sections 66321, subdivision (b)(4)(B), which is referenced in section 66323, subdivision (a)(2)(B) as would govern a unit described here in the Ordinance, requires a height allowance of “18 feet for a detached accessory dwelling unit on a lot with an existing or proposed single family or multifamily dwelling unit that is within one-half of one mile walking distance of a major transit stop or a high- quality transit corridor… A local agency shall also allow an additional two feet in height to accommodate a roof pitch on the accessory dwelling unit that is aligned with the roof pitch of the primary dwelling unit.” Footnote 5 in Table 1 of Section
18.09.030 provides for these allowances, the City must amend the Ordinance to to comply with State ADU law and avoid contradictory provisions.
3. Section 18.09.030 Table 1 – Unit Allowance – The Ordinance states in Single Family residence only “1 ADU and 1 JADU” are permitted. This prohibits the combination of units subject to Government Code section 66323, subdivision (a)(1) and (a)(2).
Government Code section 66323 states, “Notwithstanding Sections 66314 to 66322, inclusive, a l ocal agency shall ministerially approve an application for a building permit within a residential or mixed-use zone to create any of the following: (1) One accessory dwelling unit and one junior accessory dwelling unit per lot with a proposed or existing single-family dwelling…(A) The accessory dwelling unit or junior accessory dwelling unit is within the proposed space of a single family dwelling or existing space of a single-family dwelling or accessory structure.” Subparagraph (2) permits “[o]ne detached, new construction, accessory dwelling unit that does not exceed four-foot side and rear yard setbacks.” The use of the term “any” followed by an enumeration of by-right ADU types permitted indicate that any of these ADU types can be combined on a lot zoned for single-family dwellings.
T
his permits a homeowner, who meets specified requirements, to create one converted ADU; one detached, new construction ADU; and one JADU. Thus, if the local agency approves an ADU that is created from existing (or proposed) space, and the owner subsequently applies for a detached ADU (or vice versa) that meets the size and setbacks pursuant to the subdivision, the local agency cannot deny the application, nor deny a permit for a JADU under this section.
Limiting single-family primary dwelling lots to one ADU and one JADU prevents property owners from creating ADUs by-right under section 66323. Therefore, the City must amend the Ordinance to allow for all by-right ADU combinations.
4. S
ection 18.09.030 (d) – Delay of Enforcement – The Ordinance states, “The establishment of accessory dwelling units and junior accessory dwelling units pursuant to this section shall not be conditioned on the correction of non- conforming zoning conditions; provided; however, that nothing in this section shall limit the authority of the Chief Building Official to require correction of building standards relating to health and safety.” However, Government Code
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section 66331 states, “In enforcing building standards pursuant to Article 1 (commencing with Section 17960) of Chapter 5 of Part 1.5 of Division 13 of the Health and Safety Code for an accessory dwelling unit described in subdivision (a) or (b), a local agency, upon request of an owner of an accessory dwelling unit for a delay in enforcement, shall delay enforcement of a building standard, subject to compliance with Section 17980.12 of the Health and Safety Code: (a) The accessory dwelling unit was built before January 1, 2020. (b) The accessory dwelling unit was built on or after January 1, 2020, in a local jurisdiction that, at the time the accessory dwelling unit was built, had a noncompliant accessory dwelling unit ordinance, but the ordinance is compliant at the time the request is made.” Therefore, the City must add language allowing delay of enforcement.
5. Section 18.09.030 (e) – Sprinklers – The Ordinance states, “The installation of fire sprinklers shall not be required in an accessory dwelling unit if sprinklers are not required for the primary residence.” However, Government Code section 66323, subdivision (c) states, “The installation of fire sprinklers shall not be required in an accessory dwelling unit if sprinklers are not required for the primary residence. The construction of an accessory dwelling unit shall not trigger a requirement for fire sprinklers to be installed in the existing multifamily dwelling.” Therefore, City must add the second sentence in the preceding citation to the Ordinance to be consistent with State ADU law.
6. Section 18.09.030 (g) – JADUs and Interior Entry – The Ordinance states, “Except for JADUs, attached units shall not have an interior access point to the primary dwelling.” However, Government Code section 66633, subdivision (e)(2) states, “If a permitted junior accessory dwelling unit does not include a separate bathroom, the permitted junior accessory dwelling unit shall include a separate entrance from the main entrance to the structure, with an interior entry to the main living area.” Therefore, the City must amend the Ordinance accordingly.
7. Section 18.09.030 (h) – Conversion and Expansion – Th Ordinance states, “Conversion of an existing accessory structure pursuant to Government Code section 65852.2(e)(1)(A) may include reconstruction in-place of a non- conforming structure, so long as the renovation of reconstruction does not increase the degree of non-compliance, such as increased height, envelope, or further intrusion into required setbacks. Any portion of an ADU that exceeds the envelope of the existing accessory structure shall be subject to Section
18.09.040.” However, Government Code section 66323, subdivision (a)(1)(A) provides for, “an expansion of not more than 150 square feet beyond the same physical dimensions as the existing accessory structure. An expansion beyond the physical dimensions of the existing accessory structure shall be limited to accommodating ingress and egress.” The City must amend the Ordinance to allow for such an expansion without reference to Section 18.09.040.
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8. Section 18.09.030 (j) and 18.09.040 (m)2. – Separate Sale1 – The Ordinance notes that ADUs “shall not be sold separately from the primary residence.” However, Government Code section 66341 creates a narrow exception to allow separate conveyance of an ADU to a qualified buyer if the property was built or developed by a qualified nonprofit corporation, among other things. The City must note the exception.
9. Section 18.09.030 (m), 18.09.040 (g) and (j) 2.C. – Tree Ordinance – The Ordinance makes several references to Chapter 8.10, the City’s Tree and Landscape Preservation and Management regulations, and requires that elements of ADU development conform to Chapter 8.10. However, Government Code section 66317, subdivision (c) states that “No local ordinance, policy, or regulation shall be the basis for the delay or denial of a building permit or a use permit under this section.” The City should amend the Ordinance to ensure that compliance with this ordinance section will not delay or cause the denial of an ADU or JADU building permit or use permit.
10. Section 18.09.040 (a), Table 2– JADUs and Development Standards – The Ordinance describes JADUs in the section “Units Subject to Local Standards” and creates governance of JADUs that “do not qualify for approval under section 18.090.030.” However, all JADUs are created pursuant to Government Code section 66323, subdivision (a)(1), and would therefore be approved under section 18.090.030. the City must remove references to JADUs in this section.
11. Section 18.09.040 (c) – Multifamily ADU Allowances – In the “Units Subject to Local Standards” section, the Ordinance states, “A single-family dwelling shall exist on the lot or shall be constructed on the lot in conjunction with the construction of an ADU/JADU.” However, Government Code section 66314, subdivision (a)(2) permits ADUs when “The lot is zoned to allow single-family or multifamily dwelling residential use and includes a proposed or existing dwelling.” The City must amend the Ordinance to include multifamily as well.
12. Section 18.09.040 (h) – Local Historic Register – The Ordinance applies special requirements to properties “listed on the Palo Alto Historic Inventory.” However, Government Code section 66314, subdivision (b)(1) states that ADU ordinances may “Impose objective standards on accessory dwelling units that include, but are not limited to, parking, height, setback, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historical Resources.” Therefore, the use of a local historic register such as the Palo Alto
1Please note that Government Code section 66342 gives local jurisdictions the option of adopting an ordinance to provide for the separate conveyance of an ADU from its primary dwelling.
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Historic Inventory would be inconsistent with State ADU Law. The City must remove this reference.
13. Section 18.09.040 (j)(4) – “Street Side Setbacks” – The Ordinance states, “For corner lots developed as a single-family home only, when an existing or proposed primary dwelling unit is expanded or constructed simultaneously with the construction of a new ADU/JADU, all structures may be built to a 10-foot street-side setback and a 16-foot front yard setback, regardless of the presence of a special setback, unless a fire or life-safety regulation requires a greater setback.” A street side setback for a corner lot is in essence a front setback.
Government Code section 66321, subdivision (b)(3) states that a front setback may not preclude the development of an 800 square foot unit. The City must note the exception.
14. Section 18.09.040 (l) – Parking Exceptions – The Ordinance does not provide for exemptions to parking requirements pursuant to Government Code section 66322, subdivisions (a)(1) through (a)(6):
“(1) Where the accessory dwelling unit is located within one-half of one mile walking distance of public transit.
(2) Where the accessory dwelling unit is located within an architecturally and historically significant historic district.
(3) Where the accessory dwelling unit is part of the proposed or existing primary residence or an accessory structure.
(4) When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit.
(5) When there is a car share vehicle located within one block of the accessory dwelling unit.
(6) When a permit application for an accessory dwelling unit is submitted with a permit application to create a new single-family dwelling or a new multifamily dwelling on the same lot, provided that the accessory dwelling unit or the parcel satisfies any other criteria listed in this subdivision.
Therefore, the City must amend the Ordinance to add the required exemptions.
15. 18.09.040 (l)(2) – Garage Conversion and Replacement Parking – The Ordinance states, “Replacement parking is required when an existing attached garage, carport, or covered parking structure is converted to a JADU….” Local agencies may not require parking as a condition to permitting a JADU, even when the JADU is converted from an attached garage.
2 The City must amend
the Ordinance accordingly.
2 Gov. Code, § 66334, subd. (a).
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16. 18.09.050 (a) - JADUs in Attached Garages – The Ordinance states, “A junior accessory dwelling unit may only be created on a lot in a single-family residential zone with an existing or proposed single family residence. A junior accessory dwelling unit shall be attached to or created within the walls of an existing or proposed primary dwelling.” However, Government Code section 66333, subdivision (d) states that for the purposes of siting JADUs, “enclosed uses within the residence, such as attached garages, are considered a part of the proposed or existing single-family residence.” Therefore, the City must amend the Ordinance to include a reference to enclosed uses.
17. 18.09.050 (b)(i) and (ii) – JADU Kitchen Facilities – The Ordinance states, “A cooking facility with appliances shall mean, at minimum a one burner installed range, an oven or convection microwave, a 10 cubic foot refrigerator and freezer combination unit, and a sink that facilitates hot and cold water.” It also states “[a] food preparation counter and storage cabinets shall be of reasonable size in relation to a JADU if they provide counter space equal to a minimum 24- inch depth and 36-inch length.” However, Government Code section 66333, subdivision (f) requires “the permitted junior accessory dwelling unit to include an efficiency kitchen, which shall include all of the following: (1) A cooking facility with appliances. (2) A food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit.” The terms “appliances” and “reasonable size” are broad provisions in statute. Therefore, the Ordinance is more stringent than state JADU law. The City must remove the quoted language.
18. 18.09.050 (b) iii. – JADU Entry – The Ordinance states, “JADUs may share sanitation facilities (bathrooms, laundry facilities, etc.) with the primary unit.” However, Government Code section 66333, subdivision (e)(2) states “If a permitted junior accessory dwelling unit does not include a separate bathroom, the permitted junior accessory dwelling unit shall include a separate entrance from the main entrance to the structure, with an interior entry to the main living area.” Therefore, the City must amend the Ordinance to comply with State ADU Law.
19. 18.09.050 (e) – JADU Term Limits – The Ordinance requires that JADU deed restrictions “[do] not permit short-term rentals”. However, Government Code section 66333, subdivision (c) requires only “(1) A prohibition on the sale of the junior accessory dwelling unit separate from the sale of the single-family residence, including a statement that the deed restriction may be enforced against future purchasers. (2) A restriction on the size and attributes of the junior accessory dwelling unit that conforms with this article.” No additional provisions may be added to the listed deed restrictions in statute. JADU Law does not provide for rental limits to JADUs and therefore the City may not require these term limits. Therefore, the City must amend the Ordinance accordingly.
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20. 18.04.030 (a)(75)(A) – Kitchen Requirements – The Ordinance requires “major appliances” and then states, “For ADUs, major appliances shall mean a minimum two burner installed range, and an oven or convection microwave, as well as a minimum 11 cubic foot freezer and refrigerator combination unit.
Kitchens shall also include counter space for food preparation equal to a minimum 24-inch depth and 36-inch length, and a sink that facilitates hot and cold water.” However, Government Code section 66313, subdivision (a) defines ADUs as needing only “permanent provisions for living, sleeping, eating, cooking, and sanitation” and does not describe them any further. Additionally, section 66313, subdivision (a)(1) allows ADUs to be an efficiency unit, which Health and Safety Code section 17958.1 states may have “partial kitchen” facilities. Therefore, the establishment of appliance and counterspace minimums are inconsistent with State ADU Law. The City must amend the Ordinance accordingly.
Please note that the City has two options in response to this letter. 3 The City can either
amend the Ordinance to comply with State ADU Law4 or adopt the Ordinance without changes and include findings in its resolution adopting the Ordinance that explain the reasons the City believes that the Ordinance complies with State ADU Law despite HCD’s findings.
5 If the City fails to take either course of action and bring the Ordinance into compliance with State ADU Law, HCD must notify the City and may notify the California Office of the Attorney General that the City is in violation of State ADU Law.6
HCD appreciates the City efforts in the preparation and adoption of the Ordinance and welcomes the opportunity to assist the City in fully complying with State ADU Law.
Please feel free to contact Mike Van Gorder at [email protected] if you have any questions.
