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City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: June 9, 2025
Report #:2506-4802
TITLE
LEGISLATIVE. Adoption of a Temporary, Emergency Ordinance Amending Title 18 and Title 21 to Reflect Changes in State Law in Accordance with Senate Bill 1123 and Related Direction to Staff Regarding Updates to the Land Use Element of the Comprehensive Plan. CEQA Status: Exempt Pursuant to Government Code Sections 65852.28 and 66499.41.
RECOMMENDATION
Staff recommends the City Council:
1. Adopt the attached ordinance (Attachment A) by a four-fifths majority (six affirmative votes), temporarily updating Title 18 and Title 21 of the Municipal Code in accordance with recent changes in State law.
2. Direct staff to update the Land Use Element of the Comprehensive Plan to more specifically differentiate single-family, low-, medium-, and high-density residential land use designations.
EXECUTIVE SUMMARY
This report recommends City Council adoption of a temporary, emergency ordinance amending Palo Alto Municipal Code Titles 18 and 21 to implement Senate Bill 1123, which takes effect on July 1, 2025. SB 1123 expands the Starter Home Revitalization Act to permit ministerial approval of small-scale residential subdivisions—up to 10 units—on qualifying vacant lots zoned for single-family use, subject to specific development standards and site criteria.
The proposed ordinance updates local code to reflect these standards, including provisions for minimum lot sizes, setbacks, height limits, floor area ratios, and parking. It also establishes a minimum lot size for permitting accessory dwelling units (ADUs) on subdivided parcels, while preserving local discretion to apply objective design and development standards that remain consistent with State law.
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Staff further recommends that Council direct updates to the Land Use Element of the Comprehensive Plan to better differentiate between residential land use categories, in response to recent amendments to State Density Bonus Law that affect how base density is calculated.
BACKGROUND
Senate Bill (SB) 684 (California Government Code 65852.28, 65913.4.5 and 66499.41), adopted in October 2023 and effective July 1, 2024, modified the Starter Home Revitalization Act, allowing for ministerial review of subdivisions for up to 10 units on sites zoned multi-family and meeting specific criteria. Specific criteria included, but was not limited to, a requirement that the lot is zoned for multifamily residential development, is no larger than five acres, and is not located within certain areas (e.g. flood zone). Criteria also generally included requirements that the housing development project on the lot proposed to be subdivided will contain 10 or fewer residential units and that the newly created parcels are no smaller than 600 square feet. On April 7, 2025, the City Council adopted an ordinance implementing SB 684. No projects have been proposed in accordance with SB 684.
SB 1123 (California Government Code Section 65852.28 and 66499.41) adopted September 19, 2024, and effective July 1, 2025, expands existing law under the Starter Home Revitalization Act to include vacant lots zoned for single-family residential development that are no larger than
1.5 acres and that meet other specific criteria. SB 684 and SB 1123 are intended to facilitate the development of smaller-scale ownership housing, often referred to as “missing middle” housing. The legislation limits the average size of dwelling units to 1,750 habitable square feet and streamlines the subdivision process, allowing for the individual sale of units.
To the best of staff’s knowledge there are approximately 20 vacant lots in the R-1, RE, RMD, and R2 zones that would be potentially eligible to utilize SB 1123, approximately half of which are under 0.5 acres. SB 684 and 1123 authorize local jurisdictions to adopt implementing ordinances that may impose objective design standards and other regulations, so long as they remain consistent with state law and do not preclude development at the “Mullins” density (30 du/ac). Staff is aware of one property owner who has expressed potential interest in utilizing SB 1123.
ANALYSIS
The following are changes proposed to Title 18 and Title 21 of the Zoning Ordinance to align the code with State law and to execute local authority in accordance with State law.
