CITY COUNCIL
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Planning and Development Services
Meeting Date: August 17, 2026
Report #: 2604-6295
TITLE
PUBLIC HEARING/QUASI-JUDICIAL. 762 San Antonio Road [24PLN-00120]: Request for Approval of a Major Architectural Review Application to Demolish Three Existing Commercial Buildings and Construct an Eight-Story Multi-Family Residential Building Containing 228 Rental Apartments. The Project is Proposed in Accordance with California Government Code Section 65589.5(d)(5) “Builders Remedy". CEQA Status: An Addendum to the Previously Certified Environmental Impact Report for the Housing Incentive Program Expansion and 788 San Antonio Mixed Use Project (SCH # 2019090070) has Been Prepared. Zoning District: CS (AD); Service Commercial (Automobile Dealership).
RECOMMENDATION
Staff recommend that the City Council:
1. Consider the Addendum to the previously certified Environmental Impact Report (EIR) (SCH#2019090070) (Attachment F); and
2. Approve the Major Architectural Review application based on findings and subject to conditions of approval in the Record of Land Use Action (RLUA) in Attachment B.
EXECUTIVE SUMMARY
The applicant requests approval of a Major Architectural Review application to demolish three existing commercial buildings and to construct an eight-story multi-family residential development containing 228 rental apartments, including 30 deed-restricted below-market- rate units affordable to lower-income households (Attachments E and F). The project includes three levels of above-grade parking, residential amenity spaces, landscaping, and associated site improvements on an approximately two-acre site located at 762 San Antonio Road (Attachment A).
The project qualifies as a Builder's Remedy project pursuant to Government Code Section 65589.5(d)(5) and is subject to the Housing Accountability Act, Senate Bill (SB) 330, Assembly Bill (AB) 1893, and State Density Bonus Law. The applicant submitted a complete SB 330 pre- application on January 9, 2024, which established the applicable development standards for project review. The Architectural Review Board (ARB) recommended approval of the project on June 4, 2026.
Staff find that the project is consistent with relevant plans and regulations, as modified by State housing laws, and satisfies the required findings. The project would contribute toward the City's housing goals through the construction of 228 residential units, including 30 units rented at a rate affordable to low-income households. Accordingly, staff recommend that the City Council approve the Major Architectural Review application, subject to the conditions contained in the Record of Land Use Action.
BACKGROUND
The project proposes to demolish three existing commercial buildings and to construct an eight- story multi-family residential rental development containing 228 units, including 30 units deed- restricted at a rate affordable to lower-income households. The project also includes three levels of above-grade parking and associated site improvements.
The project site consists of two parcels located at 762 San Antonio Road (APN 147-05-102) and an adjacent unaddressed parcel fronting Leghorn Street (APN 147-05-012) (Attachment A). The parcels would be merged through a Certificate of Compliance to create an approximately two- acre (87,120-square-foot) development site. The site is currently occupied by the Hengehold Truck Rental facility and associated commercial structures totaling approximately 8,628 square feet.
The applicant submitted a complete SB 330 pre-application on January 9, 2024. Accordingly, the project is evaluated based on the development standards in effect at that time and is limited to five total hearings, of which the project has had two total hearings to date. The project is also proposed pursuant to California Government Code Section 65589.5(d)(5), commonly referred to as Builder's Remedy, and is subject to the provisions of AB 1893 and State Density Bonus Law.
The project site is located within the San Antonio corridor near the Palo Alto – Mountain View city boundary. The surrounding area contains a mix of commercial, office, hotel, and residential uses and is identified in the City's Housing Element as a Housing Inventory Site. The site is also located within the San Antonio Road Area Plan study area, where the City is currently evaluating long-term land use, mobility, and urban design improvements for approximately 275 acres along the corridor.
Prior City Reviews and Action
The ARB conducted an initial review of the project on August 7, 2025.1 At that hearing, the ARB provided feedback regarding building massing and scale, architectural articulation, materiality, landscaping, open space design, pedestrian experience, circulation, and rooftop amenities. 1 August 7, 2025, ARB Staff report:
https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=8368&meetingTemplateType=2&compiledMeeting DocumentId=15247
Because the California Environmental Quality Act analysis was not yet complete, the ARB continued the project to a date uncertain.3
The applicant subsequently revised the project, modifying the floor plan and facades in response to the ARB’s feedback to improve architectural quality, pedestrian experience, and open space usability and also increasing the unit count from 197 units to 228 units, which added an eighth story. Key changes to the architectural design included enhanced transparency and use activation along San Antonio Road, additional vertical breaks and upper-level-step- backs, and a refined material and color palette.
