City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: February 9, 2026
Report #:2506-4768
TITLE
Adoption of a Resolution Amending the El Camino Real Retail Node Map for Purposes of Palo Alto Municipal Code Section 18.40.180: Retail Preservation. CEQA Status: Addendum to the Comprehensive Plan Environmental Impact Report (EIR), adopted November 17, 2023 (SCH #2014052101)
RECOMMENDATION
Adopt the Resolution (Attachment A) amending the El Camino Real Retail Node Map for the purposes of Palo Alto Municipal Code Section 18.40.180: Retail Preservation unanimously recommended for adoption by the Planning and Transportation Commission.
EXECUTIVE SUMMARY
As directed by City Council on March 3, 2025, the Planning and Transportation Commission (PTC) discussed the El Camino Real Retail Node Map, including the temporary “interim node” adopted by City Council with the modifications to the Retail Preservation Ordinance. A revised map, as unanimously recommended by the PTC and the Retail Committee, is provided as Exhibit 1 to the Draft Resolution in Attachment A.
BACKGROUND
The 2023-2031 Housing Element identified the retail preservation ordinance as a potential constraint to housing development. Housing Element Program 3.4B calls for waivers from and modifications to these regulations to accommodate more housing density and affordability while focusing retail development in the most desirable locations in Palo Alto, including retail node locations along the southern portion of El Camino Real.
December 2024 Planning and Transportation Commission Hearing On December 17, 2024, the PTC held a public hearing and recommended that the City Council adopt an ordinance to modify the Housing Incentive Program, Affordable Housing Incentive Program, and Retail Preservation Ordinance. As part of the motion, the PTC asked for the map of retail nodes on El Camino Real to return to the PTC in the first quarter of 2025 to consider additional retail node locations.
March 2025 City Council Hearing
On March 3, 2025, the City Council adopted, on first reading, an ordinance amending the zoning code to implement programs in the City’s adopted Housing Element that modify the Housing Incentive Program (HIP), Affordable Housing Incentive Program (AHIP), and Retail Preservation Ordinance. The City Council motion was as follows:
1. Modify the retail node to extend along El Camino Real from Page Mill Road to the southern city boundary, and refer to the Planning and Transportation Commission for further discussion and recommendation to City Council; and
2. Exclude auto dealerships (AD overlay) near El Camino Real and Charleston Road from the HIP Program.
This action had the effect of locating the entire El Camino Real corridor south of Page Mill to the City Boundary, within a node (the “interim node”) and therefore subject to the Retail Preservation Ordinance. This included continuing to require compliance with retail preservation regulations at the automobile dealerships near Charleston Road, should existing tenants vacate their buildings or the sites were to redevelop.
Planning and Transportation Commission Hearings
The PTC considered the map revisions at three meetings on March 26, 2025,1 April 30, 2025,2 and May 28, 2025.3, 4 PTC recommendations, summarized below have been incorporated into the subject attachment. Specifically, the Commission focused on the following refinements:
Reduce complexity of overlapping rules, especially for:
oParcels with little/no existing retail;
oHousing Element sites eligible for 100% housing, though some Housing Element sites were included for contiguity of the nodes;
oParcels zoned Planned Community (PC), where the RPO does not apply; and oAreas covered by other regulations (Retail Overlay) or recent plans (El Camino Real Focus Area, North Ventura CAP).
Assess impacts of retail-preservation requirements on future housing feasibility, particularly on narrow/shallow lots.
Address small-site parking constraints, especially along long segments of El Camino Real where on-street parking has been replaced by bike lanes. 1 March 26, 2025 PTC Meeting, Agenda Item 3:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16505 2 April 30, 2025 PTC Meeting Video:
https://www.youtube.com/watch?v=wae4iNkod0U
3 May 28, 2025 PTC Meeting, Agenda Item 3:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16533 4 May 28, 2025 PTC Meeting Video:
https://www.youtube.com/watch?v=2GhDZsjsKWI
Consider including student-serving retail areas along the West Charleston/Arastradero corridor.
The unanimous PTC recommendation is for adoption of a revised El Camino Real Retail Node Map with three nodes (Attachment A):
1.Central Node: This node is located halfway between California Avenue and the City’s southern boundary, including properties on both sides of El Camino Real from Matadero Creek to Los Robles Avenue.
2.Triangle Node: This node includes the properties on the “triangle” between El Camino Real and El Camino Way, as well as the commercial properties on the other side of El Camino Way.
3.Bike to School Node: This node incorporates the “Auto Dealerships Node” with additional adjacent commercial properties, and those on two of the other three corners of the Charleston Road/Arastradero Road/El Camino Real intersection.
This process and ordinance change is separate and distinct from other retail ordinance work underway. Specifically, the City Council adopted a 2025 Council priority objective “consideration of an ordinance that expends retail opportunities and promotes retail resiliency” Work is underway to prepare recommendations on retail approaches and ordinance revision with PTC review is anticipated in calendar year 2025 followed by Council review in 2026.