Title 18
The attached temporary, emergency ordinance amends Palo Alto Municipal Code (PAMC) Chapter 18.42 to add a new subsection (18.42.220). The proposed code section sets forth the applicability of these State laws, clarifies the application process, and indicates the development standards and general requirements that would apply. The proposed ordinance 8 2
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generally refers to State law rather than setting forth the nuances of the State regulations, except where the City is provided discretion. Generally, the State law applies to the following sites:
•Sites zoned for Multi-family development and meeting the following criteria:
oThe lot is no larger than five acres and is substantially surrounded by qualified urban uses.1
•Sites zoned for Single-family development and meeting the following criteria:
oThe lot is no larger than 1.5 acres and is substantially surrounded by qualified urban uses; and
oThe lot is vacant. 2
Additionally, the law does not apply to the site if the site:
•Is located on Prime Farmland or Farmland of Statewide importance; •Contains wetlands;
•Is located in a Very High Fire Hazard Severity Zone;
•Is a hazardous waste site that is listed pursuant to Section 65962.5 (Cortese list), except in certain instances;
•Is within a delineated earthquake fault zone; or
•Is within a special flood hazard area subject to inundation by the one-percent annual chance flood (100-year flood), except in certain instances.
The lists above are not exhaustive and are intended to provide the general parameters of the State law for Council and the public’s benefit. California Government Code Section 65852.28, as amended in accordance with SB 1123, provides additional details and nuanced exceptions. Key site and development standards set forth in the State law with respect to the future development includes the following:
•Parcel Size:
oFor sites zoned for multi-family development, the newly created parcels are no smaller than 600 square feet. [Already addressed in PAMC Chapter 21.11] oFor sites zoned for single-family development the newly created parcels are no smaller than 1,200 square feet.
•Height: For development on a site zoned single-family, the City may enforce a maximum height limit that is no less than that of the underlying zone district. •Setbacks: Minimum Setbacks shall be no more than four feet from the original side and rear lot lines except that no setback shall be required for an existing structure, In 1 Where substantially surrounded is defined in section 21072 of the public resources code and qualified urban use is defined in paragraph (2) of subdivision (a) of section 21159.25 of the public resources code 2 Where vacant is defined as set forth in California Government Code Section 66499.41 as having no permanent structure, unless the permanent structure is abandoned and uninhabitable and excluding other specific circumstances such as where any structure on the site is subject to deed restriction. 8 2
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addition, the setback between units shall be no greater than that required by the Building Code.
•Floor Area Ratio:
oFor a housing development project consisting of three to seven units: no less than 1.0: 1 floor area ratio;
oFor a housing development project consisting of eight to ten units: no less than
1.25:1 floor area ratio.
•Density: Minimum density is 20 du/ac, or two-thirds of the maximum density specified in the zoning code, whichever is greater.
•Parking: Parking at no less than one space per unit unless there is a car share vehicle within one block of the parcel, or the parcel is located within one-half mile walking distance of either a high-quality transit corridor or a major transit stop, in which case no parking can be required. The City cannot mandate that the parking be a covered space.
Within these parameters, the City is authorized to adopt objective development and design standards. Projects will be required to comply with these standards, so long as the standards do not physically prohibit a development built at a density of 30 du/ac. Thus, although SB 1123 generally permits more density that typically allowed, the City appears to retain control over design.
In addition, SB 1123 allows the local jurisdiction to make a determination as to whether accessory dwellings units or junior accessory dwelling units would be permitted on lots subdivided in accordance with this provision. The law specifies that if the local jurisdiction chooses to allow for one or more (J)ADUs to be constructed, these units would not count toward the 10-unit limit, though they would count toward the minimum density requirement.
The draft ordinance in Attachment A allows for up to one ADU or JADU on any resulting lot created through this code provision only if the lot size is 2,400 square feet or greater. This threshold was selected as a midway point between the 1,200 square foot lot size permitted by SB 1123 and the 6,000 square foot lot size that is standard in the R-1 district. However, Council in its discretion may choose a different threshold, may choose to allow up to three ADUs (one attached ADU, one detached ADU, and one JADU) to be constructed, or may choose to prohibit ADU/JADUs on resulting parcels altogether. Notably, although the law theoretically applies to lots up to 1.5 and 5 acres in size, if the Council chooses to prohibit ADUs/JADUs, an applicant would only be able to comply with both the 10-unit limit and a 20 du/ac minimum density requirement by utilizing a site of 0.5 acres or smaller. This, in turn, may lead applicants to look to other state laws, such as State Density Bonus Law, which could result in more waivers of development and design standards.
