City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: November 12, 2024
Report #:2409-3482
TITLE
FIRST READING: Adoption of an Ordinance Amending Palo Alto Municipal Code Title 18 (Zoning) and Title 21 (Subdivisions and Other Divisions of Land) to Clarify Existing Regulations and to Implement State Housing Laws Adopted in 2023 and earlier. Provide Direction on: (1) Implementation of AB 2097 (2022) and (2) Implementation of Recently Adopted State Housing Laws from the 2023-24 Legislative Session.
CEQA Status - Exempt Pursuant to CEQA Guidelines Section 15061(b)(3).
RECOMMENDATION
Staff recommends that the City Council:
1. adopt the attached ordinance implementing state law and other minor amendments to Titles 18 and 21 of the municipal code;
2. direct staff to apply AB 2097 to properties within the radius depicted in Attachment B;
3. provide direction on whether to require some on-site accessible and/or electric vehicle charging spaces, even when no other parking is proposed, including direction on alternatives such as exploration of an in-lieu program or provision of additional accessible spaces in the right of way or in public land;
4. direct staff to prepare an urgency ordinance for placement on the consent calendar to implement various land use-related state law changes from the 2024 state legislative session.
EXECUTIVE SUMMARY
This report includes an ordinance that modifies local zoning and subdivision provisions in accordance with recent changes to state law from the 2023 legislative session and earlier. Some minor amendments are also proposed unrelated to state law that do not have any meaningful policy implications but clarify existing municipal code provisions.
For the 2024 legislative session, staff recommend that Council provide direction for staff to return before the end of the year with an urgency ordinance that would implement required changes to the municipal code. A summary of relevant new legislation is provided in this report.
AB 2097 (2022) is discussed at length compared to other state law changes to respond to questions that have arisen over the past several months. Staff recommendations include applying this state law to a geographic boundary based on the boarding platform area for major transit stops. Staff recommends a policy approach that would require on-site accessible and electric vehicle charging parking spaces in AB 2097 areas, provided direction is also received to amend the code to implement an in-lieu parking program for these spaces. Staff further recommends the Council direct staff to consider an additional accessible parking strategy in areas impacted by AB 2097.
BACKGROUND
On May 29, 2024, the Planning and Transportation Commission (PTC) voted to forward the staff recommendation on a draft ordinance to the City Council but continued its discussion regarding changes to Palo Alto Municipal Code (PAMC) Section 18.52.040(d) related to AB 2097 to July 10, 2024. The PTC made minor adjustments to this section, which have been incorporated into the attached ordinance, and further recommends the City Council:
1. Consider a mandate to require at least a minimal number of ADA parking spaces for projects within one-half mile of a major transit stop, consistent with 65863.2 and the position taken by some cities responding to AB 2097;
2. Direct staff to develop a policy that provides accessible parking spaces on streets and other public property within one-half mile of a major transit stop; and,
3. Investigate the desirability of requiring at least a minimal number of electric vehicle parking spaces for projects within one-half mile of a major transit stop, consistent with 65863.2 and the position taken by some cities responding to AB 2097.
The PTC staff reports1, videos2 and presentations3 are viewable via links provided below. The ordinance the PTC recommends would amend PAMC Titles 18 and 21 to address or implement provisions of state laws - Senate and Assembly Bills SB 684, SB 4, AB 2162, AB 894, AB 970 and AB 2097, and make several non-substantive revisions.
