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HomeMy WebLinkAbout2025-10-22 City Council Agenda PacketCITY COUNCIL Special Meeting Wednesday, October 22, 2025 Council Chambers & Hybrid 5:30 PM   Palo Alto City Council meetings will be held as “hybrid” meetings with the option to attend by teleconference or in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. The meeting will be broadcast on Cable TV Channel 26, live on YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org. VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/362027238) Meeting ID: 362 027 238 Phone:1(669)900-6833   PUBLIC COMMENTS General Public Comment for items not on the agenda will be accepted in person for up to three minutes or an amount of time determined by the Chair. General public comment will be heard for 30 minutes. Additional public comments, if any, will be heard at the end of the agenda. Public comments for agendized items will be accepted both in person and via Zoom for up to three minutes or an amount of time determined by the Chair. Requests to speak will be taken until 5 minutes after the staff’s presentation or as determined by the Chair. Written public comments can be submitted in advance to city.council@PaloAlto.gov and will be provided to the Council and available for inspection on the City’s website. Please clearly indicate which agenda item you are referencing in your subject line. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to city.clerk@PaloAlto.gov at least 24 hours prior to the meeting. Once received, the Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks, posts, poles or similar/other type of handle objects are strictly prohibited; (2) the items do not create a facility, fire, or safety hazard; and (3) persons with such items remain seated when displaying them and must not raise the items above shoulder level, obstruct the view or passage of other attendees, or otherwise disturb the business of the meeting. TIME ESTIMATES Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public.  1 October 22, 2025 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. CALL TO ORDER   BOARDS, COMMISSIONS, AND COMMITTEES APPOINTMENTS (5:30 - 5:45 PM)   1.Appointment of Candidates to the Human Relations Commission (HRC), Parks and Recreation Commission (PRC), and Public Art Commission (PAC); CEQA Status: Not a Project AGENDA CHANGES, ADDITIONS AND DELETIONS   PUBLIC COMMENT (5:45 - 6:15 PM) Members of the public may speak in-person ONLY to any item NOT on the agenda. 1-3 minutes depending on number of speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the end of the agenda. STUDY SESSION (Item 2: 6:15 - 7:15 PM, Item 3: 7:15 - 8:15 PM)   2.City Council Feedback on an Updated Housing Project Design Concept and Other Project Updates Related to the City and Alta Housing Partnership to Develop the Downtown Surface Parking lot at the Corner of Kipling Street and Lytton Avenue (Lot T) for Affordable Housing. CEQA Status – Not a Project.   3.Reinforcing Best Practices in Managing Consultant Services   BREAK (15 MINUTES) ACTION ITEMS (8:30 - 10:00 PM) Include: Report of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Report of Officials, Unfinished Business and Council Matters.   4.Update and Direction to Staff on the Downtown Housing Plan Project and Implementation of Senate Bill 79 (2025-2026). CEQA Status: Exempt Under CEQA Guidelines Section 15262. Late Packet Report Added ADJOURNMENT OTHER INFORMATION  2 October 22, 2025 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. Standing Committee Meetings this week FInance Committee October 21, 2025 Public Comment Letters Schedule of Meetings   SUPPLEMENTAL / AMENDED AGENDA ITEMS   4.Update and Direction to Staff on the Downtown Housing Plan Project and Implementation of Senate Bill 79 (2025-2026). CEQA Status: Exempt Under CEQA Guidelines Section 15262. Late Packet Report Added      3 October 22, 2025 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1.Written public comments may be submitted by email to city.council@PaloAlto.gov. 2.For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3.Spoken public comments for agendized items using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom-based meeting. Please read the following instructions carefully. ◦You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure you are using a current, up-to-date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. ◦You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. ◦When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. ◦When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4.Spoken public comments for agendized items using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 362-027-238 Phone: 1-669-900-6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329-2550 (voice) or by emailing ada@PaloAlto.gov. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service.  4 October 22, 2025 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. California Government Code §84308, commonly referred to as the "Levine Act," prohibits an elected official of a local government agency from participating in a proceeding involving a license, permit, or other entitlement for use if the official received a campaign contribution exceeding $500 from a party or participant, including their agents, to the proceeding within the last 12 months. A “license, permit, or other entitlement for use” includes most land use and planning approvals and the approval of contracts that are not subject to lowest responsible bid procedures and have a value over $50,000. A “party” is a person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. A “participant” is a person who actively supports or opposes a particular decision in a proceeding involving a license, permit, or other entitlement for use, and has a financial interest in the decision. The Levine Act incorporates the definition of “financial interest” in the Political Reform Act, which encompasses interests in business entities, real property, sources of income, sources of gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a “party” or “participant” to a proceeding, and you have made a campaign contribution to a Council Member exceeding $500 made within the last 12 months, you must disclose the campaign contribution before making your comments.  5 October 22, 2025 Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. City Council Staff Report Report Type: BOARDS, COMMISSIONS, AND COMMITTEES APPOINTMENTS Lead Department: City Clerk Meeting Date: October 22, 2025 Report #:2508-5097 TITLE Appointment of Candidates to the Human Relations Commission (HRC), Parks and Recreation Commission (PRC), and Public Art Commission (PAC); CEQA Status: Not a Project RECOMMENDATION Staff recommends the City Council appoint members to fill 3 vacancies on HRC, 3 vacancies on PRC, and 3 vacancies on PAC. BACKGROUND Recruitment The Fall 2025 Boards and Commissions recruitment opened on August 22, 2025, and closed on September 24, 2025. Details on the vacancies and recruitment are summarized in the below table. Applications may be accessed online1. The City Council conducted interviews on October 15, 2025, which may be viewed on the City’s YouTube Channel2 . Commission Membership Requirements Membership requirements for HRC, PRC, and PAC are listed below. Additionally, no commissioners can be Councilmembers, officers, or employees of the City. 1 City Council, October 6, 2025; Agenda Item #2; SR # 2508-5096 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83629&dbid=0&repo=PaloAlto 2 City of Palo Alto YouTube Channel: https://www.youtube.com/@cityofpaloalto Item 1 Item 1 Staff Report Item 1: Staff Report Pg. 1 Packet Pg. 6 of 83  Human Relations Commission – Palo Alto residency5 Parks and Recreation Commission – Palo Alto residency and demonstrated interest in parks, open space and recreation matters6 Public Art Commission - shall be either members of the architectural review board or professional visual artists, professional visual arts educators, professional visual arts scholars, or visual arts collectors whose authorities and skills are known and respected in the community and, whenever feasible, who have demonstrated an interest in, and have participated in, the arts program of the city7 Voting The City Clerk will conduct live voting during the meeting and will announce the results and how each Councilmember voted. Each Councilmember may select up to 3 applicants per commission. A majority of 4 votes is required to appoint a candidate. Additional rounds of voting may be required if there is a tie or no candidates receive a majority of votes. FISCAL/RESOURCE IMPACT None. STAKEHOLDER ENGAGEMENT City staff publicized the recruitment through the City’s Uplift Local community newsletter, City Clerk’s Office newsletters, the City’s website, and the City’s social media channels. The recruitment was also advertised in both print and online in the Palo Alto Daily Post and Palo Alto Weekly. Recruitment information was also posted at Palo Alto libraries and City Hall and emailed to previous applicants, community-based organizations and businesses related to the commissions’ issue areas. ENVIRONMENTAL REVIEW Council action on this item is not a project as defined by CEQA because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5). APPROVED BY: Mahealani Ah Yun, City Clerk 5 Palo Alto Municipal Code Section 1.22.010 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0- 6 Palo Alto Municipal Code Section 2.25.020 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0- 7 Palo Alto Municipal Code Section 2.18.020 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0- Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 2  Packet Pg. 7 of 83  City Council Staff Report From: City Manager Report Type: STUDY SESSION Lead Department: Planning and Development Services Meeting Date: October 22, 2025 Report #:2505-4745 TITLE City Council Feedback on an Updated Housing Project Design Concept and Other Project Updates Related to the City and Alta Housing Partnership to Develop the Downtown Surface Parking lot at the Corner of Kipling Street and Lytton Avenue (Lot T) for Affordable Housing. CEQA Status – Not a Project. RECOMMENDATION Staff recommends City Council receive an update on the design development for a 100% affordable housing development located on Lot T and provide informal feedback on key design considerations and other project updates. EXECUTIVE SUMMARY On January 21, 2025, the City Council selected Alta Housing as their development partner for a 100% affordable housing project on the City-owned surface parking lot, Lot T. The purpose of this study session is to seek informal feedback from City Council on design options studied for this project. Alta Housing will incorporate the feedback received in this study session and from a community meeting which will be held in late 2025 into a development application to be submitted in early 2026. In addition to other feedback that may be provided, Alta Housing is seeking the City Council’s input on the preferred project size in terms of height, unit count and mix as well as the orientation of the building’s courtyard. These design considerations will influence the project’s development costs and the developer’s requested financial contribution from the City. Alta Housing is expected to seek project approval and a City contribution of $4.1 million to $5.5 million as part of a future development agreement in 20261. The City currently has approximately $7 million in unreserved affordable housing funds after the anticipated allocation of $5 million to 3001 El Camino Real next month for a 100% affordable housing project. A concept proposal for a third potential affordable housing project at the former Fry’s 1 This contribution is in addition to the provision of the land parcel itself which is contemplated to be provided as a ground lease to Alta. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 1  Packet Pg. 8 of 83  Electronics site (a part of the 340 Portage development agreement) will be shared with the City Council next month that would also likely require City funding. BACKGROUND Program 1.4 – City-owned Land Lots of the City’s Certified 2023-2031 Housing Element targets the development of 290 affordable housing units on City-owned lands, over the course of the eight-year planning period, including several surface parking lots in the Downtown. In the first phase of this effort, the City Council selected Lot T as the site for the first affordable housing development, and also re-initiated the design of a six-story garage structure to provide replacement public parking on Lot D, the City-owned parking lot located at the corner of Waverley Street and Hamilton Avenue. On January 21, 2025, the City Council reviewed the responses received and selected Alta Housing as their development partner for a 100% affordable housing project on Lot T3, the City- owned parking lot located at the corner of Kipling Street and Lytton Avenue. On June 17, 2025, City Council approved a one-year exclusive negotiation agreement with Alta Housing for the development of 100% affordable housing on Lot T4. Previous Council Feedback Following the execution of the agreement in June, staff worked collaboratively with the Alta Housing team to refine the project proposal based on the preliminary feedback received from City Council on January 21, 2025. Specifically, during that hearing City Council expressed support for an initial project proposal from Alta Housing that included 54 units of family housing in a five-story building with 27 on-site parking stalls serving residents only. However, in their motion the members of City Council directed staff and Alta Housing to come back to Council with a plan to maximize the total units provided by the project while: Not exceeding seven stories in height; Maintaining the ratio of family housing included in the initial proposal; and Providing on-site parking for residents at a ratio similar to the initial proposal. For reference, the initial proposal included 57.4% family housing units (two- and three- bedroom units) and provided 0.5 parking spaces per unit. 3 See minutes for Action Item 9 for details: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=43223 4 See minutes for Consent Item 4 for details: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=43284 Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 2  Packet Pg. 9 of 83  ANALYSIS The purpose of this study session is to receive City Council feedback on the design and development options studied in response to this direction. This section presents key design elements, cost considerations, and relationship to State laws relevant to the next steps for the proposed project. Design Discussion Alta Housing and staff have developed two additional design options for City Council’s consideration, in addition to the initial design Council supported in January 2025. For this report, the January 2025 design is referred to as Option 1 and the two new designs are referred to as Options 2 and 3. Conceptual plans for each of these options are included in Attachment C. Options 2 and 3 both increase the total number of units provided compared to Option 1, which provides 54 units; Option 2 provides 72 units and Option 3 provides 68 units. Both Options 2 and 3 maintain the “C” shaped residential floorplate included in Option 1 but increase the building height from five to six stories in accordance with Council feedback.7 All three options currently assume an on-site transformer, however staff in the Utilities and Planning and Development Services departments are working closely together to explore additional options which may allow the project to achieve the upper end of the parking space ranges shown in Table 1 while also reducing construction costs. The main difference between Option 2 and Option 3 is the orientation of the central courtyard. Option 2 maintains the courtyard in the interior of the block as contemplated in the initial design (Option 1), while Option 3 explores a courtyard that faces the street. Alta Housing prefers Option 2 because it provides more units overall with a larger average unit size and better access to light and air within units. Alta Housing also shared that studio units, such as those included in Option 3, yield lower rents and can be harder to fill than one-bedroom units. However, Option 3 significantly reduces the mass of the building on Kipling Street, opposite and adjacent to a collection of historic8, small-scale single-family homes and local businesses. Table 1 summarizes these design differences. Staff encourages City Council to provide feedback on any preferences related to the overall building massing, height, average unit size, or unit quality. 7 Six stories is the greatest number of stories possible without requiring additional levels of concrete construction or changing construction types altogether; either of which would increase construction costs. Therefore, a seven story option is not proposed. 8 The nearby properties located at 405, 411, 421-423, 430, 431-433 and 443 Kipling Street are included in the City’s Historic Inventory, found here: https://www.paloalto.gov/files/assets/public/v/1/planning-amp-development- services/historic-preservation/historic-inventory/city-historic-inventory-list.pdf. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 3  Packet Pg. 10 of 83  Table 1: Summary of Design Option Differences Stories 5 6 6 Total Units 54 units 72 units 68 units Courtyard Orientation Inward-Facing Inward-Facing Outward-Facing Unit Mix 1-BR: 23 2-BR: 15 3-BR: 16 1-BR: 33 2-BR: 20 3-BR: 19 STUDIO: 10 1-BR: 20 2-BR: 19 3-BR: 19 Percent Family Units 57.4% (31 total)54.2% (39 total)55.9% (38 total) Approx. Parking Spaces* 27-31 spaces 30-34 spaces 29-34 spaces Parking Ratio 0.5-0.57 spaces per unit 0.42-0.47 spaces per unit 0.43-0.5 spaces per unit Units facing interior lot lines 2 units per residential floor (8 units total) 3 units per residential floor (15 units total) 7 units per residential floor (35 units total) Courtyard Lighting Courtyard receives mostly direct sunlight Courtyard receives mostly direct sunlight Courtyard receives mostly indirect sunlight * Parking space counts for each option are estimated and will vary based on final transformer and trash room locations; one or more of the parking spaces provided may be dedicated to passenger loading and unloading. Total Development Costs and Funding Sources Table 2 below provides a summary of the total development costs, the requested City contribution, and potential gap funding required (see following section for gap funding options) under each of the three design options studied. Under any of these scenarios, the total development costs for the project are expected to be higher than those included in the proposal City Council reviewed in January 2025 for the following reasons: 1. The Alta Team recommends holding more conservative cost assumptions for the project in response to increased financial/economic volatility including (but not limited to) changing markets, construction costs, and material costs; and 2. There is increasing uncertainty around and competitiveness for funding at all levels (County, State, and Federal). Additionally, Options 2 and 3 also increase the total development size and unit count above what was proposed in Option 1, which also increases the total development cost. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 4  Packet Pg. 11 of 83  The City’s contribution shown in all options is based on the per unit cost contribution of approximately $76,000 that Council indicated support for in January 2025. This funding would be drawn from the Housing In-Lieu – Residential, Housing In-Lieu – Commercial, and Residential Housing Impact Fee funds. The gap financing needed is calculated by subtracting the City’s contribution and other reliable funding sources (such as state tax credits and loans) from the total development cost. The City Council may consider providing a per unit cost contribution above $76,000, if it would like to reduce the total amount of gap funding needed. However, this has not been assumed at this time and should be considered in the context of other potential affordable housing development projects the City might like to support in addition to Lot T. For instance, through grant funding, staff has analyzed a financial feasible 100% affordable housing project design concept that could be considered at the former Fry’s Electronics site. Through a development agreement, a portion of this land will be given to the City with the intent to create in the future, a park and affordable housing project. The work to date on the affordable housing concept plan, which will be presented to the City Council in November, could be used for a future request for proposals if directed by Council. Managing limited affordable housing funds, which includes about $7 million at the time of this report is unlikely to support Lot T and a third project without an additional funding from Measure K, which is expected, but also serves as a potential limiter on additional funding for the Lot T project. Staff will continue to monitor the affordable housing fund relative to these projects. Table 2: Development Costs by Design Scenario Scenario Total Development Costs Cost Per Unit City Contribution Per Unit Total City Contribution Gap Financing Needed after City Contribution, State Tax Credits, Loans* Option 1**$57.9 M $1.07 M $76,667 $4.1 M $2,034,000 Option 2 $78.3 M $1.09 M $76,389 $5.5 M $2,270,000 Option 3 $74 M $1.10 M $76,471 $5.2 M $2,648,000 * See sample proforma included as an attachment to the June 17, 2025 staff report on this topic: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=6453 ** The January 2025 project proposal costs have been updated to reflect market conditions and political considerations as of June 2025. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 5  Packet Pg. 12 of 83  Gap Funding Sources Alta Housing proposes filling the funding gap created by changing market and funding landscape conditions in one of the following ways, without requesting a City contribution per unit over and above what the Council expressed support for in January 2025: 1. Seeking a partnership with the Housing Accelerator Fund, an independent nonprofit lender; 2. Requesting funding from the County of Santa Clara or other regional source; or 3. Restructuring the project to serve a higher AMI level and applying for California Housing Financing Agency (CalHFA)'s Mixed Income Program (MIP). Table 3 below provides an overview of the pros and cons of each of these options. Table 3: Pros and Cons of Additional Funding Source Options Source Funding Description Pros Cons Programming Impact(s) Housing Accelerator Fund (HAF) Covers anticipated gap and replaces State tax credit and Affordable Housing Program (AHP) loan Streamlines financing process and schedule Over the counter application Would require project team to meet aggressive cost per unit targets Requires approval from HAF investors Limited experience in the Peninsula; looking to expand beyond San Francisco None County or Other Regional Funding Covers the gap, replaces the AHP loan and partially replaces State tax credits Compatible with most other funding sources Experienced funding partner for Peninsula projects No funding currently available; may become available next election cycle May be required to serve Rapid Re-Housing (RRH) families CalHFA MIP Covers the gap, replaces the AHP loan and partially replaces State tax credits Yearly source Less competitive than most other funding sources Inclusion of higher- income units may present marketing, cost, funding and/or policy challenges AMI levels served shifts from 30% - 60% to 30% -120% Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 6  Packet Pg. 13 of 83  Zoning Compliance and State Density Bonus Law Lot coverage (~90% v. 30%) Property line setbacks (all) Floor Area Ratio (~4.0:1 v 1.0:1) Required open space dimensions NEXT STEPS Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 7  Packet Pg. 14 of 83  POLICY IMPLICATIONS FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 8  Packet Pg. 15 of 83  Council hearing and direction to initiate a Request for Information to examine housing and parking development opportunities in the downtown area on December 6, 2021;11 Issuance and Review of a Request for Information in 2022 and 2023, including a public hearing on December 11, 2023;12 Issuance of a Request for Refined Proposals in 2024; Council review of refined proposals and direction to staff to prepare the subject Exclusive Negotiation Agreement (ENA) in January 2025; and Housing Element community meetings and discussions identifying Lot T as a City-owned site suitable for affordable housing. Additional engagement is anticipated during the ENA term and project application review process, specifically: A community meeting hosted by Alta Housing in Fall 2025; An ARB study session in early 2026; and A public hearing with City Council in spring 2026. ENVIRONMENTAL REVIEW This study session with City Council is not a project subject to environmental review under the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15378(b)(2). The formal application with be evaluated in accordance with CEQA as part of that review. ATTACHMENTS Attachment A: Location Map Attachment B: Development Standards Compliance Summary Attachment C: Conceptual Design Plans and Diagrams APPROVED BY: Jonathan Lait, Planning and Development Services Director 11 For details, see: https://www.cityofpaloalto.org/files/assets/public/v/8/agendas-minutes-reports/agendas- minutes/city-council-agendas-minutes/2021/12-december/20211206/20211206pccsm-amended-linked.pdf 12 For details, see: https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=433ee206-0e46-4856- aa54-d6aa54ee085d Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 9  Packet Pg. 16 of 83  7 7 7 7 7 7-11 135.0'112.5' 50.0' 112.5' 112.5' 93.0' 75.0' 135.0' 100.0'135.0' 100.0' 135.0' 25.0' 135.0' 25.0' 150.0' 112.5'150.0' 112.5' 45.0' 112.5' 45.0' 112.5' 135.0' 25.0' 135.0' 25.0' 135.0' 50.0' 135.0' 50.0' 43.0' 79.0' 43.0' 79.0' 43.0' 33.5'43.0' 33.5' 45.0' 105.5' 45.0' 105.5' 50.0' 105.5' 50.0' 105.5' 50.0' 105.5' 50.0' 105.5' 93.0' 105.5' 93.0' 105.5' 37.5' 105.5' 37.5' 105.5' 37.5' 105.5' 37.5' 105.5' 93.0' 105.5' 93.0' 105.5' 168.0' 112.5' 168.0' 112.5' 50.0' 57.0' 50.0' 57.0' 71.5' 43.0'50.0' 30.4' 21.5' 21.5' 21.5' 30.4' 57.0' 43.0' 100.0' 50.0' 112.5' 50.0' 112.5' 50.0' 112.5' .0' 112.5' 50.0' 112.5' 88.0' 125.0' 93.0' 12.5' 25.0' 37.5'30.0' 75.0' 143.0' 100.0' 43.0'43.0' 50.0' 40.0' 112.5' 40.0' 112.5'50.0' 112.5' 50.0' 112.5' 50.0' 112.5' 50.0' 112.5' 36.0' 95.0' 36.0' 95.0' 39.0' 37.5' 18.0' 75.0' 57.0' 112.5' 107.0' 50.0' 107.0' 50.0'107.0' 25.0' 107.0' 25.0' 20.0' 50.0' 130.0' 125.0' 37.5' 25.0' 112.5' 50.0' 112.5' 14.0'17.5'36.0' 130.0' 130. 50.0' 50.0' 218.0' 50.0' 218.0' 45.0' 112.5' 45.0' 112.5' 45.0' 105.5' 45.0' 105.5' 110.0' 100.0' 110.0' 100.0' 110.0' 25.0' 110.0' 25.0' 110.0' 50.0' 110.0' 50.0' 100.0' 50.0' 100.0' 50.0' 135.0' 25.0' 135.0' 25.0' 95.0' 50.0' 95.0' 50.0' 95.0' ' 95.0' 25.0' 95.0' 25.0' 30.0'40.0' 30 80.0' 85.0' 80.0' 30.0' 7. 150.0' 55.0' 80.0' 125.0' 80.0' 125.0' 50.0' 143.0' 70.0' 118.0' 70.0' 118.0' 10.0' 50.0' 10.0' 50.0' 0.0' 75.0' 50.0' 112.5' 112.5' 50.0' 112.5' 50.0' 112.5'37.5' 112.5' 37.5' 112.5' 37.5' 112.5' 37.5' 112.5' 30.0' 75.0' 30.0' 75.0' 97.0' 6.0' 3.0' 50.0' 100.0' 56.0' 28.0' 112.5' 25.0' 50.0' 3.0' 62.5' 50.0' 112.5' 50.0' 112.5'40.0' 112.5' 40.0' 112.5'60.0' 112.5' 60.0' 112.5' 60.0' 112.5' 60.0' 112.5' 60.0' 112.5' 60.0' 112.5' 50.0' .'0.0' 50.0' 100.0'100.0' 12.5' 3.0' 56.5' 97.0' 69.0' 5.0' 112.5' 25.0' 112.5' 50.0' 112.5' 50.0' 112.5' 35.0' 62.5' 35.0' 62.5' 83.0' 62.5'83.0' 62.5' 118.0' 62.5' 118.0' 62.5' 118.0' 100.0'118.0' 100.0' 100.0' 112.5' 100.0' 112.5' 225.0' 1 225.0' 130.5' 225.0' 93.0' 112.5' 93.0' 112.5' 100.0' 112.5' 100.0' 112.5'53.0' 112.5' 53.0' 112.5' 50.0' 140.0' 65.0' 140.0' 65.0' 65.0' 140.0' 50.0' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 100.0' 112.5' 1 225.0' 130.5' 225.0' 1 225.0' 130.5' 225.0' 1 225.0' 130.5' 225.0' 379 405 437 463 480 530 460 405 431 433 437 440 420 431 330 332 334 336 360 380 416- 424 373- 377 473- 479 425 415-419 384-396 436- 452 305- 313 489- 499 347- 359 426 411385 333 411 421 320 328 332 330 340 344 348 452 456 321 325 327 333 335 337 474 72 328 418412 461 353 355 367 415 379 375 401 366 436 390 425 419 405 401 450 407 401 423 443 451 463 440 4 430 431 444 441439 423 405403 383 382 376 432 428 400 453 351349 361 457 451 465 420 430 515 342 340 338 502 450 327A FLORENCE STREET KIPLING STREET LYTTON AVENUE WAVERLEY STREET E COWPER STREET KIPLING STREET UNIVERSITY AVEN WAVERLEY COWPER STREET LANE 20 EAST LANE 30 PF PF C-4436 PC CD (NP) Lot F Lot T Br P Union Bank This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend Project Site Current Features 0' 73' Attachment A Location Map 450 Lytton (Lot T) CITY OF PALO ALTO I NC O R P O R A TED CALI FORNIA P a l o A l t o T h e C i t y o f APRIL 1 6 1894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2016 City of Palo Alto ekallas, 2025-10-02 10:36:42 Attachment A. Location Map (\\cc-maps\Encompass\Admin\Personal\Planning.mdb) Item 2 Attachment A - Location Map        Item 2: Staff Report Pg. 10  Packet Pg. 17 of 83  ATTACHMENT B PRELIMINARY ZONING COMPARISON TABLE* Lot T, 450 Lytton (APN 120-15-100) Table 1: COMPARISON WITH CHAPTER 18.28 (PF DISTRICT) Minimum Site Area Not Applicable No Change (.44 acres [18,900 sf]) Min. front yard setback (based on most restrictive abutting district – [PF] but None at Ground Floor / Varies at Levels 2-6 setback (based on most restrictive abutting district-[PF] but no less None at Ground Floor / Varies at Levels 2-6 setback (based on most restrictive abutting district-[PF] but no less Kipling) None at Ground Floor / Varies at Levels 2-6 (based on most restrictive abutting district-[PF] but Lytton) None at Ground Floor / Varies at Levels 2-6 92.2% (17,426 sf) Ratio No Density Limit for Density Bonus projects within ½ mile of major Max. Building Height 50 ft or 35 ft when located within 150 ft of residential zone +33 ft and + 3 stories for Density Bonus projects within ½ mile 60 feet measured to the roof structure 64 feet measured to top of roof at Elevator 69 feet measured to the top of roof at Stairs . Table 2: CONFORMANCE WITH CHAPTER 18.52 (Off-Street Parking and Loading) for Non-profit Office and Residential Uses Vehicle Parking 0.5 space per unit for Transit-Oriented Projects (72 units * 0.5 30-34 spaces Item 2 Attachment B - Development Standards Compliance Summary        Item 2: Staff Report Pg. 11  Packet Pg. 18 of 83  Bicycle Parking 1 long-term space per unit; 1 short-term guest per 10 units equals 79.2 total spaces = 72 long-term, 80 (72 long term; 8 short term) * This analysis is based on Design Option 2, Alta Housing’s preferred option. 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3DUNLQJ'LVWULFW8QLYHUVLW\$YH 7UDIILF,PSURYHPHQW'LVWULFW1RQH (DVHPHQWV1R $IIRUGDEOH+RXVLQJ,QFHQWLYH3URJUDP1R1R OPTION 3 Item 2Attachment C - ConceptualDesign Plans and Diagrams       Item 2: Staff Report Pg. 15  Packet Pg. 22 of 83  City Council Staff Report From: City Manager Report Type: STUDY SESSION Lead Department: City Manager Meeting Date: October 22, 2025 Report #:2507-4924 TITLE Reinforcing Best Practices in Managing Consultant Services RECOMMENDATION City Council review and discussion of ongoing work to ensure high quality and valuable services developed through the engagement of professional consultants. EXECUTIVE SUMMARY This report provides a review of the current and planned work for the consultant engagement review project. At its meeting on May 28, 2025, the Policy & Services Committee received a report on this effort and provided feedback to staff. This report provides an updated status report based on the Committee’s feedback as well as subsequent progress by staff. BACKGROUND The City of Palo Alto regularly engages professional consultants for a wide variety of functions. These include, for example: Planning, architectural, engineering, and construction management for capital improvement projects; Specialized and supplemental staffing for land use planning, processing entitlement applications, building permitting and inspection, as well as other operations; Specialized recreation, arts, and enrichment programming for community classes, summer camps, and other public services; Development of studies and plans on a broad range of topics in areas such as economic development, transportation, and facilities planning. Attachment A provides a list of consultant contracts approved by the City Council in 2024, reflecting the broad range of consultant services used by the City. The majority of City Council priority objectives rely on consultant services for their timely completion. The use of consultants is critical to the City’s ability to produce the volume and range of services expected and required by the community. It is equally important that circumstances Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 1  Packet Pg. 23 of 83  under which consultants are engaged be clearly identified and that the quality of work products provide the value expected. ANALYSIS Core Principles Project Timeline and Activities Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 2  Packet Pg. 24 of 83  1. Review of Current Practices: In December 2024, the City’s Management Fellow conducted initial interviews with staff across departments. A follow-up questionnaire with refined and expanded questions was distributed to gather additional insights. 2. Budget Review: As part of the FY 2026 budget development process, the City Manager and Budget Office led a department-by-department review of contractual services line items to assess their necessity and identify opportunities where in-house staffing may be more cost-effective or strategically beneficial. This is expected to be an ongoing part of the City’s annual budget development process. 3. Initial presentation to Policy and Services Committee and implementation of feedback, followed by full City Council study session. 4. Practice Improvements: Into the summer, feedback from departments and management identified priority areas for improvement in consultant engagement. This builds on currently ongoing efforts led by the Administrative Services Department (ASD) and the City Attorney’s Office with training sessions on contract management. 5. Defining the Consultant Management Lifecycle: To ensure all steps are covered in a standard format, city staff are reviewing all elements of the management lifecycle, from the first step of decision to outsource to the final closeout and work review of the project. 