CITY COUNCIL
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Planning and Development Services
Meeting Date: September 9, 2026
Report #: 2607-6598
TITLE
Notification of 2023-2031 Housing Element Site Inventory Modifications for State Law Compliance. CEQA Status: The City Council approved a Revised Addendum to the Comprehensive Plan Environmental Impact Report on December 23, 2023 that fully analyzed the impacts of the 2023-2031 Housing Element, including maintenance of the site inventory.
RECOMMENDATION
This is an informational report, and no Council Action is required.
BACKGROUND
The City’s 2023-2031 Housing Element was adopted on April 14, 2024, and certified by California Department of Housing and Community Development (HCD) on August 20, 2024.1 Regional Housing Need Allocation (RHNA) and Maintaining Adequate Sites Per State law requirements, the Housing Element contains a list of available housing site to help address the City’s share of regional housing needs as identified by the Association of Bay Area Governments (ABAG). The City’s housing needs are quantified in the RHNA, which includes housing targets at all income levels. As shown in Table 1, the minimum RHNA requirement for Palo Alto in the 2023-31 planning period is 6,086 homes across four income levels.
Table 1: City of Palo Alto 2023-31 RHNA Requirement
Income Level
Very Low
Income Low Income
Moderate
Income
Above
Moderate
Income Total
Area Median
Income (AMI) <50% AMI
50-80% of
AMI 80-120% AMI >120% AMI
Units 1,556 896 1,013 2,621 6,086
1https://www.paloalto.gov/files/assets/public/v/1/planning-amp-development-services/housing- element/housing-element_2023_2031/palo-alto-housing-element.pdf
Housing Element Program 1.1 Adequate Sites Program requires the City to maintain a residential site inventory that is adequate to accommodate the City’s share of regional housing needs through the duration of planning period.
Housing Element Program 1.2 Site Inventory Monitoring Program requires the City to identify additional housing inventory sites if there is a shortfall of adequate RHNA capacity for any income level.3 The City Council adopted a 2026 priority objective in March to identify and designate additional Housing Element site capacity to maintain RHNA compliance. This was identified in anticipation of estimated shortfalls occurring in 2026.
The Housing Element site inventory4 includes estimated capacities and income levels based on the best available information at the time of adoption. As sites in the inventory develop, the actual number of units and income levels in the proposed development projects will vary based on the unique circumstances of each project and likely will not match the City’s projections. In the past year, several sites projected to provide moderate income units have received planning entitlement approvals with units designated at other levels, including both above moderate and inclusionary units deed restricted to be available to lower income households.
On March 16, 2026, City Council approved of the project at 2100-2400 Geng Road, that resulted in a deficit in the City’s moderate income RHNA category, requiring the City to identify new sites to meet the capacity within 180 days.
On April 20, 2026,5 the City Council adopted a resolution authorizing the Director of Planning and Development Services to make minor modifications to the 2023-2031 Housing Element Site Inventory. This action allowed staff maintain compliance with State law and the Housing Element’s Adequate Sites Program, while being responsive to mid-cycle conditions.
The April 20 agenda item outlined criteria for identifying replacement sites to implement the City’s Housing Element and comply with State law, and stated that the Director would report to the City Council when changes were made to the Housing Element site inventory, and report changes annually to HCD as part of the State-mandated reporting requirement.
ANALYSIS
Based on the moderate income net loss resulting from approval of the Geng Road project, and other pipeline projects located on Housing Element sites with lower than anticipated moderate income units (80-120 percent of area median income), staff began analyzing potential replacement sites. Staff applied the same evaluation criteria used for the existing Housing 3 Note: for purposes of determining adequate capacity in a site inventory, the RHNA requirements for very low- and low-income are combined. (See Gov. Code Section 65583.2(c)(3).) 4 https://www.paloalto.gov/files/assets/public/v/1/planning-amp-development-services/housing- element/housing-element_2023_2031/appendix-d_site-inventory.pdf 5 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18703 Element inventory sites and reassessed previously studied sites. Staff also considered additional criteria in response to changing State laws such as Senate Bill (SB) 79.
