City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: Planning and Development Services
Meeting Date: August 11, 2025
Report #:2505-4640
TITLE
4256 El Camino Real [25PLN-00095]. Request for Council Prescreening to Rezone the Subject Property from Commercial Services to Planned Community/Planned Home Zoning and to Allow Construction of a Multi-Family Apartment Complex with 120 Units in a Six-Story Structure on a 25,950-Square-Foot (0.6 Acre) Site. CEQA Status: Not a Project.
RECOMMENDATION
Staff recommends that Council conduct a prescreening and provide informal comments regarding the applicant’s request to rezone 4265 El Camino Real from Service Commercial (CS) to Planned Community/Planned Home Zoning (PHZ).1 Comments provided during the prescreening process are not binding on the City nor the applicant.
EXECUTIVE SUMMARY
This prescreening is a request by the applicant to rezone the subject property, which is currently zoned Service Commercial (CS) to “Planned Home Zoning (PHZ).” The project site is 25,950 square feet, and currently has a valid Planning Entitlement for a five-story hotel. The new project includes construction of a 92,700-square-foot building (3.57:1 Floor Area Ratio) with 120 residential rental units.
In accordance with Palo Alto Municipal Code (PAMC) Section 18.79.030(A), a prescreening review is required for legislative changes, including rezoning, prior to submittal of a formal application. Prescreenings are intended to solicit early feedback on proposed projects and, like all study sessions, cannot result in any formal action. Since this proposal may return to the City Council as a formal application, Councilmembers should refrain from forming firm opinions supporting or opposing the project.
Following this prescreening, the applicant may choose to file a formal application to amend the zoning for the site. Planned Community Rezoning applications require an initial review by the Planning and Transportation Commission (PTC) followed by a formal recommendation from the 1 Referred to in this report as "Planned Home Zoning" to emphasize the focus on housing as the benefit to the community. PAMC Section 18.38, which outlines the requirement and process for Planned Community (PC) Zoning, remains the underlying code supporting application of this policy.
Architectural Review Board, a formal recommendation from the PTC, and Council’s final decision as set forth in PAMC Chapter 18.38.
BACKGROUND
On February 3, 2020, Council unanimously endorsed using Planned Home Zoning (PHZ) for housing and mixed-use housing projects to help spur housing production. In exchange for deviation from the development standards, as allowed under the rezoning if approved by Council, the project must include at least 20% of the housing units as deed restricted, or equivalent based on a menu of options, for lower income households.
Prior Entitlement
In 2020, the Planning Director approved a five-story, 51,300 square foot hotel project with 96 guest rooms and 85 parking spaces. This entitlement was modified in 2021 under 21PLN-00034, to reduce the provided parking for the site in conjunction with a request for a Director’s Parking adjustment.
As detailed in the Project Description letter (Attachment C), the applicant states that the approved entitlement is no longer viable, and the property owner is interested in developing a housing project instead. The building and demolition permits for the hotel project were issued in 2023 and demolition work is complete. Therefore, the site is currently vacant. The building permits for the approved hotel will expire in September 2025 and may apply for a 180-day extension prior to then. The permit cannot be further extended beyond March 2026.
Project Description
The preliminary schematic drawings, included in Attachment F, are conceptual, as is appropriate at this stage of project consideration. As shown in these schematic drawings, the applicant is proposing an approximately 92,700-square-foot multi-family residential building with 120 rental units. The units would be a mix of studio (55), one-bedroom (55), and two- bedroom (10) units. The proposed project would have a lot coverage of approximately 22,550 square feet. The footprint of the building complies with all required setbacks. The proposed development would be six stories tall. The ground floor would contain 100 parking spaces and amenity space, with the apartments on the upper five floors. The proposed height is 79 feet, six inches. This does not include the height of the rooftop mechanical equipment, which extends to 91 feet.
The pedestrian and vehicle entrances are located along El Camino Real, with the vehicle entry in approximately the center of the site. The units include private open space with balconies ranging 45 to 150 square feet in area. They protrude into the setbacks in a manner allowed by the zoning code. A 3,170-square-foot second-floor courtyard and 5,520-square-foot roof deck also would provide common open space.
