1. BAAQMD Local Action List
2. Housing Element Technical Document
The Housing Element portion of this Comprehensive Plan (Chapter 4) is
accompanied by the Housing Element Technical Document dated Fall 1997,
prepared by Freitas and Freitas, Planning and Engineering Consultants,
Embracing the New Century
List of Appendices- 1
BAAQMD Local Action List
The Bay Area Air Quality Management District (BAAQMD) has prepared a list of actions that
are intended to encourage drivers, and especially work-related commuters, to use alternatives
to the single occupant automobile.The Santa Clara Valley Transportation Authority Congestion
Management Program (CMP) has divided the BAAQMD’s actions into those that are feasible to
implement immediately by individual cities and actions that require multi-jurisdictional imple-
mentation efforts. The items on the CMP’s immediate local implementation list are identified
BAAQMD/CMA Local Action List
1. Bicycle Storage Facilities at Transit Centers. This action consists of adding bicycle stor-
age facilities at designated transit centers, including:
• park-and-ride lots
• rail transit stations
• major transit transfer stations
2. Improved Roadside Bicycle Facilities. This action consists of improving roadside bi-
cycle facilities and connections to bicycle routes.
3. Improve Pedestrian Circulation. This action consists of improving public sidewalks and
pathways within existing commercial, employment and mixed use centers.
4. Shuttle Service to Rail Transit Stations [existing development]. This action consists of
performing an initial rail station shuttle feasibility study for major employment centers
(defined as having over 750 employees or 300,000 gross square feet of building area)
located over 2,500 feet from a rail transit station.
5. Transit Stop Improvements. This action consists of improving transit stops to encourage
transit use as well as improving adjoining roadways to improve traffic flow and/or re-
duce delays to transit vehicles entering the traffic flow.
6. Transportation Demand Management Public Information Programs. This action con-
sists of providing public information on availability and benefits of transportation alter-
natives to the single occupant automobile as well as the air and water quality impacts of
7. Peak-period Parking and Delivery Restrictions. This action consists of restricting
curbside parking and deliveries during peak periods to improve traffic flow.
8. Traffic Signal Timing and Synchronization Program. This action consists of optimizing
the timing of traffic signals to reduce vehicle delay and vehicle emissions at intersec-
Palo Alto Comprehensive Plan
BAAQMD List- 1
9. Urban Area Traffic Flow Improvements. This action consists of making traffic flow
improvements within congested urbanized areas to control traffic flows rather than to
add capacity. These improvements may include items such as the following:
• Additional turn lanes at intersections;
• HOV lanes;
• Turning two-way streets into one-way streets;
• Computerized traffic & transit control and management on arterials;
• Turn restrictions at intersections (peak period and all day);
• Designating reversible lanes to serve peak direction traffic flows.
10. Parking Preference for HOVs. This action consists of providing preferential parking
for high occupancy vehicles (HOVs) at employment and activity centers.
11. Bicycle Facilities at Development Projects. This action consists of requiring bicycle
storage facilities and showers/changing areas for all new employment centers that have
100 or more employees.
12. Building Placement on Site. This action consists of placing new buildings on their sites
in a manner designed to encourage alternative forms of transportation.
13. Pedestrian Circulation System: New Development. This action consists of building safe,
attractive, and useful public sidewalks and pathways in all new development projects.
14. Bicycle Facilities at New Residential Development. This action consists of requiring
secure bicycle storage facilities at all new residential development projects that do not
have private garages.
15. Shuttle Service [new development]. This action consists of providing shuttle transit
service to rail transit stations and other locations. All new employment center develop-
ment projects with either a minimum of 750 employees or 300,000 gross square feet
would provide shuttle service to and from a rail transit station, unless the city has
performed a feasibility study and determined that his action is infeasible for a particu-
lar development project.
16. Transit Stop Improvements. This action consists of improving transit stops to encour-
age transit use as well as improving adjoining roadways to improve traffic flow and/or
reduce delays to transit vehicles entering the traffic flow. Cities would work with SCVTA
to require new development projects to assist in provision of roadway improvements
(including bus turnouts and bus bulbs) at bus stops affected by the development project
and transit station amenities (such as shelters, signs, maps, schedules, public telephones,
and lighting) at transit stops affected by the development project.
Source: Santa Clara Valley Transportation Authority Congestion Management Program, Technical Standards and
Procedures, “Requirements for Deficiency Plans”, November 18, 1992.
Embracing the New Century
BAAQMD List- 2
Housing Element Technical
City of Palo Alto Comprehensive Plan
City of Palo Alto
Housing Element Technical Document
This document is the full and complete 1998 Housing Element
and serves as a technical appendix to the Housing Element
chapter of the City of Palo Altos Comprehensive Plan.