Sincerely,
Jamie Candelaria
Senior Housing Accountability Unit Manager
Housing Policy Development Division
3 Gov. Code, § 66326, subd. (c)(1).
4 Gov. Code, § 66326, subd. (b)(2)(A).
5 Gov. Code, § 66326, subd. (b)(2)(B).
6 Gov. Code, § 66326, subd. (c)(1).
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State ADU/JADU Law Statutory Conversion Table
New Government Code Sections Previous Government Code Sections Article 1. General Provisions
66310 65852.150 (a)
66311 65852.150 (b)
66312 65852.150 (c)
66313 General Definition Section
65852.2 (j)
65852.22 (j)
Article 2. Accessory Dwelling Unit Approvals
66314 65852.2(a)(1)(A), (D)(i)-(xii), (a)(4)-(5)
66315 65852.2 (a)(8)
66316 65852.2 (a)(6)
66317 65852.2 (a)(3), (a)(7)
66318 65852.2 (a)(9), 65852.2 (a)(2)
66319 65852.2 (a)(10)
66320 65852.2 (b)
66321 65852.2 (c)
66322 65852.2 (d)
66323 65852.2 (e)
66324 65852.2 (f)
66325 65852.2 (g)
66326 65852.2 (h)
66327 65852.2 (i)
66328 65852.2 (k)
66329 65852.2 (l)
66330 65852.2 (m)
66331 65852.2 (n)
66332 65852.23.
Article 3. Junior Accessory Dwelling Units
66333 65852.22 (a)
66334 65852.22 (b)
66335 65852.22 (c)
66336 65852.22 (d)
66337 65852.22 (e)
66338 65852.22 (f)-(g)
66339 65852.22 (h)
Article 4. Accessory Dwelling Unit Sales
66340 65852.26 (b)
66341 65852.26 (a)
66342 65852.2 (a)(10)
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November 26, 2024
Mike Van Gorder
Housing & Community Development
Division of Housing Policy Development
2020 W. El Camino Avenue, Suite 500
Sacramento, CA 95833
[email protected]
Dear Mr. Van Gorder,
This letter represents the City of Palo Alto’s response to HCD’s letter dated October 29, 2024.
1. HCD Comments 1, 3, 7-8, 11-12, 15, and 19: the City will update its ordinance to incorporate this feedback by June 30, 2025.
2. HCD Comments 2, 4-6, 16, and 18: Unless HCD requires local implementing ordinances match verbatim state law, no change is needed as the local ordinance complies with state law.
3. HCD Comment 9: the City’s Tree Ordinance is included in the local ADU ordinance and is not a separate policy document or ordinance; the City could restate that language but this seems unnecessarily duplicative. Accordingly, the City does not a believe a change needed.
4. HCD Comment 10: there continues to a be a misunderstanding regarding this section. Nothing about this section precludes JADU production in compliance with state law. This section sets forth incentives that allow a JADU to be constructed in conjunction with new development and not converted after the fact. Table 2 is more permissive than state law and has yielded a significant increase in JADU production in Palo Alto.
5. HCD Comment 13: This is a local incentive for homeowners on corner lots. Nothing about this incentive precludes construction of an ADU in compliance with state law. The City does not a believe a change needed.
6. HCD Comment 14: The City does not require parking for J/ADUs. The local implementing ordinance does not need include every provision or exemption of state law.
7. HCD Comments 17 and 20: State law requires J/ADUs be reviewed ministerially against objective criteria. HCD’s comment would have the City use subjective criteria to assess reasonableness and introduce discretionary decision-making. If HCD has objectively defined a reasonableness standard, please share, otherwise, the City does not believe a change is warranted.
Please advise if HCD disagrees with any of the City’s responses. To meet our June 2025 timeframe reported in comment response 1 above, we request a meeting before January 31, 2025, if necessary.
Sincerely,
Jonathan Lait
Director of Planning and Development Services
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City of Palo Alto-Notes re ADU reforms, 2025
John Kelley
Apr 23, 2025
Ver. 0.2
These notes summarize some of the key points made in the accompanying document, “City of Palo Alto-Notes re 2025-03 ADU reforms--Revised 2025-04-23.” Please see that document for details.
Based on State ADU Regulations
1. Because the City does not charge impact fees for additions to or scrapes of single-family residences (SFRs), proportionality requires that impact fees be eliminated for ADUs. [No. 26]
1.1. As a matter of equity, the City should also refund improperly charged ADU fees back to at least March 23, 2023. [No. 36]
2. Additional local design, zoning, and other standards may not be imposed on 66323 Units. The 2025-01 HCD ADU Handbook makes clear, at p. 20, that development of 66323 Units may not be curtailed by local standards that penalize such "state exemption" ADUs and JADUs. (This principle applies to all four categories of ADUs and JADUs identified in Gov. C. sec. 66323.) This principle requires modifying Palo Alto’s regulation of 66323 Units in many ways. [Nos. 30, 30A, 30B, and 30C]
2.1. Palo Alto calculates allowable heights for all ADUs differently from single-family homes in flood zones.
2.2. Palo Alto calculates FAR for basements for all ADUs differently from single-family homes.
2.3. Palo Alto incorrectly calculates FAR for ADUs, and possibly single-family homes as well, requiring measurements "to the outside of stud walls...." [ See also No. 29]
2.4. Palo Alto generally prohibits ADUs from either (i) using an existing sewer line for a single-family residence to convey sewage from an ADU to the main sewer system or (ii) running a 1 Item 10
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separate sewer line for an ADU under a single-family home, effectively requiring long, sometimes tortuous, and frequently expensive separate sewer runs for ADUs.
2.5. Palo Alto, through the City of Palo Alto Utilities, prohibits ADUs from obtaining their own, separate municipal utilities. This too may operate as a constraint on the production of 66323 Units.
Homeowners should, at their sole option, have the choice of whether to connect ADUs, both attached and detached, directly to CPAU utilities.
2.6. Just as Urban Forestry review should not be part of permitting ADUs or JADUs, CPAU should not review ADU or JADU permit applications unless the applicant specifically requests such permitting review in writing as part of the permit application.
2.7. Palo Alto should (A) use HCD tools for determining whether a given parcel is within 1/2 mile of transit, and (B) acknowledge that (i) non-VTA bus routes are relevant to determining such areas, (ii) the appropriate unit of analysis is a bus stop, not a bus route, and (iii) the requisite periodicity established by state law has changed recently. This requires that Palo Alto's current maps, wherever they are maintained and however they are shared with the public, be revised.
3. Fire review criteria should focus on "fire area," not FAR. [No. 23]
4. No assumed property line between two buildings. [No. 24]
5. Constructing an ADU does not change a Group R occupancy, unless an authorized representative of a local agency makes a specific, written finding regarding a particular project. [No. 25]
6. Palo Alto must allow an attached ADU up to 800 sf in size to be built out to four-foot side and rear setbacks. [No. 31A]
6.1. In other words, it need not be confined to the setbacks for the primary dwelling on the lot.
6.2. Such an ADU would enjoy the height benefits provided by Gov.
C. subd. 66321(b)(4)(D); as a result, in most parts of the City, it could be built to 25', provided that it does not have more than two stories.
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More Effective Local Regulations For Stimulating ADU Production
1. Palo Alto should allow for separate conveyance of ADUs under Gov.
C. sec. 66342. [No. 32]
2. Palo Alto should adopt a 1,200 sf size limit for all ADUs. [No. 39]
3. Palo Alto should create an alternative, local, 20' height limit, specifically for two-story, detached, Table 2 ADUs, with a daylight plane. [No. 38]
4. Palo Alto should experiment with meaningful financial incentives to increase ADU production, totaling $5 million in grants and on-bill financing over two years. [No. 41]
4.1. Up to 50 $25k grants for pre-designed ADUs.
4.2. Up to 50 $25k grants based on CalHFA program.
4.3. Up to 25 on-CPAU-bill financings for first $100k of ADU costs.
5. The City should waive all impact and permitting fees on both ADUs and JADUs. [No. 37]
5.1. If the City does charge any impact fees on ADUs, however, applicants should be allowed to defer them without recording a lien against their properties. [No. 27]
6. End the "loser lottery." Do not condition permit approval of ADUs or JADUs on charging applicants for CPAU infrastructure upgrades, a type of impermissible demand for public improvements, and give applicants, at their sole option, the ability to obtain one or more separate utility services for ADUs. [No. 34]
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1 City of Palo Alto-Notes re 2025-03 ADU reforms (selected summary points for City Staff and City Council in larger font, comments from 2024-10 HCD L2025-04-23 Ver. 0.5(WIP draft).
Category No. Issue Reference(s)
"18.09.030UnitsExemptfromGenerallyApplicableLocalRegulations" 1 The HCD's comments concern additional height requirements for, , detached ADUs witihin a half mile of a major transit stop or a high-quality transit corridor,as well as additional height for matching the roof pitch of the primary dwelling. Those changes should be adopted.
Please also see the further discussions below, "Additional concerns re setbacks, daylight plane, and height," and "Palo Alto should use HCD tools for determiningwhether a given parcel is within 1/2 mile of transit." 2024-10 HCD Letter,#2
2These proposed changes should be adopted.
2024-10 HCD Letter,#3
3This proposed change, which concerns Gov. C. sec. 66331, should be made. 2024-10 HCD Letter,#4
4This proposed change, which refers to ADU construction not triggering "a requirement for fire sprinklers to be installed in the existing multifamily dwelling," shouldbe made. 2024-10 HCD Letter,#5
5The proposed change, which concerns JADUs without a separate bathroom needing "a separate entrance from the main entrance to the structure, with an interiorentry to the main living area," should be adopted. 2024-10 HCD Letter,#6
6 As indicated by the HCD, the City should amend this portion of the Ordinance to allow for the expansion for ingress and egress pursuant to Gov. C. subd.66323(a)(1)(A).
Although not specifically noted by HCD:
(a) in the Ordinance, "renovation of reconstruction..." should perhaps read, "renovation or reconstruction...."; and, 2024-10 HCD Letter,#7 7Both sections of the Ordinance should allow for the separate sale of an ADU "built or developed by a qualified nonprofit corporation, among other things," to aqualified buyer pursuant to Gov. C. sec. 66341. 2024-10 HCD Letter,#8
Section 18.09.030 (a) iii -- "Footnote 5 in Table 1 of Section 18.09.030 provides for these allowances, the City must amend the Ordinance to comply withState ADU law and avoid contradictory provisions." Section 18.09.030 Table 1 – . "This permits a homeowner, who meets specified requirements, to create one converted ADU; one detached, newconstruction ADU; and one JADU." Section 18.09.030(d) – . "Therefore, the City must add language allowing delay of enforcement." Section 18.09.030(d) – . "Therefore, City must add the second sentence in the preceding citation to the Ordinance to be consistent with State ADUlaw.." Section 18.09.030 (g) – JADUs and Interior Entry. "Therefore, the City must amend the Ordinance accordingly." Section 18.09.030(h) – .
Sections 18.09.030(j) & 18.09.040(m)(2) – .
Height.
Unit Allowance
Delay of Enforcement
Sprinklers
Conversion and Expansion
Separate Sale
e.g.
Gov. C. subd.66321(b)(4)(B)Gov. C. subd.66323(a)(1)(C)Gov. C. subd.66317(c) Gov. C. sec. 66323
Gov. C. sec. 66331
Gov. C. subd.66323(d)
Gov. C. subd.66333(e)(2)
Gov. C. subd.66323(a)(1)(A)
Gov. C. subd. 66341
(b) if the ADU being expanded for ingress and egress is a 66323 Unit (formerly sometimes known as a statewide exemption ADU) under Gov. C. subd.66323(a)(1), then, in addition, such an expansion should not be subject to Section 18.09.040.
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2 8
(a) All explicit or implicit references to any of the City's tree or landscape regulations, including those in PAMC Chap. 8.10, "Tree and Landscape Preservation andManagement," should be deleted from the ADU Ordinance. (b) PAMC Chap. 8.10 should be amended to make clear that it may not be applied or enforced with regard to ADUs, pursuant to Gov. C. subd. 66317(c). (c) Any review of an ADU permit application by the City's Public Works Urban Forestry Section, or any other part of the City seeking information or review withregard to the City's tree or landscape regulations, should cease, pursuant to Gov. C. subd. 66317(c). (d) These actions are consistent with Governor Newsom's recent . As explained on February 6, 2025 in a , "Theexecutive order issued by Governor Newsom," among other things, "[d]irects the State Board of Forestry to accelerate its work to adopt regulations known as“Zone 0,” which will require "an ember-resistant zone within 5 feet of structures located in the highest fire severity zones in the state." From the recent, devastating fires in Southern California and advances in fire science, we know that "Zone 0" protections are critical to enhancing fire safety forCalifornia homes. The current Tree Ordinance should not prohibit Palo Altans from defending their homes against the increasing and increasingly great threats ofwildfires resulting from catastrophic global heating. 2024-10 HCD Letter,#9
"18.09.040UnitsSubject toLocalStandards." 9As indicated by the HCD, the City should amend this portion of the Ordinance to "remove references to JADUs in this section," because JADUs are createdpursuant to Gov. C. subd. 66323(a)(1), "and would therefore be approved under section 18.090.030." 2024-10 HCD Letter,#10
10As indicated by the HCD, the City should amend this portion of the Ordinance to clarify that ADUs may be built when a "lot is zoned to allow single-family ormultifamily dwelling residential use...," pursuant to Gov. C. subd. 66314. 2024-10 HCD Letter,#11
11 As indicated by the HCD, the City should amend this portion of the Ordinance to delete any reference to the Palo Alto Historic Inventory, pursuant to Gov. C.subd. 66314(b)(1).