1 Links to July 10, 2024 PTC staff report: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/agendas-minutes/planning-and-transportation-commission/2024/ptc-7.10-muni-code-title-18.pdf and May 29, 2024 staff report: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/agendas-minutes/planning-and-transportation-commission/2024/05.29-ptc-Zoning-Amendments.pdf 2 Links to May 29, 2024 video: https://midpenmedia.org/planning-and-transportation-commission-2-5292024/ and July 10, 2024 video: https://midpenmedia.org/planning-and-transportation-commission-2-7102024/ July 10, 2024 PTC videos:
3 Link to staff presentations: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/agendas-minutes/planning-and-transportation-commission/2024/ptc-5.29-ordinance-update_staff- presentation.pdf
The six state laws the ordinance addresses are summarized further below:
1.SB 684:
The law requires streamlined, ministerial review of parcel maps and housing development projects of up to 10 units that meet certain criteria. Projects must provide the number of projected units (market rate and BMR) for sites identified in a housing element or, for sites not identified in the housing element, the maximum number of units allowed by local regulation. It sets specific timelines for local agencies to approve or deny applications for such projects, such that failure to act within 60 days would result in automatic approval. If denied, the City must provide written feedback within 60 days on how to remedy the application.
The law allows the City to establish objective zoning, subdivision, or design standards for qualifying projects. The attached ordinance refers to the City’s existing objective standards established for Senate Bill (SB) 9 projects and for housing development projects (as defined in GC 65589.5) as set forth in PAMC Title 18, Chapter 18.24 (Contextual Design Criteria and Objective Design Standards). SB 684 also addresses the issuance of building permits, outlining the conditions under which a permit would be granted prior to final map recordation. It states that local agencies are not required to permit accessory or junior accessory dwelling units on parcels created under SB 684. Existing provisions regarding SB-9 urban lot splits and two-unit housing developments cannot be combined with SB 684 projects.
2.SB 4:
Streamlines the building process for faith-based institutions and certain colleges by providing a process that allows 'qualified developers’ to build qualifying housing projects regardless of zoning restrictions if certain requirements are satisfied. Such projects are therefore a "use by right" on land owned by independent higher education or religious institutions. Among other criteria, 100% of the units (exclusive of manager units) must be affordable to lower-income households, with allowances for 20% moderate-income and 5% staff units. Ancillary ground- floor uses are also permitted:
•In a single-family residential zone, childcare centers and facilities operated by community- based organizations for the provision of recreational, social, or educational services for use by the residents of the development and members of the local community in which the development is located; and,
•In all other zones, the development may include commercial uses that are permitted without a conditional use permit.
Housing projects eligible for "use by right" status can also qualify for density bonuses, incentives, and other concessions, including reduced parking standards. No additional parking requirements can be imposed if the development is within half a mile of high-quality public transit or one block from a car-share vehicle. The City must provide written documentation outlining conflicts with objective planning standards within a specified timeframe and failure to do so deems the project compliant. Design reviews can only focus on ministerial review criteria and cannot inhibit or preclude such streamlined approval. The bill would extend the CEQA exemption for ministerial project approvals. The provisions of this bill are set to expire on January 1, 2036.
3. AB 2162:
Makes certain supportive housing projects a “use by right” in zones that permit multifamily housing. To qualify:
1) The project must be deed restricted to be affordable to lower income households for a period of at least 55 years
2) At least 25% of the units or 12 units, whichever is greater, must be restricted to residents in supportive housing (i.e. housing for a target population that is linked to onsite or offsite services)
3) A certain percentage of square footage must be provided for on-site services 4) The project cannot exceed 50 units, unless the City allows larger projects to be a use by right
The City has implemented AB 2162 since it was adopted, including with the recent approval of the Mitchell Park Place supportive housing project at 525 East Charleston Avenue. As part of the Housing Element review process, however, HCD has asked that the City incorporate the bill into its zoning code. Implementation of AB 2162 is included as Program 6.5(D) of the City’s 2023-2031 Housing Element.
4. AB 894:
Requires the City to approve shared parking agreements for contiguous or nearby uses where a parking analysis shows that the proposed shared parking is “underutilized.” Parking is “underutilized” if at least 20 percent of parking spaces in a development are vacant during the time that the parking will be shared.
5. AB 2097:
Enables 100% reductions in required parking spaces for all uses except hotels within one-half mile of the major transit stops, as defined in state law. The requirements of AB 2097 generally apply to fixed rail station locations (Palo Alto, aka University Ave, station, California Avenue Station, and San Antonio station) with the slightly offset location of the bus transfer service station near the University Avenue transit stop as shown on the attached map (Attachment B).