Adopted by City Council:
Approved by State of California,
Department of Housing and
Housing Element Prepared by:
Melanie Shaffer Freitas
Freitas + Freitas, Planning and Engineering Consultants
311 Laurent Avenue
Santa Cruz, California 95060
With Assistance from City of Palo Alto:
Dept. of Planning and Community Environment
James E. Gilliland
City of Palo Alto
Housing Element Technical Document
Table of Contents
Executive Summary i
Chapter 1 Introduction
Comprehensive Plans and Housing
Housing Elements: City of Palo Alto 1
Citizen Participation 2
Chapter 2 Population and Households
Population Growth 5
Population by Race/Ethnicity 6
Population by Age 7
Households and Household Size 8
Household by Type 8
Households by Income Level 9
Employment Trends 11
Households with Special Needs 11
1. Elderly Households 11
2. Single Parent Households 14
3. Disabled Households 15
4. Overcrowded Households 16
5. Homeless Households 17
Chapter 3 Housing Stock
Inventory of Housing Units 21
Housing Units by Type and Tenure 22
Vacancy Rates 23
Housing Age and Condition 24
Cost and Affordability of Housing 26
Chapter 4 Existing Affordable Housing
City Housing Programs and Policies 29
1. Below Market Rate Program 29
2. City Housing Funds 30
Federal and State Housing Resources 31
Affordable Housing Unit Inventory 31
Housing Support Services 32
Chapter 5 Future Housing Needs
New Construction Needs 33
1. Need Addressed to Date 34
2. Household Need by Income Level 34
Rehabilitation Need 36
Conservation Need 36
1. Energy Conservation 36
2. Conservation of Affordable Units 37
3. Description of “At Risk” Units 40
4. Cost Analysis 43
Chapter 6 Housing Constraints
Governmental Constraints 45
1. Land Use Controls 45
2. Local Processing /Permit Procedures 48
3. Below Market Rate (BMR) Program 49
4. Land Availability 51
5. Infrastructure 51
6. Environmental 51
Market/Non-Governmental Constraints 52
1. Financing Costs 52
2. Land and Construction Costs 52
Chapter 7 Review of 1990 Housing Element
Background Information 55
Policies, Programs and Goals 55
Effectiveness of 1990 Housing Element
and Implications for 1995 Element
A. Reprint of the Housing Element of the Comprehensive Plan
(Chapter 4) included here for HCD review
B. City of Palo Alto Subsidized Rental Housing Developments
C. Summary of Below Market Rate (BMR) Units
D. Land Inventory, Potential Residential Development: 1997-2002
E. Resource Persons During Preparation of 1997 Element
Housing Technical Document
Table of Illustrations
Illustration Title Page
1 Population by City, Santa Clara County 1980-90 5
2 Population by Race/Ethnicity, 1990 7
3 Population by Age, 1970, 1980 and 1990 7
4 Household Size, 1970-1996 8
5 Household Income Distribution, 1989 9
6 Annual Household Income Limits, 1996 10
7 Independent Living Facilities for Elderly, 1995 13
8 Residential Care Facilities, 1995 13
9 Homeless Count in Palo Alto, 1991 18
10 Transitional Housing Shelters, (Nearby Areas) 1995 20
11 Supportive Shared Housing Facilities, City of Palo Alto 20
12 Total Number of Housing Units, 1970-95 21
13 Rate of Annual Housing Production, 1970-95 21
14 Housing Stock by Type, City of Palo Alto, 1990 22
15 Housing Units by Tenure, Palo Alto and Surrounding
Communities, 1990 23
16 Year Structure Built, City of Palo Alto, 1990 24
17 1996 Income Limits/Housing Affordability 27
18 Revised ABAG New Construction Estimate 34
19 ABAG New Construction Estimate by Household Income
Level, As Adjusted in 1990 Housing Element 34
20 Revised ABAG New Construction Estimate by Household
Income Level, 1990-2002 35
21 Summary of Revised New Construction Estimate by
Household Income Level, 1996-2002 35
22 Summary of Government Assisted Units “At Risk”
for Conversion 38-39
23 Cost Analysis to Conserve “At Risk” Units 43
24 R-1 Districts and Minimum Site Areas 45
25 Land Inventory, Potential Residential Development 50
26 1990-95 Housing Goals and Results 69
Note: The data used in this document originated from a variety of sources and time frames. The majority of statistical
information was obtained from U.S. Census data; however, State of California (Department of Finance) data was also used.
Inconsistencies in the data have been corrected as much as feasible but there still may remain some differences in data
reporting due to the time frame when the data was collected or the agency collecting the data.
Following are some of the highlights or more significant information contained in the 1997
Housing Element Technical Document:
Household and Housing Data
Palo Alto’s Population Mix Will Change:
While Palo Alto’s total population is not expected to increase significantly in future years, it is
anticipated that certain groups within the population will change in size and proportion. In
specific, the number and percentage of older adults is expected to continue to increase.
Additionally, the number of persons of childbearing age has increased in recent years and
this may affect the percentage and number of children in the population.
Both Ends Of The Income Spectrum Are Represented In Palo Alto:
Palo Alto households overall are affluent yet the City also has its share of very low-, low- and
moderate-income households. Approximately 20% of Palo Alto households reported incomes
of under $25,000 in 1989 which is almost the same percentage of households in the County
of Santa Clara who also reported incomes of under $25,000 for the same year.
Household Income Levels Reflect Household Types:
There is a disparity between household income levels based on type of household. For ex-
ample, the mean family income for married couples in Palo Alto in 1990 was $101,537; the
mean family income for a female-headed single parent household in Palo Alto was $36,651.
Rate of Housing Production Has Decreased:
Palo Alto’s highest rate of housing production was during the decade between 1950-60 when
approximately one-third of all of Palo Alto’s housing units were constructed. Since then,
however, the rate of housing production has continued to decrease. From 1970-80 the an-
nual rate of housing production was 240 units per year, however, by 1995 the annual rate of
housing production had decreased to 61 units per year.
Palo Alto Is Essentially A “Built-Out” Community:
Only 1.4% of the land area in the City is vacant and there are few opportunities to annex
additional lands in the future.
Housing Is Expensive:
The median sales price for the first half of 1995 for a single family, detached home in Palo
Alto was $456,000. This sales price would require an annual income of approximately $124,000
in order to purchase a unit using traditional underwriting criteria. A condominium/townhome
sold for a median sales price of $267,600 in the same time period and would require an
annual income of approximately $80,000 in order to afford the unit.
Housing Technical Document Executive Summary i
Home ownership Is Only Available To Higher Income Households:
Without a public subsidy, home ownership is only affordable to households with above
moderate-incomes. Very low-, low- and moderate-income households cannot afford the
median sales price home ownership units.
Rental Units Are Affordable to Moderate-Income Household But Not To Very
Low-Income and Low-Income Households:
Moderate-income households in Palo Alto can afford average rental rates but very low-in-
come and low-income households are being priced out of the market.
Housing Achievements (1990-December, 1995)
The City has actively supported the development and preservation of affordable housing
opportunities through the following activities:
1. “Below Market Rate” (BMR) Program
18 units were provided through the BMR Program from 1990 to December, 1995. These
units were purchased by a variety of households including 7 moderate-income, 8 low-in-
come and 3 very low-income households.