Although not specifically noted by HCD, this also means that the City should refrain from any review of an ADU permit application by the City's Planningpersonnel or any other part of the City with reference to the Palo Alto Historic Inventory, pursuant to Gov. C. subd. 66317(c). 2024-10 HCD Letter,#11
12As indicated by the HCD, the City should amend this portion of the Ordinance to make clear that, in the case of a street-side setback, as well as a front setback,such a setback "may not preclude the development of an 800 square foot unit," pursuant to Gov. C. subd. Gov. C. subd. 66321(b)(3). 2024-10 HCD Letter,#13
13As indicated by the HCD, the City should amend this portion of the Ordinance to include the parking exceptions included in Gov. C. subds. 66322(a)(1)-(a)(6),, if an ADU is within a half mile of public transit. 2024-10 HCD Letter,#14
14As indicated by the HCD, the City "may not require parking as a condition to permitting a JADU, even when the JADU is converted from an attached garage,"citing Gov. C. subd. 66334(a) in a footnote. This change should be made. 2024-10 HCD Letter,#15
Sections 18.09.030(m) & 18.09.040(g) and (j)(2)(C) –
Section 18.09.040(a) – JADUs and Development Standards.
Section 18.09.040(c) – Multifamily ADU Allowances.
Section 18.09.040(h) – Local Historic Register.
Section 18.09.040 (j)(4) – Street-Side Setback.
Section 18.09.040 (l) – Parking Exceptions.
18.09.040 (l)(2) – Garage Conversion and Replacement Parking.
Tree Ordinance.
Executive Order N-18-25 separate announcement
Gov. C. subd.66317(c)
Gov. C. subd.66323(a)(1)(A)
Gov. C. subd. 66314
Gov. C. subd.66314(b)(1)Gov. C. subd.66317(c)
Gov. C. subd.66321(b)(3)
Gov. C. subds.66322(a)(1)-(a)(6)
Gov. C. subd.66334(a)
e.g.
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15As indicated by the HCD, the City should amend this portion of the Ordinance to clarify that "'enclosed uses within the residence' include 'attached garages,[which] are considered a part of the proposed or existing single-family residence.'” Gov. C. subd. 66333(d). 2024-10 HCD Letter,#16
16As indicated by the HCD, the City should amend this portion of the Ordinance to conform with the broad language of Gov. C. subd. 66333(f), deleting the City'smore stringent requirements regarding JADU kitchens. 2024-10 HCD Letter,#17
17As indicated by the HCD, the City should amend this portion of the Ordinance to conform with the precise terms of Gov. C. subd. 66333(e)(2). 2024-10 HCD Letter,#18
18As indicated by the HCD, Gov. C. subd. 66333(c) does not include authority for prohibiting short term rentals, and the City must delete such provisions from its listof deed restrictions. 2024-10 HCD Letter,#19
"18.04.030Definitions"
19 .
As indicated by the HCD, Gov. C. subd. 66313(a) does not specifically define cooking facilities, and HSC sec. 17958.1 allows for "'partial kitchen'" facilities.Accordingly, the City must delete its appliance and counterspace requirements for ADUs.
Although not specifically noted by HCD, relying upon those same code sections, an ADU applicant constructing an "efficiency unit" should also be allowed toprovide only "partial .... bathroom facilities," as described in HSC sec. 17958.1. 2024-10 HCD Letter,#20
18.09.050 (a) - JADUs in Attached Garages.
18.09.050 (b)(i) and (ii) – JADU Kitchen Facilities.
18.09.050 (b) iii. – JADU Entry.
18.09.050 (e) – JADU Term Limits.
18.04.030(a)(75)(A) – Kitchen Requirements
Gov. C. subd.66333(d)
Gov. C. subd. 66333(f)
Gov. C. subd.66333(e)(2)
Gov. C. subd.66333(c)
Gov. C. subd.66313(a)HSC sec. 17958.1
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20 Combine building permit applications and demo permit applications for ADUs, and makeresponsibilities for matters typically handled by contractors (such as securing a J#) post-permit-issuance, rather than pre-permit-issuance, requirements. Suchchanges should be memorialized in Chp. 18.09 of the PAMC. " .Adds a requirement fora local agency toreview and issue ademolition permit for“a detached garagethat is to be replacedwith an ADU” at thesame time it reviews,and issues permits for,the ADU construction.(Gov. Code, § 66314,subd. (e).) Alsoprohibits permittingagencies requiringapplicants to “providewritten notice or post aplacard for thedemolition of adetached garage ...unless the property islocated within anarchitecturally andhistorically significantdistrict.” (Gov. Code, §66314, subd. (f).)"2025-01 HCD ADUHandbook, p. 14 21 The 60-day time limit for approving or denying an ADU or JADU permit application should be (a) strictly observed, and (b)calculated using the equivalent of a "chess clock" displayed in the City's online permitting system. Such changes should be memorialized in Chp. 18.09 of thePAMC. " .Requires a permittingagency to eitherapprove or deny(replacing the formerlanguage “act on”) anapplication to create orserve an ADU orJADU within 60 days Integrate building and demo permit applications for ADUs.
Demolition Permits
Enforce the 60-day time limit. Permitting Process
Compare:
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Prohibit reviewers from adding new plan check comments after C1 plan check comments have been returned to anapplicant unless such new plan check comments (a) only note a failure to comply with prior plan check comments, or (b) are directed to and concern onlychanges in submittal materials made in response to earlier plan check comments. Such changes should be memorialized in Chp. 18.09 of the PAMC. 23 The City's "Fire Department Checklist for
Residential Plan Review" includes a misleading question, which can lead to an incorrect plan check comment. It asks: "Are you doing an addition that will resultin the total floor area (including basements and attached garages) exceeding 3600 square feet?" This question refers impliciitly to PAMC subd. 16.06.140,"Section R313.2.2 NFPA 13D sprinkler systems increase in design requirements," whose numbered sub-part 2 states, "Structures where the combined fire area is3600 sq ft or larger." FAR is simply not the same as fire area. Accordingly, the fire review criteria should focus on fire area, not FAR, and the Fire Departmentchecklist should be revised accordingly. , : "[BF] FIRE AREA. The aggregate floor area enclosed and bounded by fire walls, fire barriers, exterior walls orhorizontal assemblies of a building. Areas of the building not provided with surrounding walls shall be included in the fire area if such areas are included within thehorizontal projection of the roof or floor next above." 24 Instead:
(1) Consider the two buildings as one structure with two dwelling units. This would be the same as considering one structure with an attached ADU. (2) One of the walls between the buildings to be considered as the wall separating dwelling units would require 1-hour fire-rating with 45 min. rated openingprotection (the same as fire partition requirements per CBC).
CRC R302.3.
" Obligates apermitting agency,when it denies an ADUor JADU application,to “return in writing afull set of comments tothe applicant with a listof items that aredefective or deficientand a description ofhow the applicationcan be remedied bythe applicant” within60 days from when acompleted applicationis received. (Gov.Code, §§ 66317, subd.(b); 66320, subd. (b);66335, subd. (b).)" No new-later-cycle plan check comments. Permitting AgencyDenials.
Fire review criteria should focus on "fire area," not FAR.
No assumed property line between two buildings.
See also
See, e.g.,
Cal. Fire Code (2022) sec. 202
PAMC subd.16.06.140
CRC R302.3
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26 Palo Alto recently replaced per-unit with per-square-foot impact fees to comply with prior state law. Nonetheless, it still treats ADUs unfairly, because on parcelswith existing SFRs, it does not levy impact fees on additions or even complete “scrapes.” ( video recording of the .) The proportionality example at p. 23 of the HCD’s 2025 ADU Handbook refers to “a new primary dwelling on the same site.” If a parcel in Palo Alto has an existing SFR, a new primary dwelling on that site would not trigger any impact fees under the city’s procedures. Consequently, theproportionate impact fees for an ADU of any size should also be zero.
Imposition of such impact fees on ADUs should cease immediately (and the City should refund amounts charged improperly to applicants, as discussed below). 2025-01 HCD ADUHandbook, p. 23.
"(c) (1) A local agency,special district, orwater corporation shallnot impose any impactfee upon thedevelopment of anaccessory dwellingunit less than 750square feet. Anyimpact fees chargedfor an accessorydwelling unit of 750square feet or moreshall be chargedproportionately inrelation to the squarefootage of the primarydwelling unit." Gov. C. subd. 66314(d)(8) states in part:
"[T]he construction of an accessory dwelling unit shall not constitute a Group R occupancy change under the local building code, as described in Section 310 ofthe California Building Code (Title 24 of the California Code of Regulations), unless the building official or enforcement agency of the local agency makes a writtenfinding based on substantial evidence in the record that the construction of the accessory dwelling unit could have a specific, adverse impact on public health andsafety. Nothing in this paragraph shall be interpreted to prevent a local agency from changing the occupancy code of a space that was unhabitable space or wasonly permitted for nonresidential use and was subsequently converted for residential use pursuant to this article." (Introductory language omitted.) Because the City does not charge impact fees for additions to or scrapes ofsingle-family residences (SFRs), proportionality requires that impact fees beeliminated for ADUs.
Constructing an ADU does not change a Group R occupancy, unless an authorizedrepresentative of a local agency makes a specific, written finding regarding aparticular project.
See, e.g., Palo Alto City Council meeting onNovember 18, 2024 Gov. C. subd.66324(c)(1)
Gov. C. subd. 66314
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Payment of impact fees on ADUs, among other projects, may deferred until , as now codified in , as well as ,which was updated recently based on Ord. 5645.
If any impact fees are assessed on ADUs, then homeowners should be allowed to defer payment of such fees, and the issuance of a permit to build an ADUshould not be deferred pending their payment.
But requiring that homeowners record a lien for payment of such fees is unnecessarily burdensome, time-consuming, and expensive. The City should be able tocraft other means of ensuring that such fees, if any, are paid prior to final inspection or issuance of a certificate of occupancy using the City's own permitting andinspection systems, rather than requiring a recorded lien. 28 As indicated above, the City's current impact fee regime as applied to ADUs is, at best, problematic. If the City is genuinely interested in providing more and moreaffordable housing, and if the City wishes to meet its Housing Element goals by producing more ADUs, one of the most reasonable steps would be to eliminateimpact fees on ADUs altogether.
In addition, one might have doubts about the continued constitutional validity of California's impact fee system. following the vacating of the priorsubmission of the case in , Case Number C093682, before the 3rd District Court of Appeal, is now scheduled for June 24, 2025. ,Case NumberC093682.
29 The HCD has clarified how square footage of ADUs and JADUs should be calculated:
"The CBC defines “Floor Area, Gross” as “[t]he floor area within the inside perimeter of the exterior walls of the building under consideration, exclusive of ventshafts and courts, without deduction for corridors, stairways, ramps, closets, the thickness of interior walls, columns or other features. The floor area of a building,or portion thereof, not provided with surrounding exterior walls shall be the usable area under the horizontal projection of the roof or floor above. The gross floorarea shall not include shafts with no openings or interior courts.
Government Code section 66314, subdivision (d)(8) states that a local ADU ordinance must require ADUs to comply with local building codes. Thus, when a localagency has not adopted specific changes to the CBC in its local building standards, then the CBC standards, and in this case the definition of floor area, shallapply. If the local agency has made specific amendments, additions, or deletions relating to the definition of “Floor Area” within its local building standards, thenthose altered definitions shall apply." 2025-01 HCD ADU Handbook, p. 39.
Palo Alto does ot appear to have incorporated a change to this portion of the CBC. PAMC subds. . Consequently, Palo Alto is bound by theCBC rules, requiring measurements to "the inside perimeter of the exterior walls of the building under consideration...." But Palo Alto measures "to the outside ofstud walls...." . The same considerations likely apply to lot coverage and other zoning measurements based on square footagecalculations. Therefore, Palo Alto's Municipal Code and its calculation of square footages for ADUs must be changed.
In addition, because the PAMC likely requires conformity with the CBC for single-family homes, absent specific local changes, this problem may affect thecalculation of square footages for single-family homes as well. 2025-01 HCD ADUHandbook, p. 39 If the City does charge any impact fees on ADUs, applicants should be allowed todefer them without recording a lien against their properties Indeed, the City can and should go further and simply eliminate impact fees onADUs Palo Alto incorrectly calculates square footages, including FAR, for ADUs, andpossibly single-family homes as well. .
.
SB 937 Gov. C. sec. 66007 PAMC subd.16.64.030
Oral argument
Docket of
16.04.230-240
PAMC subd. 18.04.030(a)(65)(C)
Sheetz v. County of El Dorado
See
Sheetz v.County of El Dorado
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2024-10 HCD Letter,#3
Additional local design, zoning, and other standards may not be imposed on 66323Units.
Palo Alto calculates allowable heights for all ADUs differently from single-familyhomes in flood zones.
Palo Alto calculates FAR for basements for all ADUs differently from single-familyhomes Palo Alto incorrectly calculates FAR for ADUs, and possibly single-family homesas well, requiring measurements "to the outside of stud walls...." Palo Alto generally prohibits ADUs from either (i) using an existing sewer line fora single-family residence to convey sewage from an ADU to the main sewer systemor (ii) running a separate sewer line for an ADU under a single-family home,effectively requiring long, sometimes tortuous, and frequently expensive separatesewer runs for ADUs.
