City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: Planning and Development Services
Meeting Date: September 8, 2025
Report #:2506-4838
TITLE
414 California Avenue [25PLN-00140]. Request for Council Prescreening to Rezone the Subject Property from Community Commercial (2) (CC[2]) to Planned Community/Planned Home Zoning and to Allow Construction of a Mixed-Use Building with 37 Units in a Six-Story Structure on a 16,231-Square-Foot (0.37 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 414 California Avenue from Community Commercial (2) (CC(2)) 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 Community Commercial (CC[2]) to “Planned Home Zoning (PHZ).” The project site is 16,230 square feet, and most recently was occupied by Bank of the West. The existing building is currently vacant. The proposed project includes restaurant/retail space, and 37 housing units. The project also proposes encroachments and modifications within the public right-of-way on California Avenue and Mimosa Lane.
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 (PTC) followed by a formal recommendation from the 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.
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 83,218-square-foot mixed-use building with 14 rental units and 23 condominium units. The units would be a mix of studio (10), one-bedroom (11), two-bedroom (8), and three-bedroom (8) units. The plans did not specify which of the units would be rental or condominium in the plans. The proposed project would have a lot coverage of approximately 16,068 square feet (99% of the site). This includes portions of the property which are currently used for surface parking, and the private access alley between 414 California Avenue and 410 California Avenue (The Cobblery). The proposed development would be six stories tall and extend to a height of 78 feet, six inches to the building parapet, and 83 feet to the top of the roof deck stair access. The below grade parking garage would contain two levels of parking with a total of 74 parking spaces, 20 of which would be tandem spaces. The proposed ground floor includes two spaces designated for eating and drinking (restaurant use) and a residential lobby, and two retail/restaurant support spaces, shown as a bakery and butcher on the floor plan (sheet A202). The ground floor includes three roof overhangs that encroach into the public right-of-way on California Avenue and Mimosa Lane. The residential units would be on the upper five floors.
The primary pedestrian entrances for the ground floor restaurants and the residential lobby are designed to front Mimosa Lane, which is proposed to be redesigned to be a pedestrian only street with outdoor seating located along the project frontage within the public right-of-way.
Secondary pedestrian entrances are also provided from California Avenue for the two smaller tenant spaces. The sole vehicle entrance is located at the rear of the site on New Mayfield Lane.
With the existing closure of a portion of California Ave., New Mayfield Lane is accessible from Cambridge Avenue. The upper floors are wrapped with balconies, providing private open space for residential uses. Five of the units have private roof decks.
Surrounding Uses
This project is located within the California Avenue downtown district adjacent to a wide variety of retail, restaurants, and personal services. The site is specifically between Country Sun Natural Foods market and The Cobblery cobbler. The adjacent buildings are both one story, and buildings in the vicinity vary from one story to four stories.
The project site is on the portion of California Avenue which is permanently closed to vehicles.
On May 21, 2025 the Retail Committee recommended approval of the Car Free California Avenue Outdoor Activation Program to City Council2. That staff report includes a map of the potential/proposed improvements to the California Avenue right-of-way, including in front of 414 California Avenue. California Avenue and adjacent streets are also used for the Farmer’s Market every Sunday morning, as well as community events such as 3rdThursday.
On June 17, 20253 Council approved the resolutions associated with outdoor dining and permit fees enabling activation to continue in its current state. Council also provided direction to staff to revise the outdoor activation program guidelines seeking revisions for outdoor parklet like structures and bike lane adjustments.
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 Community Commercial. High-density housing is identified as an allowed use in some locations within this land use designation, including this one within one half-mile of the California Avenue CalTrain station. 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.
Zoning Compliance
This property is within the California Avenue downtown district. This property is zoned CC(2).
A summary of the project’s consistency with these development standards is detailed in Attachment B. The applicant is requesting to deviate, through the Planned Community rezoning process from the following development standards:
Height: 83 feet in height where up to 37 feet is allowed (60 feet under HIP); 2 Retail Committee Staff Report, May 21, 2025, Item 1:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=17618 3 City Council Staff Report, June 17, 2025, Item 17:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=17567 Floor Area: A 5.13:1 FAR where a maximum of 2.0 total FAR is allowed (0.6 residential FAR allowed)(2.6:1 FAR allowed under HIP);
Open Space: 1,612 square feet of useable open space is proposed, all of which is private and available to five of the units, where 150 square feet of usable open space per unit is required. See additional discussion below.
Parking: 88 parking spaces are proposed where 169 spaces are required (161 required under HIP). This site is eligible to use AB 2097 to reduce parking to 0 with a TDM plan. Roof overhangs encroach into the public right of way on California Avenue and Mimosa Lane.
Portions of the upper floors, where the elevators and stairways are located, do not meet the 10 foot required rear setback for residential uses. No street-side setback is proposed on Mimosa Lane, where five feet is required; 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. The side and rear facades lack upper floor modulation.
Base/Middle/Top (PAMC 18.24.060(c)(1): Although the design has a strong base and middle, the top is less defined. The fenestration variation is also limited on the upper floors.
Planned Community/PHZ projects are not required to comply with Chapter 18.24 of the code.
However, it is analyzed for the purposes of understanding how the design could be improved to be more consistent with the standard project requirements. Under the CC(2) zoning a project could also opt to be evaluated in accordance with the context-based design criteria in-lieu of the objective design standards under 18.24.