2. Assistance to Non-Profit Organizations
Financial and technical assistance has been provided to assist non-profits in:
• providing housing services, such as
a) Senior Home Improvement Repair Program
b) Shared Housing Programs
c) Homeless Assistance
d) Accessibility Improvements to Existing Housing Developments
e) Fair Housing and Information Services
• developing Affordable Housing
a) Acquisition and Rehabilitation of Arastradero Apartments (66 Units)
b) Acquisition and Rehabilitation of Barker Hotel (26 Units)
c) Acquisition and Rehabilitation of Emerson North (6 Units)
d) Construction of Lytton Courtyard (51 Units)
3. Funding Assistance
Funding assistance to projects using Housing Development Funds and Community Devel-
opment Block Grant (CDBG) Funds. For fiscal years 1990-96, the City has allocated 86% of
the total $5.5 million in CDBG funds for housing development, housing programs and ad-
ministrative costs for housing related services.
4. Rehabilitation Assistance
Assistance to very low- and low- income households to rehabilitate their housing units
through the Rental Rehabilitation Program and the CDBG Program.
ii Housing Technical Document: Executive Summary
Affordable Housing Is Needed:
Affordable housing is the most significant housing need for very low-, low- and moderate-
income households and for “special need” households such as elderly, disabled, single par-
ent, overcrowded and homeless.
Major New Construction Projects In The Future Must Contain Affordable
There will be several opportunities in the future for the City to review proposals for larger,
residential developments. Affordable housing, consistent with City policies, shall be included
as a requirement in approving any of these proposals.
Palo Alto’s Existing Housing Stock Needs To Be Preserved and Maintained:
Existing units in the housing stock must continue to be maintained and affordable units
must be monitored to ensure that they continue to be preserved as affordable housing for
very low- and low-income households.
Continue to Support Non-Profit Organizations Providing Housing Services:
Non-profit groups are very active in the Palo Alto area in providing housing related services.
The City should continue its tradition of supporting those organizations with technical and
Continue and Assess Current Housing Programs:
The City’s BMR Program has been operative since 1974. While it is recognized as being suc-
cessful in providing affordable housing opportunities, it is an appropriate time to review and
evaluate the overall results of the program and identify possible new directions for the fu-
ture. Program policies and requirements need to be coordinated so that all program docu-
ments reflect the same information. The City should assess the effectiveness of programs
such as the second unit or “cottage” provisions, incentives for mixed use projects, allowing
for small lot subdivision and requiring minimum densities. In addition, the City should re-
assess the need to reinstate the housing rehabilitation program.
Evaluate Existing and Proposed Ordinances:
A Planned Development process should be evaluated especially in regard to having no “public
benefit” requirement that is perceived as adding to housing cost. The City should assess the
need for a “Single Room Occupancy” (SRO) Ordinance or special provisions within the Zon-
ing Ordinance to more readily enable the construction of SROs. The City should evaluate
modifying parking requirements to encourage more housing where jobs, services and tran-
sit decrease the parking need.
Housing Technical Document Executive Summary iii
Chapter 1: Introduction
Comprehensive Plans and Housing Elements
Cities and counties in California are required to develop Comprehensive or General Plans,
which are long-range planning documents. A community’s Comprehensive Plan typically
provides an extensive and long-term strategy for the physical development of the commu-
nity and any adjoining land. There are seven subject areas that must be addressed in a
community’s Comprehensive Plan, although other subjects can be added based on the
community’s needs and objectives. The seven mandated “Elements” that each Comprehen-
sive Plan must contain include Land Use, Circulation, Conservation, Open Space, Noise, Safety
and Housing Elements.
The Housing Element of the Comprehensive Plan is mandated by State law to contain cer-
tain subject areas and is reviewed by a State agency for conformance to State law. The State
of California, Department of Housing and Community Development (HCD), can review each
community’s Housing Element to determine if it complies with State Housing Element Law,
specifically Article 10. 6 of the Government Code. Article 10. 6 requires communities to in-
clude the following information in their Housing Element:
• evaluation of existing housing needs,
• estimates of projected housing needs,
• review of previous Housing Element goals and programs,
• inventory of adequate sites for housing and evaluation of infrastructure condition and
• identification of constraints on housing, including governmental as well as non-govern-
• development of housing programs to address identified needs, and
• quantifiable objectives for attainment of new construction, rehabilitation and conserva-
tion housing needs.
Housing Elements: City of Palo Alto
The Technical Document that follows is the Housing Element for the City of Palo Alto. It is
anticipated that the Comprehensive Plan including the goals, policies and programs of the
Housing Element, and this Technical Document, will be adopted in 1998. The Housing Ele-
ment covers the five year period from June, 1998 to June, 2003. This Technical Document was
prepared pursuant to Article 10. 6 of the Government Code (State Housing Element Law)
and was developed to address the issues noted above.
The City has previously adopted Housing Elements, the most recent being the 1990 City of
Palo Alto Housing Element. This 1997 Housing Element updates the 1990 Housing Element
and reflects the planning period and policies of the City’s 1998-2010 Comprehensive Plan.
The City’s Housing Element also includes information not required by Article 10. 6 but im-
portant to the evaluation of housing needs. For example, Chapter 4 of the Element is a com-
prehensive inventory of the existing affordable housing resources in the City. This inventory
was designed so that the reader would be able to acquire a complete overview of the range
Housing Technical Document: Chapter 1 1
of housing opportunities currently available in Palo Alto. This inventory provides informa-
tion that is important in order to evaluate housing needs and is supplemental to that re-
quired by State Housing Element Law.
The 1997 update of the City’s Housing Element was completed as part of the revision pro-
cess of the City’s Comprehensive Plan. The City’s Comprehensive Plan was updated through
a planning process involving the Comprehensive Plan Advisory Committee (CPAC), the City’s
advisory boards and commissions, and the City Council.