The 2025-01 HCD ADU Handbook makes clear, at p. 20, that development of 66323 Units may not be curtailed by local standards that penalize such"state exemption" ADUs and JADUs. (This principle applies to all four categories of ADUs and JADUs identified in Gov. C. sec. 66323.) As the HCDhas explained:
"What design, zoning, or other local standards can be imposed on 66323 Units?A local agency may not impose development or design standards, including both local standards and standards found in State ADU Law, on 66323Units that are not specifically listed in Government Code section 66323. (Gov. Code, § 66323, subds. (a), (b).) This includes, but is not limited to,parking, height, setbacks, or other zoning provisions (e.g., lot size, open space, floor area ratio, etc.)." (Blue font deleted.). 2025-01 HCD ADUHandbook, p. 20.
Palo Alto has many ADU-specific, local standards that may not be applied to 66323 Units, including, but not limited to, the following:
(a)
See, e.g., footnotes 3 and 3 to Table 1 of Section 18.09.030 and Table 2 of Section 18.09.040, respectively. (b)
See, e.g., City of Palo Alto, "Guidebook 2024, Accessory Dwelling Unit" ("Palo Alto ADU Guidebook 2024"), p. 16: "Basements are permitted, but habitable basement space will contribute to unit size." Contrast one part of the definition of "Gross floor area" in PAMC subd.18.04.030(a)(65)(D)(i):
"D) Low Density Residential Exclusions: In the RE and R-1 single-family residence districts and in the R-2 and RMD two-family residence districts,'gross floor area' shall not include the following:
(i) Basements where the finished level of the first floor is not more than three feet above the grade around the perimeter of the buildingfoundation, shall be excluded from the calculation of gross floor area, provided that lightwells, stairwells and other excavated features comply withthe provisions of Section 18.12.070;....' (c)
PAMC subd. 18.04.030(a)(65)(C).
(See the discussion above.)
(d)
(This requirement is believed to be in a manual maintained at the Development Services office, to which I do not presently have access.) But these requirements as well go beyond the text of Gov. C. sec. 66323. (See also the discussion below of the limitedscope of utilities review of ADU building permit applications.)
.
Gov. C. sec. 66323
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(e)
(f)
Otherwise, such CPAU review may also operate as a constraint on the production of 66323 Units. The City has already determined which parts of Palo Alto have adequate water and sewer service. This is apparently includes all residential areas in Palo Alto: "ADUs are allowed on any property wheresingle- or multi-family residential is a permited use." Palo Alto ADU Guidebook 2024, p. 6. ADU and JADU applicants should simply indicate that the parcel islocated in a residential area on the title sheet of a set of plans for an ADU or a JADU. Applicants should have the option of deferring all other CPAU reviews untilafter a permit has issued. This will also facilitate contractor involvement with utilities issues. (See also the additional discussion of limitations on CPAU permittingreview below.) (g) Palo Alto should use HCD tools for determining whether a given parcel is within 1/2 mile of transit. (PLEASE NOTE: please see the further discussionimmediatley below.) 2024-10 HCD Letter,#3
Palo Alto, through the City of Palo Alto Utilities, prohibits ADUs from obtainingtheir own, separate municipal utilities. This too may operate as a constraint on theproduction of 66323 Units. Homeowners should, at their sole option, have thechoice of whether to connect ADUs, both attached and detached, directly to CPAUutilities.
Just as Urban Forestry review should not be part of permitting ADUs or JADUs,CPAU should not review ADU or JADU permit applications unless the applicantspecifically requests such permitting review in writing as part of the permitapplication.
Gov. C. sec. 66323
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Additional local design, zoning, and other standards may not be imposed on 66323 Units (continued). (h)
The HCD has prepared an "Affirmatively Furthering Fair Housing (AFFH), Data Viewer & Mapping Resources," which provides tools for determiningwhether a given parcel is or is not within 1/2 mile of transit. I have not checked this recently, but in the past I have observed that the results of usingthe HCD tool lead to different results from consulting with the City regarding the distance between particular parcels and transit. In general, I believethat the City should, at a minimum, accept the results from such HCD tools, even if the City wishes to be more generous than the state mandates.Reasons for this conclusion include the following:(i) I believe that non-VTA bus routes are relevant to determining such areas. Although I have not been able to find a public-facing, web-available toolfrom the City for determining whether or not a given parcel is within 1/2 mile of transit, based on past communications, I believe, but have notconfirmed, that the City's current maps are based on VTA bus routes. But there are other transit providers whose routes should be considered, suchas AC Transit, Stanford, and perhaps others, and, as far as I know, one cannot easily test the City's maps to determine whether such other routes areeven being considered in determining such 1/2 mile distances.(ii) Importantly, the appropriate unit of analysis is a bus stop, not a bus route. Gov. C. subd. 66321(b)(4)(B), for example, refers to this distance:"one-half of one mile walking distance of a major transit stop or a high-quality transit corridor, as those terms are defined in Section 21155 of thePublic Resources Code." The phrase "major transit stop" is significant. PRC subd. 21155(b) states, in part, " "A major transit stop is as defined in Section 21064.3, except that, for purposes of this section, it also includes major transit stops that are included inthe applicable regional transportation plan. For purposes of this section, a high-quality transit corridor means a corridor with fixed route bus servicewith service intervals no longer than 15 minutes during peak commute hours. A project shall be considered to be within one-half mile of a majortransit stop or high-quality transit corridor if all parcels within the project have no more than 25 percent of their area farther than one-half mile fromthe stop or corridor and if not more than 10 percent of the residential units or 100 units, whichever is less, in the project are farther than one-half milefrom the stop or corridor." (Emphasis added.) (iii) PRC sec. 21064.3 was recently changed. ("Amended by Stats. 2024, Ch. 275, Sec. 2. (AB 2553) Effective January 1, 2025.). It now states:"“Major transit stop” means a site containing any of the following: (a) An existing rail or bus rapid transit station. (b) A ferry terminal served by eithera bus or rail transit service. (c) The intersection of two or more major bus routes with a frequency of service interval of 20 minutes or less during themorning and afternoon peak commute periods." In terms of implications for Palo Alto's ADU ordinace, specifically with reference to height limits:(1) It is unclear how one can interrogate the City's current maps through the web. Asking regarding particular parcels is accepting a "black box"analysis which is not transparent. Homeowners are entitled to know what they can build before they incur the cost and expense of preparing a permitapplication, and the community should be able to know, for example, in the context of urging the City Council to amend its current ordinance, whichspecific areas of Palo Alto the City current considers to be within such 1/2 mile distances.
PLEASE NOTE: These are additional comments provided on 2025-03-25.
This concern applies specifically to 66323 Units, as well as to what might bedeemed "66321 Units." Palo Alto should (A) use HCD tools for determiningwhether a given parcel is within 1/2 mile of transit, and (B) acknowledge that (i)non-VTA bus routes are relevant to determining such areas, (ii) the appropriate unitof analysis is a bus stop, not a bus route, and (iii) the requisite periodicityestablished by state law has changed recently. This requires that Palo Alto'scurrent maps, wherever they are maintained and however they are shared with thepublic, be revised. 2024-10 HCD Letter,#3Gov. C. sec. 66323
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31PLEASE NOTE: Please see the further discussion immediately below. 2024-10 HCD Letter,#2
(2) It is unclear whether the City has even begun to update its analyses based on the recent changes to PRC sec. 21064.3 with its new, 20-min.standard.(3) It is unclear whether the City has taken account of non-VTA transit providers, including AC Transit and Stanford, among others.(4) It is unclear on what principled basis the City would substitute its own analyses for those of HCD.(5) And, perhaps most importantly, while I am not certain, I believe that the City has constructed its map based on bus routes, rather than bus stops.A "major transit stop" includes "the intersection of two or more major bus routes...." There is nothing on the face of PRC sec. 21064.3 requiring thatsuch bus routes be orthogonal, or even at a slight angle, to one another. In the absence of such a legislative requirement, two bus routes couldintersect by overlaping one another. Since the fundamental unit of analysis is a "major transit stop," this means that the number of "major transitstops" throughout Palo Alto is likely considerable greater than that suggested by the City's maps. In many instances, VTA, AC Transit, Stanford, andperhaps other transit servcie providers (including the City itself, whether now or in the future) run buses along the same major vehicular arteries,such as University, Embaracadero, San Antonio, Middlefield, etc. Although service may be provided by different agencies or carriers at such stops,because the same bus stop is served by multiple providers, there are likely far more that qualify as "major transit stops" under the new 20-min.standard. If the City has not undertaken such an analysis, in addition to acknowleging and accepting the results of the HCD's tools, it should alsocalculate which particular stops in Palo Alto are served with 20-min. intervals by any carrier at peak commute times. It would be sad, and, indeed,ironic, were the City not to take account of interactions between different transit providers for the purposes of assessing height limitations for ADUswhen its own "Getting Around" web page champions "the free Stanford Marguerite shuttle bus network" as complementing VTA buses.
Although not specifically noted by the HCD (see discussion of "Section 18.09.030 (a) iii -- Height," above, parts of both Table 1 of Section 18.09.030and Table 2 of Section 18.09.040 are inconsistent with state law. Among other things, "66323 Units do not have to comply with lot coverage, frontsetbacks, and design standards." The 2025-01 HCD ADU Handbook, p. 18. Cf. paragraph immediately below table at p. 20. That 66323 Units do nothave to comply with lot coverage, front setbacks, and design standards affects both Table 1 and, importantly, and Table 2 as well, in several ways:
(a) The heading for the third column from the left of Table 1 reads, "Construction of Attached ADU Within the Proposed Space of a Single-FamilyHome," and a large cell for the rows concerning setbacks, daylight plane, and maximum height states, "Underlying zone standard for Single[-]FamilyHome (ADU must be within allowable space of Single-Family Home)." (b) As for setbacks, Gov. C. subd. 66323(a)(1)(C) states, "The side and rear setbacks are sufficient for fire and safety," not that the setbacks are thesame as for the single-family home. (c) As for daylight plane requirements, none are mentioned in Gov. C. subd. 66323(a); therefore, for the same reasons discussed by the HCD in2024-10 HCD Letter, #9 (discussed above), under Gov. C. subd. 66317(c), the City may not enact additional requirements to delay an ADU or JADUbuilding permit. (d) As for maximum height, footnote (3) states, "Units built in a flood zone are not entitled to any height extensions granted to the primary dwelling."Again, under Gov. C. subd. 66317(c), the City may not enact additional requirements to delay an ADU or JADU building permit. Consequently, the Citycannot rely upon other parts of the PAMC to reduce the effective height limit for ADUs. (e) In addition, the heading for the second column from the left of Table 2 merely states, "Attached," but its problems --- regarding setbacks, daylightplane, and maximum heigh --- are analogous to those of the third column in Table 1, and they too must be corrected. (f) Both tables should incorporate the current guidance from HCD regarding two-story ADUs:
"If a detached two-story ADU can be built according to the height allowances required under State ADU Law while remaining compliant with thebuilding code, a local agency cannot deny an ADU application to create a two-story ADU, irrespective of the underlying zoning that might restrict aprimary dwelling to one story. (Gov. Code, §§ 66321, subd. (b)(4)(D); 66314, subd. (d)(8).)". 2025-01 HCD ADU Handbook, p. 25. 2024-10 HCD Letter,#3Gov. C. sec. 66323
Gov. C. subd.66321(b)(4)(B)
Gov. C. subd.66323(a)(1)(C)Gov. C. subd.66317(c)
Additional concerns re setbacks, daylight plane, and height.
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(g) While 66323 Units have a special status, including an explicit ministerial approval requirement, Gov. C. subd. 66323(a), additional concerns regarding PaloAlto's current ADU ordinance concerning setbacks, daylight plan, and height arise from consideration of Gov. C. subd. 66321. For example, while Gov. C. subd.66323(a)(1)(A) does not speak separately and explicitly to rules governing attached ADU ("The accessory dwelling unit or junior accessory dwelling unit is withinthe proposed space of a single-family dwelling or existing space of a single-family dwelling or accessory structure...."), state ADU laws still encourage and protectthe development of attached ADUs in important ways. Among other things:
Gov. C. subd. 66321(a) explicitly references "both attached and detached accessory dwelling units."Gov. C. subd. 66321(b)(2) sets floors for the maximum sizes of all ADUs and those that "provide[] more than one bedroom."Gov. C. subd. 66321(b)(4)(D) generally provides greater height limits for attached ADUs: "A height of 25 feet or the height limitation in the local zoning ordinancethat applies to the primary dwelling, whichever is lower, for an accessory dwelling unit that is attached to a primary dwelling. This subparagraph shall not require alocal agency to allow an accessory dwelling unit to exceed two stories."And Gov. C. subd. 66321(b)(3) establishes a special set of protections for "an 800 square foot accessory dwelling unit with four-foot side and rear yard setbacksto be constructed in compliance with all other local development standards." Because all of these provisions are part of one section of the Government Code, and because Gov. C. sec. 66321 should be read in harmony with Gov. C. subd.66323, along with the other parts of Article 2, an 800-sf ADU with four-foot side and rear setbacks, whether attached or detached, enjoys, among other things, theadditional height allowances provided by Gov. C. subd. 66321(b)(4)(D), and protection from any portion of any local agency ordinance that would seek to impose"[a]ny requirement for a zoning clearance or separate zoning review or any other minimum or maximum size for an accessory dwelling unit, size based upon apercentage of the proposed or existing primary dwelling, or limits on lot coverage, floor area ratio, open space, front setbacks, and minimum lot size, for eitherattached or detached dwellings...." Gov. C. subd. 66321(b)(3).