Usable Open Space
The proposed plans include balconies at all upper levels, wrapping most of the façade, however these four foot wide balconies do not count as useable open space as they do not meet the minimum depth requirement of six feet. Additionally, five roof decks are proposed. In the CC(2) zoning district, roof decks are only allowed if they are for common open space, and these are private open space (PAMC 18.40.240 [c]).
Refuse Pick Up
The project currently proposes a shared refuse room for residential and commercial uses, which is not allowed by the Code. Additonally the refuse room is not sufficiently sized to accommodate the project’s needs and would need to be redesigned. Staff would expect the trash room to be designed in a manner that allows the bins to be pulled directly from the trash room and would not support staging of the bins within public right-of-way.
Public Right-of-way Modifications and Encroachments
The closure of Mimosa Lane would require a Comprehensive Plan Amendment to Amend Map T-5 and a Resolution to Close this public street to vehicular traffic, similar to the efforts lead by the City for the closure of portions of California Avenue and Ramona Street. This proposal would need to be evaluated as staff understands it could have impacts on deliveries to neighboring properties and activation of the public space for events such as 3rd Thursday and the farmers' market or other civic events. The project also includes canopies that extend into the public right-of-way on California Avenue and along Mimosa Lane. There are several existing buildings along California Avenue that have existing minor canopy encroachments. Staff has generally allowed existing legal noncomplying buildings to maintain their canopies when modifying the facade, with approval of a permanent encroachment permit, but has not generally allowed new permanent encroachments.
PC Special Requirements
The project is not within 150 feet of residential uses or residential zones. Therefore, the PC Special Requirements (PAMC 18.38.150) do not apply.
Housing Incentive Program or State Density Bonus Law Alternatives As an alternative to the PHZ process the applicant could consider 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 CC(2) zone does not regulate maximum density, a density bonus is calculated based on allowable FAR and proposed average unit size. The highest number of units achievable under State Density Bonus Law is 16 units. The Housing Incentive Program provides an additional path but would be insufficient for the proposed building heights, floor area and other standards.
Multi-Modal Access & Parking
414 California is approximately 0.3 miles from the California Avenue CalTrain Station, providing potential for future residents to walk or bike to CalTrain. It is also approximately 120 feet from the nearest Valley Transit Authority (VTA) bus stop, served by lines 22 and Rapid 522. 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.
However, staff notes that the plans proposed modifications to California Avenue and Mimosa Lane do not align with what is currently planned for street improvements in this area proposed by the City, as recommended for approval by the Retail Committee.
Parking
All parking is proposed in two levels of below-grade parking. Access to the parking garage would be provided from New Mayfield Lane through a single entrance/exit. Of the 74 proposed parking spaces, 20 would be in tandem to other spaces. Under the zoning code, 169 stalls would be required based on the sizes of the housing units. Under AB 2097, no spaces are required with implementation of a TDM plan. One loading space is proposed, interior to the building at grade, with access adjacent to the parking garage entrance; the functionality of this space for deliveries or ride share services remains to be evaluated.
Potential space for bicycle parking is identified on both levels of the parking garage. It is unclear how many bikes each space could hold. The rooms are only accessible by stair or elevator and do not have a protected path within the garage. Thirty-seven long term and four short term spaces are required for the proposed residential use, and five long term and seven short term spaces are required for the proposed commercial use.
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. The proposed mixed-use project would demolish an approximately 6,135 sf bank and develop a mixed-use project with approximately 15,063 sf of retail and 37 residential units. The net new commercial sf would result in the need for 5 new housing units, which is less than the 37 proposed. Therefore, the project complies with this requirement.
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 18.9% BMR units (7 units) at unspecified income levels. Additionally, the project proposes a mix of rental and condominium units, and does not specify how many of which type would be provided at BMR. Until more information is provided, this project cannot be fully analyzed for compliance with Council’s requirements.
POLICY IMPLICATIONS
The City Council has previously identified California Avenue as an area to accelerate housing, though the effort is not currently resourced. California Avenue would benefit from a policy document to guide future housing and development proposals. In the absence of such a framework, individual property owners are advancing projects independently. In addition to the subject project, a builder’s remedy application is being processed for 17-, 11-, and 7-story buildings at 156 California Avenue. While the City has broad discretion to evaluate PHZ applications due to their legislative nature, the lack of a coordinated planning policy that considers proximity to the rail station, the California Avenue street closure, parcel sizes, street access, and broader urban design and placemaking objectives may result in a less cohesive neighborhood character.
The conceptual plans for the subject project also propose use of the public right-of-way, raising a unique policy question for the City Council. Staff must analyze the access implications of this proposal. Developer-funded improvements could support pedestrian activity in the area, though in an ad hoc manner. Council’s support for or opposition to such improvements would significantly affect both the project and the surrounding neighborhood. Use of the public right- of-way as part of a PHZ application has not been considered previously and may warrant further public benefits, beyond the minimum benefits typically associated with these projects.
FISCAL/RESOURCE IMPACT
The recommendation in this report does not have any significant fiscal or budgetary impacts.
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 no project-related public written comments were 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 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: Link to Project Plans
APPROVED BY:
Jonathan Lait, Planning and Development Services Director