HomeMy WebLinkAboutStaff Report 2412-3948CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, March 03, 2025
Council Chambers & Hybrid
5:30 PM
Agenda Item
9.FIRST READING: Adoption of an Ordinance Amending Palo Alto Municipal Code Title 18
(Zoning) to Modify the Housing Incentive Program, Affordable Housing Incentive
Program, and Retail Preservation Ordinance (Housing Element Programs 3.3A, B, and D;
3.4A-D; and 6.2A). CEQA Status -- Addendum to the Comprehensive Plan Environmental
Impact Report (EIR), adopted December 18, 2023 (SCH #2014052101). Public Comment,
Staff Presentation
City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: March 3, 2025
Report #:2412-3948
TITLE
FIRST READING: Adoption of an Ordinance Amending Palo Alto Municipal Code Title 18
(Zoning) to Modify the Housing Incentive Program, Affordable Housing Incentive Program,
and Retail Preservation Ordinance (Housing Element Programs 3.3A, B, and D; 3.4A-D; and
6.2A). CEQA Status -- Addendum to the Comprehensive Plan Environmental Impact Report
(EIR), adopted December 18, 2023 (SCH #2014052101).
RECOMMENDATION
Staff recommends that the City Council amend Title 18 (Zoning) of the Palo Alto Municipal
Code (PAMC) (Attachment A) to implement Programs 3.3A, B, and D, 3.4A-D, and 6.2A of the
Housing Element regarding the Affordable Housing Incentive Program (AHIP), Housing
Incentive Program (HIP), and Retail Preservation Ordinance.
EXECUTIVE SUMMARY
The 2023-2031 Housing Element, adopted by the City Council on April 15, 2024, and certified
by the California Department of Housing and Community Development (HCD) on August 20,
2024, includes two key implementation programs to support affordable and market-rate
multifamily housing development beyond the housing sites inventory:
•Housing Element Program 3.3 outlines amendments to the Affordable Housing
Incentive Program (AHIP) to streamline, incentivize, and improve project feasibility of
affordable housing projects.
•Housing Element Program 3.4 seeks to expand development incentives in the
Housing Incentive Program (HIP); extend the HIP to additional zoning districts to
facilitate housing production; and modify the Retail Preservation Ordinance to reduce
constraints on housing development.1
1 This draft ordinance does not include implementation of Program 3.3C regarding State Density Bonus Law
updates, nor Program 3.4E regarding the El Camino Real Focus Area expansion, which will proceed through
separate work efforts.
Incentives for larger units (3+ bedrooms) through the HIP also serve to implement Housing
Element Program 6.2A.
BACKGROUND
The City approved a
102-unit residential
mixed-use
development at 788
San Antonio Road.
The project, which
includes 16 below-
market rate units,
was awarded
additional
residential density
through the HIP.
Affordable Housing Incentive Program
The City enacted an Affordable Housing Overlay in 2018 to promote 100% affordable
housing development. In July 2022, the City modified the Affordable Housing Overlay district
into the AHIP program to streamline the approval process. Currently, AHIP projects are
eligible for increased density, taller heights, and reduced parking ratios, among other
benefits. Eligibility is currently limited to projects that are:
•100% affordable rental housing (up to 120 percent of Area Median Income [AMI]);
•Located within ½ mile from CalTrain or ¼ mile from a bus transit corridor; and
•Located in the CD, CC, CN, CS, or North Ventura zoning districts.
The City has received only one development project application utilizing the AHIP. Given the
narrow eligibility criteria and recent changes in State Density Bonus Law, changes to the
AHIP are warranted to make sure that the program is providing a real incentive for
affordable housing development compared to State law.
Wilton Court, at
3705 El Camino Real,
used the AHIP to
increase residential
density otherwise
allowed at the site
and construct 59
units affordable to
low-income
households.
State Streamlining Incentives
Recent State laws offer qualifying development projects streamlined review, often with
limited public hearings and/or subject to ministerial approvals. The City originally developed
the HIP and AHIP incentive programs to retain full architectural review by the Architectural
Review Board (ARB) in exchange for relaxed development standards. However, for these
local programs to be effective and used, they must provide incentives for developers that
exceed what is attainable under State law. Recent and commonly used State law programs
are summarized and compared to the HIP and AHIP in Attachment F.
Retail Preservation Ordinance
In 2015, the City Council adopted an interim urgency ordinance prohibiting the conversion of
ground floor spaces used for retail and retail like uses (i.e., restaurants and personal services)
to office or other uses. At that time, there was a trend of retail being replaced by office uses.
The Council adopted a permanent ordinance in 2017. It requires redevelopment projects to
replace any existing ground-floor retail, restaurant, or service uses on a square foot basis.
•Provide floor area ratio (FAR) bonus for providing 3+ bedroom units; and
•Extend AHIP eligibility to include all sites eligible for the HIP.
•Consider allowing an additional five feet of allowed height for projects using the
HIP/AHIP;
•Consider eliminating FAR standard for the HIP/AHIP citywide; and
•Consider additional commercial nodes on El Camino Real and return to the PTC to
review them within the first quarter of 2025.
ANALYSIS
Table 1: Summary of Draft Ordinance
18.14.030:
Housing
Incentive
Program
•Consolidate HIP regulations from Chapters 18.16 and 18.18.
•Update development standards:
Increase FAR and building height maximums (see Attachment G for
details of existing rules and proposed changes).
Reduce parking ratios to match State Density Bonus Law.
Revise daylight plane and reduce front/street side setbacks.
Allow bonus density/FAR for “family-friendly” (3+ bedroom units)
(see Attachment G for an analysis of proposed changes).
•Expand eligibility to include RM districts and GM/ROLM Focus Area.
•Expand transportation demand management measures.
•Streamline process for projects that meet objective design standards,
with cross-reference to Section 18.77.073: Streamlined Housing
Development Project Review.
•Remove separate development standards for 100% affordable
projects (and relocate to AHIP).
18.14.040:
Affordable
Housing
Incentive
Program
•Relocate Chapter 18.32 Affordable Housing Incentive Program.
•Increase FAR and building height, reduce parking ratios, and
streamline review process.
• Expand eligibility to include all locations eligible for the HIP.
18.40.180: Retail
Preservation
•Modify exemptions and partial exemptions in subsection (4).
•Waive retail preservation requirement on Housing Element
opportunity sites.
•Retain existing retail requirements in the Ground floor (GF) and Retail
(R) combining districts and in commercial nodes on El Camino Real.
•Reduce replacement retail floor area requirement in other locations.
•Create incentives for ground-floor retail (i.e., parking reduction for
first 1,500 square feet of retail and additional 5 feet of height).
•Standardize definitions for 100% affordable housing and clarify
meaning of existing regulations.
The draft ordinance also includes minor modifications to base district regulations to
consolidate and add cross-references to the new housing incentive regulations in Chapter
18.14. As shown in Attachment C, Housing Element Program 3.3 provides explicit direction
on the modifications to be made to the AHIP and so they are not discussed further here.
Incentives for Larger Units
As noted in Table 1, the draft ordinance provides an incentive for projects that include larger
units (projects in which at least 10% of the proposed units are 3+ bedroom units). This
incentive includes unlimited residential density and/or FAR bonuses of 0.5 FAR. This
proposed amendment also implements Housing Element Program 6.2A: study to incentivize
larger units:
Research and implement incentives to encourage larger units, such as FAR exemptions
for three or more bedroom units, and creation of family-friendly design standards.
Meet with housing stakeholders and conduct public hearings before the Planning and
Transportation Commission to receive public and commissioner input on ways to
achieve stated objective. Make recommendations to Council and follow up with an
ordinance to effect a change in local zoning regulations as directed.
lower income housing units. To simplify administration and support
housing production and affordability outside of priority retail areas, the draft
ordinance extends this waiver to all Housing Element opportunity sites.)
2. NVCAP: The North Ventura area where the NVCAP requires ground-floor retail along
the El Camino Real frontage.
3. Focus Area: The El Camino Focus Area frontage, where large sites combined with
more genera Focus Area allows for higher density development close to existing retail
development on California Avenue and El Camino Real.
4. Triangle/El Camino Way: A smaller scale and block pattern, with existing crosswalks
across El Camino Way that are more conducive to pedestrians, existing restaurants
and retail uses, and Housing Element opportunity sites that allow for redevelopment
of housing with ground-floor retail.
For Housing Element opportunity sites located within these nodes a developer will still have
the ability to build a 100% residential project. However, if they wish to use the incentives of
the HIP program, then retail replacement would be required. Existing regulations allow a
reduced retail replacement requirement of up to 1,500 sq. ft. for higher density housing
projects (at least 30 units/acre) outside of the GF and R combining districts. The draft
ordinance extends this reduction outside of these nodes and exempts this commercial area
from required parking. This amount of commercial floor area would accommodate a small
cafe or retail establishment but provides more flexibility at the ground-floor than current
requirements.
Attachment I provides examples of how the retail preservation ordinance applies to different
locations, project types, and affordability levels, and highlights changes between the existing
and proposed regulations.
Figure 1: El Camino Real Required Retail Nodes
2 produce and to determine whether these housing types are likely to be
financially feasible for a developer to build.
3 Figure 2 (below) summarizes this
process and the outcome of the studies.
2 Notably, these analyses exclude zoning changes that went into effect in January 2024 on Housing Element opportunity
sites. These recent changes improve physical and financial feasibility on opportunity sites only. Modifications to the HIP are
expected to assist developers/property owners of sites that are not listed as opportunity sites, but will also further improve
feasibility on opportunity sites.
3 Financial feasibility findings are based on assumptions about costs, land values, and profits that are averages, and
represent KMA’s local research and professional opinions. These assumptions may not reflect the economic situations and
assumptions for individual sites and developers, based on their specific values and priorities.
Figure 2: Feasibility Analysis – Process and Outcome
Figure 3 illustrates an example of the physical feasibility analysis detailed in Attachment D.
Architects modeled what existing standards yield (image and column at left) and then
modified various standards to try to increase yield (image and column at right). In general,
this process aimed to keep building height increase to no more than 10-20 feet (one to two
stories) and retain on-site parking.
However, zoning standards are interconnected; there are tradeoffs that the City can consider
when evaluating changes to standards. For example, reducing parking can free up space at
the ground-level for housing units or commercial spaces without substantial changes to
building height. If side/rear setbacks and daylight planes are priorities, then building heights
may need to be higher and front/street side setbacks lower to achieve sufficient yields. In
the example in Figure 3, the architects increased building height, reduced the rear setback,
modestly reduced the parking requirement, met the open space requirement on top of the
podium, and substantially increased the FAR. This results in an increase from four to seven
units.
Figure 3: Excerpt from Physical Feasibility Report (see Attachment D)
POLICY IMPLICATIONS
As part of the implementation of Program 3.2 (Monitor Constraints to Housing) of the
Housing Element, the City committed to prepare an analysis in staff reports for initiatives
proposing new regulations. This analysis details how the regulations may impact housing
production, if at all, and recommend solutions to address any adverse impacts.
The draft ordinance implements the following Housing Element programs:
•Housing Element Program 3.3A, B, and D to streamline, incentivize, and improve
project feasibility of 100% affordable housing projects.
•Housing Element Program 3.4A-D to expand development incentives in the Housing
Incentive Program (HIP) and extend the program to additional zoning districts to
facilitate housing production. Based on quantified objectives in the Housing Element,
this modification is anticipated to generate 550 housing units.
•Housing Element Program 6.2A to incentivize larger units and create family-friendly
housing.
As a result, the draft ordinance would help affirmatively affirm fair housing goals expressed
in the Housing Element by revising zoning in a range of high resource areas and different
locations within the City, including: existing residential neighborhoods, along commercial
corridors, in the GM/ROLM Focus Area, as well as in Downtown and California Avenue. This
ordinance also supports implementation of Housing Element Goal 2.0 (Affordable Housing)
and Goal 3.0 (Housing Development).
The implementation of the proposed ordinance is not anticipated to have any direct fiscal
impacts on the City budget.
Preparation of the Housing Element included a range of community outreach methods,
including surveys, Working Group meetings, community workshops, and public hearings.
Hundreds of community members have participated in the Housing Element update over the
course of the project. City staff and consultants are working with developers and architects
familiar with the City’s regulations to test potential standards. Community members have an
opportunity to provide feedback on the draft standards at PTC, ARB, and City Council study
sessions and public hearings.
On April 15, 2024, the City Council adopted Resolution No. 10155, approving an Addendum
to the Comprehensive Plan Environmental Impact Report (EIR). The addendum analyzed
potential environmental impacts of the 6th Cycle Draft Housing Element. This includes
implementation of Housing Element Programs 3.3, 3.4, and 6.2, and associated increase in
housing production including and beyond what was projected by the RHNA and Housing
Element sites inventory.
Attachment A: Amendments to Title 18 to Implement Housing Element Programs 3.3A, B,
and D and 3.4A-D
APPROVED BY:
1
Ordinance No.
Ordinance of the Council of the City of Palo Alto Amending Various Chapters of
Title 18 (Zoning) of the Palo Alto Municipal Code to Implement Programs 3.3
and 3.4 of the 2023-2031 Housing Element to Revise the Housing Incentive
Program and Affordable Housing Incentive Program
SECTION 1. Findings and Declarations. The City Council finds and declares as follows:
A. On May 8, 2023, the City Council adopted Resolution No. 10107, approving an Addendum
to the Comprehensive Plan Environmental Impact Report (EIR), making various findings,
and adopting the 2023-2031 Housing Element for the City of Palo Alto.
B. On December 18, 2023, the City Council approved a Revised Addendum to the
Comprehensive Plan EIR and adopted Ordinance No. 5608, rezoning sites in the 2023-
2031 Housing Element Sites Inventory to accommodate the City’s Regional Housing Needs
Allocation.
C. On April 15, 2024, the City Council adopted Resolution No. 10155, making various
findings, adopting a Revised 2023-2031 Housing Element, and authorizing the Director of
Planning and Development Services to take further actions necessary to achieve
certification of the Housing Element by the California Department of Housing and
Community Development (HCD).
D. On August 19, 2024, HCD found that the Revised 2023-2031 Housing Element, as further
modified on July 17, 2024, was substantially compliant with state law.
E. Programs 3.3 and 3.4 of the City’s Revised 2023-2031 Housing Element direct a variety of
updates to the City’s Housing Incentive Program and Affordable Housing Incentive
Program, which are implemented in this ordinance.
F. On ________, 2024, the Planning and Transportation Commission considered and
recommended that the City Council adopt this ordinance to implement the 2023-2031
Housing Element.
SECTION 2. Section 18.14.030 (Housing Incentive Program) of Chapter 18.14 (Housing
Incentives) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended to read as
follows:
18.14.030 Housing Incentive Program
(a) Purpose
The housing incentive program modifies base zoning district standards and streamlines
review to encourage higher-density multi-family housing production. The program is a local
2
alternative to State Density Bonus Law.
(b) Applicability
The housing incentive program shall apply to the following zoning districts or locations:
(1) Chapter 18.13: RM-20, RM-30, RM-40
(2) Section 18.14.020: GM/ROLM Focus Area (see Figure 1)
(3) Chapter 18.16: CC(2); CN or CS-zoned sites on El Camino Real; CS sites on San Antonio
Road between Middlefield Road and East Charleston Road
(4) Chapter 18.18: CD(C)
(5) Chapter 18.29: NV- R3, NV- R4, NV- MXL, NV- MXM, NV- MXH, NV- PF
(c) Procedures
The regulations established by this section provide increases in development standards for
eligible projects electing to take advantage of the Housing Incentive Program. A property
owner may elect to use the site consistent with the underlying zoning district.
The Housing Incentive Program provides flexibility in development standards that allow for
a density increase that would in most cases exceed density bonuses under state density
bonus law (Government Code Section 65915). Therefore, a project applicant may utilize the
provisions of this section as an alternative to use of the state density bonus law implemented
through Chapter 18.15 (Density Bonus) of this Title, but may not utilize both this section and
state density bonus law. If an applicant utilizes state density bonus law, the provisions of
this section shall not apply.
(d) Permitted Uses
The following uses shall be permitted to use the housing incentive program:
(1) Multiple-Family Residential.
(2) In conjunction with a Multiple-Family Residential use, any uses permitted in the
underlying district, provided the uses are limited to the ground floor.
(e) Development Standards
For all eligible zoning districts, the housing incentive program shall modify underlying zoning
district standards as shown in Table 5. Floor area ratio (FAR) and building height standards
are specified in Table 6; unlike the standards in Table 5, these standards vary by zoning
district and whether or not a site is classified as an opportunity site listed in Appendix D of
the Housing Element.
Table 5
Housing Incentive Program Development Standards
Minimum Site Specifications
Standards for All Eligible
Zoning Districts Subject to regulations in:
Implements Program 3.4Dto add RM and GM/ROLM Focus Area districts
Similar toexistingproceduresfor AHIP
Based on the City’sDefinitions in Ch. 18.04,MFR is defined as 3+ units
ImplementsProgram 3.4B+Dre: modifiedstandards
3
Minimum Setbacks
Front Yard (ft) Same as underlying district
or 10 ft. (whichever is less)
Setback lines imposed by a
special setback map
pursuant to Chapter 20.08
of this code or imposed to
create required effective
sidewalk widths apply.
Rear Yard (ft) Same as underlying district
Rear Yard abutting residential
zoning district (ft)
Same as underlying district
Interior Side Yard if abutting
residential zoning district (ft)
Same as underlying district
Street Side Yard (ft) Same as underlying district
or 8 ft. (whichever is less)
Maximum Site Coverage 100% (commercial districts
and GM/ROLM Focus Area)
70% (residential districts)
Minimum Landscape/Open Space
Coverage
Same as underlying district See 18.14.020 for
modified standards
applicable to Housing
Element Opportunity Sites
Minimum Usable Open Space Same as underlying district
Maximum Height (ft) See Table 6 for standards,
by zoning district
Portions of a site within 50 ft of a
low density residential district (RE,
R1, NV-R1, R2, NV-R2, RMD)
35 ft(1)
Daylight Plane for lot lines
abutting a low density residential
district (RE, R1, NV-R1, R2, NV-R2,
RMD)
Unless the underlying
zoning district standard is
more permissive, the
daylight plane shall be as
follows:
Initial height: 16 feet,
measured at the property
line
Slope: 45 degrees
Reducedsetbackrequirementswill affect theROLM and RMzones (20 to10 ft front and16 to 8 ft streetside).