Applying these principles to Palo Alto's current ADU ordinance leads to several important conclusions, including, but not limited to, the following:
(3) Although it is perhaps a bit of an open question, I believe that the most reasonable reading of Gov. C. sec. 66321, particulary in light of Gov. C. subd. 66323,along with the other parts of Article 2, protects such an attached ADU from Palo Alto's daylight plane requirements, provided it respects the four-foot side and rearsetback requirements. 2024-10 HCD Letter,#2
Additional concerns re setbacks, daylight plane, and height.
PLEASE NOTE: These are additional comments provided on 2025-03-25. (1) Palo Alto must allow an attached ADU up to 800 sf in size to be built out to four-footside and rear setbacks; in other words, it need not be confined to the setbacks for theprimary dwelling on the lot. (2) Such an ADU would enjoy the height benefits provided by Gov. C. subd.66321(b)(4)(D); as a result, in most parts of the City, it could be built to 25', provided thatit does not have more than two stories.
Gov. C. subd.66321(b)(4)(B)
Gov. C. subd.66323(a)(1)(C)Gov. C. subd.66317(c)
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13 OTHERPOLICYCHANGES
32 Althought not required by state law, Gov. Code section 66342 gives local jurisdictions the option of adopting an ordinance to provide for the separate conveyanceof an ADU, apart from its primary dwelling, as noted by the HCD in a footnote in the 2024-10 HCD letter. Palo Alto should adopt such an ordinance as a means ofstimulating ADU production. Allowing for the separate conveyance of ADUs in Palo Alto would likely expand capital availability for ADU production considerably. 2024-10 HCD Letter,#8, fn.1
33 A Palo Alto worksheet for estimating existing electrcal loads ( ), which isreferenced by implication in Palo Alto's " " at p. 2 ("COMPLETED AND SIGNED UTILITY SERVICE APPLICATION INCLUDING UTILITYDEMANDS FOR THE REQUIRED SERVICES") essentially relies upon nameplate information, with repeated instructions to specify "Volt Amps from Label." WithPalo Alto's new "Advanced Meter Infrastructure" for electrical service, applicants can, in addition, use , which begins, "The calculation of a feeder or service load for existing installations shall be permitted to use actual maximum demand to determine the existing load under all ofthe following conditions...." Palo Alto should: (a) make clear that this alternate form of calculation existing electrical loads can be used for ADUs and JADUs; (b) provide an updated form forcalculating the resultant demand in accordance with CEC (2022) 220.87; and (c) simplify and publicize clearly instructions for obtaining historical load data fromCPAU customer service personnel or directly online through MyCPAU.
Allow for separate conveyances of ADUs under Gov. C. sec. 66342 Gov. C. sec. 66342.
res_load_calc_gh_03.24.17_dc1-emUtility Service Application CEC (2022) 220.87
Simplify and improve CPAU load calculatons.
220.87 Determining Existing Loads
CEC (2022) 220.87
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14 34 2025-01 HCD ADUHandbook, p. 33,
At present CPAU will sometimes
charge a customer for electrical infrastructure upgrades. For example, if a customer seeks to upgrade a home's electrical service to electrify the home or to addan EV charger, CPAU sometimes allocates the entire cost of that infrastructure upgrade to the customer requesting a new service, even thought the capacity ofthe existing CPAU infrastructure reached an exhaustion threshold by the load demands of all of the customers in a given local area. This can be thought of as a"loser lottery." When this policy is applied to ADUs or JADUs in the additional regulatory context of the City's newly modified reach codes, it becomes particularlyuntenable. Making it extremely difficult for ADU or JADU applicants to have gas appliances while charging them for CPAU electrical infrastructure upgradescreates a "damned if you do, and damned if you don't" choice. This is also poor public policy because CPAU infrastructure upgrades, in general, should be borneby CPAU itself or all customers, not a select few.
From an ADU and JADU regulatory perspective, such CPAU policies also violate state law. Gov. C. subd. 66314(a) makes clear that (a) only local water andsewer utilities have any proper participation in ADU and JADU permitting, and (b) even then, the only legitimate inquiry concerns "the adequacy of water andsewer services...."; once a local agency has consulted with local water and sewer utilities as to which regions with that agency's jurisdiction have adequate waterand sewer services, further involvement of local utilities in ADU and JADU permitting should end. Thus, if a local agency (a) allows water or sewer review of aparticular permit application concerning a parcel that is in an area with adequate water and sewer services, or (b) allows any other local utility to review an ADU orJADU permit application, it fails to respect and honor that portion of Gov. C. sec. 66314. Therefore, current CPAU policies concerning the "loser lottery" aredoubly problematic: electrical utilities have no role in ADU and JADU permitting, and even if the state had allowed cities to consider the adequacy of electricalservice in a local sub-region --- which is not the case --- once that determination had been made, an electrical utility should not be further involved in permittng foran ADU or JADU.
CPAU's "loser lottery" policies are troublesome when applied to 66323 Units for other reasons as well. There is no mention of electrical infrastructure upgrades inGov. C. sec. 66323, and Gov. C. subds. 66323(b)-(c) state:
"(b) A local agency shall not impose any objective development or design standard that is not authorized by this section upon any accessory dwelling unit thatmeets the requirements of any of paragraphs (1) to (4), inclusive, of subdivision (a). (c) A local agency shall not require, as a condition for ministerial approval of a permit application for the creation of an accessory dwelling unit or a junioraccessory dwelling unit, the correction of nonconforming zoning conditions." Taken together, the entirety of that section and those particular sub-divisions also prohibit the City from forcing ADU or JADU applicants to pay for CPAUinfrastructure upgrades as price for a building permit, as well as prohibiting CPAU electrical permitting review. 2025-01 HCD ADU Handbook, p. 33,concerning non-conforming zoning.
End the "loser lottery." Do not condition permit approval of ADUs or JADUs oncharging applicants for CPAU infrastructure upgrades, a type of impermissibledemand for public improvements, and give applicants, at their sole option, theability to obtain one or more separate utility services for ADUs.
Cf.
Gov. C. sec. 66314
Gov. C. sec. 66323
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A homeowner seeking to build an ADU in a flood zone will frequently be directed to complete a" ," which will likely result in a determination by the City, made using RS Means cost estimating data or software,which, without further work, frequently results in a determinaton by the City that the cost of adding an ADU is more than 50% of the current value of the primaryhome, thus preventing one from obtaining an exception to certain additional flood zone building requirements. As ordinarily followed, this procedure is irrational,failing to take reasonable account of home values in Palo Alto. Therefore, an applicant is required to seek and to pay for a custom appraisal of the home, onemore expense tacked onto the price of creating the additonal housing that our community needs. A better approach is possible. Here are three suggestions(doubtless there are more possibilities):
1. The City could acknowledge that the RS Means data and software are extremely poor indicators of the value of existing homes in Palo Alto, and it could createmore realistic estimates of home values in our community. This need not be a major undertaking requiring exceptional expenditures. (Perhaps there are studentsat local universities who might find this an interesting project and a worthwhile endeavor that could even lead to creating a profitable business. One will only knowfor sure by asking.)
2. The City, having made that acknowledgement, could entertain other approaches that are likely far more accurate than the RS Means data and softwareapproach. The question ought not to be whether the alternative is perfect, but whether it's better than the current, highly tarnished, "gold standard." The Cityshould be able to use, for example, rough data from, ., Zillow, to establish the market price of a home and then to have an optional parameter, perhaps 25% oreven 20% (and maybe an variable that changes with both the size of the house relative to the size of the lot and the age of the house) of the Zillow-estimatedFMV as an acceptable approximation of the FMV of the structure on property. Local relators might have even better ideas. Any such figures that accord with theexperience and judgments of those who probably know these values best, such as local relators, ought to be allowed in lieu of a detailed and costly appraisal forthe purposes of a flood-zone-screening analysis. Perhaps waivers or exceptions might be necessary state or federal regulators, but let's not make the process ofbuilding ADUs in Palo Alto --- even in flood zones --- any more expensive than it already is, particularly when RS Means data and software simply fail to measureactual Palo Alto home FMV values accurately.
3. Simply accept a good-faith estimate provided by a local, licensed relator. 36 In a , the HCD wrote, with respect to Palo Alto's
December, 2022 draft housing element:
"Fees and Exaction: While the element describes required fees for single family and multifamily housing developments, including impact fees, on (pp. 4-66) theelement states that impact fees/capacity fees are considered the highest in the County. In addition, on (pp. 4-67) the City recognizes that currentplanning/permitting and development fees add substantial cost to residential development." By this time, if not earlier, Palo Alto reasonably should have known that there were serious problems with its per-unit impact fees as applied to ADUs, and that, asthe City would acknowledge explicitly in the redlined ("V6") of the housing element, if not earlier that:
"Because Palo Alto has historically charged per-unit feesfor residential development, this has led to some inequitable results, as the fees for an ADU will dependnot only on the size of the ADU, but also on the size of the primary unit, with higher fees required under state law when the primary unit is smaller." V6, at p. 4-65.
The City should do the right thing and refund the impact fees that were charged on ADUs improperly from at least March 23, 2023 to the present in two distinctways:
1. At a minimum, the City should re-calculate the fees charged on a per-unit basis and refund the difference as compared with the amounts that would becharged under current rules. To follow its stated values ( , Recital A(5) in the draft resolution attached to ": "Will safeguard public trust through transparent practices and opencommunication."), this is the minimum that the City should do even to begin to make whole the homeowners who were overcharged for ADU impact fees.
2. If the City recognizes that even the current impact fee structure is improper, as discussed above, then the City should refund the entire amount of the feespreviously charged to such homeowners, as having been charged in violation of state proportionality rules for ADUs. references notedabove concerningimpact fees andproportionality.
Create a simplified approach for flood zone appraisals.
FLOOD ZONE SCREENING QUESTIONNAIRE
letter dated March 23, 2023
April, 2024 version
"City Council At Places Memo, From: MayorLauing and Vice Mayor Veenker, Meeting Date: February 24, 2025, Item Number: 8 e.g
see, e.g.
See
Refund improperly charged ADU fees.
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If the City is serious about meeting its
goals in the Housing Element, it should simply waive all such fees. Impact fees for larger ADUs can amount to tens of thousands of dollars. In addition,permitting fees are themselves consequential, sometimes amounting to several thousand dollars or more. Building more ADUs and JADUs is, perhaps, thefastest, most effective, and most demonstrably successful means of creating more and more afforedable housing in Palo Alto. We should make it easier and lessexpensive for people to build ADUs and JADUs. Waiving all such fees would send the right message and address current geopolitical conditions. Homeownersare already concerned about the effects of global tariff wars on the prices of lumber, appliances, and the other goods necessary to construct ADUs and JADUs.Cutting all such fees would show that Palo Alto is committed to meeting its housing goals even as geopolitical changes create higher construction costs. referencesnoted aboveconcerning impactfees andproportionality, as wellas the separatediscussion of simplyending impact fees onADUs. 38 By going beyond what is required by state law in terms of ADU height, the City may be able to create appropriate incentives for complying with current daylight plane standards. A simple approach would be to allow for 20' high, two-story, detached,Table 2 ADUs, on the condition that they conform with current daylight plane standards. Because the 20' height limit is greater than that contemplated in stateADU statutes for non-66323 Units, allowing for such an alternative, non-mandatory regulatory pathway might be countenanced by the HCD. 39 State law allows for 1,200 sf ADUs, and some Bay Area jurisdictions allow for such larger ADUs already. To truly reform Palo Alto's housing market and spur construction of more and more affordable housing, our community needs to embrace"next phase housing," which will meet the needs of, and be embraced by, Palo Altans seeking to downsize, but confronted with the unavailability of suitablehousing alternatives. Community members who have lived for decades in larger homes are likely to be sceptical about moving into 800 sf ADUs. 1,200 sf ADUs,which could have a third bedroom, space for family members who visit occasionally, or home offices, might be attractive enough so that homeowners wouldconsider moving our of their single-family residences into a 1,200 sf ADU, thus freeing primary dwellings up for rental (and ideally sale, if the City ever embracesGov. C. sec. 66342). 2024-10 HCD Letter,#8, fn.1
40 To create the additional and lessexpensive housinng that our community needs and deserves, the City should do more than meet minimal standards; it should strive for excellence. Palo Altoshould set a goal of earning a "Prohousing Designation" from the HCD. As shown on the , neighboring cities such as Mountain View and RedwoodCity have already achieved such designations, as have other cities such as Santa Monica. Achieving such a designation can unlock meaningful benefits forcreating additional housing in Palo Alto, and changing existing regulations and creating new housing incentives will benefit the Palo Alto community along the wayto earning such a designation.
Waive all impact and permitting fees on both ADUs and JADUs.
Create an alternative, local, 20' height limit, specifically for two-story, detached,Table 2 ADUs, with a daylight plane.
Adopt a 1,200 sf size limit for all ADUs.