6. Interdepartmental Staff Engagement: Staff convened a half-day working session this summer with representatives from departments that regularly engage consultants. The workshop validated the overall approach to the workplan and furthered practical steps toward the goals of this project. Since the initial outline, staff has oriented the effort toward developing visible tools available citywide to project managers and departments. 7. Clarifying Local Knowledge Roles: City staff play a vital role in ensuring that consultants understand Palo Alto’s specific context. Through the Summer, expectations around sharing prior work, guiding community engagement processes, and providing historical knowledge have been explored in order to establish clear expectations for staff that can be communicated throughout the City. 8. Identifying Skill and Role Gaps: Into the Fall, this review will also examine where project managers may require additional training or role clarification to effectively manage consultant relationships and deliverables, as well as review the workload capacity required to fulfill these roles. 9. Training and Tools: Through the Fall and into 2026, potential outcomes of this work include the development of workflow templates, dashboards for progress tracking, and structured training for project managers in collaboration with Human Resources and relevant departments. The development of a best practices guide is under way, and will Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 3  Packet Pg. 25 of 83  serve as a training and reference point for all materials related to carrying out effective consultant engagements. 10. Consultant Engagement: Input from consultants will be solicited throughout the process to gather insights from their perspective into what makes engagements successful. Overview of the Consultant Engagement Process and Areas for Reinforcement The following paragraphs provide an overview of the typical consultant engagement process in the City and provide an initial sampling of specific areas that have been identified for evaluation and reinforcement of best practices. Precursors to Outsourcing As part of the annual budget development process, each department’s proposed consultant funding levels is reviewed to assess whether those funds might be more effectively allocated to hiring in-house staff. In some cases, the City outsources as a first step before adding permanent staff due to concerns around long-term financial commitments and the need to sustain consistent workloads. The budget cycle provides a regular opportunity to review this practice in the context of department-specific work forecasts. When consultants perform tasks that are similar in some respects to those of City employees, the annual budget review provides an appropriate point at which to consider whether in-house capacity could better serve the City over time. This informs staffing changes proposed in the City Manager’s Proposed Budget released every April. In addition, the City Manager recently directed additional internal review and approvals of task orders issued under master agreements. Master agreements are consultant contracts established for “as needed” or “on-call” services, where a contract is established without a specific scope of services. Task orders are subsequently issued to the consultant with a specific scope of services and budget. In order to ensure that best practices are being applied to task orders, task orders at specified thresholds now require City Manager approval. The Decision to Outsource The decision to outsource to meet specific project needs is based on the expertise required as well as in-house capacity. Scopes of service are developed in consultation with the Administrative Services Department’s Purchasing Division and the City Attorney’s Office. Determining a Scope of Services Departments develop scopes of services that are then used to solicit consultant proposals through issuance of Requests for Proposals (RFPs). Major projects may also involve City Council review of scopes of services. Practices are being reviewed to determine when further refinements in the development of scopes of services would be beneficial. This includes prompts such as: How to best complement consultant’s specialized skills with in-house staff local knowledge and other roles throughout a project Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 4  Packet Pg. 26 of 83  How artificial intelligence and other technologies might best assist in delivering cost- effective outcomes How to ensure outsourcing aligns with City long-term goals for building internal expertise Scoping the Approach to Community Engagement Community engagement is a central element of virtually all studies and planning efforts in Palo Alto. It is therefore important to ensure the consultant is aware of the nature and extent of community engagement expected. Department staff consult with the City Manager’s Office communications staff to develop community engagement plans for RFPs and updated as projects proceed. Roles between the consultant and staff requires specific attention; in general, staff take primary responsibility for identifying key stakeholders and arranging for meeting venues and logistics. Online engagement tools are also coordinated with the City Manager’s Office. Selecting the Service Provider In selecting consultants, departments consider not only cost but also expertise, alignment with project needs, and prior performance. The process emphasizes open and fair opportunities to submit proposals that are objectively evaluated and a selection based on the best interests of the City. Practices are being reviewed to determine whether any enhancements to the procurement process would be beneficial. Managing Contingencies At various points, circumstances can arise that cause consideration of a change in direction. This could include issues such as cost proposals that exceed budget, and a lack of strong proposals. In such cases, staff must balance the tension between proceeding and changing direction. Project managers must then engage department management and the City Manager’s Office in order to evaluate options and determine appropriate steps forward. Establishing Points of Contact, Communication Expectations, and Handling Professional Differences At project kick-off, an important first step in the successful completion of a consultant engagement is establishing primary points of contact on both the City’s and consultant’s teams, and reviewing the scope and key understandings needed for the project. Topics to be covered include: reviewing scope of services, schedule, and deliverables; establishing recurring meetings or other means of progress coordination; project documentation responsibilities; and, lead time and turnaround expectations for follow-up and review of deliverables. This is also the point at which to establish escalation paths, secondary points of contact when needed due to disagreements or performance concerns from either the City or consultant. Escalation paths may also be reinforced contractually, including implications for delays in the case of time-sensitive projects. One of the most difficult dimensions of the consultant-client relationship is handling professional differences. Consultants are typically engaged for subject matter expertise, which can conflict with organizational sensitivities and staff perspectives on how issues should be addressed. Escalation paths can be a critical tool for resolving such disagreements. Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 5  Packet Pg. 27 of 83  Contract Management FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Ed Shikada, City Manager Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 6  Packet Pg. 28 of 83  Service Provider Description  Contract or  Amendment Value  Safebuilt, Integrated Design 360, CSG Consultants,  4LEAF, True North Compliance Services, TRB and  Associates, West Coast Code Consultants Development Services On Call Services ‐ Staffing and Subject  Matter Experts: Inspection, Plan Review, Green Building 4,000,000$               Carollo Engineers Regional Water Quality Control Plant Long Range Facilities Plan 2,742,774$               Watry Design Downtown Parking Garage Design 2,403,592$               WaterTalent, LLC Temporary Licensed Water Operator Staffing Services ( 3 years) 1,896,000$               AgreeYa Solutions, Elegant Enterprise‐Wide Solutions,  Forsys, Object Technology Solutions, Techlink Systems,  Zion Cloud Solutions, Inspyr Solutions IT Consulting 1,540,000$               Wallace Roberts & Todd Downtown Housing Plan 1,508,254$               Carollo Engineers Construction management and inspection for RWQCP 12kV  Electrical Power Distribution Loop (Amend 5)1,314,192$               MuniServices, LLC Tax and Fee Consulting (5 years) 1,161,550$               Park Engineering Electric Construction Inspection (5 years) 925,000$                  Cumming Management Group (formerly Nova Partners) Construction Management for PSB & Other Infrastructure Plan 827,418$                  Nova Partners, Inc. Construction Management for PSB & Other Infrastructure Plan 766,919$                  Lexington, Metropolitan Planning Group, Arnold  Mammarella Architecture and Consulting, Page  Sotherland Page AE, Placeworks, Urban Planning  Partners, Michael Baker International  Planning On Call Services ‐ Staffing and Subject Matter Experts:  Long Range Planning Projects, Application Processing,  Environmental Review 750,000$                  Concordia Development of a Revised Master Plan for the Cubberley Site 631,966$                  GDS Associates, Inc. Electric and Gas Cost of Service Analysis (5 years) 505,723$                  Lexington, Metropolitan Planning Group, Arnold  Mammarella Architecture and Consulting, Page  Sotherland Page AE, Placeworks, Urban Planning  Partners, Michael Baker International  Planning On Call Services ‐ Staffing and Subject Matter Experts:  Long Range Planning Projects, Application Processing,  Environmental Review 500,000$                  Kittelson and Associates South Palo Alto Bike/Pedestrian Connectivity Project (2 years) 499,490$                  Woodard & Curran Sewer Master Plan Study (2 years) 498,866$                  3Di Systems Rental Registry Program 443,256$                  BKF Engineers Charleston/Alma Railroad Crossing Plans (5 years) 397,705$                  Urban Field Studio Car‐free Streets Study 384,990$                  Good City Company Downtown Housing Plan Project Manager 375,522$                  Kittelson & Associates Bike and Pedestrian Plan Update 333,945$                  A3 Immersive Projection Mapping Production Services for the 2025 Code:ART  Interactive Media Public Art Festival 275,692$                  4Leaf, Inc. WGW Construction Inspection (5 years) 264,247$                  Michael Baker International, Inc. CDBG Program Administration (2 years) 211,310$                  Rincon Consultants California Environmental Quality Act (CEQA) Review of a Revised  Master Plan for the Cubberley Site 202,322$                  Townsend Public Affairs, Inc. Legislative Advocacy & Grant Consulting 186,000$                  Urban Planning Partners, Inc. Car‐free Ramona Street Design 165,573$                  Kimley‐Horn Quiet Zone Study (Churchill, Meadow, Charleston) 162,359$                  Rankin Stock Heaberlin Oneal Legal Services 150,000$                  Integrated Design 360 Reach Code Development 132,200$                  Anne Rosenthal Fine Art Conservation Services 118,624$                  HdL Coren & Cone Property Tax Consulting (5 years) 111,800$                  BKF Engineers Foothills Nature Preserve Design 109,583$                  OIR Group Policing Auditing Services 105,000$                  Salas O'Brien RWQCP 12kV Electrical Power Distribution Loop Design (Amend 4) 99,200$                    DNV GL USA, Inc Gas Modeling 85,000$                    Schaaf & Wheeler Design for 3 stormwater ballot measure projects 77,360$                    Sandis Civil Engineers Construction Admin. for Churchill Enhanced Bikeway 59,975$                    Matrix Consulting Group Department Fee Study 56,500$                    Raftelis Financial Consulting, Inc. Water and Wastewater Collection  Cost of Service Analysis (5 years) 48,905$                    CSW/Stuber‐Stoeh Engineering University Ave. Streetscape Conceptual Design 25,000$                    Hexagon Transportation Consultants Development Review Support 10,000$                    Schaaf & Wheeler PSB Stormwater Construction Observation & Certification 9,600$                       27,073,412$             ATTACHMENT A CONSULTING SERVICES APPROVED BY CITY COUNCIL IN 2024 Item 3 Attachment A - Consultant Contracts Approved by City Council in 2024        Item 3: Staff Report Pg. 7  Packet Pg. 29 of 83  City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: October 22, 2025 Report #:2510-5298 TITLE Update and Direction to Staff on the Downtown Housing Plan Project and Implementation of Senate Bill 79 (2025-2026). CEQA Status: Exempt Under CEQA Guidelines Section 15262. This report will be a late packet report published on October 16, 2025. Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 1  Packet Pg. 30 of 83  City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: October 22, 2025 Report #:2506-4861 TITLE Update and Direction to Staff on the Downtown Housing Plan and Implementation of Senate Bill 79. CEQA Status: Exempt Under CEQA Guidelines Section 15262. RECOMMENDATION Staff recommends the City Council provide direction to staff on the next steps for the Downtown Housing Plan, including citywide implementation of Senate Bill (SB) 79. EXECUTIVE SUMMARY This report provides an update on the Downtown Housing Plan and discusses the implications of SB 79, which mandates increased residential density, height, and floor area within one-half mile of major transit stations, including Downtown Palo Alto. The Downtown Housing Plan, initiated in 2024, is intended to expand housing opportunities in the downtown core while maintaining community character. Public outreach shows broad support for additional housing near transit and jobs, though most projects are unlikely to proceed under current market conditions due to high development costs, small parcel sizes, and stronger financial performance of office uses. SB 79, effective July 1, 2026, establishes new state minimums for building height, residential density, and floor area near transit. Cities may prepare a state-approved Transit-Oriented Development (TOD) Alternative Plan to guide how and where this new housing capacity is applied. Staff seeks City Council direction on completing the Downtown Housing Plan; a proposal to refocus staff and consultant efforts on an SB 79 compliant TOD Alternative Plan, and potentially formation of a Council ad hoc to support staff planning efforts given the limited time available for Alternative Plan development. Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 1  Packet Pg. 31 of 83  BACKGROUND 1 This followed City action to designate the University Ave / Downtown Area as a Priority Development Area (PDA) on January 13, 2020.2 This designation, later approved by the Association of Bay Area Governments (ABAG), encompasses approximately 206 acres within a half mile radius of the Palo Alto Caltrain Station and generally includes downtown University Avenue, the South of Forest Area Coordinated Area Plan and the Stanford Shopping Center. PDAs as envisioned by the Metropolitan Transportation Commission (MTC) are established to guide growth around transit and connect housing to jobs and areas of interest. 1 https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=454870f4- 764a-4aef-a47a-85ea3f582fbb 2 Attachment E: Draft Resolution of Proposed Priority Conservation Area Designation of Foothills and Baylands Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 2  Packet Pg. 32 of 83  In the project’s initial phase, extensive outreach was conducted to engage community members. Key activities included: Online Presence: A dedicated project website for updates and feedback. Stakeholder Interviews: Confidential one-on-one interviews with key stakeholders to gather interests and concerns. Public Events: A Community Open House, a Community Workshop, pop-up booths at local events, and meetings with property owners. Surveys: Community surveys to capture broader resident feedback. 