City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: Planning and Development Services
Meeting Date: August 11, 2025
Report #:2506-4878
TITLE
332 Forest Avenue [25PLN-00130]. Request for Council Prescreening to Rezone the Subject Property from Multifamily Residential (RM-40) to Planned Home Zoning (PHZ) and to Allow Construction of a New Multi-Family Apartment Complex with 82 units in an Eight-Story Structure on a 25,000 Square Foot (0.57 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 332 Forest Avenue from Multifamily Residential (RM-40) 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 Multifamily Residential (RM-40) to “Planned Home Zoning (PHZ).”1 The project site is comprised of two parcels totaling 25,000 square feet. The project includes demolition of an existing 16-unit apartment complex and construction of a 105,230-square-foot building (4.21:1 FAR) with 82 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.
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.
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 followed by a formal recommendation from the Architectural Review Board, a formal recommendation from the Planning and Transportation Commission, and Council’s final decision as set forth in PAMC Chapter 18.38.
Because no formal action is requested as part of this study session, analysis of the proposed redevelopment is not required in accordance with the California Environmental Quality Act.
However, staff notes that there are conflicting evaluations determining the historic status of the existing building on the property.
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.
As detailed in the Project Description letter (Attachment C), the applicant states that the property owner is interested in redeveloping the site to replace the existing 16-unit apartment building with a housing project that increases density near the downtown area and transit hubs.
Project Description
The preliminary schematic drawings, included in Attachment D, are conceptual, as is appropriate at this stage of project consideration. As shown in these schematic drawings, the applicant is proposing an approximately 105,230-square-foot multi-family residential building with 82 rental units. The units would be a mix of one-bedroom (21 units), one- bedroom + den (6 units), two-bedroom (42 units), two-bedroom + den (3 units), and three- bedroom (10 units). The proposed project would have a lot coverage of approximately 21,780 square feet. The footprint of the building complies with all required setbacks. The proposed development would be eight stories with a height of 85 feet, excluding the height of the rooftop mechanical equipment and screening, which extends to 95 feet. The first two floors and a portion below grade would contain 110 parking spaces and amenity space, with the apartments on the upper six floors. The pedestrian and vehicle entrances are located along Forest Avenue, with the vehicle entry in the southern corner of the site.
Surrounding Uses
The project is located near downtown Palo Alto, a commercial activity hub of citywide and regional significance, with a mix of shopping, offices, and some housing. The surrounding streets are characterized by well-developed street trees and street widths that accommodate pedestrians and bicycles. The nearby network of streets, alleys, parks, and plazas (including Lytton Plaza, Cogswell Plaza, Johnson Park, Heritage Park, and the permanent street closure of Ramona Street) invite public use and enhance quality of life. The project site is located less than one-half mile from the University Avenue Caltrain station. Across Forest Avenue, to the north of the property is Lanning Chateau/Staller Court, a five-story 85-unit apartment building. To the east, there is a two-story 19-unit condominium development. To the south, there is a four-story 30-unit condominium development. To the west of the property, there is a 40-unit apartment building, Casa Real, listed as a Category 4 Historic Resource on the City’s Historic Inventory.
When completed in 1930, it was the only seven-story building in the City.
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 Compliance2
The property is located within the boundaries of the South of Forest Area (SOFA) 1 Coordinated Area Plan (CAP).3 The Comprehensive Plan designation is SOFA 1 CAP. This CAP implements the City of Palo Alto Comprehensive Plan and provides more detailed programs and policies for the specifically defined SOFA 1 CAP. For the subject property, the SOFA 1 CAP simply designates the site as "RM-40." During the 1999-2006 Housing Element cycle, the City Council adopted SOFA 1 CAP as a planning tool to address a specific nine block area comprised of 19 acres. The policy framework for SOFA 1 CAP is for a walkable and livable neighborhood that is compatible with the surrounding area, transitioning from a low-density detached housing in the south-east to higher density closer to downtown. The SOFA 1 CAP also envisions a neighborhood that takes advantage of the opportunities presented by its close proximity to Downtown Palo Alto and the regional transit center at the University Avenue/Downtown train station. Some existing zoning designations remain in effect, e.g. RM-30, RM-40, R-2, and PF, which largely retain the current associated zoning designation and development standards. Maintaining housing on the site would align with Comprehensive Plan Policy B-6.2 that provides uses in SOFA 1 CAP should be maintained that complement the downtown business district. Further, promoting infill development with higher densities nearby transit corridors helps to reach the goals of energy conservation and integrating land use with transportation.
