUs in Palo Alto. Yet the
RRHE assumes, based on ABAG’s conclusions about circumstances in “most
jurisdictions,” 18 that over 300 ADUs will be built in Palo Alto over the next several years,
apparently for rental at the “Extremely Low Income,” “Very Low Income,” and “Low
Income” prices described in Table 2-18. RRHE, pg. 2-39.
In the “AFFORDABILITY” section of the RRHE, the City seems almost to
concede that this is fanciful.
When comparing the home prices and rents shown earlier in Figure 2-17, Figure
2-18, and Table 2-16 with the maximum affordable housing costs presented in
Table 2-18 below, it is evident that extremely low-, very low- and low-income
households in Palo Alto have almost no affordable housing options without
substantial subsidies.
RRHE, pg. 2-39. How is the City intending to provide such subsidies for ADUs?
While Section 2.6 of the RRHE, “HOUSING STOCK CHARACTERISTICS,”
discusses, among other things, means of addressing expiring Section 8 project-based
subsidies, RRHE, pgs. 2-83 - 2-88, it is unclear whether, and if so how, these or other
discussions of potential subsidies would or could apply to the 300+ ADUs the RRHE
assumes would be available at extremely low-, very low- and low-income rental prices.
18 https://abag.ca.gov/sites/default/files/documents/2022-03/ADUs-Projections-Memo-final.pdf , p. 1.
10
What is known is that the combination of extremely high and inequitable impact fees,
costly utilities policies, onerous permitting practices, and disavowal of recognized AFFH
tools operates as an anti-subsidy, as a housing tax, especially on ADUs.
The City does not appear to have offered an ADU-specific financial analysis of
such constraints. What metrics might one use to assess the City’s policies and
practices on ADU housing production? At least two come to mind.
One standard has a proven track record of success at the state level. During
those parts of a fiscal year when its funding has not been fully allocated, and for eligible
recipients, the maximum $40,000 grants offered by CalHFA appear to have been
successful in stimulating ADU production.
CalHFA’s ADU Grant Program has already created more housing units in
California by providing grants up to $40,000 to reimburse pre-development and
non-recurring closing costs associated with the construction of an ADU.
Pre-development costs include site prep, architectural designs, permits, soil
tests, impact fees, property surveys, and energy reports. 19
Under the 2023-24 state budget, which provided $25 million for the project, there
appears to have been “high demand” 20 for such grants. As a first approximation, and
certainly one that would appear to be more relevant to ADU construction than a survey
of four dozen townhomes, a $40,000 marginal cost might be more than sufficient to
have negative implications for ADU production.
A second method of calculation might be based upon the Santa Clara County
ADU “Accessory Dwelling Unit Calculator.” 21 Assuming that one were seeking to build a
“0 Bed / 1 Bath / 0 / 400 sqft” studio in Palo Alto, the calculator projected $184-224K in
development costs, an estimated monthly rent of $1,600 - $2,000, monthly expenses of
$1,500 - $1,900, based upon a capital structure of a $60,000 cash investment and a
$144,000 loan with a 20 year term and an 8% interest rate, yielding an estimated
monthly mortgage payment of $1,194. Since the estimated monthly rent was quite
comparable to the estimated monthly expenditures with this capital structure, it appears
that most of the economic benefit was projected to be realized as an increase in
property value. “It is estimated that your ADU will increase your home value by
$214,000.” 22 But using $60,000 in cash, and leveraging it with a $144,000 mortgage —
even if one could obtain such a mortgage — to produce an increase in value of
22 https://santaclaracounty.aducalculator.org/
21 https://citiesassociation.org/documents/santa-clara-county-adu-calculator/
20 https://www.calhfa.ca.gov/homeownership/bulletins/2023/2023-12.pdf
19 https://www.calhfa.ca.gov/adu/index.htm
11
$214,000 in a relatively illiquid asset with relatively high sales transaction costs would
appear, on its face, to be only modestly attractive as an investment opportunity when
10-year Treasury bonds are yielding, at least at this time, over 4.5%. 23 As a result, one
might expect an economically motivated ADU applicant to strive to increase rents
higher, potentially to levels above what the City has contemplated in Table 2-18.
There is a substantial chance that Palo Alto’s constraints on ADU production will
cause the City to fail to meet its projected targets for extremely low-, very low- and
low-income ADUs. As a result, the City’s “Buffer above Remaining RHNA After
Credits,” RRHE, pg. 3-72, for those categories of affordable housing units may be lost.
In addition to the policy changes discussed above — eliminating or greatly
reducing impact fees on ADUs; returning previously inequitably levied impact fees to
homeowners; allowing, at a homeowner’s option and expense, for separate electrical
and water utilities services for ADUs; ending Urban Forestry, Electrical Utilities, and
WGW gas-related departmental reviews; and accepting the results of HCD’s AFFH tools
— this analysis points towards the types of policy interventions to which the City should
commit itself if it truly intends to rely upon ADUs as an important source of extremely
low-, very low- and low-income housing during the current RHNA cycle. It could and
should:
● replicate the maximum $40,000 grants offered by CalHFA, perhaps in
cooperation with CalHFA itself.
● offer qualifying ADU applicants, perhaps using the same income and other
qualifications established by CalHFA, to provide, e.g., $200,000 - $300,000 loans
at the City’s cost of capital to those applicants willing to offer rentals at federally
approved rates for a period of 10 years with “on-bill payments,” perhaps through
the CPAU’s own billing system; and
● immediately implement AB 1033: “ Accessory dwelling units, also referred to as
ADUs and “granny flats,” have been available in California only as rentals. But a
new law, Assembly Bill 1033 , is giving Californians the opportunity to buy and sell
them as condominiums,” creating an important innovation to foster actual
ownership of smaller homes in Palo Alto.
Palo Alto has the capability, the credit rating, and the spirit of innovation to provide
capital and new forms of ownership for more affordable housing in our community. The
City can augment ADU production, especially of more affordable ADUs, should the City
Council demonstrate leadership and commitment to such goals.
23 https://www.bloomberg.com/markets/rates-bonds/government-bonds/us
12
From:Greg Schmid
To:Council, City
Subject:Comments on Item 13 of April 15, 2024 Council Agenda
Date:Sunday, April 14, 2024 8:47:24 PM
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April 14, 2024
Dear Council Members and Commissioners,
This Housing Proposal before you tonight is destroying local democracy.
How can you approve it without raising a few fundamental questions. Let me point our fourquestions that need answers before you move ahead.
1. The whole RHNA process within the Plan Bay Area 2023-2031 is based on an overlyaggressive—and, as it turns out, wrong-- Bay Area jobs forecast made by HCD in 2019. Andit was asserted at that time that it would be illegal to have any public discussion of loweringthat jobs forecast number until 2032—even though that forecast has proven wrong!
2. California Code requires that any state agency that makes a demographic forecast be inagreement with the State Demographer. In 2019, the State Demographer was projecting apopulation growth in the Bay Area of 17% for the period 2020-2030. But a dramatic change inemployment patterns in knowledge based industries with a clear dispersion of jobs has theState Demographer now projecting a Bay Area decline in jobs of 1.7% between 2020-2030instead of the projected increase. HCD’s base numbers are seriously outdated!
3. It is time for HCD to publish the Code required Guidebook (CA Code 65890) that would
help local cities offer incentives to induce companies to disperse jobs to cheaper and moreaccessible communities.
4. The Bay Area has had one of the country’s most expensive and unequal housing markets.One of the key goals of the Housing Element is to produce more affordable housing. But withaffordable units in multiunit projects being paid for through inclusionary zoning, market rateunits remain among the highest and the most unequal in the country.
Please do NOT approve this Housing Element until there is a clear open meeting discussion of
the major shifts in the jobs market in and around Palo Alto. The people in the City must havethe opportunity to discuss the longer term health and environmental impacts of concentrating
jobs and housing in Palo Alto and the larger Bay Area—and look at the possibilities for jobsdispersion to less congested and more affordable areas. Following the California Government
Code means keeping local democracy alive and maintaining a healthy and prosperouseconomy that benefits all.
Respectfully,Gregory Schmidgregschmid @sbcglobal.net
From:Scott O"Neil
To:HeUpdate; Council, City; Planning Commission
Subject:Palo Alto"s Third Housing Element Draft
Date:Sunday, April 14, 2024 8:40:52 PM
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Dear Palo Alto City Council, Planning and Transportation Commission, and City Staff,
I am writing for myself (not PAF), to suggest the city’s best move toward certification on
Monday is to reject the third housing element draft, and direct staff to come back with a
fourth draft that uses an aggressive HIP implementation to address HCD’s concerns about
the second draft.
This is necessary because the third draft, rather than taking the feedback to heart, re-
evaluating their theory of compliance, and coming forward with a different policy direction –
is instead trying to explain harder how the original strategy is fine. This was also the core
strategy behind draft 2, which also failed to gain certification.