5 Community Assessment Report 6 In summary, the document provides an overview of current conditions and key challenges affecting new housing development in downtown Palo Alto. It finds that very little housing has been built in the downtown area in the past decade, largely due to challenges such as small parcel sizes, high land costs, a 50-foot building height limit, and requirements for ground-floor retail and parking. These factors make most housing projects unlikely to build under current regulations and market conditions. The report also identifies clear opportunities in this area due to the downtown’s proximity to transit, services, and jobs, making it well-suited for smaller housing types, including units for seniors and essential workers. Community input shows support for more housing, especially if it is well-designed and in alignment with downtown’s character. Housing Development Economic Feasibility Analysis 5 Downtown Housing Plan – City of Palo Alto, CA 6 https://www.paloalto.gov/files/assets/public/v/1/planning-amp-development-services/long-range-planning/area- plans-and-studies/downtown-housing/june-16-item-b-staff-report.pdf Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 3  Packet Pg. 33 of 83  production and identify policy opportunities for increasing the likelihood of development. The analysis focused on key factors such as construction costs, potential revenues, and the impact of City fees and requirements on overall project feasibility. This analysis is available on Attachment A. The report findings are summarized below. Key Findings Current Feasibility: Under current market conditions, the development prototypes analyzed do not generally meet financial feasibility thresholds. Ownership vs. Rental: Smaller ownership prototypes (condominiums) outperform rental prototypes due to a high local price premium for luxury ownership housing. Mid-Rise Rental Projects: Mid-rise rental prototypes are unlikely to be built under current conditions, but their feasibility can change quickly with shifts in development conditions. Office vs. Residential: Office uses continue to outperform residential uses financially in the Plan Area, although office performance is also constrained by broader development challenges. Parking Costs: Parking spaces add substantial costs to housing development, ranging from $25,000 to $123,000 per housing unit, depending on the parking format. Impact Fees: Removal of affordable housing requirements has a minor positive impact on financial feasibility. The removal of all City fees (including impact and permitting fees) results in a substantial increase in the financial feasibility performance of the prototypes.9 Challenges: Broader Market Trends: Construction cost inflation and increased thresholds for return on investment (related to higher interest rates) pose challenges to housing development throughout the Bay Area. Site Constraints: Difficulty providing market-required parking and efficiently using smaller sites. Lot consolidation has historically been rare in Palo Alto, underscoring the need for development incentives or other tools to encourage parcel assembly. 9 NOTE: The feasibility analysis and this report do not recommend eliminating fees as these serve other important City service and infrastructure needs. However, the analysis suggests as part of a future policy discussion some re- calibration to balance impact fees with housing production. This work is soon to get underway as part of the Development Impact Fee update with results expected to be shared with Council in 2026. Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 4  Packet Pg. 34 of 83  Office Competition: The strong desirability of office uses in the Downtown Housing Plan area creates competitive challenges for housing development, as property owners may prefer to maintain high-value office uses. Fees: The City's affordable housing requirements and other fees are not the main reason the prototypes are unlikely to develop under current conditions, but the requirements and fees create an additional cost challenge that reduces the likely timing and pace of housing delivery as development conditions improve. Opportunities to Support Housing Production Adjust Zoning and Land Use Requirements: Increase height and FAR (Floor Area Ratio) to support higher-density housing, allow a greater variety of housing product types, provide flexibility in accommodating parking, and increase the opportunity to produce housing under different market cycles. Link Office Production with Housing Production and Encourage Site Assembly: Create requirements or incentives, such as an office transfer development rights program, that link office production with housing production and encourage site assembly; modify restrictive zoning that limits existing non-conforming office from redeveloping. Reduce City Impact Fees for Housing: Consider reducing or waiving impact fees for housing to improve financial feasibility, while also weighing the importance of these fees in funding critical City infrastructure needs. Flexible Affordable Housing Requirements: Consider greater flexibility in meeting affordable housing requirements, especially for ownership housing products (e.g., allowing fees in lieu of on-site units). Downtown Housing Plan: Next Steps Prior to the adoption of Senate Bill 79, staff and the consultant team were preparing for a community workshop event to refine input on where within the Downtown Housing Plan area greater development potential, such as increased building height and floor area, should be allowed, and where the existing downtown character should be preserved. The project team assigned subareas to the project boundary to gather feedback on where to increase height and floor area. While there was no clear consensus, there was general support for increased height and floor area in Subarea A, closest to the Caltrain station. Opinions regarding future development along Lytton and Hamilton Avenues in Subareas C and D, respectively, and along University Avenue in Subarea B, were mixed between maintaining existing standards and allowing varying levels of increased height (Attachment B). Figure 1 depicts the subareas. Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 5  Packet Pg. 35 of 83  The community workshop and related outreach were also intended to address concerns about potential impacts on adjacent residential neighborhoods and to evaluate properties unlikely to redevelop due to factors such as historic designation, recent construction, or continued office use. Figure 1: Downtown Housing Plan Sub Areas Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 6  Packet Pg. 36 of 83  Key provisions of an TOD Alternative Plan include maintaining at least 50 percent of the statutory density for individual residential sites, except in high-risk areas such as very high fire hazard zones, sites vulnerable to sea level rise, or those with historic designations. Additionally, no single site may accommodate more than 200 percent of the capacity established by state law. 11 Classification of Transit Stops: SB 79 designates transit stops as Tier 1 or Tier 2, with corresponding development standards applicable to areas within one-half mile of a designated stop. The Palo Alto Station, California Avenue Station, and San Antonio Station are all classified as Tier 1 stops (Attachment C). (Gov. Code § 65912.156) Applicable Development Standards for Tier 1 Stops (Downtown Palo Alto, California Avenue, and San Antonio Caltrain Stops) (Gov. Code § 65912.157, subd. (a)): Within one-quarter mile, local governments must allow: o Building height of 75 feet. o Residential density of 120 dwelling units per acre (average unit size 1,750 square feet). o Residential floor area ratio (FAR) of 3.5. o If site is “adjacent” to the transit stop (within 200 feet of a pedestrian access point) it is allowed an additional 20 feet in allowable height, an additional 40 11 SB 79 Legislative Text: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260SB79 Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 7  Packet Pg. 37 of 83  dwelling units per acre in allowable density, and an increase of 1.0 in allowable residential FAR. Between one-quarter and one-half mile, local governments must allow: o Building height of 65 feet. o Residential density of 100 dwelling units per acre (average unit size 1,750 square feet). o Residential FAR of 3.0. Additional Provisions of Interest: A project under SB 79 must include at least five dwelling units and meet the greater of a minimum of at least 30 dwelling units per acre or the minimum density required under local zoning. Inclusionary Housing Requirements (Gov. Code § 65912.157, subd. (c) and (i)) o SB 79 requires each transit-oriented development to satisfy one of the following minimum affordability standards: 7% of units affordable to extremely low-income households; 10% of units affordable to very low-income households; or 13% of units affordable to lower-income households. o Where a local jurisdiction requires a higher percentage of inclusionary units, the local requirement supersedes SB 79. Density Bonus Eligibility (Gov. Code § 65912.157, subd. (d)) o A transit-oriented development shall remain eligible for density bonuses, incentives, concessions, waivers, or reductions in development standards pursuant to Government Code Section 65915 (Density Bonus Law) or a local density bonus program. o For purposes of calculating density bonuses, the base density shall be the minimum density mandated by SB 79. o If the proposed building height for a project exceeds the local limit, the local jurisdiction need not provide a waiver of height beyond the height mandated by SB 79. Relationship to CEQA and Ministerial Approvals (Gov. Code §§ 65912.157, subd. (l), and 65912.159) o SB 79 does not modify the requirements of the California Environmental Quality Act (CEQA). However, individual projects may still take advantage of various CEQA streamlining provisions and exemptions. Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 8  Packet Pg. 38 of 83  o SB 79 does not establish a new ministerial approval process. However, projects qualifying under existing state streamlining statutes (SB 35 and SB 423) may be eligible for ministerial approval, subject to compliance with those statutes. Affordable housing requirements for such projects are not contingent upon the jurisdiction’s RHNA compliance status. TOD Alternative Plan Provision: As noted above, a local jurisdiction may elect to adopt a local TOD Alternative Plan in lieu of implementing SB 79 directly. Requirements for the TOD Alternative Plan include (Gov. Code § 65812.161): Maintains at least the same net zoned capacity (both total units and residential FAR) as prescribed by SB 79. Does not reduce the maximum allowed residential density for any site by more than 50 percent of the density required under SB 79, except in cases where the site: o Is located within a Very High Fire Hazard Severity Zone; o Is vulnerable to at least one foot of projected sea level rise; or o Contains a designated historic resource on a local register. In aggregate, such exceptions may not exceed 10 percent of the eligible TOD zone area. Does not allow any site to exceed 200 percent of the maximum density prescribed by SB 79. Excludes from capacity calculations any sites exempted on the basis of fire hazard, sea level rise vulnerability, or historic resource designation. A local TOD Alternative Plan may provide an opportunity to guide higher building height, density and floor area away from lower density single family or lower density zoning or potentially from University Avenue if there is interest in maintaining a lower profile experience to match the existing character of this retail-oriented street. However, this effort will not preserve the lower density development standards for single family districts within the SB 79 radius. The most the City could reduce allowable density or a property’s floor area ratio through an TOD Alternative Plan is to 50 percent of the new minimum standards established by the legislation. This effectively establishes a baseline development capacity of 1.5 FAR and 50 dwelling units per acre for these sites. For comparison, the City’s R-1 Single-Family Residential zoning currently allows an FAR of 0.45 for lots 5,000 square feet or smaller, and 0.30 for lots larger than 5,000 square feet. In addition, it is unclear whether a 3.0 FAR development would occur on a typically sized R-1 lot in Palo Alto if the statutory density is not modified by an alternative plan. ANALYSIS The original intent of this scheduled discussion with the City Council was to provide an update on the Downtown Housing Plan, describe upcoming community outreach, and receive feedback Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 9  Packet Pg. 39 of 83  on the project’s next steps. With the passage of SB 79, staff’s focus now broadens to seek Council feedback not only on the future of the area planning initiative but also on related efforts connected to SB 79’s broader community implications. This discussion is also informed by other recent legislative changes, including updates to state density bonus law, AB 2097 (which exempts on-site parking for new development), and AB 130 (which provides for streamlined application processing and exemptions from certain state environmental laws). Continue to work on the Downtown Housing Plan. Staff believes there continues to be value in completing the Housing Plan. At a minimum, it can serve as a vision document reflecting Council and community interests for the future development of this area. Completing the Downtown Housing Plan is not a requirement of the Housing Element. There is no obligation to reimburse MTC for any grant funds expended on this project should the City choose not to complete the initiative. Staff recommends this effort continue in parallel with but ultimately trailing work on item 2 below, the TOD Alternative Plan. Focus Resources on Implementing a TOD Alternative Plan. If the City Council determines that a more tailored approach to SB 79 standards is appropriate for Palo Alto, staff recommends temporarily redirecting efforts on the Downtown Housing Plan to prioritize development TOD Alternative Plan. Due to the substantial geographic overlap between the Downtown Housing Plan area and the scope of SB 79, work on the TOD Alternative Plan would also advance the broader goals of the Downtown Housing Plan. The TOD Alternative Plan would be a distinct effort from the Downtown Housing Plan; at this time, staff does not anticipate that this shift in focus will significantly impact the Downtown Housing Plan’s overall timeline. Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 10  Packet Pg. 40 of 83  3.Consider directing staff to create a TOD Alternative Plan for the California Avenue and San Antonio Road Caltrain stops. If the City Council supports pursuing a TOD Alternative Plan for the University Avenue Caltrain station, a similar approach may be appropriate for the California Avenue and San Antonio Road stations, which also serve the Palo Alto community. These areas, due to their proximity to single-family neighborhoods and historic districts, may warrant additional attention to address potential impacts from the increased height and density allowances permitted under SB 79. While a TOD Alternative Plan would not preserve the current development potential on lower-density parcels, it could facilitate improved transitions in height and density between higher- and lower-intensity areas. To promote efficiency, staff recommends that, if the University Avenue plan proceeds, the existing contract with WRT be amended to include the development of SB 79 implementation strategies and TOD Alternative Plans for the California Avenue and San Antonio Road stations. If supported, this work would be conducted concurrently, with public outreach occurring through scheduled, noticed meetings before City boards, commissions, and the City Council. Initiating this additional task could also support the Council’s previous direction to accelerate housing efforts around the California Avenue station. 4.Identify additional sites and opportunities for affordable housing development. Housing Element Program 1.4 contemplates using the Downtown Housing Plan to identify alternate sites for affordable housing development if the City is not on track to meet its quantified objective of 290 affordable units by 2027. Given the current uncertainty surrounding the City’s ability to meet this objective, staff recommends commencing this work as part of its TOD Alternative Plan, if supported, or Downtown Housing Plan, as appropriate. 5.Consider input from the Transit Center ULI study. The Santa Clara Valley Transportation Authority, City of Palo Alto, and Stanford University are hosting the Urban Land Institute’s Advisory Services Program to assess operational efficiency and connectivity at the Palo Alto Transit Center. At the time of this report, a panel of experts are conducting more than 60 stakeholder interviews. This initiative aims to improve transit circulation, enhance station functionality, and explore redevelopment opportunities. Staff will consider the results of this study when developing recommendations for the TOD Alternative Plan, if supported, or Downtown Housing Plan, as appropriate. 