Palo Alto should seek a "Prohousing Designation," and ADU reforms can help our community to achieve that goal.
See also
Gov. C. sec. 66342.
HCD's website ProhousingDesignation Benefitsand ProhousingDesignatedJurisdictions Item 10
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To create more and more affordable housing, the City should also allocate reasonable funding. In some housing projects, the City appears to expect other government agencies to contribute significantly to construction costs. But the City has an enormous budget, much more of which couldbe used to create incentives for new housing. Allocating a tiny fraction of that budget, even only 25 basis points or less over a two-year period would free up $5million in total that could be used to test different regulatory and incentive programs to determine the ease of their implementation and the likelihood of theirsuccess. The oversubscription and success of certain state-wide financial incentives has already demonstrated demand for funds to help build ADU. Palo Altocould and should experiment with such mechanisms and others. Here is a rough outline of a series of such possible experiments:
Total of $5 million in grants and on-bill financing over two years:
Up to 50 $25k grants for pre-designed ADUs Up to 50 $25k grants based on CalHFA program Up to 25 on-CPAU-bill financings for first $100k of ADU costs With this partricular experimental approach, $2.5 million would be returned to the City over time, which could help pay for the next, full implementation phase ofsuch programs. Creating such incentives, even on an experimental basis, might also accelerate Palo Alto's obtaining a "Prohousing Designation." 2025-01 HCDADU Handbook, p. 28. 2025-01 HCD ADUHandbook, p. 28 Palo Alto should experiment with meaningful financial incentives to increase ADUproduction.
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1 City of Palo Alto-References & Abbreviations re 2025-03 ADU reforms Abbreviation Reference
2024-10 HCD
Letter
Letter to Jonathan Lait, Director, from Jamie Candelaria Senior Housing Accountability Unit Manager, HCD, dated October 29, 2024 2025-01 HCD
ADU Handbook
CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT, OK, January 2025ACCESSORY DWELLING UNIT HANDBO
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City Council
Staff Report
Report Type: INFORMATION REPORTS
Lead Department: Administrative Services
Meeting Date: May 12, 2025
Report #:2412-3861
TITLE
Sales Tax Digest Q4 (Oct-Dec) 2024
ANALYSIS
This report transmits information regarding the City of Palo Alto’s sales tax receipts for the fourth quarter (October to December) 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 (Attachment A)
Regional and statewide sales tax, adjusted economic benchmark year (Attachment A, p. 2):
• Palo Alto: decreased by 3.4%
• San Francisco Bay Area: decreased by 2.2%
• California statewide: decreased by 2.2%
City’s most significant activity for this period (Attachment A, p. 1):
• Leasing segment, 12.6% decrease (year-ending Q4)
• New auto sales, 18% decrease (year-ending Q4)
• Office equipment, 6.9% decrease (from Q4 2023 to Q4 2024) • Business services, 2.1% decrease (from Q4 2023 to Q4 2024) County Pool (Attachment A, p. 4)
• The City’s share of the county pool for this quarter is 5.9%; lower from Q4 2024 • Sales tax receipts from the County pool totaled $1.8 million.
ATTACHMENTS
Attachment A: 2024 Q4 Sales Tax Digest Summary
APPROVED BY:
Lauren Lai, Administrative Services Director
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City of Palo Alto
Sales Tax Digest Summary
Collections through February 2025
Sales October through December 2024 (2024Q4)
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California Overview
For the year ending in the fourth quarter of 2024, cash receipts decreased by 0.7% statewide and decreased by 2.4% 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 fourth quarter of 2024 decreased by 2.2% statewide and decreased by 2.2% in S.F. Bay Area.
City of Palo Alto
For the year ending in the fourth quarter of 2024, sales tax cash receipts for the city decreased by 6.5% 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 fourth quarter of 2024 decreased by 3.4%. The primary drivers of Palo Alto's sales tax decrease were the leasing and new auto sales sectors. Leasing sales tax revenue decreased by 12.6%, representing 19.6% of the city's total sales tax. New auto sales decreased by 18.0% over the same period, contributing 13.2% to the total sales tax revenue.
Same quarter sales tax cash receipts increased by 2.3% in California from Q4 2023 to Q4 2024. Palo Alto citywide sales tax cash receipts decreased by 4.7% over the Q4 2023 to Q4 2024 period. Key reasons for the Palo Alto decrease during this period were: 1) Decrease in the leasing segment of 12.6% which comprises 19.6% of the total sales tax for the city, 2) Decrease in Office Equipment segment from Q4 2023 to Q4 2024 by 6.9%, and 3) Decrease in the business services segment from Q4 2023 to Q4 2024 by 2.1%.
According to the California New Car Dealers Association (CNCDA), California’s new light vehicle registrations increased by 4.8% in 2024Q4. Tesla’s sales have been on the decline in California with registrations down a significant 7.6% YTD for 2024Q4.
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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 27.4 / 3.4 29.3 / 0.0 26.1 / -1.6 29.0 / 3.1 39.0 / 3.1 27.3 / -0.9 35.8 / 0.0 27.3 / -2.9Food Products 19.0 / 5.5 21.6 / 0.4 22.9 / -0.3 17.1 / 0.9 14.9 / 0.2 23.8 / 0.8 18.3 / -1.1 19.0 / 2.5Transportation 16.9 / -16.0 22.4 / -7.5 18.4 / -6.6 26.3 / -4.0 21.3 / -7.5 23.2 / -7.9 22.8 / -10.0 27.9 / -5.7Business to Business 31.8 / -9.9 16.0 / -1.3 21.7 / 0.5 14.1 / -5.6 14.7 / 0.1 15.7 / -0.9 10.4 / -8.3 10.3 / -0.3Misc/Other 4.9 / 35.5 10.7 / -2.8 10.9 / -4.8 13.4 / -1.4 10.0 / -6.7 10.0 / -0.8 12.8 / -5.5 15.6 / -1.7Total 100.0 / -3.4 100.0 / -2.2 100.0 / -2.2 100.0 / -1.1 100.0 / -1.2 100.0 / -2.2 100.0 / -4.2 100.0 / -2.3 Palo Alto California Statewide S.F. Bay Area Sacramento Valley Central Valley South Coast Inland Empire North Coast Largest Segment Leasing Restaurants Restaurants Miscellaneous Retail Miscellaneous Retail Restaurants Miscellaneous Retail Restaurants % of Total / % Change 19.6 / -12.6 15.8 / 1.0 17.2 / 0.6 12.4 / 13.0 17.4 / 10.0 17.7 / 1.2 18.9 / 4.3 12.2 / 4.1 2nd Largest Segment Restaurants Miscellaneous Retail Miscellaneous Retail Restaurants Department Stores Auto Sales - New Restaurants Department Stores% of Total / % Change 17.2 / 5.7 11.6 / 5.9 10.2 / 3.1 11.7 / 0.4 10.9 / 0.4 11.8 / -8.8 12.0 / 0.6 11.3 / -2.9 3rd Largest Segment Auto Sales - New Auto Sales - New Auto Sales - New Auto Sales - New Restaurants Miscellaneous Retail Auto Sales - New Auto Sales - New% of Total / % Change 13.2 / -18.0 10.7 / -7.9 8.8 / -7.4 11.1 / -5.7 10.2 / 1.4 9.5 / 4.8 10.8 / -7.0 10.8 / -5.1 ECONOMIC CATEGORY ANALYSIS FOR YEAR ENDED 4th Quarter 2024 ECONOMIC SEGMENT ANALYSIS FOR YEAR ENDED 4th Quarter 2024 Regional Overview
The first chart on page two shows adjusted economic benchmark year amounts, which shows the year ended fourth quarter of 2024 compared to the year ended fourth 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 2024Q4 COMPARED TO BENCHMARK YEAR 2023Q4 Item 11
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Leasing19.6%
Restaurants17.2%
Auto Sales -New13.2%
Office Equipment7.3%Apparel Stores7.2%
All Other35.5%
Net Pools & Adjustments18.9%
$-
$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 fourth Quarter 2024: $34,442,860 *Benchmark year (BMY) is the sum of the current and 3 previous quarters (2024Q4 BMY is sum of 2024 Q4, 2024 Q3, 2024 Q2, 2024 Q1) Item 11
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Anderson Honda Magnussen's Toyota Stanford Health CareApple Stores Neiman Marcus TeslaArco AM/PM Mini Marts Nordstrom Department Store Tesla Lease TrustAudi Palo Alto Restoration Hardware Tiffany & CompanyBloomingdale's Richemont Union 76 Service StationsHermes Sephora Varian Medical SystemsHP Enterprise Services Shell Service Stations Volvo Cars Palo AltoLouis Vuitton Shreve & Co. Wilkes BashfordMacy's Department Store 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 2023Q4 2024Q1 2024Q2 2024Q3 2024Q4 Quarter Over QuarterTotal County Pool 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 31,312,972 28.2%Jurisdiction Share 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 1,834,044 11.9%Jurisdiction % of Total 6.0% 5.5% 5.9% 6.2% 6.0% 6.3% 6.7% 6.7% 6.0% 6.3% 5.9% 5.9% 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 fourth quarter of 2024, cash receipts for the overall County Pool increased by 28.2% from the same quarter in the prior year. A significant reason for the increase in the County Pool this quarter was due to a large misallocation adjustment in 2023Q4, so most of the growth in 2024Q4 was the result of comparing back to an unusually low quarter in the year prior. The City’s share of the County Pool decreased to 11.9%.
The City’s revenues from the County Pool increased from $1,638,965 in 2023Q4 to $1,834,044 in 2024Q4.
TOP 25 SALES/USE TAX CONTRIBUTORS
The following list identifies Palo Alto’s Top 25 Sales/Use Tax contributors. The list is in alphabetical order and represents the year ended fourth quarter of 2024. The Top 25 Sales/Use Tax contributors generate
58.7% of Palo Alto’s total sales and use tax revenue.
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$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Benchmark Year 2024Q4 Benchmark Year 2023Q4
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www.avenuinsights.com (800) 800-8181 Page 6 Economic Category % 2024Q4 2024Q3 2024Q2 2024Q1 2023Q4 2023Q3 2023Q2 2023Q1 2022Q4 2022Q3 2022Q2 Business To Business 25.3% 2,352,638 2,228,773 2,366,493 2,149,237 2,343,293 2,943,907 2,683,293 2,135,883 2,490,368 2,067,771 2,118,344 Miscellaneous/Other 13.8% 1,284,493 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 General Retail 26.5% 2,466,315 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 Food Products 15.6% 1,448,644 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 Subtotal Economic (Local Business) 81.3% 7,552,090 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 Net Pools & Adjustments 18.7% 1,737,280 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 Total Cash Receipts 100.0% 9,289,370 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 Economic Segment % 2024Q4 2024Q3 2024Q2 2024Q1 2023Q4 2023Q3 2023Q2 2023Q1 2022Q4 2022Q3 2022Q2 Miscellaneous/Other 42.4% 3,939,826 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 Restaurants 14.1% 1,307,103 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 Miscellaneous Retail 7.7% 717,726 512,154 582,600 489,040 689,939 480,649 512,077 448,322 545,797 381,616 479,710 Apparel Stores 6.8% 633,554 480,138 531,926 440,402 586,863 478,973 509,894 423,470 538,573 435,730 495,508 Department Stores 6.1% 570,391 432,925 501,499 411,345 549,893 435,388 492,374 356,626 533,032 423,601 454,349 Service Stations 2.0% 187,487 201,591 226,411 198,584 214,900 229,911 222,029 192,723 215,640 233,387 250,715 Food Markets 1.3% 117,774 111,242 114,071 107,031 112,372 103,251 111,465 101,978 116,810 99,811 104,253 Business Services 0.8% 78,229 57,730 80,732 204,085 98,980 83,130 93,106 74,150 98,027 62,683 80,950 Subtotal Economic (Local Business) 81.3% 7,552,090 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 Net Pools & Adjustments 18.7% 1,737,280 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 Total Cash Receipts 100.0% 9,289,370 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 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.
Item 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
Pg.