The CPAC included 37 community members appointed by the City Council. Members in-
cluded 28 community members, 8 representatives of Boards and Commissions, and 1 repre-
sentative from the Palo Alto Unified School District (PAUSD) Board. The assignment given to
CPAC by the Council was to solicit input from the community and to prepare visions, goals,
policies and programs to be considered for inclusion in the plan. The CPAC was assisted in
their task by a professional process facilitation firm and staff from the City’s Planning Divi-
From January, 1993 through October, 1995, the CPAC held more than 20 public meetings.
Two newsletters that described the Comprehensive Plan effort and solicited ideas and sug-
gestions on a mail-in comment form, were mailed to each Palo Alto household at different
stages of the process. The CPAC conducted a series of educational forums to explore topics
of current interest relevant to the plan. A community survey was also conducted to a ran-
dom sample of 400 Palo Alto households.
CPAC produced a video summarizing the visions and goals that they developed and pack-
aged the video with questionnaires and other materials for conducting workshops into “out-
reach kits. ” These kits were then checked out by residents to conduct outreach workshops
with neighborhood and community organizations. Over 600 individuals participated in these
CPAC appointed six subcommittees to work on specific program areas, including housing.
The housing subcommittee met on seven occasions, reviewing the current Housing Element
goals, policies and programs and recommending revisions. These recommendations were
presented to the entire CPAC for inclusion.
The visions, goals, policies, and programs that resulted from the work of the CPAC were first
reviewed by the Planning Commission which held public hearings, workshops and then pri-
oritized the CPAC recommendations at several public meetings. Recommendations of the
Planning Commission were then passed on to the City Council which also held public hear-
ings and workshops and where each vision, goal, policy and program was reviewed, discussed
and acted on over a course of several public meetings. Each individual who expressed inter-
est in the Comprehensive Plan process was added to a mailing list and was informed of all
Comprehensive Plan activities. This list ultimately included over 2,000 names.
From these recommendations the draft Technical Document and Housing Element were pre-
pared by Freitas + Freitas consultants and City staff. An administrative draft version of the
document was reviewed by representatives of City staff from all departments. The revised
draft was reviewed in a public process for a minimum period of 45 days. Notice of availability
of the draft was published in a local newspaper and mailed to the individuals and organiza-
tions on the Comprehensive Plan mailing list and posted in accordance with City policy. Cop-
ies were available for review at City Hall and six City branch libraries.
2 Housing Technical Document: Chapter 1
The entire Comprehensive Plan document, including the Housing Element and Technical
Document were reviewed at public meetings by various City Boards and Commissions in-
cluding the Historic Resources Board, the Utilities Advisory Commission, the Public Arts Com-
mission, the Human Relations Commission and the Architectural Review Board. All comments
were forwarded to the Planning Commission for a public hearing, where the Commission
prepared a formal recommendation to the City Council. The City Council has tantatively
adopted the 1998-2010 City of Palo Alto Comprehensive Plan; final adoption of the Compre-
hensive Plan is scheduled for July 20, 1998.
Housing Technical Document: Chapter 1 3
Chapter 2: Population and Households
During the decade between 1980-90, Palo Alto’s population increased by only 1%. In 1980,
the City’s population was 55,225 and by 1990, that number had increased by only 675 per-
sons to 55,900. This was one of the lowest rates of population growth for communities in
Santa Clara County for that decade. Santa Clara County’s total population increased by 16%
and the State of California’s population increased by 25.7% for that same time period.
Illustration #1: Population by City, Santa Clara County, 1980-90p
City 1980 1990 Growth 1980-90
Campbell 27,067 36,048 33%
Cupertino 34,420 40,263 17%
Gilroy 21,641 31,487 45%
Los Altos 25,769 26,303 2%
Los Altos Hills 7,421 7,514 1%
Los Gatos 26,593 27,357 3%
Milpitas 37,820 50,686 34%
Monte Sereno 3,434 3,287 -4%
Morgan Hill 17,060 23,928 40%
Mountain View 58,655 67,460 15%
Palo Alto 55,225 55,900 1%
San Jose 628,283 782,248 25%
Santa Clara 87,746 93,613 7%
Saratoga 29,261 28,061 -4%
Sunnyvale 106,618 117,229 10%
Unincorporated 128,058 106,193 -17%
Total County 1,295,071 1,497,577 16%
Source : 1990 U.S. Census
By 1996, however, the State Department of Finance estimated that the City’s population had
grown to 58,501, an approximate increase of 5% from 1990. It should be noted that the
Department of Finance generally overestimates the Palo Alto population. However, there
has been some increase in population that is due, in part, to an increase in household xize,
which has increased from 2.2 persons in 1990 to 2.3 persons in 1996. The increase in popu-
lation cannot be directly attributable to additonal housing units being constructed in the
City because the housing stock increased by only 353 units or 1.2% from 1990 to 1996.
Housing Technical Document: Chapter 2 5
A possible explanation for the increase in population is that households are expanding due
to increased birth rates in the existing household mix. A demographic analysis (Lapkoff and
Gobalet Study, December, 1992) conducted for the Palo Alto Unified School District corrobo-
rates this observation. In that analysis, the authors reported that enrollments in the kinder-
garten and elementary grades were beginning to rise in the late 1980s and early 1990s. Part
of this increase was attributable, they felt, to higher birth rates among the population. The
Palo Alto Unified School District reported in 1996 that kindergarten enrollment has varied in
the years since 1990. The registration numbers have increased one year and then decreased
the next; hence, there was no discernable pattern of a steadily increasing trend at the time
that this Housing Element was written. The increase in household size might also be attribut-
able to young adult children staying or returning to their family home (“boomerang kids”)
because of the high cost of securing housing on their own.
Palo Alto’s population is not expected to increase dramatically in the coming years. One of
the primary reasons for this is that the City is essentially “built out” and there is little available
land for new residential construction. In addition, the trend in Palo Alto has been towards a
predominance of households with older household heads and no children at home. The same
demographic study cited in the paragraph above predicts that “Palo Alto’s population will
get older, not younger, during the coming decades “(page I, Lapkoff and Gobalet Study, De-
cember, 1992). Further, their analysis indicates that migrants to Palo Alto in the future will
also likely be older, have two incomes and be beyond the child bearing ages.