6.Explore opportunities to unlock downtown properties for housing production. Independent of SB 79, certain properties are unlikely to redevelop unless the City amends policies that discourage the rebuilding of older, noncomplying commercial buildings. Staff Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 11  Packet Pg. 41 of 83  recommends evaluating options to promote housing production, including allowing commercial office floor area to be transferred from a sender site within the Downtown Housing Plan area to facilitate higher-quality office space in conjunction with new multi-family housing, either as mixed-use or standalone residential development, at another site. Appoint a Downtown Housing Plan/SB 79 Implementation Ad Hoc Committee. Given the volume of work and accelerated timeline, staff recommends considering a City Council ad hoc committee to work with staff and serve as a resource to reflect Council and community values related to changes in the development standards. While most of this work implements state law, these changes represent a significant departure from current City requirements. Where local discretion remains, the ad hoc committee could help staff respond quickly and effectively. The ad hoc would serve for a limited term of less than one year and would not have decision-making authority. Engagement with the ad hoc would not be subject to Brown Act requirements; however, all recommendations and actions would be reviewed through publicly noticed hearings before applicable boards, commissions, and the City Council. NEXT STEPS Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 12  Packet Pg. 42 of 83  and Downtown Housing Plan will be directed to noticed public meetings before applicable City boards, commissions and City Council. A contract amendment for expanded services and resulting budget implications will be presented to Council in a separate consent calendar report. While staff will work to get as close to the implementation schedule for SB 79 as possible, conducting the analysis, preparing the plan, having it reviewed, potentially iteratively, by HCD and preparing any required environmental analysis will likely extend the effort to Q4 2026. If supported, staff will engage the Council ad hoc to maximize Council and community values and expectations in the TOD Alternative Plan and Downtown Housing Plan initiatives. FISCAL/RESOURCE IMPACT 13 for this project, of which $0.6 million has been expended to-date. With the enactment and forthcoming implementation of SB 79, staff anticipates the need to revise the project scope to encompass additional geographic areas not previously included within the Downtown Housing Plan boundary. Following Council direction, staff will return with an updated cost assessment and contract amendment as appropriate. STAKEHOLDER ENGAGEMENT 13 Professional Services Agreement with Wallace Roberts & Todd, LLC: https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=6a9a1f e5-16fb-44c4-9675-89bbc13567a6 Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 13  Packet Pg. 43 of 83  Over the past year, the project team has conducted the following outreach activities: Community Workshop (June 18, 2025) – Held at the Downtown Library and attended by approximately 25 participants, the workshop included an interactive mapping exercise to identify areas suitable for increased residential density within the Downtown Plan Area. Community Survey (September 6–28, 2025) – Approximately 270 responses were received. Staff is consolidating and analyzing the results. Community Open House (October 10, 2024) – Hosted in the Community Meeting Room at City Hall, the event provided an opportunity for participants to share perspectives on key challenges and opportunities related to housing development in the Downtown area. Essential and Service Worker Survey (Fall 2024) – Conducted through two focus groups and a printed survey distributed to downtown business employees; approximately 50 participants provided input on housing needs and commuting patterns. Resident Community Survey (November 18–December 20, 2024) – Received approximately 406 responses. Results have been published on the project webpage for public access. Pop-Up Engagement Events – Project staff participated in the City’s Annual Tree Lighting Event, the California Avenue “3rd Thursday” event, and the Farmers Market, and distributed informational materials to commuters at the Palo Alto Caltrain Station. Community Advisory Group (CAG) Meetings – Convened on January 14, 2025, and July 1, 2025, to review site test fits, discuss feasibility analyses, and provide feedback on engagement strategies and preliminary planning concepts. ENVIRONMENTAL REVIEW ATTACHMENTS Attachment A: Housing Development Economic Feasibility and Implementation Analysis Attachment B: Community Outreach Summary and Preliminary Policy Recommendations Based on Feasibility Analysis Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 14  Packet Pg. 44 of 83  Attachment C: SB 79 Map Based on Caltrain Platform Location15 Attachment D: SB 79 boundary in relation to Downtown Housing Plan and SOFA Boundary APPROVED BY: Jonathan Lait, Planning and Development Services Director 15 The area impacted by SB 79 on based on pedestrian access points rather than platform location, which may result in an expanded boundary. Identification of these points is still being evaluated by staff. Item 4 Item 4 Late Packet Report        Item 4: Staff Report Pg. 15  Packet Pg. 45 of 83  Housing Development Economic Feasibility and Implementation Analysis PALO ALTO DOWNTOWN HOUSING PLAN Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 16  Packet Pg. 46 of 83  Housing Development Economic Feasibility and Implementation Analysis Table of Contents INTRODUCTION .............................................................................................................................. 4 APPROACH AND USE OF ANALYSIS RESULTS.............................................................................. 5 PROTOTYPES AND DEVELOPMENT ASSUMPTIONS ..................................................................... 6 FINANCIAL FEASIBILITY ANALYSIS FINDINGS ............................................................................. 9 OPPORTUNITIES FOR THE CITY OF PALO ALTO TO SUPPORT HOUSING PRODUCTION............18 APPENDIX: PRO FORMA ANALYSIS ASSUMPTIONS AND PRO FORMA STATEMENTS .............20 Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 17  Packet Pg. 47 of 83  Housing Development Economic Feasibility and Implementation Analysis Table of Figures Figure 1: Development Prototypes Studied in the Feasibility Analysis ..................................................... 8 Figure 2: Residual Land Value per Square Foot of Land for each Development Prototype Compared to Typical Current Land Costs per Square Foot ........................................................................................... 11 Figure 3: California Statewide Cost Inflation and Santa Clara County Rent Inflation, 2011 to 2025. 12 Figure 4: Cap Rates and Sales Price per Unit for Multifamily Rental Buildings (20+ Units) Sold Between 2014 and 2025 in Santa Clara County ................................................................................... 13 Figure 5: Residual Land Value Sensitivity under Historic Market Conditions and Revenue Growth Scenarios (Prototype #5: Mid-rise Residential) ....................................................................................... 13 Figure 6: Residual Land Values per Square Foot for each Prototype with Varying Affordable Housing Requirements and Fee Level Scenarios .................................................................................................. 17 Figure 7: Revenue and Supportable Value Calculation and Results for Rental Prototypes................. 21 Figure 8: Revenue and Project Value Calculation and Results for Ownership Prototypes ................... 22 Figure 9: Total Development Cost Results for Rental Prototypes .......................................................... 23 Figure 10: Total Development Cost Results for Ownership Prototypes ................................................. 24 Figure 11: Pro Forma Feasibility Results for Rental Prototypes ............................................................ 25 Figure 12: Pro Forma Feasibility Results for Ownership Prototypes...................................................... 25 Figure 13: Revenue Assumptions for Rental Prototypes ........................................................................ 26 Figure 14: Cost Assumptions for Rental Prototypes ............................................................................... 27 Figure 15: Municipal Fee Calculations for Rental Prototypes ................................................................ 28 Figure 16: Revenue Assumptions for Ownership Prototypes ................................................................. 29 Figure 17: Cost Assumptions for Ownership Prototypes ........................................................................ 30 Figure 18: Municipal Fee Calculations for Ownership Prototypes ......................................................... 31 Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 18  Packet Pg. 48 of 83  Housing Development Economic Feasibility and Implementation Analysis Introduction This report describes the findings and conclusions of an analysis completed to help identify ways to enable and attract housing growth in the Palo Alto Downtown Housing Plan area (“Plan Area”). The findings and recommendations can inform related policy considerations and decisions for inclusion in the City of Palo Alto’s Downtown Housing Plan. The Downtown Housing Plan seeks to enable and attract market rate housing development when market conditions allow, while also safeguarding affordability, livability, and fiscal sustainability. The analysis consisted of a “financial feasibility” assessment for seven market rate housing development prototypes that correspond to typical site conditions in downtown Palo Alto. A financial feasibility analysis reflects the perspective of a housing developer, since production of market rate housing (along with any associated on-site affordable housing units or affordable housing fee revenue for the City of Palo Alto) requires developer interest in pursuing projects. This report’s findings and policy recommendations are one subset of the many considerations for crafting a plan that achieves affordability and livability in downtown Palo Alto. The approach to the analysis reflected the goals of identifying challenges and opportunities for enabling housing production in the Downtown Housing Plan area through policy changes that are within the control of the City of Palo Alto. A sensitivity analysis examined ways in which different policies and evolving development conditions can improve the financial performance of the prototypes and therefore incentivize housing development activity. The remainder of this report opens with a discussion of the approach to and appropriate use of the analysis results. The report then details the development prototype characteristics and describes findings from the financial feasibility analyses of the prototypes. Section V describes conclusions regarding potential policy changes to better enable and support market rate housing production in the Plan Area. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 19  Packet Pg. 49 of 83  Housing Development Economic Feasibility and Implementation Analysis Approach and Use of Analysis Results A financial feasibility analysis represents a developer’s perspective on whether the financial return for a given potential development project merits pursuing that project. Strategic Economics examined the financial feasibility of seven housing development prototypes using a static pro forma model that estimated the current costs, required returns, and supportable land values for each prototype. The assumptions used in the pro forma model were based on market research, review of recent feasibility analyses, and interviews with experienced developers in the region who have completed or are pursuing projects comparable to the prototypes. The analysis measured the financial performance of each prototype using residual land value analysis. In residual land value analysis, the land cost estimate is initially taken out of the equation. Instead, the analysis begins by estimating project market value, hard costs, and soft costs, and applies a minimum acceptable return threshold for a typical developer pursuing the project. The supportable land value is then calculated last, as a residual value after all costs and the minimum return are subtracted from the project’s market value. The residual value conceptually represents the price a developer could pay for a property while still achieving a financially feasible project. If the residual land value is negative or below the typical range of sales prices for land or underutilized properties, then the development project is likely to be infeasible under current conditions. The results of the pro forma analysis represent current development conditions relevant to the generalized and prototypical housing development projects in downtown Palo Alto. This approach aligns with the analysis purpose of informing policy decisions for the Palo Alto Downtown Housing Plan. However, any actual property and development project will benefit from or be challenged by unique conditions such as existing uses, property owner motivations and acquisition/holding costs, access to financing, site- specific land use regulations, and unique pricing for construction labor and materials. As discussed further in this chapter’s findings and conclusions, the financial performance of development projects shifts over time as changes occur in factors often outside the City’s control. The analysis therefore focused on local changes that can improve the financial feasibility of housing development in downtown Palo Alto. This perspective emphasizes ways to better enable development under current conditions and throughout the ongoing changes in the development market cycle. Market rate housing production can be supported by ensuring housing developments in downtown Palo Alto are more likely to provide a competitive return on investment and pose an acceptable level of risk for developers. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 20  Packet Pg. 50 of 83  Housing Development Economic Feasibility and Implementation Analysis Prototypes and Development Assumptions The financial feasibility analysis examined five primary development prototypes based on two differently sized sites, with three variations of Prototype 1 located at the smaller site. The development prototypes represent a range of development densities, heights, configurations, and overall housing product types. Figure 1 provides an overview of the prototypes, followed by further details. The development prototypes and feasibility analysis do not reflect conditions at a specific site. However, the prototypes derive from a series of buildout “test fits” prepared by WRT based on properties in downtown Palo Alto. The relevant test fits reflected conditions for properties located at 318 University Avenue (a small mid-block parcel) and 136 Hamilton Avenue / 650 High Street (a large three-parcel site with common ownership, located near the Palo Alto Caltrain Station). The test fits were based on physical site characteristics and typical housing product types found in Palo Alto, rather than on the existing zoning and development standards in downtown Palo Alto. In addition to their residential components, all prototypes except Prototype 5 included office and ground-floor retail space. This was to acknowledge ground floor retail requirements in areas of downtown and is based on developer feedback that office space is desirable and financially beneficial for development projects in downtown Palo Alto. The prototypes include on-site parking for the residential units, but only in the minimal quantities likely required to make the units marketable to buyers or renters. Most of the project area is located within a half-mile radius of the Palo Alto Caltrain station. Under State legislation authorized by AB 2097, no minimum parking requirements apply to those qualifying parcels. and are four-story mixed-use buildings on a small 8,000 square foot (.18 acre) site. The prototypes include 2,000 square feet of retail on the first floor, 6,000 square feet of office on the second floor and up to eight residential units on the upper floors. The parking is accessed via an alley at the rear of the building and tucked under the upper floors. Prototype 1a was analyzed as a rental project and prototypes 1b and 1c were analyzed as ownership projects. Prototype 1b best reflects recently completed and proposed development projects on similar sites in downtown Palo Alto, with most projects including the maximum allowable office space and a limited number of larger ownership condominium housing units. is a horizontal mixed-use development that includes two buildings at a 20,937 square foot site (.48 acres). The buildings consist of a seven-story residential building and a four-story retail and office building. This prototype includes 55 rental housing units and approximately 21,000 square feet of office space, with parking located underground. The average residential unit size for this prototype is the same as Prototype 3 at 725 net square feet. is a vertical mixed-use building located at a property with the same site characteristics as Prototype 2. Prototype 3 includes 63 rental housing units above retail and office space on the first two floors, with parking located underground. is a horizontal mixed-use building located at a property with the same site characteristics as Prototype 2. Prototype 4 is similar to Prototype 2, but includes fewer rental housing units, more office space, and relatively cost efficient “podium” parking. This prototype was included to examine whether additional office space improves the financial performance of a mixed-use housing project and the impact of podium versus underground parking. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 21  Packet Pg. 51 of 83  Housing Development Economic Feasibility and Implementation Analysis is a mid-rise residential building located at a property with the same site characteristics as Prototype 2. This prototype consists of an entirely residential seven-story rental apartment building with podium parking. The prototype was included to examine the performance of this building type without the influence of other commercial uses in the analysis results. Building codes specify the use of different materials for different building heights and uses based on safety requirements. Construction labor and materials costs vary with different construction “types.” As a result, costs per square foot of the building area vary with the prototypes: • The small-scale prototypes 1a, 1b, and 1c were assumed to primarily consist of Type II light steel construction. • Prototypes 2, 3, 4, and 5 were assumed to use mixes of “Type I” concrete or steel construction for parking structures and office space, and Type IIIa wood frame construction for upper residential floors above the concrete podium. • Generally, construction costs per square foot are highest for Type I construction, lower for Type II and lower still for Type IIIa. • The analysis did not include a prototype taller than eight stories. Towers taller than mid-rise seven- to eight-story projects typically must consist entirely of Type I construction.1 These high- rises therefore incur a relatively high increase in overall fixed costs and incur high construction costs per square foot of building area compared to mid-rise “podium” buildings with a mix of Type I and IIIa construction. Type I buildings often require substantial additional height to include sufficient square feet of revenue-generating space that overcomes the large increase in fixed development costs associated with these high-rise projects. High-rise projects are typically only built under extremely favorable development conditions when rents or sales prices exceed these high construction costs. 1 “Mass timber” construction (Type IVa.-c.) can also be used to construct buildings taller than eight stories, especially in conjunction with a Type I concrete podium. Mass timber is a relatively new construction type in the Bay Area for taller residential development projects. Although costs per square foot are slightly higher than Type I construction, mass timber may become an increasingly attractive alternative for taller residential building construction as supply chains become better established and construction costs decline. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 22  Packet Pg. 52 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 1: DEVELOPMENT PROTOTYPES STUDIED IN THE FEASIBILITY ANALYSIS 7 (Residential) 7 (Residential) Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 23  Packet Pg. 53 of 83  Housing Development Economic Feasibility and Implementation Analysis Financial Feasibility Analysis Findings The financial feasibility analysis results illustrate the relative performance of the prototypes, factors influencing that performance, and how changes in development conditions and City requirements can enhance the feasibility of and better enable market rate housing development in downtown Palo Alto. The findings therefore focus on how to enhance the financial performance of housing development in the Plan Area to motivate developers and property owners to pursue new projects. The findings cover the following topic areas and inform policy decisions for accelerating housing development as part of the Downtown Housing Plan: • Relative financial feasibility performance of the prototypes under current conditions • Impacts of broader development trends and opportunities • Mid-rise housing performance and opportunities • Influence of office uses • Parking impacts • Sensitivity to City fees and requirements RELATIVE FINANCIAL FEASIBILITY PERFORMANCE OF THE PROTOTYPES UNDER CURRENT CONDITIONS The prototypes do not meet general financial feasibility thresholds under current conditions. Typical costs for developable sites in and near downtown Palo Alto vary widely, and few transactions have occurred in recent years. However, typical sales of land and underutilized properties in and near downtown Palo Alto range from $600 to $800 per square foot of land. As shown in Figure 2, no development prototype achieves a minimum $600 per square foot residual land value under current conditions; two prototypes support land values that are significantly positive but still below the $600 to $800 threshold. The following findings discuss results and implications for specific prototypes. Property owners and developers with low land costs may choose to pursue development of a project that does not achieve the typical return on investment (expressed in this analysis as meeting the required residual land value threshold). However, any development project must still generate a competitive return on investment that corresponds to the relatively high risk of pursuing a development project. Developers and landowners have a wide variety of options for use of property, including selling it, holding it for sale in anticipation of improved conditions, receiving revenue from the existing conditions, or developing the property. As described in detail in Section II, the financial feasibility analysis results are based on current and generalized conditions to provide a tool for gauging how changes in market conditions and City policies can improve the prototypes’ performance. Later findings of this report describes broader challenges impacting housing feasibility in the Bay Area—primarily construction cost inflation and increased thresholds for return on investment Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 24  Packet Pg. 54 of 83  Housing Development Economic Feasibility and Implementation Analysis (related to higher interest rates)–and the report’s conclusions describe opportunities to better enable housing development in the Plan Area. As shown in Figure 2, the analysis found that larger luxury ownership products—such as prototype 1c and especially 1b—perform relatively well in downtown Palo Alto due to high achievable sales prices. Prototype 1b achieves the highest residual value per square foot of land, at $505. Prototypes 1b and 1c represent small boutique condominium projects. Palo Alto attracts a substantial price premium for condominiums compared to the larger region, with the “Zillow Home Value Index” for July 2025 estimating that typical condominiums in Palo Alto command a 149 percent value premium compared to typical condominiums in Santa Clara County overall.2 While achievable rents in downtown Palo Alto are also among the highest in the surrounding area, they do not command a comparable overall premium. As of April 2025, CoStar reported that average effective rents per square foot for apartments in Palo Alto were only 6.3 percent higher than in Santa Clara County overall.3 As shown in Figure 2, Prototypes 2, 3, 4, and 5 generated residual land values of between -$437 and $12 per square foot of land. These rental prototypes represent a mid- rise product that achieves a relatively high density in an efficient format—especially when built at sites of at least half an acre. However, broader market challenges are temporarily constraining the financial feasibility performance of these prototypes. The following subsection of this chapter describes these challenges and how shifting development conditions can especially support higher density mid-rise housing products. 2 Based on data gathered in August, 2025, the Zillow Home Value Index (ZHVI) estimated condominium values of $1,258,451 in Palo Alto and $842,418 in Santa Clara County. More details regarding the ZHVI are available at https://www.zillow.com/research/data/. 3 Based on CoStar data for all tracked apartments, gathered in April, 2025. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 25  Packet Pg. 55 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 2: RESIDUAL LAND VALUE PER SQUARE FOOT OF LAND FOR EACH DEVELOPMENT PROTOTYPE COMPARED TO TYPICAL CURRENT LAND COSTS PER SQUARE FOOT Source: CoStar, 2025; Strategic Economics, 2025. IMPACTS OF BROADER DEVELOPMENT TRENDS AND OPPORTUNITIES The following findings discuss how broader regional and national factors are influencing the financial feasibility outcomes of the housing development prototypes for downtown Palo Alto, and how changes in these factors can readily improve the prototypes’ performance in the future. Project costs can fluctuate due to changes in construction labor costs, materials costs, and a variety of other factors. Similarly, a development project’s revenue can vary depending on the availability of housing supply in the local market, changes in the attractiveness of a project’s location, or other factors impacting demand in the local market. The minimum threshold for investment return can also fluctuate based on external factors such as interest rates and trends in real estate capital markets—recognizing that real estate development must compete against all other investment options. These are shared challenges that are slowing housing development throughout the Bay Area. Figure 3 shows the annual percent change in the California Construction Cost Index produced by the State of California. The index measures change in labor and materials costs in the San Francisco Bay Area and Los Angeles regions. Costs rapidly increased in 2021 through 2023, greatly outpacing rent growth in Santa Clara County. However, rent growth also often outpaces construction cost growth, such as in 2012 through 2015, 2018, and 2024. $23 $505 $394 ($437) ($259) $12 ($76) -$600 -$400 -$200 $0 $200 $400 $600 $800 Prototype 1a: Small Vertical Mixed-Use Apartments Prototype 1b: Small Vertical Mixed-Use Condos (4 Unit) Prototype 1c: Small Vertical Mixed-Use Condos (8 Unit) Prototype 2: Horizontal Mixed-Use Apartments Prototype 3: Vertical Mixed-Use Apartments Prototype 4: Horizontal Mixed-Use with Higher Commercial FAR Prototype 5: Mid-rise Residential Typical Range of Land Values in Downtown Palo Alto Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 26  Packet Pg. 56 of 83  Housing Development Economic Feasibility and Implementation Analysis Figure 4 shows that capitalization rates (which describe the ratio between a property’s annual income and its market value) increased in 2023, indicating a decline in investor confidence in multifamily investments. This decline was in response to higher interest rates at the national level and a softening of the rental market throughout much of the Bay Area.Increased perceptions of risk and required return on investment also led to a decline in the average market value of multifamily properties per housing unit in Santa Clara County since 2020, as also shown in Figure 4. Figure 5 demonstrates the variability of residual value for development Prototype 5 (the mid-rise housing-only product) in response to changes in cap rates and achievable rents.4 Essentially, the chart demonstrates that this prototype was financially feasible during a period of lower cap rates and required return on investment, and could again become financially feasible with modest increases in rents and eventual declines in required investment returns. These changes will take time to occur; however, changes to local policies could better enable housing development in downtown Palo Alto once these market conditions turn favorable. Developers continue to propose new housing development projects anticipating future improvements in conditions and situation-specific advantages related to project financing, costs, investment goals, and site or project efficiency. For example, developers are pursuing at least five large mid-rise market rate housing projects within the boundaries of Palo Alto’s San Antonio Road Area Plan. FIGURE 3: CALIFORNIA STATEWIDE COST INFLATION AND SANTA CLARA COUNTY RENT INFLATION, 2011 TO 2025 Source: California Department of General Services, 2025; CoStar, 2025; Strategic Economics, 2025. 4 The analysis presents a simplified example of current versus historic conditions and outcomes for two variables to gauge whether and how the mid-rise development prototype could become financially feasible. As noted earlier in this report, all aspects of development costs, revenues, and returns are, in reality, complexly dynamic and inter-related. -5% 0% 5% 10% 15% 20% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 California Construction Costs Santa Clara County Multifamily Rents Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 27  Packet Pg. 57 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 4: CAP RATES AND SALES PRICE PER UNIT FOR MULTIFAMILY RENTAL BUILDINGS (20+ UNITS) SOLD BETWEEN 2014 AND 2025 IN SANTA CLARA COUNTY Source: CoStar, 2025; Strategic Economics, 2025. FIGURE 5: RESIDUAL LAND VALUE SENSITIVITY UNDER HISTORIC MARKET CONDITIONS AND REVENUE GROWTH SCENARIOS (PROTOTYPE #5: MID-RISE RESIDENTIAL) Note: As previously described, developers and landowners have unique investment goals, property holding costs, and other unique conditions that may allow projects that do not meet the typical land cost threshold to still proceed—although any project must generate a competitive return on investment relative to risk. Source: CoStar, 2025; Strategic Economics, 2025. MID -RISE HOUSING PERFORMANCE AND OPPORTUNITIES While the small ownership prototypes currently perform relatively well, these prototypes are likely insufficient to meet the housing needs of downtown Palo Alto due to the prototypes’ high sales prices, creation of small increments of housing, high construction costs, and limited opportunity sites. Prototypes 1b and 1c, located on a small typical site in downtown Palo Alto, support relatively high residual values. However, developers interviewed for this study noted that these prototypes are challenging to deliver due to the inefficiencies inherent in providing market-required parking and in making efficient use of small sites while meeting safety and circulation needs. Notably, Prototypes 1b 0% 1% 2% 3% 4% 5% 6% $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Ca p R a t e Sa l e s P r i c e p e r U n i t Sales Price per Unit Cap Rates -$50,000 $0 $50,000 $100,000 $150,000 $200,000 $250,000 0%5%10% Change in Market Rents Typical Land Values per Unit in Downtown Palo Alto Range of Residual Land Values based on Historic Cap Rates Residual Land Value under Approximate 2017-2019 Cap Rates Residual Land Value under Current Cap Rates Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 28  Packet Pg. 58 of 83  Housing Development Economic Feasibility and Implementation Analysis and 1c assumed use of tuck-under parking off a rear alley, but most sites in downtown would likely require the more expensive underground parking. As noted above, the mid-rise housing prototype can move closer to becoming financially feasible through changes such as increased achievable rents, changing thresholds for returns on investment, and slower increases in construction costs. Mid-rise housing developments are relatively efficient development products that concentrate a large amount of housing units at a given site—enabling mid-rise developments to become attractive investments under conditions in which each square foot of space provides a return on investment. Larger mid-rise housing products—such as those in Prototypes 2, 3, 4, and 5—also support production or relatively large increments of housing that can help meet the production goals of the City of Palo Alto. As described in the Community Assessment Report for the Downtown Housing Plan, the ideal site for a mid-rise housing development is a rectangular site of at least a half-acre in size. Few sites in downtown Palo Alto fall within this size range, making it likely that developers would prefer to assemble properties to create larger development opportunity sites; however, lot consolidations have historically been rare in Palo Alto, underscoring the need for development incentives or other tools to encourage parcel assembly. INFLUENCE OF OFFICE USES Based on the financial feasibility analysis of the prototypes, office uses currently outperform residential uses in the Plan Area—although office performance is also constrained by broader development challenges. As shown in Figure 1, Prototype 5 consists of an entirely residential mid-rise podium building while Prototype 4 consists of an office building (with 34,385 square feet of office space rather than the 20,937 square feet that is currently allowed) and a residential building. The prototype floor area ratios (FAR) are 3.91 and 3.56 overall, respectively. The financial feasibility results in Figure 2 show that the entirely residential Prototype 5 only supports a -$76 residual value per square foot of land area, compared to $12 for Prototype 4. Office use supports higher residual land values than the residential use for these prototypes under current conditions, although office products are still unlikely to be financially feasible due to broader weakness in the office market and increased thresholds for required return on investment. The relatively strong performance of office space in downtown Palo Alto reinforces input from local developers that the area has long been a highly desirable office location that commands exceptionally high rents within the Silicon Valley. This creates a challenge for housing development in that property owners would often prefer to maintain existing high value office uses rather than pursue redevelopment to include other uses. This is especially true given that the base zoning in downtown Palo Alto only allows a maximum 1.0 base FAR for office space, discouraging developers from redeveloping properties that exceed this FAR under a prior nonconforming use. Examples include allowing transfers of office development rights between properties in exchange for housing development or allowing “bonus” office space in exchange for housing development on the same property. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 29  Packet Pg. 59 of 83  Housing Development Economic Feasibility and Implementation Analysis Examples of these concerns include the potential to exacerbate the City’s already high ratio of jobs to housing, and the risk of spillover impacts on adjacent neighborhoods from additional automobile traffic and demand for limited on-street parking—especially since minimum parking requirements for new development projects do not apply within one-half mile of the Palo Alto Caltrain station under AB 2097. PARKING IMPACTS Parking spaces add substantial costs to housing development. The parking spaces included in the development prototypes serve the housing units. The parking components of these prototypes added $25,000 to $50,000 in additional “hard” costs (labor and materials) per housing unit for Prototypes 1a through 1c, $107,000 to $123,000 per unit for Prototypes 2 and 3, and $17,000 to $34,000 for Prototypes 4 and 5. These varying costs relate to the parking format and ratio of spaces to housing units, but demonstrate the high additional costs for providing parking. As noted in the Community Assessment Report for the Downtown Housing Plan, nearly the entire Plan Area falls within a half mile radius of the Caltrain station and is therefore subject to AB 2097. AB 2097 eliminates minimum parking requirements near robust transit service such as the Palo Alto Caltrain station. Parking ratios can typically be reduced more for rental housing projects than ownership projects. However, developers still typically seek to provide at least 1 to 1.25 spaces per unit, but with the opportunity to reduce ratios below 1.0 in locations with excellent regional transit service (such as blocks immediately adjacent to the Caltrain station) and access to local jobs and amenities. The cost to provide a parking space increases significantly when built underground versus in an at- or above-grade podium level. Developer interviews suggest an approximate hard cost of $40,000 per space in a podium versus $100,000 or more per space below grade (with especially high costs if space constraints result in the need for parking access solely via a vehicle elevator). Parking lifts or stackers can increase efficiency, but the spaces are less desirable for residents and still add $15,000 to $40,000 in additional construction cost per space for the mechanical equipment (which then must be maintained and eventually replaced). SENSITIVITY TO CITY FEES AND REQUIREMENTS Strategic Economics analyzed the sensitivity of the financial feasibility outcomes to two sets of requirements directly imposed on housing development by the City of Palo Alto. These analyses complement the preceding findings that discussed financial feasibility outcomes and opportunities related to land uses, housing product types, broader development conditions, competition with office uses, and parking quantity and format. The sensitivity analysis explored two scenarios to gauge relative improvement of the prototypes’ financial performance. The first scenario examined outcomes if all local affordable housing Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 30  Packet Pg. 60 of 83  Housing Development Economic Feasibility and Implementation Analysis requirements applicable to the housing uses were waived. As originally applied to the prototypes based on City of Palo Alto mandates, these requirements included: • payment of an affordable housing impact fee for all rental prototypes (1a, 2, 3, 4, 5), • payment of a fractional inclusionary housing in-lieu fee for the small four-unit ownership housing project in Prototype 1b, and • provision of one inclusionary unit and payment of a fractional in-lieu fee for Prototype 1c. The second sensitivity analysis scenario examined outcomes if, in addition to the removal of local affordable housing requirements, all other City impact fees and entitlement/permitting fees were also waived (regardless of whether those fees apply to the residential, retail, or office components of the prototypes). The testing of these scenarios was not intended to directly represent a recommended course of action since the waived requirements support other City of Palo Alto goals. Affordable housing requirements impact where and how the City provides affordable housing and supports the creation of mixed income communities. Impact fees support capital improvements that serve new public infrastructure and facilities associated with housing. The positive financial feasibility impact of removing affordable housing requirements from the development prototypes was relatively minor, as shown in Figure 6. However, the cost impacts of Palo Alto’s affordable housing requirements can vary depending on the type and magnitude of the requirements. For example, a large gap exists between sales prices for market rate housing units versus affordable housing units. For Prototype 1c, this gap is equivalent to an $800,000 revenue loss due to inclusion of its single affordable housing unit. In contrast, the in-lieu fee payment for the affordable housing unit would be approximately $412,000. This difference partly explains why Prototype 1b, which was assumed to pay an in-lieu fee for its fractional .6 affordable housing unit obligation, outperforms prototype 1c. As shown in Figure 6, elimination of all City impact and permitting fees markedly improved the residual value of the development prototypes. This includes Prototype 5, which solely consists of residential use. Removal of the Park Impact Fee resulted in the greatest cost savings for the prototypes, with this fee constituting a quarter to half of total fee costs for all prototypes—except for Prototype 1b in which the affordable housing in- lieu fee is higher than the Park Impact Fee Due to the broader challenges for housing development identified earlier, Figure 6 shows that only the small ownership prototypes 1b and 1c are relatively likely to achieve financial feasibility without application of affordable housing requirements and impact fees. However, Figure 6 also shows that the residual values of all prototypes significantly improve without those requirements. Such improvements can better enable housing development by reducing risk for developers and creating further financial incentives for them to pursue new projects. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 31  Packet Pg. 61 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 6: RESIDUAL LAND VALUES PER SQUARE FOOT FOR EACH PROTOTYPE WITH VARYING AFFORDABLE HOUSING REQUIREMENTS AND FEE LEVEL SCENARIOS Source: Strategic Economics, 2025. -$600 -$400 -$200 $0 $200 $400 $600 $800 $1,000 Prototype 1a: Small Vertical Mixed-Use Apartments Prototype 1b: Small Vertical Mixed-Use Condos (4 Prototype 1c: Small Vertical Mixed-Use Condos (8 Unit) Prototype 2: Horizontal Mixed-Use Apartments Prototype 3: Vertical Mixed-Use Apartments Prototype 4: Horizontal Mixed-Use with Higher Commercial FAR Prototype 5: Mid-rise Residential Typical Range of Land Values in Downtown Palo Alto Residual Land Value (Current Requirements and Conditions) Residual Land Value (no Residential Affordable Housing Requirements/Fees) Residual Land Value (no Affordable Housing Requirements/Fees and no Municipal Fees) Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 32  Packet Pg. 62 of 83  Housing Development Economic Feasibility and Implementation Analysis Opportunities for the City of Palo Alto to Support Housing Production Based on the pro forma analysis findings, the following conclusions describe opportunities for the City of Palo Alto to better enable housing production in the Downtown Plan Area by improving the financial feasibility of market rate housing projects. These conclusions indicate potential policy changes for further exploration and refinement by the WRT team based on input from City decision makers. Developers and landowners each have their own unique investment goals, property holding costs, and other unique conditions. Developers and landowners also have a wide variety of options for use of property, including selling it, holding it for sale in anticipation of improved conditions, receiving revenue from the existing conditions, or developing the property. Furthermore, current regional conditions—such as high construction materials and labor costs and elevated interest rates and required return on investment—are unfavorable for housing development. Palo Alto has a range of options to better enable downtown homebuilding in response, from modest adjustments that position housing to move forward when conditions improve, to more proactive measures that could stimulate housing production even under today’s challenging market environment. Adjust zoning and land use requirements—including increased height and FAR to support higher density housing—to allow a greater variety of housing product types, provide flexibility in accommodating parking, and increase the opportunity to produce housing under different market cycles: Allowing additional flexibility to increase building heights and FAR, and potentially relaxing other design and use requirements can increase the potential for the Downtown Housing Plan area to produce new housing. For example, these relaxed requirements could enable Downtown Palo Alto to produce a significant quantity of housing in mid-rise housing projects during periods when those products are financially feasible as discussed in this report13. Increased allowable heights can also reduce construction costs by enabling less expensive above-ground parking options as opposed to the more expensive subterranean parking option15. Create requirements or incentives that link office production with housing production and encourage site assembly: 14Office space in downtown Palo Alto has stronger long-term demand and performs relatively well from a financial feasibility perspective. The City of Palo Alto historically limited office development downtown through imposition of a 1.0 FAR limit (unless using transfers of development rights from other properties) and configuration and location requirements that essentially limit the ability to replace existing office use at a Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 33  Packet Pg. 63 of 83  Housing Development Economic Feasibility and Implementation Analysis property. These limitations create an opportunity to link highly valued office development rights to housing production. Examples include: o Creating an incentive structure that links granting of office development rights with production of housing; o Allowing transfers of office development rights between properties when linked to housing production at the property that “sends” office development rights to a “receiving” property—thereby creating larger and more efficient office development opportunities while potentially freeing housing development sites and encouraging lot consolidation for creating more efficient housing development projects. o Reducing allowable commercial FAR from the current 1.0 in order to reduce competition between office and residential uses or to increase the attractiveness of the incentive concepts described above. Reduce City impact fees for housing: 15Removal of impact fees significantly improves the financial feasibility of the development prototypes. However, any waivers or reductions in fees should be weighed against the important role these fees play in funding critical City infrastructure needs. For example, the analysis found that the Park Impact Fee represents a substantial share of total housing development fees. However, the fee provides a critical source of revenue for acquisition of land and improvements for parks in Palo Alto. Consider potential flexibility in ways to meet affordable housing requirements, especially if linked with the other incentives described above: 15Affordable housing requirements reduce the financial feasibility of the development prototypes, although this impact varied depending on whether the prototype was subject to an impact fee, in-lieu fee, or on-site affordable housing requirement. However, these requirements do support the critical affordability needs and goals of Palo Alto. Therefore, greater flexibility to pay fees for ownership housing products (rather than provide on-site affordable housing units) could be considered as a means of reducing the substantial cost impact of the inclusionary requirement. These fees would still generate revenues that the City of Palo Alto can leverage to produce more affordable housing units at deeper levels of affordability in 100% affordable housing projects. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 34  Packet Pg. 64 of 83  Housing Development Economic Feasibility and Implementation Analysis Appendix: Pro Forma Analysis Assumptions and Pro Forma Statements Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 35  Packet Pg. 65 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 7: REVENUE AND SUPPORTABLE VALUE CALCULATION AND RESULTS FOR RENTAL PROTOTYPES Residential Retail Office Residential Retail Office NOI: Net Operating Income Source: CoStar, 2025; Strategic Economics, 2025 Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 36  Packet Pg. 66 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 8: REVENUE AND PROJECT VALUE CALCULATION AND RESULTS FOR OWNERSHIP PROTOTYPES Residential Retail Office Residential Commercial NOI: Net Operating Income Source: Costar, 2025; Strategic Economics, 2025. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 37  Packet Pg. 67 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 9: TOTAL DEVELOPMENT COST RESULTS FOR RENTAL PROTOTYPES Source: Strategic Economics, 2025. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 38  Packet Pg. 68 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 10: TOTAL DEVELOPMENT COST RESULTS FOR OWNERSHIP PROTOTYPES Source: Strategic Economics, 2025. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 39  Packet Pg. 69 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 11: PRO FORMA FEASIBILITY RESULTS FOR RENTAL PROTOTYPES Source: Strategic Economics, 2025. FIGURE 12: PRO FORMA FEASIBILITY RESULTS FOR OWNERSHIP PROTOTYPES Source: Strategic Economics, 2025. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 40  Packet Pg. 70 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 13: REVENUE ASSUMPTIONS FOR RENTAL PROTOTYPES GSI: Gross Scheduled Income Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 41  Packet Pg. 71 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 14: COST ASSUMPTIONS FOR RENTAL PROTOTYPES Target Developer Yield-on- cost NSF: Net Square Foot Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 42  Packet Pg. 72 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 15: MUNICIPAL FEE CALCULATIONS FOR RENTAL PROTOTYPES NSF: Net Square Foot Note: Permit fees, connection/capacity fees, and other miscellaneous fees are included in general soft cost assumptions. Note: Fees charged for all applicable square feet; analysis did not include credits for hypothetical pre-existing square feet at the development prototype sites. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 43  Packet Pg. 73 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 16: REVENUE ASSUMPTIONS FOR OWNERSHIP PROTOTYPES NSF: net square foot GSF: gross square foot GSI: gross scheduled income NOI: net operating income Source: Strategic Economics, 2025. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 44  Packet Pg. 74 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 17: COST ASSUMPTIONS FOR OWNERSHIP PROTOTYPES SF: square foot GSF: gross square foot NSF: net square foot Source: Strategic Economics, 2025. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 45  Packet Pg. 75 of 83  Housing Development Economic Feasibility and Implementation Analysis FIGURE 18: MUNICIPAL FEE CALCULATIONS FOR OWNERSHIP PROTOTYPES GSF: gross square foot NSF: net square foot Note: Permit fees, connection/capacity fees, and other miscellaneous fees are included in general soft cost assumptions Note: Fees charged for all applicable square feet; analysis did not include credits for hypothetical pre-existing square feet at the development prototype sites Source: City of Palo Alto Fiscal Year 2025 Adopted Municipal Fee Schedule, 2025; Strategic Economics, 2025. Item 4 Attachment A - Housing Development Economic Feasibility and Implementation Analysis        Item 4: Staff Report Pg. 46  Packet Pg. 76 of 83  1 Attachment B: Community Outreach Summary and Preliminary Policy Recommendations Based on Feasibility Analysis Community Outreach As a part of the community outreach and engagement strategy, the project team created a large map of the downtown area sectioned into smaller subareas based on locational attributes, general character of development, and shared physical features were provided as the base. The subareas were intended to encourage participants to take a contextual and place-based approach towards distributing density. The subareas1 as presented to the community were: •Subarea A: Encompasses blocks adjacent to the Caltrain Station, including Alma and High Streets, characterized by its proximity to regional transit and existing development. •Subarea B: Parcels on University Avenue, characterized by development with active retail frontage, a mix of uses, smaller scale, fine-grained development pattern, and a consistent street canopy that defines University Avenue’s characteristic experience. •Subarea C and D: Parcels along Lytton and Hamilton Avenues, generally characterized by adjacent residential neighborhoods. As a part of the exercise, participants were asked to distribute three dimensional blocks representing residential and commercial development within the identified project boundary. The following were recurring themes that emerged from the exercise, the pop-up event, and the survey: •Subarea A should accommodate the highest levels of new density due to transit proximity. •University Avenue’s existing character should be preserved, with minimal changes to scale and form. •Increased residential density is appropriate in Subareas C and D, provided transitions to adjacent neighborhoods are context sensitive. While feedback received at the pop-up event regarding Sub Areas A, C & D are similar to those stated here, the feedback received through the pop up exhibited more openness to height on University Avenue ranging up to 8 stories. Feasibility Analysis The project team analyzed five market-rate housing development prototypes on three representative sites within the plan area to assess their financial feasibility. Financial 1 https://www.paloalto.gov/files/assets/public/v/1/planning-amp-development-services/long-range- planning/area-plans-and-studies/downtown-housing/cag-meeting-2-presentation-slides.pdf Item 4 Attachment B - Community Outreach Summary and Preliminary Policy Recommendations Based on Feasibility Analysis        Item 4: Staff Report Pg. 47  Packet Pg. 77 of 83  2 feasibility of a project indicates the potential return on investment and helps determine the likelihood that a project would be built by developers. The analysis also identifies key factors influencing financial feasibility and highlights opportunities and policy considerations to encourage housing production under favorable market conditions, while advancing the City’s goals for housing affordability, fiscal sustainability, and overall livability. • Prototype 1 (1a–1c): Four-story mixed-use buildings on 8,000 sq. ft. parcels with retail, office, and four to eight housing units. • Prototype 2: Seven-story residential building with four stories of office/retail on a 0.48-acre parcel; 55 units with underground parking. • Prototype 3: Seven-story residential-over-office vertical mixed-use development on a 0.48-acre parcel; 63 units, FAR 2.73. • Prototype 4: Horizontal mixed-use development emphasizing office uses with podium parking on a 0.48-acre parcel. • Prototype 5: Seven-story mid-rise residential development with podium parking, entirely residential on a 0.48-acre parcel. Findings and Assumptions in the Feasibility Analysis (Attachment A) were developed using a static pro forma financial model based on the current market research, review of recent financial feasibility analyses of development projects (including construction costs, require returns, land values), interviews with experienced developers, and assumptions including affordable housing funding gap needs, fees, parking provisions, and changing market conditions. Each prototype developed is built on comparable protypes of current projects and account for the current construction costs, required returns, and supportable land values to ensure feasibility. Findings from the Feasibility Analysis The analysis used the residual land value approach. This method estimates a project’s market value, hard and soft costs, and applies a minimum return threshold. The land cost is excluded initially, with supportable land value determined in the end; representing the maximum price a developer would pay while maintaining financial viability. The feasibility analysis conducted yielded the following results: 1. Market conditions are cyclical, and the broader challenges currently impacting housing production are not limited to the project area, but affect the region. This is expected to change when the market conditions improve. 2. None of the development prototypes are likely to be financially feasible under current conditions due to high land value. 3. Small luxury ownership products significantly outperformed rental products due to high achievable sale prices; and Item 4 Attachment B - Community Outreach Summary and Preliminary Policy Recommendations Based on Feasibility Analysis        Item 4: Staff Report Pg. 48  Packet Pg. 78 of 83  3 4. Mid-rise rental prototypes are relatively infeasible in downtown Palo Alto under current conditions, but as development conditions shift, feasibility outcomes can change quickly for projects that can achieve higher densities in an efficient format, especially on half-acre or larger sites. This indicates a potential need for parcel assembly in the Plan Area.; and 5. Office uses outperform residential uses in the Plan Area, creating a strong desirability, increasing the competitiveness for residential development. Preliminary Policy Recommendations The analysis takes into consideration associated project costs such as labor, construction materials, and other factors such as market demand and interest rates to determine the investment return in the current market. While no prototype tested yields favorable results to make a project financially feasible, the analysis identifies local strategies to improve development viability and accelerate housing production by ensuring competitive returns and manageable risks for developers, recognizing that market conditions and project- specific factors will vary over time. 1. Amending development regulations to allow for greater variety of housing product types, flexibility in accommodating parking, and increased opportunity to produce housing under different market cycles: a. Increased maximum building height to encourage mid-rise residential typology: Blocks closer to the Caltrain Station (between Alma and Emerson Streets), parcels in the Plan area interfacing with the South of Forest Ave (SOFA) district and blocks along Lytton and Hamilton Avenues could potentially have a greater building height of up to 85’-0”. This could facilitate increased ground floor heights ideal for ground floor active uses, stacked parking, and the use of modular/prefabricated construction materials. 2. Increased maximum Floor Area Ratio (FAR) by-right for residential use: a. Downtown Commercial (CD-C) and RM-zones in the Plan area can take advantage of increased residential FAR to maximize residential capacity and encourage variety of unit types at different affordability levels. b. Additional FAR (beyond the inclusionary requirement) can be used to incentivize Below Market Rate (BMR) units. c. Granting “bonus” office development rights through the production of housing, allowing for transfer of office development rights between properties; and facilitating lot consolidation in the Plan Area for residential development. 3. Updated open space and common use space requirements to improve project feasibility. 4. Updated maximum unit size standards and updated development requirements on smaller parcels: Item 4 Attachment B - Community Outreach Summary and Preliminary Policy Recommendations Based on Feasibility Analysis        Item 4: Staff Report Pg. 49  Packet Pg. 79 of 83  4 a. A parcel size-based approach to on-site inclusionary unit and open space requirements. 5. Reducing impact fees for housing and providing flexibility with affordable housing requirements. Item 4 Attachment B - Community Outreach Summary and Preliminary Policy Recommendations Based on Feasibility Analysis        Item 4: Staff Report Pg. 50  Packet Pg. 80 of 83  5 Item 4 Attachment B - Community Outreach Summary and Preliminary Policy Recommendations Based on Feasibility Analysis        Item 4: Staff Report Pg. 51  Packet Pg. 81 of 83  R-1 PF (D) RP PF PF R-1 PF RE R-1 R-1 PF GM RE R-1 R-1 (8000) CC RP-5 PF PF R-1 (10000) RP-5 (D) AC (D) R-1 (10000) R-1 R-1 RE ROLM PF PF R-1 (7000) R-1 R-1 R-2 PF (D) R-2 PF (D) R-1 (S) CN RP CC CN R-1 (10000) PF R-1 (8000) R-1 (S) RM-30 CS R-1 (8000)(S) R-1 (7000)(S) RM-30 PF HD R-1 CN PC-4637 PF PF RT-35 PF PF PF R-1PF RP-5 (D)(L) CS CS (H) PF R-1 (8000) PF CN CS CD-C (GF)(P) PF PF R-1 (S) R-1 (S) RM-20 RM-20 RP (AS2) R-1 (10000) PF RM-30 PF PC-2711 PF OS R-1 (20000) PF ROLM (E)(D)(AD) PF PF NV-R4 CS CS ROLM (D)(AD) GM PF PF R-1 (7000)(S) RMD (NP) PF PF CS NV-MXM R-2 R-1 RM-30 R-1 (8000)(S) RM-20 CD-C (P) RM-40 R-1 (7000) RM-30 ROLM 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PC-2293 PC-4436 PC-3111 RT-50PC-4389 CC PC-5598 PC-3707 PC-4296 CN (L)(GF/P) PC-2666 PC-3974 PF RM-20 CS (L) RM-30 CD-C (GF)(P) PC-5621 CS (L)(D) CC (2)(P) PC-4973 PC-3517 CD-S (GF)(P) PC-4052 CC (2) PF (R) PC-3753 PC-2666 PC-3623 RM-30 RM-30 (L) PC-3571 RMD PC-3693 PC-3726 CD-S (P) PC-4262 PTOD(R) PC-3102 PC-4063 RM-30 (L) PC-4753 PC-5600 PC-4195 PF (D) Middlefield Road Cowper 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 Page Mill Road Hamilton Avenue Oregon Expressway Lincoln Avenue San Antonio Road University Avenue Newell Road Seale Avenue South Court High Street Park Boulevard East Meadow Drive Stanford Avenue West Bayshore Road Colorado Avenue Hanover Street Miranda Avenue Foothill Expressway Fabian Way Homer Avenue Greer Road Ramona Street Charleston Road Edgewood Drive Loma Verde Avenue Everett Avenue Churchill Avenue Arastradero Road Matadero Avenue Lowell Avenue Center Drive Tennyson Avenue Los Robles Avenue California Avenue Barron Avenue Hillview Avenue Palo Alto Avenue Kingsley Avenue Maybell Avenue Hansen Way Wilkie Way Coleridge Avenue Byron Street Ely Place Manuela Avenue Oregon Avenue Amarillo Avenue Marion Avenue North California Avenue Emerson Street Pitman Avenue Laguna Avenue Grove Avenue Ferne Avenue Nelson Drive Porter Drive Castilleja Avenue Chimalus Drive Hale Street College Avenue Amherst Street Seneca Street Lane 66 Bowdoin Street Stockton Place Harker Avenue Deer Creek Road Embarcadero Road Ames Avenue El Dorado Avenue La Para Avenue Grant Avenue Birch Street Hawthorne Avenue Harriet Street Coyote Hill Road Columbia Street Clara Drive Georgia Avenue Rhodes Drive San Antonio Avenue El Verano Avenue Olive Avenue La Donna Street El Camino Way Parkinson Avenue Kipling Street Kellogg Avenue Heather Lane Alger Drive Florales Drive Oxford Avenue Forest Avenue 101 Oregon-Embarcadero Ramp North Greenwood Avenue Monroe Drive Cornell Street Sherman Avenue Boyce Avenue Amaranta Avenue Oberlin Street West Charleston Road Nathan Way Donald Drive Urban Lane Harvard Street Hopkins Avenue Wilton Avenue Dana Avenue Sutherland Drive Fife Avenue Iris Way Fulton Street Lambert Avenue Marshall Drive Josina Avenue 101 Oregon-Embarcadero Ramp South Williams Street David Avenue (none) Old Adobe Road El Carmelo Avenue Geng Road Orme Street Montrose Avenue Parkside Drive Princeton Street Walnut Drive Maddux Drive Sheridan Avenue Curtner Avenue Wildwood Lane Elsinore Drive Morris Drive Mariposa Avenue Fernando Avenue Stanley Way Miller Avenue Leland Avenue Moreno Avenue Barbara Drive Creekside Drive Sutter Avenue Margarita Avenue Edlee Avenue Ventura Avenue Arbutus Avenue Chaucer Street Shopping Center Way Embarcadero Way Walter Hays Drive Jackson Drive Willmar Drive Kenneth Drive Carolina Lane Martin Avenue Patricia Lane Whitclem Drive Cereza Drive Paul Avenue Guinda Street Towle Way Old Trace Road Tennessee Lane Orinda Street Ilima Way Santa Ana Street Encina Grande Drive Briarwood Way Bruce Drive Los Palos Avenue Commercial Street Lane 21 Faber Place Ruthven Avenue Miramonte Avenue Lois Lane West Meadow Drive Gailen Avenue Laguna Way Whitsell Street Northampton Drive Southampton Drive Scripps Avenue Pomona Avenue Janice Way Bibbits Drive Madrono Avenue Warren Way Yale Street Mayview Avenue Evergreen Drive Stelling Drive Rorke Way El Centro Street Ivy Lane Ashton Avenue Military Way McKellar Lane Cedar Street Robb Road Jefferson Drive Dake Avenue Santa Rita Avenue Addison Avenue Saint Claire Drive Rinconada Avenue Seminole Way Alester Avenue Silva Avenue Kelly Way Indian Drive Escobita Avenue Quarry Road Glenbrook Drive Manuela Court Garland Drive Hubbartt Drive Christine Drive Lane 39 Kings Lane Bryson Avenue Talisman Drive Campana Drive Oak Hill Avenue Fabian Street Murdoch Drive Deodar Street Terman Drive Nevada Avenue Madison Way Sequoia Avenue Southwood Drive Crescent Drive Colonial Lane East Meadow CircleRichardson Court Lane 33 Lupine Avenue Campesino Avenue Hilbar Lane Portola Avenue Park Avenue Suzanne Drive La Calle Cypress Lane (Private) Chestnut Avenue Roble Ridge (Private) Kendall Avenue Mumford Place Sycamore Drive Vernon Terrace Celia Drive Washington Avenue Redwood Circle Dennis Drive Arboretum Road Roosevelt CircleLa Selva Drive Solana Drive Manzana Lane Ash Street De Soto Drive Rambow Drive Portage Avenue Bryant Court Ruthelma Avenue Magnolia Drive Paradise Way Cork Oak Way Manuela Way Carlson Circle Clemo Avenue Coastland Drive Wellsbury Way Fairmede Avenue Stern Avenue Mitchell Lane Fallen Leaf Street Maclane Community Lane Verdosa Drive Thomas Drive Abel Avenue Fielding Drive Maplewood Avenue Tulip Lane Ross Court Mackay Drive Berryessa Street Ilima Court Tasso Street Mesa Avenue Stone Lane Lane B East Coulombe Drive Lytton Avenue Lane D East Miranda Green Mark Twain Street El Cerrito Road Maple Street Whitman Court Lane B West Orchard Lane Laura Lane Dinah's Court Lane D West Gaspar Court Primrose Way Tanland Drive Lane 59 East Irven Court Agnes Way Baker Avenue Morton Street May Court Murray Way Driftwood Drive Melville Avenue Silva Court Pear Lane Greenmeadow Way Corina Way Phillips Road Palm Street Saint Michael Drive Lane 30 Blair Court Gilman Street Paloma Drive (Private) Wellesley Street Thornwood Drive Holly Oak Drive Cerrito Way El Cajon Way Tioga Court Wright Place Vineyard Lane Pistache Place West Crescent Drive Duncan Place Sandra Place San Jude Avenue McGregor Way Miller Court Downing Lane Ben Lomond Drive Shasta Drive Ensign Way Diablo Court Wilson Street Bret Harte Street Erstwild Court Carmel Drive Cass Way Arcadia Place Burnham Way Saint Francis Drive Ramos Way (Private) Cardinal Way Hemlock Court Flowers Lane Timlott Lane Lindero Drive Wintergreen Way Marlowe Street Shauna Lane Dixon Place Corporation Way Maybell Way Sierra Court Portal Place Cowper Court Chabot Terrace Ashby Drive El Capitan Place none Maureen Avenue La Mata Way Quail Drive (Private) Clifton Court Arrowhead Way Higgins PlaceLawrence Lane Federation Way Sharon Court Lane 20 East Juniper Lane (Private) Randers Court Manchester Court Rosewood Drive Sweet Olive Way Moffett Circle Magnolia Drive South Adobe Place Metro Circle Anton Court Toyon Place Amherst Way Louisa Court Van Auken Circle East Greenwich Place Kent Place Matadero Court Saint Michael Court Pena Court Columbia Place Tevis Place Columbia Court Palo Road Nelson Court Ames Court Rincon Circle Island DriveHamilton Court Newell Place Duluth Circle Piers Court Regent Place Gary Court Genevieve Court Gailen Court Elmdale Place Charleston Court Green Manor Forest Court Old Page Mill Road Magnolia Drive North Frandon Court Carlitos Court Wilkie Court Victoria Place Boronda Lane Somerset Place Loma Verde Place Newberry Court Laguna Oaks Place Laguna Court Darlington Court Fairfield Court David Court Marion Place Ferne Court Dymond Court (Private) Amherst Court Emma Court Martinsen Court Wellsbury Court Los Palos Circle George Hood Lane Byron Street Page Mill Road Hawthorne Avenue Emerson Street Hamilton Avenue Bryant Street High Street Park Boulevard Ramona Street Emerson Street Kipling Street Oregon Avenue Dana Avenue Sutter Avenue Matadero Avenue Santa Rita Avenue Emerson Street South Court Sheridan Avenue Fulton Street Santa Rita Avenue Byron Street Georgia Avenue Miranda Avenue Guinda Street Foothill Expressway Fulton Street Ramona Street Kipling Street Addison Avenue Washington Avenue Moreno Avenue San Jude Avenue Moreno Avenue Kendall Avenue Tasso Street Ramona Street Wilkie Way Quarry Road Maclane Ames Avenue North California Avenue Lytton Avenue Thomas Drive San Antonio Road Tasso Street Hy 101 North Oregon Avenue Park Boulevard Oregon Expressway Arastradero Road South Court Webster Street Ash Street West Bayshore Road Colorado Avenue Oregon Avenue Kellogg Avenue Kipling Street Sycamore Drive Ramona Street Palo Alto Avenue Fulton Street Byron Street Emerson Street Addison Avenue Nevada Avenue Tasso Street Los Altos Los Altos Hills Stanford University Menlo Park Mountain View East Palo Alto Atherton CC (2)(R) This map is a product of City of Palo Alto GIS [ 0 0.35 0.70.175 Miles Quarter-Mile & Half-Mile from SB 79 Transit Platforms Legend SB 79 Transit PlatformSB 79 Buffer from Transit Platform≤1/4 Mile>1/4 - ≤1/2 MileZoningSchoolsParksCity Limit £¤101 §¨¦280 Rev: July 3, 2025 Palo Alto Caltrain Station California Ave. Caltrain Station San Antonio Caltrain Station Location Distance to Transit Stop(Miles) Max Height (Feet) Maximum Density(dwelling units per acre (du/ac)) Minimum Residential FAR(du/ac) Additional DBL Concessions ≤ ¼ 75 120 3.5 3> ¼ and ≤ ½ 65 100 3 2Adjacent to transit stop  +20  +20 1 0 Tier 1 Item 4 Attachment C - SB 79 Map Based on Caltrain Platform Location        Item 4: Staff Report Pg. 52  Packet Pg. 82 of 83  Item 4 Attachment D - SB 79 boundary in relation to Downtown Housing Plan and SOFA Boundary        Item 4: Staff Report Pg. 53  Packet Pg. 83 of 83