If you approve the draft in front of you, you will hit a “snooze button” on housing element
progress that will run until HCD responds 60 days after submission. For draft 2, submission
was weeks after Council approval. That is wasted time. It would be better, tactically, to ask
staff to focus on delivering a HIP revision that addresses the city’s vulnerabilities on the HE
now, with an eye toward a third draft submission that uses HIP to make a stronger
compliance case on merits.
The City’s Theory of Compliance, and its Problems
The city’s long-standing position can be summarized thus:
What matters most is counting up enough units for RHNA.
A unit can be counted for RHNA if it can be built physically, based on zoning.
Economic feasibility does not matter.
Constraints analysis happens in the narrow context of the inventory physical
feasibility analysis.
Not in a broader context of city-wide production.
Therefore, compliance on constraints for a zone can be evaluated by looking at
the inventory development standards, even if those standards do not apply
anywhere besides those inventory sites, and almost the entire zone (and city)
uses older, more constrained standards.
Once the city has counted enough units, it cannot be noncompliant on Fair Housing
law, because Palo Alto is a universally high-opportunity city. Therefore, units can go
anywhere, and even be heavily concentrated in the South Palo Alto GM/ROLM areas.
I think the city could, with a little more work, cough up enough compliant units to tally up for
RHNA. But the problem is foundational to the current approach:
The city has a legal duty to both recognize and mitigate constraints. This analysis is
apart and separate from the inventory/RHNA exercise.
“Constraints” includes economic constraints created by zoning development
standards.
If anyone wanted to argue that our zoning standards are not a governmental
constraint, consider that the city has received applications for about 40% of its
total RHNA within one year via “Builder’s Remedy” applications. Ie: when a
zoning holiday was perceived, proposals went through the roof. This is despite
the city not recognizing such applications as valid. The real opportunity must be
much higher.
Our first Builder’s Remedy application arrived ~1.5 months after the city went
noncompliant. The city rezoned in January, about ~3 months ago. If the
rezoning addressed constraints, are there compliant applications outside
GM/ROLM/ECRF?
Constraints analysis is not narrowly constrained to the inventory. This is especially
true in a city like Palo Alto, which is only even addressing physical constraints for a
few hundred parcels. That is: even if physical constraints were the bar (it is not), the
city would need developer interest on nearly 100% of its inventory to credibly argue
the constraint is mitigated.
This is because the rezoning in January was (outside of GM/ROLM and ECR
focus area) only applied to actual inventory sites, not entire zones.
Compounding this problem: the city’s “opt out” approach to owner outreach
means it cannot show development interest on almost any inventory sites.
The only exceptions to the city’s spot-zoning approach are ECR Focus, and South
PA GM/ROLM. These are also the only places which arguably meet an economic
feasibility standard. This “dumping” renders the HE illegal under Affirmatively
Furthering Fair Housing (AFFH) law.
These are the problems the city is facing going into the draft. Instead of engaging with
them, the draft recommits to its own premises, and tries to argue its way out of the
situation.
The Way the City Argues, and its Problems
When discussing the first draft of the Housing Element, I gave the HCD reviewer some
advice. Paraphrasing: “I don’t think I’ve ever caught Palo Alto in a lie, but they are selective
about what they present. If you take their Element and add the facts we’re telling you –
you’ll get a pretty good overall picture.”
Put another way: the city’s Housing Elements only appear compliant based on an
assumption that the reader will be evaluating them unopposed. They have collapsed when
viewed alongside fact-patterns like the PHZ proposal history (and now Builder’s Remedy
proposal history), development timeline history, pre-approval activity, PAF’s geospatial
analysis of zoning effects, independent review of sites in the inventory, besides many
others.
The third draft continues to demonstrate the City’s belief that if the city only makes enough
arguments like this, then it will achieve certification. This approach has not been serving the
city well.
Case Study 1: “Stranded Parcels”
Going back to the first draft, PAF has been arguing that you cannot count certain sites
which have what they call “stranded parcels.” The original archetypical example being, the
Downtown Whole Foods parking lots, which were initially included separate of the store.
These do not pass a smell test. Is Whole Foods going to close down so the parking lots
can be redeveloped? How would the store function during construction? PAF’s argument
is you need to consider both parcels, together, as one unit.
The city has removed many (~250-300) of these sites from the inventory, including Whole
Foods. However, others remain. Including APN 137-01-078 at High Street, 2137 El
Camino, 3760 El Camino, and others. (Totaling ~50-75 units.)
HCD in its letters has been saying the city needs to rely on “local knowledge” which has
been taken as a nod to arguments like this one.
I believe the following section of draft 3 must be motivated by the “entangled land use”
argument, and intended to rebut to argue the remaining sites can, in fact, partially
redevelop:
This should be obvious, but: Novato is 51 miles away as the crow flies, Pinole is 40 miles
away. Neither is in an adjacent county. These cannot, in principle, provide “local
knowledge.”
Even setting that matter aside, though the city is flat wrong about its applicability. For one
thing, “The Village at San Antonio Center” is a separate property from the adjacent “San
Antonio Shopping Center.” What is now “The Village” is a single site that was completely
redeveloped in two phases. I do not believe you can point to any business at the new site
and say “The Village” redeveloped their parking.
Moreover, what all three of these projects have in common, is scale. Five acres in Pinole,
and six in Novato. San Antonio Village is even larger, at 16 acres, and it’s certainly close
enough to serve as a local precedent.
Notably, there is a supermarket in the new redevelopment at the Village. A Safeway,
moved in from another site. At no point was this Safeway operating while its only parking
lot was being redeveloped into housing. This is the kind of thing the city would need to
show happening to rebut our “entangled land use” argument.
Which brings us back to scale. Palo Alto Forward has only applied the “entangled land
use” argument to small sites that can’t be easily split up. The city cannot rebut this by
providing examples of much larger sites spanning numerous businesses, being partially
redeveloped, or redeveloped in phases. We have not applied this argument to sites like
Transport St APN 147-02-017, and Park Blvd APN 124-28-003, which could more
conceivably be split apart from the parent site.
Case Study 2: Streamlined Review
The Housing Element asserts:
“This new process allows multifamily projects that meet objective standards to be
considered for approval following City staff completeness review and one study
session with the ARB from submittal to approval (2 months from being deemed
complete). Notably, this streamlined review is available for projects receiving
density bonuses and other incentives or concessions such as under State Density
Bonus Law. Therefore, the vast majority of housing projects will be eligible for
streamlined review.”
Almost all apartment projects require rezoning today, and the city’s spotzoning approach
(meaning: the practice of applying different development standards to individual parcels
identified as inventory sites) failed to upzone almost every parcel in the city to even
physically-feasible zoning –GM/ROLM and El Camino Focus area notwithstanding. The
Housing Element continues to say of the rezoning process “While the rezoning process is
undoubtedly lengthy, this reflects the complex nature of a request to amend the City’s
zoning code.”
The truth of the bolded statement about streamline review thus necessarily boils down to
the future distribution of projects between ones eligible for streamlining, and ones requiring
rezoning. So how much of the city is eligible for streamlined review? Unfortunately: not
much.
Remember, because the city did not take the RHNA zoning global, most of El Camino Real
still has base zoning with FAR 1.25 or less for residential projects. This is a very big deal,
quantitatively! Inventory zoning applies only to about 150 acres of parcels. The core of
Palo Alto is probably somewhere in the range of 5,000 acres. Excluding SFH areas, it’s on
the order of 1,000 acres.
The only way the city’s claim here can be true is if there’s an absolutely uncanny degree of
correlation between inventory site owners, and owners interested in redevelopment.
Unfortunately, the city’s “opt-out” owner outreach strategy means there is no reason to
believe such a correlation exists.
It is not credible to assert that “the vast majority” of housing projects going forward will be
confined to a few hundred physically (but not economically) feasible parcels, plus
GM/ROLM.
Case Study 3: Pre-application delays for PHZ/Rezoning
applications
On p. 4-57, the Housing Element asserts:
“Rezoning applications typically have a longer timeframe since they must be heard by both
the Planning and Transportation Commission and the City Council. This process generally
takes about a year. It begins with a required preliminary screening with the City Council. …
The City Council generally hears the prescreen request within 2 months.”
As I explained in my 11/5/2023 to the city “Shift in HCD Posture on Pre-Applications &
Implications for Palo Alto”, this is false. In short, I went through the records for all of the
PHZ applications I could find -which was almost all of them-, and ran the numbers. A 2
month delay has never happened, as far as I could tell. The city’s best time was 74 days.
Mean time was 129 days –more than four months.
How HIP Can Save the Day
The city is making bad arguments because it needs to sustain a bad position.
Economic constraints created by zoning are a “rock”, and Affirmatively Furthering Fair
Housing law is a “hard place.” The city’s spot-zoning outside of GM/ROLM has put it in
between these two things. It can try to argue that it can produce at scale, but only by
validating fears that it is “dumping” housing in South Palo Alto.