Special setbacksretain sidewalkdimensions on ElCamino Real andin NVCAP
This would increase coverage in the RM andCN zones and the GM/ROLM Focus Areaas well as certain NV zones. Lot coverage isalready 100% in the CD(C) and CC(2), as wellas CS zone for non-residential uses. Projectsgenerally will not achieve 100% coverage dueto setback, landscaping, and stormwater req's.
Similar toexistingAHIP heighttransitionstandards
Requires adayight plane,but allows fortwo stories nextto the sharedproperty line
4
Maximum Residential
Density (net)
RM-20 Zone (Non-Housing
Element Opportunity Site):
40 du/ac
All Other RM Zones: 60
du/ac, except no density
limit if at least 10% of units
are 3+ bedrooms
All Other Zones: None.
Minimum Commercial FAR Same as underlying district See Section 18.40.180
(retail preservation)
Maximum Total FAR See Table 6 for standards,
by zoning district
Minimum Vehicle Parking
1 space per studio/1-bed
1.5 spaces per 2-bed+
Additional adjustments to
the required ratios may be
considered per Chapter
18.52 (Parking).
TDM Plan
Projects providing fewer
than 50% of the parking
spaces that would be
required under Section
18.52.040 shall develop and
implement a transportation
demand management plan
containing, at a minimum:
(1) free transit passes for
residents (one per/unit);
(2) at least one on-site
short-term residential
loading space;
(3) bike repair station;
(4) allocation of 5% of
required bike parking
spaces to cargo bikes;
(5) provision of outlets
appropriate spaced for e-
bike charging at 20% of
required bicycle parking
See Chapter 18.52.050(d)
for additional TDM that
may be required.
None of these other zonescurrently have a density limit
Incentive for family housing
These parkingratios matchthe basic StateDensity BonusLaw ratio
New TDMrequirementsfor projects withreduced parkingTDM measuresbuild on ElCamino FocusArea measures
5
spaces; and
(6) a micromobility program
with a fleet equal to 5% of
the number of proposed
units.
Notes:
(1) Distance shall be measured from the property line of the subject site.
Table 6
FAR and Building Height Standards, by Eligible Zoning District
(THESE COLUMNS TEMPORARILY
INCLUDED FOR REFERENCE ONLY) Housing Incentive Program Standards
Existing
Base
District
Standard
Existing
18.14.010
Standards
Existing
HIP
Standards Maximum FAR(1)
Maximum
Building
Height
Non-Opp
Sites
Opp Sites MFR Non-
Housing
Element
Opportunity
Sites
Housing
Element
Opportunity
Sites
CC(2) Max
Total
FAR: 0.6
Max
height:
37 ft.
Max Total
FAR: 2.0
Max Total
FAR: 2.0
Max
Coverage:
100%
2.6
3.5
60 ft.
CS (El
Camino
Real)
Max
Total
FAR: 0.6
Max
height:
50 ft.
Max Total
FAR: 1.25
Max Total
FAR: 1.5
Max
Coverage:
100%
2.85
3.5
60 ft.
CS (San
Antonio
Max
height:
Max Total
FAR: 1.25
Max Total
FAR: 2.0
2.0 2.0 50 ft.
Existing standards for reference. No modifications to the CS (San Antonio) or CD(C) (Downtown) districts are proposed in order to let the San Antonio CAP andDowntown study determine changes.
6
Road
between
Middlefield
Road and
East
Charleston
Road)
50 ft.
CN (El
Camino
Real)
FAR: 0.5
Max
height:
40 ft.
Max Total
FAR: 1.25
Max Total
FAR: 1.5
Max
Coverage:
100%
2.5
3.25
50 ft.
CD(C) Max
height:
50 ft.
Max Total
FAR: 2.0
Max Total
FAR: 3.0
3.0(2) 3.0(2) 50 ft.
RM-40 FAR: 1.0
Max
height:
40 ft.
Max Total
FAR: 1.5
n/a 3.0 50 ft.
RM-30 FAR: 0.6
Max
height:
35 ft.
Max Total
FAR: 1.25
n/a 2.5 40 ft.
RM-20 FAR: 0.5
Max
height:
30 ft.
Max Total
FAR: 1.25
n/a 2.0 40 ft.
GM/ROLM
Focus Area)
n/a Max Total
FAR: 2.5
Max
height: 60
ft.
n/a 3.5 No change
Notes:
(1) Maximum Floor Area Ratio shall be increased by 0.5:1 for projects in which at 10% of all units contain
three or more bedrooms.
Incentive forfamily housing
The zoning changes effective Jan. 2024allowed for building height up to 60 ft.No further changes are proposed aspart of these HIP modifications
7
(2) The use of transferable development rights under Section 18.18.080 shall not cause the site to exceed
an FAR of 3.0.
(f) Review Process
Housing Development Projects that comply with objective design standards pursuant to
Chapter 18.24 (Contextual Design Criteria and Objective Design Standards) shall be subject
to streamlined review pursuant to Section 18.77.073. All other projects shall be subject to
architectural review as provided in Section 18.76.020. Projects shall not be subject to the
requirements of site and design review in Chapter 18.30(G).
//
//
SECTION 3. Section 18.14.040 (Affordable Housing Incentive Program) of Chapter 18.14
(Housing Incentives) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended to
read as follows (changes from Chapter 18.32 shown temporarily for reference only):
(a) 18.32.010 Specific Purpose
The affordable housing incentive program is intended to promote the development of 100%
affordable rental housing projects located within one-half mile of a major transit stop or
one-quarter mile of a high-quality transit corridor, as defined in subdivision (b) of Section
21155 of the Public Resources Code, by providing flexible development standards, and
modifying the allowed uses, and streamlining the project review process allowed in the
commercial districts and subdistricts.
(b) 18.32.20 Applicability of Regulations and Affordable Housing Requirement
The affordable housing incentive program shall apply to 100% affordable housing projects in
the following zoning districts or locations:
(1) Housing Element Opportunity Sites listed in Appendix D of the Housing Element; or
(2) Pproperties located within one-half mile of a major transit stop or one-quarter mile
of a high-quality transit corridor and zoned CD, CN, CS, and CC, set forth in Chapters
18.16 and 18.18 of this Title, in accord with Chapter 18.08 and Chapter 18.80, but
excluding the Town and Country Village Shopping Center, Midtown Shopping Center,
and Charleston Shopping Center (unless otherwise allowed by subsection (i).
(3) Sites eligible for the Housing Incentive Program pursuant to Section 18.14.030(b).
Procedures
Implements Program 3.4A toallow one study session withthe ARB if a project meetsobjective standards. Based onexisting AHIP review process.
Generalized in orderto capture addition ofresidential district and Housing Elementopportunity sites outside of transit areas
Expanded applicability consistentwith Program 3.3A. Relocatedtransit statement from purposestatement above. Major transitdefinition is now in “definitions”section below.
8
The regulations established by this chapter shall apply for 100% affordable housing projects
in lieu of the uses allowed and development standards and procedures applied in the
underlying district. A property owner may elect to use the site consistent with the
underlying zoning district, in which case the applicable regulations in Chapters 18.16 and
18.18 for the commercial districts shall apply.
(a) The affordable housing incentive program provides flexibility in development
standards that allow for a density increase that would in most cases exceed density bonuses
under state density bonus law, (Government Code Section 65915). Therefore, a project
applicant may utilize the affordable housing incentive program and the provisions of this
chaptersection as an alternative to use of the state density bonus law implemented through
Chapter 18.15 (Density Bonus) of this Title, but may not utilize both the affordable housing
incentive program and state density bonuses law. If an applicant utilizes state density bonus
law, the regulations in this section shall not apply. in Chapters 18.16 and 18.18 for the
applicable underlying commercial zoning district, including as modified by Chapter
18.14.020, shall apply.
(c) 18.32.030 Definitions
For purposes of this chapter, the following definitions shall apply.
(1) (a) "100% affordable housing project" means a multiple-family housing project
consisting entirely of for-rent affordable units, as defined in Section 16.65.020 of this
code, except for a building manager's unit, and available only to households with
income levels at or below 120% of the area median income for Santa Clara County,
as defined in Chapter 16.65, and where the average monthly rent, inclusive of a
reasonable utilities allowance, does not exceed one-twelfth of 30% of the area
median income (100% AMI) for the appropriate household size.
(1)(2) “Major transit stop” and “high-quality transit corridor” as defined in subdivision
(b) of Section 21155 of the Public Resources Code.
18.32.040 (Reserved)
(d) 18.32.050 Review Process
Housing Development Projects that comply with objective design standards pursuant to
Chapter 18.24 (Contextual Design Criteria and Objective Design Standards) shall be subject
to streamlined review pursuant to Section 18.77.073 (Streamlined Housing Development
Project Review). All other projects shall be subject to architectural review as provided in
Section 18.76.020. Projects shall not be subject to the requirements of site and design
review in Chapter 18.30(G).
(e) 18.32.060 Conformance to Other Combining Districts and Retail Preservation
Implements 3.3D
9
The following requirements shall apply to projects in the AH affordable housing incentive
program:
(1) (a) Where applicable, the requirements of Chapter 18.30(A) (Retail Shopping (R)
Combining District Regulations), Chapter 18.30(B) (Pedestrian Shopping (P)
Combining District Regulations), and Chapter 18.30(C) (Ground Floor (GF) Combining
District Regulations), and Pedestrian Shopping (P) Combining Districts shall apply.
(2) (b) Where applicable, the retail preservation requirements of Section 18.40.180
shall apply except as provided below.
(2)(3) Projects shall not be subject to the requirements of site and design review in
Chapter 18.30(G).
(1) Waivers and adjustments
(A) Except in the R or GF combining districts, the City Council shall have the authority to
reduce or waive the amount of retail or retail like gross floor area required in Section
18.40.180 for any 100% affordable housing project if the City Council determines that it would
be in the public interest. Any such reduction or waiver shall not be subject to the waiver and
adjustments requirements in Section 18.40.180(c). In the R and GF combining districts, any
reduction or waiver in retail or retail like gross floor area shall remain subject to the
requirements of Section 18.40.180(c) or the combining district as applicable.
(B) The City Council shall have the authority to modify retail parking requirements
associated with a 100% affordable housing project that also requires ground floor retail.
(f) 18.32.070 Permitted Uses
The following uses shall be permitted in to use the AH affordable housing incentive program:
(1) (a) 100% affordable housing projects;
(2) (b) In conjunction with a 100% affordable housing project, any uses permitted in
the underlying district, provided the uses are limited to the ground floor:.
(A) Business or trade school.
(B) Adult day care home.
(C) Office less than 5,000 square feet when deed-restricted for use by a not-for-
profit organization.
(A)(D) Any uses permitted in the underlying district
(g) 18.32.080 Conditional Uses
The following uses may be permitted in All uses conditionally permitted in the applicable
underlying zoning district may be established in a project utilizing the AH affordable housing
incentive program: (1) in conjunction with an 100% affordable housing project;, (2) subject
to issuance of a conditional use permit in accord with Chapter 18.76 (Permits and
This is redundantwith 18.40.180
Redundant. Ch. 18.52 already outlines parking reduction process.
10
Approvals);, and (3) provided that the uses are limited to the ground floor.:
(a) Business or trade school.
(b) Adult day care home.
(c) Office less than 5,000 square feet when deed-restricted for use by a not-for-profit
organization.
(d) All other uses conditionally permitted in the applicable underlying zoning district.
(h) 18.32.090 Development Standards
The following development standards shall apply to projects subject to the AH affordable
housing incentive program in lieu of the development standards for the underlying zoning
district, except where noted below:
Table 1
Development Standards
AH Incentive Program(1)
Minimum Site Specifications Subject to regulations in:
Site Area (ft 2)
None required
Site Width (ft)
Site Depth (ft)
Minimum Setbacks
Setback lines imposed by a
special setback map
pursuant to Chapter 20.08
of this code may or
imposed to create required
effective sidewalk widths
apply
Front Yard (ft) Same as underlying district
or 10 ft. (whichever is less)
Rear Yard (ft) Same as underlying district
Rear Yard abutting residential
zoning district (ft)
Same as underlying district
Interior Side Yard if abutting
residential zoning district (ft)
Same as underlying district
Street Side Yard (ft) Same as underlying district
or 8 ft. (whichever is less)
Build-to-Lines Same as underlying district
Permitted Setback Encroachments Same as underlying district
Changes follow Program 3.3B to increase FAR (except on R-1 opportunity sites), increaseheight limit for <60% of AMI projects, reduce parking requirements, and other changes to make the 2.4 FAR achievable.
11
Maximum Site Coverage None Required
Minimum Landscape/Open Space
Coverage
20%(2)
Minimum Usable Open Space
25 sq ft per unit for 5 or
fewer units(2), 50 sq ft per
unit for 6
units or more (2)
Maximum Height (ft)
General Standard (Projects income
restricted <120% of AMI)
50'(4)
Lower Income Standard (Projects
income restricted <60% of AMI)
60’(3)(4)
Portions of a site within 50 ft of a
residential district (other than an
RM-40 or PC zone) R1, R-2, RMD,
RM-20, or RM-30 zoned property
35'(3)(4) (5)
18.08.030
Daylight Plane for lot lines
abutting a low density residential
district (RE, R1, NV-R1, R2, NV-R2,
RMD)one or more residential
zoning districts
Daylight plane height and
slope shall be identical to
those of the most restrictive
residential zoning district
abutting the lot line
Unless the underlying
zoning district standard is
more permissive, the
daylight plane shall be as
follows:
Initial height: 16 feet,
measured at the property
line
Slope: 45 degrees
Maximum Residential
Density (net)
None Required(3)
Maximum Residential Floor
Area Ratio (FAR) - Residential
Portion of a Project
2.0:1 2.4:1(3)
Maximum Non-Residential
FAR
0.4:1
Maximum Total FAR 2.4:1(3)
Currently, initial height is10 feet adjacent to RM zonesand R1 (side yard). R1 (rearyard) is already measuredat 16 feet. This increaseallows for a second story atthe shared property linewith a low density residentialdistrict only.
12
Minimum Vehicle Parking
None, within one-half mile
of a major transit stop or
one-quarter mile of a high-
quality transit corridor.
0.5 per unit, all other
locations.
0.75 per unit
The Director may modify this
standard based on findings
from a parking study that
show fewer spaces are
needed for the project.
The required parking ratio
for special needs housing
units, as defined in Section
51312 of the Health and
Safety Code shall not exceed
0.3 spaces per unit.
Adjustments to the
required ratios shall be
considered per Chapter
18.52 (Parking).
For Commercial Uses, See
Chapters 18.52 and 18.54
(Parking).
TDM Plan
A transportation demand
management (TDM) plan
shall be required pursuant to
Section 18.52.050(d) and
associated administrative
guidelines
18.52.050(d)
Notes:
(1) These developments shall be designed and constructed in compliance with the
objective design standards in Section 18.24 and. Developments that elect to deviate from one
or more objective standards in Chapter 18.24 shall meet the performance criteria, general
standards, and exceptions outlined in Chapter 18.2318.40. Developments that elect to
deviate from one or more objective standards in Chapter 18.24 shall, as well as meet the
context-based design criteria outlined in Section 18.13.060 for residential-only projects and
projects in residential, public facilities, and office, research, and manufacturing zones, Section
18.16.090 for mixed use projects in the CN, CC, and CS districts, and Section 18.18.110 for
mixed use projects in the CD district, provided that more restrictive regulations may be
recommended by the architectural review board and approved by the director of planning
and community environment, pursuant to Section 18.76.020.
(2) Landscape coverage is the total area of the site covered with landscaping as defined in
Chapter 18.04. For the purposes of this Chapter 18.32, areas provided for usable open space
may be counted towards the landscape site coverage requirement. Landscape and open space
areas may be located on or above the ground level, and may include balconies, terraces, and
No parkingrequirementnear transit isconsistentwith SB35,State DensityBonus Lawand AB2097,except thiscode refersto majortransit asdefined above
In otherlocations, ratiois reduced perProgram 3.3B
This deletion is called out for the HIP in Program 3.4 and not the AHIP in Program 3.3, but the sentiment is thesame. Especially since this clause refers to compliance with the (subjective) context-based design criteria.
13
rooftop gardens.
(3) Except on R-1 opportunity sites (owned by faith-based institutions) where maximum FAR
of 2.0; maximum residential density of 50 du/ac; and maximum building height of 50 feet
apply, regardless of income level.
(4) Mixed-use projects that include ground-floor retail or retail-like uses shall receive an
additional 5 feet of building height.
(345) Distance shall be measured from the property line of the subject site. The Planning
Director may recommend a waiver from the transitional height standard.
SECTION 4. Section 18.13.040 (Development Standards) of Chapter 18.13 (Multiple Family
Residential (RM-20, RM-30 AND RM-40) Districts) of Title 18 (Zoning) of the Palo Alto Municipal
Code is hereby amended as follows (additions underlined; deletions struck-through; unchanged
text omitted by bracketed ellipses):
18.13.040 Development Standards
(a) Site Specifications, Building Size and Bulk, and Residential Density
The site development regulations in Table 2 shall apply in the multiple-family residence
districts, provided that more restrictive regulations may be recommended by the
Architectural Review Board and approved by the Director of Planning and Development
Services, pursuant to the regulations set forth in Chapter 18.76, and the objective design
standards set forth in Chapter 18.24. Except that s Sites designated as Housing Element
Opportunity Sites shall meet the development standards specified in Chapter Section
18.14.020 and projects utilizing the Housing Incentive Program or Affordable Housing
Incentive Program shall meet the development standards specified in Sections 18.14.030
and 18.14.040, respectively.
[. . .]
SECTION 5. Section 18.16.060 (Development Standards) of Chapter 18.16 (Neighborhood,
Community, and Service Commercial (CN, CC and CS) Districts) of Title 18 (Zoning) of the Palo
Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-
through; unchanged text omitted by bracketed ellipses)::
18.16.060 Development Standards
[. . .]
(b) Mixed Use and Residential
Table 4 specifies the development standards for new residential mixed use developments
and residential developments. These developments shall be designed and constructed in
compliance with the following requirements and the objective design standards in Chapter
Modifiedstandards for R-1 zoned faith based sites
Incentive forretail/mixed use buildings
Cross-referencefor RM Zones
14
18.24, except that sites designated as Housing Element Opportunity Sites shall meet the
development standards as modified in Chapter 18.14.020 and projects utilizing the Housing
Incentive Program or Affordable Housing Incentive Program shall meet the development
standards specified in Sections 18.14.030 and 18.14.040, respectively. Non-Housing
Development Projects and Housing Development Projects that elect to deviate from one or
more objective standards in Chapter 18.24 shall meet the context-based design criteria
outlined in Section 18.16.090, provided that more restrictive regulations may be
recommended by the architectural review board and approved by the director of planning
and development services, pursuant to Section 18.76.020.
