EXHIBIT C-1
SCHEDULE OF RATES
CONSULTANT’s schedule of rates is as follows:
Role Rate Hours
Client Manager 200 32 6,400
Sr. Solution/Process Architect N/C 160 0
Sr. Process Architect 175 320 56,000
Process Architect 160 320 51,200
Associate Process Architect 100 320 32,000
Sr. Enterprise Architect (LeanIX) 175 320 56,000
Total $201,600
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EXHIBIT D
INSURANCE REQUIREMENTS
CONSULTANTS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE
CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA.
AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS AS SPECIFIED HEREIN.
REQUIRED TYPE OF COVERAGE REQUIREMENT
MINIMUM LIMITS
EACH
OCCURRENCE AGGREGATE
YES
YES
WORKER’S COMPENSATION
EMPLOYER’S LIABILITY
STATUTORY
STATUTORY STATUTORY STATUTORY
YES
GENERAL LIABILITY, INCLUDING
PERSONAL INJURY, PROPERTY
DAMAGE CONTRACTUAL, AND
BODILY INJURY
PROPERTY DAMAGE
BODILY INJURY & PROPERTY
DAMAGE COMBINED.
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
YES
AUTOMOBILE LIABILITY,
INCLUDING ALL OWNED, HIRED,
NON-OWNED
BODILY INJURY
- EACH PERSON
- EACH OCCURRENCE
PROPERTY DAMAGE
BODILY INJURY AND PROPERTY
DAMAGE, COMBINED
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
YES
PROFESSIONAL LIABILITY,
INCLUDING, ERRORS AND
OMISSIONS, MALPRACTICE (WHEN
APPLICABLE), AND NEGLIGENT
PERFORMANCE
ALL DAMAGES $2,000,000
YES
THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONSULTANT, AT ITS SOLE COST
AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM
OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY
CONSULTANT AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’
COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES.
I. INSURANCE COVERAGE MUST INCLUDE:
A. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONSULTANT’S AGREEMENT TO INDEMNIFY CITY.
II. THE CONSULTANT MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT THE FOLLOWING EMAIL: [email protected]
III. ENDORSEMENT PROVISIONS WITH RESPECT TO THE INSURANCE AFFORDED TO ADDITIONAL INSUREDS:
A. PRIMARY COVERAGE
WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED,
INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR
CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS.
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B. CROSS LIABILITY
THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER
THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE
INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE
INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY.
C. NOTICE OF CANCELLATION
1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON
OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.
2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.
EVIDENCE OF INSURANCE AND OTHER RELATED NOTICES ARE REQUIRED TO BE FILED WITH THE CITY OF PALO ALTO SENT TO THE FOLLOWING EMAIL:
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EXHIBIT E
INFORMATION OF PRIVACY
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EXHIBIT F
CYBERSECURITY TERMS AND CONDITIONS
In order to assure the privacy and security of the personal information of the City's customers and people who do business with the City, including, without limitation, vendors, utility customers, library patrons, and other individuals and companies, who are required to share such information with the City, as a condition of receiving services from the City or selling goods and services to the City, including, without limitation, the Software as a Service services provider (the "Consultant") and its subcontractors, if any, including, without limitation, any Information Technology ("IT") infrastructure services provider, shall design, install, provide, and maintain a secure IT environment, described below, while it renders and performs the Services and furnishes goods, if any, described in the Statement of Work, Exhibit B, to the extent any scope of work implicates the confidentiality and privacy of the personal information of the City's customers. The Consultant shall fulfill the data and information security requirements (the "Requirements") set forth in Part A below.
A "secure IT environment" includes (a) the IT infrastructure, by which the Services are provided to the City, including connection to the City's IT systems; (b) the Consultant's operations and maintenance processes needed to support the environment, including disaster recovery and business continuity planning; and (c) the IT infrastructure performance monitoring services to ensure a secure and reliable environment and service availability to the City. "IT infrastructure" refers to the integrated framework, including, without limitation, data centers, computers, and database management devices, upon which digital networks operate.
In the event that, after the Effective Date, the Consultant reasonably determines that it cannot fulfill the Requirements, the Consultant shall promptly inform the City of its determination and submit, in writing, one or more alternate countermeasure options to the Requirements (the "Alternate Requirements" as set forth in Part B), which may be accepted or rejected in the reasonable satisfaction of the Information Security Manager (the "ISM").
Part A. Requirements:
The Consultant shall at all times during the term of any contract between the City and the Consultant:
(a) Appoint or designate an employee, preferably an executive officer, as the security liaison to the City with respect to the Services to be performed under this Agreement. (b) Comply with the City's Information Privacy Policy:
(c) Have adopted and implemented information security and privacy policies that are documented, are accessible to the City, and conform to ISO 27001/2 – Information Security Management Systems (ISMS) Standards. See the following:
http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=42103
http://www.iso.org/iso/iso_catalogue/catalogue_tc/catalogue_detail.htm?csnumber=50297 (d) Conduct routine data and information security compliance training of its personnel that is appropriate to their role.
(e) Develop and maintain detailed documentation of the IT infrastructure, including software versions and patch levels.
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(f) Develop an independently verifi able process, consistent with industry standards, for performing professional and criminal background checks of its employees that (1) would permit verification of employees' personal identity and employment status, and (2) would enable the immediate denia l of access to the City's confidential data and information by any of its employees who no longer would require access to that information or who are terminated.
(g) Provide a list of IT infrastructure components in order to verify whether the Consultant has met or has failed to meet any objective terms and conditions. (h) Implement access accountability (identification and authentication) architecture and support role -based access control ("RBAC") and segregation of duties ("SoD") mechanisms for all personnel, systems, and Software used to provide the Services. "RBAC" refers to a computer systems security approach to restricting access only to authorized users. "SoD" is an approach that would require more than one individual to complete a security task in order to promote the detection and prevention of fraud and errors.
(i) Assist the City in undertaking annually an assessment to assure that: (1) all elements of the Services' environment design and deployment are known to the City, and (2) it has implemented measure s in accordance with industry best practices applicable to secure coding and secure IT architecture.
(j) Provide and maintain secure intersystem communication paths that would ensure the confidentiality, integrity, and availability of the City's information. (k) Deploy and maintain IT system upgrades, patches and configurations conforming to current patch and/or release levels by not later than one (1) week after its date of release.
Emergency security patches must be installed within 24 hours after its date of release. (l) Provide for the timely detection of, response to, and the reporting of security incidents, including on-going incident monitoring with logging.
(m) Notify the City within twenty four (24) hours of detecting a security incident that results in the unauthorized access to or the misuse of the City's confidential data and information. (n) Inform the City that any third party service provider(s) meet(s) all of the Requirements. (o) Perform security self-audits on a regular basis and not less frequently than on a qua rterly basis, and provide the required summary reports of those self -audits to the ISM on the annual anniversary date or any other date agreed to by the Parties. (p) Accommodate, as practicable, and upon reasonable prior notice by the City, the City's performance of random site security audits at the Consultant's site(s), including the site(s) of a third-party service provider(s), as applicable. The scope of these audits will extend to the Consultant's and its third-party service provider(s)' awareness of security policies and practices, systems configurations, access authentication and authorization, and incident detection and response.
(q) Cooperate with the City to ensure that to the extent required by applicable laws, rules and regulations, and the Confidential Information will be accessible only by the Consultant and any authorized third-party service provider's personnel. (r) Perform regular, reliable secured backups of all data needed to maximize the availability of the Services. Adequately encrypt the City of Palo Alto's data, during the operational process, hosted at rest, and the backup stage at the Vendors' environment (including Vendor's contracting organization's environment).
(s) Maintain records relating to the Services for a period of three (3) years after the expiration or earlier termination of this Agreement and in a mutually agreeable storage medium.
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Agreement, all of those records relating to the performa nce of the Services shall be provided to the ISM.
(t) Maintain the Confidential Information in accordance with applicable federal, state, and local data and information privacy laws, rules, and regulations. (u) Encrypt the Confidential Information before delivering the same by electronic mail to the City and or any authorized recipient.
(v) Provide Network Layer IP filtering services to allow access only from the City of Palo Alto's IP address to the Vendor environment (primarily hosted for the City of Palo Alto). (w) Offer a robust disaster recovery and business continuity (DR -BCP) solutions to the City for the systems and services the Vendor provides to the City. (x) Provide and support Single Sign- on (SSO) and Multifactor Authentication (MFA) solutions for authentication and authorization services from the "City's environment to the Vendor's environment," and Vendor's environment to the Vendor's cloud services/hosted environment." The Vendor shall allow two employees of the City to have superuser and super-admin access to the Vendor's IT environment, and a cloud- hosted IT environment belongs to the City.
(y) Unless otherwise addressed in the Agreement, shall not hold the City liable for any direct, indirect or punitive damages whatsoever including, without limitation, damages for loss of use, data or profits, arising out of or in any way connected with the City's IT environment, including, without limitation, IT infrastructure communications. (z) The Vendor must provide evidence of valid cyber liability insurance policy per the City’s EXHIBIT “D” INSURANCE REQUIREMENTS.
Part B. Alternate Requirements:
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: March 3, 2025
Report #:2501-3979
TITLE
Adoption of a Resolution Vacating an Easement at 318 Ferne Avenue and 4120 Mackay Drive; CEQA Status– Exempt under Cal. Code Regs. Tit. 14, section 15305
RECOMMENDATION
Staff recommends that the City Council adopt the attached resolution ordering the summary vacation of a public service easement for utilities located on the residential property at 318 Ferne Avenue and 4120 Mackay Drive in Palo Alto, CA.
ANALYSIS
The public utility easement, as shown on the map of Tract No. 1173, affecting the properties at 318 Ferne Avenue and 4120 Mackay Drive, was accepted by the Palo Alto City Council on May 11, 1953. On November 18, 1953, the map was recorded by the County of Santa Clara Recorder in Book 46 of Maps on Page 31. On October 17, 2024, the Public Works Department forwarded the owner’s request to the Real Estate Division that the easement affecting these properties be vacated. The proposed easement vacation has been approved by the Utilities and Planning departments. The abandoned easement has been replaced with a new one. Therefore, the easement may be vacated in accordance with the summary proceeding authorized in Section 8333 of the California Streets and Highways Code.
FISCAL/RESOURCE IMPACT
The Summary Easement Vacation Processing fee of $2,083 each, as set forth in the FY 2025 Municipal Fee Schedule, has been paid by the owner.
STAKEHOLDER ENGAGEMENT
The Real Estate Division collaborated with the owner and their representatives, Utilities, Public Works, and the City Attorney’s office for necessary reviews of language and exhibits.
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ENVIRONMENTAL REVIEW
Council action on the summary vacation of the public service easement is exempt from review under the California Environmental Act pursuant to Title 14 California Code of Regulations section 15305 as a minor alteration in land use limitations.
ATTACHMENTS
Attachment A: Resolution Vacating a Public Service Easement at 318 Ferne Avenue and 4120 Mackay Drive
APPROVED BY:
Lauren Lai, Administrative Services Director
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Recorded at no charge in accordance with
Streets & Highways Code Section 8336 at
the request of and when recorded return to:
City of Palo Alto
Real Estate Division
250 Hamilton Avenue
Palo Alto, CA 94301
SPACE ABOVE LINE FOR RECORDER’S USE
APN: 147-28-011 and 012
Address: 318 Ferne Avenue and
4120 Mackay Drive
Palo Alto, CA 94306
SUMMARY VACATION
RESOLUTION NO. _____
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
SUMMARILY VACATING A PUBLIC SERVICE EASEMENT
AT 318 FERNE AVENUE AND 4120 MACKAY DRIVE, PALO ALTO, CA WHEREAS, Section 8333 of the Streets and Highways Code authorizes the City Council to summarily vacate a public service easement in any of the following cases: (a) the easement has not been used for the purpose for which it was dedicated or acquired for five consecutive years immediately preceding the proposed vacation, (b) the date of dedication or acquisition is less than five years, and more than one year, immediately preceding the proposed vacation, and the easement was not used continuously since that date, (c) the easement has been superseded by relocation, or determined to be excess by the easement holder, and there are no other public facilities located within the easement; and WHEREAS, an easement on the property located at 318 Ferne Avenue and 4120 Mackay Drive, Palo Alto, CA 94306, was dedicated for public utility purposes as shown on the map recorded on November 18, 1953, in Book 46, page 31 of Santa Clara County Office Records; and
WHEREAS, the City of Palo Alto Utilities Department and Planning Department have evaluated and determined that the public utilities easement located on the property at 318 Ferne Avenue and 4120 Mackay Drive, Palo Alto, CA 94306 is excess and can be superseded by relocation; and
WHEREAS, the City Council of the City of Palo Alto intends to summarily vacate the public service easement as more particularly described in Exhibit “A” attached to this resolution and depicted on the plat map attached as Exhibit “B” to this resolution; and NOW, THEREFORE, the City Council does hereby RESOLVE as follows:
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SECTION 1. This vacation is made under the authority of California Streets and Highways Code Chapter 4 of part 3 of Division 9, commencing at Section 8333 et. seq. The public service easement described herein on Exhibit “A” and depicted on the plat map attached as Exhibit “B” is excess and has been superseded by relocation.
SECTION 2. Based upon the findings made in Section 1 of this Resolution and the provisions of Section 8333 of the Streets and Highways Code, the City Council does hereby order that the public service easement as shown on the said Exhibits “A” and “B” shall be summarily vacated.
SECTION 3. The City Clerk, acting by and through the Real Property Manager, is hereby directed to record at the Santa Clara County Clerk-Recorder’s Office a certified copy of this Resolution, including the Map.
SECTION 4. The public service easement for utilities described in Exhibit “A” and depicted in the plat map attached as Exhibit “B” will no longer constitute a public service easement from and after the date of recordation of the documents identified in Section 3 of this Resolution.
SECTION 5. The Council finds that the summary vacation of the public service easement is exempt from review under the California Environmental Act pursuant to Title 14 California Code of Regulations section 15305 as a minor alteration in land use limitations.
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City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: March 3, 2025
Report #:2412-3948
TITLE
FIRST READING: Adoption of an Ordinance Amending Palo Alto Municipal Code Title 18 (Zoning) to Modify the Housing Incentive Program, Affordable Housing Incentive Program, and Retail Preservation Ordinance (Housing Element Programs 3.3A, B, and D; 3.4A-D; and
6.2A). CEQA Status -- Addendum to the Comprehensive Plan Environmental Impact Report (EIR), adopted December 18, 2023 (SCH #2014052101).
RECOMMENDATION
Staff recommends that the City Council amend Title 18 (Zoning) of the Palo Alto Municipal Code (PAMC) (Attachment A) to implement Programs 3.3A, B, and D, 3.4A-D, and 6.2A of the Housing Element regarding the Affordable Housing Incentive Program (AHIP), Housing Incentive Program (HIP), and Retail Preservation Ordinance.
EXECUTIVE SUMMARY
The 2023-2031 Housing Element, adopted by the City Council on April 15, 2024, and certified by the California Department of Housing and Community Development (HCD) on August 20, 2024, includes two key implementation programs to support affordable and market-rate multifamily housing development beyond the housing sites inventory:
•Housing Element Program 3.3 outlines amendments to the Affordable Housing Incentive Program (AHIP) to streamline, incentivize, and improve project feasibility of affordable housing projects.
•Housing Element Program 3.4 seeks to expand development incentives in the Housing Incentive Program (HIP); extend the HIP to additional zoning districts to facilitate housing production; and modify the Retail Preservation Ordinance to reduce constraints on housing development.1
1 This draft ordinance does not include implementation of Program 3.3C regarding State Density Bonus Law updates, nor Program 3.4E regarding the El Camino Real Focus Area expansion, which will proceed through separate work efforts.
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Incentives for larger units (3+ bedrooms) through the HIP also serve to implement Housing Element Program 6.2A.
The Background section of this report describes the existing HIP and AHIP programs and the Retail Preservation Ordinance, which is also affected by these modifications. The Analysis section outlines proposed amendments consistent with the Housing Element programs discussed above. The Analysis section also presents financial and physical feasibility analyses prepared to identify specific changes to development standards; and compares the relative benefits and drawbacks of incentive programs available to developers (see Attachment F).
BACKGROUND
The City of Palo Alto 2023-2031 Housing Element aims to implement State Housing Element law. As shown in Attachment C, to support those objectives, Housing Element Programs 3.3 (AHIP) and 3.4 (HIP) provide incentives for development of affordable and multifamily housing, respectively. This Background section also includes a brief description of State streamlining incentives and the Retail Preservation Ordinance that provide context for the proposed ordinance changes.
Housing Incentive Program (HIP)
The HIP program was enacted in 2019 as a local alternative to the State Density Bonus law. It allows for development incentives including no residential density restrictions, increased floor area ratios, and increased lot coverage. The program requires Architectural Review and the Planning & Development Services Director to approve the specific increases in development standards. The HIP does not require additional below-market rate units beyond the City’s existing inclusionary housing requirement. The only eligibility criterion is that the HIP is applicable in certain commercial mixed-use districts and locations.
The City has approved two development projects that utilized the HIP to create a total of 105 units, including a 3-unit and 102-unit project. However, given recent changes in State Density Bonus Law and other State-level streamlining bills, changes to the HIP are warranted to make sure that the program is providing a real incentive compared to State law.
The City approved a
102-unit residential
mixed-use
development at 788
San Antonio Road.
The project, which
includes 16 below-
market rate units,
was awarded
additional
residential density
through the HIP.
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Affordable Housing Incentive Program
The City enacted an Affordable Housing Overlay in 2018 to promote 100% affordable housing development. In July 2022, the City modified the Affordable Housing Overlay district into the AHIP program to streamline the approval process. Currently, AHIP projects are eligible for increased density, taller heights, and reduced parking ratios, among other benefits. Eligibility is currently limited to projects that are:
•100% affordable rental housing (up to 120 percent of Area Median Income [AMI]); •Located within ½ mile from CalTrain or ¼ mile from a bus transit corridor; and •Located in the CD, CC, CN, CS, or North Ventura zoning districts.
The City has received only one development project application utilizing the AHIP. Given the narrow eligibility criteria and recent changes in State Density Bonus Law, changes to the AHIP are warranted to make sure that the program is providing a real incentive for affordable housing development compared to State law.
Wilton Court, at
3705 El Camino Real,
used the AHIP to
increase residential
density otherwise
allowed at the site
and construct 59
units affordable to
low-income
households.
State Streamlining Incentives
Recent State laws offer qualifying development projects streamlined review, often with limited public hearings and/or subject to ministerial approvals. The City originally developed the HIP and AHIP incentive programs to retain full architectural review by the Architectural Review Board (ARB) in exchange for relaxed development standards. However, for these local programs to be effective and used, they must provide incentives for developers that exceed what is attainable under State law. Recent and commonly used State law programs are summarized and compared to the HIP and AHIP in Attachment F.
Retail Preservation Ordinance
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to office or other uses. At that time, there was a trend of retail being replaced by office uses.
The Council adopted a permanent ordinance in 2017. It requires redevelopment projects to replace any existing ground-floor retail, restaurant, or service uses on a square foot basis.
The 2023-2031 Housing Element identified the retail preservation ordinance as a potential constraint to housing development. Program 3.4B calls for specific waivers from and modifications to these regulations to accommodate more housing density and affordability while focusing retail development in the most desirable locations in Palo Alto.
Planning & Transportation Commission (PTC) and Architectural Review Board (ARB) Review The PTC and ARB held study sessions on September 25, 2024, and October 3, 2024, respectively, to discuss planned and potential modifications to the HIP and AHIP. On December 17, 2024, the PTC held a public hearing on the resulting draft ordinance and recommended that the City Council adopt the ordinance unanimously (6-0 vote). The PTC provided the following comments, which have been incorporated in the draft ordinance (Attachment A):
•Provide floor area ratio (FAR) bonus for providing 3+ bedroom units; and •Extend AHIP eligibility to include all sites eligible for the HIP.
Additionally, the PTC requested the following considerations for future study:
•Consider allowing an additional five feet of allowed height for projects using the HIP/AHIP;
•Consider eliminating FAR standard for the HIP/AHIP citywide; and •Consider additional commercial nodes on El Camino Real and return to the PTC to review them within the first quarter of 2025.
City staff expect to consider the suggested additional building height and FAR modifications as part of a future citywide comprehensive zoning update. Since the City does not regulate residential density (i.e., dwelling units per acre) in many districts, removing FAR would remove almost all density/intensity limitations (setbacks and height/daylight plane would be the primary controls). This has implications for how the City calculates density bonuses under State Density Bonus Law and would eliminate one of the key incentives for applicants to use the HIP/AHIP programs—which provide greater FAR and residential density— compared with State Density Bonus Law. In addition, City staff anticipate returning to the PTC and Council later this year to making further updates to the City’s retail regulations. This could include further modifications to the policies and El Camino Real commercial node boundaries.
ANALYSIS
This section explains key aspects of the draft ordinance (Attachment A). Table 1 summarizes the substantive changes by chapter or section of the Municipal Code. Annotations in the margins of Attachment A further guide the reader about the rationale for key changes.
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Table 1: Summary of Draft Ordinance
Chapter/Section Summary of Proposed Modification
18.14.030:
Housing
Incentive
Program
•Consolidate HIP regulations from Chapters 18.16 and 18.18. •Update development standards:
Increase FAR and building height maximums (see Attachment G for details of existing rules and proposed changes).
Reduce parking ratios to match State Density Bonus Law. Revise daylight plane and reduce front/street side setbacks. Allow bonus density/FAR for “family-friendly” (3+ bedroom units) (see Attachment G for an analysis of proposed changes). •Expand eligibility to include RM districts and GM/ROLM Focus Area. •Expand transportation demand management measures.
•Streamline process for projects that meet objective design standards, with cross-reference to Section 18.77.073: Streamlined Housing Development Project Review.
•Remove separate development standards for 100% affordable projects (and relocate to AHIP).
18.14.040:
Affordable
Housing
Incentive
Program
•Relocate Chapter 18.32 Affordable Housing Incentive Program. •Increase FAR and building height, reduce parking ratios, and streamline review process.
• Expand eligibility to include all locations eligible for the HIP.
18.40.180: Retail
Preservation
•Modify exemptions and partial exemptions in subsection (4). •Waive retail preservation requirement on Housing Element opportunity sites.
•Retain existing retail requirements in the Ground floor (GF) and Retail (R) combining districts and in commercial nodes on El Camino Real. •Reduce replacement retail floor area requirement in other locations. •Create incentives for ground-floor retail (i.e., parking reduction for first 1,500 square feet of retail and additional 5 feet of height). •Standardize definitions for 100% affordable housing and clarify meaning of existing regulations.
The draft ordinance also includes minor modifications to base district regulations to consolidate and add cross-references to the new housing incentive regulations in Chapter
18.14. As shown in Attachment C, Housing Element Program 3.3 provides explicit direction on the modifications to be made to the AHIP and so they are not discussed further here.
Incentives for Larger Units
As noted in Table 1, the draft ordinance provides an incentive for projects that include larger units (projects in which at least 10% of the proposed units are 3+ bedroom units). This incentive includes unlimited residential density and/or FAR bonuses of 0.5 FAR. This Item 9
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proposed amendment also implements Housing Element Program 6.2A: study to incentivize larger units:
Research and implement incentives to encourage larger units, such as FAR exemptions for three or more bedroom units, and creation of family-friendly design standards.
