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Item 14 Staff Presentation

Palo Alto City Council
May 4, 2026

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Item 14 Staff Presentation
Meeting
May 4, 2026
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Palo Alto City Council
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May 04, 2026 www.paloalto.gov
Senate Bill (SB) 79 and
Downtown Housing Plan
Considerations
Vishnu Krishnan, Senior Planner
Background
• Initial findings presented to the Council on October 22, 2025. • The Downtown Housing Plan/SB 79 Implementation Ad Hoc was formed in January 2026 and met with staff on January 27, March 25, and April 21, 2026. o Ad Hoc Members:
▪ Councilmember Ed Lauing
▪ Councilmember Patrick Burt
• The Ad Hoc considered the preliminary analysis, made recommendations, and directed staff to present the findings, ad hoc recommendation, and seek Council input on the implementation of the State law.
2 Purpose
• Consider the implications of Senate Bill (SB) 79 in the identified transit-oriented development (TOD) areas and the potential approaches towards its implementation; and • Provide direction on the preferred approach for the citywide implementation of SB 79and the Downtown Housing Plan initiative.​
3 SB 79 (2025) Objective
• Increase the supply of affordable housing, reduce
greenhouse gas emissions through reduced vehicle miles
traveled, and enhance the efficiency of public transit
systems.
• Mandates upzoning of land located within proximity to rail stations and rapid bus corridors to encourage
transit-oriented development.
o Degree of upzoning depends on the classification of
the transit and the distance from the station, as
measured from the pedestrian access points.
44 SB 79: Transit-tiering and applicable standards
Distance from
TOD Stop
Minimum Height
Requirement
Residential Density
(du/ac) Residential FAR
Directly Adjacent Sites
(≤ 200 ft)
95 ft
(75 + 20 ft bonus)
160 du/ac
(120 + 40 bonus)

4.5 (3.5 + 1 bonus)
Within ¼ Mile 75 ft 120 du/ac 3.5
¼ – ½ Mile 65 ft 100 du/ac 3.0
• Allowable density cannot be reduced to less than 50 percent of the default standards for any individual site.
• TOD projects are eligible for a density bonus and waivers of development standards except height above the SB 79 standard.
• Inclusionary Housing requirements (one of the following):
• 7% of units affordable to extremely low-income households; • 10% of units affordable to very low-income households; or • 13% of units affordable to lower-income households.
• Local inclusionary requirements that exceed these minimums can be enforced. • Application processing generally unchanged:
• SB 79 does not modify CEQA requirements, though AB 130 may exempt many projects. • SB 79 does not establish a new ministerial approval process, though other laws like SB 35 can still be used.
5 SB 79: Exclusions
Until January 31, 2032, Palo Alto may exclude by ordinance:
• Sites zoned with capacity ≥50% of SB 79 default standards • Sites in very high fire severity zones
• Sites subject to sea level rise risk
• Sites with a locally registered historic resource (as of January 1, 2025) After January 31, 2032, excluded sites must meet SB 79 default density or be incorporated into an Alternative Plan.
6 SB 79: Alternative Plans
Alternative Plans
Jurisdictions may redistribute density across TOD zones, subject to:
• Overall capacity across all TOD zones must be maintained • Individual sites may not fall below 50% of SB 79 default (except fire, sea level rise, or historic sites)
• Historic sites may not exceed 10% of the area within any single TOD zone
• Individual sites may not be credited above 200% of SB 79 default capacity
• Individual TOD zones may not fall below 50% of SB 79 default capacity 7 What might redevelop?
In addition to sites excluded by ordinance (i.e. due to hazards, historic protections), there are additional sites across all three areas that have a very low likelihood to redevelop.

Sites excluded for the purpose of calculating staff's housing projections:
• Parcels developed within the last 25 years.
• Condominiums and Planned Communities (PC).
• Sites with existing Office-use and an FAR >= 1.50.
• Parcels less than 0.12 acre have low development feasibility. 0.12-acre (~5200 sq. ft.) yields 6 to 8 smaller units (average unit size of 780 sq.ft.). SB 79 requires a minimum of 5 dwelling units for a project to qualify.

