Planning commission recommends zoning changes to implement housing incentives, asks staff to study FAR bonus and El Camino nodes

The Planning and Transportation Commission recommended the City Council adopt an ordinance amending Title 18 of the Palo Alto zoning code to implement the Housing Incentive Program (HIP) and the Affordable Housing Incentive Program (AHIP), voting 6‑0 with one absence on Dec. 17, 2024. The commission also asked staff to analyze an FAR bonus for non‑RM zones tied to a 10% three‑bedroom unit threshold, to propose additional retail nodes along El Camino Real within three months, and to expand AHIP applicability to HIP‑eligible locations.

The programs aim to relax development standards in specified commercial and mixed‑use areas in exchange for on‑site affordable housing or architectural review. Staff presenter Jean Eisberg described the two programs as distinct: the HIP applies to market‑rate projects while the AHIP applies to projects providing deeper affordability. "This is a public hearing on presentation and potential recommendation on amendments to title 18, the zoning ordinance, to implement 2 key programs of the housing element," Eisberg said during the staff presentation.

Why it matters: The ordinance is intended to help Palo Alto meet housing goals in the adopted housing element by making more development feasible on opportunity sites. Key proposed changes include increased floor‑area ratios and building heights on eligible sites, changes to retail‑preservation rules along corridors such as El Camino Real, reduced minimum parking ratios up to the limits allowed by state density bonus law, and Transportation Demand Management (TDM) measures for projects that reduce parking by more than half.

Staff overview and technical changes

Jean Eisberg told commissioners the AHIP allows relaxed standards for affordable projects near transit and the HIP provides additional development capacity for market‑rate projects on opportunity sites and commercial corridors. The draft ordinance aligns building heights and FAR increases with analyses presented in September that examined physical and financial feasibility. The AHIP as drafted allows projects with an average affordability target of about 100% of area median income (AMI) while retaining an upper bound tied to existing code language of up to 120% AMI; Eisberg described the averaging approach as a way to permit mixed income mixes rather than all units at the upper bound.

Eisberg summarized retail‑preservation changes that would: keep ground‑floor retail requirements in downtown and California Avenue overlays and a set of El Camino nodes; exempt 100% affordable projects and housing element opportunity sites from retail replacement requirements in many locations; and retain an existing reduced replacement threshold of 1,500 square feet for higher‑density projects. The ordinance includes a staff suggestion to allow the director to modify the map of retail nodes by council resolution so the list can be updated more quickly than by ordinance.

Discussion highlights

Public comment: Amy Ashton, executive director of Palo Alto Forward, urged broad use of the HIP and AHIP. "We need to make changes to our zoning ordinance to facilitate feasible housing projects," Ashton said, and she urged removing or loosening density and parking limits to make projects financially feasible. She told the commission her organization had gathered roughly 120 signatures in support in four days.

Commissioners debated several technical trade‑offs. Commissioner Aiken pressed staff on how the AHIP averaging would be implemented and warned that using averages can complicate tenant selection and wait‑list policies; staff said affordability levels would be set at permit stage and recorded in deed restrictions. Commissioners asked for clarity on the 1,500‑square‑foot retail threshold, with some noting that fixed square‑foot thresholds can be awkward on very large or very small parcels. Several commissioners said the ARB (Architecture Review Board) recommendations—eliminating maximum FAR, adding 5 feet of height, and further parking reductions—merit study, while many expressed particular caution about removing or sharply reducing parking requirements without supporting data.

Formal action

The commission took a single formal vote forwarding the ordinance to Council with additional directions to staff. Motion (text as moved): "Recommend adoption of the ordinance as presented; expand AHIP applicability to all HIP‑eligible sites; direct staff to investigate an FAR bonus for non‑RM developments tied to projects that provide at least 10% three‑bedroom units; and direct staff to propose additional El Camino retail nodes within three months; and return analyses to Council." (Mover and seconder: not specified in the transcript.)

Vote record: Aiken — yes; Chair Chang — yes; Heckman — yes; Lu — yes; Vice Chair Rekdal — yes; Templeton — yes. Tally: yes 6, no 0, abstain 0, absent 1. Outcome: motion carries; item to proceed to City Council in Q1 with staff follow‑up.

What remains open

Commissioners asked staff to return with tighter technical analysis of: (1) whether removing a maximum FAR is advisable or whether a targeted FAR bonus is a better tool; (2) how to implement the AHIP averaging (unit‑based or square‑foot weighted averages); (3) whether and where to add more El Camino retail nodes; and (4) empirical data on the parking reductions suggested by the ARB. Staff said it will present additional work to Planning Commission and the ARB prior to Council consideration.

Ending

The commission's recommendation sends the ordinance to the City Council in the first quarter of next year. Staff will provide additional analysis on FAR alternatives, retail node mapping, and the operational details of AHIP averaging and parking/TDM measures as directed.