Surrounding Uses
This property is located on El Camino Real. It is not a Housing Element Site, and it is not within the El Camino Focus Area; however, it is within the Housing Incentive Program area. This property is zoned CS, though it does not contain any non-residential uses as it is currently vacant. The Palo Alto Redwoods condominium community surrounds the project side to the north and west, as well as a portion of the southern perimeter. To the south is a two-story real estate office. The surrounding vicinity includes a variety of one-to-four-story buildings including multi-family and single-family residential, several hotels/motels, and the Palo Alto [Elks] Event Center. The nearby Crown Plaza hotel is seven stories, but it is setback significantly (generally 100 to 300 feet) from the street and adjacent buildings.
In 2023, as a part of the public hearings regarding Zoning Code changes associated with the 2023-2030 Housing Element, the Palo Alto Redwoods HOA recommended changes to PAMC Chapter 18.16 to treat residential properties in commercial zoning districts (such as Palo Alto Redwoods) the same as residential properties in residential zoning districts (Attachment D). In particular, this includes 10-foot setbacks from residential properties, and a daylight plane identical to the adjacent residential property. This requested amendment to the Zoning Code has not been implemented as other higher priority projects have taken precedent, but could be considered as part of a future comprehensive update of the Zoning Code. If this recommendation were to be incorporated into the Zoning Code, it would impose a greater side setback (10 feet) than proposed with this project (six-foot side setback). For this project, because Palo Alto Redwoods was not subject to a daylight plane, the suggested code modification would not impact the proposed project.
Additionally, there are several mature Redwood trees on both sides of the property lines shared between the project site and Palo Alto Commons. The plan set does not currently show any existing trees or proposed future landscaping, as the plans are still preliminary. Protection of existing Redwood trees is a staff priority, and this will be further evaluated as a part of a formal submittal. The trees also provide privacy screening between the sites.
ANALYSIS
Staff will prepare a thorough analysis of the Zoning Code and Comprehensive Plan compliance upon submittal of a formal application, if filed. A review of the conceptual plans, below, summarizes staff’s preliminary review of the proposal and highlights key policy considerations associated with the applicant’s request.
Comprehensive Plan Compliance
The Comprehensive Plan designation is Service Commercial. High-density housing is identified as an allowed use in some locations within this land use designation, including this one within the Housing Incentive Program area. This property is not identified as a Housing Inventory site in the City’s Housing Element, nor was it in the previous 2015-2023 Housing Element Cycle. If the proposed project were to move forward, the housing units it creates would increase the City’s Regional Housing Allocation Needs (RHNA) buffer.
Zoning Compliance
In April 2019, Council amended the Zoning Code to encourage high density housing along El Camino Real, and modified the Palo Alto Municipal Code (Ordinance 5460) to establish the Housing Incentive Program (HIP) to apply to housing projects within these blocks. These regulations were further updated in April 2025. The updated HIP incentives include a 2.85 Floor Area Ratio (FAR), no maximum density or lot coverage, and reduced parking requirements.
For PHZ rezoning projects, Council has the authority to set the parameters for most development standards, which would be reflected in the tailored ordinance for the new PHZ District. However, for informational purposes, Attachment B compares the development standards under the current CS zone district with HIP with the proposed project in order to assist Council in considerations of how these deviations relate to the proposed public benefits of the project.
In comparison to the existing zoning, the applicant is requesting the following deviations from the existing CS zone district development standards:
A 3.57:1 FAR where a maximum of 0.6 FAR is allowed for residential use (2.85 is allowed under the HIP; 3.5 would be allowed under the HIP if the it were a Housing Element opportunity site);
An 87% lot coverage where up to 50% is allowed (100% is allowed under the HIP); 79 feet, six inches height where up to 50 feet is allowed (60 feet is allowed under the HIP);
No retail-like use(s), where 3,300 square feet of retail-like use(s) is required (see further discussion below);
121 square feet of useable open space per unit where minimum of 150 square feet are required. The CS district allows for this to be a combination of private and shared open space.
100 parking spaces where 140 parking spaces are required, prior to adjustments (125 would be required under the HIP); and
No loading space is proposed.
The project also deviates from several Objective Design Standards in PAMC Chapter 18.24, such as:
Stepback (PAMC 18.24.050(b)(1)): The building massing as proposed is not stepped back where it is more than 20 feet taller the average height of an adjacent building. This step back would start within two vertical feet of the height of the adjacent building. The step back would be a minimum depth of six feet along both the façade on the primary building frontage and the facing façade of the adjacent building, and the step shall occur for a minimum of 70% of each façade length.