[. . .]
(c) Exclusively Residential Uses
Exclusively residential uses are generally prohibited in the CN, CS, CC(2) and CC zone districts,
except on housing inventory sites identified in the Housing Element, subject to the standards in
Section 18.16.060(b), and on CS and CN sites on El Camino Real and CC(2) sites, subject to the
following.
(1) On CS and CN sites on El Camino Real and on CC(2) sites, where the retail shopping
(R) combining district or the retail preservation provisions of Section 18.40.180 do not
apply, exclusively residential uses are allowed subject to the standards in
Section 18.16.060(b) and the following additional requirements:
(A) Residential units shall not be permitted on the ground-floor of development
fronting on El Camino Real unless set back a minimum of 15 feet from the property
line or the 12-foot effective sidewalk setback along the El Camino Real frontage,
whichever is greater; for projects on Housing opportunity sites, or those utilizing
the Housing Incentive Program or Affordable Housing Incentive Program, these
setbacks may be modified by the standards in Chapter 18.14. Common areas, such
as lobbies, stoops, community rooms, and work-out spaces with windows and
architectural detail are permitted on the ground-floor El Camino Real frontage.
(B) Parking shall be located behind buildings or below grade, or, if infeasible,
screened by landscaping, low walls, or garage structures with architectural detail.
(C) Combining district use regulations and design and development standards
shall not apply to exclusively residential projects on Housing Element opportunity
sites designated to accommodate lower income households, and may be limited
for sites utilizing the Housing Incentive Program or Affordable Housing Incentive
Program. See Section 18.14.020 Chapter 18.14 for details.
[. . .]
(k) Housing Incentive Program Reserved
(1) The Director may waive the residential floor area ratio (FAR) limit and the maximum
site coverage requirement for a project that is reviewed by the Architectural Review
Board, if the Director finds that the project with such waiver or waivers is consistent with
the required architectural review findings in Section 18.76.020. The Director may only
Cross-referencefor commercial zones
Existing HIP standards arebeing replaced with the code section above
15
waive these development standards in the following areas and subject to the following
restrictions:
(A) For an exclusively residential or mixed-use project in the CC(2) zone or on CN
or CS zoned sites on El Camino Real. In no event shall the Director approve a
commercial FAR that exceeds the standard in Table 4 of Section 18.16.060(b) or a
total FAR (including both residential and commercial FAR) in excess of 2.0 in the
CC(2) zone or 1.5 in the CN or CS zone.
(B) For an exclusively residential or mixed-use project on CS zoned sites on San
Antonio Road between Middlefield Road and East Charleston Road. In no event
shall the Director approve a commercial FAR that exceeds the standard in Table 4
of Section 18.16.060(b) or a total FAR (including both residential and commercial
FAR) in excess of 2.0.
(2) The Director may waive any development standard including parking for a project
that is reviewed by the Architectural Review Board, if the Director finds that the project
with such waiver or waivers is consistent with the required architectural review findings
in Section 18.76.020. The Director may only waive these development standards in the
following areas and subject to the following restrictions:
(A) For a 100% affordable housing project in the CC(2) zone or on CN or CS zoned
sites on El Camino Real;
(B) For a 100% affordable housing project on CS zoned sites on San Antonio Road
between Middlefield Road and East Charleston Road.
(C) In no event shall the Director approve development standards more
permissive than the standards applicable to the Affordable Housing (AH)
Combining District in Chapter 18.30(J). A "100% affordable housing project" as
used herein means a multiple-family housing or mixed-use project in which the
residential component consists entirely of affordable units, as defined in Section
16.65.020, available only to households with income levels at or below 120% of
the area median income, as defined in Section 16.65.020, and where the average
household income does not exceed 60% of the area median income level, except
for a building manager's unit.
(3) This program is a local alternative to the state density bonus law, and therefore, a
project utilizing this program shall not be eligible for a density bonus under Chapter 18.15
(Residential Density Bonus).
[. . .]
SECTION 6. Section 18.18.060 (Development Standards) of Chapter 18.18 (Downtown
Commercial (CD) District) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby
amended as follows (additions underlined; deletions struck-through; unchanged text omitted by
bracketed ellipses):
18.18.060 Development Standards
[. . .]
16
(b) Mixed Use and Residential
Table 3 specifies the development standards for new residential mixed use developments
and residential developments. Housing Development Projects shall be designed and
constructed in compliance with the following requirements and the objective design
standards in Chapter 18.24, except that sites designated as Housing Element Opportunity
Sites shall meet the development standards as modified in Chapter 18.14.020 and projects
utilizing the Housing Incentive Program or Affordable Housing Incentive Program shall meet
the development standards specified in Sections 18.14.030 and 18.14.040, respectively.
Non- Housing Development Projects and Housing Development Projects that elect to
deviate from one or more objective standards in Chapter 18.24 shall meet context-based
design criteria outlines in Section 18.18.110, provided that more restrictive regulations may
be recommended by the architectural review board and approved by the director of
planning and development services, pursuant to Section 18.76.020:
[. . .]
(l) Reserved Housing Incentive Program
(1) For an exclusively residential or residential mixed-use project in the CD-C zone, the
Director may waive the residential floor area ratio (FAR) limit after the project with the
proposed waiver is reviewed by the Architectural Review Board, if the Director finds
that the project exceeding the FAR standard is consistent with the required architectural
review findings. In no event shall the Director approve a commercial FAR in excess of 1.0
or a total FAR (including both residential and commercial FAR) in excess of 3.0. Nor shall
the use of transferable development rights under Section 18.18.080 be allowed to cause
the site to exceed a FAR of 3.0.
(2) For a 100% affordable housing project in the CD-C zone, the Director may waive any
development standard including parking after the project with the proposed waiver or
waivers is reviewed by the Architectural Review Board, if the Director finds that a
project with such waiver or waivers is consistent with the required architectural review
findings. In no event shall the Director approve a FAR in excess of 3.0 or approve other
development standards more permissive than the standards applicable to the
Affordable Housing (AH) Combining District in Chapter 18.30(J). A "100% affordable
housing project" as used herein means a multiple-family housing or mixed-use project in
which the residential component consists entirely of affordable units, as defined in
Section 16.65.020 of this code, available only to households with income levels at or
below 120% of the area median income, as defined in Section 16.65.020, and where the
average household income does not exceed 60% of the area median income level,
except for a building manager's unit.
(3) This program is a local alternative to the state density bonus law, and therefore, a
project utilizing this program shall not be eligible for a density bonus under Chapter
18.15 (Residential Density Bonus).
Existing HIP standards arebeing replaced with the code section above
Cross- reference for commercialCD(C) zones
17
[. . .]
SECTION 7. Section 18.20.040 (Site Development Standards) of Chapter 18.20 (Office, Research,
and Manufacturing (MOR, ROLM, RP and GM) Districts) of Title 18 (Zoning) of the Palo Alto
Municipal Code is hereby amended as follows (additions underlined; deletions struck-through;
unchanged text omitted by bracketed ellipses):
18.20.040 Site Development Standards
[. . .]
(b) Development Standards for Exclusively Residential Uses
Residential uses shall be permitted in the MOR, RP, RP(5), ROLM, ROLM(E), and GM zoning
districts, subject to the following criteria.
[. . .]
(6) ROLM District. All multi-family development in the ROLM zoning district shall be
permitted subject to the provisions above in 18.20.040(b)(2), approval of a conditional
use permit, and compliance with the development standards prescribed for the RM-30
zoning district, except for sites designated as Housing Element Opportunity Sites or Focus
Areas, which are regulated by Chapter 18.14.020. Sites designated as Housing Element
Opportunity Sites or Focus Areas may also elect to utilize the Housing Incentive Program
or Affordable Housing Incentive Program, in which case they shall meet the development
standards specified in Sections 18.14.030 and 18.14.040, respectively.
(7) GM District. All residential development is prohibited in the GM zoning district,
except for sites designated as Housing Element Opportunity Sites or Focus Areas, which
are regulated by Chapter 18.14.020. Sites designated as Housing Element Opportunity
Sites or Focus Areas may also elect to utilize the Housing Incentive Program or Affordable
Housing Incentive Program, in which case they shall meet the development standards
specified in Sections 18.14.030 and 18.14.040, respectively.
(8) Combining Districts. Combining district use regulations and design and development
standards shall not apply to exclusively residential projects on Housing Element
opportunity sites designated to accommodate lower income households, and may be
limited for sites utilizing the Housing Incentive Program or Affordable Housing Incentive
Program. See Section 18.14.020 Chapter 18.14 for details.
(c) Development Standards for Mixed (Residential and Nonresidential) Uses in the MOR,
ROLM, ROLM(E), RP, and RP(5) Zoning Districts
Mixed (residential and nonresidential) uses shall be permitted in the MOR, ROLM, ROLM(E),
RP, and RP(5) zoning districts, subject to the following criteria:
(1) It is the intent of these provisions that a compatible transition be provided from
lower density residential zones to higher density residential, non-residential, or mixed use
zones. The Village Residential development type should be evaluated for use in transition
Cross- reference for commercialoffice and research zones
18
areas and will provide the greatest flexibility to provide a mix of residence types
compatible with adjacent neighborhoods.
(2) New sensitive receptor land uses shall not be permitted within 300 feet of a
Hazardous Materials Tier 2 or Tier 3 use. Existing sensitive receptors shall be permitted to
remain, consistent with the provisions of Chapter 18.70 (Nonconforming Uses and
Noncomplying Facilities).
(3) ROLM(E) District. Mixed (residential and nonresidential) development in the ROLM(E)
zoning district shall be permitted, subject to the provisions above in 18.20.040(c)(2),
approval of a conditional use permit, determination that the nonresidential use is
allowable in the district and that the residential component of the development complies
with the development standards prescribed for the RM-20 zoning district. The maximum
floor area ratio (FAR) for mixed use development is 0.3 to 1.
(4) ROLM District. Mixed (residential and nonresidential) development in the ROLM
zoning district shall be permitted, subject to the provisions above in 18.20.040(c)(2),
approval of a conditional use permit, determination that the nonresidential use is
allowable in the district and that the residential component of the development complies
with the development standards prescribed for the RM-30 zoning district. The maximum
floor area ratio (FAR) for mixed use development is 0.4 to 1. Except that s Sites designated
as Housing Element Opportunity Sites or Focus Areas shall meet the development
standards specified in Chapter 18.14.020 and projects utilizing the Housing Incentive
Program or Affordable Housing Incentive Program shall meet the development standards
specified in Sections 18.14.030 and 18.14.040, respectively.
(5) GM District. Mixed use (residential and nonresidential) development is prohibited in
the GM zoning district, except for sites designated as Housing Element Opportunity Sites
or Focus Areas, which are regulated by Chapter 18.14.020. Sites designated as Housing
Element Opportunity Sites or Focus Areas may also elect to utilize the Housing Incentive
Program or Affordable Housing Incentive Program, in which case they shall meet the
development standards specified in Sections 18.14.030 and 18.14.040, respectively.
In computing residential densities for mixed (residential and nonresidential) uses, the density
calculation for the residential use shall be based on the entire site, including the
nonresidential portion of the site.
[. . .]
SECTION 8. Chapter 18.32 (Affordable Housing Incentive Program) of Title 18 (Zoning) of the Palo
Alto Municipal Code is deleted in its entirety.
SECTION 9. Section 18.40.180 (Retail Preservation) of Chapter 18.40 (General Standards and
Exceptions) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows
(additions underlined; and unchanged text omitted by bracketed ellipses):
18.40.180 Retail Preservation
[. . .]
19
(c) Waivers and Adjustments; and Exemptions.
[. . .]
(4) Exemptions. The following uses shall be exempt or partially exempt from the
provisions of this Section 18.40.180, as provided below:
(A) A 100% affordable housing project not within the Ground Floor (GF) and/or
Retail (R) combining districts nor El Camino Real Node area as depicted in Figure
5on a site abutting El Camino Real. A "100% affordable housing project" as used
herein shall have the same meaning as provided in Section 18.14.040(c).means a
multiple-family housing project consisting entirely of affordable units, as defined
in Section 16.65.020 of this code, available only to households with income
levels at or below 120% of the area median income, as defined in Chapter 16.65,
except for a building manager's unit.
(B) A 100% affordable housing project on a site abutting El Camino Real in the CN
and CS zone districts outside the Retail (R) combining district. A "100%
affordable housing project" as used herein means a multiple-family housing
project consisting entirely of affordable units, as defined in Section 16.65.020 of
this code, available only to households with income levels at or below 120% of
the area median income, as defined in Chapter 16.65, and where the average
household income does not exceed 80% of the area median income level, except
for a building manager's unit.
(B) A residential project located on a Housing Element Opportunity Site listed in
Appendix D of the Housing Element, except for projects located within an El
Camino Real Node area, as depicted in Figure 5, that utilize the Housing
Incentive Program to exceed the realistic capacity estimates identified in
Appendix D of the Housing Element.
(C) A high-density residential or mixed-use project in the CS zone district, but not
within the Ground Floor (GF) or Retail (R) combining districts, shall be required
to replace only up to 1,500 square feet of an existing retail or retail-like use and
shall be exempt from minimum vehicle parking requirements pursuant to
Chapter 18.52 (Table 1) for this retail or retail-like floor area. For the purposes of
this partial exemption, high-density shall mean 30 or more dwelling units per
acre. This reduction in retail square footage and minimum vehicle parking
requirements shall not apply for a site within the Ground Floor (GF) or Retail (R)
combining districts, or within an El Camino Real Retail Node area, unless the site
is a Housing Element opportunity site, as depicted in Figure 5
(D) The Director shall maintain and update the El Camino Real Node map in Figure 5.
Figure 5: El Camino Real Retail Node Areas
Narrowsexemption from RPO to exclude El Camino sites outside of the retail nodes perProgram 3.4C
Standardize100% affordablehousing definition
Remove redundancygiven changes above
Added exemption from RPOfor Opportunity Sites perProgram 3.4C. None of theHousing Sites are on (GF)or (R) designated sites, sono exemption required,but there are Opportunity Siteswithin these nodes on ElCamino. Opportunitysites are allowed to develop as 100% housing, so this codeonly requires retail above the base realistic capacity listed in the Housing Element.
Add exemptionper Program3.4C and offerincentives tosupport flexibilityin ground flooruses and program
20
SECTION 10. If any section, subsection, clause or phrase of this Ordinance is for any reason held
to be invalid, such decision shall not affect the validity of the remaining portion or sections of
the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each
section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid.
SECTION 11. In accordance with the California Environmental Quality Act (CEQA), the City
prepared an Addendum to the 2017 Comprehensive Plan Environmental Impact Report (EIR),
analyzing the potential environmental impacts of the 2023-2031 Housing Element. On May 8,
2023, the City Council adopted Resolution No. 10107, and on December 18, 2023, the City
Council approved a Revised Addendum, finding that the Addendum, as revised, and the 2017
EIR adequately analyzed the environmental impacts of the Housing Element, including the
Programs implemented by this ordinance.
SECTION 12. This Ordinance shall be effective on the thirty-first day after the date of its
adoption.
INTRODUCE
21
D: PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIO
NS: ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED AS TO CONTENT:
Assistant City Attorney City Manager
Director of Planning and
Development Services
GM
ROLM
RM-30 (D)
RM-30
RM-30
RM-20
CS
RM-20
RM-20
RM-30
NV-R4
NV-MXM
NV-R3
RM-30
CD-C (P)
RM-20
RM-40
RM-40
RM-30
RM-30
RM-30
RM-40
RM-20
RM-30
RM-20
NV-MXH
RM-30
RM-20
RM-20
RM-30
NV-PF
RM-20RM-40
RM-20
RM-20
RMD (NP)
RM-30
RM-20
NV-MXH
RM-30
RM-20
R-2
RM-30
RM-40
RM-20
RM-30
RM-30
RM-30
RM-20
NV-MXM
RM-30
RM-30
RM-40
RM-30
RM-40
RM-40
RM-30
RM-40
RM-20
RM-30
RM-20
RM-30
RM-30
RM-30
RM-20
NV-MXL
RM-30
RM-20
RM-30
RM-30
CC (2)(R)
RM-20
Middlefield RoadCowper Street
Waverley Street
Alma Street
El Camino Real
Louis Road
Hy 101 South
Ross Road
Hy 101 North
Webster Street
Bryant Street
Channing Avenue
East Bayshore Road
Sand Hill Road
Hamilton Avenue
Page Mill Road
Lincoln Avenue
San Antonio Road
University Avenue
Newell Road Oregon Expressway
Seale Avenue
South Court
High Street
Charleston Road
Park Boulevard
East Meadow Drive
Stanford Avenue
Colorado Avenue
West Bayshore Road
Foothill Expressway
Hanover Street
Miranda Avenue
Arastradero Road
Fabian Way
Greer Road
Ramona Street
Edgewood Drive
Loma Verde Avenue
Churchill Avenue
Matadero Avenue
Center Drive
Los Robles Avenue
California Avenue
Barron Avenue
Welch Road
Kingsley Avenue
Maybell Avenue
Wilkie Way
Hansen Way
Coleridge Avenue Byron Street
Ely Place
Oregon Avenue
Marion Avenue
North California Avenue
Emerson Street
Pitman Avenue
Laguna Avenue
Grove Avenue
Ferne Avenue
Porter Drive
Chimalus Drive
College Avenue
Amherst Street
Seneca Street
Lane 66Bowdoin Street
Stockton Place
Harker Avenue
Embarcadero Road
Ames Avenue
El Dorado Avenue
La Para Avenue
Clark Way
Birch Street
Clara Drive
Coyote Hill Road
Columbia Street
Georgia Avenue
Hillview Avenue
Rhodes Drive
La Donna Street
Parkinson Avenue
Kipling Street
Pasteur Drive
Heather Lane
Kellogg Avenue
Alger Drive
Florales Drive
Forest Avenue
Greenwood Avenue
Nathan Way
Urban Lane
Harvard Street
Iris Way
Hopkins Avenue
Dana Avenue
Fife Avenue
Fulton Street
Sutherland Drive
(none)
Marshall Drive
Geng Road
Orme Street
Parkside Drive
Walnut Drive
Maddux Drive
Wildwood Lane
Elsinore Drive
Moreno Avenue
Arbutus Avenue
Shopping Center Way
Walter Hays Drive
Jackson Drive
Kenneth Drive
Patricia Lane
Cereza Drive
Towle Way
Guinda Street
Transport Street
Bruce Drive
Faber Place
Los Palos Avenue
Laguna Way
West Meadow Drive
Janice Way
Bibbits Drive
Warren Way
Mayview Avenue
Rorke Way Evergreen Drive
Stelling Drive
Military Way
Ashton Avenue
Jefferson Drive
Santa Rita Avenue
Addison Avenue
Rinconada Avenue
Encina Avenue
Silva Avenue
Escobita Avenue
Quarry Road
Bryson Avenue
Fabian Street
Nevada Avenue
Southwood Drive
Lane 33
Lupine Avenue
Poe Street
Suzanne Drive
Sycamore Drive
Manzana Lane
Elwell Court
Ruthelma Avenue
Maclane
Wells Avenue
Tasso Street
Lane D East
Lytton Avenue
Lane 7 West
Mark Twain Street
Maple Street
Lane D West
Melville Avenue
Palm Street
Tioga Court
Peral Lane
Shasta Drive
Diablo Court
Saint Francis Drive
Melville Avenue
Park Boulevard
Dana Avenue
Oregon Avenue
Colorado Avenue
Page Mill Road
Emerson Street
Guinda Street
Tasso Street
Byron Street
Byron Street
Oregon Avenue
Bryant Street
North California Avenue
San Antonio Road
Georgia Avenue
High Street
Mountain ViewStanford University
Menlo Park
Atherton
East Palo Alto
Los AltosPortola Valley
Los Altos Hills
Stanford
Menlo Park
Mountain View
Los AltosLos Altos Hills
Atherton
Portola Valley
Cupertino
Stanford University
Redwood City
East Palo Alto
Sunnyvale
Woodside
Housing Incentive Program Parcels - Existing
Housing Incentive Program Parcels - Proposed
Housing Inventory Sites 7/8/2024
NVCAP
Zoning
£¤101
5-15
Time Frame: Complete and implement studies by September 2024. Complete
additional study by 2025. Amend fee schedule by September 2026.