The applicable projects are development projects (any activity that requires a building permit) on property depicted within the shaded radius circles on the City’s map are exempt from minimum parking requirements. Developers must still meet local requirements for loading zones and bicycle parking (i.e. all standards other than automobile parking). AB 2097 also states that it does not affect requirements for electric vehicle supply equipment or parking spaces accessible to persons with disabilities, though this provision is unclear and susceptible to differing interpretations.4
The PTC as part of its review of the subject ordinance and separately, the City Council in August when it considered AB 2097 relative to the North Ventura Coordinated Area Plan, questioned the applicability of the law toward electric vehicle supply equipment or parking spaces accessible to persons with disabilities. Both bodies also expressed concern about extending SB 2097 to other properties within the NVCAP and University Avenue downtown that were just beyond the one-half mile radius set forth in the state law. Both of the topics are expanded upon further in the analysis section.
6. AB 970:
Has no limit on how many parking spaces can be removed to accommodate Electric Vehicle Storage Equipment (EVSE); the draft ordinance eliminates the restriction in the local ordinance.
ANALYSIS
The proposed PAMC ordinance changes are briefly noted below with an expanded discussion related to AB 2097:
•To address SB 684 and SB 4: Modifies PAMC Section 18.77.074, Ministerial and By Right Process, to indicate the list of State bills referenced in that code section is not exclusive. •To address SB 684: Adds Section 18.42.185 (Standards for Up to Ten Units on Lots Subdivided Pursuant to Senate Bill 684) of Chapter 18.42 (Standards for Special Uses) and adds Chapter 21.11 (Streamlined Subdivisions Resulting in Ten or Fewer Parcels). The new Section 18.42.185 includes a reference to the ’Ministerial and By Right Process’ in PAMC section 18.77.074. While some “ministerial” projects apply directly for building permits, this process applies to more complex projects that would benefit from staff review and approval for consistency with objective standards and zoning regulations before the applicant creates expensive structural/mechanical drawings and applies for a building permit. Courtesy notices to neighboring properties will continue to be required; however, with non- discretionary projects, there are no mandatory hearings or appeal process. 4 Excerpt from AB 2097: “This section shall not reduce, eliminate, or preclude the enforcement of any requirement imposed on a new multifamily residential or nonresidential development that is located within one-half mile of public transit to provide electric vehicle supply equipment installed parking spaces or parking spaces that are accessible to persons with disabilities that would have otherwise applied to the development if this section did not apply.”
•To address SB 4 and AB 2162: Adds Section 18.14.060 (By Right Affordable and Supportive Housing Projects) that would enable a ministerial review process for 100% affordable housing projects on land owned by an independent institution of higher education or a religious institution (SB 4) as well as supportive housing projects (AB 2162). This section would clarify which objective standards apply to qualifying projects, depending on the project size and scope. The ordinance proposes to apply the RM-30 development standards to SB 4 projects under this section. This is consistent with the City’s treatment of housing opportunity sites in the R-1 zones, as well as the requirement in SB 4 that qualifying projects may build to 30 du/ac and receive an additional story of height beyond the base district.
Many religious institutions in Palo Alto are located on land owned R-1 (Single-Family Residential). Courtesy notices to neighboring properties will continue to be required; however, with non-discretionary projects, there are no mandatory hearings or appeal process.
•To address AB 894: Amends Section 18.52.050 (Adjustments by the Director) to note that shared parking agreements meeting the requirements of AB 894 will be approved, even if they are inconsistent with existing provisions related to off-site parking or exceed the current maximum parking adjustment.