Palo Alto’s population is, however, expected to continue to increase at a slow rate. The in-
crease in population due to the increased household size as experienced during 1990-95
may continue as evidenced by the increase in persons of child-bearing age and the possible
increase in kindergarten enrollment. As in the past, people with young children or planning
to have children, move to Palo Alto for the good schools and the good neighborhoods. This
trend will likely continue and will effect household size.
Population by Race/Ethnicity
In evaluating Palo Alto’s racial distribution, the 1990 U.S. Census data indicate that Palo Alto’s
population is primarily composed of White persons. Approximately 82% of the population
was identified as White in 1990. The next largest population group by race in the City was
Asian or Pacific Islanders who comprised 10% of the City population. The remaining popula-
tion groups were Hispanic who represented 5% of the population and Black persons who
comprised almost 3% of the total citywide population. By comparison, in 1980 Whites repre-
sented 89% of the population, Hispanics 4%, Blacks 3% and others, including Asian or Pacific
In comparing Palo Alto to countywide racial statistics, it is apparent that Palo Alto’s share of
minority racial groups is less than the countywide average in all categories. For example,
20.5% of Santa Clara County’s population is Hispanic while only 5% of the City’s population
identified themselves as Hispanic in 1990. The illustration on the next page graphically illus-
trates the City’s ethnic/racial proportions with a comparison chart included of City and County
statistics from the 1990 U.S. Census.
6 Housing Technical Document: Chapter 2
Illustration #2: Population by Race/Ethnicity, 1990
City of Palo Alto Santa Clara County
Population 55,900 1,497,577 City of Palo Alto
White 82% 58.0% Hispanic Black
Black 3% 3.5% 5% 3%
Hispanic 5% 20.5% Asian/Pacific
Islander 10% 17.0% White
Other 0% 1.0%
Source “United Way Needs Assessment for Santa Clara County”,1993-94,
Page 10, Exhibit 2.2 (based on 1990 U.S. Census); Percentages Rounded
Population by Age
The median age of Palo Alto’s population has increased dramatically over the last several
decades. In 1970, the median age was 29.5 years for males and 33.7 years for females. By
1990, the median age of Palo Alto residents had increased by approximately 6.5 years from
1970, climbing to 36.0 years for males and 40.0 years for females. These median age figures
are quite high in relation to those for Santa Clara County, which in the 1990 census reported
a median age of 31.2 years for males and 33.0 years for females.
This “aging” of the population is evident in the increase in Palo Alto’s senior population. In
1970, persons age 65 and over numbered 5,789, constituting 10.3% of the City’s total popu-
lation. By 1990, the senior population had increased by 2,958 to 8,747 persons, or 16% of the
City’s total population. Therefore, Palo Alto’s senior population increased nearly 50% over
the 1970-90 time period.
Illustration #3: Population by Age: 1970, 1980, 1990
Age Groups 1970 1980 1990 Change 1970-90
Pre-School (Under 5) 3,205 2,168 2,764 441
School Age (5-17) 12,682 8,998 6,999 -5,683
Child Bearing (18-44) 21,472 24,004 24,863 +3,391
Middle Age (45-64) 12,818 12,647 12,527 -291
Senior (65 and Over) 5,789 7,408 8,747 +2,958
TOTAL PERSONS 55,966 55,225 55,900
Source: U.S. Census, 1970, 1980, 1990 (Report STF3, P 7 + 13)
As the table above demonstrates, the senior population increased from 1970-90 while the
number of children under the age of 18 years decreased. Persons between the ages of 18-44
years increased by about 15% during the 1970-90 time period while middle age persons
(45-64 years) decreased very little.
Housing Technical Document: Chapter 2 7
Households and Household Size
For purposes of evaluating housing supply and demand, it is useful to translate information
from population figures to household data. According to data from the State of California,
Department of Finance, there were 58,501 persons living in Palo Alto as of January 1, 1996.
Of this total, 1,433 were living in group quarters. The remaining 57,068 persons were living
in households and the total number of households in the City in 1996 was 24,545 house-
Household size is an important consideration when addressing housing issues. The number
of people occupying a housing unit affects the size and condition of the unit, as well as the
demand for additional units in the housing market. For example, a continued decrease in
household size with an increase in population would indicate a demand for additional hous-
ing units to accommodate the new household formations. On the other hand, dramatic in-
creases in household size could indicate a number of situations such as “unrelated” members
of households living together or an increase in the number of households with children. The
1996 household size in Palo Alto was 2.3 persons per household, which was a slight increase
from the 1990 household size of 2.2 persons per household.
Illustration #4: Household Size, 1970-1996
0 0.5 1 1.5 2 2.5 3
1970 Household Size - 2.7 Persons Per Household
1980 Household Size - 2.3 Persons Per Household
1990 Household Size - 2.2 Persons Per Household
1996 Household Size - 2.3 Persons Per Household
Source: U.S. Census, 1970, 1980 and 1990 data
State of California, Dept. of Finance, 1996 data
Households by Type
According to 1990 U.S. Census data, approximately 13,835 households or 56% of all house-
holds were “family” households and 10,865 households (44% of total households) were “non-
family” households. A family household is one in which a household lives with one or more
persons related to him or her by birth, marriage or adoption. A non-family household is one
in which a householder lives alone or with non relatives only
Family households are by definition typically larger in size than non-family households be-
cause family households consist of a minimum of two persons while non-family households
can be single person households. As would be expected, then, in Palo Alto there are more
persons living in family than non-family households. Of the total 55,900 persons in Palo Alto
in 1990, 72.3% lived in family households (40,410 persons) and 26.2% (14,645 persons) lived
in non-family households. The remaining 1.5% of the population (845 persons) reported that
they were living in group quarter situations.