Primary Associated
Goals and Policies
Goals: 3, 4
Policies: 3.1, 4.1
P ROGRAM 3.2: M ONITOR C ONSTRAINTS TO H OUSING
The Constraints chapter of the Housing Element identifies several conditions and practices that act to
constrain housing development. By addressing these conditions and practices, the City can streamline
development processes, and promote future residential development. The City will continue to monitor
its policies, standards, and regulations to ensure the City’s regulatory framework facilitates residential
and balanced mixed-use development in the community.
Responsible Agency: Planning and Development Services
Funding Sources(s): General Fund
Implementing
Objectives:
A. Monitor new local policy initiatives for effectiveness in combatting
identified constraints to housing development.
B. When new land use regulations, impact fees or procedural changes are
being considered by the Planning and Transportation Commission and City
Council, the City shall prepare an analysis in the accompanying staff report
detailing how the regulation may impact housing production, if at all, and
recommended solutions to address those impacts.
C. Monitor application of the Municipal Code standards for constraints to
housing projects and recommend changes annually, as appropriate, to
enhance the feasibility of affordable housing.
Time Frame: Complete review and implementation of required edits once
during the planning period, by January 2027.
Primary Associated
Goals and Policies:
Goals: 2, 4
Policies: 2.1, 2.3, 4.2
P ROGRAM 3.3: A FFORDABLE H OUSING D EVELOPMENT I NCENTIVES
The Planning and Development Services Department, in its review of development applications, market
conditions and through conversations with non-profit housing providers, has identified certain changes in
development standards that will encourage the development of low- and moderate-income housing. The
City has already adopted an affordable housing incentive program (AHIP) that includes flexible
development standards, streamlined application review processes, direct financial assistance and other
incentives to encourage affordable housing. These initiatives will be extended through this Program to
reduce constraints and expand the opportunity for below-market rate housing.
Responsible Agency: Planning and Development Services
Funding Sources(s): General Fund
Implementing Objectives: A. Amend the municipal code to extend the affordable housing incentive
program to apply to all housing opportunity sites identified in the
Housing Element and zoned for commercial, industrial or multi-family
5-16
residential use. Update AHIP regulations for religious institution sites
located in the R1 district with a reduced density provision.
B. Amend the affordable housing overlay (incentive program) regulations
to allow housing projects to achieve a residential floor area ratio of
2.4:1.0 without requiring commercial floor area (except where required
on University and California Avenues). The City will modify AHIP
development and parking standards commensurate with FAR increases,
and, for housing projects income restricted to 60 percent of the area
median income level or below, allow up to sixty (60) feet in height on all
opportunity sites.
C. Amend Zoning Code to incorporate all recent changes to State density
bonus law and develop summary materials to promote the use of
density bonuses.
Time Frame: Complete zoning changes by December 31, 2024
Quantified Objective: Amend the zoning code and comprehensive plan as
necessary to extend the provision of affordable housing incentive program
to sites in the housing inventory and codify additional incentives described
herein.
D. Amend the PAMC to streamline all 100 percent affordable housing
development projects. Implement a procedure that prioritizes
affordable housing projects for staff resources and, if applicable,
hearing dates, above other projects, regardless of submission date.
Time Frame: Complete by December 2024.
Quantified Objective: The timeframes associated with permit processing
can be viewed as a constraint to affordable development. The City aims to
complete the processing of planning entitlements for affordable housing
projects exempt from environmental review within 90 days from application
submittal.
Primary Associated Goals
and Policies:
Goal: 2, 3, 4
Policies: 2.1, 2.2, 2.3, 3.2, 4.2
P ROGRAM 3.4: H OUSING I NCENTIVE P ROGRAM (HIP)
The HIP was enacted in 2019 as an alternative to the State Density Bonus law and provides development
incentives including no housing density restrictions, increased floor area ratios and increased lot coverage.
This program seeks to expand the suite of development incentives and extends the program to additional
zoning districts that are not identified in the Site Inventory.
Responsible Agency: Planning and Development Services
Funding Sources(s): General Fund
Implementing Objectives: A. HIP qualifying projects that also comply with City approved objective
standards shall be administratively reviewed with one courtesy meeting
before the Architectural Review Board.
Time Frame: Revise review process instructions by December 2024.
5-17
Quantified Objective: Monitor projects for compliance with desired review
schedule, track application processing timelines and number of applications
appealed to Council; use data to inform future modifications to the HIP
program.
B. Amend the local Housing Incentive Program to include specific
expanded development standards, as an alternative to state density
bonus provisions. Reduce barriers by removing Planning Director
discretion to define applicable standards in each instance.
C. Allow for sites subject to the City’s retail preservation ordinance –
except in the ground floor (GF) and retail (R) combining districts and
strategic locations generally depicted in the draft South El Camino Real
Design Guidelines – to have a reduction in the amount of retail
replacement floor area needed for redevelopment and waive the retail
preservation requirement for identified housing opportunity sites.
D. Extend the local Housing Incentive Program to the multi-family
residential districts (RM-20, RM-30, and R-40).as well as the ROLM and
GM district focus area The Housing Incentive Program development
standards shall be amended to increase height and floor area allowances
for housing projects; reduce parking requirements to match or improve
upon state density bonus, and adjustment to other development
standards to enable greater housing production.
Time Frame: Complete Municipal Code amendments by December 31, 2024.
Quantified Objective: Amend the municipal code and comprehensive plan
to codify implementing objective with the goal of encouraging the
development of approximately 550 units over the planning period.
E. Expand the geographic boundaries of the El Camino Real Focus Area
(adopted in 2023) to incentivize housing production at appropriate
locations. Increase building height and floor area ratios and apply other
objective standards, such as transitional height restrictions, to address
single family zoning district adjacencies. The proposed standards will be
an alternative to the state density bonus.
Time Frame: Complete municipal code amendments by June 30, 2025.
Quantified Objective: Amend municipal code with the goal of encouraging
development of approximately 500 units over the planning period.
Primary Associated Goals
and Policies:
Goal: 2, 3, 4
Policies: 2.2, 3.1, 3.2, 4.2, 4.4
P ROGRAM 3.5: A CCESSORY D WELLING U NIT (ADU) F ACILITATION
This program aims to annually monitor provisions made to ADU legislation and amend the City’s Zoning
Ordinance as necessary to ensure compliance with State law. Furthermore, the City is committed to
encouraging a greater range of housing types, reducing barriers to alternative types of housing such as
ADUs, and promoting income integration across the City.
In recent years, multiple bills have added requirements for local governments related to ADU ordinances.
The 2016 and 2017 updates to State law included changes pertaining to the allowed size of ADUs,
Housing Incentive Program (HIP) Amendments to Implement the
6th Cycle Housing Element
Physical Feasibility Analysis Report
Revision Date: January 9, 2025
Physical Feasibility Analysis Report 1
Overview
This report helps implement Program 3.4 of the
Housing Element, which requires that the City
amend the Housing Incentive Program based
on findings of a feasibility analysis. This report
analyzes the physical feasibility of current
zoning standards to achieve different housing
types (e.g., townhomes, apartments).
Architects prepared prototypical site and
unit plans based on the City’s development
standards, including building height,
density, setbacks, open space, and parking
requirements. Then, the architects adjusted
various zoning levers, modifying zoning
standards to increase unit yield and further
support housing production and affordability.
This analysis is accompanied by Keyser
Marston Associates’ (KMA) financial feasibility
analysis to determine whether the prototypes
resulting from existing and modified zoning
standards are financially feasible.
Purpose & Findings
50’-0”50’-0”
40’-0”Height Limit Buffer
Modified CD-C ZoningExisting CD-C Zoning
60’-0” 60’-0”
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element2
Mixed-Use Zones RM Zones
Zoning
Designation
CD-C CN CC(2) RM-20 RM-30 RM40 ROLM
(RM-30)
Site 635
High
Street
3700
El Camino
Real
310
California
Avenue
680
University
Avenue
355
College
Avenue
Typical
Interior
Lot
1035
E Meadow
Circle
Lot Size 50’x102’150’x106’90’x125’100’x100’50’x132’50’x100’300’x145’
Square feet 5,125 15,761 11,250 10,000 6,626 5,000 43,560
Existing
Retail
No Yes Yes No No No No
Test Sites
RM-20
CD-C
RM-30
ROLM
CN
RM-40
CC(2)
Physical Feasibility Analysis Report 3
Key Findings
Existing zoning standards generally support
townhome development with surface or tuck-
under parking. This is largely due to low lot
coverage allowances and densities/FARs,
deep setbacks, and relatively high parking and
landscaping requirements. Townhomes are
a fine prototype, but limited in their ability to
produce affordable and market rate housing.
Existing standards generally do not support
apartments and condominiums in “stacked
flats” configuration or mixed-use development
with ground-floor retail.
To achieve these higher densities,
opportunities for more affordable housing, and
more financially feasible development, the
modified zoning standards explore adjustments
to several zoning levers:
• Reducing setbacks, especially on the street
side
• Increasing lot coverage, FAR, and density
• Increasing height limits and adjusting
daylight plane requirements
• Reducing landscaping coverage and
allowing flexibility in the placement of
common open space
• Reducing parking requirements, consistent
with State law allowances
• Reducing ground-floor retail requirements
outside of neighborhood commercial
centers
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element4
Retail Preservation
Requirements Revisions
•Revise use requirements for retail
•Do not require one-for-one replacement:
allow minimum FAR standard for retail
•Revise Retail preservation applicability
•Only require retail at key nodes. Allow
100% residential in between nodes on
commercial corridors, and Housing
Element opportunity sites
•Clarify that Retail Preservation replacement
is allowed on two floors
Objectives
•Support affordable and market rate
housing production goals, as specified in
the Housing Element
•Allow for apartment housing formats
•Accommodate stacked flats and mixed-use
development
•Enable financial feasibility
•Retain Palo Alto design values
50’-0”
14’-0”
25’-0”
36’-0”
40’-0”60’-0”Redefine maximum height
of buildings to measure to
top of structure, rather
than top of parapet to
allow a more reasonable
fit within the height limit.
Decrease parking
requirements, consistent
with State law
allowances: The space
taken up by parking
compared to housing can
be close to 1:1.
✓X
2-Bedroom Unit
828 sf
3 parking spaces
plus drive aisle
= 837 sf12’-0’
Circulation
(aisle width)
19’ x 9’
Parking Space
Guest Parking
23’ x 36’
Physical Feasibility Analysis Report 5
Ground Floor
Upper Level
Development Standard
Revisions
• Increase or eliminate maximum residential
densities, which do not directly affect
building massing
• Increase FAR and building height
• Revise the Daylight Plane to allow for at
least two stories of development
• Revise height buffer in CD-C district: 150
feet is too far from “adjacent” residential to
create a meaningful transition
• Revise Height Limit Buffer to apply only
when the entire site is within the buffer
• Revise Height Limit Buffer to apply to area
within 10 feet of a visible property line
(thus defining a setback)
Lot Standard Revisions
• Decrease landscape/open space
coverage. The Ground Floor is a contested
space. The more Landscape/Open Space
is required, the smaller the podium. It’s a
big trade-off.
• Allow landscape/open space to be
counted above the ground floor on small
sites (e.g, at the podium level)
• Reduce setbacks, especially on the street
side which tend to be deep even though
this does not affect neighbors.
• Allow zero setbacks or mixed-use citywide
or on commercial streets like California
Avenue, University Avenue, and El Camino
Real
• Reduce rear setback near roads. Count
the alleyways/lanes/service roads in lieu of
rear setback
Revise the daylight plane
to allow at least two
stories at the edges of
sites.
Allow the landscape/open
space requirement to be
met on upper levels to
free up contested space
at the ground level.
Ground Floor
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element6
CD-C District
Alle
y
50’
-
0
”
102’-6
”
Alle
y
Prim
a
r
y
S
t
r
e
e
t
Modified CD-C Zoning
15 Apartments
Existing CD-C Zoning
4 Townhomes
The Height Limit Buffer and requirement for
open space at the ground floor limit the amount
of housing potential on the site.
Housing capacity almost quadruples when
allowing 10 more feet of height, eliminating the
height buffer, and open space requirements to
met on top of podiums.
Prim
a
r
y
S
t
r
e
e
t
Physical Feasibility Analysis Report 7
Existing CD-C Zoning Modified CD-C Zoning
Setback: Front N/A N/A
Setback: Interior Side N/A N/A
Setback: Rear 10 feet for residential
portion
5 feet for residential
portion
Setback: Street Side Yard N/A N/A
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer Yes (40 feet)No
Height Limit 50 feet 60 feet
Daylight Plane N/A N/A
Maximum Site Coverage N/A N/A
Minimum Landscape/Open Space
Coverage
20% on ground 20% on ground and/or
upper level
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1.5
Maximum FAR Overall 2.0 4.0
Maximum Residential FAR 1.0 4.0
Maximum Commercial FAR 1.0 0.0
Parking Required 2 per unit
8 spaces
1.5 per unit
17.5 spaces
Total Number of Units 4 units 15 units
Average Unit Size 1,575 sf 1,003 sf
Density 34 du/ac 127 du/ac
FAR Overall 1.23 FAR 4.07 FAR
Parking Provided (spaces)8 spaces 18 spaces
Parking Type Covered, tandem Podium, tandem
50’-0”
14’-0”
25’-0”
36’-0”
40’-0”
60’-0”
50’-0”
40’-0”Height Limit Buffer
Modified CD-C ZoningExisting CD-C Zoning
PR
O
T
O
T
Y
P
E
R
E
S
U
L
T
S
ST
A
N
D
A
R
D
S
Modified standards indicated in red.
60’-0” Height Limit
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element8
Retail
l/wk
l/wk
l/wk
l/wktrash
Retail
Open
S
p
a
c
e
Ramp
150’-0
”
106
’
CN District
Existing CN Zoning
16 Apartments
A height limit buffer, maximum height limit, and
daylight plane apply to this site. With a 35%
minimum landscape/open space coverage, there is
not much left space left for mixed use development.
Underground parking is therefore required.
Modi ied CN Zoning
33 Apartments
More housing is possible by raising the height limit,
allowing modest changes to the setbacks, and
allowing the landscape/open space to be located
on upper levels. Parking is accommodated at grade
using mechanical lifts.
Primar
y
S
t
r
e
e
t
Primar
y
S
t
r
e
e
t
Alley
Alley
Sid
e
S
t
r
e
e
t
Ramp
Sid
e
S
t
r
e
e
t
Physical Feasibility Analysis Report 9
Existing CN Zoning Modified CN Zoning
Setback: Front 0-10’ for sidewalks 0-10’ for sidewalks
Setback: Interior Side 10 feet 5 feet
Setback: Rear 10’ for residential portion 5’ for residential portion
Setback: Street Side Yard 5 feet 5 feet
Build-to-Lines: Frontage 50%50%
Build-to-Lines: Side Street 33%33%
Height Limit Buffer Yes (35 feet)Daylight plane in-lieu of
buffer
Height 40 feet 50 feet
Daylight Plane 16 feet height, 60 degrees 16 feet height, 60 degrees
Maximum Site Coverage 50%100%
Minimum Landscape/Open Space
Coverage
35% on ground 35% on ground and/or
upper level
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1.5
Maximum FAR Overall 1.5 FAR 3.5 FAR
Maximum Residential FAR 1.5 FAR 3.5 FAR
Maximum Commercial FAR 0.4 FAR 0.4 FAR
Minimum Mixed-Use Ground Floor
Commercial FAR
0.15 FAR 0 FAR
Parking Required 34 spaces 42 spaces
Total Number of Units 16 units 33 units
Average Unit Size 735 sf 742 sf
Retail Preservation 2900 sf 0 sf
Density 44 du/ac 91 du/ac
FAR Overall 1.22 FAR 2.57 FAR
Parking Provided 35 total spaces 46 spaces
Parking Type Underground, tandem Podium, mechanical
16’-0”60
Modified CN Zoning
16’-0”60
35’-0”
20’-0”
30’-0”
35’-0”
Existing CN Zoning
35’-0”
Height
Limit
Buffer 16’-0”16’-0”60°
40’ Height Limit
Day
l
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g
h
t
P
l
a
n
e
Day
l
i
g
h
t
P
l
a
n
e
PR
O
T
O
T
Y
P
E
R
E
S
U
L
T
S
ST
A
N
D
A
R
D
S
Modified standards indicated in red.
50’-0” Height Limit
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element10
CC(2) District
Existing CC(2) Zoning
3 Townhomes
Building height, setbacks, lot coverage, parking
requirements, and FAR maximums apply to this site.