•To address AB 970: The ordinance revises Section 18.52.050, Adjustments to Existing Parking Facilities, item (a)(1) Accessibility and EVSE-Related Equipment to delete some verbiage and add a phrase “to accommodate accessibility requirements”. •To provide non-substantive clarifications: The attached draft ordinance’s following non- substantive clarifications or 'clean-up' items would amend PAMC Titles 18 and 21. •Chapter 18.18 (Downtown Commercial (CD) District) to fix a footnote 3 of Table 3 of Section 18.18.060 (Development Standards)
•Chapter 18.20(F).045 to clarify permitted and conditionally permitted uses •Chapter 18.30(F).040 (Automobile Dealership (AD) Combining District Regulations) to clarify the permitted and conditionally permitted uses. •Chapter 18.42 (in Section 8) to amend Section 18.42.040 (Late Night Uses and Activities) to add zone districts NV-MXM and NV-MXH to the list of zone districts cited (CS and CN) for applicability of the section.
•Section 21.12.090 to clarify that tentative maps may be placed on the City Council's consent agenda, consistent with the City's practice.
•To address AB 2097: The ordinance revises PAMC 18.52.030 (Basic Parking Regulations) to implement a parking exemption for qualifying projects within one-half mile of a major transit stop. A major transit stop is a defined term in state law and referenced in AB 2097 to include an existing rail or bus rapid transit station; a ferry terminal served by either a bus or rail transit service; or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.5 For Palo Alto, the latter only occurs at the bus transfer service station near the University Avenue transit stop. There are three transit stations whose AB 2097 radii extend to properties in Palo Alto: University Avenue, California Avenue and San Antonio Road (Mountain View) transit stations.
Methodology to Determine Applicability
The methodology for determining the radius is not specified in AB 2097 but HCD has issued a technical assistance letter on November 17, 2023, to the City of San Clemente (Attachment C) that provides guidance. According to HCD, the methodology for determining if a property is eligible for AB 2097 is to measure the distance from the nearest edge of the property where the project is proposed in a straight, direct line toward to the parcel(s) where the major transit stop is located. Unfortunately, the parcels for Caltrain stations in Palo Alto have highly irregular shapes that extend along the right-of-way occupied by the rail tracks between stations (Attachment D). As a result, the parcel boundaries have no relationship to the locations where trains stop and where individuals would board or exit.
Accordingly, based on the intent of state law and understanding of HCD’s technical assistance letter, staff recommends the City use the Caltrain or bus station platforms and associated buildings as the area boundary from which to measure the one-half mile radius.
Establishing the platforms as the parcel boundary aligns with the idea that individuals within a short distance of a rail station will likely access this service using means other than a single occupancy vehicle. Attachment B illustrates this interpretation and how staff would evaluate applicability of AB 2097 toward qualifying projects. Properties touching or within the radius boundary, as per HCD guidance, can utilize AB 2097 provisions.
Previously, staff represented the one-half mile radius using a point at the center of the transit station. This perspective was formed shortly after the passage of AB 2097 and based on guidance from Metropolitan Transportation Commission maps. The current staff recommendation results in a wider area of eligibility in recognition of HCD’s technical assistance letter to another jurisdiction.
5 AB 2097 includes a reference to the definition of a major transit stop found in Public Resources Code Section 21155 (b), which states: ‘A major transit stop is as defined in Section 21064.3, except that, for purposes of this section, it also includes major transit stops that are included in the applicable regional transportation plan.’. Section 21064.3 defines a major transit stop as including the following:
a) An existing rail or bus rapid transit station.
b) A ferry terminal served by either a bus or rail transit service. c) The intersection of two or more major bus routes with a frequency of service interval of 15 minute The 15 minute interval refenced in c) above will change to a 20 minute interval by new bill effective 1/1/25; this will not result in any changes to the AB 2097 boundary in Palo Alto.
Transportation Demand Management Plan Requirement
The subject ordinance includes a staff proposed requirement supported by the PTC to require a transportation demand management plan for applicants seeking to take advantage of AB 2097. The TDM plan would be subject to existing provisions of the municipal code (PAMC 18.52.030 (i))6 and require a 20% to 45% reduction in peak hour motor vehicle trips depending on where a project is located in the city. Typically, a TDM plan is required for projects that generate 50 or more net new weekday or weekend peak hour trips; for projects claiming a reduction in net new trips due to its proximity to public transit; and all projects requesting a parking reduction. Similarly, a project utilizing the provisions of AB 2097 seeks to reduce or eliminate on-site parking and will inherently rely upon TDM measures to reduce vehicle trips to the site and incorporation of this provision is an extension of existing local law. The City Council could decide to strike this added provision in the draft ordinance and rely on existing parking resources in areas subject to AB 2097 if it does not agree with staff and the PTC’s recommendation.