Meet with housing stakeholders and conduct public hearings before the Planning and Transportation Commission to receive public and commissioner input on ways to achieve stated objective. Make recommendations to Council and follow up with an ordinance to effect a change in local zoning regulations as directed.
The 10% minimum threshold for 3+ bedroom units results from conversations with four developers and architects and evaluation of eight proposed or recently approved multi- family projects in Palo Alto. This threshold is intended to stretch project applicants to achieve this incentive, while still being a realistic goal. A higher threshold is unlikely to be achieved except for townhome projects (which do not need unlimited density nor FAR bonuses).
Retail Preservation Ordinance Modifications
Housing Element Program 3.4B calls for changes to the Retail Preservation Program, separate from the HIP changes. As listed in the table above, the modifications are within the Exemptions section and include:
1. Waive retail preservation requirement on Housing Element opportunity sites. (State law requires 100% residential development be allowed on sites identified as accommodating lower income housing units. To simplify administration and support housing production and affordability outside of priority retail areas, the draft ordinance extends this waiver to all Housing Element opportunity sites.)
2. Retain retail requirements in the:
a. Ground floor (GF) combining district;
b. Retail (R) combining district; and
c. Commercial nodes on El Camino Real.
3. Reduce replacement retail floor area requirement in other locations.
4. Create incentives for ground-floor retail (i.e., parking reduction for first 1,500 square feet of retail and additional 5 feet of height).
5. Clean-up existing regulations to clarify intent and standardize definitions for 100% affordable housing exemptions.
The draft ordinance outlines four “nodes” on El Camino Real, where the retail preservation ordinance would continue to apply. These nodes are intended to provide clarity to the general areas shown in the South El Camino Design Guidelines for pedestrian-oriented nodes and were also informed by site visits and the recently adopted North Ventura Coordinated Area Plan (NVCAP). Figure 1 identifies the following nodes for required ground-floor retail and retail preservation:
1. California Avenue: The intersection of El Camino Real and California Avenue to continue this dynamic retail corridor, especially at the El Camino terminus.
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2. NVCAP: The North Ventura area where the NVCAP requires ground-floor retail along the El Camino Real frontage.
3. Focus Area: The El Camino Focus Area frontage, where large sites combined with more genera Focus Area allows for higher density development close to existing retail development on California Avenue and El Camino Real.
4. Triangle/El Camino Way: A smaller scale and block pattern, with existing crosswalks across El Camino Way that are more conducive to pedestrians, existing restaurants and retail uses, and Housing Element opportunity sites that allow for redevelopment of housing with ground-floor retail.
For Housing Element opportunity sites located within these nodes a developer will still have the ability to build a 100% residential project. However, if they wish to use the incentives of the HIP program, then retail replacement would be required. Existing regulations allow a reduced retail replacement requirement of up to 1,500 sq. ft. for higher density housing projects (at least 30 units/acre) outside of the GF and R combining districts. The draft ordinance extends this reduction outside of these nodes and exempts this commercial area from required parking. This amount of commercial floor area would accommodate a small cafe or retail establishment but provides more flexibility at the ground-floor than current requirements.
Attachment I provides examples of how the retail preservation ordinance applies to different locations, project types, and affordability levels, and highlights changes between the existing and proposed regulations.
Figure 1: El Camino Real Required Retail Nodes
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Physical and Financial Feasibility Studies to Evaluate Potential Changes to the HIP As required by Housing Element Program 3.4, City staff and consultants prepared physical and financial feasibility studies to determine the types and densities of housing that current zoning standards2 produce and to determine whether these housing types are likely to be financially feasible for a developer to build.
Attachment D illustrates the physical models prepared by architects at Urban Field Studio and planners at Lexington Planning and reports the high-level financial feasibility findings prepared by economic consultants, Keyser Marston Associates (KMA). Attachment E is the detailed report on KMA’s financial feasibility findings.3 Figure 2 (below) summarizes this process and the outcome of the studies.
2 Notably, these analyses exclude zoning changes that went into effect in January 2024 on Housing Element opportunity sites. These recent changes improve physical and financial feasibility on opportunity sites only. Modifications to the HIP are expected to assist developers/property owners of sites that are not listed as opportunity sites, but will also further improve feasibility on opportunity sites.
3 Financial feasibility findings are based on assumptions about costs, land values, and profits that are averages, and represent KMA’s local research and professional opinions. These assumptions may not reflect the economic situations and assumptions for individual sites and developers, based on their specific values and priorities.
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Figure 2: Feasibility Analysis – Process and Outcome
Figure 3 illustrates an example of the physical feasibility analysis detailed in Attachment D.
Architects modeled what existing standards yield (image and column at left) and then modified various standards to try to increase yield (image and column at right). In general, this process aimed to keep building height increase to no more than 10-20 feet (one to two stories) and retain on-site parking.
However, zoning standards are interconnected; there are tradeoffs that the City can consider when evaluating changes to standards. For example, reducing parking can free up space at the ground-level for housing units or commercial spaces without substantial changes to building height. If side/rear setbacks and daylight planes are priorities, then building heights may need to be higher and front/street side setbacks lower to achieve sufficient yields. In the example in Figure 3, the architects increased building height, reduced the rear setback, Item 9
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modestly reduced the parking requirement, met the open space requirement on top of the podium, and substantially increased the FAR. This results in an increase from four to seven units.
Figure 3: Excerpt from Physical Feasibility Report (see Attachment D) The result of this analysis, and subsequent discussion with the ARB and PTC is a draft ordinance that modifies maximum FAR and building height, reduces parking ratios, revises daylight planes, and reduces front/street side setbacks, as described in Table 1 above.
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POLICY IMPLICATIONS
As part of the implementation of Program 3.2 (Monitor Constraints to Housing) of the Housing Element, the City committed to prepare an analysis in staff reports for initiatives proposing new regulations. This analysis details how the regulations may impact housing production, if at all, and recommend solutions to address any adverse impacts.
The draft ordinance implements the following Housing Element programs:
•Housing Element Program 3.3A, B, and D to streamline, incentivize, and improve project feasibility of 100% affordable housing projects. •Housing Element Program 3.4A-D to expand development incentives in the Housing Incentive Program (HIP) and extend the program to additional zoning districts to facilitate housing production. Based on quantified objectives in the Housing Element, this modification is anticipated to generate 550 housing units. •Housing Element Program 6.2A to incentivize larger units and create family-friendly housing.
As a result, the draft ordinance would help affirmatively affirm fair housing goals expressed in the Housing Element by revising zoning in a range of high resource areas and different locations within the City, including: existing residential neighborhoods, along commercial corridors, in the GM/ROLM Focus Area, as well as in Downtown and California Avenue. This ordinance also supports implementation of Housing Element Goal 2.0 (Affordable Housing) and Goal 3.0 (Housing Development).
FISCAL/RESOURCE IMPACT
The implementation of the proposed ordinance is not anticipated to have any direct fiscal impacts on the City budget.
STAKEHOLDER ENGAGEMENT
Preparation of the Housing Element included a range of community outreach methods, including surveys, Working Group meetings, community workshops, and public hearings.
Hundreds of community members have participated in the Housing Element update over the course of the project. City staff and consultants are working with developers and architects familiar with the City’s regulations to test potential standards. Community members have an opportunity to provide feedback on the draft standards at PTC, ARB, and City Council study sessions and public hearings.
ENVIRONMENTAL REVIEW
On April 15, 2024, the City Council adopted Resolution No. 10155, approving an Addendum to the Comprehensive Plan Environmental Impact Report (EIR). The addendum analyzed potential environmental impacts of the 6th Cycle Draft Housing Element. This includes implementation of Housing Element Programs 3.3, 3.4, and 6.2, and associated increase in housing production including and beyond what was projected by the RHNA and Housing Element sites inventory.
ATTACHMENTS
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Attachment A: Amendments to Title 18 to Implement Housing Element Programs 3.3A, B, and D and 3.4A-D
Attachment B: HIP and AHIP Applicability Map
Attachment C: Excerpt from 2023-2031 Adopted Housing Element Program Attachment D: Physical Feasibility Analysis Report
Attachment E: Financial Feasibility of Multifamily Housing Typologies (Executive Summary; link to full report)
Attachment F: Comparison of HIP/AHIP vs. State Law Incentive Programs Attachment G: Summary of Draft Density, FAR, Building Height and Daylight Plane Modifications
Attachment H: State Density Bonus Law Handout
Attachment I: Retail Preservation Ordinance Example Matrix APPROVED BY:
Jonathan Lait, Planning and Development Services Director Item 9
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1 Ordinance No.
Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 18 (Zoning) of the Palo Alto Municipal Code to Implement Programs 3.3 and 3.4 of the 2023-2031 Housing Element to Revise the Housing Incentive Program and Affordable Housing Incentive Program
SECTION 1. Findings and Declarations. The City Council finds and declares as follows:
A. On May 8, 2023, the City Council adopted Resolution No. 10107, approving an Addendum to the Comprehensive Plan Environmental Impa ct Report (EIR), making various findings, and adopting the 2023-2031 Housing Element for the City of Palo Alto.
B. On December 18, 2023, the City Council approved a Revised Addendum to the Comprehensive Plan EIR and adopted Ordi nance No. 5608, rezoning sites in the 2023- 2031 Housing Element Sites Inventory to accommodate the City’s Regional Housing Needs Allocation.
C. On April 15, 2024, the City Council adop ted Resolution No. 10155, making various findings, adopting a Revised 2023-2031 Housing Element, and authorizing the Director of Planning and Development Services to ta ke further actions necessary to achieve certification of the Housing Element by the California Department of Housing and Community Development (HCD).
D. On August 19, 2024, HCD found that the Revised 2023-2031 Housing Element, as further modified on July 17, 2024, was substantially compliant with state law.
E. Programs 3.3 and 3.4 of the City’s Revised 2023-2031 Housing Element direct a variety of updates to the City’s Housing Incentive Pr ogram and Affordable Housing Incentive Program, which are implemented in this ordinance.
F. On ________, 2024, the Planning and Tran sportation Commission considered and recommended that the City Council adopt this ordinance to implement the 2023-2031 Housing Element.
SECTION 2. Section 18.14.030 (Housing Incentive Pr ogram) of Chapter 18.14 (Housing Incentives) of Title 18 (Zoning) of the Palo Alto Municipal Code is here by amended to read as follows:
18.14.030 Housing Incentive Program
(a) Purpose
The housing incentive program modifies base zoning district standards and streamlines review to encourage higher-density multi-family housing production. The program is a local Item 9
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2 alternative to State Density Bonus Law.
(b) Applicability
The housing incentive program shall apply to the following zoning districts or locations:
(1) Chapter 18.13: RM-20, RM-30, RM-40
(2) Section 18.14.020: GM/ROLM Focus Area (see Figure 1) (3) Chapter 18.16: CC(2); CN or CS-zoned sites on El Camino Real; CS sites on San Antonio Road between Middlefield Road and East Charleston Road
(4) Chapter 18.18: CD(C)
(5) Chapter 18.29: NV- R3, NV- R4, NV- MXL, NV- MXM, NV- MXH, NV- PF (c) Procedures
The regulations established by this section pr ovide increases in development standards for eligible projects electing to take advantage of the Housing Incentive Program. A property owner may elect to use the site consistent with the underlying zoning district.
The Housing Incentive Program provides flexibility in development standards that allow for a density increase that would in most case s exceed density bonuses under state density bonus law (Government Code Section 65915). Therefore, a project applicant may utilize the provisions of this section as an alternative to use of the state density bonus law implemented through Chapter 18.15 (Density Bonus) of this Title, but may not utilize both this section and state density bonus law. If an applicant utilizes state density bonus law, the provisions of this section shall not apply.
(d) Permitted Uses
The following uses shall be permitted to use the housing incentive program:
(1) Multiple-Family Residential.
(2) In conjunction with a Multiple-Family Residential use, any uses permitted in the underlying district, provided the uses are limited to the ground floor. (e) Development Standards
For all eligible zoning districts, the housing incentive program shall modify underlying zoning district standards as shown in Table 5. Floor area ratio (FAR) and building height standards are specified in Table 6; unlike the standards in Table 5, these standards vary by zoning district and whether or not a site is classified as an opportunity site li sted in Appendix D of the Housing Element.
Table 5
Housing Incentive Program Development Standards
Minimum Site Specifications
Standards for All Eligible
Zoning Districts Subject to regulations in:
Implements Program 3.4D
to add RM and GM/ROLM
Focus Area districts
Similar to
existing
procedures
for AHIP
Based on the City’s
Definitions in Ch. 18.04,
MFR is defined as 3+ units
Implements
Program 3.4B+D
re: modified
standards
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3 Minimum Setbacks
Front Yard (ft) Same as underlying district
or 10 ft. (whichever is less)
Setback lines imposed by a
special setback map
pursuant to Chapter 20.08
of this code or imposed to
create required effective
sidewalk widths apply.
Rear Yard (ft) Same as underlying district
Rear Yard abutting residential
zoning district (ft)
Same as underlying district
Interior Side Yard if abutting
residential zoning district (ft)
Same as underlying district
Street Side Yard (ft) Same as underlying district
or 8 ft. (whichever is less)
Maximum Site Coverage 100% (commercial districts
and GM/ROLM Focus Area)
70% (residential districts)
Minimum Landscape/Open Space
Coverage
Same as underlying district See 18.14.020 for
modified standards
applicable to Housing
Element Opportunity Sites
Minimum Usable Open Space Same as underlying district
Maximum Height (ft) See Table 6 for standards,
by zoning district
Portions of a site within 50 ft of a
low density residential district (RE,
R1, NV-R1, R2, NV-R2, RMD)
35 ft
(1)
Daylight Plane for lot lines
abutting a low density residential
district (RE, R1, NV-R1, R2, NV-R2,
RMD)
Unless the underlying
zoning district standard is
more permissive, the
daylight plane shall be as
follows:
Initial height: 16 feet,
measured at the property
line
Slope: 45 degrees
Reduced
setback
requirements
will affect the
ROLM and RM
zones (20 to
10 ft front and
16 to 8 ft street
side).
Special setbacks
retain sidewalk
dimensions on El
Camino Real and
in NVCAP
This would increase coverage in the RM and
CN zones and the GM/ROLM Focus Area
as well as certain NV zones. Lot coverage is
already 100% in the CD(C) and CC(2), as well
as CS zone for non-residential uses. Projects
generally will not achieve 100% coverage due
to setback, landscaping, and stormwater req's.
Similar to
existing
AHIP height
transition
standards
Requires a
dayight plane,
but allows for
two stories next
to the shared
property line
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4 Maximum Residential
Density (net)
RM-20 Zone (Non-Housing
Element Opportunity Site):
40 du/ac
All Other RM Zones: 60
du/ac, except no density
limit if at least 10% of units
are 3+ bedrooms
All Other Zones: None.
Minimum Commercial FAR Same as underl ying district See Section 18.40.180 (retail preservation)
Maximum Total FAR See Table 6 for standards,
by zoning district
Minimum Vehicle Parking
1 space per studio/1-bed
1.5 spaces per 2-bed+
Additional adjustments to
the required ratios may be
considered per Chapter
18.52 (Parking).
TDM Plan
Projects providing fewer
than 50% of the parking
spaces that would be
required under Section
18.52.040 shall develop and
implement a transportation
demand management plan
containing, at a minimum:
(1) free transit passes for
residents (one per/unit);
(2) at least one on-site
short-term residential
loading space;
(3) bike repair station;
(4) allocation of 5% of
required bike parking
spaces to cargo bikes;
(5) provision of outlets
appropriate spaced for e-
bike charging at 20% of
required bicycle parking
See Chapter 18.52.050(d)
for additional TDM that
may be required.
None of these other zones
currently have a density limit
Incentive for family
housing
These parking
ratios match
the basic State
Density Bonus
Law ratio
New TDM
requirements
for projects with
reduced parking
TDM measures
build on El
Camino Focus
Area measures
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5 spaces; and
(6) a micromobility program
with a fleet equal to 5% of
the number of proposed
units.
Notes:
(1) Distance shall be measured from the property line of the subject site.
Table 6
FAR and Building Height Standards, by Eligible Zoning District
(THESE COLUMNS TEMPORARILY
INCLUDED FOR REFERENCE ONLY) Housing Incentive Program Standards
Existing
Base
District
Standard
Existing
18.14.010
Standards
Existing
HIP
Standards Maximum FAR
(1)
Maximum
Building
Height
Non-Opp
Sites
Opp Sites MFR Non-
Housing
Element
Opportunity
Sites
Housing
Element
Opportunity
Sites
CC(2) Max
Total
FAR: 0.6
Max
height:
37 ft.
Max Total
FAR: 2.0
Max Total
FAR: 2.0
Max
Coverage:
100%
2.6 3.5
60 ft.
CS (El
Camino
Real)
Max
Total
FAR: 0.6
Max
height:
50 ft.
Max Total
FAR: 1.25
Max Total
FAR: 1.5
Max
Coverage:
100%
2.85 3.5
60 ft.
CS (San
Antonio
Max
height:
Max Total
FAR: 1.25
Max Total
FAR: 2.0
2.0 2.0 50 ft.
Existing standards for reference. No
modifications to the CS (San Antonio) or
CD(C) (Downtown) districts are proposed in
order to let the San Antonio CAP and
Downtown study determine changes.
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6 Road
between
Middlefield
Road and
East
Charleston
Road)
50 ft.
CN (El
Camino
Real)
FAR: 0.5
Max
height:
40 ft.
Max Total
FAR: 1.25
Max Total
FAR: 1.5
Max
Coverage:
100%
2.5 3.25
50 ft.
CD(C) Max
height:
50 ft.
Max Total
FAR: 2.0
Max Total
FAR: 3.0
3.0 (2) 3.0 (2) 50 ft.
RM-40 FAR: 1.0
Max
height:
40 ft.
Max Total
FAR: 1.5
n/a 3.0 50 ft.
RM-30 FAR: 0.6
Max
height:
35 ft.
Max Total
FAR: 1.25
n/a 2.5 40 ft.
RM-20 FAR: 0.5
Max
height:
30 ft.
Max Total
FAR: 1.25
n/a 2.0 40 ft.
GM/ROLM
Focus Area)
n/a Max Total
FAR: 2.5
Max
height: 60
ft.
n/a 3.5 No change
Notes:
(1) Maximum Floor Area Ratio shall be increased by 0. 5:1 for projects in which at 10% of all units contain three or more bedrooms.
Incentive for
family housing
The zoning changes effective Jan. 2024
allowed for building height up to 60 ft.
No further changes are proposed as
part of these HIP modifications
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7 (2) The use of transferable development rights under Section 18.18.080 shall not ca use the site to exceed an FAR of 3.0.
(f) Review Process
Housing Development Projects that comply with objective design standards pursuant to Chapter 18.24 (Contextual Design Criteria and Ob jective Design Standards) shall be subject to streamlined review pursuant to Section 18.77. 073. All other projects shall be subject to architectural review as provid ed in Section 18.76.020. Projects shall not be subject to the requirements of site and design review in Chapter 18.30(G). //
//
SECTION 3. Section 18.14.040 (Affordable Housing Incentive Program) of Chapter 18.14 (Housing Incentives) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended to read as follows (changes from Chapter 18.32 shown temporarily for reference only):
(a) 18.32.010 Specific Purpose
The affordable housing incentive program is intended to promote the development of 100% affordable rental housing projects located within one-half mile of a major transit stop or one-quarter mile of a high-quality transit corridor, as defined in subdivision (b) of Section 21155 of the Public Resources Code, by providing flexible development standards, and modifying the allowed uses, and streamlining the project review process allowed in the commercial districts and subdistricts.
(b) 18.32.20 Applicability of Regulations and Affordable Housing Requirement The affordable housing incentive program shall apply to 100% affordable housing projects in the following zoning districts or locations:
(1) Housing Element Opportunity Sites listed in Appendix D of the Housing Element; or (2) Pproperties located within one-half mile of a major transit stop or one-quarter mile of a high-quality transit corridor and zoned CD, CN, CS, and CC, set forth in Chapters
18.16 and 18.18 of this Title, in accord with Chapter 18.08 and Chapter 18.80, but excluding the Town and Country Village Shopping Center, Midtown Shopping Center, and Charleston Shopping Center (unless otherwise allowed by subsection (i). (3) Sites eligible for the Housing Incentive Program pursuant to Section 18.14.030(b).
Procedures
Implements Program 3.4A to
allow one study session with
the ARB if a project meets
objective standards. Based on
existing AHIP review process.
Generalized in order
to capture addition of
residential district
and Housing Element
opportunity sites
outside of transit
areas
Expanded applicability consistent
with Program 3.3A. Relocated
transit statement from purpose
statement above. Major transit
definition is now in “definitions”
section below.
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8 The regulations established by this chapter shall apply for 100% affordable housing projects in lieu of the uses allowed and development standards and procedures applied in the underlying district. A property owner may elect to use the site consistent with the underlying zoning district, in which case the applicable regulations in Chapters 18.16 and
18.18 for the commercial districts shall apply.
(a) The affordable housing incentive program provides flexibility in development standards that allow for a density increase that would in most cases exceed density bonuses under state density bonus law, (Government Code Section 65915). Therefore, a project applicant may utilize the affordable housing incentive program and the provisions of this chaptersection as an alternative to use of the state density bonus law implemented through Chapter 18.15 (Density Bonus) of this Title, but may not utilize both the affordable housing incentive program and state density bonuses law. If an applicant utilizes state density bonus law, the regulations in this section shall not apply. in Chapters 18.16 and 18.18 for the applicable underlying commercial zoning district, including as modified by Chapter
18.14.020, shall apply.
(c) 18.32.030 Definitions
For purposes of this chapter, the following definitions shall apply. (1) (a) "100% affordable housing project" means a multiple-family housing project consisting entirely of for-rent affordable units, as defined in Section 16.65.020 of this code, except for a building manager's unit, and available only to households with income levels at or below 120% of the area median income for Santa Clara County, as defined in Chapter 16.65, and where the average monthly rent, inclusive of a reasonable utilities allowance, does not exceed one-twelfth of 30% of the area median income (100% AMI) for the appropriate household size. (1)(2) “Major transit stop” and “high-quality transit corridor” as defined in subdivision (b) of Section 21155 of the Public Resources Code.
18.32.040 (Reserved)
(d) 18.32.050 Review Process
Housing Development Projects that comply with objective design standards pursuant to Chapter 18.24 (Contextual Design Criteria and Objective Design Standards) shall be subject to streamlined review pursuant to Section 18.77.073 (Streamlined Housing Development Project Review). All other projects shall be subject to architectural review as provided in Section 18.76.020. Projects shall not be subject to the requirements of site and design review in Chapter 18.30(G).
(e) 18.32.060 Conformance to Other Combining Districts and Retail Preservation Implements 3.3D
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9 The following requirements shall apply to projects in the AH affordable housing incentive program:
(1) (a) Where applicable, the requirements of Chapter 18.30(A) (Retail Shopping (R) Combining District Regulations), Chapter 18.30(B) (Pedestrian Shopping (P) Combining District Regulations), and Chapter 18.30(C) (Ground Floor (GF) Combining District Regulations), and Pedestrian Shopping (P) Combining Districts shall apply. (2) (b) Where applicable, the retail preservation requirements of Section 18.40.180 shall apply except as provided below.
(2)(3) Projects shall not be subject to the requirements of site and design review in Chapter 18.30(G).