Two levels of underground parking is required to
meet minimum parking standards, which is costly.
Existing residential FAR limits and setbacks limit the
housing to 3-stories and to only 3 units.
Modified CC(2) Zoning
34 Apartments
More housing is possible by raising the height limit,
eliminating setbacks, allowing the landscape/open
space to be located on upper levels and increasing
the FAR. Retail parking is not provided onsite but in
district commercial parking structures. Residential
parking is provided onsite in mechanical lifts.
Prim
a
r
y
S
t
r
e
e
t
Prim
a
r
y
S
t
r
e
e
t
Side S
t
r
e
e
t
Side S
t
r
e
e
t
Alle
y
125’-0
”
90’
-
0
”
Alle
y
Ramp
Ret
a
i
l
Open
S
p
a
c
e
Ret
a
i
l
Open
S
p
a
c
e
Physical Feasibility Analysis Report 11
Existing CC(2) Zoning Modified CC(2) Zoning
Setback: Front 0-10’ for sidewalks 0 feet
Setback: Interior Side 10 feet 0 feet
Setback: Rear 10’ for residential portion 0 feet
Setback: Street Side Yard 5 feet 0 feet
Build-to-Lines: Frontage 50%50%
Build-to-Lines: Side Street 33%33%
Height Limit Buffer Not Applicable Not Applicable
Height 37 feet 60 feet
Daylight Plane Not Applicable Not Applicable
Maximum Site Coverage 100%100%
Minimum Landscape/Open Space
Coverage
20% on ground
(23% shown)
20% (on any level)
Parking: Studio/1BR 1 0.5
Parking: 2+ BR 2 1.0
Parking: Retail 1 per 250 sf
First 1,500sf exempt
0
offsite with district parking
Maximum FAR Overall 2.0 FAR 3.5 FAR
Maximum Residential FAR 1.5 FAR 3.5 FAR
Maximum Commercial FAR 0.4 FAR 0.4 FAR
Minimum Mixed-Use Ground Floor
Commercial FAR
0.25 FAR 0.25 FAR
Total Number of Units 3 units (tuck under parking)34 units
Average Unit Size 1,800 sf 902 sf
Retail Preservation 10,700 2,812 sf
Density 11 du/ac 132 du/ac
FAR Overall 1.43 FAR 3.81 FAR
Residential FAR 0.47 FAR 3.56 FAR
Commercial FAR 0.96 FAR 0.25 FAR
Parking Provided 38 commercial spaces 27 residential spaces
Parking Type 2 levels underground Podium, mechanical
PR
O
T
O
T
Y
P
E
R
E
S
U
L
T
S
ST
A
N
D
A
R
D
S
Modified standards indicated in red.
37’ Height Limit
Existing CC(2) Zoning Modified CC(2) Zoning
60’-0” Height Limit
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element12
Primar
y
S
t
r
e
e
t
Sid
e
S
t
r
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t
Primar
y
S
t
r
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e
t
Sid
e
S
t
r
e
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t
RM-20 District
Existing RM-20 Zoning
4 Apartments
The daylight plane, height limit, setbacks, and
maximum site coverage limit unit yield on this
site.
Modified RM-20 Zoning
7 Apartments
Adjustements to zoning allow the development
envelope to be more flexible and doubles the
amount of housing possible on the site.
Physical Feasibility Analysis Report 13
Existing RM-20 Zoning Modified RM-20 Zoning
Setback: Front 20 feet 10 feet
Setback: Interior Side 10, 6 feet 5 feet
Setback: Rear 10 feet 5 feet
Setback: Street Side Yard 16 feet 5 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 30 feet 40 feet
Daylight Plane 10 feet, 45 degrees 2 story residential edges or
16 feet, 45 degrees
Maximum Site Coverage 35%65%
Minimum Landscape/Open Space
Coverage
35% on ground 35% on ground and/or
upper level
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1.5
Maximum Density 20 du/ac No maximum
Maximum FAR Overall 1.0 FAR 2.0 FAR
Parking Required 8 spaces 10.5 spaces
Total Number of Units 4 units 7 units
Average Unit Size 2,500 sf 2,341 sf
Density 18 du/ac 32 du/ac
FAR Overall 1.0 FAR 1.21 FAR
Parking Provided (spaces)8 spaces 11 spaces
Parking Type Tuck under Tuck under
10’-0”10’-0”
30’-0” Height Limit 30’-0” Height Limit
Dayl
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h
t
p
l
a
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e
Dayl
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h
t
p
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45 degrees
45
degrees
Modified RM-20 ZoningExisting RM-20 Zoning
30’-0” Height Limit
10’-0”
Dayl
i
g
h
t
P
l
a
n
e
16’-0”
45°45°
Dayl
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h
t
P
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a
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40’-0” Height Limit
PR
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O
T
Y
P
E
R
E
S
U
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T
S
ST
A
N
D
A
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S
Modified standards indicated in red.
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element14
RM-30 District
Existing RM-30 Zoning
4 Apartments
The daylight plane and maximum site coverage
limits development to the extent that the
prototype does not reach the limits of the
building envelope.
Modified RM-30 Zoning
7 Apartments
Modification of the daylight plane and the
maximum site coverage allows for development
to fill the building envelope while still
maintaining the daylight plane.
Side S
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Side S
t
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Prim
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S
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Prim
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S
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Physical Feasibility Analysis Report 15
16’-0”45
Dayl
i
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h
t
p
l
a
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e
10’-0”45 degrees
Dayl
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g
h
t
p
l
a
n
e
Existing RM-30 Zoning Modified RM-30 Zoning
Setback: Front 20 feet 10 feet
Setback: Interior Side 10, 6 feet 5 feet
Setback: Rear 10 feet 5 feet
Setback: Street Side Yard 16 feet 5 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 35 feet 40 feet
Daylight Plane 10 feet, 45 degrees 2 story residential edges or
16 feet, 45 degrees
Maximum Site Coverage 40%65%
Minimum Landscape/Open Space
Coverage
30%30%
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1.5
Maximum Density 30 du/ac No maximum
Maximum FAR Overall 1.0 FAR 2.5 FAR
Parking Required 8 spaces 10.5 spaces
Total Number of Units 4 7
Average Unit Size 1,650 sf 1,457 sf
Density 27 du/ac 47 du/ac
FAR Overall 1.0 FAR 1.62 FAR
Parking Provided 8 spaces 11 spaces
Parking Type Tuck under, driveway Tuck under, tandem
Modified RM-30 ZoningExisting RM-30 Zoning
35’-0”
10’-0”16’-0”
45°45°
Daylight
Plane
Daylight
Plane
PR
O
T
O
T
Y
P
E
R
E
S
U
L
T
S
ST
A
N
D
A
R
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S
Modified standards indicated in red.
40’-0” Height Limit
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element16
RM-40 District
Existing RM-40 Zoning
4 Townhomes
The setbacks and daylight plane on this small
(and typical) site limit the shape of the building
reducing the amount of housing possible on
the site. The daylight plane rules prevent a
development from meeting the district height
limit. This site test assumes no parking.
Stre
e
t
F
r
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n
t
a
g
e
Stre
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F
r
o
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t
a
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e
50’
-
0
”
50’
-
0
”
100’-0
”
100’-0
”
Existing RM-40 Zoning - No Parking
8 Apartments
To better understand the maximum
development possible within this limited
building envelopment, the site test was run
again without parking requirements.
Physical Feasibility Analysis Report 17
Modified RM-40 Zoning - 10,000sf site
21 Apartments
The width of two typical lots allows the layout
of podium parking to be more efficient. Parking
was also modified to 1 space per unit minimum.
The number of units is still limited by the
modified parking required, resulting in three
stories over podium parking.
Stre
e
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F
r
o
n
t
a
g
e
Modified RM-40 Zoning
16 Apartments
Revising setbacks to be more uniform with
other zoning districts and removing the daylight
plane allows a regularly shaped building and
more capacity of housing. This allows for four
stories of housing on top of the podium if
only the building envelope was considered,
excluding limits on FAR, density, or parking.
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element18
Existing RM-40 Zoning Existing RM-40 Zoning
Setback: Front 20 feet 20 feet
Setback: Interior Side 10, 6 feet 10, 6 feet
Setback: Rear 10 feet 10 feet
Setback: Street Side Yard 16 feet 16 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 40 feet 40 feet
Daylight Plane 10 feet, 45 degrees 10 feet, 45 degrees
Maximum Site Coverage 45%45%
Minimum Landscape/Open Space
Coverage
30%30%
Parking: Studio/1BR 1 0
Parking: 2+ BR 2 0
Maximum Density 40 du/ac No maximum
Maximum FAR Overall 1.0 FAR 1.0 FAR
Parking Required 7 spaces 0 spaces
Total Number of Units 4 units 8 units
Average Unit Size 1,009 sf 644 sf
Density 34 du/ac 67 du/ac
FAR Overall 0.88 FAR 1.0 FAR
Parking Provided 7 spaces 0 spaces
Parking Type Podium N/A
50’-0” Height Limit
35’-0” Height @
intersection of
the daylight
planes
10’-0”
45 d
e
g
r
e
e
d
a
y
l
i
g
h
t
p
l
a
n
e
50’-0” Height Limit
35’-0” Height @
intersection of
the daylight
planes
10’-0”
45 d
e
g
r
e
e
d
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t
p
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Modified RM-40 ZoningExisting RM-40 Zoning
40’-0” Height Limit 40’-0” Height Limit
35’-0” Intersection
of daylight planes
35’-0” Intersection
of daylight planes
10’-0”
30’-0”30’-0”
10’-0”
45°45°
PR
O
T
O
T
Y
P
E
R
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S
U
L
T
S
ST
A
N
D
A
R
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Modified standards indicated in red.
Physical Feasibility Analysis Report 19
Modified RM-40 Zoning Modified RM-40 Zoning
Setback: Front 10 feet 10 feet
Setback: Interior Side 5 feet 5 feet
Setback: Rear 5 feet 5 feet
Setback: Street Side Yard 5 feet 5 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 50 feet 50 feet
Daylight Plane N/A N/A
Maximum Site Coverage 70%70%
Minimum Landscape/Open Space
Coverage
20%20%
Parking: Studio/1BR N/A 1
Parking: 2+ BR N/A 1
Maximum Density No maximum No maximum
Maximum FAR Overall N/A 2.5 FAR
Parking Required N/A 21 spaces
Total Number of Units 16 units 21 units
Average Unit Size 644 sf 734 sf
Density 130 du/ac 91 du/ac
FAR Overall 2.8 FAR 2.3 FAR
Parking Provided 6 spaces 21 spaces
Parking Type Podium Podium, mechanical
45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”
45’-0”45’-0”
45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”
45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”
45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”45’-0”
Modified RM-40 Zoning (10,000 sf lot)Modified RM-40 Zoning
50’-0” Height Limit50’-0” Height Limit
40’-0”
50’-0”
PR
O
T
O
T
Y
P
E
R
E
S
U
L
T
S
ST
A
N
D
A
R
D
S
Modified standards indicated in red.
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element20
ROLM District
Existing ROLM Zoning
16 Apartments
The existing height limit restricts the housing
typology to townhomes. The potential is
much higher at this site. The 40% maximum
site coverage is also a constraint on housing
potential for stacked flats.
Modified ROLM Zoning
130 Apartments
More housing is possible If the height limit and
maximum site coverage is revised to allow
for apartments. Allowing the landscape/open
space requirement to be met on upper levels
also contributes to efficient use of the site.
Pri
m
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r
y
S
t
r
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e
t
Pri
m
a
r
y
S
t
r
e
e
t
304’
293’
145
’
Physical Feasibility Analysis Report 21
Existing ROLM Zoning Modified ROLM Zoning
Setback: Front 20 feet 10 feet
Setback: Interior Side 10, 6 feet 5 feet
Setback: Rear 10 feet 5 feet
Setback: Street Side Yard 16 feet 5 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 35 feet 60 feet
Daylight Plane N/A N/A
Maximum Site Coverage 40%70%
Minimum Landscape/Open Space
Coverage
30% on ground 20% on ground and/or
upper level
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1
Maximum FAR Overall 0.6 FAR 2.5 FAR
Parking Required 32 spaces 130 spaces
Total Number of Units 16 units 130 units
Average Unit Size 1,633 sf 760 sf
Density 16 du/ac 130 du/ac
FAR Overall 0.6 FAR 2.7 FAR
Parking Provided 32 spaces 139 spaces
Parking Type Surface and tuck under Podium, Mechanical
58’-0”
60’-0” Height Limit
58’-0”58’-0”
65’-0”65’-0”
35’-0”35’-0”
Existing ROLM Zoning Modified ROLM Zoning
35’-0” Height Limit
PR
O
T
O
T
Y
P
E
R
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S
U
L
T
S
ST
A
N
D
A
R
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Modified standards indicated in red.
30’-0”
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element22
Recommendations
Potential Changes to Enable Feasibility
Already Planned/Underway
•Increase residential densities (on specific
sites in Housing Element Sites Inventory)
•Decrease parking requirements to match
standards permitted under State law
•AB2097 eliminates parking within ½
mile of Caltrain
•State Density Bonus law allows reduced
parking
Additional Changes to Achieve Financial
Feasibility and Stacked Flats/Mixed Use
•Increase FAR and density
•Increase building height
•Reduce setbacks (esp. front/street side)
•Increase maximum site coverage
•Decrease landscape/open space coverage
and allow more flexibility in open space
•Revise retail preservation applicability
Development standards work in unison. Other
changes will be necessary to complement
changes in density and parking.
Other Changes to Consider to Enable
Feasibility
•Simplify and reduce requirements for open
space
•Modify the daylight plane for small lots or
lots that have 100 foot depths or bigger
•Reduce parking requirements for lots
smaller than 10,000sf, “small lot program”
•Modify height buffer (i.e., within 150 ft. of a
residential use)
•Allow height definition to exclude parapet
height and rooftop mechanical
•Exclude mechanical rooms from FAR so
that building systems are not undersized
Physical Feasibility Analysis Report 23
Mixed-Use Zones RM Zones
Zoning
Designation CD-C CN CC(2) RM-20 RM-30 RM40 ROLM
(RM-30)
Residential
Units 4 12 3 4 4 4 16
Parking
Spaces 8 21 38 8 8 7 32
Residential
Density (du/
ac)
34 33 11 18 27 34 16
FAR 1.23 1.04 1.43 1.0 1.0 0.88 0.6
Building
Height (feet)40 30 37 30 30 30 30
Typology Town
Homes
Town
Homes
Town
Homes
Town
Homes
Town
Homes
Town
Homes
Town
Homes
Financially
Feasible?X X X X X X X
Current Zoning Standards Yield
Mixed-Use Zones RM Zones
Zoning
Designation CD-C CN CC(2) RM-20 RM-30 RM40 ROLM
(RM-30)
Residential
Units 15 35 34 7 7 16 130
Parking
Spaces 18 46 27 11 11 6 139
Residential
Density
(du/ac)127 97 132 32 47 130 130
FAR 4.07 2.19 3.81 1.21 1.62 2.8 2.7
Building
Height (feet)60 50 60 40 40 50 58
Typology Apartments Apartments Apartments Town
Homes
Town
Homes Apartments Apartments
Financially
Feasible?✓✓✓✓✓✓✓
Modified Zoning Standards Yield
City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element24
Mixed-Use Zones RM Zones
Zoning Designation CD-C CN CC(2) RM-20 RM-30 RM40 ROLM
(RM-30)
Development Intensity
FAR 2.0 4.0 1.5 3.5 2.0 3.5 1.0 2.0 1.0 2.5 1.0 3.0 0.6 3.5
Res FAR 1.0 4.0 1.5 3.5 2.0 3.5 2.25 2.25 2.5 2.25
Minimum Mixed
Use Ground Floor
Commercial FAR
N/A 0.15 0.0 0.25 0.0 N/A N/A N/A N/A
Residential Density
Max (du/ac)
No max No max No max 20
No Max
30
No Max
40
No Max
30
No Max
Residential Density
Min (du/ac)
N/A N/A N/A 11 16 21 16
Maximum Building Heights
Height Limit Buffer Yes (50') Yes (40')No No No No No
Height (feet)40 60 35 50 37 60 30 40 35 40 40 50 35
60
Daylight Plane
(* for side and rear
abutting R, lots less
than 70 feet)
N/A 16 feet
height, 60
degrees
(in lieu of
buffer)
N/A 10 16
feet, 45
degrees
10 16
feet, 45
degrees
10 feet, 45
degrees
N/A
N/A
Physical Feasibility Analysis Report 25
Setbacks
Setback: Front N/A 0-10' for
sidewalks
0-10' for
sidewalks
0
20 10 20 10 20 10 20 10
Setback: Interior
Side
N/A 10 5 10 0 10, 6 5 10, 6 5 10, 6 5 10, 6 5
Setback: Rear 10' 5 for
residential
portion
10' 5 for
residential
portion
10' for
residential
portion 0
10 5 10 5 10 5 10 5
Setback: Street Side
Yard
N/A 5 5 0 16 5 16 5 16 5 16 5
Mixed-Use Zones RM Zones
Zoning Designation CD-C CN CC(2) RM-20 RM-30 RM40 ROLM
(RM-30)
Max Site Coverage N/A 100%100%35% 65%40% 65%45% 70%40% 70%
Landscape/Open
Space Coverage
20%35%20%35%30%20%30%
Landscape/Open
Space Location
Ground floor only Ground floor and upper stories
Parking Requirements
Parking: Studio/1 BR 1 1 1 0.5 1 1 1 1
Parking: 2+ BR 2 1.5 2 1.5 2 1.0 2 1.5 2 1.5 2 1 2 1
HOUSING INCENTIVE PROGRAM STUDY:
TESTING THE FINANCIAL FEASIBILITY OF
MULTI-FAMILY HOUSING TYPOLOGIES
Prepared for:
C it y of Palo Alto
Prepared by:
Keyser Marston Associates, Inc.