ECR Focus Area helps a little, but not much. For a few reasons:
1.
The area is very small. (~30 acres)
2.
The largest site in the focus area has grandfathered structures that will not be
replaceable, especially economically. Palo Alto Square ia about 20 acres.
3.
It’s hard to argue you’re Affirmatively Furthering Fair Housing when you’re only
upzoning an area to try get credit for surrendering to two Builder’s Remedy applicants
whom you do not want to fight in court.
What HIP can add to the picture, is a policy vehicle for taking economically credible
upzoning broad enough to smash both the rock and the hard place. Taking reforms more
broadly also allows more of the city to qualify for expedited review.
HCD has challenged the city:
“the element mentions the isolation of lower-income units in the Research; Office and
Limited Manufacturing (ROLM) zone; however, the element provides minimal information
on how this zone improves fair housing.”
I have read the updated Housing Element and not found a credible answer to this. What
HIP offers, is an opportunity to answer, honestly:
“It cannot. However, because the GM/ROLM area is no longer the overwhelmingly majority
of our economically feasible apartment rezoning, it does not need to. Taken holistically, our
lower-cost production is spread far and wide throughout the city, and that is how we are
Affirmatively Furthering Fair Housing.”
Conclusion
The city deserves credit for implementing much of Draft 2 in a straightforward way via the
rezoning ordinance. It represents a good-faith effort at reaching a physical feasibility
standard. Taken on its own terms, it might reach certification.
Palo Alto’s problem is that its own terms are not the terms. The City is not going to respond
to my concerns and PAF’s concerns, and most importantly: HCD’s concerns by explaining
harder how we shouldn’t have those concerns. Especially not with the arguments I’m
reading.
There have been implications in some quarters that PAF is responsible for the Housing
Element being uncertified. This may be narrowly true, in the sense that if they were not
writing letters, HCD might have accepted an earlier draft out of partial ignorance. But the
deeper reason why HCD is rejecting these drafts, is because they are bad. Because they
are bad, PAF has been able to marshal good arguments against them.
It does not need to be this way for the next draft. The city is holding all the cards, and can
reshape the facts to deny PAF good arguments. HIP offers a promising vehicle for this.
My concern is: if you submit this draft, you risk being taken as obfuscatory and deceptive.
That will be counterproductive. Much better -and faster- to accept development standards
as a governmental constraint due to impact on economic feasibility citywide, explicitly in the
Constraints section. Then, focus on getting HIP nailed down to mitigate that constraint
broadly. Finally, use HIP as a vehicle to submit a draft 3 that offers substantive changes.
From:John Kelley
To:Council, City; Planning Commission
Subject:PA-POLI-letter to PACC and PTC re Revised Housing Element 2024-04-14 --- Please direct City Staff to make
further changes
Date:Sunday, April 14, 2024 8:39:15 PM
Attachments:PA-POLI-letter to PACC and PTC re Revised Housing Element 2024-04-14.pdf
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TO: Palo Alto City Council (City Council) and Planning & Transportation Commission
(PTC)
RE: Recommendations re Agenda Item #13, “Joint City Council and Planning and
Transportation Commission Meeting to Adopt a Resolution Amending the
Comprehensive Plan by Adopting a Revised 2023‐31 Housing Element [etc.]” and
Comments re Staff Report 2312-2450 (Staff Report)
DATE: April 14, 2024
FROM: John Kelley
RECOMMENDATION
City Staff have improved the prior version of the 2023-2031 Housing Element
(Housing Element) in important ways, but the PTC and the City Council should
direct City Staff to make further changes in the revised Housing Element prior
to adopting it and delivering it to the California Department of Housing and Community Development (HCD).
Please see the accompanying PDF for more details.
Thank you,
John Kelleyjkelley@399innovation.com
TO: Palo Alto City Council (City Council) and Planning & Transportation
Commission (PTC)
RE: Recommendations re Agenda Item #13, “Joint City Council and Planning
and Transportation Commission Meeting to Adopt a Resolution Amending
the Comprehensive Plan by Adopting a Revised 2023-31 Housing
Element [etc.]” and Comments re Staff Report 2312-2450 (Staff Report)
DATE: April 14, 2024
FROM: John Kelley
RECOMMENDATION
City Staff have improved the prior version of the 2023-2031 Housing Element
(Housing Element) in important ways, but the PTC and the City Council should
direct City Staff to make further changes in the revised Housing Element prior to
adopting it and delivering it to the California Department of Housing and
Community Development (HCD).
DISCUSSION
1. ADUs Play a Crucial Role in the City’s Housing Element
The City relies heavily on accessory dwelling units (ADUs) in attempting to meet
its RHNA. For example, when comparing the “ADUs” row with the “Total Unit Surplus”
row in Table 3-27, “Adequacy of Residential Site Inventory,” of the revised draft “Palo
Alto Housing Element 2023-2031 (Redlined),” 1 for both (a) the combination of the “Very
Low-Income” and the “Low-Income” columns and (b) the “Moderate Income” column,
one can see that the “ADUs” values exceed the “Total Unit Surplus” values. Thus, if the
City fails to produce very low-income, low-income, and moderate-income ADUs to the
extent predicted, much of the “buffer” may disappear, the City may fail to satisfy its
RHNA. Accordingly, assessing the City’s constraints on ADU production is vital in
analyzing the sufficiency of the Revised Redline Housing Element.
2. The City’s ADU Projections Still Ignore Important Constraints
The City relies on ABAG’s technical guidance for estimating the future distribution
of ADUs by income category based on actual Palo Alto production figures from
2019-2021. 2 Yet the ABAG technical memo articulates its own limits: “ABAG conducted
2 https://abag.ca.gov/sites/default/files/documents/2022-03/ADUs-Projections-Memo-final.pdf , RRHE, p.
3-8.
1 “Revised Redline Housing Element” or “RRHE,”
https://paloaltohousingelement.com/wp-content/uploads/2024/04/Palo-Alto-Housing-Element-1.pdf , p.
3-72.
1
an analysis of ADU affordability and concluded that in most jurisdictions , the following
assumptions are generally applicable.” 3 “Generally applicable,” however, does not
necessarily mean “applicable in Palo Alto” (especially if one considers the “Palo Alto
premium,” among other things). Thus, in assessing the RRHE, one must scrutinize the
unique constraints that Palo Alto imposes on ADU production. 4
A. Impact Fees
Since an earlier draft of the Housing Element was submitted to the HCD in 2022,
the City Council again raised the impact fees imposed on 750+ sf ADUs. 5 Today the
FY2024 facial — essentially “MSRP,” because proportionality discounts apply to such
ADUs — total of Community Center, general government, library, park, and public safety
facilities fees for “Single Family” in Palo Alto totals $76,385, more than $3,000 greater
than the base, $72,562 figure discussed in the RRHE. 6 Because Palo Alto changed
both the categories used to calculate impact fees and the magnitude of the fees, 7 their
effects were not reflected in 2019-2021 baseline ADU production figures that the City
has relied upon in its RHNA projections. 8 Furthermore, as applied especially to ADUs,
8
https://www.paloaltoonline.com/news/2021/04/15/palo-alto-hikes-development-impact-fees-for-first-time-in
-20-years Compare the figures on RRHE, p. 3-8.
7 Staff report for 4/20/2021 meeting , p. 8
6 FY2024 Fee Schedule, p. 65, and RRHE p. 4-64. Please note: in the RRHE, a range of values is
provided, “$72,562 - $302,362.” See pgs. 4-63 – 4-64 for a discussion of how the $302,362 figure is
calculated. The City acknowledges that such “larger projects involving detached single-family
homes…..are rare….” RRHE p. 4-64. (Perhaps ADU impact fees could even exceed the “MSRP.”).
5 “ADOPTED MUNICIPAL FEE FISCAL YEAR SCHEDULE 2024,” “Impact & In-Lieu Fees,” “Development
Impact Fees - Residential,” (FY2024 Fee Schedule)
( https://www.cityofpaloalto.org/files/assets/public/v/1/administrative-services/city-budgets/fy-2024-city-bud
get/adopted/fy24-muni-fee-book-final.pdf , p. 65.
4 Until recently, Palo Alto’s Tree Ordinance, PAMC Chapter 8.10, “TREE AND LANDSCAPE
PRESERVATION AND MANAGEMENT,”
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-65934#JD_Chapter8.10 , was
among the most important, Palo-Alto-specific constraints on ADU production. At the City Council meeting
on April 1, 2024, the City Council considered a Staff Report incorporating an important finding from the
City Attorney:
During passage of the tree ordinance updates in January, staff confirmed during the Council
Questions that based on CAO analysis of PAMC Chapter 18.09, the updated Title 8 and
applicable state law, the tree ordinance would not apply to stand alone Table 1 ADU’s .