On June 4, 2026, the ARB reviewed the revised proposal4 and recommended approval of the Major AR application with the following modifications.5 In forwarding its recommendation for approval, the ARB found that the project demonstrated meaningful improvements to the building's architectural expression, pedestrian orientation, open space design, and overall site planning, while supporting the City's housing objectives. Following the ARB recommendation, the applicant submitted revised plans on July 14, 2026. The revisions did not materially alter the approved project design and were limited to incorporating minor refinements and providing additional information, including unit floor plans, for City Council review and consideration.
Requested Entitlements, Findings, and Purview:
The following discretionary applications are being requested:
Architectural Review – Major (AR): The process for evaluating this type of application is set forth in Palo Alto Municipal Code (PAMC) 18.77.070. Major AR applications are reviewed by the ARB and recommendations are forwarded to the Planning & Development Services Director for action within five business days of the Board’s recommendation. Pursuant to PAMC Section 18.40.170, the Director may forward decision on the application to the City Council. AR projects are evaluated against specific findings. All findings must be made in the affirmative to approve the project. Failure to make any one finding requires project redesign or denial. The findings to approve an AR application are provided in Attachment B.
The City’s purview of the formal application is also limited by the following State laws:
Housing Accountability Act (Government Code §65589.5): The project qualifies as a “housing development project,” including housing for very low-, low-, or moderate- income households under the Housing Accountability Act. Pursuant to Government 3 August 7, 2025, ARB meeting minutes:
https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=16790&compileOutputType=1 4 June 4, 2026, ARB Staff report:
https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=8ce5486d-350f- 4f5b-9197-f5164813cdc8
5 June 4, 2026, ARB meeting minutes:
https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=19489&compileOutputType=1 Code Section 65589.5, the City may not deny or impose conditions of approval that would render the project infeasible unless it makes specific written findings, including a finding of a specific, adverse impact to public health or safety that cannot be mitigated. Builder’s Remedy (Government Code §65589.5(d)(5) and AB 1893): The project is proposed as a Builder’s Remedy project and is therefore subject to streamlined application of objective standards. The City’s review is limited to objective zoning, design, and development standards that are applicable to residential development of the proposed density. The project may not be conditioned or reduced in a manner that would preclude development consistent with applicable State law protections.
ANALYSIS
The applicant requests multiple waivers from objective development standards related to building articulation, façade activation, open space provisions, pedestrian access dimensions, and setback requirements (Attachment D) that would preclude development at the proposed density. Pursuant to Government Code Section 65589.5, a Builder’s Remedy project cannot be denied on the basis of inconsistency with the City‘s zoning or Comprehensive Plan land use designation. Moreover, a project’s consistency with City regulations is judged after the application of waivers under State Density Bonus Law, which must be granted unless the City can make findings supported by substantial evidence that the standards do not physically preclude development of the project at the proposed density or that denial is necessary to protect public health and safety.
Consistency with the Comprehensive Plan, Area Plans, and Guidelines9 The Comprehensive Plan land use designation for the project site is Service Commercial, which states: "Consistent with the Comprehensive Plan's encouragement of housing near transit centers, higher density multi-family housing may be allowed in specific locations.” The project is not located near a transit center; however, it is consistent with other relevant goals and policies of the Comprehensive Plan that encourage high density housing growth along this corridor.
Moreover, both sites are identified as Housing Inventory Sites under the adopted Housing Element, albeit at a lower density. The proposed density is discussed further below.
A detailed review of the project’s consistency with relevant goals and policies set forth in the Comprehensive Plan is provided in the RLUA (Attachment B). However, staff notes that the proposed application was filed in accordance with the Builder’s Remedy provision in the Housing Accountability Act. This provision applies to jurisdictions where a compliant Housing Element has not been adopted by the jurisdiction and certified by the Department of Housing and Community Development (HCD). Although the City has an adopted and certified Housing Element as of August 2024, the compliant SB 330 pre-application was filed on January 9, 2024, and therefore froze development standards in effect at the time of submittal. Therefore, even 9 The Palo Alto Comprehensive Plan is available online: https://www.paloalto.gov/Departments/Planning-Development- Services/Housing-Policies-Projects/2030-Comprehensive-Plan though the project is arguably inconsistent with the Comprehensive Plan because the proposed density exceeds what would be allowed absent the application of State laws, it cannot be denied on this basis.
