Palo Alto Gets State Blessing for Housing Plan

After numerous rejections and drastic changes, a Palo Alto plan to build more than 6,000 apartments has won state approval, according to an Aug. 20 letter from the California Department of Housing and Community Development.

HCD’s determination that the city’s housing element is now “substantially compliant with state law regarding housing elements” is a key victory for the city after nearly two years of failure. Cities were required to obtain HCD certification for their housing elements by Jan. 31, 2023. Those that failed to comply became vulnerable to applications for “builder remedies,” which allow developers to effectively ignore local zoning laws and design standards.

Melinda Coy, HCD’s proactive housing accountability chief, wrote in her letter that as part of the approval, the city must monitor and report on the performance of various programs in a document that aims to add 6,086 housing units by 2031. Programs that would require monitoring include the city’s plan to build apartments on downtown parking lots, efforts to speed up review of housing projects and a “housing incentive program” that awards bonuses for height and density to housing projects in commercial areas.

She noted that state law gives HCD the authority to determine whether the city’s actions or inactions are inconsistent with the Housing Act.

“This includes failure to implement program activities included in the housing element,” Coy wrote. “HCD may revoke housing element compliance if local government actions are not consistent with state law.”

Once a cursory exercise, passing the Housing Element has become a high-stakes battle due to new state laws and much more ambitious housing goals that have been set by the San Francisco Bay Area Association of Authorities as part of its Regional Housing Needs Allocation process.

The consequences of failing to obtain certification are also more severe than in the past. Palo Alto and other cities are seeing a flurry of “builder-solution” projects that far exceed zoning regulations.

Locally, they include a 350-apartment project at 3997 Fabian Way, a 382-apartment complex in two residential towers on the Mollie Stone site at 156 California Ave., a 380-apartment project on the former site of The Fish Market at 3150 El Camino Real and a proposal to build 231 apartments on the Creekside Inn site at 3400 El Camino Real.

Councilmember Pat Burt, who rejoined the council shortly before the first project was transferred to HCD in 2022, said the 6,000 housing units in the Housing Element are “three times the largest number of units in any previous Element.”

“It was a really difficult process—we had to really respond to new and often undefined requirements that were constantly coming in and that were something that was unprecedented in the history of residential construction,” Burt said in an interview.

In addition to the large number of units the city must plan for — more than triple the requirement in the previous eight-year period — the process has been unpredictable, Burt said. HCD not only required the city to add new housing units and streamline its rules, but also asked the city to make other changes, such as expanding a historical chapter focused on historical discrimination, which lengthened the approval timeline.

The council initially adopted the Housing Element in May 2023. After HCD rejected its application, the city added additional measures to streamline approvals for housing projects and created a “housing-focused zone” with looser development standards on El Camino Real, between Page Mill Road and Matadero Road. The state agency signaled last month that it was close to approving the document when it requested only a few minor corrections and clarifications to the latest application. City planners completed those changes and resubmitted the document earlier this month.

The adoption of Housing Element also came after years of opposition from Palo Alto Forward and other housing advocates who questioned the city’s strategies and methodologies for identifying future housing locations. HCD has repeatedly noted in its letters that its findings took into account testimony from Palo Alto Forward and others in the review. The nonprofit, which advocates for more housing, withdrew its opposition last month and supported the city’s latest version of Housing Element.

The document introduces a series of policies to promote housing, including significantly relaxing height and density requirements for residential developments in commercial areas such as San Antonio Road and El Camino Real, just south of Page Mill Road. Commercial and industrial areas around San Antonio and Fabian Way would accommodate about 2,000 units. The city is now launching an area plan to adopt a new vision for San Antonio, in which new housing is complemented by amenities such as parks, shops and bicycle facilities.

Other programs under the new Housing Element include building affordable housing on downtown parking lots; “rezoning” residential areas to be transit-friendly so that, for example, properties that previously had up to 40 units per acre could now be zoned for 50 units per acre; and building housing on three “investment properties” owned by Stanford University.

With the document approved, Burt said city staff “can now focus not on approvals but on actions that increase the likelihood of people getting housing.”

“We’re going to try to build the largest housing growth in Palo Alto in over 60 years, when South Palo Alto was originally developed from green space,” Burt said. “But these units have to be added to a largely built environment, and we have to do it in a way that has strong community design with parks, walkable and bikeable streets, and nearby shopping and services.”

In a statement, city officials said HCD’s approval of the Housing Element is “a key milestone after several years of leadership by council, city commissions and staff, and community engagement.”

“The housing component will help inform future housing production and housing programs and policies,” the city said.

The city’s statement also highlighted recent actions to promote housing, including efforts to preserve the Buena Vista Mobile Home Park; a $52 million contribution from the city’s public housing fund or land value to various housing projects; the planned construction of a 108-unit transitional housing project in Baylands; a 50-unit complex known as Mitchell Park Place, which Eden Housing is building at 525 Charleston Road and which is geared toward people with disabilities; and a 129-unit project for low-income residents that Charities Housing is building at 3001 El Camino Real, which was once home to a Mike’s Bikes bike shop.

The city’s new Housing Element recognizes that despite recent efforts, “greater action is needed at the local, regional and state levels to address California’s housing shortage.”

“This housing component includes significant programs to further encourage and facilitate local housing production and to seek partnerships to expand
“possibilities of finding affordable housing in the city,” the document reads.