7 Packet Pg. 338 of 349
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 7 Economic Category % 2024Q4 2023Q4 2022Q4 2021Q4 2020Q4 2019Q4 2018Q4 2017Q4 2016Q4 2015Q4 Business To Business 26.8% 9,232,044 10,069,198 9,470,030 7,429,716 7,892,339 8,552,385 6,449,047 5,784,574 5,070,338 4,816,050 Miscellaneous/Other 18.2% 6,283,279 6,663,630 6,544,315 6,808,975 5,644,772 7,305,572 7,675,512 6,512,034 6,341,684 5,870,766 General Retail 23.1% 7,950,414 7,767,128 7,695,732 6,884,490 4,446,793 7,707,933 8,242,149 8,243,228 8,405,459 8,004,603 Food Products 16.0% 5,508,041 5,184,711 4,799,545 3,653,946 2,792,288 4,927,015 4,836,530 4,691,143 4,623,448 4,477,229 Subtotal Economic (Local Business) 84.1% 28,973,777 29,684,668 28,509,623 24,777,127 20,776,192 28,492,905 27,203,238 25,230,978 24,440,930 23,168,648 Net Pools & Adjustments 15.9% 5,469,083 7,161,947 5,534,016 5,252,686 4,581,233 6,368,218 6,245,742 4,747,057 4,007,873 3,910,626 Total 100.0% 34,442,860 36,846,615 34,043,639 30,029,814 25,357,425 34,861,122 33,448,980 29,978,035 28,448,802 27,079,275 Economic Segment % 2024Q4 2023Q4 2022Q4 2021Q4 2020Q4 2019Q4 2018Q4 2017Q4 2016Q4 2015Q4 Miscellaneous/Other 47.2% 16,259,943 17,457,055 17,021,481 14,955,112 14,224,570 16,848,675 15,322,569 13,781,407 12,398,374 11,601,638 Restaurants 14.4% 4,976,671 4,674,768 4,276,150 3,194,169 2,345,059 4,363,220 4,242,726 4,081,788 4,022,319 3,891,360 Miscellaneous Retail 6.2% 2,146,703 2,073,948 1,849,815 1,945,897 1,209,629 1,611,952 1,675,357 1,682,585 2,315,408 1,630,195 Apparel Stores 6.0% 2,076,930 2,008,961 1,866,535 1,610,034 1,005,415 1,912,604 1,979,846 1,741,358 1,659,929 1,657,179 Department Stores 5.6% 1,936,091 1,834,276 1,781,739 1,536,282 777,559 1,795,157 1,980,754 2,066,909 2,143,430 2,366,679 Service Stations 2.4% 816,790 865,278 892,331 645,596 436,436 700,254 697,083 613,070 551,153 644,027 Business Services 0.9% 308,397 338,309 408,864 526,824 420,433 817,597 834,834 759,131 843,203 872,811 Food Markets 1.3% 452,253 432,073 412,708 363,213 357,092 443,446 470,070 504,729 507,114 504,759 Subtotal Economic (Local Business) 84.1% 28,973,777 29,684,668 28,509,623 24,777,127 20,776,192 28,492,905 27,203,238 25,230,978 24,440,930 23,168,648 Net Pools & Adjustments 15.9% 5,469,083 7,161,947 5,534,016 5,252,686 4,581,233 6,368,218 6,245,742 4,747,057 4,007,873 3,910,626 Total 100.0% 34,442,860 36,846,615 34,043,639 30,029,814 25,357,425 34,861,122 33,448,980 29,978,035 28,448,802 27,079,275 Historical Analysis by Calendar BMY from 2015Q4 to 2024Q4 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 (2024Q4 BMY is sum of 2024 Q4, 2024 Q3, 2024 Q2, 2024 Q1).
Item 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
Pg.
8 Packet Pg. 339 of 349
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 8 General Retail
Food Products
Transportation
Business to Business
Misc/Other
2024/4 Total
2023/4 Total
% Chg
Largest Gain
Second LargestGain
Largest Decline
Second LargestDecline
Campbell -2.3% 3.9% -11.1% -19.8% -4.2% 2,618,865 2,766,901 -5.4%Restaurants Miscellaneous Retail Light Industry Service Stations Cupertino 11.4% 4.0% -10.7% -6.1% 50.4% 10,027,465 10,506,360 -4.6%Miscellaneous Retail Restaurants Office Equipment Light Industry Gilroy -2.9% 4.7% -15.4% -8.3% 1.6% 4,544,040 4,839,644 -6.1%Restaurants Leasing Auto Sales - New Misc. Vehicle Sales Los Altos -0.9% 0.7% -8.3% 25.2% 15.5% 666,496 658,520 1.2%Electronic Equipment Light Industry Office Equipment Service Stations Los Gatos 6.2% -4.2% -14.9% 10.2% 46.3% 1,466,714 1,488,636 -1.5%Leasing Miscellaneous Retail Auto Sales - New Restaurants Milpitas -8.0% -0.3% -3.0% 48.9% -4.5% 6,562,815 5,974,111 9.9%Office Equipment Electronic Equipment Miscellaneous Retail Service Stations Morgan Hill -11.0% -1.0% -6.3% -8.0% -6.6% 2,510,912 2,659,582 -5.6%Heavy Industry Business Services Service Stations Light Industry Mountain View -10.8% 3.6% -0.7% -37.7% -32.3% 4,378,979 4,744,477 -7.7%Restaurants Auto Parts/Repair Office Equipment Miscellaneous Retail Palo Alto 10.6% 5.8% -47.6% -6.3% 34.3% 7,566,145 8,089,423 -6.5%Miscellaneous Retail Restaurants Auto Sales - New Leasing San Jose -0.5% 1.7% -16.3% 9.2% 2.4% 50,521,151 51,169,054 -1.3%Office Equipment Electronic Equipment Auto Sales - New Service Stations Santa Clara -3.0% 7.0% 4.9% 54.2% 15.4% 15,923,339 12,597,725 26.4%Office Equipment I.T. Infrastructure Electronic Equipment Service Stations County of Santa Clara -27.8% 6.4% -34.0% -11.6% -9.3% 1,158,496 1,284,388 -9.8%Restaurants Electronic Equipment Miscellaneous Retail Light Industry Saratoga 4.5% -0.7% -13.6% -31.7% -4.2% 269,181 279,555 -3.7%Miscellaneous Retail Restaurants Service Stations Food Markets Sunnyvale -6.8% 2.9% -4.5% 10.9% -18.8% 8,917,955 8,827,376 1.0%Business Services Light Industry Miscellaneous Retail Office Equipment Quarterly Analysis by Sales Tax Category: Change from 2023Q4 to 2024Q4 (Economic) Unlike the chart on page one which showed a ‘benchmark year’ through the fourth quarter of 2024, the chart above shows a comparison of one quarter only – fourth quarter of 2024 to fourth quarter of 2023. This chart is for local ‘brick and mortar’ businesses, and it excludes county pools and adjustments.
Item 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
Pg.
9 Packet Pg. 340 of 349
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 9 California Avenue % CHANGE QoQ 2024Q4 QE 2023Q4 QE 24Q4 % OF TOTAL 23Q4 % OF TOTAL FOOD PRODUCTS 11.9% 107,132 95,772 65.2% 60.0%
GENERAL RETAIL -2.0% 20,766 21,185 12.6% 13.3%
ALL OTHER -14.6% 36,330 42,561 22.1% 26.7%
TOTAL 3.0% 164,228 159,517 100.0% 100.0%
El Camino Real and Midtown % CHANGE QoQ 2024Q4 QE 2023Q4 QE 24Q4 % OF TOTAL 23Q4 % OF TOTAL FOOD PRODUCTS 0.6% 161,420 160,406 41.7% 28.4%
GENERAL RETAIL -3.4% 38,938 40,326 10.1% 7.2%
ALL OTHER -48.5% 186,882 363,214 48.3% 64.4%
TOTAL -31.3% 387,240 563,946 100.0% 100.0%
Greater Downtown % CHANGE QoQ 2024Q4 QE 2023Q4 QE 24Q4 % OF TOTAL 23Q4 % OF TOTAL FOOD PRODUCTS 2.0% 563,025 551,742 60.8% 60.7%
GENERAL RETAIL 6.8% 292,069 273,351 31.5% 30.1%
BUSINESS TO BUSINESS 47.0% 48,077 32,713 5.2% 3.6%
CONSTRUCTION -72.9% 11,007 40,615 1.2% 4.5%
MISCELLANEOUS 13.0% 8,292 7,340 0.9% 0.8%
TRANSPORTATION 3.6% 3,356 3,240 0.4% 0.4%
TOTAL 1.9% 925,826 909,002 100.0% 100.0%
Stanford Shopping Center % CHANGE QoQ 2024Q4 QE 2023Q4 QE 24Q4 % OF TOTAL 23Q4 % OF TOTAL GENERAL RETAIL -2.5% 1,647,638 1,690,418 88.3% 75.1%
FOOD PRODUCTS -0.3% 164,670 165,234 8.8% 7.3%
ALL OTHER -86.2% 54,324 394,381 2.9% 17.5%
TOTAL -17.0% 1,866,631 2,250,033 100.0% 100.0%
City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2023Q4 to 2024Q4 (Economic) Item 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
Pg.
10 Packet Pg. 341 of 349
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 10 Town And Country Shopping Center % CHANGE QoQ 2024Q4 QE 2023Q4 QE 24Q4 % OF TOTAL 23Q4 % OF TOTAL FOOD PRODUCTS -5.8% 107,279 113,934 57.0% 59.0%
GENERAL RETAIL 11.4% 80,029 71,823 42.6% 37.2%
ALL OTHER -89.6% 763 7,326 0.4% 3.8%
TOTAL -2.6% 188,071 193,083 100.0% 100.0%
All Other Geos combined with Balance of Jurisdiction % CHANGE QoQ 2024Q4 QE 2023Q4 QE 24Q4 % OF TOTAL 23Q4 % OF TOTAL BUSINESS TO BUSINESS -5.3% 2,206,625 2,330,684 33.9% 31.4% GENERAL RETAIL -1.0% 2,138,011 2,159,234 32.8% 29.1%
FOOD PRODUCTS 1.5% 1,194,473 1,176,729 18.3% 15.8%
TRANSPORTATION -47.7% 867,544 1,658,006 13.3% 22.3%
MISCELLANEOUS 84.4% 82,943 44,992 1.3% 0.6%
CONSTRUCTION -53.1% 26,852 57,288 0.4% 0.8%
TOTAL -12.3% 6,516,448 7,426,932 100.0% 100.0%
All Geo Areas Total Comparison 24Q4 & 23Q4 % CHANGE QoQ 2024Q4 QE 2023Q4 QE 24Q4 % OF TOTAL 23Q4 % OF TOTAL Balance of Jurisdiction -10.9% 2,984,452 3,351,352 45.8% 45.1% Stanford Shopping Center -17.0% 1,866,631 2,250,033 28.6% 30.3% Greater Downtown 1.9% 925,826 909,002 14.2% 12.2%
El Camino Real and Midtown -31.3% 387,240 563,946 5.9% 7.6% Town And Country Shopping Center -2.6% 188,071 193,083 2.9% 2.6% California Avenue 3.0% 164,228 159,517 2.5% 2.1%
TOTAL -12.3% 6,516,448 7,426,932 100.0% 100.0%
Palo Alto citywide QE 24Q4 & 23Q4 % CHANGE QoQ 2024Q4 QE 2023Q4 QE 24Q4 % OF TOTAL 23Q4 % OF TOTAL GENERAL RETAIL 10.6% 2,466,315 2,229,901 32.6% 27.6%
BUSINESS TO BUSINESS -6.3% 2,352,638 2,510,308 31.1% 31.0% FOOD PRODUCTS 5.8% 1,448,644 1,369,791 19.1% 16.9%
TRANSPORTATION -47.6% 870,749 1,660,959 11.5% 20.5%
MISCELLANEOUS 20.8% 306,784 253,947 4.1% 3.1%
CONSTRUCTION 87.6% 121,015 64,517 1.6% 0.8%
TOTAL -6.5% 7,566,145 8,089,423 100.0% 100.0%
City of Palo Alto Geo Areas & Citywide Chart Data: Change from 2023Q4 to 2024Q4 (Economic) Cont.
Item 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
Pg.
11 Packet Pg. 342 of 349
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 11
F O O D P R O D U C T S ,
1 1 . 9 % C H A N G E , $ 1 0 7 , 1 3 2 ,
6 5 . 2 % T O T A L
G E N E R A L R E T A I L ,
- 2 . 0 % C H A N G E , $ 2 0 , 7 6 6 ,
1 2 . 6 % T O T A L
A L L O T H E R ,
- 1 4 . 6 % C H A N G E , $ 3 6 , 3 3 0 ,
2 2 . 1 % 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 4 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 5 , 7 7 2 ,
6 0 . 0 % T O T A L
G E N E R A L R E T A I L ,
$ 2 1 , 1 8 5 , 1 3 . 3 % T O T A L
A L L O T H E R , $ 4 2 , 5 6 1 ,
2 6 . 7 % 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 4 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 ,
0 . 6 % C H A N G E , $ 1 6 1 , 4 2 0 ,
4 1 . 7 % T O T A L
G E N E R A L R E T A I L ,
- 3 . 4 % C H A N G E , $ 3 8 , 9 3 8 ,
1 0 . 1 % T O T A L
A L L O T H E R ,
- 4 8 . 5 % C H A N G E ,
$ 1 8 6 , 8 8 2 ,
4 8 . 3 % 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 4 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 6 0 , 4 0 6 ,
2 8 . 4 % T O T A L
G E N E R A L R E T A I L ,
$ 4 0 , 3 2 6 , 7 . 2 % T O T A L
A L L O T H E R , $ 3 6 3 , 2 1 4
6 4 . 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 4 S A L E S T A X A M O U N T S City of Palo Alto Geo Area Pie Charts
Item 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
Pg.