Housing Element Projections and Proposed Density
Both parcels are designated Housing Inventory Sites with an anticipated combined capacity of 56 units, of which 44 units were projected for lower income and 12 units for above-moderate income households. The proposed 228-unit development exceeds this estimated capacity by 172 dwelling units, which further contributes to the City’s Regional Housing Needs Allocation, beyond what was assumed for this Housing Inventory Site.
Under the Comprehensive Plan, the maximum allowable base density for the site is 40 du/ac, or 81 units on the merged, resulting parcel. However, the maximum density for Builder's Remedy projects under AB 1893 is three times the zoning maximum, which would be 120 du/ac. An additional 35 du/ac would also apply because the project site is in a highest resource census tract (Gov. Code § 65589.5(h)(11)(C)). Together, these provisions establish a maximum allowable density of 155 du/ac. The proposed project density of approximately 114 du/ac is therefore consistent with State law.
The Housing Element Site Inventory identified this site and the adjacent site as having capacity to accommodate lower-income housing units. The Site Inventory projected a combined capacity of 23 lower-income units (12 very low-income units and 11 low-income units) for 762 San Antonio Road site (APN 147-05-102) and 21 lower-income units (11 very low-income units and 10 low-income units) for the Leghorn Street property (APN 147-05-012).
The proposed project would provide 30 deed-restricted below-market-rate (BMR) units (13%) affordable to lower-income households earning up to 80 percent of Area Median Income (AMI), exceeding the lower-income unit capacity identified for the project site in the Housing Element Site Inventory. Therefore, the project would continue to contribute toward the City’s Housing Element goals and exceeds the City’s overall capacity to accommodate its Regional Housing Needs Allocation (RHNA) obligations.
San Antonio Road Area Plan
The City initiated the San Antonio Road Area Plan in March 2025, with completion anticipated in 2028.11 The plan covers approximately 275 acres along the Palo Alto–Mountain View border and seeks to guide long-term transformation of the corridor into mixed-use neighborhoods with improved access to transit, employment, community services, and recreation. The planning effort includes evaluation of land use changes, housing capacity, and multi-modal mobility improvements, including connections to the San Antonio Caltrain station and nearby destinations such as the Cubberley Community Center and Baylands Nature Preserve. 11 San Antonio Road Area Plan: https://www.paloalto.gov/Departments/Planning-Development-Services/Housing-Policies- Projects/San-Antonio-Road-Area-Plan
The project has been designed to comply with the existing San Antonio Road special setback requirements. The proposed improvements are located outside of the required setback area and do not preclude the City from pursuing future streetscape, transportation, or mobility improvements contemplated as part of the San Antonio Road Area Plan.
As part of the RLUA (Attachment B), a condition of approval has been included to acknowledge the City’s interest in preserving flexibility within the San Antonio Road special setback area for potential future improvements associated with the San Antonio Road Area Plan. The condition requires the property owner to provide reasonable cooperation with future City efforts that may involve the use of the setback area, including, but not limited to, dedication of easements, property dedications, or acquisition of portions of the property at fair market value, if determined necessary by the City.
The Area Plan will also consider an increase to 90 feet for the maximum allowed height of buildings on the south side of San Antonio Road.
Zoning Compliance13
Attachment C summarizes the project’s consistency with applicable zoning development standards, including base CS zoning, Housing Incentive Program (HIP) standards, and the El Camino Real (ECR) Focus Area standards. Under State law, the City may only apply objective standards that would permit the proposed density, therefore, ECR Focus Area standards are the applicable regulatory framework. CS and HIP standards are provided for informational purposes only. Attachment D includes staff’s analysis of the project’s compliance with objective design standards (PAMC Chapter 18.24).
The comparison of the CS and HIP standards are provided only for informational purposes as State law requires application of the objective standards that would apply to the project if it were proposed on a site that allows the density requested (i.e. the El Camino Real Focus Area).