(1) Waivers and adjustments
(A) Except in the R or GF combining districts, the City Council shall have the authority to reduce or waive the amount of retail or retail like gross floor area required in Section
18.40.180 for any 100% affordable housing project if the City Council determines that it would be in the public interest. Any such reduction or waiver shall not be subject to the waiver and adjustments requirements in Section 18.40.180(c). In the R and GF combining districts, any reduction or waiver in retail or retail like gross floor area shall remain subject to the requirements of Section 18.40.180(c) or the combining district as applicable. (B) The City Council shall have the authority to modify retail parking requirements associated with a 100% affordable housing project that also requires ground floor retail. (f) 18.32.070 Permitted Uses
The following uses shall be permitted in to use the AH affordable housing incentive program:
(1) (a) 100% affordable housing projects;
(2) (b) In conjunction with a 100% affordable housing project, any uses permitted in the underlying district, provided the uses are limited to the ground floor:. (A) Business or trade school.
(B) Adult day care home.
(C) Office less than 5,000 square feet when deed-restricted for use by a not-for- profit organization.
(A)(D) Any uses permitted in the underlying district
(g) 18.32.080 Conditional Uses
The following uses may be permitted in All uses conditionally permitted in the applicable underlying zoning district may be established in a project utilizing the AH affordable housing incentive program: (1) in conjunction with an 100% affordable housing project;, (2) subject to issuance of a conditional use permit in accord with Chapter 18.76 (Permits and This is redundant
with 18.40.180
Redundant. Ch. 18.52
already outlines parking
reduction process.
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10 Approvals);, and (3) provided that the uses are limited to the ground floor.:
(a) Business or trade school.
(b) Adult day care home.
(c) Office less than 5,000 square feet when deed-restricted for use by a not-for-profit organization.
(d) All other uses conditionally permitted in the applicable underlying zoning district. (h) 18.32.090 Development Standards
The following development standards shall apply to projects subject to the AH affordable housing incentive program in lieu of the development standards for the underlying zoning district, except where noted below:
Table 1
Development Standards
AH Incentive Program(1)
Minimum Site Specifications Subject to regulations in:
Site Area (ft 2)
None required
Site Width (ft)
Site Depth (ft)
Minimum Setbacks
Setback lines imposed by a
special setback map
pursuant to Chapter 20.08
of this code may or
imposed to create required
effective sidewalk widths
apply
Front Yard (ft) Same as underlying district
or 10 ft. (whichever is less)
Rear Yard (ft) Same as underlying district
Rear Yard abutting residential
zoning district (ft)
Same as underlying district
Interior Side Yard if abutting
residential zoning district (ft)
Same as underlying district
Street Side Yard (ft) Same as underlying district
or 8 ft. (whichever is less)
Build-to-Lines Same as underlying district
Permitted Setback Encroachments Same as underlying district Changes follow Program 3.3B to increase FAR
(except on R-1 opportunity sites), increase
height limit for <60% of AMI projects, reduce
parking requirements, and other changes to
make the 2.4 FAR achievable.
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11 Maximum Site Coverage None Required
Minimum Landscape/Open Space
Coverage
20%(2)
Minimum Usable Open Space
25 sq ft per unit for 5 or
fewer units(2), 50 sq ft per
unit for 6
units or more (2)
Maximum Height (ft)
General Standard (Projects income
restricted <120% of AMI)
50'(4)
Lower Income Standard (Projects
income restricted <60% of AMI)
60’(3)(4)
Portions of a site within 50 ft of a
residential district (other than an
RM-40 or PC zone) R1, R-2, RMD,
RM-20, or RM-30 zoned property
35'
(3)(4) (5)
18.08.030
Daylight Plane for lot lines
abutting a low density residential
district (RE, R1, NV-R1, R2, NV-R2,
RMD)one or more residential
zoning districts
Daylight plane height and
slope shall be identical to
those of the most restrictive
residential zoning district
abutting the lot line
Unless the underlying
zoning district standard is
more permissive, the
daylight plane shall be as
follows:
Initial height: 16 feet,
measured at the property
line
Slope: 45 degrees
Maximum Residential
Density (net)
None Required(3)
Maximum Residential Floor
Area Ratio (FAR) - Residential
Portion of a Project
2.0:1 2.4:1(3)
Maximum Non-Residential
FAR
0.4:1
Maximum Total FAR 2.4:1(3)
Currently, initial height is
10 feet adjacent to RM zones
and R1 (side yard). R1 (rear
yard) is already measured
at 16 feet. This increase
allows for a second story at
the shared property line
with a low density residential
district only.
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12 Minimum Vehicle Parking
None, within one-half mile
of a major transit stop or
one-quarter mile of a high-
quality transit corridor.
0.5 per unit, all other
locations.
0.75 per unit
The Director may modify this
standard based on findings
from a parking study that
show fewer spaces are
needed for the project.
The required parking ratio
for special needs housing
units, as defined in Section
51312 of the Health and
Safety Code shall not exceed
0.3 spaces per unit.
Adjustments to the
required ratios shall be
considered per Chapter
18.52 (Parking).
For Commercial Uses, See
Chapters 18.52 and 18.54
(Parking).
TDM Plan
A transportation demand
management (TDM) plan
shall be required pursuant to
Section 18.52.050(d) and
associated administrative
guidelines
18.52.050(d)
Notes:
(1) These developments shall be designed and constructed in compliance with the objective design standards in Section 18.24 and. Developments that elect to deviate from one or more objective standards in Chapter 18.24 shall meet the performance criteria, general standards, and exceptions outlined in Chapter 18.2318.40. Developments that elect to deviate from one or more objective standards in Chapter 18.24 shall, as well as meet the context-based design criteria outlined in Section 18.13.060 for residential-only projects and projects in residential, public facilities, and office, research, and manufacturing zones, Section
18.16.090 for mixed use projects in the CN, CC, and CS districts, and Section 18.18.110 for mixed use projects in the CD district, provided that more restrictive regulations may be recommended by the architectural review board and approved by the director of planning and community environment, pursuant to Section 18.76.020. (2) Landscape coverage is the total area of the site covered with landscaping as defined in Chapter 18.04. For the purposes of this Chapter 18.32, areas provided for usable open space may be counted towards the landscape site coverage requirement. Landscape and open space areas may be located on or above the ground level, and may include balconies, terraces, and No parking
requirement
near transit is
consistent
with SB35,
State Density
Bonus Law
and AB2097,
except this
code refers
to major
transit as
defined above
In other
locations, ratio
is reduced per
Program 3.3B
This deletion is
called out for
the HIP in
Program 3.4
and not the
AHIP in
Program 3.3,
but the
sentiment is the
same. Especially
since this clause
refers to
compliance with
the (subjective)
context-based
design criteria.
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13 rooftop gardens.
(3) Except on R-1 opportunity sites (owned by faith-based institutions) where maximum FAR of 2.0; maximum residential density of 50 du/ac; and maximum building height of 50 feet apply, regardless of income level.
(4) Mixed-use projects that include ground-floor retail or retail-like uses shall receive an additional 5 feet of building height.
(345) Distance shall be measured from the property line of the subject site. The Planning Director may recommend a waiver from the transitional height standard.
SECTION 4. Section 18.13.040 (Development Standards) of Chapter 18.13 (Multiple Family Residential (RM-20, RM-30 AND RM-40) Districts) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-through; unchanged text omitted by bracketed ellipses):
18.13.040 Development Standards
(a) Site Specifications, Building Size and Bulk, and Residential Density The site development regulations in Table 2 shall apply in the multiple-family residence districts, provided that more restrictive regulations may be recommended by the Architectural Review Board and approved by the Director of Planning and Development Services, pursuant to the regulations set forth in Chapter 18.76, and the objective design standards set forth in Chapter 18.24. Except that s Sites designated as Housing Element Opportunity Sites shall meet the development standards specified in Chapter Section
18.14.020 and projects utilizing the Housing Incentive Program or Affordable Housing Incentive Program shall meet the development standards specified in Sections 18.14.030 and 18.14.040, respectively.
[. . .]
SECTION 5. Section 18.16.060 (Development Standard s) of Chapter 18.16 (Neighborhood, Community, and Service Commercial (CN, CC and CS) Districts) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck- through; unchanged text omitted by bracketed ellipses)::
18.16.060 Development Standards
[. . .]
(b) Mixed Use and Residential
Table 4 specifies the development standards for new residential mixed use developments and residential developments. These developments shall be designed and constructed in compliance with the following requirements and the objective design standards in Chapter Modified
standards for
R-1 zoned faith
based sites
Incentive for
retail/mixed
use buildings
Cross-reference
for RM Zones
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14 18.24, except that sites designated as Hous ing Element Opportunity Sites shall meet the development standards as modified in Chapte r 18.14.020 and projects utilizing the Housing Incentive Program or Affordab le Housing Incentive Program shall meet the development standards specified in Sections 18.14.03 0 and 18.14.040, respectively. Non-Housing Development Projects and Housing Development Projects that el ect to deviate from one or more objective standards in Chapter 18.24 shall meet the context-based design criteria outlined in Section 18.16.090, provided th at more restrictive regulations may be recommended by the architectural review board and approved by the director of planning and development services, pursuant to Section 18.76.020.
[. . .]
(c) Exclusively Residential Uses
Exclusively residential uses are generally proh ibited in the CN, CS, CC(2) and CC zone districts, except on housing inventory sites identified in the Housing Element, subject to the standards in Section 18.16.060(b), and on CS and CN sites on El Cami no Real and CC(2) sites, subject to the following.
(1) On CS and CN sites on El Camino Real and on CC(2) sites, wh ere the retail shopping (R) combining district or the retail preservation provisions of Section 18.40.180 do not apply, exclusively residential uses ar e allowed subject to the standards in Section 18.16.060(b) and the following additional requirements:
(A) Residential units shall not be permitted on the ground-floor of development fronting on El Camino Real unless set back a minimum of 15 feet from the property line or the 12-foot effective sidewalk setb ack along the El Camino Real frontage, whichever is greater; for projects on Ho using opportunity sites, or those utilizing the Housing Incentive Program or Affordable Housing Incentive Program, these setbacks may be modified by the standards in Chapter 18.14. Common areas, such as lobbies, stoops, community rooms, a nd work-out spaces with windows and architectural detail are permitted on the ground-floor El Camino Real frontage. (B) Parking shall be located behind build ings or below grade, or, if infeasible, screened by landscaping, low walls, or garage structures with architectural detail. (C) Combining district use regulations and design and development standards shall not apply to exclusively residential projects on Housing Element opportunity sites designated to accommodate lower income households, and may be limited for sites utilizing the Housing Incentive Program or Affordable Housing Incentive Program. See Section 18.14.020 Chapter 18.14 for details.
[. . .]
(k) Housing Incentive Program Reserved
(1) The Director may waive the residential floor area ratio (FAR) limit and the maximum site coverage requirement for a project that is reviewed by the Architectural Review Board, if the Director finds that the project with such waiver or waivers is consistent with the required architectural review findings in Section 18.76.020. The Director may only Cross-reference
for commercial
zones
Existing HIP standards are
being replaced with the code
section above
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15 waive these development standards in the fo llowing areas and subject to the following restrictions:
(A) For an exclusively residential or mixed-use project in the CC(2) zone or on CN or CS zoned sites on El Camino Real. In no event shall the Director approve a commercial FAR that exceeds the standard in Table 4 of Section 18.16.060(b) or a total FAR (including both re sidential and commercial FAR) in excess of 2.0 in the CC(2) zone or 1.5 in the CN or CS zone.
(B) For an exclusively residential or mi xed-use project on CS zoned sites on San Antonio Road between Middlefield Road a nd East Charleston Road. In no event shall the Director approve a commercial FAR that exceeds the standard in Table 4 of Section 18.16.060(b) or a total FAR (including both residential and commercial FAR) in excess of 2.0.
(2) The Director may waive any developmen t standard including parking for a project that is reviewed by the Architectural Review Board, if the Director finds that the project with such waiver or waivers is consistent with the required architectural review findings in Section 18.76.020. The Director may only waive these development standards in the following areas and subject to the following restrictions:
(A) For a 100% affordable housing project in the CC(2) zone or on CN or CS zoned sites on El Camino Real;
(B) For a 100% affordable housing project on CS zoned sites on San Antonio Road between Middlefield Road and East Charleston Road.
(C) In no event shall the Director approve development standards more permissive than the standards applicab le to the Affordable Housing (AH) Combining District in Chapter 18.30(J). A "100% affordable housing project" as used herein means a multiple-family housing or mixed-use project in which the residential component consists entirely of affordable units, as defined in Section
16.65.020, available only to households wi th income levels at or below 120% of the area median income, as defined in Section 16.65.020, and where the average household income does not exceed 60% of the area median income level, except for a building manager's unit.
(3) This program is a local alternative to the state density bonus law, and therefore, a project utilizing this program shall not be eligible for a density bonus under Chapter 18.15 (Residential Density Bonus).
[. . .]
SECTION 6. Section 18.18.060 (Development Standards) of Chapter 18.18 (Downtown Commercial (CD) District) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-through; unchanged text omitted by bracketed ellipses):
18.18.060 Development Standards
[. . .]
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16 (b) Mixed Use and Residential
Table 3 specifies the development standards for new residential mixed use developments and residential developments. Housing Development Projects shall be designed and constructed in compliance with the following requirements and the objective design standards in Chapter 18.24, except that sites designated as Housing Element Opportunity Sites shall meet the development standards as modified in Chapter 18.14.020 and projects utilizing the Housing Incentive Program or Affordable Housing Incentive Program shall meet the development standards specified in Sections 18.14.030 and 18.14.040, respectively.
Non- Housing Development Projects and Housing Development Projects that elect to deviate from one or more objective standards in Chapter 18.24 shall meet context-based design criteria outlines in Section 18.18.110, provided that more restrictive regulations may be recommended by the architectural review board and approved by the director of planning and development services, pursuant to Section 18.76.020:
[. . .]
(l) Reserved Housing Incentive Program
(1) For an exclusively residential or residential mixed-use project in the CD-C zone, the Director may waive the residential floor area ratio (FAR) limit after the project with the proposed waiver is reviewed by the Architectural Review Board, if the Director finds that the project exceeding the FAR standard is consistent with the required architectural review findings. In no event shall the Director approve a commercial FAR in excess of 1.0 or a total FAR (including both residential and commercial FAR) in excess of 3.0. Nor shall the use of transferable development rights under Section 18.18.080 be allowed to cause the site to exceed a FAR of 3.0.
(2) For a 100% affordable housing project in the CD-C zone, the Director may waive any development standard including parking after the project with the proposed waiver or waivers is reviewed by the Architectural Review Board, if the Director finds that a project with such waiver or waivers is consistent with the required architectural review findings. In no event shall the Director approve a FAR in excess of 3.0 or approve other development standards more permissive than the standards applicable to the Affordable Housing (AH) Combining District in Chapter 18.30(J). A "100% affordable housing project" as used herein means a multiple-family housing or mixed-use project in which the residential component consists entirely of affordable units, as defined in Section 16.65.020 of this code, available only to households with income levels at or below 120% of the area median income, as defined in Section 16.65.020, and where the average household income does not exceed 60% of the area median income level, except for a building manager's unit.
(3) This program is a local alternative to the state density bonus law, and therefore, a project utilizing this program shall not be eligible for a density bonus under Chapter
18.15 (Residential Density Bonus).
Existing HIP standards are
being replaced with the code
section above
Cross- reference
for commercial
CD(C) zones
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17 [. . .]
SECTION 7. Section 18.20.040 (Site Development Standards) of Chapter 18.20 (Office, Research, and Manufacturing (MOR, ROLM, RP and GM) Distri cts) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; deletions struck-through; unchanged text omitted by bracketed ellipses):
18.20.040 Site Development Standards
[. . .]
(b) Development Standards for Exclusively Residential Uses Residential uses shall be permitted in the MO R, RP, RP(5), ROLM, ROLM(E), and GM zoning districts, subject to the following criteria.
[. . .]
(6) ROLM District. All multi-family develo pment in the ROLM zoning district shall be permitted subject to the provisions above in 18.20.040(b)(2), approval of a conditional use permit, and compliance with the develo pment standards prescribed for the RM-30 zoning district, except for sites designated as Housing Element Opportunity Sites or Focus Areas, which are regulated by Chapter 18.14.020. Sites designated as Housing Element Opportunity Sites or Focus Areas may also elect to utilize the Housing Incentive Program or Affordable Housing Incentive Program, in which case they shall meet the development standards specified in Sections 18.14.030 and 18.14.040, respectively. (7) GM District. All residential developmen t is prohibited in the GM zoning district, except for sites designated as Housing Elem ent Opportunity Sites or Focus Areas, which are regulated by Chapter 18.14.020. Sites designated as Housing Element Opportunity Sites or Focus Areas may also elect to utilize the Housing Incentive Program or Affordable Housing Incentive Program, in which case they shall meet the development standards specified in Sections 18.14.030 and 18.14.040, respectively. (8) Combining Districts. Combining district use regulations and design and development standards shall not apply to exclusively residential projects on Housing Element opportunity sites designated to accommod ate lower income households, and may be limited for sites utilizing the Housing Incentiv e Program or Affordable Housing Incentive Program. See Section 18.14.020 Chapter 18.14 for details.
(c) Development Standards for Mixed (Residential and Nonresidential) Uses in the MOR, ROLM, ROLM(E), RP, and RP(5) Zoning Districts
Mixed (residential and nonresidential) uses shall be permitted in the MOR, ROLM, ROLM(E), RP, and RP(5) zoning districts, subject to the following criteria:
(1) It is the intent of these provisions th at a compatible transition be provided from lower density residential zones to higher density residential, non-residential, or mixed use zones. The Village Residential development type should be evaluated for use in transition Cross- reference for commercial
office and research zones
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18 areas and will provide the greatest flexibility to provide a mix of residence types compatible with adjacent neighborhoods.
(2) New sensitive receptor land uses sha ll not be permitted within 300 feet of a Hazardous Materials Tier 2 or Tier 3 use. Existing sensitive receptors shall be permitted to remain, consistent with the provisions of Chapter 18.70 (Nonconforming Uses and Noncomplying Facilities).
(3) ROLM(E) District. Mixed (residential and nonresidential) development in the ROLM(E) zoning district shall be permitted, subject to the provisions above in 18.20.040(c)(2), approval of a conditional use permit, dete rmination that the nonresidential use is allowable in the district and that the residential component of the development complies with the development standards prescribed for the RM-20 zoning district. The maximum floor area ratio (FAR) for mixed use development is 0.3 to 1. (4) ROLM District. Mixed (residential a nd nonresidential) deve lopment in the ROLM zoning district shall be permitted, subject to the provisions above in 18.20.040(c)(2), approval of a conditional use permit, dete rmination that the nonresidential use is allowable in the district and that the residential component of the development complies with the development standards prescribed for the RM-30 zoning district. The maximum floor area ratio (FAR) for mixed use development is 0.4 to 1. Except that s Sites designated as Housing Element Opportunity Sites or Focus Areas shall meet the development standards specified in Chapter 18.14.020 and projects utilizing the Housing Incentive Program or Affordable Housing Incentive Program shall meet the development standards specified in Sections 18.14.030 and 18.14.040, respectively. (5) GM District. Mixed use (residential and nonresidential) development is prohibited in the GM zoning district, except for sites designated as Housing Element Opportunity Sites or Focus Areas, which are regulated by Chapter 18.14.020. Sites designated as Housing Element Opportunity Sites or Focus Areas may also elect to utilize the Housing Incentive Program or Affordable Housing Incentive Prog ram, in which case they shall meet the development standards specified in Sections 18.14.030 and 18.14.040, respectively.
In computing residential densities for mixed (residential and nonresidential) uses, the density calculation for the residential use shall be based on the entire site, including the nonresidential portion of the site.
[. . .]
SECTION 8. Chapter 18.32 (Affordable Housing Incentive Program) of Title 18 (Zoning) of the Palo Alto Municipal Code is deleted in its entirety.
SECTION 9. Section 18.40.180 (Retail Preservation) of Chapter 18.40 (General Standards and Exceptions) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended as follows (additions underlined; and unchanged text omitted by bracketed ellipses):
18.40.180 Retail Preservation
[. . .]
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19 (c) Waivers and Adjustments; and Exemptions.
[. . .]
(4) Exemptions. The following uses shall be exempt or partially exempt from the provisions of this Section 18.40.180, as provided below:
(A) A 100% affordable housing project not within the Ground Floor (GF) and/or Retail (R) combining districts nor El Camino Real Node area as depicted in Figure 5on a site abutting El Camino Real. A "100% affordable housing project" as used herein shall have the same meaning as provided in Section 18.14.040(c).means a multiple-family housing project consisting entirely of affordable units, as defined in Section 16.65.020 of this code, available only to households with income levels at or below 120% of the area median income, as defined in Chapter 16.65, except for a building manager's unit.
(B) A 100% affordable housing project on a site abutting El Camino Real in the CN and CS zone districts outside the Retail (R) combining district. A "100% affordable housing project" as used herein means a multiple-family housing project consisting entirely of affordable units, as defined in Section 16.65.020 of this code, available only to households with income levels at or below 120% of the area median income, as defined in Chapter 16.65, and where the average household income does not exceed 80% of the area median income level, except for a building manager's unit.
(B) A residential project located on a Housing Element Opportunity Site listed in Appendix D of the Housing Element, except for projects located within an El Camino Real Node area, as depicted in Figure 5, that utilize the Housing Incentive Program to exceed the realistic capacity estimates identified in Appendix D of the Housing Element.
(C) A high-density residential or mixed-use project in the CS zone district, but not within the Ground Floor (GF) or Retail (R) combining districts, shall be required to replace only up to 1,500 square feet of an existing retail or retail-like use and shall be exempt from minimum vehicle parking requirements pursuant to Chapter 18.52 (Table 1) for this retail or retail-like floor area. For the purposes of this partial exemption, high-density shall mean 30 or more dwelling units per acre. This reduction in retail square footage and minimum vehicle parking requirements shall not apply for a site within the Ground Floor (GF) or Retail (R) combining districts, or within an El Camino Real Retail Node area, unless the site is a Housing Element opportunity site, as depicted in Figure 5 (D) The Director shall maintain and update the El Camino Real Node map in Figure 5.
Figure 5: El Camino Real Retail Node Areas
Narrows
exemption from
RPO to exclude
El Camino sites
outside of the
retail nodes per
Program 3.4C
Standardize
100% affordable
housing definition
Remove redundancy
given changes above
Added exemption from RPO
for Opportunity Sites per
Program 3.4C. None of the
Housing Sites are on (GF)
or (R) designated sites, so
no exemption required,
but there are Opportunity Sites
within these nodes on El
Camino. Opportunity
sites are allowed to develop
as 100% housing, so this code
only requires retail above the
base realistic capacity listed in
the Housing Element.
Add exemption
per Program
3.4C and offer
incentives to
support flexibility
in ground floor
uses and program
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20 SECTION 10. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase th ereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid.
SECTION 11. In accordance with the California Environmental Quality Act (CEQA), the City prepared an Addendum to the 2017 Comprehensive Plan Environm ental Impact Report (EIR), analyzing the potential environmental impacts of the 2023-2031 Housing Element. On May 8, 2023, the City Council adopted Resolution No. 10107, and on December 18, 2023, the City Council approved a Revised Adde ndum, finding that the Addendum , as revised, and the 2017 EIR adequately analyzed the environmental im pacts of the Housing Element, including the Programs implemented by this ordinance.
SECTION 12 . This Ordinance shall be effective on the thirty-first day after the date of its adoption.