8 Housing Technical Document: Chapter 2
In evaluating this data from a historical perspective, it appears that the percentage of per-
sons living in family households has decreased since 1970. In 1970, 83% of the population
lived in family households whereas by 1990 that percentage had decreased to 72.3%. Simi-
larly, the percentage of persons in non-family households has increased from 18% in 1970 to
26.2% in 1990.
It is interesting to note that, of the family households in 1990, there were fewer households
with children under the age of 18 years at home than other types of family households such
as a married couple only or a married couple with children over the age of 18 or with other
family relatives living with them. Only 32.6% of family households were a married couple
with children under the age of 18 years. Another 7% of the family households were single
parent households (primarily female-headed) with children under the age of 18 years at
home. These two family household types then constitute 39.6% of all family households.
The remaining 60.4% of family households are households with no children under the
age of 18 years. These households are primarily married couple households and the as-
sumption is that either they are living by themselves or with other family members.
Households by Income Level
Generally, Palo Alto households have higher than average median family incomes. The 1990
U.S. Census data indicated that the median family household income in Palo Alto was $68,737.
This is considerably more than the median family household income of $53,670 for the County
of Santa Clara for the same time period.
While there are many high income households in Palo Alto, there are also households on
more limited incomes. An interesting statistic from the 1990 Census data is the fact that 20%
of all Palo Alto households reported that their annual household incomes were less than
$25,000. This percentage is similar to the countywide average of 21% of all Santa Clara County
households reporting incomes of $25,000 or less. In other words, Palo Alto has the same
proportion of households with limited incomes as the County as a whole. However, Palo Alto
has almost twice as many households proportionally who had incomes over $100,000 in
1989 than the rest of the County.
Illustration #5: Household Income Distribution, 1989
$25,000 $25-50,000 $50-100,000 $100,000+
City of Palo Alto 20% 25% 34% 21%
County of Santa Clara 21% 31% 37% 11%
Source: “United Way Needs Assessment for Santa Clara County”, 1993-94
Housing Technical Document: Chapter 2 9
The definition of income level varies depending on the government entity or the program.
The generally accepted definition and the 1997 Palo Alto definitions are as follows:
Households with incomes between 0-50% of areawide median family income.
1997 limit for a family of 4: $35,100
Households with incomes between 51-80% of areawide median family income.
1997 limit for a family of 4: $56,160
Households with incomes between 81-120% of areawide median income. 1997 limit
for a family of 4: $84,240
Households with incomes greater than 120% of areawide median family income.
As noted, various agencies and programs use different definitions of household income. In
Palo Alto, the following modifications applied in 1997:
CDBG and HUD Section 8 rental programs: Low-income maximum was 61.9% of County
median income with a 1997 limit for a family of 4 of $43,500. Low-Income Housing Tax
Credit and HUD HOME Program: Low-Income maximum for rental units is 60% with a
1997 limit for a family of 4 of $42,120.
City of Palo Alto BMR Program: Moderate-income for ownership program is 80-100% of
areawide median family income. 1997 limit for a family of 4: $70,200.
Using 1990 U.S. Census data, there were 3,778 very low-income households and 1,590 low-
income households in Palo Alto, based on federal HUD definition of income. Translating
these numbers to percentages of total Palo Alto households, very low-income households
represented 15.3% of all households and low-income households accounted for 6.4% of the
total households. Therefore, together very low- and low-income households accounted for
21.7% of all households in Palo Alto.
The federal government adjusts income limits on a regular basis to reflect changes in house-
hold income levels. Listed below are the maximum income levels for very low- and low-
income households for Santa Clara County, including the City of Palo Alto for 1996.
Illustration #6: Annual Household Income Limits, 1997
Persons in Very Low-Income Maximum Low-Income Maximum
Household (50% of Median Income) 61.7% of Median Income)
1 $24,550 $30,450
2 $28,100 $34,800
3 $31,600 $39,150
4 $35,100 $43,500
5 $37,900 $47,000
6 $40,700 $50,450
Notes: 1997 San Jose PMSA median income for a family of four is $70,200
10 Housing Technical Document: Chapter 2
In 1990 the Association of Bay Area Governments (ABAG) set employment in the Palo Alto
Sphere of Influence area as 94,161. By 1995 the estimate had dropped to 90,010. Projec-
tions are that employment will not reach the 1990 level of 94,161 jobs until 2010 when the
ABAG estimate is 94,710. The drop in jobs and the slow growth is attributable to many fac-
tors including limited expansion capacity for local businesses, unlikely expansion of the com-
mute shed area and limited availability of local housing. As with other cities in the Bay Area,
the employment sectors and trends in employment fall across all economic sectors. ABAG
projections are that most increases will continue in the service sector and in the electronic
equipment subcategory of manufacturing.
Households with Special Needs
There are certain households within a community that typically have special housing needs.
In Palo Alto, those households which have been identified as having special housing needs
1. Elderly Households,
2. Single Parent Households,
3. Disabled Households,
4. Overcrowded Households, and
5. Homeless Households.
Information about each of these households is described in more detail in the paragraphs
that follow. A general description of each of these 5 household types is provided as well as a
summary of the current resources available and a summary of the household’s more signifi-
cant housing needs.
1. Elderly Households
a) Description of Elderly Households in Palo Alto
The number of elderly persons in the City of Palo Alto has increased over the last two de-
cades. In 1970, elderly (persons age 65 years and older) comprised 10% of the population
but, by 1990, that percentage had increased to 15.6% of the total population. The total num-
ber of elderly persons residing in Palo Alto in 1990 was 8,747 persons. With longer life spans
and age expectancies, it is anticipated that the proportion of elderly in Palo Alto’s population
will continue to increase in future years.
The 1990 Census data indicate that, of the 8,747 total elderly persons, 8,329 lived in house-
hold situations and the remaining 418 persons were living in group quarters or were institu-
tionalized. There were a total of 5,802 households in the City in which the primary house-
holder was 65 years or older. These 5,802 households represent 24% of all Palo Alto house-
holds in 1990. The 5,802 households are almost equally split between family households
(49% of all elderly households) and non-family households (51% of all elderly households).