Additionally, Attachment D includes a summary of the project’s consistency with the objective design standards set forth in PAMC Chapter 18.24.
Comparison to PAMC 18.14.020 El Camino Real (ECR) Focus Area Standards Because the project is processed under Builder’s Remedy, the City may only apply objective standards that would allow the proposed density. Based on the project’s proposed density (114 du/ac) and floor area ratio (3.45:1), the ECR Focus Area standards are the applicable zoning framework. Under State Density Bonus Law, the applicant may also request waivers, incentives, and concessions for standards that would physically preclude development at the proposed density.
The project complies with ECR Focus Area development standards, except for the following, for which the applicant has requested waivers:
13 The Palo Alto Zoning Code is available online: https://codelibrary.amlegal.com/codes/paloalto/latest/overview •Upper Story Step-back: Per PAMC 18.14.020 Table 3: The project provides a six-foot step-back where 10-foot step-back on El Camino Real (the major street frontage) is required.
•Garage openings: Per PAMC 18.14.020 Table 3: Note (4) b: On the Leghorn Street frontage, 83% of the frontage is dedicated to garage openings, loading entries, and utility access, where no more than 50% is allowed.
Comparison to PAMC 18.24 Contextual Design Criteria and Objective Design Standards In addition to the base development standards, the project is subject to applicable objective design standards in PAMC Chapter 18.24. The applicant requests waivers to allow the project to deviate from the following standards as detailed in Attachment D and E:
•Pedestrian Walkways: Per PAMC 18.24.020(b)(1)(C): Pedestrian walkways that are designed to provide access to bicycles shall have a minimum width of eight feet, with two feet of clear space on either side. The entry to the bike room south of the main entrance is eight feet wide but provides only 2 feet of landscaping on one side for a total width of 10 feet, where 12 feet with 2 feet of landscaping on each side is required.
Waiver is also needed for bike room access from Leghorn, where proposed bike room access is 5'-0" wide.
•Side and Rear Step Backs: Per PAMC 18.24.050(b)(1)(B): On the side and rear elevations, the step back shall occur for a minimum of 70% of each façade length and shall occur between 33 and 37 feet in height when adjacent to one-story buildings. By contrast for the Project, the North elevation provides a 44.8% step-back; the South elevation provides a 35.5% step-back.
•Side Street Step Back: Per PAMC 18.24.050(b)(1)(A) and (B): On the Leghorn side, the required upper floor step back extends 45% of the frontage where 70% is required. (Note: for both of these, the plans dimension all the way across the building façade, however we understand the City proposed to count only the portion adjacent to each individual frontage, so that the portions of the building “behind” the 780 San Antonio parcel do not count).
•Façade Transparency: Per PAMC 18.24.060(c)(6)(A) and (B): On the Leghorn Street frontage, the Project does not provide 14-foot floor-to-floor and 50% transparency. If the Project had to provide 50% transparency storefront space on the ground level with 14 feet double-height, the design would reduce the building area by approximately 480 SF (assuming a 20' deep active space).
•Screening of Above Grade Parking: Per PAMC 18.24.060(c)(7)(B): On the Leghorn Street frontage, the above grade parking is not lined with commercial or habitable uses with a minimum depth of 20 feet.
•Common Open Space Landscaping: Per PAMC 18.24.080(b)(2)(F): The fourth-floor common open space is 15% landscaped, and the eighth-floor common open space contains no planting, where a minimum of 20% is required.
Multi-Modal Access & Parking
Valley Transit Authority (VTA) bus line 21 and ACE transit orange line are the nearest bus lines to the project site. The San Antonio Road Caltrain Station is located approximately 1.1 miles from the project site. Although there are no separate bicycle lanes on San Antonio Road that exist currently, multi-modal improvements are anticipated as part of the San Antonio Road Area Plan within the right-of-way or 24-foot special setback area on San Antonio Road.
The project includes three levels of above-grade parking totaling 284 spaces. The ground level garage (104 spaces, including 7 tandem) is accessed from San Antonio Road. The upper two parking levels (173 spaces, including 24 tandem) are internally connected and accessed from Leghorn Street via a separate entrance/exit. Under applicable ECR Focus Area standards per PAMC Chapter 18.14, one space per unit is required (228 spaces). Per Density Bonus Laws required number of parking spaces is 273. The project therefore exceeds the required vehicle parking requirement.