INTRODUCE
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21 D: PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIO
NS: ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED AS TO CONTENT:
Assistant City Attorney City Manager
Director of Planning and
Development Services
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GM
ROLM
RM-30 (D)
RM-30
RM-30
RM-20
CS
RM-20
RM-20
RM-30
NV-R4
NV-MXM
NV-R3
RM-30
CD-C (P)
RM-20
RM-40
RM-40
RM-30
RM-30
RM-30
RM-40
RM-20
RM-30
RM-20
NV-MXH
RM-30
RM-20
RM-20
RM-30
NV-PF
RM-20RM-40
RM-20
RM-20
RMD (NP)
RM-30
RM-20
NV-MXH
RM-30
RM-20
R-2
RM-30
RM-40
RM-20
RM-30
RM-30
RM-30
RM-20
NV-MXM
RM-30
RM-30
RM-40
RM-30
RM-40
RM-40
RM-30
RM-40
RM-20
RM-30
RM-20
RM-30
RM-30
RM-30
RM-20
NV-MXL
RM-30
RM-20
RM-30
RM-30
CC (2)(R)
RM-20
Middlefield 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
Sand Hill Road
Hamilton Avenue
Page Mill Road
Lincoln Avenue
San Antonio Road
University Avenue
Newell Road
Oregon Expressway
Seale Avenue
South Court
High Street
Charleston Road
Park Boulevard
East Meadow Drive
Stanford Avenue
Colorado Avenue
West Bayshore Road
Foothill Expressway
Hanover Street
Miranda Avenue
Arastradero Road
Fabian W
ay
Greer Road
Ramona Street
Edgewood Drive
Loma Verde Avenue
Churchill Avenue
Matadero Avenue
Center Drive
Los Robles Avenue
California Avenue
Barron Avenue
Welch Road
Kingsley Avenue
Maybell Avenue
Wilkie Way
Hansen Way
Coleridge Avenue Byron Street
Ely Place
Oregon Avenue
Marion Avenue
North California Avenue
Emerson Street
Pitman Avenue
Laguna Avenue
Grove Avenue
Ferne Avenue
Porter Drive
Chimalus Drive
College Avenue
Amherst Street
Seneca Street
Lane 66Bowdoin Street
Stockton Place
Harker Avenue
Embarcadero Road
Ames Avenue
El Dorado Avenue
La Para Avenue
Clark Way
Birch Street
Clara Drive
Coyote Hill Road
Columbia Street
Georgia Avenue
Hillview Avenue
Rhodes Drive
La Donna Street
Parkinson Avenue
Kipling Street
Pasteur Drive
Heather Lane
Kellogg Avenue
Alger Drive
Florales Drive
Forest Avenue
Greenwood Avenue
Nathan W
ay
Urban Lane
Harvard Street
Iris Way
Hopkins Avenue
Dana Avenue
Fife Avenue
Fulton Street
Sutherland Drive
(none)
Marshall Drive
Geng Road
Orme Street
Parkside Drive
W
alnut Drive
Maddux Drive
W
ildwood Lane
Elsinore Drive
Moreno Avenue
Arbutus Avenue
Shopping Center Way
Walter Hays Drive
Jackson Drive
Kenneth Drive
Patricia Lane
Cereza Drive
Towle Way
Guinda Street
Transport Street
Bruce Drive
Faber Place
Los Palos Avenue
Laguna Way
West Meadow Drive
Janice Way
Bibbits Drive
Warren Way
Mayview Avenue
Rorke Way
Evergreen Drive
Stelling Drive
M
ilitary W
ay
Ashton Avenue
Jefferson Drive
Santa Rita Avenue
Addison Avenue
Rinconada Avenue
Encina Avenue
Silva Avenue
Escobita Avenue
Quarry Road
Bryson Avenue
Fabian Street
Nevada Avenue
Southwood Drive
Lane 33
Lupine Avenue
Poe Street
Suzanne Drive
Sycamore Drive
Manzana Lane
Elwell Court
Ruthelma Avenue
Maclane
Wells Avenue
Tasso Street
Lane D East
Lytton Avenue
Lane 7 West
Mark Twain Street
M
aple Street
Lane D West
Melville Avenue
Palm Street
Tioga Court
Peral Lane
Shasta Drive
Diablo Court
Saint Francis Drive
M
elville Avenue
Park Boulevard
Dana Avenue
Oregon Avenue
Colorado Avenue
Page Mill Road
Emerson Street
Guinda Street
Tasso Street
Byron Street
Byron Street
Oregon Avenue
Bryant Street
North California Avenue
San Antonio Road
Georgia Avenue
High Street
Mountain View
Stanford University
Menlo Park
Atherton
East Palo Alto
Los AltosPortola Valley
Los Altos Hills
Stanford
Menlo Park
Mountain View
Los AltosLos Altos Hills
Atherton
Portola Valley
Cupertino
Stanford University
Redwood City
East Palo Alto
Sunnyvale
Woodside
Housing Incentive Program Parcels - Existing
Housing Incentive Program Parcels - Proposed
Housing Inventory Sites 7/8/2024
NVCAP
Zoning
£¤101
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Time Frame: Complete and implement studies by September 2024. Complete additional study by 2025. Amend fee schedule by September 2026.
Primary Associated
Goals and Policies
Goals: 3, 4
Policies: 3.1, 4.1
PROGRAM 3.2: MONITOR CONSTRAINTS TO HOUSING
The Constraints chapter of the Hous ing Element identifies several conditions and practices that act to constrain housing development. By addressing these conditions and practices, the City can streamline development processes, and promote future residentia l development. The City will continue to monitor its policies, standards, and regulations to ensure th e City’s regulatory framework facilitates residential and balanced mixed-use development in the community.
Responsible Agency: Planning and Development Services
Funding Sources(s): General Fund
Implementing
Objectives:
A. Monitor new local policy initiative s for effectiveness in combatting identified constraints to housing development.
B. When new land use regulations, impact fees or procedural changes are being considered by the Planning and Transportation Commission and City Council, the City shall prepare an anal ysis in the accompanying staff report detailing how the regulation may impact housing production, if at all, and recommended solutions to address those impacts.
C. Monitor application of the Municipal Code standards for constraints to housing projects and recommend chan ges annually, as appropriate, to enhance the feasibility of affordable housing.
Time Frame : Complete review and implementation of required edits once during the planning period, by January 2027.
Primary Associated
Goals and Policies:
Goals: 2, 4
Policies: 2.1, 2.3, 4.2
PROGRAM 3.3: AFFORDABLE HOUSING DEVELOPMENT INCENTIVES The Planning and Development Services Department, in its review of development applications, market conditions and through conversations with non-profit housing providers, has identified certain changes in development standards that will encourage the development of low- and moderate-income housing. The City has already adopted an affordable housing incentive program (AHIP) that includes flexible development standards, streamlined application review processes, direct financ ial assistance and other incentives to encourage affordable housing. These in itiatives will be extended through this Program to reduce constraints and expand the opportunity for below-market rate housing.
Responsible Agency: Planning and Development Services
Funding Sources(s): General Fund
Implementing Objectives: A. Amend the municipal code to extend the affordable housing incentive program to apply to all housing opportunity sites identified in the Housing Element and zoned for commercial, industrial or multi-family Item 9
Attachment C - Excerpt
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Housing Element Program
Item 9: Staff Report
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residential use. Update AHIP regula tions for religious institution sites located in the R1 district with a reduced density provision.
B. Amend the affordable housing overlay (incentive program) regulations to allow housing projects to achieve a residential floor area ratio of
2.4:1.0 without requiring commercial floor area (except where required on University and California Avenues). The City will modify AHIP development and parking standards commensurate with FAR increases, and, for housing projects income restricted to 60 percent of the area median income level or below, allow up to sixty (60) feet in height on all opportunity sites.
C. Amend Zoning Code to incorporate all recent changes to State density bonus law and develop summary ma terials to promote the use of density bonuses.
Time Frame: Complete zoning changes by December 31, 2024 Quantified Objective: Amend the zoning code and comprehensive plan as necessary to extend the provision of affordable housing incentive program to sites in the housing inventory and co dify additional incentives described herein.
D. Amend the PAMC to streamline all 100 percent affordable housing development projects. Implement a procedure that prioritizes affordable housing projects for staff resources and, if applicable, hearing dates, above other projects, regardless of submission date.
Time Frame: Complete by December 2024.
Quantified Objective: The timeframes associated with permit processing can be viewed as a constraint to affo rdable development. The City aims to complete the processing of planning entitlements for affordable housing projects exempt from environmental review within 90 days from application submittal.
Primary Associated Goals
and Policies:
Goal: 2, 3, 4
Policies: 2.1, 2.2, 2.3, 3.2, 4.2
PROGRAM 3.4: HOUSING INCENTIVE PROGRAM (HIP)
The HIP was enacted in 2019 as an alternative to the State Density Bonus law and provides development incentives including no housing density restrictions, increased floor area ratios and increased lot coverage.
This program seeks to expand the suite of development incentives and extends the program to additional zoning districts that are not identified in the Site Inventory.
Responsible Agency: Planning and Development Services
Funding Sources(s): General Fund
Implementing Objectives: A. HIP qualifying projects that also co mply with City approved objective standards shall be administratively reviewed with one courtesy meeting before the Architectural Review Board.
Time Frame: Revise review process instructions by December 2024.
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Housing Element Program
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Quantified Objective: Monitor projects for compliance with desired review schedule, track application processing timelines and number of applications appealed to Council; use data to inform future modifications to the HIP program.
B. Amend the local Housing Incentiv e Program to include specific expanded development standards, as an alternative to state density bonus provisions. Reduce barriers by removing Planning Director discretion to define applicable standards in each instance.
C. Allow for sites subject to the City’s retail preservation ordinance – except in the ground floor (GF) and retail (R) combining districts and strategic locations generally depicted in the draft South El Camino Real Design Guidelines – to have a re duction in the amount of retail replacement floor area needed for redevelopment and waive the retail preservation requirement for identified housing opportunity sites.
D. Extend the local Housing Incentive Program to the multi-family residential districts (RM-20, RM-30, and R-40).as well as the ROLM and GM district focus area The Housing Incentive Program development standards shall be amended to increase height and floor area allowances for housing projects; reduce parking requirements to match or improve upon state density bonus , and adjustment to other development standards to enable greater housing production.
Time Frame: Complete Municipal Code amendments by December 31, 2024.
Quantified Objective: Amend the municipal code and comprehensive plan to codify implementing objective with the goal of encouraging the development of approximately 550 units over the planning period.
E. Expand the geographic boundaries of the El Camino Real Focus Area (adopted in 2023) to incentivize housing production at appropriate locations. Increase building height and floor area ratios and apply other objective standards, such as transiti onal height restrictions, to address single family zoning district adjacencies. The proposed standards will be an alternative to the state density bonus.
Time Frame: Complete municipal code amendments by June 30, 2025.
Quantified Objective: Amend municipal code with the goal of encouraging development of approximately 500 units over the planning period.
Primary Associated Goals
and Policies:
Goal: 2, 3, 4
Policies: 2.2, 3.1, 3.2, 4.2, 4.4
PROGRAM 3.5: ACCESSORY DWELLING UNIT (ADU) FACILITATION This program aims to annually monitor provisions made to ADU legislation and amend the City’s Zoning Ordinance as necessary to ensure compliance with St ate law. Furthermore, the City is committed to encouraging a greater range of housing types, reducing barriers to alternative types of housing such as ADUs, and promoting income integration across the City.
In recent years, multiple bills have added requirements for local governments related to ADU ordinances.
The 2016 and 2017 updates to State law included chan ges pertaining to the allowed size of ADUs, Item 9
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Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element
Physical Feasibility Analysis Report
Revision Date: January 9, 2025
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Physical Feasibility Analysis Report
1 Overview
This report helps implement Program 3.4 of the
Housing Element, which requires that the City
amend the Housing Incentive Program based
on findings of a feasibility analysis. This report
analyzes the physical feasibility of current
zoning standards to achieve different housing
types (e.g., townhomes, apartments).
Architects prepared prototypical site and
unit plans based on the City’s development
standards, including building height,
density, setbacks, open space, and parking
requirements. Then, the architects adjusted
various zoning levers, modifying zoning
standards to increase unit yield and further
support housing production and affordability.
This analysis is accompanied by Keyser
Marston Associates’ (KMA) financial feasibility
analysis to determine whether the prototypes
resulting from existing and modified zoning
standards are financially feasible.
Purpose & Findings
50’-0”
14’-0”
25’-0”
36’-0”
40’-0”
50’-0”
40’-0”
Height Limit Buffer
Modified CD-C ZoningExisting CD-C Zoning
60’-0”
60’-0”
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 2 Mixed-Use Zones RM Zones
Zoning
Designation
CD-C CN CC(2) RM-20 RM-30 RM40 ROLM
(RM-30)
Site 635
High
Street
3700
El Camino
Real
310
California
Avenue
680
University
Avenue
355
College
Avenue
Typical
Interior
Lot
1035
E Meadow
Circle
Lot Size 50’x102’ 150’x106’ 90’x125’ 100’x100’ 50’x132’ 50’x100’ 300’x145’ Square feet 5,125 15,761 11,250 10,000 6,626 5,000 43,560 Existing
Retail
No Ye s Ye s No No No No
Test Sites
RM-20
CD-C
RM-30
ROLM
CN
RM-40
CC(2)
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Physical Feasibility Analysis Report
3 Key Findings
Existing zoning standards generally support
townhome development with surface or tuck-
under parking. This is largely due to low lot
coverage allowances and densities/FARs,
deep setbacks, and relatively high parking and
landscaping requirements. Townhomes are
a fine prototype, but limited in their ability to
produce affordable and market rate housing.
Existing standards generally do not support
apartments and condominiums in “stacked
flats” configuration or mixed-use development
with ground-floor retail.
To achieve these higher densities,
opportunities for more affordable housing, and
more financially feasible development, the
modified zoning standards explore adjustments
to several zoning levers:
• Reducing setbacks, especially on the street
side
• Increasing lot coverage, FAR, and density
• Increasing height limits and adjusting
daylight plane requirements
• Reducing landscaping coverage and
allowing flexibility in the placement of
common open space
• Reducing parking requirements, consistent
with State law allowances
• Reducing ground-floor retail requirements
outside of neighborhood commercial
centers
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 4 Retail Preservation
Requirements Revisions
• Revise use requirements for retail
• Do not require one-for-one replacement:
allow minimum FAR standard for retail
• Revise Retail preservation applicability
• Only require retail at key nodes. Allow
100% residential in between nodes on
commercial corridors, and Housing
Element opportunity sites
• Clarify that Retail Preservation replacement
is allowed on two floors
Objectives
• Support affordable and market rate
housing production goals, as specified in
the Housing Element
• Allow for apartment housing formats
• Accommodate stacked flats and mixed-use
development
• Enable financial feasibility
• Retain Palo Alto design values
50’-0”
14’-0”
25’-0”
36’-0”
40’-0”
60’-0”
Redefine maximum height
of buildings to measure to
top of structure, rather
than top of parapet to
allow a more reasonable
fit within the height limit.
Decrease parking
requirements, consistent
with State law
allowances: The space
taken up by parking
compared to housing can
be close to 1:1.
✓X
2-Bedroom Unit
828 sf
3 parking spaces
plus drive aisle
= 837 sf
12’-0’
Circulation
(aisle width)
19’ x 9’
P
arking Space
Guest Parking
23’ x 36’
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Physical Feasibility Analysis Report
5 Ground Floor
Upper Level
Development Standard
Revisions
• Increase or eliminate maximum residential
densities, which do not directly affect
building massing
• Increase FAR and building height
• Revise the Daylight Plane to allow for at
least two stories of development
• Revise height buffer in CD-C district: 150
feet is too far from “adjacent” residential to
create a meaningful transition
• Revise Height Limit Buffer to apply only
when the entire site is within the buffer
• Revise Height Limit Buffer to apply to area
within 10 feet of a visible property line
(thus defining a setback)
Lot Standard Revisions
• Decrease landscape/open space
coverage. The Ground Floor is a contested
space. The more Landscape/Open Space
is required, the smaller the podium. It’s a
big trade-off.
• Allow landscape/open space to be
counted above the ground floor on small
sites (e.g, at the podium level)
• Reduce setbacks, especially on the street
side which tend to be deep even though
this does not affect neighbors.
• Allow zero setbacks or mixed-use citywide
or on commercial streets like California
Avenue, University Avenue, and El Camino
Real
• Reduce rear setback near roads. Count
the alleyways/lanes/service roads in lieu of
rear setback
Revise the daylight plane
to allow at least two
stories at the edges of
sites.
Allow the landscape/open
space requirement to be
met on upper levels to
free up contested space
at the ground level.
Ground Floor
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 6 CD-C District
Alley
50’-0”102’-6”
Alley
Primary Street
Modified CD-C Zoning
15 Apartments
Existing CD-C Zoning
4 Townhomes
The Height Limit Buffer and requirement for
open space at the ground floor limit the amount
of housing potential on the site.
Housing capacity almost quadruples when
allowing 10 more feet of height, eliminating the
height buffer, and open space requirements to
met on top of podiums.
Primary Street
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Physical Feasibility Analysis Report
7 Existing CD-C Zoning Modified CD-C Zoning
Setback: Front N/A N/A
Setback: Interior Side N/A N/A
Setback: Rear 10 feet for residential
portion
5 feet for residential
portion
Setback: Street Side Yard N/A N/A
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer Y es (40 feet) No
Height Limit 50 feet 60 feet
Daylight Plane N/A N/A
Maximum Site Coverage N/A N/A
Minimum Landscape/Open Space
Coverage
20% on ground 20% on ground and/or
upper level
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1.5
Maximum FAR Overall 2.0 4.0
Maximum Residential FAR 1.0 4.0
Maximum Commercial FAR 1.0 0.0
Parking Required 2 per unit
8 spaces
1.5 per unit
17.5 spaces
Total Number of Units 4 units 15 units
Average Unit Size 1,575 sf 1,003 sf
Density 34 du/ac 127 du/ac
F
AR Overall 1.23 FAR 4.07 FAR
P
arking Provided (spaces) 8 spaces 18 spaces
Parking Type Covered, tandem Podium, tandem
50’-0”
14’-0”
25’-0”
36’-0”
40’-0”
60’-0”
50’-0”
40’-0”
Height Limit Buffer
Modified CD-C ZoningExisting CD-C Zoning
PROTOTYPE RESULTS STANDARDS
Modified standards indicated in red.
60’-0” Height Limit
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 8 Retail
l/wk
l/wk
l/wk
l/wktrash
Retail
Open SpaceRamp
150’-0”
106’
CN District
Existing CN Zoning
16 Apartments
A height limit buffer, maximum height limit, and
daylight plane apply to this site. With a 35%
minimum landscape/open space coverage, there is
not much left space left for mixed use development.
Underground parking is therefore required.
Modi ied CN Zoning
33 Apartments
More housing is possible by raising the height limit,
allowing modest changes to the setbacks, and
allowing the landscape/open space to be located
on upper levels. Parking is accommodated at grade
using mechanical lifts.
Primary Street
Primary StreetAlley
Alley
Side Street
Ramp
Side Street
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Physical Feasibility Analysis Report
9 Existing CN Zoning Modified CN Zoning
Setback: Front 0-10’ for sidewalks 0-10’ for sidewalks
Setback: Interior Side 10 feet 5 feet
Setback: Rear 10’ for residential portion 5’ for residential portion Setback: Street Side Yard 5 feet 5 feet
Build-to-Lines: Frontage 50% 50%
Build-to-Lines: Side Street 33% 33%
Height Limit Buffer Y es (35 feet) Daylight plane in-lieu of buffer
Height 40 feet 50 feet
Daylight Plane 16 feet height, 60 degrees 16 feet height, 60 degrees Maximum Site Coverage 50% 100%
Minimum Landscape/Open Space
Coverage
35% on ground 35% on ground and/or
upper level
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1.5
Maximum FAR Overall 1.5 FAR 3.5 FAR
Maximum Residential FAR 1.5 FAR 3.5 FAR
Maximum Commercial FAR 0.4 FAR 0.4 FAR
Minimum Mixed-Use Ground Floor
Commercial FAR
0.15 FAR 0 FAR
Parking Required 34 spaces 42 spaces
Total Number of Units 16 units 33 units
Average Unit Size 735 sf 742 sf
Retail Preservation 2900 sf 0 sf
Density 44 du/ac 91 du/ac
FAR Overall 1.22 FAR 2.57 FAR
Parking Provided 35 total spaces 46 spaces
Parking Type Underground, tandem Podium, mechanical
16’-0”
6020’-0”
30’-0”
50’-0”
40’-0”
Modified CN Zoning
16’-0”60
35’-0”
20’-0”
30’-0”
35’-0”
Existing CN Zoning
35’-0”
Height
Limit
Buffer
16’-0” 16’-0”60°
40’ Height Limit
Daylight PlaneDaylight Plane
PROTOTYPE RESULTS STANDARDS
Modified standards indicated in red.
50’-0” Height Limit
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 10 CC(2) District
Existing CC(2) Zoning
3 Townhomes
Building height, setbacks, lot coverage, parking
requirements, and FAR maximums apply to this site.
Two levels of underground parking is required to
meet minimum parking standards, which is costly.
Existing residential FAR limits and setbacks limit the
housing to 3-stories and to only 3 units.
Modified CC(2) Zoning
34 Apartments
More housing is possible by raising the height limit,
eliminating setbacks, allowing the landscape/open
space to be located on upper levels and increasing
the FAR. Retail parking is not provided onsite but in
district commercial parking structures. Residential
parking is provided onsite in mechanical lifts.
Primary Street
Primary Street
Side Street
Side Street
Alley
125’-0”
90’-0”
Alley
Ramp
Retail
Open Space
Retail
Open Space
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Physical Feasibility Analysis Report
11 Existing CC(2) Zoning Modified CC(2) Zoning
Setback: Front 0-10’ for sidewalks 0 feet
Setback: Interior Side 10 feet 0 feet
Setback: Rear 10’ for residential portion 0 feet
Setback: Street Side Yard 5 feet 0 feet
Build-to-Lines: Frontage 50% 50%
Build-to-Lines: Side Street 33% 33%
Height Limit Buffer Not Applicable Not Applicable
Height 37 feet 60 feet
Daylight Plane Not Applicable Not Applicable
Maximum Site Coverage 100% 100%
Minimum Landscape/Open Space
Coverage
20% on ground
(23% shown)
20% (on any level)
Parking: Studio/1BR 1 0.5
Parking: 2+ BR 2 1.0
Parking: Retail 1 per 250 sf
First 1,500sf exempt
0 offsite with district parking
Maximum FAR Overall 2.0 FAR 3.5 FAR
Maximum Residential FAR 1.5 FAR 3.5 FAR
Maximum Commercial FAR 0.4 FAR 0.4 FAR
Minimum Mixed-Use Ground Floor
Commercial FAR
0.25 FAR 0.25 FAR
Total Number of Units 3 units (tuck under parking) 34 units Average Unit Size 1,800 sf 902 sf
Retail Preservation 10,700 2,812 sf
Density 11 du/ac
132 du/ac
FAR Overall 1.43 FAR 3.81 FAR
Residential FAR 0.47 FAR 3.56 FAR
Commercial FAR 0.96 FAR 0.25 FAR
Parking Provided 38 commercial spaces 27 residential spaces Parking Type 2 levels underground Podium, mechanical
PROTOTYPE RESULTS STANDARDS
Modified standards indicated in red.
