City planning staff on Oct. 22 presented the City Council with choices for responding to SB 79, a new California law that increases by‑right heights, residential densities and floor‑area allowances near qualifying rail stations and rapid‑bus corridors. Staff proposed three paths: continue the planned downtown housing plan and apply SB 79 as written; pause the downtown plan to prepare a transit‑oriented alternative plan that redistributes development potential within station radii; or deprioritize the downtown plan because SB 79 largely establishes the new baseline.

Vishnu Krishnan, a planner on the downtown housing team, summarized the downtown housing plan’s goals: to increase housing feasibility downtown by adjusting development and design standards, addressing infrastructure and parking constraints, and identifying policy tools to encourage housing near transit. Krishnan said the team’s initial feasibility testing showed mid‑rise residential becomes financially more attractive under improved market conditions and that local policy changes can help accelerate projects when the market recovers.

Director Jonathan Lake explained that SB 79 will take effect July 1, 2026, and for Palo Alto would allow by‑right heights generally between 65 and 95 feet and densities up to 160 dwelling units per acre within a half‑mile of qualifying stations (University Avenue, California Avenue and portions of the San Antonio station area), with residential floor‑area ratios and the ability to obtain additional concessions under state density bonus law. Lake cautioned that the law’s implementation raises numerous uncertainties, including how much development will actually occur, whether office property owners will redevelop for housing, and what environmental review, if any, will be required for a local alternative plan.

Staff identified tradeoffs for an alternative, transit‑oriented plan: a potential benefit would be a more nuanced distribution of additional floor area that preserves lower‑scale character in sensitive blocks by shifting development potential to other parcels; costs and unknowns include extra staff time, additional consultant work, a required state review by the Department of Housing and Community Development (HCD), unclear HCD review criteria and timing, and possible environmental analysis. Lake noted that an alternative plan must keep the same overall development potential within a station radius while limiting reductions on any single site and avoiding creating extreme density concentrations on others.

Council members discussed priorities and next steps. Some members supported a targeted alternative‑plan effort to explore whether Palo Alto could preserve lower‑scale character in parts of University Avenue or other sensitive locations by shifting development potential to other nodes. Several council members recommended forming an ad hoc group to help staff explore SB 79 implementation details and to coordinate the downtown plan, the San Antonio area plan and California Avenue planning work.

Public comment included a resident who said she intends to develop a property within a station radius and urged the city not to use procedural delays to obstruct implementation. Several council members and staff said they would seek additional technical analysis — including feasibility modeling, rough visual massing studies of potential build‑outs, and conversations with HCD and regional agencies — before deciding whether to pursue a formal alternative plan.

Ending

Council directed staff to continue analysis and recommended forming an ad hoc to work with staff on SB 79 implications and how to coordinate related planning efforts. Staff said it would return with further technical analysis and options for council consideration.