Accessible and Electric Vehicle Parking Spaces
City Council policy direction is needed on whether to assert that accessible and electric vehicle charging stations (ADA & EVCS) parking should be required for projects utilizing AB 2097.
State law includes a provision that AB 2097 ‘shall not reduce, eliminate, or preclude the enforcement of any requirement imposed on a new multifamily residential or nonresidential development that is located within one-half mile of public transit to provide electric vehicle supply equipment installed parking spaces or parking spaces that are accessible to persons with disabilities that would have otherwise applied to the development if this section did not apply.’
Because ADA & EVCS spaces are typically required as a percentage of on-site parking under the California Building Codes, many jurisdictions implement this provision to require these percentages when a developer voluntarily provides parking on-site. If a developer elected not to provide parking, no ADA or EVCS spaces would be required. Under this view, the provision simply means that AB 2097 cannot be used override the minimum percentages of ADA & EVCS spaces provided in the building codes. In other words, a developer cannot voluntarily provide some parking spaces but choose not to provide any ADA or EVCS spaces.
By contrast, some jurisdictions interpret the bill to require the number of ADA & EVCS spaces that would be required if the project provided the total parking that would have been required prior to the passage of AB 2097; potentially a substantially higher number of on-site parking spaces.
6 PAMC 18.52.030 https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-80975.
By requiring a development to provide ADA & EVCS parking, even when no other parking is proposed, the City would continue to create opportunities to improve universal access to sites and expand the City’s electrification infrastructure to support its carbon reduction goals. However, requiring ADA & EVCS parking may create other challenges related to project costs and urban design principles. In addition, requiring ADA and EVCS parking when parking is not otherwise provided could invite legal challenges given the ambiguity in the law.
Parcel sizes and lot areas within the AB 2097 radius tend to be small in Palo Alto. And, lot consolidation historically has not been a feature of local land use development for a variety of reasons. AB 2097 is expected to spur redevelopment but this may be hampered when trying to design ADA & EVCS parking spaces on a smaller lot. The first ADA parking spaces placed on a site, must include an adjacent ADA compliant van-accessible loading area, which is equivalent to a second parking space. This is roughly the area of a two car garage, but it also needs to take into consideration an accessible path of travel from the parking space to the building’s entrance and account for sight visibility requirements and back up distances. If additional ADA & EVCS parking spaces are required, it is likely these spaces will need to be placed on another level that may introduce additional constraints related to drive aisles and ramping between levels. On-site parking may require an additional curb cut, which may not be ideal in a pedestrian-oriented environment. Above grade parking can present other undesirable urban design characteristics (aesthetics) or reduce ground level commercial floor area and below grade, or subterranean parking, may be cost prohibitive for some developers. Moreover, before AB 2097 was enacted, downtown developers could take advantage of the City’s in-lieu parking program, which had no replacement policy for ADA & EVCS parking spaces.
Some of these challenges could be mitigated by offering developers an in-lieu fee option for any accessible and EVCS spaces that are required. However, an in-lieu program comes with its own pitfalls, including the delay associated with accumulating a critical mass of funds.
This can mean that no benefit is provided from the fees for many years and because of increasing costs over time, fees do not go as far when they are eventually expended. In addition, in-lieu fees are a poor fit for ADA spaces, which are most effective when distributed throughout a commercial area rather than grouped in a potentially distant parking lot or structure. The City has encountered numerous practical and legal challenges to the use of parking in-lieu fees in the University Avenue downtown area; it may not be desirable to recreate this type of program with an even smaller pool of potential fees.