Staff Report 2403-2809,
https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=4688&meetingTemplateType=2&
compiledMeetingDocumentId=9485 , p. 1 (emphasis added). (Since this statement was attributed to the
City Attorney’s Office, it is assumed that the City will follow that guidance and no longer apply the Tree
Ordinance to what are, in effect, statewide exemption ADUs.) Attachment A, the ordinance proposed by
City Staff, was amended at the April 1, 2024 meeting. See the video of the April 1, 2024 meeting,
https://www.youtube.com/watch?v=s2PxdunJHco , beginning at approximately 6:06:59.
3 https://abag.ca.gov/sites/default/files/documents/2022-03/ADUs-Projections-Memo-final.pdf , p. 1
(emphasis added).
2
the City’s impact fee structure is (a) inequitable, for multiple reasons, only one of which
is discussed in the RRHE, and (b) a significant impediment to production of ADUs, a
point not addressed in the City’s RRHE financial feasibility analysis. Pgs. 4-64 - 4-65.
The City itself acknowledges that the basic, per-unit fee architecture is
inequitable, but it promises to make amends:
In accordance with state law, fees for ADUs are only charged on ADUs larger
than 750 square feet, and are charged in proportion to the fee that are or would
be assessed on the primary unit. Because Palo Alto has historically charged
per-unit fees for residential development, this has led to some inequitable results,
as the fees for an ADU will depend not only on the size of the ADU, but also on
the size of the primary unit, with higher fees required under state law when the
primary unit is smaller. To avoid this scenario, the City will implement Programs
3.1 and 3.5 to convert fees to a per square foot calculation. 9
That is a step in the right direction but remains insufficient to correct past and continuing
harms. This promise lacks a specific deadline, but Program 3.1 refers to December
2024. RRHE, p. 5-15. Still, that program omits some of the impact fees identified
above, is not offered as a specific condition for present acceptance of the RRHE, and
offers nothing to those previously saddled with inequitable housing impact fees to obtain
permits for ADUs in Palo Alto. The City should:
● not submit a further revised Housing Element to the HCD until the current
per-unit system is replaced;
● immediately place a moratorium on charging new impact fees for ADUs until
such a new system is adopted; and, after its adoption,
● recalculate the impact fees for any ADU built after the revised fee schedule was
first adopted in April, 2021, refunding the difference between the previously
charged fees and those that would have been due under the new system to
homeowners.
Even with such changes, however, the City would only be addressing one half of the
inequities built into its current impact fee structure as applied to ADUs.
In the FY2024 Fee Schedule at p. 65, the phrases “Single Family” and “per unit”
tell only a partial story. The City asserts that “the burden of housing costs is being more
equitably distributed across project types,” pg. 4-65, but the discussion in the
“DEVELOPMENT IMPACT FEES AND IN-LIEU FEES'' section, RRHE pgs. 4-63 – 4-65,
9 RRHE p. 4-64.
3
fails to make clear that, as currently implemented, “Single Family” and “per unit”
essentially mean “brand new single-family on a vacant parcel.” This implicit meaning of
the fee schedule language is noteworthy given the City’s observation that there is a
“lack of vacant land in Palo Alto.” RRHE pgs. 4-64. It is inequitable to impose impact
fees on ADUs that vary with the size of the primary dwelling on a parcel — such that a
person with an 800 sf house might have to pay $76,385 to build an 800 sf ADU,
whereas a neighbor with a 3,200 sf house would only pay a quarter of such fees to build
an identical 800 sf ADU. But a far more fundamental inequity becomes evident when
one compares single-family homes and ADUs.
● Instead of building an 800 sf ADU, the hypothetical homeowner with an
800 sf house could instead add 2,400 sf to the house, but since there was
a pre-existing home on the lot, Palo Alto would not currently charge
$76,385 in impact fees, nor indeed any of the park or other impact fees
detailed above, on that home addition, even though it would be three
times the size of the 800 sf ADU alternative.
● If the hypothetical neighbor, with a 3,200 sf house, had the capital and the
desire, the neighbor might “scrape” the entire existing house, rebuild at or
above grade 3,200 sf more luxuriously, and then add a basement, perhaps
2,400 sf in size, and, again, not pay any impact fees.
The City may “implement Program 3.1 Fee Waivers & Adjustments ” before New Year’s
Eve 2024, RRHE pgs. 4-65, but this does not appear to include a commitment to alter
the fundamental discrimination in Palo Alto’s impact fee architecture as implemented:
the City privileges substantial additions to and even complete “scrapes” of single-family
homes, while seeking to shift the vast majority of all housing impact fees to new ADUs,
apartments, condominiums, and townhomes. Palo Alto’s impact fees are, in essence,
housing taxes on smaller, non-R-1 dwellings. Such taxes constrain ADU production.
As HCD has recognized, 10 one of the merits of ADUs as a housing production
strategy is their low costs. This “lower denominator” means that the impact fees charged
by Palo Alto constitute an outsized percentage of costs for ADUs. As a corollary, the
financial feasibility analysis offered by the City, RRHE pgs. 4-64 - 4-65, is not applicable
to ADUs. Rather than building four dozen townhomes, a Palo Alto homeowner may
only be seeking to build a single 800 sf ADU. Adding even tens of thousands of dollars
to an ADU project may make it significantly less attractive to an individual homeowner,
who generally would have lower access to capital than the developer of 48 townhomes.
Even without reaching the full $76,385 amount, many homeowners with smaller homes
10 “ACCESSORY DWELLING UNIT HANDBOOK UPDATED JULY 2022” (“HCD 2022 ADU
Handbook”)( https://www.hcd.ca.gov/sites/default/files/docs/policy-and-research/ADUHandbookUpdate.pdf
), p. 4.
4
will end up being charged $25,000, $30,000 or even more in “Planning Impact Fees''
before they can receive a building permit for an ADU from the City. Not everyone in
Palo Alto can put $25,000 on a credit card or send an e-check for $30,000 to the City.
Thus the architecture of City’s housing impact fees — already heavily disadvantaging
ADUs — further privileges more economically advantaged homeowners. The City’s
financial feasibility tests will be cold comfort for many homeowners building ADUs.
The burden of the City’s impact fees on ADUs — whether $25,000 or $75,000 —
will also affect the City’s ability to meet its RHNA, particularly for more affordable
housing. This is especially true given the current interest rate environment. If one were
able to obtain — which could be quite difficult — a 30-year fixed mortgage at 7% to
build an ADU, $30,000 in marginal fees paid to Palo Alto would translate into an
approximately $200 greater monthly payment. 11 $200 per month translates into a sizable
percentage of the 1- and even 2-person rents described in “TABLE 2-18 MAXIMUM
AFFORDABLE HOUSING COSTS, SANTA CLARA COUNTY, 2021” for the “Extremely
Low Income,” “Very Low Income,” “Low Income,” and even “Median Income rental limits.
RRHE pg. 2-39. Thus the the City’s reliance on ADUs to meet its affordable housing
goals is incoherent if not completely inconsistent:
● while relying on ADUs to provide a significant percentage of its more affordable
units, and while knowing that any such tax will constitute a relatively larger
proportion of project costs in comparison with, for example, R-1 developments,
the City nonetheless taxes ADU production; and
● Program 3.1 does not appear to commit the City to correcting the taxation
disparity between new smaller housing units — ADUs, apartments, etc. — and
new additions to or “scrapes” of single-family homes.
Both the magnitude and the architecture of Palo Alto’s impact fees significantly
constrain ADU production, particularly production of more affordable ADUs.
B. Utilities Policies
City of Palo Alto Utilities (CPAU) policies further constrain ADU production.
While the UAC may take up this issue at some point in the future, at present the City
follows what is, in essence, a “one-parcel, one service” policy in R-1 neighborhoods.
This means that, for example, electrical, water, and sewer services for a primary
11
https://www.google.com/search?q=mortgage+calculator&oq=mortga&gs_lcrp=EgZjaHJvbWUqDQgAEAA
YgwEYsQMYgAQyDQgAEAAYgwEYsQMYgAQyDQgBEAAYgwEYsQMYgAQyBggCEEUYPDIGCAMQR
Rg8MgYIBBBFGD0yBggFEEUYPDIGCAYQRRhBMgYIBxBFGEGoAgCwAgA&sourceid=chrome&ie=UTF
-8
5
dwelling and an ADU (or JADU) on the same lot will be provided and billed under one
CPAU account. If a homeowner is seeking to build and rent an ADU (or JADU), this can
cause several types of problems.
● Tiering problems. If a utility’s prices are tiered based on consumption (for
example, higher per unit rates above one or more thresholds), then two
households on a single account will be billed at a marginally higher rate than they
would be billed on two separate accounts.
● Overhead and collections problems. Even with sub-metering equipment, a
homeowner renting an ADU will be left with the tasks of calculating charges,
billing, and receiving payment.