37’ Height Limit
Existing CC(2) Zoning Modified CC(2) Zoning
60’-0” Height Limit
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 12 Primary Street
Side Street
Primary Street
Side Street
RM-20 District
Existing RM-20 Zoning
4 Apartments
The daylight plane, height limit, setbacks, and
maximum site coverage limit unit yield on this
site.
Modified RM-20 Zoning
7 Apartments
Adjustements to zoning allow the development
envelope to be more flexible and doubles the
amount of housing possible on the site.
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Physical Feasibility Analysis Report
13 Existing RM-20 Zoning Modified RM-20 Zoning
Setback: Front 20 feet 10 feet
Setback: Interior Side 10, 6 feet 5 feet
Setback: Rear 10 feet 5 feet
Setback: Street Side Yard 16 feet 5 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 30 feet 40 feet
Daylight Plane 10 feet, 45 degrees 2 story residential edges or 16 feet, 45 degrees
Maximum Site Coverage 35% 65%
Minimum Landscape/Open Space
Coverage
35% on ground 35% on ground and/or
upper level
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1.5
Maximum Density 20 du/ac No maximum
Maximum FAR Overall 1.0 FAR 2.0 FAR
Parking Required 8 spaces 10.5 spaces
Total Number of Units 4 units 7 units
Average Unit Size 2,500 sf 2,341 sf
Density 18 du/ac 32 du/ac
FAR Overall 1.0 FAR 1.21 FAR
Parking Provided (spaces) 8 spaces 11 spaces
Parking Type Tuck under Tuck under
10’-0” 10’-0”
30’-0” Height Limit 30’-0” Height Limit
Daylight plane
Daylight plane
45 degrees
45 degrees
Modified RM-20 ZoningExisting RM-20 Zoning
30’-0” Height Limit
10’-0”
Daylight Plane
16’-0”
45°
45°
Daylight Plane
40’-0” Height Limit
PROTOTYPE RESULTS STANDARDS
Modified standards indicated in red.
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 14 RM-30 District
Existing RM-30 Zoning
4 Apartments
The daylight plane and maximum site coverage
limits development to the extent that the
prototype does not reach the limits of the
building envelope.
Modified RM-30 Zoning
7 Apartments
Modification of the daylight plane and the
maximum site coverage allows for development
to fill the building envelope while still
maintaining the daylight plane.
Side Street Side Street
Primary Street Primary Street
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15 16’-0” 45
40’-0” Height Limit
Daylight plane
10’-0” 45
35’-0” Height Limit
degrees
Daylight plane
Existing RM-30 Zoning Modified RM-30 Zoning
Setback: Front 20 feet 10 feet
Setback: Interior Side 10, 6 feet 5 feet
Setback: Rear 10 feet 5 feet
Setback: Street Side Yard 16 feet 5 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 35 feet 40 feet
Daylight Plane 10 feet, 45 degrees 2 story residential edges or 16 feet, 45 degrees
Maximum Site Coverage 40% 65%
Minimum Landscape/Open Space
Coverage
30% 30%
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1.5
Maximum Density 30 du/ac No maximum
Maximum FAR Overall 1.0 FAR 2.5 FAR
Parking Required 8 spaces 10.5 spaces
Total Number of Units 4 7
Average Unit Size 1,650 sf 1,457 sf
Density 27 du/ac 47 du/ac
FAR Overall 1.0 FAR 1.62 FAR
Parking Provided 8 spaces 11 spaces
Parking Type Tuck under, driveway Tuck under, tandem
Modified RM-30 ZoningExisting RM-30 Zoning
35’-0”
10’-0”
16’-0”
45° 45°
Daylight
Plane
Daylight
Plane
PROTOTYPE RESULTS STANDARDS
Modified standards indicated in red.
40’-0” Height Limit
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 16 RM-40 District
Existing RM-40 Zoning
4 Townhomes
The setbacks and daylight plane on this small
(and typical) site limit the shape of the building
reducing the amount of housing possible on
the site. The daylight plane rules prevent a
development from meeting the district height
limit. This site test assumes no parking.
Street Frontage Street Frontage
50’-0” 50’-0”
100’-0” 100’-0”
Existing RM-40 Zoning - No Parking
8 Apartments
To better understand the maximum
development possible within this limited
building envelopment, the site test was run
again without parking requirements.
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17 Modified RM-40 Zoning - 10,000sf site
21 Apartments
The width of two typical lots allows the layout
of podium parking to be more efficient. Parking
was also modified to 1 space per unit minimum.
The number of units is still limited by the
modified parking required, resulting in three
stories over podium parking.
Street Frontage
Modified RM-40 Zoning
16 Apartments
Revising setbacks to be more uniform with
other zoning districts and removing the daylight
plane allows a regularly shaped building and
more capacity of housing. This allows for four
stories of housing on top of the podium if
only the building envelope was considered,
excluding limits on FAR, density, or parking.
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 18 Existing RM-40 Zoning Existing RM-40 Zoning
Setback: Front 20 feet 20 feet
Setback: Interior Side 10, 6 feet 10, 6 feet
Setback: Rear 10 feet 10 feet
Setback: Street Side Yard 16 feet 16 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 40 feet 40 feet
Daylight Plane 10 feet, 45 degrees 10 feet, 45 degrees
Maximum Site Coverage 45% 45%
Minimum Landscape/Open Space
Coverage
30% 30%
Parking: Studio/1BR 1 0
Parking: 2+ BR 2 0
Maximum Density 40 du/ac No maximum
Maximum FAR Overall 1.0 FAR 1.0 FAR
Parking Required 7 spaces 0 spaces
Total Number of Units 4 units 8 units
Average Unit Size 1,009 sf 644 sf
Density 34 du/ac 67 du/ac
FAR Overall 0.88 FAR 1.0 FAR
Parking Provided 7 spaces 0 spaces
Parking Type Podium N/A
50’-0” Height Limit
35’-0” Height @
intersection of
the daylight
planes
10’-0”
45 degree daylight plane
50’-0” Height Limit
35’-0” Height @
intersection of
the daylight
planes
10’-0”
45 degree daylight plane
Modified RM-40 ZoningExisting RM-40 Zoning
40’-0” Height Limit 40’-0” Height Limit
35’-0” Intersection
of daylight planes
35’-0” Intersection
of daylight planes
10’-0”
30’-0” 30’-0”
10’-0”
45° 45°
PROTOTYPE RESULTS STANDARDS
Modified standards indicated in red.
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19 Modified RM-40 Zoning Modified RM-40 Zoning
Setback: Front 10 feet 10 feet
Setback: Interior Side 5 feet 5 feet
Setback: Rear 5 feet 5 feet
Setback: Street Side Yard 5 feet 5 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 50 feet 50 feet
Daylight Plane N/A N/A
Maximum Site Coverage 70% 70%
Minimum Landscape/Open Space
Coverage
20% 20%
Parking: Studio/1BR N/A 1
Parking: 2+ BR N/A 1
Maximum Density No maximum No maximum
Maximum FAR Overall N/A 2.5 FAR
Parking Required N/A 21 spaces
Total Number of Units 16 units 21 units
Average Unit Size 644 sf 734 sf
Density 130 du/ac 91 du/ac
FAR Overall 2.8 FAR 2.3 FAR
Parking Provided 6 spaces 21 spaces
Parking Type Podium Podium, mechanical
45’-0”45’-0” 45’-0”45’-0” 45’-0” 45’-0”45’-0” 45’-0”
45’-0”45’-0”
45’-0”45’-0” 45’-0”45’-0” 45’-0” 45’-0”45’-0” 45’-0”
45’-0”45’-0” 45’-0”45’-0” 45’-0” 45’-0”45’-0” 45’-0”
45’-0”45’-0” 45’-0”45’-0” 45’-0” 45’-0”45’-0” 45’-0”
Modified RM-40 Zoning (10,000 sf lot)Modified RM-40 Zoning 50’-0” Height Limit50’-0” Height Limit
40’-0”
50’-0”
PROTOTYPE RESULTS STANDARDS
Modified standards indicated in red.
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 20 ROLM District
Existing ROLM Zoning
16 Apartments
The existing height limit restricts the housing
typology to townhomes. The potential is
much higher at this site. The 40% maximum
site coverage is also a constraint on housing
potential for stacked flats.
Modified ROLM Zoning
130 Apartments
More housing is possible If the height limit and
maximum site coverage is revised to allow
for apartments. Allowing the landscape/open
space requirement to be met on upper levels
also contributes to efficient use of the site.
Primary StreetPrimary Street
304’
293’
145’
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21 Existing ROLM Zoning Modified ROLM Zoning
Setback: Front 20 feet 10 feet
Setback: Interior Side 10, 6 feet 5 feet
Setback: Rear 10 feet 5 feet
Setback: Street Side Yard 16 feet 5 feet
Build-to-Lines: Frontage N/A N/A
Build-to-Lines: Side Street N/A N/A
Height Limit Buffer N/A N/A
Height 35 feet 60 feet
Daylight Plane N/A N/A
Maximum Site Coverage 40% 70%
Minimum Landscape/Open Space
Coverage
30% on ground 20% on ground and/or
upper level
Parking: Studio/1BR 1 1
Parking: 2+ BR 2 1
Maximum FAR Overall 0.6 FAR 2.5 FAR
Parking Required 32 spaces 130 spaces
Total Number of Units 16 units 130 units
Average Unit Size 1,633 sf 760 sf
Density 16 du/ac 130 du/ac
FAR Overall 0.6 FAR 2.7 FAR
Parking Provided 32 spaces 139 spaces
Parking Type Surface and tuck under Podium, Mechanical
58’-0”
60’-0” Height Limit
58’-0”58’-0”
65’-0”65’-0”
35’-0”35’-0”
Existing ROLM Zoning Modified ROLM Zoning
35’-0” Height Limit
PROTOTYPE RESULTS STANDARDS
Modified standards indicated in red.
30’-0”
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 22 Recommendations
Potential Changes to Enable Feasibility
Already Planned/Underway
• Increase residential densities (on specific
sites in Housing Element Sites Inventory)
• Decrease parking requirements to match
standards permitted under State law
• AB2097 eliminates parking within ½
mile of Caltrain
• State Density Bonus law allows reduced
parking
Additional Changes to Achieve Financial
Feasibility and Stacked Flats/Mixed Use
• Increase FAR and density
• Increase building height
• Reduce setbacks (esp. front/street side)
• Increase maximum site coverage
• Decrease landscape/open space coverage
and allow more flexibility in open space
• Revise retail preservation applicability
Development standards work in unison. Other
changes will be necessary to complement
changes in density and parking.
Other Changes to Consider to Enable
Feasibility
• Simplify and reduce requirements for open
space
• Modify the daylight plane for small lots or
lots that have 100 foot depths or bigger
• Reduce parking requirements for lots
smaller than 10,000sf, “small lot program”
• Modify height buffer (i.e., within 150 ft. of a
residential use)
• Allow height definition to exclude parapet
height and rooftop mechanical
• Exclude mechanical rooms from FAR so
that building systems are not undersized
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23 Mixed-Use Zones RM Zones
Zoning
Designation CD-C CN CC(2) RM-20 RM-30 RM40 ROLM
(RM-30)
Residential
Units
4 12 3 4 4 4 16
Parking
Spaces
8 21 38 8 8 7 32
Residential
Density (du/
ac)
34 33 11 18 27 34 16
FAR 1.23 1.04 1.43 1.0 1.0 0.88 0.6
Building
Height (feet) 40 30 37 30 30 30 30
Typology Town
Homes
Town
Homes
Town
Homes
Town
Homes
Town
Homes
Town
Homes
Town
Homes
Financially
Feasible? X X X X X X X
Current Zoning Standards Yield
Mixed-Use Zones RM Zones
Zoning
Designation
CD-C CN CC(2) RM-20 RM-30 RM40 ROLM
(RM-30)
Residential
Units
15 35 34 7 7 16 130
Parking
Spaces
18 46 27 11 11 6 139
Residential
Density
(du/ac)
127 97 132 32 47 130 130
FAR 4.07 2.19 3.81 1.21 1.62 2.8 2.7
Building
Height (feet)
60 50 60 40 40 50 58
Typology Apartments Apartments Apartments Town
Homes
Town
Homes Apartments Apartments
Financially
Feasible?
✓ ✓ ✓ ✓ ✓ ✓ ✓
Modified Zoning Standards Yield
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City of Palo Alto Housing Incentive Program (HIP) Amendments to Implement the 6th Cycle Housing Element 24 Mixed-Use Zones RM Zones
Zoning Designation CD-C CN CC(2) RM-20 RM-30 RM40 ROLM (RM-30)
Development Intensity
FAR 2.0 4.0 1.5 3.5 2.0 3.5 1.0 2.0 1.0 2.5 1.0 3.0 0.6 3.5 Res FAR 1.0 4.0 1.5 3.5 2.0 3.5 2.25 2.25 2.5 2.25
Minimum Mixed
Use Ground Floor
Commercial FAR
N/A 0.15 0.0 0.25 0.0 N/A N/A N/A N/A
Residential Density
Max (du/ac)
No max No max No max 20
No Max
30 No Max
40 No Max
30 No Max
Residential Density
Min (du/ac)
N/A N/A N/A 11 16 21 16
Maximum Building Heights
Height Limit Buffer Y es (50') Y es (40') No No No No No Height (feet) 40 60 35 50 37 60 30 40 35 40 40 50 35
60 Daylight Plane
(* for side and rear
abutting R, lots less
than 70 feet)
N/A 16 feet
height, 60
degrees
(in lieu of
buffer)
N/A 10
16 feet, 45
degrees
10 16
feet, 45
degrees
10 feet, 45
degrees
N/A
N/A
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25 Setbacks
Setback: Front N/A 0-10' for
sidewalks
0-10' for
sidewalks
0 20 10 20 10 20 10 20 10
Setback: Interior
Side
N/A 10 5 10 0 10, 6 5 10, 6 5 10, 6 5 10, 6 5
Setback: Rear 10' 5 for
residential
portion
10' 5 for
residential
portion
10' for
residential
portion 0
10 5 10 5 10 5 10 5
Setback: Street Side
Yard
N/A 5 5 0 16 5 16 5 16 5 16 5
Mixed-Use Zones RM Zones
Zoning Designation CD-C CN CC(2) RM-20 RM-30 RM40 ROLM (RM-30)
Max Site Coverage N/A 100% 100% 35% 65% 40% 65% 45% 70% 40% 70% Landscape/Open
Space Coverage
20% 35% 20% 35% 30% 20% 30%
Landscape/Open
Space Location
Ground floor only
Ground floor and upper stories
Parking Requirements
Parking: Studio/1 BR 1 1 1 0.5 1 1 1 1
Parking: 2+ BR 2 1.5 2 1.5 2 1.0 2 1.5 2 1.5 2 1 2 1
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HOUSING INCENTIVE PROGRAM STUDY:
TESTING THE FINANCIAL FEASIBILITY OF
MULTI-FAMILY HOUSING TYPOLOGIES
Prepared for:
City of Palo Alto
Prepared by:
Keyser Marston Associates, Inc.
June 13 , 2024
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TABLE OF CONTENTS
I. EXECUTIVE SUMMARY ............................................................................................................... 1 A. FINANCIAL EVALUATION METHODOLOGY .................................................................................................. 1 B. BASE ZONING PROTOTYPE ANALYSIS ........................................................................................................ 1 C. PROPOSED ZONING PROTYPE ANALYSIS .................................................................................................... 4 D. ADDITIONAL POLICY CONSIDERATIONS ..................................................................................................... 6 II. FINANCIAL EVALUATION METHODOLOGY .................................................................................. 8 A. ANALYSIS OF BASE ZONING PROTOTYPES .................................................................................................. 8 B. ANALYSIS OF PROPOSED ZONING PROTOTYPES ........................................................................................... 8 C. FINANCIAL EVALUATION ORGANIZATION ................................................................................................... 9 D. PRO FORMA ASSUMPTIONS ................................................................................................................. 10 III. ANALYSIS OF BASE ZONING PROTOTYPES ................................................................................ 12 A. SITE A: CD-C ZONE.......................................................................................................................... 12 B. SITE B: CN ZONE .............................................................................................................................. 13 C. SITE C: CC(2) ZONE .......................................................................................................................... 16 D. SITE D: RM-20 ZONE ........................................................................................................................ 18 E. SITE E: RM-30 ZONE ........................................................................................................................ 20 F. SITE F: RM-40 ZONE ......................................................................................................................... 21 G. CONCLUSIONS ................................................................................................................................... 23 IV. ANALYSIS OF PROPOSED ZONING PROTOTYPES ....................................................................... 25 A. SITE A: CD-C ZONE ........................................................................................................................... 25 B. SITE B: CN ZONE .............................................................................................................................. 27 C. SITE C: CC(2) ZONE .......................................................................................................................... 29 D. SITE D: RM-20 ZONE ........................................................................................................................ 32 E. SITE E: RM-30 ZONE ........................................................................................................................ 34 F. SITE F: RM-40 ZONE ......................................................................................................................... 35 G. CONCLUSIONS ................................................................................................................................... 42 V. POLICY CONSIDERATIONS ........................................................................................................ 44 A. APPLICABILITY OF ZONING MODIFICATIONS TO SMALL SITES ....................................................................... 44 B. APPLICABILITY OF ZONING MODIFICATIONS TO LARGER SITES ...................................................................... 44 C. CURRENT CITY PERMITS AND FEES ......................................................................................................... 45 D. CONCLUSIONS ................................................................................................................................... 45
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ATTACHMENTS
Attachment 1: Base Zoning Prototype Analyses
Appendix A: Site A – CD-C Zone
Appendix B: Site B – CN Zone
Appendix C: Site C – CC(2) Zone
Appendix D: Site D – RM-20 Zone
Appendix E: Site E – RM-30 Zone
Appendix F: Site F – RM-40 Zone
Attachment 2: Proposed Zoning Prototype Analyses
Appendix A: Site A – CD-C Zone
Appendix B: Site B – CN Zone
Appendix C: Site C – CC(2) Zone
Appendix D: Site D – RM-20 Zone
Appendix E: Site E – RM-30 Zone
Appendix F: Site F – RM-40 Zone
Attachment 3: Background Information
Appendix A: Market Surveys
Exhibit I Resale Home Survey
Exhibit II New Home Sales
Exhibit III Apartment Rent Survey
Appendix B: Affordable Sales Price Calculations
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I. EXECUTIVE SUMMARY
The City of Palo Alto (City) is considering modifications to the Zoning Ordinance to create incentives for multi-family and affordable housing development. The intent of the revised zoning standards is to enable multi-family housing typologies that are both physically feasible and financially feasible.
To that end, the City engaged Keyser Marston Associates, Inc. (KMA) to evaluate the financial characteristics associated with prototypical residential projects. The intent of this financial analysis is to ensure that the proposed zoning modifications allow for financially feasible multi-family residential projects. The following report discusses the financial analyses prepared by KMA.
A. Financial Evaluation Methodology
KMA utilized the following methodology to evaluate the financial feasibility of each prototype:
1. KMA prepared pro forma analyses based on the scopes of development that were provided by Urban Field Studio.
2. The pro forma analyses were used to compare the value supported by the prototype project to the project’s development cost plus a standard developer profit.
3. If the project’s estimated value was less than the estimated costs plus developer profit, the project was deemed not likely to be built.
B. Base Zoning Prototype Analysis
As the first step in the process, Urban Field Studio and Lexington Planning created prototype development scenarios for six sites that comport with the City’s current development standards. For the purposes of this KMA analysis, “current” and “base” development standards refer to the base zoning standards applicable citywide, but do not take into account increased density standards available to Housing Element opportunity sites (adopted December 2023) or those available per State of California (State) Density Bonus Law. As described in Attachment 1, KMA evaluated the financial feasibility of each “Base Zoning Prototype.”
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As can be seen in Attachment 1, each of the Base Zoning Prototypes was found not likely to be developed under the City’s current zoning standards. The results of the KMA analyses of the Base Zoning Prototypes are presented in the table on the following page.
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SITE C SITE F
CC(2) Zone RM-40 Zone
I. Site Area (Sf) 11,250 5,000
II. Development Scope
A. Unit Type Townhome Apartment Townhome Townhome Townhome Townhome B. Unit Mix
Studio Units 0 3 0 0 0 1
One-Bedroom Units 0 1 0 0 0 0
Two-Bedroom Units 0 12 3 0 0 3
Three-Bedroom Units 4 0 0 2 4 0
Four-Bedroom Units 0 0 0 2 0 0
Total Units 4 16 3 4 4 4
B. Unit Sizes
Studio Units 0 360 0 0 0 360
Live/Work One-Bedroom Units 0 0 0 0 0 0
One-Bedroom Units 0 528 0 0 0 0
Two-Bedroom Units 0 828 1,810 0 0 1,120
Three-Bedroom Units 1,575 0 0 1,891 1,429 0
Four-Bedroom Units 0 0 0 2,791 0 0
Net Living Area 6,300 11,544 5,430 9,364 5,716 3,720
Average SF/Unit 1,575 722 1,810 2,341 1,429 930
Retail GBA 0 2,900 10,784 0 0
Gross Building Area (Sf) 6,300 19,701 18,230 9,364 5,716 3,720 Floor Area Ratio (FAR) 1.23 1.22 1.53 0.94 0.86 0.74
Density (Units/Acre) 34 44 12 17 26 35
III. Estimated Development Cost
A. Land Value $1,614,000 $4,965,000 $3,544,000 $3,150,000 $2,087,000 $1,575,000 B. Direct Costs $2,387,000 $8,902,000 $9,571,000 $3,690,000 $2,284,000 $1,528,000 Per Sf of Net Saleable Area $379 $771 $1,763 $394 $400 $411 C. Public Permits & Fees $384,000 $1,392,000 $387,000 $412,000 $380,000 $364,000 Per Unit $96,000 $87,000 $129,000 $103,000 $95,000 $91,000 D. Indirect + Financing Costs $1,600,000 $3,515,000 $3,933,000 $2,505,000 $1,603,000 $1,146,000 As a % of Direct Costs 67% 39% 41% 68% 70% 75%
Total Development Cost $5,985,000 $18,774,000 $17,435,000 $9,757,000 $6,354,000 $4,613,000 Per Square Foot of GBA $950 $953 $956 $1,042 $1,112 $1,240 IV. Projected Revenues
A. Residential Revenue $7,005,000 $781,000 $6,101,000 $9,575,000 $6,356,000 $4,164,000 Per Market Rate Unit $1,751,300 $4,300 $2,033,700 $2,393,800 $1,589,000 $1,041,000 Per Affordable Unit $0 $0 $0 $0 $0 $0
B. Net Sales Revenue / Value
Residential Component $6,620,000 $5,765,000 $9,048,000 $6,006,000 $3,935,000 Retail Component 10,283,000
Total Net Sales Revenue / Value $6,620,000 $15,151,000 $16,048,000 $9,048,000 $6,006,000 $3,935,000 V.