Alternatively, as conceptually supported by the PTC, the City could look at developing a policy to distribute ADA parking spaces on streets or other public property within the AB 2097 radius. While this policy may limit direct on-site access to a specific property, distributing ADA spaces throughout the district could expand universal access to a greater number of individuals visiting these areas and would not just serve an AB 2097 qualifying project’s tenants or visitors. It should also be noted that on-street parking spaces dedicated as ADA spaces would likely replace spaces currently available to the general public.
Staff has not developed or fully evaluated all the pros and cons with this policy approach and it is not anticipated that there would be a one for one equivalency of ADA parking spaces provided on the public right of way as may have been provided on private property.
Nevertheless, staff recommends that if of interest, the City Council provide this direction for staff to report back with options on implementation, costs, and any resource constraints.
Staff from the Office of Transportation are currently working on a municipal code parking update scheduled to go to the PTC later this year and this effort could potentially be included that policy discussion. This approach also coincides with efforts underway in the City’s public works department, which already has an operational system in place for installing EVCS spaces in the public right of way and it is also creating a new electric mobility strategic plan through the City’s S/CAP efforts.
Based on the practical challenges and legal risks described above, the attached ordinance has been drafted to not require on-site ADA or EVCS parking spaces for qualifying AB 2097 projects. If Council wishes to provide alternative direction, staff can return with a separate ordinance to implement that direction in early 2025. If Council is inclined to require ADA and EVCS parking, staff offers the following secondary recommendation: The on-site parking requirement should be paired with an in-lieu fee option. This in-lieu fee could be based on the cost to convert existing spaces in the right-of-way and in public lots to ADA and EVCS spaces. This would mitigate the problem of needing to accumulate significant funds before the fees can be expended.
Additionally, staff recommends, if a developer elects to voluntarily provide parking spaces on-site, that the City apply the following approach:
•For ADA spaces – the local percentage required shall be applied to the project based on the number of parking spaces provided on-site;
•For EV spaces – the local percentage required shall be applied to the total number of required parking spaces that would have been required if the project were not subject to AB 2097.
The staff recommends a two-tiered approach for ADA and EV parking spaces in this scenario for the following reasons:
1. Incentivizing Voluntary Parking. ADA spaces are always the first spaces added to a parking plan due the statutory requirement for this form of parking, general parking follows. Requiring a high proportion of ADA spaces, which can only be used by qualified disabled individuals, may discourage developers from providing any parking if it does not yield sufficient general parking spaces. Using the building code’s formula-based approach to the number of spaces provided, as opposed to what would have been required, balances these interests.
2. Addressing EVCS Parking Demand. EVCS spaces have more versatility accommodating both individuals with disabilities and electric vehicle owners. Also, electric vehicle adoption is also greatest in the Bay Area and Palo Alto is a leader among those communities with 50% of the new vehicles purchased and 16% of all registered vehicles being electric.7 This increased demand necessitates a dedicated approach to ensure sufficient infrastructure availability.
3. Managing Infrastructure Costs. EVCS spaces require significant infrastructure investments, which can be costly. The in-lieu fee option offers a way to offset these costs and encourage EVCS infrastructure development.
4. Balancing ADA and EV Requirements. While local building codes mandate a specific percentage of ADA spaces, EVCS parking requirements are more flexible. By strategically placing a limited number of ADA spaces throughout the district, the city can mitigate the potential shortfall from on-site development. However, the growing demand for EV charging infrastructure requires a separate strategy to ensure adequate availability.
Enforcing a Minimum Parking Requirements by Making Specified Findings Government Code section 65863.2(b) provides that a local jurisdiction may still impose or enforce minimum parking requirements on a project if the agency makes written findings within 30 days of receiving a completed application that reducing parking requirements on the development would have a substantially negative impact, supported by a preponderance of the evidence in the record, on any of the following:
1. The jurisdiction’s ability to meet its share of the regional housing need in accordance with Section 65584 for low- and very low-income households.