12 Packet Pg. 343 of 349
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 12
F O O D P R O D U C T S ,
2 . 0 % C H A N G E , $ 5 6 3 , 0 2 5 ,
6 0 . 8 % T O T A L
G E N E R A L R E T A I L ,
6 . 8 % C H A N G E ,
$ 2 9 2 , 0 6 9 ,
3 1 . 5 % T O T A L
B U S I N E S S T O B U S I N E S S ,
4 7 . 0 % C H A N G E , $ 4 8 , 0 7 7 ,
5 . 2 % T O T A L
C O N S T R U C T I O N ,
- 7 2 . 9 % C H A N G E , $ 1 1 , 0 0 7 ,
1 . 2 % T O T A L
M I S C E L L A N E O U S ,
1 3 . 0 % C H A N G E , $ 8 , 2 9 2 ,
0 . 9 % T O T A L
T R A N S P O R T A T I O N ,
3 . 6 % C H A N G E , $ 3 , 3 5 6 ,
0 . 4 % T O T A L
G r e a t e r D o w n t o w n 2 0 2 4 Q 4 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 ,
$ 5 5 1 , 7 4 2 , 6 0 . 7 % T O T A L
G E N E R A L R E T A I L ,
$ 2 7 3 , 3 5 1 , 3 0 . 1 % T O T A L
B U S I N E S S T O B U S I N E S S ,
$ 3 2 , 7 1 3 , 3 . 6 % T O T A L
C O N S T R U C T I O N , $ 4 0 , 6 1 5 ,
4 . 5 % T O T A L
M I S C E L L A N E O U S , $ 7 , 3 4 0 ,
0 . 8 % T O T A L T R A N S P O R T A T I O N , $ 3 , 2 4 0 , 0 . 4 % T O T A L
G r e a t e r D o w n t o w n 2 0 2 3 Q 4 S A L E S T A X A M O U N T S
G E N E R A L R E T A I L
$ 1 , 6 9 0 , 4 1 8 ,
7 5 . 1 % T O T A L
F O O D P R O D U C T S , $ 1 6 5 , 2 3 4 ,
7 . 3 % T O T A L
A L L O T H E R , $ 3 9 4 , 3 8 1 ,
1 7 . 5 % T O T A L
S t a n f o r d S h o p p i n g C e n t e r 2 0 2 3 Q 4 S A L E S T A X A M O U N T S
G E N E R A L R E T A I L ,
- 2 . 5 % C H A N G E , $ 1 , 6 4 7 , 6 3 8 ,
8 8 . 3 % T O T A L
F O O D P R O D U C T S ,
- 0 . 3 % C H A N G E ,
$ 1 6 4 , 6 7 0 ,
8 . 8 % T O T A L
A L L O T H E R , - 8 6 . 2 % C H A N G E ,
$ 5 4 , 3 2 4 , 2 . 9 % T O T A L
S t a n f o r d S h o p p i n g C e n t e r 2 0 2 4 Q 4 S A L E S T A X A M O U N T S City of Palo Alto Geo Areas Pie Charts
Item 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
Pg.
13 Packet Pg. 344 of 349
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 13
F O O D P R O D U C T S ,
- 5 . 8 % C H A N G E , $ 1 0 7 , 2 7 9 ,
5 7 . 0 % T O T A L
G E N E R A L R E T A I L ,
1 1 . 4 % C H A N G E , $ 8 0 , 0 2 9 ,
4 2 . 6 % T O T A L
A L L O T H E R , - 8 9 . 6 % C H A N G E , $ 7 6 3 , 0 . 4 % T O T A L T o w n A n d C o u n t r y S h o p p i n g C e n t e r 2 0 2 4 Q 4 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 1 3 , 9 3 4 ,
5 9 . 0 % T O T A L
G E N E R A L R E T A I L ,
$ 7 1 , 8 2 3 ,
3 7 . 2 % T O T A L
A L L O T H E R , $ 7 , 3 2 6 , 3 . 8 % T O T A L
T o w n A n d C o u n t r y S h o p p i n g C e n t e r 2 0 2 3 Q 4 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 ,
- 5 . 3 % C H A N G E ,
$ 2 , 2 0 6 , 6 2 5 ,
3 3 . 9 % T O T A L
G E N E R A L R E T A I L ,
- 1 . 0 % C H A N G E , $ 2 , 1 3 8 , 0 1 1 ,
3 2 . 8 % T O T A L
F O O D P R O D U C T S ,
1 . 5 % C H A N G E ,
$ 1 , 1 9 4 , 4 7 3 ,
1 8 . 3 % T O T A L
T R A N S P O R T A T I O N ,
- 4 7 . 7 % C H A N G E , $ 8 6 7 , 5 4 4 ,
1 3 . 3 % T O T A L
M I S C E L L A N E O U S , 8 4 . 4 % C H A N G E ,
$ 8 2 , 9 4 3 , 1 . 3 % T O T A L
C O N S T R U C T I O N ,
- 5 3 . 1 % C H A N G E , $ 2 6 , 8 5 2 ,
0 . 4 % T O T A L
A l l O t h e r G e o s c o m b i n e d w i t h B a l a n c e o f J u r i s d i c t i o n 2 0 2 4 Q 4
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 , 3 3 0 , 6 8 4 ,
3 1 . 4 % T O T A L
G E N E R A L R E T A I L , $ 2 , 1 5 9 , 2 3 4 ,
2 9 . 1 % T O T A L
F O O D P R O D U C T S ,
$ 1 , 1 7 6 , 7 2 9 ,
1 5 . 8 % T O T A L
T R A N S P O R T A T I O N ,
$ 1 , 6 5 8 , 0 0 6 ,
2 2 . 3 % T O T A L
M I S C E L L A N E O U S ,
$ 4 4 , 9 9 2 , 0 . 6 % T O T A L
C O N S T R U C T I O N ,
$ 5 7 , 2 8 8 , 0 . 8 % T O T A L
A l l O t h e r G e o s c o m b i n e d w i t h B a l a n c e o f J u r i s d i c t i o n 2 0 2 3 Q 4
S A L E S T A X A M O U N T S
City of Palo Alto Geo Area Pie Charts
Item 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
Pg.
14 Packet Pg. 345 of 349
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 14 B a l a n c e o f J u r i s d i c t i o n ,
- 1 0 . 9 % C H A N G E ,
$ 2 , 9 8 4 , 4 5 2 ,
4 5 . 8 % T O T A L
S t a n f o r d S h o p p i n g C e n t e r ,
- 1 7 . 0 % C H A N G E , $ 1 , 8 6 6 , 6 3 1 ,
2 8 . 6 % T O T A L
G r e a t e r D o w n t o w n ,
1 . 9 % C H A N G E ,
$ 9 2 5 , 8 2 6 , 1 4 . 2 % 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 ,
- 3 1 . 3 % C H A N G E , $ 3 8 7 , 2 4 0 ,
5 . 9 % T O T A L
T o w n A n d C o u n t r y S h o p p i n g C e n t e r , - 2 . 6 % C H A N G E , $ 1 8 8 , 0 7 1 , 2 . 9 % T O T A L C a l i f o r n i a A v e n u e , 3 . 0 % C H A N G E , $ 1 6 4 , 2 2 8 , 2 . 5 % T O T A L
A l l G e o A r e a T o t a l s 2 0 2 4 Q 4 S A L E S T A X A M O U N T S B a l a n c e o f J u r i s d i c t i o n ,
$ 3 , 3 5 1 , 3 5 2 , 4 5 . 1 % T O T A L
S t a n f o r d S h o p p i n g C e n t e r ,
$ 2 , 2 5 0 , 0 3 3 , 3 0 . 3 % T O T A L
G r e a t e r D o w n t o w n ,
$ 9 0 9 , 0 0 2 , 1 2 . 2 % 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 ,
$ 5 6 3 , 9 4 6 , 7 . 6 % T O T A L
T o w n A n d C o u n t r y S h o p p i n g C e n t e r , $ 1 9 3 , 0 8 3 , 2 . 6 % T O T A L
C a l i f o r n i a A v e n u e ,
$ 1 5 9 , 5 1 7 , 2 . 1 % T O T A L
A l l G e o A r e a T o t a l s 2 0 2 3 Q 4 S A L E S T A X A M O U N T S
G E N E R A L R E T A I L ,
1 0 . 6 % C H A N G E , $ 2 , 4 6 6 , 3 1 5 ,
3 2 . 6 % T O T A L
B U S I N E S S T O B U S I N E S S ,
- 6 . 3 % C H A N G E , $ 2 , 3 5 2 , 6 3 8 ,
3 1 . 1 % T O T A L
F O O D P R O D U C T S ,
5 . 8 % C H A N G E ,
$ 1 , 4 4 8 , 6 4 4 ,
1 9 . 1 % T O T A L
T R A N S P O R T A T I O N ,
- 4 7 . 6 % C H A N G E ,
$ 8 7 0 , 7 4 9 ,
1 1 . 5 % T O T A L
M I S C E L L A N E O U S , 2 0 . 8 % C H A N G E ,
$ 3 0 6 , 7 8 4 , 4 . 1 % T O T A L
C O N S T R U C T I O N ,
8 7 . 6 % C H A N G E , $ 1 2 1 , 0 1 5 ,
1 . 6 % T O T A L
P a l o A l t o c i t y w i d e 2 0 2 4 Q 4 S A L E S T A X A M O U N T S
G E N E R A L R E T A I L ,
$ 2 , 2 2 9 , 9 0 1 ,
2 7 . 6 % T O T A L
B U S I N E S S T O B U S I N E S S ,
$ 2 , 5 1 0 , 3 0 8 , 3 1 . 0 % T O T A L
F O O D P R O D U C T S ,
$ 1 , 3 6 9 , 7 9 1 ,
1 6 . 9 % T O T A L
T R A N S P O R T A T I O N ,
$ 1 , 6 6 0 , 9 5 9 2 0 . 5 % T O T A L
M I S C E L L A N E O U S , $ 2 5 3 , 9 4 7 ,
3 . 1 % T O T A L
C O N S T R U C T I O N , $ 6 4 , 5 1 7 ,
0 . 8 % T O T A L
P a l o A l t o c i t y w i d e 2 0 2 3 Q 4 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 11
Attachment A - 2024 Q4 Sales Tax
Digest Summary
Item 11: Staff Report
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Item No. 3. Page 1 of 1
City Council
Supplemental Report
From: Mahealani Ah Yun, City Clerk
Meeting Date: May 12, 2025
Item Number: 3
Report #:2505-4630
TITLE
Supplemental Memo - Review List of Applicants and Select Candidates to Interview for the Architectural Review Board (ARB) Vacancies
RECOMMENDATION
Staff recommends the City Council review the nine (9) applicants from the Architectural Review Board Extended Recruitment and select candidates using the BCC Candidate Interview Selection Policy adopted on May 5, 2025. Each Councilmember may use up to six (6) votes.
BACKGROUND
City Council adopted the policy as follows:
The number of candidates to interview varies based on the number of vacancies.
Councilmembers will vote on whom to interview, getting twice the number of votes as there are openings. The candidates who receive the most votes will move on to the Interview Phase. •Interview all candidates if there are 6 or fewer applicants •Interview up to 6 candidates when there are 1-2 openings •Interview up to 8 candidates when there are 3 openings •Interview up to 10 candidates when there are 4 openings
APPROVED BY:
Mahealani Ah Yun, City Clerk
Item 3
Item 3 Supplemental
Report
Item 3: Staff Report
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1 Packet Pg. 347 of 349
City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: Administrative Services
Meeting Date: May 12, 2025
Report #:2503-4317
TITLE
FY 2026 Proposed Operating and Capital Budget - Finance Committee Update and Council Budget Discussion. CEQA Status – Not a project
RECOMMENDATION
This study session is intended to facilitate next steps in the FY 2026 Budget process. Facilitation of a forum for Finance Committee to discuss with the City Council the status of FY 2026 budget review in preparation for the Committee’s budget wrap-up work on May 20, 2025.
Staff recommends that the City Council:
•Review the current proposed budget adjustments to the Fiscal Year 2026 Proposed Operating and Capital Budgets and Municipal Fee Schedule in alignment with the work completed by the Finance Committee on May 6, 2025 and May 7, 2025; •Review the areas of focus for the City Council as identified by the Finance Committee and staff; and
•Provide feedback to the Finance Committee on any areas of focus or additional deliberations to review as part of the Budget Wrap-up Meeting scheduled for May 20, 2025.
ANALYSIS
Finance Committee reviewed the FY 2026 Proposed Operating and Capital Budgets and Municipal Fee Schedule at the Finance Committee Meeting on May 6, 2025 and May 7, 2025.
This report supports the discussion on the Finance Committee proposed adjustments to the FY 2026 budgets and/or Municipal Fee schedule.
FY 2026 Budget documents are referenced below:
- FY 2026 City Manager Proposed Budget Transmittal Letter - FY 2026 Proposed Operating Budget
- FY 2025 Proposed CIP Budget
Item 4
Item 4 Late Packet Report
Item 4: Staff Report
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- Budget Transmittal to City Council ( May 5, 2025) - Agenda Report - Finance Committee Review of Proposed Budgets ( May 6 and May 7, 2025) Agenda Report
- Finance Committee Review of Proposed Municipal Fee ( May 7, 2025) Agenda Report As new materials are released during the Finance Committee review, all materials can be found on https://www.paloalto.gov/budget
FISCAL/RESOURCE IMPACT
This report is a study session for the City Council to review the Finance Committee’s analysis and tentatively recommended changes to the FY 2026 Proposed Budget. No financial impacts will occur as a result of this report; however, recommendations from this study session will inform the Finance Committee’s final recommendations for adjustments to the FY 2026 Proposed Budgets to the City Council for adoption on June 16, 2025.
STAKEHOLDER ENGAGEMENT
Community members are encouraged to review budget publications available online and engage throughout the budget process with City Council and Finance Committee to inform priorities and service needs.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) because providing recommendations regarding the FY 2026 Proposed Budgets is fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).
APPROVED BY:
Lauren Lai, Administrative Services Director
Item 4
Item 4 Late Packet Report
Item 4: Staff Report
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2 Packet Pg. 349 of 349