$794,000 $1,515,000 $1,720,000 $1,086,000 $721,000 $472,000 VI. Net Surplus/(Cost)
A. Net Sales Revenue / Value $6,620,000 $15,151,000 $16,048,000 $9,048,000 $6,006,000 $3,935,000 B. Revenue Offsets
Total Development Cost $5,985,000 $18,774,000 $17,435,000 $9,757,000 $6,354,000 $4,613,000 Threshold Developer Profit 794,000 1,515,000 1,720,000 1,086,000 721,000 472,000 Total Revenue Offsets $6,779,000 $20,289,000 $19,155,000 $10,843,000 $7,075,000 $5,085,000 VII. Net Surplus/(Cost) ($159,000) ($5,138,000) ($3,107,000) ($1,795,000) ($1,069,000) ($1,150,000) $15,151,000
Threshold Developer Profit @ 12%
Net Residential Sales Revenue or
10% of Apt Value
SUMMARY OF BASE ZONING PROTOTYPES
CD-C Zone CN Zone RM-20 Zone RM-30 Zone
5,125 15,761 10,000 6,626
SITE A SITE B SITE D SITE E
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C. Proposed Zoning Protype Analysis
Subsequent to the analysis of the Base Zoning Prototypes, Urban Field Studio and Lexington Planning created prototype development scenarios that modified current development standards (Proposed Zoning Prototypes). The purpose of modifying current development standards was to create zoning requirements that allow for the development of multi-family projects that are both physically and financially feasible.
Modifications were made to a variety of development standards such as: reduced parking ratios, increased building height, increased floor-area-ratios (FAR), reduced setbacks, modified daylight planes, reduced lot and landscape coverage and changes to ground floor retail requirements.
Specifically, the modifications were intended to allow for additional units to be constructed on each of the development sites (e.g., increased FAR) and/or to reduce the costs associated with developing residential units (e.g. reduced parking requirements). These factors have a direct impact on the financial feasibility of each development prototype.
The Proposed Zoning Prototypes evaluated in this analysis are the result of an iterative process between KMA, Urban Field Studio, Lexington Planning and the City. A number of potential modifications were tested for each of the sites in order to develop prototypes that were both physically and financially feasible. In particular, for the RM-40 Zone site, three scenarios for proposed modifications were evaluated in this analysis.
The KMA financial analyses of the Proposed Zoning Prototypes are presented in Attachment 2. As shown, each of the Proposed Zoning Prototypes was found to be financially feasible under the proposed zoning modifications.
The results of the KMA analyses of the Proposed Zoning Prototypes are presented in the table on the following page.
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SITE A SITE B SITE C SITE D SITE E
No Parking
Limited
Parking 10,000 SF Lot
I. Site Area (Sf) 5,125 15,761 11,250 10,000 6,626 5,000 5,000 10,000 II. Development Scope
A. Unit Type Condo Apartment Apartment Townhome Townhome Apartment Apartment Apartment B. Unit Mix
Studio Units 0 0 8 0 0 4 3 0
Live/Work One-Bedroom Units 0 4 0 0 0 0 0 0
One-Bedroom Units 10 11 6 0 0 4 3 2
Two-Bedroom Units 1 18 16 2 0 0 6 16
Three-Bedroom Units 4 0 4 5 7 0 0 3
Total Units 15 33 34 7 7 8 12 21
B. Unit Sizes
Studio Units 0 0 514 0 0 415 450 0
Live/Work One-Bedroom Units 0 1,050 0 0 0 0 0 0
One-Bedroom Units 751 528 713 0 0 678 637 625
Two-Bedroom Units 1,240 828 1,066 1,593 0 0 740 971
Three-Bedroom Units 1,500 0 1,302 1,795 1,457 0 0 1,250 Net Living Area 14,746 24,912 30,654 12,163 10,199 4,370 7,701 20,540 Average Square Feet / Unit 983 755 902 1,738 1,457 546 642 978 Gross Building Area (Sf) 20,841 33,240 42,895 12,163 10,199 5,016 10,725 26,114 Floor Area Ratio (FAR) 4.07 2.11 3.81 1.22 1.54 1.00 2.15 2.61 Density (Units/Acre) 127 91 132 30 46 70 105 91
III. Estimated Development Cost
A. Land Value $1,614,000 $4,965,000 $3,544,000 $3,150,000 $2,087,000 $1,575,000 $1,575,000 $3,150,000 B. Direct Costs $7,724,000 $12,553,000 $15,434,000 $4,614,000 $3,763,000 $1,895,000 $3,959,000 $9,727,000 Per Square Foot $524 $504 $503 $379 $369 $434 $514 $474 C. Public Permits & Fees $1,425,000 $2,805,000 $2,958,000 $686,000 $665,000 $656,000 $1,008,000 $1,827,000 Per Unit $95,000 $85,000 $87,000 $98,000 $95,000 $82,000 $84,000 $87,000 D. Indirect + Financing Costs $3,138,000 $5,250,000 $6,007,000 $2,222,000 $1,764,000 $915,000 $1,616,000 $3,864,000 As a % of Direct Costs 41% 42% 39% 48% 47% 48% 41% 40%
Total Development Cost $13,901,000 $25,573,000 $27,943,000 $10,672,000 $8,279,000 $5,041,000 $8,158,000 $18,568,000 Per Square Foot of GBA $667 $769 $651 $877 $812 $1,005 $761 $711 IV. Projected Revenues
A. Residential Revenue $17,097,000 $1,741,000 $1,168,000 $12,863,000 $10,220,000 $363,000 $622,000 $1,234,000 Per Market Rate Unit $1,246,800 $4,500 $4,200 $2,060,700 $1,620,200 $3,700 $4,200 $5,100 Per Affordable Unit $444,500 NA NA $499,000 $499,000 NA NA NA B. Total Net Sales Revenue / Value $16,157,000 $28,825,000 $31,327,000 $12,156,000 $9,658,000 $5,925,000 $10,325,000 $20,650,000 V.
$1,939,000 $2,883,000 $3,133,000 $1,459,000 $1,159,000 $593,000 $1,033,000 $2,065,000 VI. Net Surplus/(Cost)
A. Net Sales Revenue / Value $16,157,000 $28,825,000 $31,327,000 $12,156,000 $9,658,000 $5,925,000 $10,325,000 $20,650,000 B. Revenue Offsets
Total Development Cost $13,901,000 $25,573,000 $27,943,000 $10,672,000 $8,279,000 $5,041,000 $8,158,000 $18,568,000 Threshold Developer Profit 1,939,000 2,883,000 3,133,000 1,459,000 1,159,000 593,000 1,033,000 2,065,000 Total Revenue Offsets $15,840,000 $28,456,000 $31,076,000 $12,131,000 $9,438,000 $5,634,000 $9,191,000 $20,633,000 VII. Net Surplus/(Cost) $317,000 $369,000 $251,000 $25,000 $220,000 $291,000 $1,134,000 $17,000 Threshold Developer Profit @ 12%
Net Residential Sales Revenue or
10% of Apt Value
SUMMARY OF PROPOSED ZONING PROTOTYPES
SITE F
CD-C Zone CN Zone CC(2) Zone RM-20 Zone RM-30 Zone
RM-40 Zone
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Feasibility of Multifamily
Housing Typologies
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D. Additional Policy Considerations
The following section provides additional policy considerations for the City:
APPLICABILITY OF ZONING MODIFICATIONS TO SMALL SITES
The City is also interested in understanding the impact on financial feasibility if the reductions in required parking ratios and/or building height and FAR are less substantial than those applied in the Proposed Zoning Prototypes analysis. A key factor that should be considered in the decision making process is that many of the sites evaluated in this analysis are fairly small – consisting of between 5,000 and 15,000 square feet of land area. For a development on a small site to achieve financial feasibility it is necessary to be able to create an extremely efficient design.
Parking Standards
The proposed reduction in the parking requirements significantly enhances the potential for financially feasible residential uses to be developed. A change to the proposed parking standard would require more site area to be dedicated for parking spaces, which would materially reduce the site’s buildable area. Given the limited number of units that each site can support a loss of even a few units on each site results in a significant impact on financial feasibility.
Height and FAR Standards
The achievable building footprint on a small site is disproportionately lower than the footprint that can be accommodated on a more typically sized development site. The proposed increases in FAR and height are necessary to compensate for this limitation. Recognizing the small number of units that can be accommodated per floor, even the reduction of one floor of building area has a significant impact on financial feasibility.
APPLICABILITY OF ZONING MODIFICATIONS TO LARGER SITES
As discussed above, this analysis primarily focuses on small sites. The site sizes were intended to be representative of typical parcel sizes within each zoning designation. However, the proposed zoning Item 9
Attachment E - Financial
Feasibility of Multifamily
Housing Typologies
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modifications may be applied to sites of all sizes within each zoning designation. Therefore, a developer may utilize the proposed zoning modifications on sites larger than evaluated in this analysis.
Without the physical constraints imposed by small sites, larger sites will likely be developed with more efficiently designed projects. Therefore, it is possible that the proposed zoning modifications will have a greater positive financial impact on larger sites.
CURRENT CITY PERMITS AND FEES
The pro forma analyses included in this report take into account the City’s current permits and impact fees. Specifically, the development costs for each prototype include the following impact fees: parks fee, community center fee, libraries fee, public safety facilities fee, general government facilities fee, school district fee, and the in-lieu art fee. As such, the financial analyses demonstrate that Proposed Zoning Prototypes are financially feasible with the City’s current impact fee schedule.
CONCLUSIONS
Based on the financial analyses that KMA has prepared over the course of this engagement, it is our opinion that the proposed modifications to the zoning standards are necessary to create sufficient incentive to attract residential development on the prototypical sites evaluated in this analysis. This is particularly true of the parking requirements and building height/FAR, all of which tend to have an outsized impact on financial feasibility.
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Attachment E - Financial
Feasibility of Multifamily
Housing Typologies
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To download the complete Keyser Marston Associates’ report, “Housing Incentive Program Study: Testing The Financial Feasibility Of Multi-Family Housing Typologies, ” please use the link below:
https://www.cityofpaloalto.org/files/assets/public/v/2/planning-amp-development- services/long-range-planning/kma-housing-incentive-program-report_2405001v3.pdf Item 9
Attachment E - Financial
Feasibility of Multifamily
Housing Typologies
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Item No. 9. Page 1 of 4
Comparison Between City Incentive Programs and State Housing Laws Applicants currently have the ability to utilize State Density Bonus Law (SDBL) to achieve additional residential density. In order for applicants to choose to use the HIP or AHIP rather than the SDBL program, they need to obtain greater benefits.
Summary of State Housing Laws
State Density Bonus Law (Gov. Code Section 65915): This law gives developers the right to build additional dwelling units and obtain flexibility in local development requirements, in exchange for building on-site affordable or senior housing. To support the development of affordable and senior housing, projects can receive “waivers” and “concessions” to modify applicable regulations. This could include standards such as height, setbacks, parking, and ground-floor retail requirements. The handout in Attachment G includes a more thorough description of State Density Bonus Law and how it applies in Palo Alto.
SB 35 Streamlining for Affordable Housing (Gov. Code Section 65913.4): Effective since 2018, this law allows housing development projects that meet certain physical and affordability criteria to undergo expedited project review and ministerial approval. Palo Alto is subject to SB 35 based on the City’s limited progress toward meeting the City‘s low-income housing targets in its RHNA. To be eligible for SB 35 streamlining in Palo Alto, a project must provide at least 50% of their residential units at a rate affordable to low-income households. SB 35 projects are frequently combined with State Density Bonus Law to achieve density bonuses and waivers/concessions.
HIP
Table F-1 explores the tradeoffs between the HIP and SDBL. The HIP provides greater predictability for what community members can expect from housing projects. By comparison, SDBL offers developers more flexibility in terms of modifying development standards and seeking other concessions.
However, the HIP allows developers of rental housing to pay the affordable housing impact fee, whereas SDBL requires on-site below market rate housing; payment of fees is generally preferred by market rate developers and is therefore a strong incentive. For ownership housing, developers are required to include below-market rate units on site under the City’s inclusionary housing regulations. As a result, the City is likely to see ownership projects continue to utilize State Density Bonus Law.
With implementation of Housing Element Program 3.4A, there would be no difference in review processes since HIP projects would be eligible for Streamlined Review (i.e., one study session with the ARB). Although this will remove a key aspect of the original purpose of the HIP, which was to retain Architectural Review, the City’s objective standards will continue to provide more local control of design. There is little room to further streamline the HIP process. As a result, the HIP amendments are primarily focused on modifying development standards to incentivize applicants to use it instead of SDBL.
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Attachment F -
Comparison of HIP AHIP
vs. State Law Incentive
Programs
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Item No. 9. Page 2 of 4
Table F-1: Comparison Between Proposed HIP and State Density Bonus Law Proposed HIP State Density Bonus Law
Benefits
+ Inclusionary housing fee in-lieu of on-site
affordable housing (rental housing only)
+ More predictability (for City/ community
members)
+ Higher density and FAR
+ Unlimited waivers from
standards that physically limit
housing units
+ Specified number of
concessions for cost reductions
Drawbacks - Limitations on additional modifications to
other development standards
- On-site affordable housing
required
Constants Streamlined review process (one ARB meeting)
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Attachment F -
Comparison of HIP AHIP
vs. State Law Incentive
Programs
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Item No. 9. Page 3 of 4
AHIP
Table 2 compares the detailed draft amendments to the AHIP with the criteria and incentives in State Density Bonus Law and SB35 streamlining.
Table 2: Existing vs. Planned AHIP Regulations Compared to State Law Standard Existing Regulations Draft Amendments State Density Bonus Law SB 35 Applicability •Sites zoned CD, CN, CS, and
CC, but excluding shopping
centers
•Sites within ½-mile of a major
transit stop or ¼-mile of a
high-quality transit corridor
•Add all Housing Element
opportunity sites
•Add all sites eligible for the
HIP
Any site with Zoning or
General Plan compliance
Eligibility based on
specific environmental
factors and physical
conditions and Zoning
or General Plan
compliance
Affordability
Eligibility
100% affordable rental housing
projects at or below 120% of
the area median income
No specific changes
identified, except for height
bonus related to deeper
affordability
Minimum 5% affordability
at or below 50% of AMI or
10% at 80% of AMI to
qualify for minimum 20%
bonus
Minimum 50% on-site
affordability in Palo
Alto currently, at or
below 80% of AMI
Review/
Approval
Process
Architectural Review (up to
three meetings with the ARB)
Projects that meet objective
standards pursuant to Ch.
18.24, allow Streamlined
Review Process (i.e., one
study session with the ARB)
Per local requirements Ministerial: no
hearings required
Environmental
Review
Subject to CEQA Subject to CEQA Subject to CEQA No CEQA since ministerial action
Maximum
Residential
Density
None in commercial mixed-use
zones.
None, except 50 du/ac for
R1 Zoned Faith Based Sites
100% affordable projects
(at least 80% at 80% of AMI
and up to 20% at 120% of
AMI): no density limit
Per local requirements
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Attachment F - Comparison of HIP
AHIP vs. State Law Incentive
Programs
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Standard Existing Regulations Draft Amendments State Density Bonus Law SB 35 Maximum
Floor Area
Ratio
Residential: 2.0
Non-Residential: 0.4
Total: 2.4
Allow up to 2.4 Residential
FAR (without requiring
commercial uses, except in -
GF and -R combining
districts), except 2.0 FAR for
R-1 Zoned Faith Based Sites.
100% affordable projects
(at least 80% at 80% of AMI
and up to 20% at 120% of
AMI): no density limit for
projects that only regulate
FAR and not residential
density
Per local requirements
Maximum
Building Height
50 feet Allow up to 60 feet for
projects at or below 60% of
Area Median Income, except
50 feet for R-1 Zoned Faith
Based Sites.
100% affordable projects
(at least 80% at 80% of AMI
and up to 20% at 120% of
AMI): up to 3 additional
stories or 33 feet (above
base height limit)
Per local requirements
Minimum
Parking Ratio
0.75 spaces/unit 100% affordable within ½-
mile of transit: None
Otherwise:
1 sp. per studio, 1-bed
1.5 sp. per 2-, 3-bed
2.5 sp. per 4+bed
None if located within
½ mile of transit;
otherwise maximum 1
space/unit
Other
Development
Standards
Max. Lot Coverage: 100%
Min. Usable Open Space: 25-50
sq. ft./unit
None required near transit
(consistent with AB 2097
definitions)
0.5 spaces/unit elsewhere
100% affordable projects
within ½-mile of transit: five
concessions/incentives
Per local requirements
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Attachment F - Comparison of HIP
AHIP vs. State Law Incentive
Programs
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Modifications to HIP Density, FAR, Building Height, and Daylight Planes Table G-1 summarizes the proposed density, FAR, and height changes to the HIP. In the commercial districts, it distinguishes between sites that are designated or not designated as Housing Element opportunity sites, where existing standards diverge.
The draft ordinance also includes modifications to setback and daylight plane requirements, which generally affect the RM districts and adjacencies to lower density residential districts, respectively. Collectively, these standards support livable spaces and respect adjacent uses, but may also limit development to townhomes or prevent sufficient unit yields to support financially feasible projects.
Table G-1: Summary of Existing vs. Proposed HIP Maximum Building Height and Residential FAR/Density Standards
Housing Incentive ProgramZoning
District Base Standards Existing Proposed Standards
CD-C
2.0 FAR (HE Opp Site)
1.0 FAR (Non-Opp Site)
3.0 FAR w/ TDR
50-foot height
3.0 FAR
50-foot
height
No changes proposed yet due to
Downtown Housing Area Plan.
That process may result in revised
base zoning and HIP standards.
CC(2)
1.5 FAR (HE Opp Site)
0.6 FAR (Non-Opp Site)
37-foot height
2.0 FAR
50-foot
height
3.5 FAR (HE Opp Site)*
2.6 FAR (Non-Opp Site)*
60-foot height
CS (El
Camino)
1.25 FAR (HE Opp Site)
0.6 FAR (Non-Opp Site)
50-foot height
1.5 FAR
50-foot
height
3.5 FAR (HE Opp Site)*
2.85 FAR (Non-Opp Site)*
60-foot height
CS (San
Antonio)
1.25 FAR/30-40 du/ac (HE Opp
Site)
0.6 FAR/30 du/ac (Non-Opp Site)
50-foot height
2.0 FAR
50-foot
height
No changes proposed yet due to
San Antonio Road Area Plan. That
process may result in revised base
zoning and HIP standards.
CN (El
Camino)
1.25 FAR (HE Opp Site)
0.5 FAR (Non-Opp Site)
40-foot height
1.5 FAR
50-foot
height
3.25 FAR (HE Opp Site)*
2.5 FAR (Non-Opp Site)*
50-foot height
GM/ROLM
Focus Area
2.5 FAR
60-foot height N/A
3.5 FAR*
No change in height
RM-40
40-50 du/ac (HE Opp Site)
40 du/ac (Non-Opp Site)
1.0 FAR (All Sites)
40-foot height N/A
60 du/ac*
3.0 FAR*
50-foot height
RM-30
30-50 du/ac (HE Opp Site)
30 du/ac (Non-Opp Site)
0.6 FAR (All Sites)
35-foot height N/A
60 du/ac*
2.5 FAR*
40-foot height
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Attachment G - Summary
of Draft Density, FAR,
Building Height and
Daylight Plane
Modifications
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Housing Incentive ProgramZoning
District Base Standards Existing Proposed Standards
RM-20
20-50 du/ac (HE Opp Site)
20 du/ac (Non-Opp Site)
0.5 FAR (All Sites)
30-foot height N/A
60 du/ac* (HE Opp Site)
40 du/ac (Non-Opp Sites)
2.0 FAR*
40-foot height
Notes:
*Except no residential density (du/ac) limit and additional 0.5 FAR bonus if at least 10% of units are 3+ bedroom units, to provide an incentive for family- friendly units.
HE Opp Site = Housing Element Opportunity Sites
Modifications to HIP Daylight Planes
The HIP ensures height transitions in areas where higher density zones abut lower density zones or lower height structures, by continuing to enforce daylight plane and height transition standards. However, to accommodate taller heights, the ordinance proposes adjustments to the daylight plane to allow daylight planes to start higher.
As shown in Figure G-1, the existing daylight plane makes is challenging to fit two full- height stories within the daylight plane area (left diagram). Modifying the initial daylight plane from 10 feet to 16 feet allows for development of two stories at the front of the site (right diagram). Figure G-1 illustrates the impact of these changes in the RM-30 zone.
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Attachment G - Summary
of Draft Density, FAR,
Building Height and
Daylight Plane
Modifications
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Figure G-1: Comparison of Existing and Modified Daylight Plane Requirements (RM-30 Zone Example)
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Attachment G - Summary
of Draft Density, FAR,
Building Height and
Daylight Plane
Modifications
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State Density
Bonus Law
(SDBL)
State Density Bonus Law (SDBL) gives developers the right to build additional dwelling units and obtain flexibility in local development requirements, in exchange for building on-site affordable or senior housing. To support the development of affordable and senior housing, projects can receive “waivers” and “concessions” to modify applicable regulations. This includes standards such as height, setbacks, parking and ground-floor retail requirements.
WAIVERS:
Projects can request waivers, which
are generally used to modify physical
standards affecting the building envelope.
CONCESSIONS:
Projects are eligible for between one to
five concessions, which are generally used
to modify land use or design requirements
that add to the cost of development.
How Many?
Unlimited 1 to 5, depending on level of affordability
Which Standards?
Development standards that would
physically preclude the construction of the
development at the density permitted by
SDBL.
Other regulations, where modifications
would result in identifiable and actual
cost reductions to provide for affordable
housing costs
Common Examples
• Height limits
• Daylight planes
• Setbacks
• Ground-floor retail requirements
• Undergrounding utilities
• Public or private open space
requirements
FURTHER READING:
• Government Code Section 65915
MORE REQUIREMENTS
AND EXAMPLES >
Palo Alto Municipal Code Chapter 18.15
As required by State Law, the City’s zoning ordinance includes a code section detailing how State Density Bonus Law will be implemented in Palo Alto. Where the local ordinance is in conflict with State law, State law takes precedence.
The SDBL offers developers the ability to modify
certain development standards by requesting either
waivers or concessions from the local jurisdiction.
The City cannot require submission of reports of
studies that are not otherwise required by State
law. The burden is on the City to demonstrate that a
requested concession or waiver is inconsistent with
State law.
SDBL vs. City Inclusionary Ordinance
In order for a for-sale project to satisfy both SDBL and the City’s inclusionary housing requirements, units would need to remain affordable for at least 99 years.
Rental projects pay a fee in-lieu of the on-site inclusionary housing requirement. However, under SDBL, a rental project must place units on- site and therefore, generally, will be not be subject to the fee PAMC Ch. 16.65: Affordable
Housing Requirements
State Density Bonus
Law
For-Sale
Projects
15% on-site inclusionary
requirement (moderate income
level)
99-year term
Very-low, low, and
moderate income
options 55-year term
Rental
Projects Fee payment in-lieu 55-year term
Pro Tip:
A project sponsor is not required to take advantage of a density bonus. If a project qualifies for State Density Bonus Law because of the City’s inclusionary housing requirement, it can still take advantage of the flexible development standards by requesting waivers and concessions.
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Attachment H - State Density Bonus
Law Handout
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BASIC DENSITY BONUS ACHIEVABLE
The density bonus and concessions achievable scale in
proportion to the level of affordability and percentage of affordable units provided. The more affordable units and more deeply affordable those units are, the more a project can exceed local density standards.
Various scenarios of affordability qualify, including the following minimum thresholds.