A significant fact is that approximately 75% of all elderly non-family household were single
females living alone. These female head of households living alone represent 26% of all
elderly Palo Alto residents.
Housing Technical Document: Chapter 2 11
Approximately 5% of all elderly (293 persons total) had incomes below the poverty level in
1989 (1989 poverty level for a one person elderly household was an annual income of $5,
947 or less). The majority of those persons (220 ) were elderly over the age of 75 years, living
alone and primarily female. While there were a very small number of elderly persons living
below the poverty level, it is important to note that many elderly households in Palo Alto
were still living on limited incomes. For example, the 1990 U.S. Census data also indicates
that approximately 41% of all elderly households had incomes that were at the low- or very
low-income level. (See page10 of this document for definitions of income level.) There were
1,891 elderly households that had incomes that could be classified as very low- income and
another 583 households that were low-income.
The majority of Palo Alto elderly households are homeowners. Approximately 69% of all
elderly households live in owner-occupied housing units and the remaining 31% are renters.
Very low- and low-income elderly homeowners represented 30% of all elderly homeowners,
according to the 1990 U.S. Census data.
While renter households represent less than one-third of all elderly households, the percent-
age of very low- and low-income households who are elderly and rent is significant. Ap-
proximately 65% of all elderly renters in 1990 were either low- or very low- income house-
holds. Further, more than half (59%) of all very low- and low-income elderly renters in Palo
Alto had incomes that were less than 30% of median income and are therefore considered
to be “extremely low-income” households. Not surprisingly, the 1990 census data also
indicates that the most significant housing problem for very low- and low-income eld-
erly homeowners and renters is overpaying for housing. There were 825 very low- and
low-income renter households who were paying more than 30% of their income for housing
in 1990. These 825 households represent 68% of all very low- and low-income renter house-
holds. Of all elderly homeowners who had a “housing problem” according to the census
data, 100% of all very low- and low-income elderly homeowners reported that overpayment
for housing was one of their housing problems. There were 333 very low- and low- income
elderly homeowners who reported paying more than 30% of their income for their housing.
b) Resources Available to Elderly Households
Listed on the next page (Illustration #7) are existing housing developments in the City of
Palo Alto that are specifically designed for elderly households.
In regard to supportive living facilities for elderly, there are nursing care facilities as well as
non-profit and for-profit residential care facilities in the City of Palo Alto. Lytton III provides
skilled nursing care for approximately 128 elderly persons. Lytton III is part of the Lytton
Gardens complex (Lytton I, II, III and Lytton Courtyard) which is the only development in Palo
Alto that provides a full range of living options for lower income elderly from independent
living to assisted living to skilled nursing care.
12 Housing Technical Document: Chapter 2
Illustration #7: Independent Living Facilities for Elderly
City of Palo Alto, 1997
Development Total Units Senior Units Income Level Served
Independent Living (No Meals or Other Services)
1 Palo Alto Gardens 156 units 128 units Very Low-Income
2 Sheridan Apartmentss 57 units 57 units Very Low- / Low-Income
3 Terman Apartments 92 units 24 units Very Low-Income
4 Webster Wood 68 units 4 units Very Low- / Low-Income
5 Arastradero Park 66 units 13 units Very Low- / Low-Income
6 Colorado Park 60 units 8 units Very Low- / Low-Income
Independent Living (Some Meals Provided)
7 Stevenson House 120 units 120 units Very Low- / Low-Income
8 Lytton I and II 318 units 318 units Very Low- / Low-Income
9 Lytton Courtyard 51 units 51 units Very Low- / Low-Income
TOTAL 988 units 723 units
Source: City of Palo Alto, "Consolidated Plan, 1995-2000", Pg. 7-8
Listed below are the residential care facilities for elderly in Palo Alto.
Illustration #8: Residential Care Facilities, City of Palo Alto, 1997
Name of Facility Persons Served
1. Channing House 254
2. Webster House 37
3. Lytton II 50
4. Palo Alto Commons 150
5. Casa Olga 101
Private Board and Care Homes
6. Pleasant Manor 6
7. Rosedale Manor 8
8. Lucretta Home 6
9. May Care 5
10. Sweet Home 6
Source: City of Palo Alto, “ Consolidated Plan, 1995-2000”, Pg. 9
Housing Technical Document: Chapter 2 13
c) Housing Needs of Elderly Households
As identified earlier on page 12 of this document, overpaying for housing is the most signifi-
cant housing problem of very low- and low-income elderly households. The 1990 U. S. Cen-
sus data indicated that there were 825 elderly renter households and 333 elderly home-
owner households who were very low- and low-income and paying more than 30% of their
income for housing. Over half of the elderly renter households who were overpaying (442
households) had incomes of less than 30%of median income and are considered to be “ex-
tremely low-income.” Therefore, providing affordable housing for very low- and low-income
elderly is one of the more significant housing needs of this household category.
In addition, the federally required “Consolidated Plan 1995-2000,” which is prepared by and
for the City of Palo Alto, has identified a need for additional supportive housing facilities for
elderly and frail elderly households in Palo Alto. The Plan has identified a need for an addi-
tional 1,000 units of assisted living facilities and additional skilled nursing care or 24 hour
care facilities for 950 elderly persons.
2. Single Parent Households
a) Description of Single Parent Households in Palo Alto
There were a total of 24,700 households in Palo Alto according to the 1990 census data and,
of these 24,700 households, approximately 13,835 were “family” households. Single parent
households represented 7% of all family households. There were 1,014 single parent house-
holds in 1990: 136 single parent households were headed by a male parent and 878 had a
female head of household. Single parent household as used in this document is defined as a
family household with one or more children under the age of 18 years and headed by either
a female or male head of household, with no spouse present.
Lower household income is one of the more significant factors affecting single parent house-
holds. For example, married couple families in Palo Alto reported a mean family income of
$101,537 for 1990 census purposes. Single parent family households, however, were signifi-
cantly lower for the same data collection period. Male single parent households had annual
family incomes of approximately $49,193. Annual mean household income for female single
parents in Palo Alto was $36,651 or slightly over one-third that of a married couple family.