2. The jurisdiction’s ability to meet any special housing needs for the elderly or persons with disabilities identified in the analysis required [for the Housing Element]. 7 Based on 2023 data published in Appendix E of the 11/12/24 Quarterly Report on Sustainability and Climate Action Plan (S/CAP) Implementation and S/CAP Key Performance Indicators Annual Progress Report (Report 2407- 3266).
3. Existing residential or commercial parking within one-half mile of the housing development project.
Of these three options, the third appears to have the broadest applicability; however, it only applies to housing development projects. In other words, this would not be a basis for imposing parking requirements on commercial projects under AB 2097. In addition, with respect to housing projects, the statute goes on to stipulate that the above findings cannot be used to require parking for housing development projects that satisfy any of the following:
A. The development dedicates a minimum of 20 percent of the total number of housing units to very low, low-, or moderate-income households, students, the elderly, or persons with disabilities.
B. The development contains fewer than 20 housing units.
C. The development is subject to parking reductions based on the provisions of any other applicable law.
In short, there are a limited class of projects for which the City could utilize findings to impose parking requirements: housing projects with 20 or more units that do not provide at least 20 percent of units for moderate income households, students, elderly persons or persons with disabilities, and that are not utilizing parking reductions provided in any other law such as State Density Bonus law.
For such a project, the City would still face a high bar to make the required findings. Given the limited time to conduct the analysis needed to support the required findings (30 days from the filing of a complete application), staff does not envision being able to make project-specific findings that would compel a project to meet minimum on-site parking requirements. The City would have to prepare parking demand studies in advance for each of the relevant areas where AB 2097 may be utilized. The study would need to show a “substantial negative impact,” and the City’s findings would need to be supported by a preponderance of the evidence.
If the Council directs the proactive preparation of parking studies, staff will return during the Council’s priority setting discussion with a description of the work effort and study parameters, resource costs and identify other Council priority projects that may be impacted with the inclusion of this assignment. Given the limited applicability of qualifying projects and the high bar to produce evidence of a substantial negative impact, staff does not recommend initiating this study.
Extending Provisions of AB 2097 to the Extent of the Downtown & NVCAP Project Boundaries
As part of its review of the North Ventura Coordinated Area Plan (NVCAP), the City Council declined to extend the provisions of AB 2097 to other nearby properties within the project boundaries but just beyond the one-half mile radius. The Council expressed a perspective that the provisions of the AB 2097 should not be extended beyond the minimum standard prescribed by the state. In an earlier draft of this report, staff recommended the City Council consider extending AB 2097 to another six properties in the downtown University Avenue district. However, based on Council’s guidance from the NVCAP hearing, staff has omitted this extension. As drafted in the attached ordinance, the provisions of AB 2097 would only apply to those qualifying projects that meet the distance measuring methodology detailed in this report and graphically illustrated in Attachment B.
PTC Recommendation on Additional Consideration of AB 2097 On May 29 and July 10, 2024, the PTC considered the draft ordinance and policy recommendations to Council. The PTC’s ordinance revisions have been reflected in the ordinance. The PTC’s policy discussion related to AB 2097 have been incorporated into the analysis above for Council’s consideration.
2024 State Legislative Amendments
The legislature continues to pass significant housing and land use legislation affecting cities. In total over 30 planning and land use bills were signed by the Governor in September 2024, and a select number are highlighted below. The most significant bills for Palo Alto address the Builder’s Remedy and SB 9. Other bills look forward to the next housing element cycle.
Builder’s Remedy
AB 1893 – Significantly amends and expands the Builder’s Remedy, including:
•Lower the amount of affordable housing required from 20% lower income units to 13% lower income units.
•Creates upper limits on density – generally three times the maximum allowed in local regs. This figure is increased by 35 du/ac for projects near transit. •A Builder’s Remedy project cannot be treated as a non-complying facility. •Allows a pending Builder’s Remedy application to take advantage of any or all of the newly enacted provisions.