Historical trends show roughly 10% of parcels citywide have redeveloped over the last 25 years; less projected for R1-zoned properties – 1% (excluding single family home rebuilding and new accessory units).
8 9
University Ave Caltrain Station
What can be excluded per SB 79?
• Very High Fire Severity Zone – not applicable
• Flooding – not applicable
• Historic Properties – 22.25%
SB 79 Area
Distance Acres
200 feet 52.86
200 feet – 0.25 mile 120.53

0.25 mile – 0.5 mile 151.85
Total 325.23
SB 79 Area – excluding PF, PC, and parcels <= 0.12 acre Distance Acres
200 feet 0
200 feet – 0.25 mile 64.56

0.25 mile – 0.5 mile 66.64
Total 163.26
10 California Ave Caltrain Station
What can be excluded per SB 79?
• Very High Fire Severity Zone – not applicable
• Flooding – not applicable
• Historic Properties – 1%
SB 79 Area
Distance Acres
200 feet 48.38
200 feet – 0.25 mile 111.11

0.25 mile – 0.5 mile 324.18
Total 483.67
SB 79 Area – excluding PF, PC, and parcels <= 0.12 acre Distance Acres
200 feet 0
200 feet – 0.25 mile 47.73

0.25 mile – 0.5 mile 141.35
Total 222.72
11 San Antonio Caltrain Station
What can be excluded per SB 79?
• Very High Fire Severity Zone – not applicable
• Flooding – not applicable
• Historic Properties – 17%
SB 79 Area
Distance Acres
200 feet 0
200 feet – 0.25 mile 27.39

0.25 mile – 0.5 mile 147.28
Total 174.28
SB 79 Area – excluding PF, PC, and parcels <= 0.12 acre Distance Acres
200 feet 0
200 feet – 0.25 mile 0.65

0.25 mile – 0.5 mile 16.58
Total 32.79
Approaches – SB 79
The City can choose to allow State Law to go into effect as written, adopt an ordinance clarifying how State Law applies locally, and/or propose a“transit-oriented development alternative plan” (ordinances and plans are subject to State approval). Default SB 79 densities go into effect on July 1, 2026.

Note: An ordinance is required to exempt historic resources and requires HCD review. • Approach 1: No action on SB 79.
• Approach 2: Adopt a local implementing ordinance to protect historic resources. • Provides additional local control.
• Approach 3: Rezone all TOD eligible sites to allow 50 percent of the SB 79 development potential. • Provides the City approximately six years to consider advancing a TOD Alternative Plan. • Approach 4: Prepare a TOD Alternative Plan.
• Provides the City with maximum control through development standards, infrastructure plan, and structured community outreach process.
12 Approaches – Downtown Housing Plan
• Option A: Refocus the Downtown Housing Plan on Development Standards. o The Plan will produce updated development standards but may not result in a complete Area Plan policy document.
• Option B: Resume and complete the Downtown Housing Plan. o Model the Plan on SB 79 standards while addressing other local considerations. • Option C: Discontinue the Downtown Housing Plan.

Except for SB 79 Approach 4, the Downtown Housing Plan can reasonably continue under other options provided – or may be discontinued altogether if SB 79 is thought to address Downtown Housing Plan's housing interests.
13 Staff / Ad Hoc Recommendation

1. Prepare an ordinance for adoption prior to July 1, 2026, excluding all sites with historic resources;

2. Prepare an ordinance increasing allowable development capacity on eligible sites to at least 50% of SB 79 capacity (increase density, height and modify setbacks, daylight plane, and lot coverage); place on May 18 City Council consent calendar; and

3. Continue work to advance and complete the Downtown Housing Plan. 14 15
Approach 3: R1 Zone 50 Percent Feasibility
Achievable FAR 1.75
Lot Size 6,000 square feet (50' x 120')
Setback
Front 10 feet
Rear 10 feet
Side 4 feet
Daylight Plane Initial Height: 16'-0", measured
from property line. Slope: 45
degrees (modeled from HIP
provision)
Site Coverage 4,200 square feet
Total Floor Area
Floor 1 4,200 square feet
Floor 2 4,200 square feet
Floor 3 2,100 square feet

Council Direction / Next Steps
16 1. Provide direction to staff on the preferred approach to implement SB 79;

2. Provide direction to staff on whether to proceed with the Downtown Housing Plan; and

3. As appropriate, the Council Ad Hoc will continue to engage with staff regarding the Downtown Housing Plan through 2026.

Vishnu Krishnan
Senior Planner
[email protected]
650.329.2425
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