Title 21
The draft ordinance in Attachment B also amends Title 21 of the PAMC to amend chapter 21.11, which implemented SB 684 in a minimal fashion. These amendments clarify the application process and indicate the development standards and general requirements that apply to 8 2
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subdivisions proposed under this State law. Adoption of the ordinance in this case will ensure that the fees that apply to staff level review of a subdivision map would also apply to this mapping process as the level of effort to review for compliance with the municipal code and subdivision map act is consistent regardless of whether the process is considered ministerial or discretionary. It also helps to clearly set forth the reduced timelines that apply.
Direction Regarding Comprehensive Plan Land Use Designations In the process of discussing SB 1123 with the interested property owner, staff were alerted to a potential interaction between the City’s Comprehensive Plan land use designations and State Density Bonus Law that suggests the need for updates to the Land Use Element. In short, State Density Bonus Law was recently amended to define “base density” as the highest density allowed in any regulation applicable to a property, including zoning, a specific plan, or the general plan. In essence, this means that lower density zones within a land use designation can be developed at the highest density permitted in the land use element (e.g. the R-20 zone will be treated as having a base density of 40 du/ac). To address this, staff recommends that the Council direct the preparation of amendments to the Comprehensive Plan land use designations that better differentiate between single-family, low-, medium-, and high-density residential land uses.
POLICY IMPLICATIONS
The proposed ordinance updates local regulations to align with SB 1123 and SB 684, maintaining consistency with State law while incorporating locally permitted standards. SB 1123 establishes minimum densities, floor area ratios, and limitations on development standards that differ from those typically applied to surrounding properties. Where discretion is allowed, staff has generally proposed standards that reflect existing City policies as possible.
Council may choose to adjust these standards—such as allowing greater heights, smaller setbacks, or smaller lot sizes—based on policy considerations and local context.
With respect to accessory dwelling units, the draft ordinance allows one (J)ADU per resulting lot if the lot is at least 2,400 square feet in size. This threshold is double the State’s minimum lot size and just under half of the City’s standard for R-1 parcels. Council may consider alternate approaches, including prohibiting (J)ADUs, allowing more than one per lot, or setting a different minimum lot size. If (J)ADUs are prohibited, projects on larger parcels may not be able to meet the State’s minimum density requirement due to the 10-unit cap, which could limit the application of SB 1123 on such sites.
Staff also recommends that the Council consider directing updates to the Land Use Element of the Comprehensive Plan to more clearly differentiate among residential land use categories.
This would respond to recent changes in State Density Bonus Law that define “base density” as the highest density allowed under any applicable regulation, including general plan land use designations. Greater clarity may reduce interpretive conflicts when applying zoning or density bonus provisions.
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If Council directs such amendments, staff resources may need to be reallocated from projects not directly related to State law compliance or Housing Element implementation. Other efforts, such as the bird-safe glass ordinance and stream corridor policies, would continue but may be scheduled behind this work based on available capacity.
FISCAL/RESOURCE IMPACT
There is no fiscal impact associated with this action.
STAKEHOLDER ENGAGEMENT
The Palo Alto Municipal Code requires notice of this public hearing be published in a local paper at least ten days in advance of the public hearing. Notice of a public hearing for this project was published in the Daily Post on May 23, 2025, which is 10 days in advance of the meeting. As of the writing of this report, no public comments have been received on the draft ordinance.
ENVIRONMENTAL REVIEW
The adoption of this ordinance is not a project subject to the California Environmental Quality Act, under CEQA Guidelines Section 15061(b)(3), because it can be seen with certainty that adoption of the ordinance will not have a significant impact on the environment.
ATTACHMENTS
Attachment A: Draft Temporary Urgency Ordinance
APPROVED BY:
Jonathan Lait, Planning and Development Services Director