Façade Modulation (PAMC 18.24.050(b)(3)): Additional information would be needed to analyze the façade modulation depth; however, it appears that the recesses may need to be deeper in some areas
Parking Location/Screening (PAMC 18.24.060(b)(7)(B)): This project proposes ground- level parking rather than underground. In order to do so, it must also be lined with commercial or habitable uses with a minimum depth of 20 feet along the street frontage. The alternative is to fully underground the parking (PAMC 18.24.060(c)(7)). Privacy and Transitions to Residential Uses (PAMC 18.24.050(b)(2)(D) and (E)): The proposed balconies and windows within 30 feet of windows, balconies, and private open space at Palo Alto Redwoods do not utilize privacy measures such as high sills, obscured glazing, or angling away from the property lines. A sight line analysis will be required in the formal submittal.
Miscellaneous: Some details, particularly regarding landscaping, are not included in the conceptual plans. As the project moves forward to the formal review, additional Objective Design Standards may be identified.
Not all projects are required to meet the Objective Design Standards, as a project may opt to use the subjective Contextual Design Criteria instead.
Retail Preservation
Prior to the demolition associated with the current entitlement, this property was the location of Su Zhe Eatery. The previous building was 3,300 square feet. The approved hotel is a retail- like use, and therefore the hotel entitlement was consistent with the Retail Preservation requirements (PAMC 18.40.180). However, the proposed residential project would not be consistent with the City’s Retail Preservation requirements, as it is not eligible for the Housing Element Opportunity Site exemption.
Prior to April 2025, it could have been allowed to replace only 1,500 as a HIP project. At this time, under the most recent code change that exemption was removed for non-Housing Element Sites along El Camino Real (as part of an “interim retail node”). If retained in a Retail Preservation Node, this project would need to provide approximately 3,300 square feet of a retail or retail-like use. However, a revised El Camino Real Retail Node map has been prepared and recommended by the PTC. The revised map recommended by PTC does not include this site in a Retail Preservation Node and is expected to be considered by Council prior to submittal of a formal application on this project.
PC Special Requirements
The project would be subject to one of the special standards for PCs as set forth in PAMC Section 18.38.150, as there is one R-1 zoned property within 150 feet of the project site.
However, the R-1 zoned property is located approximately 149 feet from the site; therefore, all portions of the proposed improvements are outside the 150 foot setback and are not subject to the height limitations required for structures within 150 feet of properties zone R-1. The site is also not abutting an RE, R-1, R-2, RMD, RM, or residential PC district. Therefore, the other special requirements for setbacks and daylight plane do not apply.
Housing Incentive Program or State Density Bonus Law Alternatives As an alternative to the PHZ process the applicant could consider two options. One option would be to utilize the Housing Incentive Program process, which allows for some deviations to the base zoning standards. As noted above, these include increases in FAR 2.85:1, lot coverage to 100%, and height to 60 feet. It also allows for a reduction in parking to 125 spaces. This would require reducing the scope of the project (both the quantity and size of proposed units) in a manner the applicant believes is not economically viable.
Alternatively, the applicant could propose a State Density Bonus Law project and may request waivers and concessions from certain standards in accordance with State Density Bonus Law requirements. However, because the CS zone does not regulate maximum density, a density bonus is calculated instead as FAR; the highest FAR achievable under State Density Bonus Law would be 1.2:1 (a 100% bonus). In addition, the applicant would be required to provide a significant percentage of the units at BMR in order to achieve the proposed density increase (for example, 24% of units affordable to low income households and an additional 15% of units affordable to moderate income households).
Multi-Modal Access & Parking
Valley Transit Authority (VTA) bus line 22 is the nearest bus line to the project site. The VTA Rapid 522 line bypasses the nearest stop but stops at Arastradero Road/W Charleston Road approximately a quarter mile from the project site. The San Antonio Caltrain station is located approximately 1.1 miles from the project site. This project has not yet been analyzed for consistency with the City’s Bicycle and Pedestrian Transportation Plan and other transportation policies such as Council’s Local Transportation Impact Analysis Policy adopted on June 15, 2019 (CMR 11256). This analysis would be conducted as a part of any formal application and reviewed by the Office of Transportation.
