City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: Planning and Development Services
Meeting Date: March 9, 2026
Report #:2601-5833
TITLE
51 Encina Avenue [25PLN-00312]. Request for Council Prescreening for a Zoning Text Amendment to Palo Alto Municipal Code Title 18 (Zoning) Section 18.18.070 (Floor Area Bonuses) and Section 18.18.080 (Transfer of Development Rights) to Expand Floor Area and Transfer of Development Right Benefits to Category 1 and 2 Buildings on the City's Historic Inventory in the CS Zone District. CEQA Status: Not a Project.
RECOMMENDATION
Staff recommends that Council conduct a prescreening and provide informal comments regarding the applicant’s request to expand Floor Area Bonuses and Transfer of Development Right benefits to Category 1 and 2 buildings on the City's Historic Inventory in the CS Zoning District. 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 expand floor area bonuses and transfer of development right benefits to Category 1 and 2 buildings on the City's Historic Inventory in the Service Commercial (CS) Zoning District. The project site at 51 Encina Avenue is a Category 2 Structure on the City’s Historic Inventory. It would be the only qualifying historic structure on the City’s inventory within this zone district with respect to this text amendment. Therefore, this text amendment would not affect any other properties unless another property in the CS District were upgraded to re-classify as a Category 1 or 2 Historic Structure. Project plans show a historic rehabilitation of the building, including improvements to accommodate four exam rooms and accessibility upgrades.
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 Code. Amendments to the Zoning Code require a review and recommendation by the Planning and Transportation Commission, and Council’s final decision as set forth in PAMC Chapter 18.80. Should Council determine that a change of the Zoning Code is appropriate, such change will be accomplished by ordinance.
BACKGROUND
Established in 1986, the transfer of development rights (TDR) program implements the Comprehensive Plan by encouraging seismic and historic rehabilitation of buildings within the Commercial Downtown (CD) district, including Planned Community (PC) properties formerly within the CD district. The program allows qualifying properties, known as sender sites, to receive a floor area bonus when they preserve a historic resource or complete seismic improvements. This bonus floor area represents unused development potential that can be transferred to another property, known as a receiver site, where it may be used to increase the allowable building floor area. Approximately 32,100 square feet of unused bonus floor area is currently available downtown.
In general, floor area bonuses and the TDR program work together to balance preservation and development goals. Floor area bonuses are granted to properties that provide a public benefit, such as historic preservation or seismic strengthening, allowing those sites to generate additional development capacity beyond what is otherwise permitted. Through the TDR program, this unused capacity may be transferred to eligible receiver sites, enabling additional development in appropriate locations while preserving and improving important historic or vulnerable buildings elsewhere. This approach directs growth toward designated areas while providing an economic incentive for property owners to maintain and rehabilitate existing structures. Specific eligibility criteria, transfer limitations, and calculation methods are provided in PAMC Sections 18.18.070 and 18.18.080.
Project Description
As detailed in the Project Description letter (Attachment B), the applicant states that the property owner is interested in expanding floor area bonuses and TDR benefits to Category 1 and 2 buildings on the City's Historic Inventory in the CS Zoning District. The purpose of the proposed amendment is to provide preservation-based development incentives that would help offset the costs associated with rehabilitating and adapting historic buildings for continued use. In this case, the applicant states that expanding access to these incentives would support the continued operation and expansion of Peninsula Healthcare Connection, Inc. within the existing historic structure.
The preliminary schematic drawings, included in Attachment C, illustrate the type of historic rehabilitation and accessibility improvements that the proposed text amendment is intended to facilitate. The drawings are conceptual and demonstrate how the building could be rehabilitated to accommodate modern medical office functions while preserving significant historic materials and features. Proposed improvements include installation of an accessible ramp at the rear of the structure, construction of accessible restrooms, and interior reconfiguration to meet accessibility standards and functional requirements for medical services, including exam rooms, counseling and staff areas, a waiting room, and a vitals check area.
These improvements reflect a reinvestment in the historic structure that aligns with the City's preservation goals. However, rehabilitation of historic buildings often involves higher costs due to accessibility upgrades, preservation requirements, and limitations on building expansion. The requested text amendment would allow the property to access TDR and floor area bonus incentives, which are intended to provide economic value that can help offset rehabilitation costs and support the long-term preservation and continued viable use of historic resources.
The conceptual plans therefore serve to illustrate the type of preservation-oriented rehabilitation that the proposed amendment is intended to enable.
Surrounding Uses
The project site is surrounded by commercial and office uses. To the south across Encina Avenue is Town and Country Village Shopping Center and its associated surface parking areas.
To the north is the Palo Alto Medical Foundation campus, which is developed with a three-story building. To the west are CS zoned office properties, including a five-story office building.
Across Urban Lane to the west is an additional one-story office building also zoned CS. Council recently reviewed a prescreening application for a multi-family housing development on the north parking lots for Town & Country. A Conditional Use Permit is also on file to change the use of 63 and 67 Encina Avenue from warehouse to eating and drinking use.