● Fundamental capital cost problems, especially with electrical services. Many
existing single-family homes in Palo Alto have existing 100A or 200A electrical
services. Adding even an 800 sf ADU may, based on the normal electrical load
calculation methods followed by CPAU at present, and especially if a homeowner
is seeking to build an all-electric ADU, result in approximately 100A (or more) of
additional electrical load. While other techniques may be used, if one simply
seeks to increase one’s electrical service capacity, present CPAU forms and
policies can result in the need for an application to increase the existing electrical
service to 400A, even though some of this capacity is not necessarily needed for
the ADU. Such an electrical upgrade, including both the fees charged by CPAU
and those charged by a contractor, can sometimes cost $10,000 or more.
● “Loser lottery.” That first $10,000 cost may not be the biggest cost. CPAU may,
in addition, determine that there is not sufficient capacity in its local distribution
system for a new 400A service, in which case an ADU applicant may have “won”
a “loser lottery”: CPAU may determine that, because the ADU would exhaust
local distribution capacity, the ADU applicant should bear the cost of, for
example, upgrading a transformer, or, sometimes, even having also to place a
large pedestal for new CPAU-owned electrical equipment in the applicant’s front
yard. 12 The “winners” of such a “loser lottery” might have to pay tens of
thousands of additional dollars to CPAU.
Returning to the prior mortgage cost analysis, all of these costs might add another $70,
$140, $210, or more in monthly costs to an ADU project, further undermining its
potential to help the City meet its housing affordability goals.
Other policies could and should be adopted by the City.
12 Requiring such payments and siting equipment on a homeowner’s land as conditions for obtaining a
building permit may be quite improper, e.g., as requiring a “public benefit” from a building permit applicant.
6
● CPAU could and should give homeowners building ADUs the option — as
determined solely by the homeowner, and at the homeowner’s expense — to
build a new ADU (or JADU) with its own utilities, particularly electrical and water
utilities. The homeowner should decide if such capital investments make sense.
● CPAU could and should bear the costs of maintaining its own distribution capacity,
a n issue that will probably return to the City Council in other contexts (e.g., future
deliberations regarding S/CAP and electrical infrastructure).
● CPAU could and should move more quickly in accepting, working with, and even
supporting alternative means of calculating electrical loads under the NEC.
With such changes, the City would begin to eliminate some of the most important
constraints on ADU, and especially affordable ADU, housing production resulting from
current CPAU policies.
C. Permitting Policies
Government Code sub-section 66314(a) allows a local agency to designate
areas in which ADUs may be permitted based on “on the adequacy of water and sewer
services and the impact of accessory dwelling units on traffic flow and public safety.” 13
Government Code sub-section 66317(c) provides: “No local ordinance, policy, or
regulation, other than an accessory dwelling unit ordinance consistent with this article
shall be the basis for the delay or denial of a building permit or a use permit under this
section.” 14
Despite these and other limits on which types of considerations a local agency
may consider in reviewing an ADU permit application ministerially, the City routinely
routes ADU permit applications to multiple departments whose reviews are not
specifically authorized under the California statute, including, Urban Forestry, Electrical
Utilities, and the gas portion of WGW Utilities. Individualized reviews of ADU permit
applications by such departments, particularly involving non-objective standards,
frustrate the ministerial ADU permit application process. The City’s routinely subjecting
14
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=1.&title=7.&part
=&chapter=13.&article=2 . (formerly Government Code sub-section 65852.2(a)(7), see
https://codes.findlaw.com/ca/government-code/gov-sect-65852-2/https://codes.findlaw.com/ca/governmen
t-code/gov-sect-65852-2/ ).
13
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=1.&title=7.&part
=&chapter=13.&article=2 .
(formerly Government Code sub-section 65852.2(a)(1)(A), see
https://codes.findlaw.com/ca/government-code/gov-sect-65852-2/https://codes.findlaw.com/ca/governmen
t-code/gov-sect-65852-2/ ).
7
ADU applications to such reviews is another way in which it constrains ADU production,
delays ADU permit issuance, and increases costs to those seeking to build ADUs.
D. Disavowing HCD’s AFFH Tools
The HCD has provided tools for determining whether certain types of ADUs are
allowed in particular areas. The “Affirmatively Furthering Fair Housing Data and
Mapping Resources” is an example of one such tool. 15 Using it, one can identify, for
example, “High Quality Transit Stop Areas” within Palo Alto: 16
16
https://affh-data-and-mapping-resources-v-2-0-cahcd.hub.arcgis.com/datasets/636e3f917b3445929f4aa0
647afc4085_2/explore?location=37.436345%2C-122.134573%2C12.94
15 https://affh-data-and-mapping-resources-v-2-0-cahcd.hub.arcgis.com/
8
Such a map should allow one, before filing an ADU building permit application, to
determine with precision whether one can build, for example, an 18’ detached ADU on
one’s property. See PAMC 18.09.030, Table 1, fn. 5. 17 Despite the availability of such
tools, Palo Alto appears not to recognize their accuracy, and appears to base its
determination of such areas based on its own compilation of data, which may well be
inadequate and incomplete.
Failing to acknowledge and accept the legitimacy of such HCD-provided AFFH
tools is another significant constraint on ADU production, because it makes it more
difficult, more expensive, and more time-consuming to determine whether one can build
the type of ADU that one might seek to build in Palo Alto; even more unfortunately, it
can result in an incorrect determination of whether a particular design is permissible.
3. Compounding Effects and Cumulative Financial Metrics
Extremely high and inequitable impact fees, costly utilities policies, onerous
permitting practices, and disavowal of recognized AFFH tools are all, when considered
individually, significant constraints on ADU production and especially on production of
more affordable ADUs in Palo Alto. Considering them collectively compounds and
multiplies deleterious effects, further reducing the likelihood of the RRHE being
sufficient to meet Palo Alto’s RHNA mandates.
● Regulatory uncertainty, such as that caused by the City’s failure to acknowledge
HCD-provided AFFH tools may keep an ADU project from ever commencing.
Knowing that friends or neighbors in other parts of Palo Alto can build 18’
detached ADUs (e.g., over an existing detached garage) may set an expectation
for prospective ADU applicants that cannot be verified at the outset of a project.
● Prospective ADU applicants that live in smaller homes and that may also be less
capital advantaged may be dissuaded from building larger ADUs when they can
spend the money in better ways simply by adding onto their existing houses
without incurring enormous impact fees. Why let the City charge $50,000 or
$75,000 for an 800 sf ADU when the same overall budget might support an extra
bedrooms or even more in a 900 sf or larger addition?
● How much will it actually cost, over the lifetime of an ADU, to pay higher marginal
electrical and water service rates with single accounts for both primary dwellings
and ADUs? Who will bear that financial risk?
● Would one decide not to build an all-electric ADU or even drop a project if CPAU
failed to pay the costs for upgrading a transformer in its distribution plant?
17 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-76751
9
● Who, indeed, would ever want to be the grand-prize “winner” in a “loser lottery,”
having to pay $10,000, $20,000, or even more to install a 400A electrical service,
with the special bonus of housing a CPAU transformer in one’s front yard?
● Why should there be any review by Urban Forestry, Electrical Utilities or gas
utilities of 800 sf or smaller ADUs? Why are such reviewing departments in Palo
Alto also sometimes the very last to approve an ADU application, delaying what
is supposed to be a maximum 60-day, completely objective, and
ascertainable-in-advance, ministerial review process?
● Obtaining an ADU building permit from any local agency in California should be
quick, easy, and inexpensive. Those are not the adjectives that many
homeowners who have built, or who would like to build, ADUs in Palo Alto would
use to describe the City’s permitting processes. Instead, as a result of other City
policies and practices, those seeking to build ADUs and other residential
dwellings often come face-to-face with the “Palo Alto Premium,” the implicit
surcharge that contractors and others may impose for working in Palo Alto.
All of these effects, especially when considered in combination, take their
cumulative toll, particularly on production of more affordable ADUs in Palo Alto. Yet the
RRHE assumes, based on ABAG’s conclusions about circumstances in “most
jurisdictions,” 18 that over 300 ADUs will be built in Palo Alto over the next several years,
apparently for rental at the “Extremely Low Income,” “Very Low Income,” and “Low
Income” prices described in Table 2-18. RRHE, pg. 2-39.
In the “AFFORDABILITY” section of the RRHE, the City seems almost to
concede that this is fanciful.
When comparing the home prices and rents shown earlier in Figure 2-17, Figure
2-18, and Table 2-16 with the maximum affordable housing costs presented in
Table 2-18 below, it is evident that extremely low-, very low- and low-income
households in Palo Alto have almost no affordable housing options without
substantial subsidies.
RRHE, pg. 2-39. How is the City intending to provide such subsidies for ADUs?