The project includes the demolition of an evaluated structure that appears eligible for the National Register of Historic Places. This could potentially be at odds with Comprehensive Plan 2 The Palo Alto Comprehensive Plan is available online: https://www.paloalto.gov/files/assets/public/v/2/planning- amp-development-services/3.-comprehensive-plan/comprehensive-plan/full-comp-plan-2030_with-june21- amendments.pdf
3 The South of Forest Area (SOFA) 1 Coordinated Area Plan is available online:
https://www.paloalto.gov/files/assets/public/v/1/planning-amp-development-services/file-migration/current- planning/forms-and-guidelines/south-of-forest-coordinated-area-plan-phase-1.pdf Goal L-7 that provides for the conservation and preservation of Palo Alto’s historic buildings, sites, and districts.
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. The proposed project would result in a net increase of 66 units which would still count toward the City’s Regional Housing Needs Allocation (RHNA).
Zoning Compliance4
The site is currently zoned RM-40 (medium density multi-family residential). Multi-family housing is identified as a permitted use in the RM-40 Zone District. The proposed project exceeds the standards under the RM-40 zone district and proposes to deviate from these standards in a manner consistent with the zoning ordinance through the PHZ rezoning process as set forth in PAMC Chapter 18.38. For projects proposing to rezone to PHZ, Council has the authority to set the parameters for most development standards, which would be reflected in the tailored ordinance for the new Planned Community District. However, for informational purposes, Attachment B compares the development standards under the current RM-40 zone district 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 RM-40 zone district development standards:
A 4.21:1 FAR where 1:1 FAR is allowed in the RM-40 zone; 85 feet height where 40 feet is allowed in the RM-40 zone; The private open space meets the 50 square feet per unit average, however, the project proposes common open space be provided through a shared common space located on the adjacent parcel;
Does not comply with the required side and rear daylight planes; 110 parking spaces where no minimum parking is required (AB 2097); No bicycle parking shown where 82 long term spaces are required; and No loading space is proposed, where one space would normally be required.
The project also deviates from several Objective Design Standards in PAMC Chapter 18.24, such as:
The building massing is not stepped back where it is more than 20 feet taller the average height of an adjacent building. This step back standard starts 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.
This project proposes ground-level parking as well as a portion underground. In order to 4 The Palo Alto Zoning Code is available online:
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-76269 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)).
Compliance with some standards, like façade modulation depth and landscaping, can not be analized at this time given the conceptual nature of the current plans. It should be noted that the objective standards do not specifically apply to PHZ zone districts; therefore, these standards are used as a guidepost to inform the site planning and architectural design, considering aspects such as transitions between uses, massing, and privacy, but strict adherence to the standards is not required.
PC Special Requirements
The project site abuts the property at 707 Forest Avenue, a multi-family development within the RM-30 Zone District. Therefore, per PAMC Section 18.38.150, the project would be subject to several of the special requirements unless otherwise authorized by the City Council.
Specifically:
A 50-foot height limit.
A daylight plan of 45-degree angle measured at 10 feet up on the property line for the side lot lines and the setbacks of the RM-30 zone district would apply or a daylight plane of 30-degree angle measured at 10 feet up on the property line may be used with lesser setbacks.
A 10-foot setback with landscape screen on the southern interior side yard that abuts the RM-30 zoned parcel.
Attachment B provides more detailed information regarding the PC/PHZ special requirements.
Ultimately, Council in its discretion may choose to follow these special requirements or deviate from these requirements through approval of the PHZ ordinance setting forth the zoning of the site.
Parking and Circulation
Parking is proposed at two levels of at-grade parking and one level below grade. Access to the 110 parking garage spaces would be provided from Forest Avenue through a single entrance/exit. Per PAMC Chapter 18.52, the project would normally be required to provide 137 parking spaces: one space per one bedroom unit (27 units) and two spaces per unit with two bedrooms or more (55 units). Further, no loading space is proposed, where one car loading space (not commercial vehicle loading) is typically required for residential buildings with more than 50 units. However, the regional transit center at the University Avenue/Downtown train station is located approximately 0.4 miles from the project site. Considering the project site is within one half mile of a major transit stop, California Government Code Section 65863.2 [Assembly Bill (AB) 2097] would be applicable. AB 2097 prohibits minimum required parking standards for qualifying projects. An applicant may choose to add parking even if they qualify for a full parking exemption under State law. A public agency may require voluntary parking spaces be used for car share vehicles, be made publicly available (e.g., not assigned to a specific use or business), or be charged a parking fee, but cannot require that any voluntary parking is free of charge to residents.5
No bicycle parking is currently shown on the plans. Based on the 82-unit count, 82 long-term bicycle spaces are required. Bike parking would be required to be shown on the plans as part of any formal application and would need to be designed to meet the requirements of a Restricted-Access Bicycle Enclosure as defined in PAMC 18.54.060(a)(2)(B).