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 project site is designated Major Institution/Special Facilities, which accommodates institutional, academic, governmental, and community service uses that are publicly owned or operated by nonprofit organizations. The proposed amendment would not change the land use designation. Instead, it provides a preservation-based development incentive that supports continued use of the historic structure consistent with that designation.
The Comprehensive Plan supports preservation and adaptive reuse through Policy L-7.8, which states, “Promote adaptive reuse of old buildings.” The proposed code amendment advances this policy by expanding access to Floor Area Bonuses and Transfer of Development Rights, helping offset the financial constraints associated with rehabilitation. Comprehensive Plan Program L7.8.1 calls for expanding incentives for retention and rehabilitation in all zones and minimizing regulatory constraints. The amendment implements this direction by extending existing incentives to eligible historic resources in the CS District. Program L7.8.3 encourages innovative application of codes to older buildings, including use of the State Historical Building Code. Expanding development incentives is consistent with this approach and supports rehabilitation of historic resources.
Overall, the proposed amendment is generally aligned with the Comprehensive Plan’s goals and programs related to historic preservation and adaptive reuse. It advances adopted policies that encourage the retention, rehabilitation, and continued use of buildings with historic merit while maintaining consistency with the site’s land use designation.
Zoning Compliance
The property at 51 Encina Avenue is located within the Service Commercial (CS) zoning district.
The City provides development incentives to support the preservation, rehabilitation, and improvement of historic resources in a manner consistent with the Secretary of the Interior’s Standards for Rehabilitation. However, these incentives are limited in application. Properties listed in the Palo Alto Historic Inventory and eligible under PAMC Chapter 18.18, Downtown Commercial (CD) District, may utilize tools such as transfer of development rights and bonus floor area to encourage seismic upgrades and historic rehabilitation. Transfer of development rights may be retained for investment purposes or conveyed to a designated receiving site.
Because the subject property is zoned CS and is not located within the CD district, the owner is not eligible to access local incentives such as transfer of development rights or bonus floor area to help offset the cost of rehabilitation. Expanding the availability of transfer of development rights to this site would provide a site-specific incentive to support completion of the proposed historic rehabilitation while maintaining consistency with adopted preservation standards.
Historic Resource
The two-story vernacular Colonial Revival residence at 51 Encina Avenue, constructed in 1900, was designed and built for Mary Greer O'Brine, daughter of Captain John and Maria Louisa Soto Coppinger Greer. The land was part of the Ranch Rinconada del Arroyo de San Francisquito, an 1835 Mexican land grant to Maria Louisa's father Raphael Soto, a member of the De Anza expedition. What was once the oldest house in Palo Alto, the home of Captain John and Maria Louisa, built in 1862 and moved in 1869 to the adjacent Embarcadero Road site (the present Town and Country Village), was demolished in 1952. The only other remaining Greer home, also a Category 2 on the Inventory, is that of Mary's brother and his wife, Joseph F. and Mary Catherine Greer, built in 1905 and located at 1517 Louisa Court. The property was added to the Historic Inventory as a Category 2 on October 27, 1986 (Attachment A).
The project consists of the historic rehabilitation of the building, including improvements to accommodate four exam rooms and accessibility upgrades in conformance with the Secretary of the Interior’s Standards for Rehabilitation. This proposed work would be reviewed in accordance with the ten Secretary's Standards for Rehabilitation upon a formal application submittal.
POLICY IMPLICATIONS
Prescreenings 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. If a formal application is submitted, additional analysis would be required to evaluate whether the TDR program should be further expanded to additional properties. The TDR program was established to encourage historic preservation and seismic rehabilitation in the commercial downtown district. While the program was expanded in 2003 and 2007 to include select residential areas in SOFA and City owned historic properties, Downtown has remained the primary receiving area to align incentives with planned growth.
It is important to note that the proposed text amendment would only affect one property, as 51 Encina Avenue is the only property in the CS Zoning District listed on the City’s Historic Inventory that would be eligible, given its Category 2 designation, as a sender site. Any transferable floor area generated would be eligible for use at receiver sites (CD District and/or properties in RT-35 or RT-50 district within SOFA). With approximately 32,100 square feet of TDR available, the addition of one sender site is not expected to substantially affect the overall supply. The site’s proximity to Downtown and commercial setting are generally consistent with the TDR program’s objectives to encourage historic preservation. While the text amendment is currently proposed to be limited to CS and therefore only affects a single property, expanding the eligibility to other commercial districts would require additional policy review to evaluate the number of eligible properties and potential impacts on the program.
Should the amendment not be adopted, the property would remain ineligible to use TDRs as an incentive to offset rehabilitation costs. While rehabilitation could still occur, preservation improvements may not be financially feasible without the financial benefits of TDRs. Approval of the amendment would allow participation by one additional historic property without substantially changing the program’s overall structure or eligibility for other sites.
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 February 26, 2026, which is 10 days in advance of the meeting. Postcard mailing occurred on February 24, 2026, which is 12 days in advance of the meeting.
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.
ATTACHMENTS
Attachment A: Location Map
Attachment B: Applicant’s Description Letter
Attachment C: Project Plans
APPROVED BY:
Jonathan Lait, Planning and Development Services Director