While Section 2.6 of the RRHE, “HOUSING STOCK CHARACTERISTICS,”
discusses, among other things, means of addressing expiring Section 8 project-based
subsidies, RRHE, pgs. 2-83 - 2-88, it is unclear whether, and if so how, these or other
discussions of potential subsidies would or could apply to the 300+ ADUs the RRHE
assumes would be available at extremely low-, very low- and low-income rental prices.
18 https://abag.ca.gov/sites/default/files/documents/2022-03/ADUs-Projections-Memo-final.pdf , p. 1.
10
What is known is that the combination of extremely high and inequitable impact fees,
costly utilities policies, onerous permitting practices, and disavowal of recognized AFFH
tools operates as an anti-subsidy, as a housing tax, especially on ADUs.
The City does not appear to have offered an ADU-specific financial analysis of
such constraints. What metrics might one use to assess the City’s policies and
practices on ADU housing production? At least two come to mind.
One standard has a proven track record of success at the state level. During
those parts of a fiscal year when its funding has not been fully allocated, and for eligible
recipients, the maximum $40,000 grants offered by CalHFA appear to have been
successful in stimulating ADU production.
CalHFA’s ADU Grant Program has already created more housing units in
California by providing grants up to $40,000 to reimburse pre-development and
non-recurring closing costs associated with the construction of an ADU.
Pre-development costs include site prep, architectural designs, permits, soil
tests, impact fees, property surveys, and energy reports. 19
Under the 2023-24 state budget, which provided $25 million for the project, there
appears to have been “high demand” 20 for such grants. As a first approximation, and
certainly one that would appear to be more relevant to ADU construction than a survey
of four dozen townhomes, a $40,000 marginal cost might be more than sufficient to
have negative implications for ADU production.
A second method of calculation might be based upon the Santa Clara County
ADU “Accessory Dwelling Unit Calculator.” 21 Assuming that one were seeking to build a
“0 Bed / 1 Bath / 0 / 400 sqft” studio in Palo Alto, the calculator projected $184-224K in
development costs, an estimated monthly rent of $1,600 - $2,000, monthly expenses of
$1,500 - $1,900, based upon a capital structure of a $60,000 cash investment and a
$144,000 loan with a 20 year term and an 8% interest rate, yielding an estimated
monthly mortgage payment of $1,194. Since the estimated monthly rent was quite
comparable to the estimated monthly expenditures with this capital structure, it appears
that most of the economic benefit was projected to be realized as an increase in
property value. “It is estimated that your ADU will increase your home value by
$214,000.” 22 But using $60,000 in cash, and leveraging it with a $144,000 mortgage —
even if one could obtain such a mortgage — to produce an increase in value of
22 https://santaclaracounty.aducalculator.org/
21 https://citiesassociation.org/documents/santa-clara-county-adu-calculator/
20 https://www.calhfa.ca.gov/homeownership/bulletins/2023/2023-12.pdf
19 https://www.calhfa.ca.gov/adu/index.htm
11
$214,000 in a relatively illiquid asset with relatively high sales transaction costs would
appear, on its face, to be only modestly attractive as an investment opportunity when
10-year Treasury bonds are yielding, at least at this time, over 4.5%. 23 As a result, one
might expect an economically motivated ADU applicant to strive to increase rents
higher, potentially to levels above what the City has contemplated in Table 2-18.
There is a substantial chance that Palo Alto’s constraints on ADU production will
cause the City to fail to meet its projected targets for extremely low-, very low- and
low-income ADUs. As a result, the City’s “Buffer above Remaining RHNA After
Credits,” RRHE, pg. 3-72, for those categories of affordable housing units may be lost.
In addition to the policy changes discussed above — eliminating or greatly
reducing impact fees on ADUs; returning previously inequitably levied impact fees to
homeowners; allowing, at a homeowner’s option and expense, for separate electrical
and water utilities services for ADUs; ending Urban Forestry, Electrical Utilities, and
WGW gas-related departmental reviews; and accepting the results of HCD’s AFFH tools
— this analysis points towards the types of policy interventions to which the City should
commit itself if it truly intends to rely upon ADUs as an important source of extremely
low-, very low- and low-income housing during the current RHNA cycle. It could and
should:
● replicate the maximum $40,000 grants offered by CalHFA, perhaps in
cooperation with CalHFA itself.
● offer qualifying ADU applicants, perhaps using the same income and other
qualifications established by CalHFA, to provide, e.g., $200,000 - $300,000 loans
at the City’s cost of capital to those applicants willing to offer rentals at federally
approved rates for a period of 10 years with “on-bill payments,” perhaps through
the CPAU’s own billing system; and
● immediately implement AB 1033: “ Accessory dwelling units, also referred to as
ADUs and “granny flats,” have been available in California only as rentals. But a
new law, Assembly Bill 1033 , is giving Californians the opportunity to buy and sell
them as condominiums,” creating an important innovation to foster actual
ownership of smaller homes in Palo Alto.
Palo Alto has the capability, the credit rating, and the spirit of innovation to provide
capital and new forms of ownership for more affordable housing in our community. The
City can augment ADU production, especially of more affordable ADUs, should the City
Council demonstrate leadership and commitment to such goals.
23 https://www.bloomberg.com/markets/rates-bonds/government-bonds/us
12
From:Palo Alto Forward
To:Council, City
Subject:4/15 Council - Agenda Item #13
Date:Sunday, April 14, 2024 8:27:37 PM
Attachments:Item #13 - HE Cmnt Letter 3rd Draft.pdf
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Please find our attached comment letter on Item #13 for the April 15th City Council meeting.
Thank you as always!
--
Amie AshtonExecutive Director, Palo Alto Forward
650-793-1585
April 14, 2024
SUBJECT: Agenda Item #13 - 3rd Draft of the Housing Element
Dear Mayor Stone and Honorable Council Members,
Palo Alto Forward is a non-profit organization focused on innovating and expanding housing
choices and transportation mobility for a vibrant, welcoming, and sustainable Palo Alto. We are
a broad coalition with a multi-generational membership that includes students and retirees,
renters and homeowners, and residents new and old.
We have been engaged in the Housing Element process at every stage. Our board and
membership have written extensive comment letters (several are posted at our website ),
attended nearly all meetings of the Housing Element Working Group, and provided public
comments throughout the process. We want to thank you for making Housing for Social and
Economic Balance a priority for 2024 and for all your work on Palo Alto’s 6th cycle Housing
Element.
We also commend City staff for making several good-faith changes on this 3rd Draft of the
Housing Element, especially as it relates to removing several housing-infeasible parcels from
the Site Inventory. We feel that it is moving closer to achieving compliance with the California
State Department of Housing and Community Development (HCD) requirements. We
understand clearly the breadth of challenges Staff has faced over the last few months.
However, we have reviewed the 3rd Draft of the Housing Element and still see that there are
serious governmental constraints to the production of housing, especially the higher-density
apartment housing that we desperately need.
At a minimum, we suggest the following five additions to the Housing Element to bring this 3rd
draft closer to HCD approval:
1) Extend the El Camino Real Housing Focus Area to More Parcels
The El Camino Housing Focus area is very small. The largest site in the Housing Focus Area
(Palo Alto Square, which comprises about two thirds of its total area) has existing tall tower
structures that are occupied and are unlikely to be replaced with housing in the near term due to
existing leases. Other than the parcels in the El Camino Housing Focus Area most of the base
zoning for parcels along El Camino Real still only allows Floor Area Ratios of 1.0 or less for
residential projects. When one excludes Palo Alto Square due to the grandfathered structures,
1
and the Creekside site (which due to the unusual setback, seems to have deterred the project
applicant though it is still in the inventory), almost the entire opportunity becomes the Acclaim
site, 330 El Camino Real, and a few small parcels totaling about three acres. The pipeline likely
reflects the entire total future impact of this program for the cycle. But the standards are good,
so expanding the program should address this problem.
Further, there is property owner/developer interest in extending the Housing Focus Area.
Additionally, there are Builder's Remedy applications that have already been submitted on El
Camino Real that propose development standards that are close to what was approved for the
El Camino Focus Area. Extending the Housing Focus Area to more parcels will show HCD that
we are serious about locating housing more broadly across the city--and not just out on San
Antonio Road far from transit and local retail.
2) Commit to (not study) Reducing City Impact Fees
The most recent HCD letter to the City stated that the Housing Element "should specifically
commit to reducing impact fees comprehensively and not limit the scope of the program to park
fees."
An impact fee study will be completed in September 2024, with an additional study postponed to
December 2025. Modifications to Program 3.1 reference only three specific impact fees, and
ignore the tremendous disparities between additions to single-family dwellings or complete
“scrapes,” (demolitions) on the one hand, and ADUs, SB 9 units, apartments, condominiums,
and townhouses, on the other hand. Commit to (a) implementing the recommendations
contained within the study, especially as it relates to not overburdening smaller projects and
ADUs with fees, (b) placing a moratorium on new per-unit fees until a new fee schedule is
approved, (c) rebating previously charged inequitable impact fees back to the beginning of
FY2023, and (d) ending the disparities between ADUs and other smaller units in comparison
with single-family additions and “scrapes.” Our residents are clamoring for equity and fairness,
and more action and less study.