AB 1886 – Clarifies that an SB 330 preliminary application can “vest” the Builder’s Remedy – i.e. the Builder’s Remedy is still available to a developer even if the City has subsequently adopted a certified housing element.
SB 9
AB 450 – Amends SB 9 to create a 60-day timeframe for approval or denial of an SB 9 application. Requires that SB 9 projects only be subject to those objective standards that apply uniformly in the underlying zone.
Housing Element Law
AB 2023 – A housing element is presumed to be invalid if HCD has opined that it is not in substantial compliance with state law.
AB 2667 – Requires the HCD to develop a standardized reporting format for programs and actions taken with regards to AFFH.
AB 3093 – Creates two new income categories, Acutely Low Income (ALI) and Extremely Low Income (ELI), to the Regional Housing Needs Allocation (RHNA) and throughout the housing element process to include those experiencing or at risk of homelessness.
Other
SB 937 – Allows housing developers to defer payment of impact fees until issuance of a certificate of occupancy; freezes fees at the level in effect at the time of building permit issuance.
AB 2663 – Requires cities to establish a website with information on collection and use of housing impact fees.
SB 1211 – Allows up to 8 detached ADUs on parcels with existing multifamily development. Cities can no longer require replacement parking for uncovered parking spaces that are removed for an ADU.
AB 2553 – Redefines “major transit stop” to include the intersection of two or more bus routes with 20 minute headways rather than the existing requirement for 15-minute headways.
AB 2694 – Expands density bonus law to apply to elder care facilities.
Of these bills, SB 450 (SB 9 update), SB 937 (deferred impact fees), SB 1211 (ADUs), and AB 2694 (density bonus) require amendments to the Palo Alto Municipal Code. Staff recommend that Council provide direction to return in December 2024 with an urgency ordinance amending the code to reflect these bills.
The only bill requiring policy analysis is SB 450, due to its requirement that the only objective standards that may apply to SB 9 projects are those that apply uniformly to the underlying zone. Currently, the City has adopted a series of objective standards (based on results of the Single-Family Individual Review process) that apply only to SB 9 projects, which are generally lower than R-1 development standards in terms of height, daylight plane and objective privacy standards.
Until a comprehensive analysis of SB 450 can be prepared and presented to Council for consideration, staff recommends the SB 9 standards for one-story homes be suspended, while the standards for two-story homes be applied throughout the R-1 district. Two-story, single- family projects may then utilize those standards for streamlined review or may elect to go through the Individual Review process to deviate from the standards.
SB 450 has the potential to reduce the number discretionary Individual Review applications processed in the City in favor of an administrative process that would not include neighbor input. The extent and implications of this change will be based on the future standards the City applies to SB 9 projects.
FISCAL/RESOURCE IMPACT
In conjunction with Council adoption of the ordinance, PDS staff would coordinate with Public Works Engineering regarding objective standards related to subdivisions proposed pursuant to SB 684. At this time, staff does not plan to utilize consultants to prepare the objective standards.
If the Council directs staff to engage in further study in response to AB 2097, further resources may be needed; staff would return in response to Council direction with cost estimates for fee study and consultant costs.
STAKEHOLDER ENGAGEMENT
Staff had prepared an informational report published in the November 8, 2023 PTC packet related to AB 2097. The PTC conducted a study session April 24, 2024, and conducted two hearings of the draft ordinance, on May 29, 2024, and July 10, 2024.
ENVIRONMENTAL REVIEW
The draft Ordinance is considered exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that updating the municipal code to incorporate existing requirements of State laws will have a significant effect on the environment, and similarly, there would be no significant effect from the non-substantive clarifications.
ATTACHMENTS
Attachment A: Draft Ordinance Amending Sections of PAMC Title 18 and Title 21 Attachment B: AB 2097 Map (City of Palo Alto)
Attachment C: AB 2097 Transit Distance Criteria – Letter of Technical Assistance (HCD) Attachment D: Caltrain Platforms and Associated Parcels APPROVED BY:
Jonathan Lait, Planning and Development Services Director