Parking
All parking is proposed in one level of at-grade parking. Access to the parking garage would be provided from El Camino Real through a single entrance/exit. Of the 100 proposed parking spaces, 96 would be in two tandem puzzle lift systems. It has not been specified if these stackers will be EV-ready. Under the zoning code, 140 stalls would be required based on the sizes of the housing units. No loading space is proposed, where one is required for residential buildings with more than 50 units.
Bicycle parking is currently shown within the ground level parking garage, with access from the side yard. The proposed bike parking area holds 120 bikes, consistent with the zoning code. The bike room meets or can be designed to meet the requirements of a Restricted-Access Bicycle Enclosure as defined in PAMC 18.54.060(a)(2)(B). Twelve short-term bicycle stalls will also be available, consistent with the zoning code.
Inclusionary Requirement and Jobs Housing Imbalance
The intent of limiting PHZ projects to residential and residential mixed-use is to address the job/housing imbalance and to support increased housing production within the City, consistent with the City’s RHNA allocation. PHZ projects are required to provide more housing than jobs on site. As this is a 100% residential project, no new jobs would be created.
The project is required to provide 20% of the units at Below Market Rate at an average of 80% AMI in accordance with Council’s requirements for projects seeking to rezone using the PHZ process. The applicant is currently proposing 15% BMR units (18 units) with 1 of the units offered at a rate affordable to very-low income, 14 of the units provided at a rate affordable to low income, and three of the units provided at a rate affordable to moderate income. Option 2 presented in the June 23, 2020 Council staff report2 provides greater weight and flexibility towards providing very-low income units, however this proposal falls short of that with a weighted value of only 17.1% and would need to be adjusted to meet the 20% threshold. 4256 El Camino Real Below Market Rate Unit Calculation
Income Level
Area Median
Income
Weighted
Value
Number
of Units
% of Actual
Units Weighted %
Extremely-low
Income 16-30% 1.9 0 0.0% 0%
Very-low Income 31-50% 1.9 1 0.8% 2%
Low Income 51-80% 1.2 14 11.7% 14%
Below
Market Rate
Units Moderate Income 81-120% 0.6 3 2.5% 2%
Typical Units
Above Moderate
& Market Rate 121% + 0 102 0%
Total 120 15.0% 17.1%
POLICY IMPACT
Pre-screenings are intended to solicit early feedback on proposed projects and, like all study sessions, cannot result in any formal action. Therefore, informal comments from Councilmembers would not impact policy.
FISCAL/RESOURCE IMPACT
The proposed project would replace an entitled hotel project, resulting in the loss of 2 June 23, 2020 Council staff report. https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/year-archive/2020/id-10715.pdf potential transient occupancy tax revenue that may have been obtained through development of the hotel. However, there would be no loss in existing revenue as the site is currently vacant.
The increase in residential units would likely generate higher property tax revenue and add residents who consume goods and services within the city.
The prescreening and any future formal application are funded by applicant fees. The project would also be subject to impact fees to address its effects on public services and infrastructure.
STAKEHOLDER ENGAGEMENT
The Palo Alto Municipal Code requires notice of this public hearing be published in a local paper and mailed to owners and occupants of property within 600 feet of the subject property at least ten days in advance. Notice of a public hearing for this project was published in the Daily Post on July 31, which is 10 days in advance of the meeting. Postcard mailing occurred on July 29, which is 12 days in advance of the meeting.
As of the writing of this report ten project-related public written comment were received. The majority of the commentors are residents of the Palo Alto Redwoods condominiums. The public comment is included in Attachment E. Some recurring concerns include:
Increased traffic congestion
Not enough parking for the proposed number of units, as well as the parking spaces proposed in parking lift systems
A lack of setbacks and/or stepbacks from the neighboring residences Privacy between the Palo Alto Redwoods residences and the proposed projects’ Importance of protecting existing redwood trees, including for privacy
ENVIRONMENTAL REVIEW
The prescreening is a preliminary review process in which Councilmembers may provide comment, but no formal action will be taken. Therefore, no review under the California Environmental Quality Action (CEQA) is required at this time. A full review in accordance with CEQA would be initiated with the formal filing of a development application.
ATTACHMENTS
Attachment A: Location Map
Attachment B: Zoning Comparison Table
Attachment C: Applicant’s Description Letter
Attachment D: 2023 Neighbor Comments
Attachment E: Neighbor Comments on Prescreening Application Attachment F: Project Plans
APPROVED BY: Jonathan Lait, Planning and Development Services Director