3) Commit to (not study) Making the Housing Incentive Program (HIP) Economically
Feasible
Based on the El Camino Real Focus Area projects and developer engagement, we know what
zoning changes will get housing built. The HIP program is being framed as a major policy
vehicle to facilitate housing; it needs to be crafted such that it can allow economically credible
projects across the city–something not possible without extensive zoning incentives. It must be
noted that the Housing Element does not provide details about the HIP zoning incentives or
process, which makes it difficult to rely on this program as a tool to facilitate additional housing.
Results of the economic feasibility study have also not been provided. A HIP which commits to
allowing economically feasible apartments in more places will also show that we are credibly
2
From:Hamilton Hitchings
To:Council, City; HeUpdate; Planning Commission
Subject:City Council Housing Element Input
Date:Sunday, April 14, 2024 5:53:47 PM
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Dear City of Palo Alto,
I want to thank the City of Palo Alto staff and their consultants for the very hard, extensive
and costly work they have conducted creating the Housing Element, and the high quality of
material they have produced. In addition, working directly with HCD to address their
concerns. I was a former member of the Housing Element Working Group, but these are
my comments.
The city provided HCD with these 920 pages including 350 for the housing element and
119 pages for Appendix C: Assessment of Fair Housing as well as other appendixes. HCD
responded to the city that this information was insufficient. Many of HCD’s requests in the
rejection letters were for more information and analysis only.
HCD's delays in certifying Palo Alto's Housing Element creates uncertainty and instability
for housing developers, which postpones investing in and committing capital to building
housing projects. Thus reducing the rate of housing production until the rules are solidified
relative to what it could be otherwise. Furthermore, HCDs continued requests for additional
information and analysis diverts city staff from executing on creating affordable housing in
our city.
California State Housing Element Law (Article 10.6) section 65581 (c) states:
To recognize that each locality is best capable of determining what efforts are required by it
to contribute to the attainment of the state housing goal, provided such a determination is
compatible with the state housing goal and regional housing needs.
My opinion is that HCD is overreaching this clause of state law. I feel that HCD has gone
overboard on requesting additional information and analysis. For example, after Palo Alto
explained its two census tracts had a higher rate of poverty because one contained
Stanford Students living adjacent to Stanford and the other primarily contained an senior
affordable housing site, HCD demanded more information as one of reasons for rejection in
a previous letter to the city. Given that they have already rejected the element twice and the
city has worked hard to answer all their information and analysis requests to date, I’d
request any additional letters from HCD do not ask for additional information and analysis.
Despite Palo Alto's RHNA numbers being tripled above those of the last cycle and Palo Alto
only having 0.5% vacant land, Palo Alto managed to meet its new RHNA numbers by
identifying sites that could be redeveloped in the first version of its Housing Element
onwards. In addition, it provided 10% extra units as a buffer in case any problems were
found with existing sites. The City proposed many new projects to create affordable
housing including the HomeKey project (providing transitional housing for 200 folks per
year), more safe parking (already implemented), downtown parking lot(s) with 100% BMR
housing, Wilton Court (58 units 100% BMR already occupied), El Camino Real corridor
upzoning with large projects in the pipeline, special needs housing, teacher housing, many
market rate higher density projects, etc…There are currently 1,118 units that have been
entitled or are going through the review process and should be entitled by the end of this
year assuming we don’t have too many distractions.
Dear City Council, please pass this latest version of the Housing Element or if you do
require changes, that it does not need to come back to council.
Dear HCD, please certify our housing element so the city can focus on implementing these
and many other exciting programs. Thus housing developers will know what the rules are
and can raise and commit capital to building more housing.
-------------------------------------
Additional Note to City Staff on the Housing Element
The housing element. Figure ES-3 on page ES-5 says Palo Alto home prices increased
40% between 2021 and 2022. This is a false and misleading graphic. According to Zillow
the price increased 16% between January 1, 2021 and December 31st, 2022:
https://www.zillow.com/home-values/26374/palo-alto-ca/
Please consider revising the housing price increase so it is not cherrypicking the post Covid
crash low to the height of the recovery (before going down again) but a timeframe more
reflective of the overall housing price growth through ups and downs.
From:Henry Etzkowitz
To:Council, City
Cc:Kristina Loquist; Council, City; perrysandy@aol.com; Representative Eshoo; Roberta Ahlquist;
provost@stanford.edu
Subject:Housing Element
Date:Sunday, April 14, 2024 3:38:58 PM
CAUTION: This email originated from outside of the organization. Be cautious of opening attachments and clicking
on links.________________________________The last element and the current proposal both share common basic flaws that make it unlikely that the housingdeficit will seriously be addressed without further steps.
1 the assumption that Palo Alto is a suburb. The documents acknowledge that Palo Alto has significantly more jobsthan housing and that many employees commute from places, known and unknown, to Palo Alto. This is the verydefinition of an urban area, in this case with “invisible suburbs.” For example, some Stanford medical technicianscarpool more than two hours a day each way from the Central Valley.
Palo Alto has a stronger reality as a Center of employment and a subsidiary function as a housing location. Areasonable objective might be to bring the two functions into alignment. Likely, this would require a step changeincrease in housing provision.
2. A second misconception in the documents is that Palo Alto is “built out.” Thought of as a city, the one storycommercial and industrial spaces may be viewed as “taxpayers,” temporary structures only in place until their sitesneed to be utilized for denser high rise buildings. As secondary shopping areas like California street empty out, high rise housing can provide the demand to make these shopping areas viable, one again.
3 relative neglect of border issues. For example, through purchase of Oak Creek apartments,Stanford recently removed 750 units from the Palo Alto housing stock to address its housing needs without any planto redress the deficit.The only meaningful pushback to date has been from Santa Clara County’s 5% increase in expectation of campushousing provision. As previously suggested, the Stanford Shopping center parking garages provide an ideal base forhigh rise housing development.
Beyond the element which provides general guidelines a stronger methodology for housing provision is required.Palo Alto’ assumption of responsibility for electricity provision in an earlier era should be considered as a modelalong with public-private and university-public partnerships.
SincerelyHenry EtzkowitzCo organizerCommunity of Oak Creek Residents
Sent from my iPhone
From:Ellen Smith
To:Council, City
Subject:Housing Element
Date:Saturday, April 13, 2024 2:53:57 PM
CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links.
As a long-time resident of Palo Alto, I have watched it transform from a mostly
middle-class community with a range of housing options and costs to a tech-rich
enclave. If we are serious about welcoming diversity of income, real change has tohappen. Therefore, I urge you, in establishing our housing element, to do the following, as
recommended by Palo Alto Forward:
1. Extend the El Camino Real Focus Area to more parcels - there is developer
interest and it shows that we are placing housing more broadly across the city
(not just out on San Antonio)
2. Commit to (not study) modifying city impact fees - per the impact fee studyresults coming in May
3. Commit to (not study) making the Housing Incentive Program (HIP)
feasible based on the El Camino Real Focus Area and developer
engagement - we know what zoning changes will get housing built, let's do it4. Engage on the Builder's Remedy projects - 2000+ units have been submitted
(or 30% of our 8-year housing goal), which includes 400 units of affordable
housing AT NO COST TO THE CITY
Ellen Smith
850 Webster Street, Apt 427
From:Patty Irish
To:Council, City
Subject:A letter about the Housing Element for Palo Alto
Date:Friday, April 12, 2024 4:36:26 PM
CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links.
Dear Mayor and City Council members,
I am writing concerning the Housing Element you are going to submit again and will be discussing this
Monday.
I suggest some additions and changes.
1. Extend the El Camino Real and California Ave. Focus Area to add more parcels - there is
developer interest and it shows that we are placing housing more broadly across the city (not
just out on San Antonio)
2. Commit to (not study) modifying city impact fees - per the impact fee study results coming
in May
3. Commit to (not study) making the Housing Incentive Program (HIP) feasible based on the
El Camino Real and California Ave. Focus Area and developer engagement - we know
what zoning changes will get housing built, let's do it
4. Engage on the Builder's Remedy projects - 2000+ units have been submitted (or 30% of our
8-year housing goal), which includes 400 units of affordable housing AT NO COST TO THE
CITY
Time is very important. Housing is needed NOW.
I live at Channing House and know what a gift it is to live where all of our 250
residents can get downtown easily for many of the services we need.
Also we have 175 employees and 150 of those will probably qualify for subsidized
housing and presently drive many miles to come to work. If you want to discuss this further I welcome additional conversation and ACTION.
Thank you,
Patty Irish
-- Patty Irish850 Webster St. #628 Palo Alto, CA 94301
650-324-7407
650-245-3906 cell
How do you tell a story that has been told the wrong way for so long?