Retail Committee
On January 22, 2026, the Retail Committee reviewed the map recommended by the PTC. After discussion of several questions, including the deliberation by the PTC, the names given to the proposed nodes, and the impact of the Housing Element opportunity sites in the area, the Retail Committee voted unanimously to recommend that Council approve the map as proposed.
ANALYSIS
The El Camino Real Retail Node Map adopted by City Council on March 2, 2025, included an “interim node” to temporarily preserve retail preservation protections for existing retail on properties on El Camino Real and El Camino Way between Page Mill Road and the southern City boundary, plus a small node at the intersection of El Camino Real and California Avenue. As provided in the Background Section above, the motion on March 2, 2025, to adopt the map also referred the map to the Planning and Transportation Commission for further discussion and recommendation to City Council.
Housing Element Program 3.4 specified changes to be made to the City’s Housing Incentive Program (HIP) and specified that this work should include modifications to the retail preservation ordinance to reduce the amount of retail replacement except in certain combining districts and “strategic locations generally depicted in the draft South El Camino Real Design Guidelines.”
Figure 1: Draft South El Camino Real Design Guidelines Node Map The PTC recommendation aligns closely to this map, with more detail and specificity, along with an understanding that California Avenue retail is already protected by the existing Retail (R) and Pedestrian (P) overlays and therefore does not need a specific node.
As recommended by the Streetsense Economic Development Strategies Report, shared with City Council on August 14, 2023, the goal is to concentrate ground-floor retail in a few strategic areas (“nodes”) where foot traffic, transit, and anchor destinations already cluster, so that each storefront reinforces the next and creates a true “stroll” experience. Reducing and focusing the areas of stronger retail preservation requirements, allows those properties outside these nodes, more flexible uses (e.g., services, offices, housing) to right-size supply, reduce vacancies, and channel investment to the places with the best chance of thriving.
The revised map recommended by the PTC is based on a detailed discussion, as described above. PTC’s efforts focused on simplifying overlapping retail regulations, aligning retail- preservation requirements with housing feasibility (especially on narrow/shallow lots), addressing small-site parking constraints, including along El Camino Real where on-street spaces were replaced by bike lanes, and evaluating inclusion of student-serving retail corridors along West Charleston/Arastradero.
POLICY IMPLICATIONS
As part of the implementation of Program 3.2 (Monitor Constraints to Housing) of the Housing Element, the City committed to prepare an analysis in staff reports for initiatives proposing new regulations. This analysis details how the regulations may impact housing production, if at all, and recommend solutions to address any adverse impacts.
The recommended map is the final step in the HIP, AHIP, Retail Preservation update efforts to implement the following Housing Element programs:
• Housing Element Program 3.3A, B, and D to streamline, incentivize, and improve project feasibility of 100% affordable housing projects.
• Housing Element Program 3.4A-D to expand development incentives in the Housing Incentive Program (HIP) and extend the program to additional zoning districts to
facilitate housing production. Based on quantified objectives in the Housing Element, this modification is anticipated to generate 550 housing units. • Housing Element Program 6.2A to incentivize larger units and create family-friendly housing.
As a result, the recommended map, that reduces the areas with strongest retail preservation protections, would help affirmatively affirm fair housing goals expressed in the Housing Element.
FISCAL/RESOURCE IMPACT
Changes to the nodes subject to the Retail Preservation Ordinance are consistent with Housing Element Program 3.4C, which committed to reductions in retail requirements in support of future housing development; as discussed with the City Council on March 3, 2025, and described above. Direct fiscal impacts are not anticipated from this action. However, the actions recommended in this report more effectively concentrate retail into three nodes along El Camino Real, thereby creating clusters of retail that can provide goods and services to the surrounding neighborhood. The previous ’interim’ retail node that extended from Page Mill south along El Camino Real to the City limits would have applied retail preservation requirements to that entire corridor, which was not consistent with Housing Element Program
3.4C and included areas that were less viable retail locations. This refined map confers greater flexibility and better balances the potential for residential development with the continued need for neighborhood-serving retail opportunities. This is anticipated to create a greater synergy between commercial and potential residential in this corridor, which may positively impact revenues in Sales Tax and Property Tax categories.
STAKEHOLDER ENGAGEMENT
Preparation of the Housing Element included a range of community outreach methods, including surveys, Working Group meetings, community workshops, and public hearings.
Hundreds of community members have participated in the Housing Element update over the course of the project. Community members have an opportunity to provide feedback on the draft standards at PTC, Architectural Review Board (ARB), and City Council study sessions and public hearings.
ENVIRONMENTAL REVIEW
On April 15, 2024, the City Council adopted Resolution No. 10155, approving an Addendum to the Comprehensive Plan Environmental Impact Report (EIR). The addendum analyzed potential environmental impacts of the 6th Cycle Draft Housing Element. This includes implementation of Housing Element Programs 3.4, including changes to the Retail Preservation Ordinance.
ATTACHMENTS
Attachment A: Draft Resolution (including Exhibit 1 - El Camino Real Retail Nodes Map) APPROVED BY: Jonathan Lait, Planning and Development Services Director