Density Bonus
(% increase)
20% 35% 50% 80%+
Number of
Concessions 1 2 3 4 5
% Very Low-
Income 5% 11% 15% 16% 100%
% Low-Income 10% 20% 24% N/A 100%
% For-Sale
Moderate Income 10% 40% 44% 45% N/A
+20%
50% Base
+35%
50% Base
+50%
50% Base
70%
85%
100%
Affordable
Housing
+
Additional
Affordable
Housing
= Total Income
Restriction
Moderate
Income
44% +
Min. 5% Very
Low or Moderate
Moderate Income
5% =
Maximum
50% Income
Restriction
49%
Low-
Income
24% +
Very Low Income
9% = 33%
Very Low-
Income
15% +
Moderate Income
15% = 30%
BASIC DENSITY BONUS BASED ON AFFORDABILITY
ADDITIONAL DENSITY BONUS
Maximum 100% Density Bonus
Additional
Density
Bonus
ADDITIONAL DENSITY BONUS
Recent changes in SDBL allow an additional density bonus. • Projects that achieve the maximum 50% “basic” density bonus are eligible for additional density bonus, up to a 100% total bonus.
• Projects must provide at least 5% additional units
restricted to very-low or moderate income households.
• The resulting development may not income restrict more than 50 percent of the total units.
SDBL Eligible Project
Types
Minimum Affordability
Percentage
(Area Median Income)
Very-Low Income 5% at <50% AMI
Low-Income 10% at <80% AMI
Senior Housing None
Moderate Income
(For Sale only) 10% at <120% AMI
100% Affordable Up to 20% at <120% AMI; at
least 80% at <80% AMI
Special Populations 10% at <50% AMI
Student Housing
20% low-income (30% of
65% AMI for single room
occupancy room)
Childcare Facility
+ Any of the Above See eligibility above
Land Donation 10% at <50% AMI
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Attachment H - State Density Bonus
Law Handout
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DENSITY BONUS FOR SPECIAL
POPULATIONS
• Projects housing seniors, foster youth,
veterans, or homeless persons, are
entitled to a density bonus equal to 20% of
the target population units.
• Affordable student housing projects are
entitled to a density bonus equal to 35% of
the student housing units.
• Projects that include on-site childcare
facilities may be entitled to an additional
density bonus equal to the square footage
of the childcare facility, as well as a
concession or incentive that contributes to
the economic feasibility of the facility.
CALCULATING DENSITY (WITHOUT DU/ACRE DENSITY STANDARDS) Senior Housing
Student Housing
Veterans
Foster Y outh
Homeless
Childcare
Facilities
20%20%
20%20%
35%35%
20%20%
20%20%
Replacement Unit Requirements
• Projects proposed with SDBL must replace any existing units that are rent-restricted or occupied by lower
income households at the same income levels.
• If household income is unknown, units are presumed to be occupied by lower income households in proportion
to the percentage of lower income renters citywide.
• For vacant or demolished units, look at affordability/ occupancy in the past 5 years.
• Replacement means equivalent size (at least the same
number of bedrooms).
• Replacement units count toward density bonus
qualification.
• SB 330 (Gov Code. Section 66300.6) includes
replacement/relocation provisions for protected units
that may also apply to a project.
Density Bonus =
+17 more units Base development
capacity = 48 units
1.5 FAR
(50% Lot Coverage)
Lot Size 200 feet x 200 feet = 40,000 square feet
Base Floor Area 40,000 square feet x 1.5 FAR = 60,000 square feet Average Unit 40 feet x 25 feet = 1000 sq. ft per unit Common Space 25% x 1000 sq. ft. = 250 sq. ft. per unit Average Area per Unit Average Unit + Common Space = 1250 sq. ft. feet per unit Base Development = Base Floor Area = 60,000 square feet = 48 units Capacity Average Area per unit 1250 square feet per unit
Density Bonus = Base Development Capacity x 35% 48 units x 35% = 16.8 rounded up to 17 units
• For sites/zoning districts where maximum dwelling units per acre is not regulated, project sponsors must calculate “base” density by determining the realistic development capacity based on the combination of FAR, site coverage, building height, and other physical standards. • The density bonus is then granted as additional floor area/FAR in proportion to the number of bonus units. Therefore, FAR cannot be granted as a waiver.
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Attachment H - State Density Bonus
Law Handout
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STATE DENSITY BONUS LAW (SDBL) PROJECT EXAMPLES
Small Lot 15% Very Low-Income SDBL Rental Project
Example: 10,000 sq. ft. site, FAR = 1.5:
Typical Project
+ in-lieu fee payment
(15,000 GFA @1,500 sf/unit)
SDBL Project (50% Density bonus)
Includes 2 on-site Very-Low Income units
(50% bonus x 15,000 GFA = 22,500 sf
@1,500 sf/unit)
In 2024, a two-person household with a maximum income of $73,750 is eligible for a Very-Low Income unit. Their maximum rent for an apartment unit, or monthly costs for a for-sale unit, would be approximately $1,850.
10 units
15 units
Medium Lot 20% Low-Income SDBL Rental Project
Example: 1 acre site, Density = 30 du/ac
SDBL Project (35% Density bonus)
Includes 6 on-site Low Income units
(61,500 sf @ 1,500 sf/unit)
Typical Project
+ in-lieu fee payment
(45,000 GFA @1,500 sf/unit)
In 2024, a four-person household with a maximum income of $146,100 is eligible for a Low Income unit. Their maximum rent for an apartment unit, or monthly costs for a for-sale unit, would be approximately $3,650. 30 units
41 units
State Density Bonus law sets a maximum parking standard that the City can impose on projects depending on unit sizes and distance to public transit.
Project Types Maximum Ratio
Any
1 space for each studio/1-bed
1.5 spaces for each 2-bed/3-bed
2.5 spaces for each 4+bed
20% low-income or 11% very
low-income; and within ½ mile
of a major transit stop
0.5 spaces per bedroom
100% affordable housing,
supportive housing, and senior
housing projects within ½ mile
of a major transit stop
No parking required
Major Transit Stops
• Caltrain stations
• Intersecting bus lines with headways < 15 mins
(SamTrans ECR, VTA line 22, and Marguerite
line P, X, and Y)
• Bus rapid transit stop (none in Palo Alto)
100% affordable housing projects within 1/2 mile of
a major transit stop are eligible for
• 5 concessions
• 3 extra stories/additional 33 feet in height
• Unlimited density bonus
• No addtional waivers (unless the City agrees
to them)
1/2 mile
1/2 mile
DENSITY BONUS AROUND MAJOR TRANSIT STOPS (AS OF MA Y 2024)
PARKING REQUIREMENTS
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Attachment H - State Density Bonus
Law Handout
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Retail Preservation Ordinance Matrix of Changes
Table I-1 provides examples of how the retail preservation ordinance (RPO) applies to different locations, project types, and affordability levels. The table also identifies changes between the existing and proposed regulations. The key changes are adding exceptions from the RPO, as identified in Housing Element Program 3.4B and State law. While the ordinance always applies to GF and R combining districts in Downtown and California Avenue, and never applies to 100% affordable housing, other locations have exceptions whether driven by State law or existing or proposed City policy.
Table I-1: Matrix of Retail Preservation Ordinance Exceptions Subject to RPO?
Location/Type
Existing
Regulations
Proposed
Regulations
(changes bolded) Exceptions, by Project Type
GF Downtown Overlay Yes Yes None
R California Avenue Overlay Yes Yes None
El Camino Real Retail Nodes Yes
Yes (see change
to exceptions)
Housing Element Opportunity
Sites Exempt
El Camino Real (Outside of Retail Nodes) Yes
Yes (see
change to
exceptions)
Reduced Replacement
Standard (1,500 sq. ft.)
100% BMR Housing (120% AMI) No No None
100% BMR Housing (80% AMI) No No None
Housing Element Opportunity Sites (HIP Projects) Yes
Yes (see
change to
exceptions)
Reduced Replacement
Standard (1,500 sq. ft.)
Housing Element Opportunity Sites (Not HIP
Projects) Yes No None
High-Density Mixed-Use Projects Yes Yes
Reduced Replacement
Standard (1,500 sq. ft.)
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Attachment I - Retail Preservation
Ordinance Example Matrix
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Attachment I - Retail Preservation
Ordinance Example Matrix
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City Council
Staff Report
Report Type: INFORMATION REPORTS
Lead Department: Administrative Services
Meeting Date: March 3, 2025
Report #:2502-4116
TITLE
Sales Tax Digest Q3 (Jul-Sept) 2024
ANALYSIS
This report transmits information regarding the City of Palo Alto’s sales tax receipts for the second quarter (April-June) of 2024. Listed below are highlights from the report; detailed discussion and data can be found in the attached City of Palo Alto Sales Tax Digest and Legislative Update 2024 Q2 (Attachment A).
Regional and statewide sales tax based upon adjusted economic benchmark year (Attachment A, p. 2) •Palo Alto: increased 0.3%
•San Francisco Bay Area: decreased 2.9%
•California statewide: decreased 2.5%
City’s Most Significant Reasons for increases during this period (Attachment A, p. 1) •New Auto Sales segment increased 9.4%, comprises 15.4% of total sales tax •Restaurant segment increased by 6.1%, comprises 16.4% of total sales tax County Pool (Attachment A, p. 4)
•The City’s share of the county pool for this quarter is 5.9%, lower from Q3 2023 •Sales tax receipts from the County pool totaled $1.4 million
ATTACHMENTS
Attachment A - 2024 Q3 Sales Tax Digest Summary
APPROVED BY:
Lauren Lai
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Item 10 Staff Report
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Sales Tax Digest Summary
Collections through December 2024
Sales July through September 2024 (2024Q3)
www.avenuinsights.com (800) 800-8181 Page 1
California Overview
For the year ending in the third quarter of 2024, cash receipts decreased by 2.0% statewide and decreased by 5.5% in S.F. Bay Area. However, when adjusted for non-period-related payments, the overall economic sales tax activity for the year ending in the third quarter of 2024 decreased by 2.5% statewide and decreased by 2.9% in S.F. Bay Area.
City of Palo Alto
For the year ending in the third quarter of 2024, sales tax cash receipts for the city decreased by 4.9% from the prior year. However, when adjusted for non-period related payments, the overall economic sales tax activity in Palo Alto for the year ending in the third quarter of 2024 increased by 0.3%. The primary drivers of Palo Alto's sales tax increase were the restaurants and new auto sales sectors. Restaurant sales tax revenue rose by 6.1%, representing 16.4% of the city's total sales tax. Year-over-year, new auto sales grew by 9.4%, contributing 15.4% to the total sales tax revenue.
Same quarter sales tax cash receipts decreased by 4.2% in California from Q3 2023 to Q2 2024. The Palo Alto citywide sales tax cash receipts decreased by 15.3% over the Q3 2023 to Q2 2024 period. Key reasons for the Palo Alto decrease during this period were: 1) Decrease in the business services segment, 2) Decrease in furniture & appliance stores (mainly electronics stores) from Q3 2023 to Q3 2024 by 19.4%, 3) Decrease in the leasing segment of 11.5% which comprises 19.4% of the total sales tax for the city.
According to the California New Car Dealers Association (CNCDA), California’s new light vehicle registrations fell by 1.7% in 2024Q3.
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Attachment A - 2024 Q3
Sales Tax Digest Summary
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% of Total / % Change Palo Alto California Statewide S.F. Bay Area Sacramento Valley Central Valley South Coast Inland Empire North Coast General Retail 26.8 / 2.8 28.7 / -0.5 23.4 / -3.0 28.1 / -4.5 38.6 / 4.5 27.2 / -0.6 35.5 / -1.1 27.0 / -1.2Food Products 18.2 / 5.4 21.6 / 0.1 23.6 / -0.9 17.1 / -0.4 14.9 / 0.8 23.6 / 0.9 18.1 / -3.6 18.8 / 1.8Transportation 19.1 / 6.1 22.8 / -7.4 19.4 / -4.7 26.6 / -3.9 21.8 / -5.4 23.5 / -8.0 22.9 / -13.3 28.2 / -3.2Business to Business 31.6 / -11.7 16.0 / -2.6 22.1 / -2.8 14.5 / -4.6 14.6 / -1.3 15.7 / -1.5 10.6 / -10.6 10.5 / 4.3Misc/Other 4.3 / 67.4 10.8 / -1.9 11.6 / -3.3 13.6 / -0.8 10.3 / -4.2 10.0 / -0.1 12.9 / -6.1 15.5 / -1.8Total 100.0 / 0.3 100.0 / -2.5 100.0 / -2.9 100.0 / -3.2 100.0 / -0.1 100.0 / -2.2 100.0 / -6.3 100.0 / -0.8 Palo Alto California Statewide S.F. Bay Area Sacramento Valley Central Valley South Coast Inland Empire North Coast Largest Segment Leasing Restaurants Restaurants Restaurants Miscellaneous Retail Restaurants Miscellaneous Retail Restaurants % of Total / % Change 19.4 / -11.5 15.7 / 0.8 17.6 / 0.1 11.7 / -0.2 17.1 / 15.7 17.5 / 1.4 18.5 / 4.4 12.0 / 3.2 2nd Largest Segment Restaurants Auto Sales - New Auto Sales - NewMiscellaneous Retail Department Stores Auto Sales - New Restaurants Department Stores% of Total / % Change 16.4 / 6.1 10.8 / -9.2 9.4 / -4.2 11.3 / -6.0 10.8 / -0.6 11.9 / -10.7 11.8 / -2.1 11.3 / 4.3 3rd Largest Segment Auto Sales - NewMiscellaneous Retail Office Equipment Auto Sales - New Restaurants Miscellaneous Retail Auto Sales - NewAuto Sales - New % of Total / % Change 15.4 / 9.4 10.8 / 6.3 7.8 / 3.1 11.1 / -6.5 10.1 / 1.7 9.3 / 6.3 10.7 / -10.6 10.7 / -7.0 ECONOMIC CATEGORY ANALYSIS FOR YEAR ENDED 3rd Quarter 2024 ECONOMIC SEGMENT ANALYSIS FOR YEAR ENDED 3rd Quarter 2024 Regional Overview
The first chart on page two shows adjusted economic benchmark year amounts, which shows the year ended third quarter of 2024 compared to the year ended third quarter of 2023 (benchmark years are rolling annual comparisons through the current quarter). The growth rates are different between the state and Palo Alto because the sales tax from businesses in Palo Alto performed better overall than the statewide average.
Regional Overview Chart (Economic)
BENCHMARK YEAR 2024Q3 COMPARED TO BENCHMARK YEAR 2023Q3 Item 10
Attachment A - 2024 Q3
Sales Tax Digest Summary
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Leasing19.4%
Restaurants16.4%
Auto Sales -New15.4%
Office Equipment7.3%Apparel Stores6.8%
All Other34.7%
Net Pools & Adjustments17.4%
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
Quarterly Benchmark Year
Gross Historical Sales Tax Cash Receipts by Benchmark Year and Quarter (Before Adjustments) Net Cash Receipts for Benchmark Year third Quarter 2024: $34,898,056 *Benchmark year (BMY) is the sum of the current and 3 previous quarters (2024Q3 BMY is sum of 2024 Q3, 2024 Q2, 2024 Q1, 2023 Q4) Item 10
Attachment A - 2024 Q3
Sales Tax Digest Summary
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2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 2023Q4 2024Q1 2024Q2 2024Q3 Quarter Over QuarterTotal County Pool 29,997,846 25,393,878 25,989,159 28,701,701 29,548,556 24,937,663 27,690,772 22,345,960 24,427,230 25,411,165 25,387,888 23,265,567 4.1%Jurisdiction Share 1,778,529 1,533,345 1,426,551 1,683,544 1,817,421 1,499,631 1,755,562 1,489,193 1,638,965 1,523,986 1,611,681 1,377,891 -7.5%Jurisdiction % of Total 5.9% 6.0% 5.5% 5.9% 6.2% 6.0% 6.3% 6.7% 6.7% 6.0% 6.3% 5.9% Anderson Honda Macy's Department Store Shreve & Co.Apple Stores Magnussen's Toyota Stanford Health CareArco AM/PM Mini Marts Neiman Marcus TeslaAudi Palo Alto Nordstrom Department Store Tesla Lease TrustBloomingdale's Restoration Hardware Tiffany & CompanyBrilliant Earth Richemont Union 76 Service StationsHermes Sephora Varian Medical SystemsHP Enterprise Services Shell Service Stations Volvo Cars Palo AltoLouis Vuitton County Pool Results
The California sales tax system is referred to as a ‘sales and use tax’ system which covers both sales tax and ‘use tax’. The County Pool revenues largely reflect use tax from qualifying transactions that do not involve a California based point of sale. Businesses report their use tax quarterly based on business activity conducted throughout the county. The County Pool is distributed each quarter based upon a formula where the jurisdiction’s quarterly percentage is based upon its total sales tax receipts for the quarter as a percentage of all sales tax receipts for all jurisdictions within the county. Thus, if local business activity (sales tax receipts) within Palo Alto increases in the quarter relative to the rest of the county, then the Palo Alto County pool percentage also will increase for the quarter compared to the rest of the county.
The total county pool is multiplied by the city’s quarterly percentage to determine the jurisdiction share each quarter.
In the third quarter of 2024, cash receipts for the overall County Pool increased by 4.1% from the same quarter in the prior year. The City’s share of the County Pool decreased to 5.9%. The City’s revenues from the County Pool decreased from $1,489,193 in 2023Q3 to $1,377,891 in 2024Q3.
TOP 25 SALES/USE TAX CONTRIBUTORS
The following list identifies Palo Alto’s Top 25 Sales/Use Tax contributors. The list is in alphabetical order and represents the year ended third quarter of 2024. The Top 25 Sales/Use Tax contributors generate
60.1% of Palo Alto’s total sales and use tax revenue.
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Attachment A - 2024 Q3
Sales Tax Digest Summary
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$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Benchmark Year 2024Q3 Benchmark Year 2023Q3
Sales Tax from Largest Non-Confidential Sales Tax Segments (Economic) Item 10
Attachment A - 2024 Q3
Sales Tax Digest Summary
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www.avenuinsights.com (800) 800-8181 Page 6 Economic Category % 2024Q3 2024Q2 2024Q1 2023Q4 2023Q3 2023Q2 2023Q1 2022Q4 2022Q3 2022Q2 2022Q1Business To Business 27.4% 2,228,773 2,366,493 2,373,414 2,262,034 2,619,833 2,439,519 2,350,567 2,571,178 2,194,817 2,095,020 2,031,199Miscellaneous/Other 20.7% 1,682,849 1,595,196 1,951,428 1,870,170 1,546,096 1,302,322 1,517,005 1,597,816 1,724,861 1,701,538 1,687,189General Retail 22.5% 1,828,014 2,044,006 1,739,261 2,315,882 1,834,297 2,017,885 1,640,927 2,305,038 1,802,777 1,920,316 1,639,417Food Products 16.6% 1,349,524 1,394,270 1,288,207 1,348,051 1,277,173 1,349,926 1,195,458 1,260,287 1,230,824 1,227,240 1,018,577 Subtotal Economic (Local Business) 87.3% 7,089,160 7,399,964 7,128,134 7,877,395 7,601,473 7,353,426 6,489,274 7,653,508 6,826,234 6,967,438 6,390,731Net Pools & Adjustments 12.7% 1,033,269 1,359,165 1,143,798 1,867,172 1,986,175 2,084,763 1,586,938 1,935,580 1,862,181 686,044 1,721,924Total Cash Receipts 100.0% 8,122,429 8,759,129 9,744,567 9,587,647 9,438,189 8,076,212 9,589,088 8,688,414 7,653,481 8,112,655 8,995,580 Economic Segment % 2024Q3 2024Q2 2024Q1 2023Q4 2023Q3 2023Q2 2023Q1 2022Q4 2022Q3 2022Q2 2022Q1Miscellaneous/Other 50.1% 4,070,462 4,102,841 4,114,784 4,409,850 4,635,983 4,197,978 3,818,384 4,490,992 4,087,158 4,008,008 3,949,786Restaurants 15.1% 1,222,917 1,259,885 1,162,863 1,214,598 1,154,189 1,214,502 1,073,621 1,114,637 1,102,248 1,093,944 902,707Miscellaneous Retail 6.3% 512,154 582,600 489,040 689,939 480,649 512,077 448,322 545,797 381,616 479,710 432,956Apparel Stores 5.9% 480,138 531,926 440,402 586,863 478,973 509,894 423,470 538,573 435,730 495,508 392,724Department Stores 5.3% 432,925 501,499 411,345 549,893 435,388 492,374 356,626 533,032 423,601 454,349 367,144Service Stations 2.5% 201,591 226,411 198,584 214,900 229,911 222,029 192,723 215,640 233,387 250,715 191,755Food Markets 1.4% 111,242 114,071 107,031 112,372 103,251 111,465 101,978 116,810 99,811 104,253 91,634Business Services 0.7% 57,730 80,732 204,085 98,980 83,130 93,106 74,150 98,027 62,683 80,950 62,025 Subtotal Economic (Local Business) 87.3% 7,089,160 7,399,964 7,128,134 7,877,395 7,601,473 7,353,426 6,489,274 7,653,508 6,826,234 6,967,438 6,390,731Net Pools & Adjustments 12.7% 1,033,269 1,359,165 1,143,798 1,867,172 1,986,175 2,084,763 1,586,938 1,935,580 1,862,181 686,044 1,721,924Total Cash Receipts 100.0% 8,122,429 8,759,129 8,271,932 9,744,567 9,587,647 9,438,189 8,076,212 9,589,088 8,688,414 7,653,481 8,112,655 Historical Analysis by Calendar Quarter
The chart above shows the categories and segments in quarterly economic basis amounts. The total amount is the net cash receipts, and it was obtained by adding up the categories/segments with the “Net Pools & Adjustments” amount.
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Attachment A - 2024 Q3 Sales Tax
Digest Summary
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www.avenuinsights.com (800) 800-8181 Page 7 Economic Category % 2024Q3 2023Q3 2022Q3 2021Q3 2020Q3 2019Q3 2018Q3 2017Q3 2016Q3 2015Q3 Business To Business 27.0% 9,409,451 10,658,399 8,712,755 7,087,926 8,172,606 8,199,294 6,134,717 5,533,647 5,274,809 4,252,574 Miscellaneous/Other 19.9% 6,961,240 6,120,140 6,727,169 6,508,810 5,535,929 8,213,925 7,119,613 6,064,826 6,044,638 5,688,670 General Retail 22.8% 7,951,680 7,724,613 7,714,659 6,210,285 5,183,026 7,805,483 8,439,325 8,410,519 8,236,289 8,097,906 Food Products 15.5% 5,400,768 5,123,356 4,644,919 3,232,436 3,381,949 4,913,041 4,799,343 4,641,768 4,622,737 4,411,228 Subtotal Economic (Local Business) 85.2% 29,723,139 29,626,508 27,799,502 23,039,457 22,273,510 29,131,744 26,492,998 24,650,760 24,178,472 22,450,377 Net Pools & Adjustments 14.8% 5,174,917 7,064,628 5,650,629 5,335,960 5,584,640 5,795,256 5,477,338 4,896,303 4,110,537 4,197,233 Total 100.0% 34,898,056 36,691,136 33,450,131 28,375,417 27,858,150 34,927,000 31,970,336 29,547,063 28,289,009 26,647,610 Economic Segment % 2024Q3 2023Q3 2022Q3 2021Q3 2020Q3 2019Q3 2018Q3 2017Q3 2016Q3 2015Q3 Miscellaneous/Other 48.8% 17,026,234 17,655,728 16,111,013 14,552,822 14,487,702 17,353,941 14,616,791 12,927,904 12,448,262 11,026,468 Restaurants 14.0% 4,879,675 4,599,238 4,130,986 2,791,240 2,901,446 4,336,770 4,197,250 4,040,242 4,021,277 3,835,898 Miscellaneous Retail 6.6% 2,313,855 1,894,326 2,029,037 1,754,193 1,231,667 1,658,326 1,688,886 2,034,461 1,992,497 1,520,014 Apparel Stores 5.8% 2,020,119 1,952,957 1,873,244 1,433,251 1,195,735 1,951,720 1,931,669 1,721,857 1,631,712 1,656,560 Department Stores 5.4% 1,895,662 1,817,587 1,774,002 1,326,441 1,014,928 1,842,137 2,085,700 2,032,059 2,188,368 2,402,334 Service Stations 2.4% 842,904 865,212 867,158 566,228 505,648 693,546 671,528 601,794 554,825 668,928 Business Services 0.9% 297,214 403,012 609,273 270,340 550,611 845,279 819,074 790,083 832,423 839,442 Food Markets 1.3% 447,477 438,449 404,790 344,944 385,774 450,026 482,100 502,359 509,109 500,731 Subtotal Economic (Local Business) 85.2% 29,723,139 29,626,508 27,799,502 23,039,457 22,273,510 29,131,744 26,492,998 24,650,760 24,178,472 22,450,377 Net Pools & Adjustments 14.8% 5,174,917 7,064,628 5,650,629 5,335,960 5,584,640 5,795,256 5,477,338 4,896,303 4,110,537 4,197,233 Total 100.0% 34,898,056 36,691,136 33,450,131 28,375,417 27,858,150 34,927,000 31,970,336 29,547,063 28,289,009 26,647,610 Historical Analysis by Calendar BMY from 2015Q3 to 2024Q3 The chart above shows the categories and segments in benchmark year economic basis amounts. The total amount is the net cash receipts, and it was obtained by adding up the categories/segments with the “Net Pools & Adjustments” amount. Benchmark year (BMY) is the sum of the current and 3 previous quarters (2024Q3 BMY is sum of 2024 Q3, 2024 Q2, 2024 Q1, 2023 Q4).