June 13 , 2024
Housing Incentive Program Study Page i
Keyser Marston Associates, Inc. 2405001v2.PA / 17125.015.001 June 13, 2024
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY ............................................................................................................... 1
A. FINANCIAL EVALUATION METHODOLOGY .................................................................................................. 1
B. BASE ZONING PROTOTYPE ANALYSIS ........................................................................................................ 1
C. PROPOSED ZONING PROTYPE ANALYSIS .................................................................................................... 4
D. ADDITIONAL POLICY CONSIDERATIONS ..................................................................................................... 6
II. FINANCIAL EVALUATION METHODOLOGY .................................................................................. 8
A. ANALYSIS OF BASE ZONING PROTOTYPES .................................................................................................. 8
B. ANALYSIS OF PROPOSED ZONING PROTOTYPES ........................................................................................... 8
C. FINANCIAL EVALUATION ORGANIZATION ................................................................................................... 9
D. PRO FORMA ASSUMPTIONS ................................................................................................................. 10
III. ANALYSIS OF BASE ZONING PROTOTYPES ................................................................................ 12
A. SITE A: CD-C ZONE.......................................................................................................................... 12
B. SITE B: CN ZONE .............................................................................................................................. 13
C. SITE C: CC(2) ZONE .......................................................................................................................... 16
D. SITE D: RM-20 ZONE ........................................................................................................................ 18
E. SITE E: RM-30 ZONE ........................................................................................................................ 20
F. SITE F: RM-40 ZONE ......................................................................................................................... 21
G. CONCLUSIONS ................................................................................................................................... 23
IV. ANALYSIS OF PROPOSED ZONING PROTOTYPES ....................................................................... 25
A. SITE A: CD-C ZONE ........................................................................................................................... 25
B. SITE B: CN ZONE .............................................................................................................................. 27
C. SITE C: CC(2) ZONE .......................................................................................................................... 29
D. SITE D: RM-20 ZONE ........................................................................................................................ 32
E. SITE E: RM-30 ZONE ........................................................................................................................ 34
F. SITE F: RM-40 ZONE ......................................................................................................................... 35
G. CONCLUSIONS ................................................................................................................................... 42
V. POLICY CONSIDERATIONS ........................................................................................................ 44
A. APPLICABILITY OF ZONING MODIFICATIONS TO SMALL SITES ....................................................................... 44
B. APPLICABILITY OF ZONING MODIFICATIONS TO LARGER SITES ...................................................................... 44
C. CURRENT CITY PERMITS AND FEES ......................................................................................................... 45
D. CONCLUSIONS ................................................................................................................................... 45
Housing Incentive Program Study Page ii
Keyser Marston Associates, Inc. 2405001v2.PA / 17125.015.001 June 13, 2024
ATTACHMENTS
I. EXECUTIVE SUMMARY
The City of Palo Alto (City) is considering modifications to the Zoning Ordinance to create incentives for
multi-family and affordable housing development. The intent of the revised zoning standards is to
enable multi-family housing typologies that are both physically feasible and financially feasible.
To that end, the City engaged Keyser Marston Associates, Inc. (KMA) to evaluate the financial
characteristics associated with prototypical residential projects. The intent of this financial analysis is
to ensure that the proposed zoning modifications allow for financially feasible multi-family residential
projects. The following report discusses the financial analyses prepared by KMA.
A. Financial Evaluation Methodology
KMA utilized the following methodology to evaluate the financial feasibility of each prototype:
1. KMA prepared pro forma analyses based on the scopes of development that were provided by
Urban Field Studio.
2. The pro forma analyses were used to compare the value supported by the prototype project to
the project’s development cost plus a standard developer profit.
3. If the project’s estimated value was less than the estimated costs plus developer profit, the
project was deemed not likely to be built.
B. Base Zoning Prototype Analysis
As the first step in the process, Urban Field Studio and Lexington Planning created prototype
development scenarios for six sites that comport with the City’s current development standards. For
the purposes of this KMA analysis, “current” and “base” development standards refer to the base
zoning standards applicable citywide, but do not take into account increased density standards
available to Housing Element opportunity sites (adopted December 2023) or those available per State
of California (State) Density Bonus Law. As described in Attachment 1, KMA evaluated the financial
feasibility of each “Base Zoning Prototype.”
As can be seen in Attachment 1, each of the Base Zoning Prototypes was found not likely to be
developed under the City’s current zoning standards. The results of the KMA analyses of the Base
Zoning Prototypes are presented in the table on the following page.
SITE C SITE F
CC(2) Zone RM-40 Zone
I.Site Area (Sf)11,250 5,000
II.Development Scope
A.Unit Type Townhome Apartment Townhome Townhome Townhome Townhome
B.Unit Mix
Studio Units 0 3 0 0 0 1
One-Bedroom Units 0 1 0 0 0 0
Two-Bedroom Units 0 12 3 0 0 3
Three-Bedroom Units 4 0 0 2 4 0
Four-Bedroom Units 0 0 0 2 0 0
Total Units 4 16 3 4 4 4
B.Unit Sizes
Studio Units 0 360 0 0 0 360
Live/Work One-Bedroom Units 0 0 0 0 0 0
One-Bedroom Units 0 528 0 0 0 0
Two-Bedroom Units 0 828 1,810 0 0 1,120
Three-Bedroom Units 1,575 0 0 1,891 1,429 0
Four-Bedroom Units 0 0 0 2,791 0 0
Net Living Area 6,300 11,544 5,430 9,364 5,716 3,720
Average SF/Unit 1,575 722 1,810 2,341 1,429 930
Retail GBA 0 2,900 10,784 0 0
Gross Building Area (Sf)6,300 19,701 18,230 9,364 5,716 3,720
Floor Area Ratio (FAR)1.23 1.22 1.53 0.94 0.86 0.74
Density (Units/Acre)34 44 12 17 26 35
III.Estimated Development Cost
A.Land Value $1,614,000 $4,965,000 $3,544,000 $3,150,000 $2,087,000 $1,575,000
B.Direct Costs $2,387,000 $8,902,000 $9,571,000 $3,690,000 $2,284,000 $1,528,000
Per Sf of Net Saleable Area $379 $771 $1,763 $394 $400 $411
C.Public Permits & Fees $384,000 $1,392,000 $387,000 $412,000 $380,000 $364,000
Per Unit $96,000 $87,000 $129,000 $103,000 $95,000 $91,000
D.Indirect + Financing Costs $1,600,000 $3,515,000 $3,933,000 $2,505,000 $1,603,000 $1,146,000
As a % of Direct Costs 67%39%41%68%70%75%
Total Development Cost $5,985,000 $18,774,000 $17,435,000 $9,757,000 $6,354,000 $4,613,000
Per Square Foot of GBA $950 $953 $956 $1,042 $1,112 $1,240
IV.Projected Revenues
A.Residential Revenue $7,005,000 $781,000 $6,101,000 $9,575,000 $6,356,000 $4,164,000
Per Market Rate Unit $1,751,300 $4,300 $2,033,700 $2,393,800 $1,589,000 $1,041,000
Per Affordable Unit $0 $0 $0 $0 $0 $0
B.Net Sales Revenue / Value
Residential Component $6,620,000 $5,765,000 $9,048,000 $6,006,000 $3,935,000
Retail Component 10,283,000
Total Net Sales Revenue / Value $6,620,000 $15,151,000 $16,048,000 $9,048,000 $6,006,000 $3,935,000
V.
$794,000 $1,515,000 $1,720,000 $1,086,000 $721,000 $472,000
VI.Net Surplus/(Cost)
A.Net Sales Revenue / Value $6,620,000 $15,151,000 $16,048,000 $9,048,000 $6,006,000 $3,935,000
B.Revenue Offsets
Total Revenue Offsets $6,779,000 $20,289,000 $19,155,000 $10,843,000 $7,075,000 $5,085,000
VII.Net Surplus/(Cost)($159,000)($5,138,000)($3,107,000)($1,795,000)($1,069,000)($1,150,000)
$15,151,000
Threshold Developer Profit @ 12%
Net Residential Sales Revenue or
CD-C Zone CN Zone RM-20 Zone RM-30 Zone
5,125 15,761 10,000 6,626
SITE A SITE B SITE D SITE E
C. Proposed Zoning Protype Analysis
Subsequent to the analysis of the Base Zoning Prototypes, Urban Field Studio and Lexington Planning
created prototype development scenarios that modified current development standards (Proposed
Zoning Prototypes). The purpose of modifying current development standards was to create zoning
requirements that allow for the development of multi-family projects that are both physically and
financially feasible.
Modifications were made to a variety of development standards such as: reduced parking ratios,
increased building height, increased floor-area-ratios (FAR), reduced setbacks, modified daylight
planes, reduced lot and landscape coverage and changes to ground floor retail requirements.
Specifically, the modifications were intended to allow for additional units to be constructed on each of
the development sites (e.g., increased FAR) and/or to reduce the costs associated with developing
residential units (e.g. reduced parking requirements). These factors have a direct impact on the
financial feasibility of each development prototype.
The Proposed Zoning Prototypes evaluated in this analysis are the result of an iterative process
between KMA, Urban Field Studio, Lexington Planning and the City. A number of potential
modifications were tested for each of the sites in order to develop prototypes that were both
physically and financially feasible. In particular, for the RM-40 Zone site, three scenarios for proposed
modifications were evaluated in this analysis.
The KMA financial analyses of the Proposed Zoning Prototypes are presented in Attachment 2. As
shown, each of the Proposed Zoning Prototypes was found to be financially feasible under the
proposed zoning modifications.
The results of the KMA analyses of the Proposed Zoning Prototypes are presented in the table on the
following page.
SITE A SITE B SITE C SITE D SITE E
No Parking
Limited
Parking 10,000 SF Lot
I.Site Area (Sf)5,125 15,761 11,250 10,000 6,626 5,000 5,000 10,000
II.Development Scope
A.Unit Type Condo Apartment Apartment Townhome Townhome Apartment Apartment Apartment
B.Unit Mix
Studio Units 0 0 8 0 0 4 3 0
Live/Work One-Bedroom Units 0 4 0 0 0 0 0 0
One-Bedroom Units 10 11 6 0 0 4 3 2
Two-Bedroom Units 1 18 16 2 0 0 6 16
Three-Bedroom Units 4 0 4 5 7 0 0 3
Total Units 15 33 34 7 7 8 12 21
B.Unit Sizes
Studio Units 0 0 514 0 0 415 450 0
Live/Work One-Bedroom Units 0 1,050 0 0 0 0 0 0
One-Bedroom Units 751 528 713 0 0 678 637 625
Two-Bedroom Units 1,240 828 1,066 1,593 0 0 740 971
Three-Bedroom Units 1,500 0 1,302 1,795 1,457 0 0 1,250
Net Living Area 14,746 24,912 30,654 12,163 10,199 4,370 7,701 20,540
Average Square Feet / Unit 983 755 902 1,738 1,457 546 642 978
Gross Building Area (Sf)20,841 33,240 42,895 12,163 10,199 5,016 10,725 26,114
Floor Area Ratio (FAR)4.07 2.11 3.81 1.22 1.54 1.00 2.15 2.61
Density (Units/Acre)127 91 132 30 46 70 105 91
III.Estimated Development Cost
A.Land Value $1,614,000 $4,965,000 $3,544,000 $3,150,000 $2,087,000 $1,575,000 $1,575,000 $3,150,000
B.Direct Costs $7,724,000 $12,553,000 $15,434,000 $4,614,000 $3,763,000 $1,895,000 $3,959,000 $9,727,000
Per Square Foot $524 $504 $503 $379 $369 $434 $514 $474
C.Public Permits & Fees $1,425,000 $2,805,000 $2,958,000 $686,000 $665,000 $656,000 $1,008,000 $1,827,000
Per Unit $95,000 $85,000 $87,000 $98,000 $95,000 $82,000 $84,000 $87,000
D.Indirect + Financing Costs $3,138,000 $5,250,000 $6,007,000 $2,222,000 $1,764,000 $915,000 $1,616,000 $3,864,000
As a % of Direct Costs 41%42%39%48%47%48%41%40%
Total Development Cost $13,901,000 $25,573,000 $27,943,000 $10,672,000 $8,279,000 $5,041,000 $8,158,000 $18,568,000
Per Square Foot of GBA $667 $769 $651 $877 $812 $1,005 $761 $711
IV.Projected Revenues
A.Residential Revenue $17,097,000 $1,741,000 $1,168,000 $12,863,000 $10,220,000 $363,000 $622,000 $1,234,000
Per Market Rate Unit $1,246,800 $4,500 $4,200 $2,060,700 $1,620,200 $3,700 $4,200 $5,100
Per Affordable Unit $444,500 NA NA $499,000 $499,000 NA NA NA
B.Total Net Sales Revenue / Value $16,157,000 $28,825,000 $31,327,000 $12,156,000 $9,658,000 $5,925,000 $10,325,000 $20,650,000
V.
$1,939,000 $2,883,000 $3,133,000 $1,459,000 $1,159,000 $593,000 $1,033,000 $2,065,000
VI.Net Surplus/(Cost)
A.Net Sales Revenue / Value $16,157,000 $28,825,000 $31,327,000 $12,156,000 $9,658,000 $5,925,000 $10,325,000 $20,650,000
B.Revenue Offsets
Total Revenue Offsets $15,840,000 $28,456,000 $31,076,000 $12,131,000 $9,438,000 $5,634,000 $9,191,000 $20,633,000
VII.Net Surplus/(Cost)$317,000 $369,000 $251,000 $25,000 $220,000 $291,000 $1,134,000 $17,000
Threshold Developer Profit @ 12%
Net Residential Sales Revenue or
10% of Apt Value
SITE F
CD-C Zone CN Zone CC(2) Zone RM-20 Zone RM-30 Zone
RM-40 Zone
D. Additional Policy Considerations
The following section provides additional policy considerations for the City:
APPLICABILITY OF ZONING MODIFICATIONS TO SMALL SITES
The City is also interested in understanding the impact on financial feasibility if the reductions in
required parking ratios and/or building height and FAR are less substantial than those applied in the
Proposed Zoning Prototypes analysis. A key factor that should be considered in the decision making
process is that many of the sites evaluated in this analysis are fairly small – consisting of between 5,000
and 15,000 square feet of land area. For a development on a small site to achieve financial feasibility it
is necessary to be able to create an extremely efficient design.
Parking Standards
The proposed reduction in the parking requirements significantly enhances the potential for financially
feasible residential uses to be developed. A change to the proposed parking standard would require
more site area to be dedicated for parking spaces, which would materially reduce the site’s buildable
area. Given the limited number of units that each site can support a loss of even a few units on each
site results in a significant impact on financial feasibility.
Height and FAR Standards
The achievable building footprint on a small site is disproportionately lower than the footprint that can
be accommodated on a more typically sized development site. The proposed increases in FAR and
height are necessary to compensate for this limitation. Recognizing the small number of units that can
be accommodated per floor, even the reduction of one floor of building area has a significant impact
on financial feasibility.
APPLICABILITY OF ZONING MODIFICATIONS TO LARGER SITES
As discussed above, this analysis primarily focuses on small sites. The site sizes were intended to be
representative of typical parcel sizes within each zoning designation. However, the proposed zoning
modifications may be applied to sites of all sizes within each zoning designation. Therefore, a
developer may utilize the proposed zoning modifications on sites larger than evaluated in this analysis.
Without the physical constraints imposed by small sites, larger sites will likely be developed with more
efficiently designed projects. Therefore, it is possible that the proposed zoning modifications will have
a greater positive financial impact on larger sites.
CURRENT CITY PERMITS AND FEES
The pro forma analyses included in this report take into account the City’s current permits and impact
fees. Specifically, the development costs for each prototype include the following impact fees: parks
fee, community center fee, libraries fee, public safety facilities fee, general government facilities fee,
school district fee, and the in-lieu art fee. As such, the financial analyses demonstrate that Proposed
Zoning Prototypes are financially feasible with the City’s current impact fee schedule.
CONCLUSIONS
Based on the financial analyses that KMA has prepared over the course of this engagement, it is our
opinion that the proposed modifications to the zoning standards are necessary to create sufficient
incentive to attract residential development on the prototypical sites evaluated in this analysis. This is
particularly true of the parking requirements and building height/FAR, all of which tend to have an
outsized impact on financial feasibility.
To download the complete Keyser Marston Associates’ report, “Housing Incentive Program
Study: Testing The Financial Feasibility Of Multi-Family Housing Typologies,” please use the
link below:
https://www.cityofpaloalto.org/files/assets/public/v/2/planning-amp-development-
services/long-range-planning/kma-housing-incentive-program-report_2405001v3.pdf
Item No. 9. Page 1 of 4
Comparison Between City Incentive Programs and State Housing Laws
State Density Bonus Law (Gov. Code Section 65915): This law gives developers the right to build
additional dwelling units and obtain flexibility in local development requirements, in exchange
for building on-site affordable or senior housing. To support the development of affordable and
senior housing, projects can receive “waivers” and “concessions” to modify applicable
regulations. This could include standards such as height, setbacks, parking, and ground-floor
retail requirements. The handout in Attachment G includes a more thorough description of
State Density Bonus Law and how it applies in Palo Alto.
SB 35 Streamlining for Affordable Housing (Gov. Code Section 65913.4): Effective since 2018,
this law allows housing development projects that meet certain physical and affordability
criteria to undergo expedited project review and ministerial approval. Palo Alto is subject to SB
35 based on the City’s limited progress toward meeting the City‘s low-income housing targets in
its RHNA. To be eligible for SB 35 streamlining in Palo Alto, a project must provide at least 50%
of their residential units at a rate affordable to low-income households. SB 35 projects are
frequently combined with State Density Bonus Law to achieve density bonuses and
waivers/concessions.
Item No. 9. Page 2 of 4
Table F-1: Comparison Between Proposed HIP and State Density Bonus Law
Proposed HIP State Density Bonus Law
Benefits
Drawbacks
Constants
Item No. 9. Page 3 of 4
AHIP
Table 2: Existing vs. Planned AHIP Regulations Compared to State Law
Standard Existing Regulations Draft Amendments State Density Bonus Law SB 35
•Sites zoned CD, CN, CS, and
CC, but excluding shopping
centers
•Sites within ½-mile of a major
transit stop or ¼-mile of a
high-quality transit corridor
•Add all Housing Element
opportunity sites
•Add all sites eligible for the
HIP
Item No. 9. Page 4 of 4
Standard Existing Regulations Draft Amendments State Density Bonus Law SB 35
Maximum
Floor Area
Ratio
Residential: 2.0
Non-Residential: 0.4
Total: 2.4
Allow up to 2.4 Residential
FAR (without requiring
commercial uses, except in -
GF and -R combining
districts), except 2.0 FAR for
R-1 Zoned Faith Based Sites.
100% affordable projects
(at least 80% at 80% of AMI
and up to 20% at 120% of
AMI): no density limit for
projects that only regulate
FAR and not residential
density
Per local requirements
Maximum
Building Height
50 feet Allow up to 60 feet for
projects at or below 60% of
Area Median Income, except
50 feet for R-1 Zoned Faith
Based Sites.