Evaluation Methodology
The project team identified potential opportunity sites by using two primary datasets: updated County parcel data and sites with developer interest. Each site was assigned an estimated realistic capacity using Housing Element site inventory assumptions and methodology. The site evaluation criteria included:
Vacant lot
Developer interest
Surface parking
Vacant building
Faith-based institution
Single story
Improvement to land ratio less than 1.5
Structure age of 47 years or older
Increased unit potential, or an existing development with floor area ratio less than or equal to 0.6
The project team excluded sites from consideration if they met criteria such as:
Zoning prohibiting multi-family residential
Lot size under 0.25 acres 9
Open space zones
Existing multi-family residential units with densities greater than 20 dwelling units/acre Sites adjacent to R-1 zones
Finally, the project team conducted site-by-site checks to exclude certain sites based on existing use and development status (e.g., recently redeveloped).
Added Sites
As of July 2026, the City faced a moderate income RHNA deficit of 189 units when accounting for the RHNA requirement plus a 15 percent buffer. On August 27, 2026, the Housing Element Site Inventory was updated with 14 additional sites with an estimated moderate income unit yield of 194. This will provide an additional buffer for Housing Element sites that develop at less than the assumed moderate income unit yield. Attachment A includes a detailed table of the sites added to the inventory. These sites are focused near the El Camino Real area/North Ventura Coordinated Area Plan and Downtown area/South of Forest Coordinated Area Plan. 9 The adopted HE Site Inventory assumed 100% Above Moderate capacity for all lots under 0.25 acres, so these small sites would not be anticipated to generate below-market rate units.
Many sites are within the SB 79 area of influence which increases development potential.
Attachment B is the revised Housing Element inventory following addition of these sites.
Additionally, if the Council were to adopt an ordinance rezoning the property at 470 Olive Avenue to allow multi-family housing, staff would add this parcel to the Housing Element inventory. It is estimated the site would yield an additional four moderate income units, providing an additional buffer, consistent with HCD recommendations.
FISCAL/RESOURCE IMPACT
To accomplish the critical and time-sensitive work of identifying suitable replacement sites, staff issued a task order through the Council approved on-call planning contracts in an amount of $66,196 for technical analysis associated with evaluating new housing opportunity sites for inclusion in the inventory. The project also included associated staff resources over the past six months to analyze and evaluate sites.
STAKEHOLDER ENGAGEMENT
Staff placed an ad in the Daily Post newspaper on August 28, 2026, 10 days in advance of the hearing. Preparation of the Housing Element included a range of community outreach methods including surveys, Working Group meetings, community workshops, and public hearings.
Identification of new housing opportunity site to include in the inventory was based on the methodology developed in the Housing Element update process. Staff met with a representative from Palo Alto Forward in May 2026 to discuss the project and replacement housing sites.
The site inventory is located on the City’s website. Staff informed property owners of sites added to the inventory via letters in August 2026.
ENVIRONMENTAL REVIEW
On April 15, 2024, the City Council adopted Resolution No. 10155, approving a Revised Addendum to the Comprehensive Plan Environmental Impact Report (EIR). The addendum analyzed potential environmental impacts of the 6th Cycle Draft Housing Element. This includes housing production to meet the RHNA through implementation of Housing Element programs, including the program requiring maintenance of the Housing Element sites inventory. Minor updates to the site inventory are consistent with the intensity of development studied in the Revised Addendum and are not anticipated to have an additional environmental impact beyond what was analyzed in the Revised Addendum.
ATTACHMENTS
Attachment A: New Moderate Income Housing Element Sites Attachment B: Housing Element Appendix D (Site Inventory), Updated August 2026 APPROVED BY:
Jonathan Lait, Planning and Development Services Director