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Attachment A - 2024 Q3 Sales Tax
Digest Summary
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Food Products
Transportation
Business to Business
Misc/Other
2024/3 Total
2023/3 Total
% Chg
Largest Gain
Second LargestGain
Largest Decline
Second LargestDecline
Campbell -11.3% 0.7% -10.5% -20.8% 0.4% 2,456,006 2,633,247 -6.7%Misc. Vehicle Sales Business Services I.T. Infrastructure Service Stations Cupertino -2.5% 1.1% -13.6% -1.5% 20.9% 8,532,895 8,677,066 -1.7%I.T. Infrastructure Restaurants Office Equipment Service Stations Gilroy -2.5% 2.9% -21.3% -22.8% -2.6% 4,059,859 4,510,162 -10.0%Restaurants Food Processing Eqp Auto Sales - New Heavy Industry Los Altos -2.0% 4.2% -5.3% 31.1% 11.2% 630,304 610,116 3.3%Restaurants Business Services Service Stations Furniture/Appliance Los Gatos -0.8% 3.9% -17.0% -5.4% -12.8% 1,378,194 1,441,499 -4.4%Bldg.Matls-Retail Restaurants Auto Sales - New Miscellaneous Other Milpitas 5.3% -2.2% -11.1% -0.4% 8.0% 5,835,243 5,897,063 -1.0%Electronic Equipment Apparel Stores Service Stations Office Equipment Morgan Hill -1.1% -1.0% -11.8% -32.9% -3.1% 2,506,473 2,801,356 -10.5%Office Equipment Chemical Products Energy Sales Auto Sales - New Mountain View -2.5% 2.1% -3.3% -10.2% -10.4% 4,265,412 4,351,154 -2.0%Auto Parts/Repair Restaurants Service Stations Auto Sales - New Palo Alto -0.3% 3.8% -19.4% -22.5% 55.3% 7,099,512 7,882,388 -9.9%Light Industry Bldg.Matls-Retail Leasing Auto Sales - New San Jose -5.0% 0.4% -12.6% -9.9% 0.7% 47,059,949 50,440,764 -6.7%Green Energy Electronic Equipment Office Equipment Auto Sales - New Santa Clara 1.9% 1.3% -9.8% 44.0% 17.7% 15,423,467 12,944,686 19.1%Office Equipment Electronic Equipment Auto Sales - New Light Industry County of Santa Clara -1.5% 5.1% -14.5% 11.0% 3.3% 1,329,342 1,313,289 1.2%Restaurants Electronic Equipment Auto Sales - Used Food Markets Saratoga -5.8% 3.2% -6.4% -18.7% 112.0% 284,436 273,963 3.8%Bldg.Matls-Whsle Restaurants Office Equipment Service Stations Sunnyvale -18.2% 3.4% -5.9% 9.6% -29.4% 7,768,657 7,980,480 -2.7%Light Industry Business Services Miscellaneous Retail Heavy Industry Quarterly Analysis by Sales Tax Category: Change from 2023Q3 to 2024Q3 (Economic) Unlike the chart on page one which showed a ‘benchmark year’ through the third quarter of 2024, the chart above shows a comparison of one quarter only – third quarter of 2024 to third quarter of 2023. This chart is for local ‘brick and mortar’ businesses, and it excludes county pools and adjustments.
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Attachment A - 2024 Q3 Sales Tax
Digest Summary
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www.avenuinsights.com (800) 800-8181 Page 9 California Avenue % CHANGE QoQ 2024Q3 QE 2023Q3 QE 24Q3 % OF TOTAL 23Q3 % OF TOTALFOOD PRODUCTS 3.7% 99,685 96,166 60.3% 58.8%GENERAL RETAIL -6.3% 25,015 26,707 15.1% 16.3%ALL OTHER 0.0% 40,546 40,554 24.5% 24.8%TOTAL 1.1% 165,246 163,427 100.0% 100.0% El Camino Real and Midtown % CHANGE QoQ 2024Q3 QE 2023Q3 QE 24Q3 % OF TOTAL 23Q3 % OF TOTALFOOD PRODUCTS -4.6% 150,795 157,992 30.4% 25.9%GENERAL RETAIL -5.0% 32,996 34,739 6.6% 5.7%ALL OTHER -25.1% 312,884 417,586 63.0% 68.4%TOTAL -18.6% 496,674 610,317 100.0% 100.0% Greater Downtown % CHANGE QoQ 2024Q3 QE 2023Q3 QE 24Q3 % OF TOTAL 23Q3 % OF TOTALFOOD PRODUCTS -0.9% 523,951 528,808 64.0% 64.4%GENERAL RETAIL -6.4% 225,935 241,261 27.6% 29.4%BUSINESS TO BUSINESS 30.5% 40,964 31,378 5.0% 3.8%CONSTRUCTION 100.4% 17,488 8,725 2.1% 1.1%MISCELLANEOUS -3.6% 7,555 7,837 0.9% 1.0%TRANSPORTATION -0.8% 3,305 3,331 0.4% 0.4%TOTAL -0.3% 819,198 821,340 100.0% 100.0% Stanford Shopping Center % CHANGE QoQ 2024Q3 QE 2023Q3 QE 24Q3 % OF TOTAL 23Q3 % OF TOTALGENERAL RETAIL -6.5% 1,237,757 1,324,378 79.9% 76.2%FOOD PRODUCTS 0.7% 159,404 158,284 10.3% 9.1%ALL OTHER -40.5% 151,885 255,414 9.8% 14.7%TOTAL -10.9% 1,549,046 1,738,075 100.0% 100.0% City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2023Q3 to 2024Q3 (Economic) Item 10
Attachment A - 2024 Q3 Sales Tax
Digest Summary
Item 10: Staff Report
Pg.
10 Packet Pg. 235 of 240
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 10 Town And Country Shopping Center % CHANGE QoQ 2024Q3 QE 2023Q3 QE 24Q3 % OF TOTAL 23Q3 % OF TOTALFOOD PRODUCTS 1.4% 114,338 112,781 62.7% 60.8%GENERAL RETAIL -2.6% 67,994 69,832 37.3% 37.6%ALL OTHER -97.8% 64 2,892 0.0% 1.6%TOTAL -1.7% 182,396 185,505 100.0% 100.0% All Other Geos combined with Balance of Jurisdiction % CHANGE QoQ 2024Q3 QE 2023Q3 QE 24Q3 % OF TOTAL 23Q3 % OF TOTALBUSINESS TO BUSINESS -23.3% 2,041,438 2,661,080 32.7% 36.6%GENERAL RETAIL -6.7% 1,653,138 1,771,654 26.5% 24.4%TRANSPORTATION -19.4% 1,312,722 1,628,437 21.0% 22.4%FOOD PRODUCTS 0.5% 1,142,365 1,136,411 18.3% 15.6%MISCELLANEOUS 30.9% 65,461 49,999 1.0% 0.7%CONSTRUCTION 23.5% 31,641 25,618 0.5% 0.4%TOTAL -14.1% 6,246,766 7,273,199 100.0% 100.0% All Geo Areas Total Comparison 24Q3 & 23Q3 % CHANGE QoQ 2024Q3 QE 2023Q3 QE 24Q3 % OF TOTAL 23Q3 % OF TOTALBalance of Jurisdiction -19.2% 3,034,205 3,754,534 48.6% 51.6%Stanford Shopping Center -10.9% 1,549,046 1,738,075 24.8% 23.9%Greater Downtown -0.3% 819,198 821,340 13.1% 11.3%El Camino Real and Midtown -18.6% 496,674 610,317 8.0% 8.4%Town And Country Shopping Center -1.7% 182,396 185,505 2.9% 2.6%California Avenue 1.1% 165,246 163,427 2.6% 2.2%TOTAL -14.1% 6,246,766 7,273,199 100.0% 100.0% Palo Alto citywide QE 24Q3 & 23Q3 % CHANGE QoQ 2024Q3 QE 2023Q3 QE 24Q3 % OF TOTAL 23Q3 % OF TOTALBUSINESS TO BUSINESS -22.5% 2,228,773 2,874,003 31.4% 36.5%GENERAL RETAIL -0.3% 1,828,014 1,833,119 25.7% 23.3%FOOD PRODUCTS 3.8% 1,349,524 1,300,141 19.0% 16.5%TRANSPORTATION -19.4% 1,315,686 1,632,093 18.5% 20.7%MISCELLANEOUS 28.2% 263,509 205,604 3.7% 2.6%CONSTRUCTION 204.6% 114,006 37,427 1.6% 0.5%TOTAL -9.9% 7,099,512 7,882,388 100.0% 100.0% City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2023Q3 to 2024Q3 (Economic) Cont.
Item 10
Attachment A - 2024 Q3 Sales Tax
Digest Summary
Item 10: Staff Report
Pg.
11 Packet Pg. 236 of 240
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 11
F O O D P R O D U C T S ,
3 . 7 % C H A N G E , $ 9 9 , 6 8 5 ,
6 0 . 3 % T O T A L
G E N E R A L R E T A I L ,
- 6 . 3 % C H A N G E , $ 2 5 , 0 1 5 ,
1 5 . 1 % T O T A L
A L L O T H E R ,
0 . 0 % C H A N G E , $ 4 0 , 5 4 6 ,
2 4 . 5 % T O T A L
C a l i f o r n i a A v e n u e 2 0 2 4 Q 3 S A L E S T A X A M O U N T S F O O D P R O D U C T S , $ 9 6 , 1 6 6 ,
5 8 . 8 % T O T A L
G E N E R A L R E T A I L ,
$ 2 6 , 7 0 7 , 1 6 . 3 % T O T A L
A L L O T H E R , $ 4 0 , 5 5 4 ,
2 4 . 8 % T O T A L
C a l i f o r n i a A v e n u e 2 0 2 3 Q 3 S A L E S T A X A M O U N T S
F O O D P R O D U C T S ,
- 4 . 6 % C H A N G E , $ 1 5 0 , 7 9 5 ,
3 0 . 4 % T O T A L
G E N E R A L R E T A I L ,
- 5 . 0 % C H A N G E , $ 3 2 , 9 9 6 ,
6 . 6 % T O T A L
A L L O T H E R ,
- 2 5 . 1 % C H A N G E ,
$ 3 1 2 , 8 8 4 ,
6 3 . 0 % T O T A L
E l C a m i n o R e a l a n d M i d t o w n 2 0 2 4 Q 3 S A L E S T A X A M O U N T S F O O D P R O D U C T S , $ 1 5 7 , 9 9 2 ,
2 5 . 9 % T O T A L
G E N E R A L R E T A I L ,
$ 3 4 , 7 3 9 , 5 . 7 % T O T A L
A L L O T H E R , $ 4 1 7 , 5 8 6
6 8 . 4 % T O T A L
E l C a m i n o R e a l a n d M i d t o w n 2 0 2 3 Q 3 S A L E S T A X A M O U N T S City of Palo Alto Geo Area Pie Charts
Item 10
Attachment A - 2024 Q3 Sales Tax
Digest Summary
Item 10: Staff Report
Pg.
12 Packet Pg. 237 of 240
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 12
F O O D P R O D U C T S ,
- 0 .9 % C H A N G E , $ 5 2 3 ,9 5 1 ,
6 4 .0 % T O T A L
G E N E R A L R E T A IL ,
- 6 .4 % C H A N G E ,
$ 2 2 5 ,9 3 5 ,
2 7 .6 % T O T A L
B U S IN E S S T O B U S IN E S S ,
3 0 .5 % C H A N G E , $ 4 0 ,9 6 4 ,
5 .0 % T O T A L
C O N S T R U C T IO N ,
1 0 0 .4 % C H A N G E , $ 1 7 ,4 8 8 ,
2 .1 % T O T A L
M IS C E L L A N E O U S ,
- 3 .6 % C H A N G E , $ 7 ,5 5 5 ,
0 .9 % T O T A L
T R A N S P O R T A T IO N ,
- 0 .8 % C H A N G E , $ 3 ,3 0 5 ,
0 .4 % T O T A L
G re a t e r D o w n t o w n 2 0 2 4 Q 3 S A L E S TA X A M O U N T S
F O O D P R O D U C T S ,
$ 5 2 8 ,8 0 8 , 6 4 .4 % T O T A L
G E N E R A L R E T A IL ,
$ 2 4 1 ,2 6 1 , 2 9 .4 % T O T A L
B U S IN E S S T O B U S IN E S S ,
$ 3 1 ,3 7 8 , 3 .8 % T O T A L
C O N S T R U C T IO N , $ 8 ,7 2 5 ,
1 .1 % T O T A L
M IS C E L L A N E O U S , $ 7 ,8 3 7 ,
1 .0 % T O T A L T R A N S P O R T A T IO N , $ 3 ,3 3 1 , 0 .4 % T O T A L
G re a t e r D o w n t o w n 2 0 2 3 Q 3 S A L E S TA X A M O U N T S
G E N E R A L R E T A IL
$ 1 ,3 2 4 ,3 7 8 ,
7 6 .2 % T O T A L
F O O D P R O D U C T S , $ 1 5 8 ,2 8 4 ,
9 .1 % T O T A L
A L L O T H E R , $ 2 5 5 ,4 1 4 ,
1 4 .7 % T O T A L
S t a n fo rd S h o p p in g C e n t e r 2 0 2 3 Q 3 S A L E S TA X A M O U N T S
G E N E R A L R E T A IL ,
- 6 .5 % C H A N G E , $ 1 ,2 3 7 ,7 5 7 ,
7 9 .9 % T O T A LF O O D P R O D U C T S ,
0 .7 % C H A N G E ,
$ 1 5 9 ,4 0 4 ,
1 0 .3 % T O T A L
A L L O T H E R , - 4 0 .5 % C H A N G E ,
$ 1 5 1 ,8 8 5 , 9 .8 % T O T A L
S t a n fo rd S h o p p in g C e n t e r 2 0 2 4 Q 3 S A L E S TA X A M O U N T S City of Palo Alto Geo Areas Pie Charts
Item 10
Attachment A - 2024 Q3 Sales Tax
Digest Summary
Item 10: Staff Report
Pg.
13 Packet Pg. 238 of 240
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 13
F O O D P R O D U C T S ,
1 . 4 % C H A N G E , $ 1 1 4 ,3 3 8 ,
6 2 . 7 % T O T A L
G E N E R A L R E T A I L ,
- 2 . 6 % C H A N G E , $ 6 7 ,9 9 4 ,
3 7 . 3 % T O T A L
A L L O T H E R , - 9 7 . 8 % C H A N G E , $ 6 4 , 0 . 0 % T O T A L To w n A n d C o u n t r y S h o p p in g C e n t e r 2 0 2 4 Q 3 S A L E S TA X A M O U N T S
F O O D P R O D U C T S ,
$ 1 1 2 ,7 8 1 ,
6 0 . 8 % T O T A L
G E N E R A L R E T A I L ,
$ 6 9 ,8 3 2 ,
3 7 . 6 % T O T A L
A L L O T H E R , $ 2 ,8 9 2 , 1 . 6 % T O T A L
To w n A n d C o u n t r y S h o p p in g C e n t e r 2 0 2 3 Q 3 S A L E S TA X A M O U N T S
B U S I N E S S T O B U S I N E S S ,
- 2 3 . 3 % C H A N G E ,
$ 2 ,0 4 1 ,4 3 8 ,
3 2 . 7 % T O T A L
G E N E R A L R E T A I L ,
- 6 . 7 % C H A N G E , $ 1 ,6 5 3 ,1 3 8 ,
2 6 . 5 % T O T A L
T R A N S P O R T A T I O N ,
- 1 9 . 4 % C H A N G E ,
$ 1 ,3 1 2 ,7 2 2 ,
2 1 . 0 % T O T A L
F O O D P R O D U C T S ,
0 . 5 % C H A N G E , $ 1 ,1 4 2 ,3 6 5 ,
1 8 . 3 % T O T A L
M I S C E L L A N E O U S , 3 0 . 9 % C H A N G E ,
$ 6 5 ,4 6 1 , 1 . 0 % T O T A L
C O N S T R U C T I O N ,
2 3 . 5 % C H A N G E , $ 3 1 ,6 4 1 ,
0 . 5 % T O T A L
A ll O t h e r G e o s c o m b in e d w it h B a la n c e o f Ju r is d ic t io n 2 0 2 4 Q 3
S A L E S TA X A M O U N T S
B U S I N E S S T O B U S I N E S S ,
$ 2 ,6 6 1 ,0 8 0 ,
3 6 . 6 % T O T A L
G E N E R A L R E T A I L , $ 1 ,7 7 1 ,6 5 4 ,
2 4 . 4 % T O T A L
T R A N S P O R T A T I O N ,
$ 1 ,6 2 8 ,4 3 7 ,
F O O D P R O D U C T S ,
$ 1 ,1 3 6 ,4 1 1 ,
M I S C E L L A N E O U S ,
$ 4 9 ,9 9 9 , 0 . 7 % T O T A L
C O N S T R U C T I O N , $ 2 5 ,6 1 8
, 0 . 4 % T O T A L
A ll O t h e r G e o s c o m b in e d w it h B a la n c e o f Ju r is d ic t io n 2 0 2 3 Q 3
S A L E S TA X A M O U N T S
City of Palo Alto Geo Area Pie Charts
Item 10
Attachment A - 2024 Q3 Sales Tax
Digest Summary
Item 10: Staff Report
Pg.
14 Packet Pg. 239 of 240
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 14 B a la n c e o f J u ris d ic t io n ,
- 1 9 . 2 % C H A N G E ,
$ 3 ,0 3 4 ,2 0 5 ,
4 8 . 6 % T O T A L
S t a n f o rd S h o p p in g C e n t e r,
- 1 0 . 9 % C H A N G E , $ 1 ,5 4 9 ,0 4 6 ,
2 4 . 8 % T O T A L
G re a t e r D o w n t o w n ,
- 0 . 3 % C H A N G E ,
$ 8 1 9 ,1 9 8 ,1 3 . 1 % T O T A L
E l C a m in o R e a l a n d M id t o w n ,
- 1 8 . 6 % C H A N G E , $ 4 9 6 ,6 7 4 ,
8 . 0 % T O T A L
T o w n A n d C o u n t ry S h o p p in g C e n t e r, - 1 . 7 % C H A N G E , $ 1 8 2 ,3 9 6 , 2 . 9 % T O T A L C a lif o rn ia A v e n u e , 1 . 1 % C H A N G E , $ 1 6 5 ,2 4 6 , 2 . 6 % T O T A L
A ll G e o A re a To t a ls 2 0 2 4 Q 3 S A L E S TA X A M O U N T S B a la n c e o f J u ris d ic t io n ,
$ 3 ,7 5 4 ,5 3 4 , 5 1 . 6 % T O T A L
S t a n f o rd S h o p p in g C e n t e r,
$ 1 ,7 3 8 ,0 7 5 , 2 3 . 9 % T O T A L
G re a t e r D o w n t o w n ,
$ 8 2 1 ,3 4 0 , 1 1 . 3 % T O T A L
E l C a m in o R e a l a n d M id t o w n ,
$ 6 1 0 ,3 1 7 , 8 . 4 % T O T A L
T o w n A n d C o u n t ry S h o p p in g C e n t e r, $ 1 8 5 ,5 0 5 , 2 . 6 % T O T A L
C a lif o rn ia A v e n u e ,
$ 1 6 3 ,4 2 7 , 2 . 2 % T O T A L
A ll G e o A re a To t a ls 2 0 2 3 Q 3 S A L E S TA X A M O U N T S
B U S I N E S S T O B U S I N E S S ,
- 2 2 . 5 % C H A N G E , $ 2 ,2 2 8 ,7 7 3 ,
3 1 . 4 % T O T A L
G E N E R A L R E T A I L ,
- 0 . 3 % C H A N G E , $ 1 ,8 2 8 ,0 1 4 ,
2 5 . 7 % T O T A L
F O O D P R O D U C T S ,
3 . 8 % C H A N G E ,
$ 1 ,3 4 9 ,5 2 4 ,
1 9 . 0 % T O T A L
T R A N S P O R T A T I O N ,
- 1 9 . 4 % C H A N G E ,
$ 1 ,3 1 5 ,6 8 6 ,
1 8 . 5 % T O T A L
M I S C E L L A N E O U S , 2 8 . 2 % C H A N G E ,
$ 2 6 3 ,5 0 9 , 3 . 7 % T O T A L
C O N S T R U C T I O N ,
2 0 4 . 6 % C H A N G E , $ 1 1 4 ,0 0 6 ,
1 . 6 % T O T A L
P a lo A lt o c it y w id e 2 0 2 4 Q 3 S A L E S T A X A M O U N T S
B U S I N E S S T O B U S I N E S S ,
$ 2 ,8 7 4 ,0 0 3 , 3 6 . 5 % T O T A L
G E N E R A L R E T A I L ,
$ 1 ,8 3 3 ,1 1 9 ,
2 3 . 3 % T O T A L
F O O D P R O D U C T S ,
$ 1 ,3 0 0 ,1 4 1 ,
1 6 . 5 % T O T A L
T R A N S P O R T A T I O N ,
$ 1 ,6 3 2 ,0 9 3 2 0 . 7 % T O T A L
M I S C E L L A N E O U S , $ 2 0 5 ,6 0 4 ,
2 . 6 % T O T A L
C O N S T R U C T I O N , $ 3 7 ,4 2 7 ,
0 . 5 % T O T A L
P a lo A lt o c it y w id e 2 0 2 3 Q 3 S A L E S T A X A M O U N T S City of Palo Alto Geo Area & Citywide Pie Charts
Item 10
Attachment A - 2024 Q3 Sales Tax
Digest Summary
Item 10: Staff Report
Pg.
15 Packet Pg. 240 of 240