Palo Alto City Council on Oct. 22 reviewed three design variations for a city‑led affordable housing project on Lot T in downtown Palo Alto and several members signaled a preference for a six‑story option that increases unit count and family‑sized units.

Jonathan Lake, director of planning and development services, introduced the project update and said the Lot T site could yield about 54 to 72 affordable units depending on building height and configuration. Julia Knight, planning manager, told council the three options retained similar parking and family‑unit ratios but varied by height and courtyard orientation: the previously supported five‑story option (option 1), a six‑story option that added units (option 2), and a six‑story option with an outward‑facing podium courtyard that reduced the net unit count by four (option 3).

Knight said staff and Alta Housing are assuming a city contribution of roughly $76,000 per unit as a planning assumption; because options 2 and 3 include more units the city’s overall contribution would be larger. She said a low‑interest long‑term loan is the most likely form for the city’s contribution and that roughly $9.7 million is available across existing city funds that could be used toward the project, while cautioning those funds may compete with other housing needs.

Carlos Castellanos, vice president of real estate development for Alta Housing, described a modest gap in the project’s financing that Alta expects to fill through a mix of sources and said the county could be one potential source for about $2 million but Alta was pursuing alternatives as well.

Council members consistently expressed support for option 2. Council member Stone said he favored option 2 because it delivers more larger, family‑friendly units and improves light and air access; he also asked staff to explore stepbacks along Kipling Street to reduce perceived massing. Council member Lythcott Haines said she preferred option 2 for the same reasons and asked for more information about studio demand; Randy Suda, Alta’s CEO, replied that studios typically lease more slowly and larger units tend to lease sooner.

Council member Burt raised concerns about massing downtown and asked whether the project was subject to the city’s streamlined affordable‑housing review; staff replied the streamlined process would apply to this application but council retains discretion to request additional Architecture Review Board engagement if it wishes. Kyle Arellano, chief assistant city attorney, clarified that Lot T currently is striped for 52 spaces; a proposed replacement garage (Lot D/Hamilton Garage) would provide about 274 spaces, producing a net gain of roughly 190 spaces for downtown public parking under the design concept presented.

Council members asked about AMI (area median income) distributions and the possible use of California Housing Finance Agency mixed‑income program funds, which could require a broader AMI range; Alta said any mixed‑income approach would keep a mix of lower‑income units and that details would be refined as financing is finalized.

No action was required at the meeting; Alta Housing expects to host a community meeting by the end of the year, submit a development application early next year, and return to the Architecture Review Board and council for the development agreement next spring.

Ending

Council members urged staff and Alta to continue work on option 2 with refinements to reduce massing impacts along Kipling Street, to present clearer financing scenarios and unit AMI mixes, and to return with more detailed renderings and community meeting feedback with the formal application.