April 15, 2024 www.paloaltohousingelement.com
City Council &
Planning and Transportation
Commission
Joint Meeting
Adoption of
2023-31 Housing Element
1
Purpose
•Review HCD comments
•Discuss proposed response to HCD comments
•Review environmental impacts
•Take public comment
•Adopt revised 2023-31 Housing Element
2
Meeting Process
1.Presentation
2.Questions
3.Public comment
4.PTC deliberation and recommendation on Housing
Element
5.Council deliberation and action:
•Resolution adopting the revised Housing
Element
3
Recent Milestones
December 2022 — HCD Submittal #1
March 2023 — HCD comments received (1st letter)
May 2023 — Housing Element adoption
June 2023 — HCD Submittal #2
August 2023 — HCD comments received (2nd letter)
February – March 2024 — HCD informal discussion/review
April 2024 (tonight) — PTC & Council consider re-adoption
May 2024 (anticipated) — HCD Submittal #3
July 2024 (anticipated) — HCD response (certification,
substantial compliance, or additional comments)
4
we are here
General themes:
1.RHNA – rationale for regional projections
2.Site inventory – criteria for site selection and locations/distribution
3.City’s development standards limit housing production
4.Application processing timeframes
5.Need for housing affordability and special needs housing
6.Support for programs that combat homelessness
7.Ambitious assumptions about ADU production
8.Need for tenant protection policies
9.Desire for a more inclusive community
Public Comments Received
5
HCD Comments
6
August 3, 2023 HCD Comment Letter
Comments focused on four areas:
•Affirmatively Furthering Fair Housing (App. B)
•Sites Inventory (Ch. 3/App. D)
•Constraints (Ch. 4)
•Programs (Ch. 5)
7
Work Completed in Response to Comments
•Revised Element in response to HCD comments
•Revisted Site Inventory
o Additions, deletions, modifications
o Links to fair housing improvements
•Met with community stakeholders and developers
•Held informal meetings with HCD reviewer
•Strengthened and streamlined programs to support
fair housing and sites inventory, reduce constraints
8
Affirmatively Furthering Fair Housing
HCD Comment Draft Response
Add local data to explain
Racially Concentrated
Areas of Affluence
•Expanded history of Palo Alto
•Described changes in land use policy and
programs to overcome past patterns
Analyze trends related to
disparities in access to
opportunities
•Expanded analysis of access to opportunities
•Documented how specific Programs further
fair housing
Link sites inventory to
improvements in fair
housing
•Added discussion of the benefits of socio-
economic diversity
•Focused program implementation in specific
neighborhoods and/or populations
9
Sites Inventory
HCD Comment Draft Response
Explain why sites are likely to
develop and at indicated
affordability levels
•Added precedent projects
•Added building permit history
•Described recent rezonings
Confirm capacity assumptions
and likelihood of residential in
commercial zones
•Emphasized changes in office market
•Added more site-specific analyses
Expand non-vacant sites
analysis to assess constraints
•Expanded discussion of site suitability
•Refined criteria to match recent projects
Discuss opportunities for
emergency shelters in ROLM(E)
•Expanded discussion of recent
redevelopment trends in this zone
10
Sites Inventory
11
Very Low Low Moderate
Above
Moderate Total
RHNA 1,556 896 1,013 2,621 6,086
Credits
Entitled Units 133 108 144 82 100 23 490 239 867 452
ADUs 153 153 153 53 512
Remaining RHNA 1,270 1,295 599 661 760 837 2,078 2,329 4,707 5,122
Opportunity Sites
Planned Units 83 83 86 553 805
Multi-family Allowed 0 0 95 67 159 177 254 244
Rezone Completed 1,091 1,009 1,092 1,010 778 815 2,118 1,907 5,079 4,741
Subtotal 1,091 1,092 1,092 1,093 873 968 2,277 2,637 5,333 5,790
Total Units (Credits +
Opportunity Sites)
2,766 2,681 1,126 1,144 2,820 2,929 6,712 6,754
Total Unit Surplus 314 229 113 131 199 308 626 668
Total % Buffer 17 12%16 15% 10 13% 13%
Constraints
HCD Comment Draft Response
Study land use controls in all
zoning districts
•Added site tests for all zoning districts
•Analyzed ability to meet max densities
Analysis of cost and financial
feasibility related to permit
procedures and processing
•Expanded analysis of City fees and
processing procedures and timelines
•Compared City’s fees to nearby cities’
Identify on- and off-site
infrastructure requirements
•Added discussion of improvement
requirements (e.g.,public works)
Expand discussion of Retail
Preservation Ordinance and
Tree Protection Ordinance
•Updated analysis of Tree Protection Ord.
•Clarified Retail Preservation Ord. exemptions
12
Programs
HCD Comment Draft Response
Clarify commitments to
specific housing outcomes
and deliverables
•Refined commitments to specific outcomes
and timelines (not just studies)
•Strengthened qualified objectives
•Focused dates on first half of planning period
Complete sites analysis;
comply w/ Surplus Lands Act
•Expanded sites analysis
•Confirmed compliance w/ Surplus Lands Act
Remove constraints to
housing for persons with
disabilities
•Reduced impact fees and processing
timelines
Refine programs to
affirmatively further fair
housing
•Expanded fair housing programs; added
targeted programming to specific
neighborhoods and populations
13
Programs (Key Changes - Modifications)
•Moved up timelines so that programs can be
impactful during the planning period
•Consolidated programs related to funding and
streamlining
•Focused entitlement streamlining on the programs
that are expected to be the most impactful
•Ex. Program 3.3 - Streamlined Review for 100%
Affordable Housing and revised procedures so
that affordable projects have priority processing
→ Realistic look at what can be achieved
14
Programs (Key Changes - Additions)
•Program 4.5 - Labor Practices: Develop a list of local
labor unions and apprenticeship programs on the
City’s website and encourage developers and
contractors to hire local labor.
•Program 6.6 - Fair Housing: Prepare an area plan for
the San Antonio Road Corridor, including the
ROLM/GM Focus Area, to integrate housing with
multi-modal transportation, access to amenities,
parks and open space, placemaking improvements,
and mitigations for environmental impacts.
15
Environmental Impacts
16
CEQA: Environmental Review - Addendum
•City Council considered an Addendum to the 2017
Comprehensive Plan Update Environmental Impact
Report as part of the Rezoning Ordinance adopted in
December 2023
•No new or substantially more severe significant
impacts were identified beyond what was analyzed in
the 2017 EIR
•Addendum analyzed the current Sites Inventory
•No additional CEQA review or action required
17
CEQA Analysis - Conclusion
•Impacts of the HE were determined to be less than
significant and generally the same as the impacts
analyzed in the 2017 EIR.
•No new or substantially more severe significant
impacts were identified beyond what was analyzed
in the 2017 EIR.
18
Non-CEQA: Traffic Level of Service Analysis
•Level of service (LOS) is no longer a threshold under
CEQA, but helps City understand potential
operational impacts
•LOS analysis conducted on Sites Inventory
•Generally, produced the same results as the 2017
Comprehensive Plan analysis
•Some modest changes in the findings, primarily as a
result of changes to the countywide traffic model
19
NEXT STEPS
20
Next Steps
April 2024
•PTC/Council
consider Housing
Element adoption
May 2024
•Submit adopted
draft for HCD
review
July 2024
•Receive HCD
Comments -letter
of substantial
compliance,
certification, or
continued
dialogue
Summer 2024+
•Implementation
ongoing
21
Staff Recommendation
Staff recommends the following actions:
Planning and Transportation Commission:
1. Review the staff responses to the HCD Comment Letter, as incorporated in
the Draft 2023-31 Housing Element (Attachment A) and recommend City
Council adopt the revised Draft 2023-31 Housing Element.
City Council:
1. Direct staff to make appropriate changes to the Draft 2023-31 Housing
Element (Attachment A) and authorize staff to make minor revisions based
on any further non-substantive changes required by HCD.
2. Adopt a Resolution (Attachment B) making the findings required under
CEQA and Housing Element Law, and adopting the 2023-31 Housing
Element, as revised, as an amendment to the City’s Comprehensive Plan.
22
Meeting Sequence
1.Staff Presentation
2.Public Comment
3.PTC Deliberation / Motion (Councilmembers move to reserved seating in
audience)
4.Councilmembers Return, Questions/Comments of PTC deliberation/motion
5.PTC members move to reserved seating in audience
6.Councilmember Veenker recusal / Council deliberation on Stanford-related
properties and programs and First Congregational Church
7.Councilmember Veenker returns / Council deliberation on remaining components
of the Housing Element
8.Council Action
Recommended Motion:Based on consideration of the revised addendum to the 2017
Comprehensive Plan Final Environmental Impact Report, I move adoption of the
resolution in Attachment B adopting the Revised 2023-2031 Housing Element with the
following additional changes [if any]...
23