Bicycle parking is provided in two ground-floor bike rooms with access from both street frontages, the lobby, and the garage. The project includes 228 long-term bicycle parking spaces where 228 are required and 24 short-term bicycle spaces where 23 are required. Short-term bicycle parking is located near building entrances.
Title 8 Consistency (Trees)
A total of 28 existing trees representing eight species were assessed in the Arborist Report prepared by ISA certified Arborist William Sowa. Of the 28 trees documented on and off-site, a total of six trees are recommended to be removed due to low suitability for preservation with construction activities. The project proposes new trees along property lines, as street trees, and within open space areas for a total of 35 trees. Tree replacement mitigation values for the project are further detailed in the Tree Protection Legend (T-2) of the plan set, see Attachment F.
Public Art
The applicant submitted a public art application indicating their intent to commission art on-site.
They came to the Public Art Commission for their Initial Review June 18 th, 2026 to gather feedback on possible locations for artwork and the artist they are considering for the project. The Public Art Commission was very supportive of the artist under consideration. Areas for art integration focused on the San Antonio Road side of the building and mostly focused on architecturally integrated artworks on the exterior of the building. The applicant will return to the Public Art Commission for a Final Review and approval of the artwork in the coming months.
Consistency with the Findings for Approval
Overall staff find that the project mostly complies with the ARB findings for approval as detailed in Attachment B. Although the project requests waivers and concessions from certain objective development and design standards, primarily within PAMC Chapter 18.24, the project deviates in a manner that is consistent and allowed pursuant to state law. Pursuant to Government Code Section 65589.5, State Density Bonus Law, and the project’s Builder’s Remedy status, these inconsistencies do not constitute a basis for denial where the requested waivers are necessary to accommodate the proposed residential density and where no specific adverse impact to public health or safety has been identified. Accordingly, staff recommend that the City Council approve the project.
FISCAL/RESOURCE IMPACT
Processing of this application has limited fiscal impact as applicants are responsible for staff and consultant costs through applicable fees through the deposit-based cost recovery program. This project is also subject to Development Impact Fees, currently estimated at $12,899,208. These fees are anticipated to increase slightly based on the new municipal fee study in August 2026 and the applicant would be subject to these slightly increased fees if the fees are not paid prior to August 17, 2026. These fees are required either to be paid at building permit issuance or, with the recordation of a lien on the property, may be deferred until occupancy. Although the current land use (Truck Rental) generates sales tax, it is anticipated that the increase in Assessed Value through this development will significantly increase the property taxes on the parcel. Staff will continue to analyze various tax revenues through standard financial monitoring for significant changes.
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 and postcard mailing occurred on August 5, 2026, which is 10 days in advance of the meeting.
City Staff has coordinated with the City of Mountain View staff for additional review and comments, particularly regarding the portion of Leghorn Street right-of-way which is within the City of Mountain View jurisdiction.
As of the writing of this report, the City of Palo Alto has not received any public projects related to the proposed project.
ENVIRONMENTAL REVIEW
The City prepared an Addendum to the Previously Certified Environmental Impact Report (EIR) for the Housing Incentive Program Expansion and 788 San Antonio Mixed-Use Project (SCH #2019090070), consistent with the California Environmental Quality Act (CEQA) Guidelines.
Pursuant to CEQA Guidelines Section 15162, a subsequent or supplemental EIR is required only if project changes would result in new significant impacts, a substantial increase in the severity of previously identified impacts, or if new information or changed circumstances would require major revisions to the EIR. None of these conditions apply. The proposed modifications do not result in new significant impacts or a substantial increase in impact severity, and no new information or changed circumstances have arisen.
The project remains within the scope of the impacts analyzed in the certified 2020 EIR, and all applicable mitigation measures continue to apply. Accordingly, an Addendum prepared pursuant to CEQA Guidelines Section 15164 is appropriate, and no subsequent or supplemental EIR is required.
ATTACHMENTS
Attachment A: Location Map
Attachment B: Draft Record of Land Use Action (RLUA)
Attachment C: Zoning Consistency Table
Attachment D: Objective Design Standards Consistency Analysis Attachment E: Applicant’s Project Description and Legal Request Letter Attachment F: Project Plans and EIR Addendum
APPROVED BY:
Jonathan Lait, Planning and Development Services Director