Palo Alto’s Housing Element Misses the Mark

**This is the first of 4 blogs in this series related to strengthening Palo Alto’s draft Housing Element.**

California law requires cities to make realistic plans for new housing at all income levels. This is a powerful way to ensure that more housing gets built here in Palo Alto. To be the most welcoming city, we need abundant housing for all kinds of people – think about local business workers, seniors, your kids, etc.

Unfortunately, Palo Alto’s plan (known as our Housing Element) falls short, as Palo Alto Forward recently explained in a 63-page letter to city and state officials. This blog post summarizes three key problems. First, our Housing Element does not identify enough places to build new housing. Second, it does not change outdated zoning requirements that place unreasonable limits on new housing construction. Third, it places about half of new low-income housing in an isolated corner of the city. Three follow-up blog posts will provide more detail about these problems.

Why does Palo Alto need a Housing Element?

California law requires each city to update their Housing Element within their comprehensive plan every 8 years. This document must plan for an amount of new housing, both overall and at different income levels, consistent with our city’s Regional Housing Needs Allocation (RHNA). Palo Alto’s RHNA is set by the Association of Bay Area Governments (ABAG). The Housing Element must include a Site Inventory, which identifies parcels of land suitable for new housing. The California Department of Housing and Community Development (HCD) determines whether a city’s Housing Element complies with state law.  

Why is our RHNA so high?

In 2021, ABAG assigned to Palo Alto a RHNA of 6,086 new housing units. This allocation is 3 times more than our last, why? The increase comes because the legislature passed SB 828, which requires HCD to address the needs of existing residents and not, as before, just the anticipated growth needs. The increase is meant to address overcrowding and low vacancy rates that have led to rapid price and rent increases. Much of the public discussion assumes that the RNHA is all about growth, but it more realistically helps existing residents.

And there are huge equity and environmental benefits of helping existing residents. Palo Alto is considered a high-opportunity community for housing low- and moderate-income residents. We have great access to jobs for both auto and non-auto commutes, which helps our regional GHG-reduction goal. Palo Alto does not have an "excess" affordable units; therefore, we were assigned those units to avoid impacting already burdened low-income areas. To learn more about this planning process, check out these explainers from Palo Alto Forward, or this one from YIMBY Action.

The 6,086 unit total includes:

• 1,556 units for very low-income people, who earn less than half of the Area Median Income (AMI)

• 896 units for low-income people, who earn 50% to 80% of AMI

• 1,013 units for moderate-income people, who earn from 80% to 120% of AMI.

In December 2022 after a year-long planning process, Palo Alto submitted its draft Housing Element to HCD for review.

How can Palo Alto’s Housing Element be improved?

Palo Alto Forward sent a 63-page letter to city and state officials raising many concerns about the city’ draft Housing Element. Three concerns are most significant, as explained below and in three forthcoming blog posts.

First, state law requires Palo Alto to identify enough sites on which to build new homes. Because Palo Alto’s Site Inventory assigns most of the required lower-income housing to non-vacant sites, state law also requires the city to submit “substantial evidence” that “existing use” is “likely to be discontinued.” Palo Alto’s Inventory fails to do so. On its face, it lacks site-specific information showing that current uses will end and make way for new housing. Of the six site owners that Palo Alto Forward was able to communicate with, all reported that their site was unlikely to be redeveloped as housing because of a long-term lease or other active site uses or development plans.

Second, state law requires Palo Alto to “remove governmental constraints” on the development of new housing. The city’s draft Housing Element fails to do so. Most importantly, the city’s zoning makes it difficult (if not impossible) to build apartment buildings. It does so by excessively limiting density, height, and floor area, and by requiring too much parking. Just about every recent housing project approved by the City has had to undergo a complex rezoning process because existing requirements cannot feasibly be met (both economically and structurally). The city also improperly constrains new housing with excessive and inequitable impact fees and some of the longest permit processing times (often due to complex rezoning processes) in the state.

Third, state law requires Palo Alto to “affirmatively further fair housing.” The city’s draft Housing Element fails to do so. Rather, it sends about half of the city’s RHNA for lower-income housing to an isolated edge of the city – the southeastern corner near the intersection of the Bayshore Freeway and San Antonio Road. This area has few needed residential amenities, because it is currently zoned for General Manufacturing (GM) and Research, Office, and Limited Manufacturing (ROLM). Much of the area is encircled by four-lane surface roads. Residents would be partitioned from the city’s schools, libraries, retail, services, and parks. It is an island. This is a recipe for segregation.

Why does this matter?

Palo Alto Forward believes in abundant housing for all, right here in our neighborhoods. Poor and rich. Renters and owners. Newcomers and old-timers. Checkout clerks and teachers. Retirees moving into smaller units. Growing families moving into bigger units. Anyone looking for a better job, a safer climate, or a more tolerant culture. Everybody welcome, nobody excluded.

To get there, we need a diversity of housing types: apartments, townhomes, duplexes, triplexes, fourplexes, single-family detached homes, and ADUs. All of these are needed to help solve our housing crisis.

Statistics in Palo Alto’s draft Housing Element illustrate how far we still have to go. Single-family detached homes are 61% of our city’s housing units. In 2021, the median sales price for such a home was $3.6 million. In 2021, the average rent for a two-bedroom unit was $3,600. One in seven residents spend more than half of their income on housing. From 2010 to 2020, the number of city jobs grew by 23%, but the number of city homes grew by only 4%. The city’s residents are 2% Black, 6% Latine, 32% Asian, and 55% White. (By contrast, the Bay Area’s residents are 6% Black, 24% Latine, 23% Asian, and 42% White.)

Palo Alto’s Housing Element is an important opportunity to correct course. But only if this housing plan follows state law. It must correctly identify sites where we can build new homes. It must lift onerous zoning rules that prevent us from building new homes. And it must not segregate half of the city’s new homes for lower-income residents in an isolated corner of our city.

Follow this blog series for more information regarding the shortcomings in the Housing Element and how we can work together to fix it!