100% affordable projects
(at least 80% at 80% of AMI
and up to 20% at 120% of
AMI): up to 3 additional
stories or 33 feet (above
base height limit)
Per local requirements
Minimum
Parking Ratio
0.75 spaces/unit 100% affordable within ½-
mile of transit: None
Otherwise:
1 sp. per studio, 1-bed
1.5 sp. per 2-, 3-bed
2.5 sp. per 4+bed
None if located within
½ mile of transit;
otherwise maximum 1
space/unit
Other
Development
Standards
Max. Lot Coverage: 100%
Min. Usable Open Space: 25-50
sq. ft./unit
None required near transit
(consistent with AB 2097
definitions)
0.5 spaces/unit elsewhere
100% affordable projects
within ½-mile of transit: five
concessions/incentives
Per local requirements
Modifications to HIP Density, FAR, Building Height, and Daylight Planes
Table G-1 summarizes the proposed density, FAR, and height changes to the HIP. In
the commercial districts, it distinguishes between sites that are designated or not
designated as Housing Element opportunity sites, where existing standards diverge.
The draft ordinance also includes modifications to setback and daylight plane
requirements, which generally affect the RM districts and adjacencies to lower density
residential districts, respectively. Collectively, these standards support livable spaces
and respect adjacent uses, but may also limit development to townhomes or prevent
sufficient unit yields to support financially feasible projects.
Table G-1: Summary of Existing vs. Proposed HIP Maximum Building Height and
Residential FAR/Density Standards
Housing Incentive ProgramZoning
District Base Standards Existing Proposed Standards
CD-C
2.0 FAR (HE Opp Site)
1.0 FAR (Non-Opp Site)
3.0 FAR w/ TDR
50-foot height
3.0 FAR
50-foot
height
No changes proposed yet due to
Downtown Housing Area Plan.
That process may result in revised
base zoning and HIP standards.
CC(2)
1.5 FAR (HE Opp Site)
0.6 FAR (Non-Opp Site)
37-foot height
2.0 FAR
50-foot
height
3.5 FAR (HE Opp Site)*
2.6 FAR (Non-Opp Site)*
60-foot height
CS (El
Camino)
1.25 FAR (HE Opp Site)
0.6 FAR (Non-Opp Site)
50-foot height
1.5 FAR
50-foot
height
3.5 FAR (HE Opp Site)*
2.85 FAR (Non-Opp Site)*
60-foot height
CS (San
Antonio)
1.25 FAR/30-40 du/ac (HE Opp
Site)
0.6 FAR/30 du/ac (Non-Opp Site)
50-foot height
2.0 FAR
50-foot
height
No changes proposed yet due to
San Antonio Road Area Plan. That
process may result in revised base
zoning and HIP standards.
CN (El
Camino)
1.25 FAR (HE Opp Site)
0.5 FAR (Non-Opp Site)
40-foot height
1.5 FAR
50-foot
height
3.25 FAR (HE Opp Site)*
2.5 FAR (Non-Opp Site)*
50-foot height
GM/ROLM
Focus Area
2.5 FAR
60-foot height N/A
3.5 FAR*
No change in height
RM-40
40-50 du/ac (HE Opp Site)
40 du/ac (Non-Opp Site)
1.0 FAR (All Sites)
40-foot height N/A
60 du/ac*
3.0 FAR*
50-foot height
RM-30
30-50 du/ac (HE Opp Site)
30 du/ac (Non-Opp Site)
0.6 FAR (All Sites)
35-foot height N/A
60 du/ac*
2.5 FAR*
40-foot height
Housing Incentive ProgramZoning
District Base Standards Existing Proposed Standards
RM-20
20-50 du/ac (HE Opp Site)
20 du/ac (Non-Opp Site)
0.5 FAR (All Sites)
30-foot height N/A
60 du/ac* (HE Opp Site)
40 du/ac (Non-Opp Sites)
2.0 FAR*
40-foot height
Notes:
*Except no residential density (du/ac) limit and additional 0.5 FAR bonus if at
least 10% of units are 3+ bedroom units, to provide an incentive for family-
friendly units.
HE Opp Site = Housing Element Opportunity Sites
Modifications to HIP Daylight Planes
The HIP ensures height transitions in areas where higher density zones abut lower
density zones or lower height structures, by continuing to enforce daylight plane and
height transition standards. However, to accommodate taller heights, the ordinance
proposes adjustments to the daylight plane to allow daylight planes to start higher.
As shown in Figure G-1, the existing daylight plane makes is challenging to fit two full-
height stories within the daylight plane area (left diagram). Modifying the initial daylight
plane from 10 feet to 16 feet allows for development of two stories at the front of the site
(right diagram). Figure G-1 illustrates the impact of these changes in the RM-30 zone.
Figure G-1: Comparison of Existing and Modified Daylight Plane Requirements
(RM-30 Zone Example)
9/9/2024
State Density Bonus Law (SDBL)
State Density Bonus Law (SDBL) gives developers the right to build
additional dwelling units and obtain flexibility in local development
requirements, in exchange for building on-site affordable or senior
housing. To support the development of affordable and senior housing,
projects can receive “waivers” and “concessions” to modify applicable
regulations. This includes standards such as height, setbacks, parking
and ground-floor retail requirements.
WAIVERS:
Projects can request waivers, which
are generally used to modify physical
standards affecting the building envelope.
CONCESSIONS:
Projects are eligible for between one to
five concessions, which are generally used
to modify land use or design requirements
that add to the cost of development.
How Many?
Unlimited 1 to 5, depending on level of affordability
Which Standards?
Development standards that would
physically preclude the construction of the
development at the density permitted by
SDBL.
Other regulations, where modifications
would result in identifiable and actual
cost reductions to provide for affordable
housing costs
Common Examples
• Height limits
• Daylight planes
• Setbacks
• Ground-floor retail requirements
• Undergrounding utilities
• Public or private open space
requirements
FURTHER READING:
• Government Code Section 65915
MORE REQUIREMENTS AND EXAMPLES >
Palo Alto Municipal Code Chapter 18.15
As required by State Law, the City’s zoning ordinance includes a code
section detailing how State Density Bonus Law will be implemented in Palo
Alto. Where the local ordinance is in conflict with State law, State law takes
precedence.
The SDBL offers developers the ability to modify
certain development standards by requesting either
waivers or concessions from the local jurisdiction.
The City cannot require submission of reports of
studies that are not otherwise required by State
law. The burden is on the City to demonstrate that a
requested concession or waiver is inconsistent with
State law.
SDBL vs. City Inclusionary Ordinance
In order for a for-sale project to satisfy both SDBL and the City’s
inclusionary housing requirements, units would need to remain affordable
for at least 99 years.
Rental projects pay a fee in-lieu of the on-site inclusionary housing
requirement. However, under SDBL, a rental project must place units on-
site and therefore, generally, will be not be subject to the fee
PAMC Ch. 16.65: Affordable
Housing Requirements
State Density Bonus
Law
For-Sale
Projects
15% on-site inclusionary
requirement (moderate income
level)
99-year term
Very-low, low, and
moderate income
options 55-year term
Rental
Projects Fee payment in-lieu 55-year term
Pro Tip:
A project sponsor is not required to take advantage of a density bonus. If a
project qualifies for State Density Bonus Law because of the City’s inclusionary
housing requirement, it can still take advantage of the flexible development
standards by requesting waivers and concessions.
9/9/2024
BASIC DENSITY BONUS ACHIEVABLE
The density bonus and concessions achievable scale in
proportion to the level of affordability and percentage of
affordable units provided. The more affordable units and
more deeply affordable those units are, the more a project
can exceed local density standards.
Various scenarios of affordability qualify, including the
following minimum thresholds.
Density Bonus
(% increase)
20%35%50% 80%+
Number of
Concessions 1 2 3 4 5
% Very Low-
Income 5%11%15%16%100%
% Low-Income 10%20%24%N/A 100%
% For-Sale
Moderate Income 10%40%44%45%N/A
+20%
50% Base
+35%
50% Base
+50%
50% Base
70%
85%
100%
Affordable
Housing
+
Additional
Affordable
Housing
=Total Income
Restriction
Moderate
Income
44%+
Min. 5% Very
Low or Moderate
Moderate Income
5%=
Maximum
50% Income
Restriction
49%
Low-
Income
24%+
Very Low Income
9%=33%
Very Low-
Income
15%+
Moderate Income
15%=30%
BASIC DENSITY BONUS BASED ON AFFORDABILITY
ADDITIONAL DENSITY BONUS
Maximum 100% Density Bonus
Additional
Density
Bonus
ADDITIONAL DENSITY BONUS
Recent changes in SDBL allow an additional density bonus.
• Projects that achieve the maximum 50% “basic” density
bonus are eligible for additional density bonus, up to a
100% total bonus.
• Projects must provide at least 5% additional units
restricted to very-low or moderate income households.
• The resulting development may not income restrict more
than 50 percent of the total units.
SDBL Eligible Project
Types
Minimum Affordability
Percentage
(Area Median Income)
Very-Low Income 5% at <50% AMI
Low-Income 10% at <80% AMI
Senior Housing None
Moderate Income
(For Sale only)10% at <120% AMI
100% Affordable Up to 20% at <120% AMI; at
least 80% at <80% AMI
Special Populations 10% at <50% AMI
Student Housing
20% low-income (30% of
65% AMI for single room
occupancy room)
Childcare Facility
+ Any of the Above See eligibility above
Land Donation 10% at <50% AMI
9/9/2024
DENSITY BONUS FOR SPECIAL POPULATIONS
• Projects housing seniors, foster youth,
veterans, or homeless persons, are
entitled to a density bonus equal to 20% of
the target population units.
• Affordable student housing projects are
entitled to a density bonus equal to 35% of
the student housing units.
• Projects that include on-site childcare
facilities may be entitled to an additional
density bonus equal to the square footage
of the childcare facility, as well as a
concession or incentive that contributes to
the economic feasibility of the facility.
CALCULATING DENSITY (WITHOUT DU/ACRE DENSITY STANDARDS)
Senior Housing
Student Housing
Veterans
Foster Youth
Homeless
Childcare
Facilities
20%
20%
35%
20%
20%
Replacement Unit Requirements
• Projects proposed with SDBL must replace any existing
units that are rent-restricted or occupied by lower
income households at the same income levels.
• If household income is unknown, units are presumed to
be occupied by lower income households in proportion
to the percentage of lower income renters citywide.
• For vacant or demolished units, look at affordability/
occupancy in the past 5 years.
• Replacement means equivalent size (at least the same
number of bedrooms).
• Replacement units count toward density bonus
qualification.
• SB 330 (Gov Code. Section 66300.6) includes
replacement/relocation provisions for protected units
that may also apply to a project.
Density Bonus =
+17 more units Base development
capacity = 48 units
1.5 FAR
(50% Lot Coverage)
Lot Size 200 feet x 200 feet = 40,000 square feet
Base Floor Area 40,000 square feet x 1.5 FAR = 60,000 square feet
Average Unit 40 feet x 25 feet = 1000 sq. ft per unit
Common Space 25% x 1000 sq. ft. = 250 sq. ft. per unit
Average Area per Unit Average Unit + Common Space = 1250 sq. ft. feet per unit
Base Development = Base Floor Area = 60,000 square feet = 48 units
Capacity Average Area per unit 1250 square feet per unit
Density Bonus = Base Development Capacity x 35%
48 units x 35% = 16.8 rounded up to 17 units
• For sites/zoning districts where maximum dwelling units per acre is not regulated, project
sponsors must calculate “base” density by determining the realistic development capacity based
on the combination of FAR, site coverage, building height, and other physical standards.
• The density bonus is then granted as additional floor area/FAR in proportion to the number of
bonus units. Therefore, FAR cannot be granted as a waiver.
9/9/2024
STATE DENSITY BONUS LAW (SDBL) PROJECT EXAMPLES
Small Lot 15% Very Low-Income SDBL Rental Project
Example: 10,000 sq. ft. site, FAR = 1.5:
Typical Project
+ in-lieu fee payment
(15,000 GFA @1,500 sf/unit)
SDBL Project (50% Density bonus)
Includes 2 on-site Very-Low Income units
(50% bonus x 15,000 GFA = 22,500 sf
@1,500 sf/unit)
In 2024, a two-person household with a maximum income of $73,750 is eligible for a
Very-Low Income unit. Their maximum rent for an apartment unit, or monthly costs for
a for-sale unit, would be approximately $1,850.
10units
15units
Medium Lot 20% Low-Income SDBL Rental Project
Example: 1 acre site, Density = 30 du/ac
SDBL Project (35% Density bonus)
Includes 6 on-site Low Income units
(61,500 sf @ 1,500 sf/unit)
Typical Project
+ in-lieu fee payment
(45,000 GFA @1,500 sf/unit)
In 2024, a four-person household with a maximum income of $146,100 is
eligible for a Low Income unit. Their maximum rent for an apartment unit, or
monthly costs for a for-sale unit, would be approximately $3,650.
30units
41units
State Density Bonus law sets a maximum parking standard
that the City can impose on projects depending on unit sizes
and distance to public transit.
Project Types Maximum Ratio
Any
1 space for each studio/1-bed
1.5 spaces for each 2-bed/3-bed
2.5 spaces for each 4+bed
20% low-income or 11% very
low-income; and within ½ mile
of a major transit stop
0.5 spaces per bedroom
100% affordable housing,
supportive housing, and senior
housing projects within ½ mile
of a major transit stop
No parking required
Major Transit Stops
• Caltrain stations
• Intersecting bus lines with headways < 15 mins
(SamTrans ECR, VTA line 22, and Marguerite
line P, X, and Y)
• Bus rapid transit stop (none in Palo Alto)
100% affordable housing projects within 1/2 mile of
a major transit stop are eligible for
• 5 concessions
• 3 extra stories/additional 33 feet in height
• Unlimited density bonus
• No addtional waivers (unless the City agrees
to them)
1/2 mile
1/2 mile
DENSITY BONUS AROUND MAJOR TRANSIT STOPS (AS OF MAY 2024)PARKING REQUIREMENTS
Retail Preservation Ordinance Matrix of Changes
Table I-1 provides examples of how the retail preservation ordinance (RPO) applies to different locations, project types,
and affordability levels. The table also identifies changes between the existing and proposed regulations. The key
changes are adding exceptions from the RPO, as identified in Housing Element Program 3.4B and State law. While the
ordinance always applies to GF and R combining districts in Downtown and California Avenue, and never applies to 100%
affordable housing, other locations have exceptions whether driven by State law or existing or proposed City policy.
Table I-1: Matrix of Retail Preservation Ordinance Exceptions
Subject to RPO?
Location/Type
Existing
Regulations
Proposed
Regulations
(changes bolded)Exceptions, by Project Type
GF Downtown Overlay Yes Yes None
R California Avenue Overlay Yes Yes None
El Camino Real Retail Nodes Yes
Yes (see change
to exceptions)
Housing Element Opportunity
Sites Exempt
El Camino Real (Outside of Retail Nodes) Yes
Yes (see
change to
exceptions)
Reduced Replacement
Standard (1,500 sq. ft.)
100% BMR Housing (120% AMI) No No None
100% BMR Housing (80% AMI) No No None
Housing Element Opportunity Sites (HIP Projects) Yes
Yes (see
change to
exceptions)
Reduced Replacement
Standard (1,500 sq. ft.)
Housing Element Opportunity Sites (Not HIP
Projects) Yes None
High-Density Mixed-Use Projects Yes Yes
Reduced Replacement
Standard (1,500 sq. ft.)
From:Palo Alto Forward
To:Council, City
Cc:PAHousingElement
Subject:HIP/AHIP - Make it a Force for Housing!
Date:Sunday, March 2, 2025 6:11:39 PM
Attachments:HIP & AHIP Better Zoning (03.02.25).pdf
CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links.
Honorable Mayor Lauing and City Council,
We support you in making HIP/AHIP strong and successful (Agenda Item #9 on March 3rd).
Please see the attached petition with over 140 signatures in support of better zoning for
more housing!
You have the opportunity to make HIP/AHIP robust to more equitably distribute housing in
our city, lessen climate emissions, increase customers within walking distance to local
businesses, and provide more students at schools with declining enrollment.
Ensure HIP/AHIP is strong and incentivises financially feasible projects - and Palo Alto
Forward members will be right behind you supporting the housing we so desperately
need.
Thank you, as always, for everything you do for this city.
--
Amie Ashton
Executive Director
Palo Alto Forward
650-793-1585
1
Dave Ashton Rev. Amy Zucker Morgenstern
Amie Ashton Owen Byrd
Michael Szeto Christopher Baum
Michael Regula Courtney Chang
Liz Gardner Claire Bailey
Betty Howell Gina Dalma
Janet Fenwick Joanne Ha
Steve Pierce Tin Nguyen
Rika Yamamoto anita Lusebrink
Bryan Baker Jennifer DiBrienza
Jason Holleb Joyce Beattie
Rachel Miller Ryan Van Soelen
Yuri Chang Michael Quinn
Hayden Kantor Justin Yamamoto
Avroh Shah Patty W Irish
Joseph Luk Selin Jessa
Jackie Wheeler Lori Linberg
Brody Huval Johnson Solomon
Barak Berkowitz Caleb Jones
Zachary Anglemyer Chris Colohan
Nanda Garber David Sloan
Ron Hall Maria Rimmel
Robert Neff Edward Hillard
Mason Hayes Sandy Songy
Mac Malone Baq Haidri
Benjamin Moran Tom Harris
Ken Hayes Cara Silver
Lois Fowkes Tim Clark
Annette Isaacson Samara Meir-Levi
Terry Murphey Dennis Smith
Ginny Madsen Francis Viggiano
Sally Ahnger Kenneth Novak
Momo Yanagihara Cindy Carroll
Patricia Kinney Judith Wasserman
2
Adam Schwartz Rob Nielsen
Alison Cingolani Steven Lee
Hitoshi Yamamoto Paul Otto
Joslyn Leve Rebecca Eisenberg
Kenneth Ligda Nicholas Zamboldi
Zachary Anglemyer Joseph Chuang
MohammadAbu Talha Meredith Slaughter
Linda Henigin Joby Bernstein
Leslie Fong Divya Dhar
Eileen Menteer Jacob Schwartz
Kelsey Rogowski Kristi Iverson
Sheila Fehring Stephen Levy
Barb Voss Alice Schaffer Smith
Rodney Leggett Bonnie Packer
bill fitch Elaine Uang
David Golden Jean Pressey
Kate Conley Darel Chapman
Auros Harman Tim Persyn
Katherine Dumont Lizzie DeKraai
Maggie Trinh Phyllis Brown
Ellen Smith Gail Price
Heather Williams Margit David
Karen Morrison Elizabeth Weal
Alex Strange Natalia Koulinka
John Havlik Susan Chamberlain
Courtney Hodrick Joy Sleizer
Hershel Macaulay Jeffrey Salzman
Shosh Vasserman Mary Nemerov
Marcia Pugsley Sarah Bell
Sheryl Klein Mimi Wolf
Wilma Vaughn Alexia Olaizola
Sunita Sastry Mary Beth Train
Matthew Pauly Hillary Thagard
Sophia Abramson Alex Konings
Rachel Golden Linnea Wickstrom
3
From:Palo Alto Forward
To:Council, City
Cc:PAHousingElement
Subject:Agenda Item #9 - HIP/AHIP Changes
Date:Sunday, March 2, 2025 9:00:40 AM
Attachments:HIP Support Ltr (03.02.25).pdf
CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links.