SOFA 1 CAP does provide reductions in parking requirements for mixed-use projects with shared parking of up to 20%, and 15% for housing, community development projects, and office projects with shared parking.
The project site could potentially accommodate a through lot connection to Homer Avenue connecting the property to the adjacent Museum of American Heritage property located at 351 Homer Avenue. The applicant indicated that there is no desire to have a connection through the property.
Since the proposed project is a rezoning, Council has the discretion to approve or deny the applicant’s request. This project has yet to be 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.
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 20% (16 units) provided at a rate affordable to low income. This is consistent with Option 2 presented in the June 23, 2020, Council staff report,6 which provides greater weight and flexibility towards providing very-low income units.
Open Space
Project plans indicate that 91 square feet of private open space will be provided per unit. The floor plan provided for a typical level of the building indicates that most units would have a balcony or patio space. The existing open space provided on the adjacent parcel for the Casa Real building is shown to be shared with the project. An easement would be required over the 5 Gov. Code, § 65863.2, subd. (g).
6 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 Casa Real open space to provide access to the subject property. Project plans also note that the lobby and amenity space would be located on the adjacent parcel. A lot line adjustment would be needed to allow the proposed amenity space to be located on the same property rather than crossing property lines.
Historic
The subject property was evaluated in 2000 with the Dames & Moore Historic Survey Update efforts. The property was identified as appearing as eligible for the National Register of Historic Places (NRHP) under criterion A and C at the local level of significance. The period of significance was cited from 1925, initial construction, to 1949, encompassing the years it was occupied by its original owners. Under Criterion A, this is an early apartment building in Palo Alto and a model followed by the apartment building located at 530 Webster Street. It served as a women's residence for a time, a characteristic type of residence, especially before 1950.
Under Criterion C, this is significant as an example of an early garden apartment. This is an unusually well-built structure with an intermediate layer of sheathing between the frame and the siding.
However, the applicant supplied a Historical Resources Evaluation prepared in 2004 by Page & Turnbull. This report concluded that the property did not appear eligible for listing in the NRHP or the California Register of Historical Resources (CRHP). When the City receives submitted reports from the applicant it is standard procedure to conduct a peer review to ensure that the analysis is accurate and conducted in a manner consistent with industry standards. This would occur at the time of a formal filing of a development application, and the results would be considered as part of the environmental review of the project.
State Density Bonus Law Alternative
As an alternative to the PHZ process the applicant could propose a State Density Bonus Law (SDBL) compliant project and may request waivers and concessions from certain standards in accordance with SDBL requirements. However, a SDBL project would not afford the developer the proposed project density of 143 units per acre (82 units total) that far exceeds the SDBL allowances.
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. Should a formal application be submitted, further analysis would be required to evaluate the existing 16-unit building and the proposal’s potential impact on historic preservation and housing removal/production. The property has been previously evaluated for historic significance, with conflicting findings to whether it qualifies as a historic resource. Further, if a future project submitted is subject to the Housing Crisis Act of 2019, certain protections and benefits would apply to any lower income households currently residing on the site, including relocation assistance and the right to return to an affordable unit.
FISCAL/RESOURCE IMPACT
Processing of this prescreening and any future formal application are funded by applicant fees.
Any formal application would also be subject to impact fees to address impacts of the proposed development 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, 2025, which is 10 days in advance of the meeting. Postcard mailing occurred on July 29, 2025, which is 12 days in advance of the meeting.
As of the writing of this report, one HOA and several residents have contacted staff on how to submit comments and when to attend the study session at City Council, but no formal comments have been received.
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 Act (CEQA) is required at this time. A full review in accordance with CEQA would be initiated with the formal filing of a development application. The existing building that is proposed for demolition has been evaluated with conflicting eligibility determinations in 2000 and 2004. Recent changes to California Government Code Section 65913.10 require that when a city or county determine whether the site of a proposed housing development project is a historic site, the city or county shall make that determination at the time the application for the housing development project is deemed complete. A determination as to whether a parcel of property is a historic site shall remain valid during the pendency of the housing development project for which the application was made unless any archaeological, paleontological, or tribal cultural resources are encountered during any grading, site disturbance, or building alteration activities.
ATTACHMENTS
Attachment A: Location Map
Attachment B: Zoning Comparison Table
Attachment C: Applicant’s Description Letter
Attachment D: Project Plans
APPROVED BY:
Jonathan Lait, Planning and Development Services Director