Honorable Mayor Lauing and City Council,
Please see our attached letter in support of HIP/AHIP zoning changes. To make the
program even more effective, we urge you to incorporate the following into the
program:
Expand HIP/AHIP citywide, not just to Housing Element inventory sites. More
broadly upzoning, something originally proposed by staff, would facilitate
additional units.
Use higher FAR limits and heights for all commercial zones (i.e. at least 3.5
FAR and 60 feet for CN, CD, and all CS zones) or match the innovatve El
Camino Real Focus Area development standards for these areas - we know this
Council-driven formula works for housing.
HIP must be better than State Density Bonus Law on parking or it isn’t an
incentive and we won’t get the projects we envision. A parking minimum of 0.5
space per unit is an incentive, or eliminate parking mandates for housing as
Mountain View has done.
Exempt parking from FAR. We are “cannibalizing” housing units for parking
spaces when FAR and height are already so limited under HIP.
Meet with home builders between first and second reading and get their
feedback. We know direct engagement works.
Consistent with Program 3.4 of the Housing Element, require an annual report
on HIP proposals and use data to inform modifications if we are not on track.
We look forward to supporting future applications and projects across our city.
Thank you!
--
Amie Ashton
Executive Director
Palo Alto Forward
650-793-1585
March 2, 2025
SUBJECT: Agenda Item #9 - Zoning Code Amendments for Housing
Honorable Mayor Ed Lauing and City Council,
We appreciate Council’s consideration of changes to the Housing Incentive Program (HIP) and
Affordable Housing Incentive Program (AHIP). These changes are timely given that we are over
1,000 units behind where we should be in terms of housing approvals.
Per our Housing Element, HIP/AHIP will produce 550 housing units across our city. To do this,
it must be robust enough to be an “incentive” to facilitate financially feasible projects in
an environment of rising costs. Thus, w e are focusing comments on two aspects of
HIP/AHIP: height/Floor Area Ratio (FAR) and parking requirements. Current requirements have
an outsized impact on financial feasibility, and thus stymie project applications.
The following items could be incorporated into HIP/AHIP to make it more successful:
● Expand HIP/AHIP citywide, not just to Housing Element inventory sites. More broadly
upzoning, something originally proposed by staff, would facilitate additional units.
● Use higher FAR limits and heights for all commercial zones (i.e. at least 3.5 FAR and 60
feet for CN, CD, and all CS zones) or match the El Camino Real Focus Area
development standards for these areas. 1
● HIP must be better than State Density Bonus Law on parking or it isn’t an incentive and
we won’t get the projects we envision. A parking minimum of 0.5 space per unit is an
incentive, or eliminate parking mandates for housing as Mountain View has done.
● Exempt parking from FAR. We are “cannibalizing” housing units for parking spaces when
FAR and height are already so limited under HIP.
● Meet with home builders between first and second reading and get their feedback. We
know direct engagement works.
● Consistent with Program 3.4 of the Housing Element, require an annual report on HIP
proposals and use data to inform modifications if we are not on track.
1 The El Camino Real Focus Area allows 4.0 FAR, an 85-foot height limit, with one parking space per unit.
We know this Council-driven formula works for housing production . Changing FAR and height limits is the
easiest way to make housing economically feasible so land, infrastructure, and development costs can be
spread across units to drive down the cost per unit.
1
We hope that HIP/AHIP will be a great success in bringing units to locations across the city. We
look forward to supporting housing projects that are submitted under this program.
Thank you for your service to our community.
Amie Ashton
Executive Director
And on behalf of the Board and Membership of Palo Alto Forward
2
From:Lizzie DeKraai
To:Council, City
Subject:Please support robust zoning for housing
Date:Tuesday, February 25, 2025 2:26:19 PM
CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links.
Dear Honorable Mayor Lauing and City Council,
My name is Lizzie DeKraai and I am an English teacher at Paly. This is my 9th year in Palo Alto and my 8th
year teaching at Paly.
I am disappointed at the slow rate we are zoning for, approving, and building new housing in our city. I moved
to Palo Alto nine years ago after grad school because my now-husband got an internship in Menlo Park. We
knew nothing of the Bay Area, but found an apartment we could barely afford in Palo Alto (2750$ for a 1
bedroom) that allowed pets. This was not an easy find! We lived paycheck to paycheck, maxing out credit cards
in order to live, for years. In 2021, the landlord passed away, and the new ones raised the rent so much we had
to move. Finding a comparable place to live took months and we now pay 3600 a month for a two bedroom built
in 1941. It is falling apart, and is more than half of my monthly paycheck, but I hope to be able to live here for
a very long time. Last year, the owners of our building - who live in Hong Kong - decided to put the whole lot
on the market, so we were subject to tours and constant stress that it would be sold, forcing us to move.
Thankfully they took it off the market but the threat that we will lose our home looms over us every single day. I
just checked Zillow and there are literally no rentals in Palo Alto right now for a 2 bedroom apartment or home
under $4000 that allows dogs.
It is a precarious market for renters. There are not enough places to live! There just aren't. I want to live here, to
be able to walk to work, to be close to my students' musical performances, football games, and plays. I am one
of three English teachers at Paly who live in the city. I will not qualify for the teacher housing, although I am
happy it's being built. It's still not enough. You must not give in to pressure from people afraid of diversity and
inclusion. What better way to stand up to Trump and attacks on people of color and the poor than to make our
city a place where more can live and thrive? Instead of symbolic gestures, commit to material change. Please
expand incentives in the Housing Incentive Program for affordable and market-rate projects. Be ambitious with
the zoning standards so more people can live here. Lessen the parking requirements and go much taller on
heights especially in areas that already have tall buildings. I want more students in my school, younger neighbors
who I can relate to, colleagues who I can socialize with on weekends, and bustling neighborhood businesses and
restaurants. Please be brave and make decisions so that Palo Alto becomes a city where more and different kinds
of people can live and thrive.
Thank you,
Lizzie DeKraai
From:Jean Pressey
To:Council, City
Subject:Housing Zoning
Date:Monday, February 24, 2025 8:31:10 PM
CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links.
Dear Mayor and Councilmentbers,
We desperately need more affordable housing in Palo Alto. I bought my first house here for
less than $100,000, obviously many years ago.
But housing costs have gone up at a faster rate than most salaries. It diminishes our
community to have only rich people able to afford
homes. Please meet the housing element requirements.
Sincerely,
Jean Pressey
City of Palo Alto
Housing Incentive Program,
Affordable Housing Incentive Program,
Retail Preservation Ordinance
Public Hearing
City Council
March 3, 2025
Meeting Purpose
1.Receive presentation summarizing a draft
ordinance amending:
a.Housing Incentive Program
b.Affordable Housing Incentive Program
c.Retail Preservation Ordinance
2.Consider amendments to Title 18 to
implement Programs 3.3A, B, & D, 3.4A-D,
and 6.2A of the Housing Element
2
Background - Available Density Bonus Incentives
3
Housing Incentive
Program (HIP)
Modified development
standards for market
rate projects in
commercial districts in
exchange for
processing through
Architectural Review
State Density Bonus
Law (SDBL)
Modified development
standards in exchange
for a percentage of
on-site affordable or
senior housing
Affordable Housing
Incentive Program (AHIP)
Modified development
standards for 100% middle-
or low-income projects in
commercial districts near
transit in exchange for
processing through
Architectural Review
Background: Housing Element Program 3.4A-D
Housing Incentive Program (HIP):
1.Streamline process: one ARB meeting for projects that comply with
objective standards.
2.Expand applicability: include RM zone and ROLM/GM Focus Area.
3.Modify zoning standards: Including building height, floor area ratio
(FAR), and parking to enable greater housing production.
Retail Preservation Ordinance:
4.Waive preservation requirements: For opportunity sites and reduce
replacement requirement, except in specific locations.
4
Based on
site tests
Background: Housing Element Program 3.3A, B, &D
Affordable Housing Incentive Program (AHIP):
1.Modify zoning standards:
○Maximum 2.4 residential FAR
○Maximum 60-foot building height for projects
< 60% of AMI
○Reduced parking ratios
2.Expand applicability to Housing Opportunity
Sites
3.Streamline project review
5
Wilton Court (AHIP Project): 59 units for low
income households
AHIP: Draft Ordinance Amendments
6
Specified in Housing Element Program 3.3 :
●Increase FAR and building height, and reduce parking ratios.
●Streamline review process (for projects that meet objective standards).
●Expand eligibility to all Housing Element opportunity sites.
Additional amendments in draft Ordinance, recommended by staff and/or PTC:
●Expand eligibility to include all locations eligible for the HIP.
●Provide consistent definitions of 100% affordable housing that include
lower income households.
7
AHIP: 2018 Original
Boundaries CD Downtown
(w/in ½ mile of
Caltrain)
CN and CS (w/in ¼
mile of El Camino)
CC (w/in ½ mile
of Caltrain)
8
Housing Element
Opportunity Sites
AHIP: 2025 Proposed
Boundaries
HIP-Eligible
Sites (e.g., RM,
ROLM/GM
Focus Area)
Retail Preservation: Draft Ordinance Amendments
Specified in Housing Element Program 3.4 :
●Retain requirements in the GF (Downtown) and R (Cal Avenue) combining
districts, and defined nodes on El Camino Real.
●Waive retail preservation requirements on Housing Element sites.
●Reduce retail replacement floor area requirement in other locations.
Additional amendments in draft Ordinance, recommended by staff and/or PTC:
●Create parking and height incentives for ground-floor retail.
●Simplify code language and 100% affordable housing definition.
9
Retail Preservation: Existing vs. Proposed
10
Location/Type
Subject to Retail Preservation
Ordinance?
Existing Proposed
GF Downtown & R Cal. Ave. Overlay ✓✓
El Camino Real Retail Nodes ✓✓
El Camino Real (Outside of Retail Nodes) ✓✗
Housing Element Opportunity Sites (Not HIP Projects) ✓✗
Housing Element Opportunity Sites (HIP Projects) ✓✓
High-Density Mixed-Use Projects ✓ (reduced)✓ (reduced)
100% BMR Housing ✗✗
Program 3.4
expands
exemptions
Required El Camino Real Retail Nodes
11
HIP: Draft Ordinance Amendments
12
Specified in Housing Element Program 3.4
●Update development standards:
○Increase FAR and building height maximums
○Reduce parking ratios to match State Density Bonus Law
○Revise daylight plane and reduce front/street side setbacks
●Expand eligibility to include RM districts and GM/ROLM Focus Area
●Streamline process for projects that meet objective design standards
Additional amendments in draft Ordinance, recommended by staff and PTC:
●Expand transportation demand management measures for projects with reduced parking
●Remove separate development standards for 100% affordable projects (and relocate to AHIP)
●Allow unlimited density/bonus FAR for “family-friendly” (3+ bedroom units) (Program 6.2A)
13
CD(C) Downtown
CC(2) California Ave.
CN El Camino Real
(neighborhood retail/
pedestrian access)
CS El Camino Real
(service commercial/
auto-oriented)
HIP: 2018 Original
Boundaries
14
CS San Antonio
(service commercial/
auto-oriented)NVCAP (all
multifamily zones)
HIP: 2020-2024
Modified Boundaries
15
RM (Multifamily
zones)
GM/ROLM Focus
Area
HIP: 2025 Proposed
Boundaries
Existing Regulations: Housing Element Created Two Tiers
16
Base Zoning
NOT a Housing
Element Opportunity
Site
Housing Element
Opportunity Site
Base Zoning
Lower
densities
Higher
densities
Draft HIP Regulations
17
Base Zoning Housing Incentive
Program
NOT a Housing Element Opportunity Site Housing Element Opportunity Site
HIP
Base Zoning Housing Incentive
Program
HIP
In the commercial mixed-use districts, HIP provides an incremental increase in FAR and height above
base zoning; other standards are the same for opportunity sites and non-opportunity sites
Commercial Districts: Existing Vs. Proposed HIP Standards
18
Existing HIP Proposed HIP Existing HIP Proposed HIP
Maximum FAR (Non-Opportunity
Site/Opportunity Site)Maximum Height (ft.)
CC(2)2.0 2.6/3.5 37 60
CS (El Camino)1.5 2.85/3.5 50 60
CS (San Antonio)2.0 2.0 50 50
CN (El Camino)1.5 2.5/3.25 40 50
CD(C)3.0 3.0 50 50
RM Districts: Existing Base Vs. Proposed HIP Standards
19
Existing Base Proposed HIP Existing Base Proposed HIP
Maximum FAR (Non-Opportunity
Site/Opportunity Site)Maximum Height (ft.)
RM-40 1.0/1.5 3.0 40 50
RM-30 0.6/1.25 2.5 35 40
RM-20 0.5/1.25 2.0 30 40
GM/ROLM Focus Area n.a./2.5 3.5 60 60
Parking: Existing Vs. Proposed HIP Standards
20
Existing Proposed HIP
Studios/1-Bedroom Units 1 space/unit 1 space/unit
2+ Bedroom Units 2 spaces/unit 1.5 spaces/unit
Comparison of Density Bonus Options
21
State Density Bonus Law Local Housing Incentive Program (Proposed)
Bonus
Density
100% BMR projects: Unlimited bonus
15% VLI + 15% MOD projects: 100% bonus
100%-500% bonus depending on district and
whether HE opportunity site
Affordability On-site required Inclusionary Housing Ordinance (fee in lieu)
Waivers Unlimited Limited (e.g., FAR, building height, coverage)
Concessions Up to 4, depending on affordability None
Parking 1 sp./studio & 1-bed; 1.5 sp./2- & 3-bed 1 sp./studio & 1-bed; 1.5 sp./2- & 3-bed
Process Streamlined Review (Objective Standards) or
Architectural Review (Context-Based Criteria)
Streamlined Review (Objective Standards)
Awareness Known Highlight in new Ch. 18.14: Housing Incentives,
create handout, provide website page
Needs to be
better than SDBL
to be viable!
Staff Recommendation
Adopt an ordinance amending Title 18 (Zoning) to implement Programs 3.3A,
B, & D, 3.4A-D, and 6.2A of the Housing Element
22
Housing Incentive Program
How HIP standards were evaluated
Site Testing Analysis:
Physical and Financial Feasibility
23
Process
Evaluate financial
feasibility of
existing zoning
standards
Consider
zoning
modifications
to improve
feasibility
Evaluate physical
feasibility of
existing zoning
standards
Test modified
zoning standards
to achieve financial
feasibility
24
Test Sites
●Sites selected primarily
from Housing Element
Sites Inventory
●Range of lot sizes and
shapes (e.g., corner,
interior, alley access)
●Most sites are small, so
results are somewhat
conservative –
feasibility improves on
larger sites
CD-C 635
High St.
RM-40 Interior
Lot (5,000 sq ft)
RM-30 355
College Ave.
RM-20 680
University Ave.
CN 3700 El
Camino Real
RM-40 Interior
Lot (10,000 sq ft)
25
CC(2) 310
Cal Ave.
RM-30 Zoning Standards
(pre-January 2024 updates)
Grade Level Plan
Third Level Plan
Second Level Plan
Section View
Key standards affecting feasibility:
parking, building height, FAR,
density and retail requirements
Summary of Findings - Existing Zoning Standards
(type of development supported by zoning)
27
Standards generally yield
lower-density townhome
product for all prototypes
Standards generally do not
support retail mixed use or
stacked flats (i.e., apartments and
condos)
✘✔✘
Financial Feasibility Approach
28
●Keyser Marston Associates (KMA) prepared pro
forma analyses based on the site tests.
●Pro formas compare value supported by the
prototype project to the project’s development cost.
○Key inputs: hard and soft costs, financing costs, rent and
for-sale revenues, standard developer profit.
●If project value < costs plus developer profit, the
project was deemed unlikely to develop.
Pro forma example
Zoning CN CC(2)RM-20 RM-30 RM40
# of Residential Units 15 3 4 4 4
Typology Townhomes Townhomes Townhomes Townhomes Townhomes
Financially Feasible?unlikely unlikely unlikely unlikely unlikely
Residential ZonesMixed-Use Zones
Summary of Findings - Existing Zoning Standards
29
Zoning Changes to Enhance Feasibility
Key Development Standards to Change:
●Increase or eliminate residential density
●Increase floor area ratio (FAR)
●Reduce parking requirements
30
Objectives:
●Accommodate stacked flats and
mixed-use development (higher density)
●Improve financial feasibility
●Retain Palo Alto design values
Additional Regulations to Refine while Addressing
Neighborhood Context and Compatibility:
●Increase building height
●Revise daylight plane
●Reduce setbacks
●Increase site coverage
●Revise use requirements for retail
Example: RM-30 Zone
Site Testing
Existing
Zoning
Potential HIP
Zoning
Example: Resulting Program
RM-30 Zoning District
Residential (units)
Building Height
Setback (rear) (ft.)
Density (du/ac)
Residential FAR
Parking
Parking Type
Open Space Min Usable (sf/unit)
Site coverage
4 7
35 40
10 5
27 47
1.0 1.6
8 (2 per unit)11 (1-1.5 per unit)
Covered, tandem Podium, tandem
150 150
40% 65%
Observations:
●Parking still limits density
●Increase in site coverage
●Modest increase in height,
but change in daylight
plane to start higher
32
Zoning CN CC(2)RM-20 RM-30 RM40
# of Residential Units 33 34 7 7 9
Typology Apartments Apartments Townhomes Townhomes Apartments
Financially Feasible?✔✔✔✔✔
RM ZonesMixed-Use Zones
Summary of Findings - Potential HIP Zoning Standards
33