Limited household income levels affect the ability of these households to locate affordable
housing and, consequently, this is one of the more significant housing problems of this house-
b) Resources Available to Single Parent Households
In past years, the City provided financial assistance to a non-profit agency,“Innovative Hous-
ing, Inc.,” to administer a shared housing program. Typically, the households participating in
the program were single parent households with 40% male parents and 60% female par-
ents. In November 1996, Innovative Housing ceased operations due to a lack of funding to
cover their operations in the Bay Area. Other agencies are being sought to provide this ser-
14 Housing Technical Document: Chapter 2
c) Housing Needs of Single Parent Households
Affordable housing is one of the more significant needs of single parent households. Many
times, their limited household incomes constrain the ability of single parent households to
“afford” housing units. Consequently, these households may have to pay more than they can
afford for housing for themselves and their children. Or, they may have to rent a housing
unit that is too small for their needs because it is the only type of housing they can afford.
Other housing related needs that affect single parent households include assistance with
security deposits, locating housing that is close to jobs, availability of child care services and
proximity to transit services.
3. Disabled Households
a) Description of Disabled Households in Palo Alto
Disabled households include households who have family members that are disabled be-
cause of physical handicaps or because of mental illness or disability. It is possible, of course
that some individuals have both a physical and mental disability but census data does not
provide that level of specificity. According to the 1990 U.S. Census data, there were 1,940
persons ages 16-64 years in Palo Alto who had a disability that affected mobility or self care.
Of these, 1,700 persons had a disability that affected their ability to work. Information is not
available about the type of household they live in, their income level or how their disability
affects their housing needs. Generally, persons with disabilities have lower incomes espe-
cially if their disability affects their ability to work.
b) Resources Available to Disabled Households
Palo Alto has a few subsidized housing units specifically designed for persons with physical
disabilities. Title 24 in the State of California relating to handicap accessibility and the fed-
eral Americans with Disabilities Act (ADA) have resulted in an increase in these opportuni-
ties. Subsidized projects that have units specifically designed and adapted for persons with
physical disabilities include California Park Apartments (1 unit), the Barker Hotel (5 units),
and 330 Emerson Street (1 unit). Other projects, such as Lytton Courtyard, include units that
can readily be adapted for persons with physical disabilities. Two new projects, opened in
April 1998, will have units that are handicap adaptable. The Alma Place SRO has 101 adapt-
able units and 6 fully accessible units. Page Mill Place housing for the developmentally dis-
abled will have 16 of 24 units fully accessible and 8 units adaptable. A few older projects
have had units adapted within the limitations of the existing construction including Webster
Woods, Terman Park and Sheridan Apartments.
For persons with a mental disability, Miramonte Mental Health Services, Inc. provides treat-
ment, support and rehabilitation services. Miramonte operates “La Selva,” which is a licensed
group home for 12 adults in Palo Alto. Through their “Community Alliance” program,
Miramonte provides affordable, permanent housing for about 75 individuals in shared living
situations in 18 properties which they own or lease in Palo Alto, Mountain View, Sunnyvale
and Santa Clara. Youth with mental or developmental disabilities are served by group homes
operated by Adolescent Counseling Services, the Peninsula Children’s Center and several
private organizations. In recent years, the City of Palo Alto provided funds to help acquire
Housing Technical Document: Chapter 2 15
and rehabilitate a 6-unit apartment structure in Sunnyvale (1215 Cortez Drive) which serves
adults with developmental disabilities and a 5-unit facility on Pettis Avenue in Mountain
View that provides housing for developmentally disabled females.
c) Housing Needs of Disabled Households
Individuals with physical disabilities are in need of housing units that have been modified to
improve accessibility. Examples of modifications that are helpful include widened doorways
and hallways, bathroom and kitchen modifications (lowered counter heights, accessible tubs/
showers and toilets, etc.) entry and exit ramps, modified smoke detectors and alarm systems
for individuals with visual or hearing impairments, etc.
A priority need for disabled households is housing near transit and jobs. Persons with physi-
cal disabilities may need housing that is connected to the provision of individualized ser-
vices including training, counseling, information and referral services, and rent subsidy ser-
vices that allow the physically disabled to live in the community. For individuals with a dis-
ability that affects their ability to work, or who live on a fixed income, affordable housing is a
high priority. Agencies that provide supportive services to the disabled population, have
been discouraged by the high cost of rental housing in Palo Alto. In fact, the City has pro-
vided funding to several agencies to help acquire housing units in nearby communities be-
cause of the lack of affordable housing units in Palo Alto.
4. Overcrowded Households
a) Description of Overcrowded Households in Palo Alto
An overcrowded household is one in which there is more than one person per room in the
living structure (usually “room” is defined as any room in the structure except for kitchen or
bathrooms). On a statewide basis, it was estimated in 1989 that 7% of all California house-
holds lived in overcrowded housing. (Source: California Statewide Housing Plan Update, 1990,
State of California Dept. of Housing and Community Development).
According to the 1990 U.S. Census, approximately 655 units or 2.7% of the City’s total occu-
pied housing units were overcrowded with more than one person per room. Of these 655
units, 287 were “severely overcrowded” with more than 1.51. persons per room. The majority
(252 units) of these severely overcrowded units were occupied by renter households. In fact,
renter households have a higher incidence of overcrowding than owner households. Ap-
proximately 74% of the total 655 overcrowded units are occupied by renter households. In
regard to age of the residential structure, overcrowded households are found in both older
as well as newer housing units in the City. While 88% of the overcrowded households live in
units that were built since 1940, this proportion reflects the fact that 79% of the units in the
City were built since 1940. Therefore, the age of the housing units is not statistically signifi-
cant in regard to overcrowded households in Palo Alto.
Households do not typically choose to be overcrowded but end up in that situation because
they cannot afford a housing unit that is appropriate in size to their needs. Traditionally,
large households (households of 5 or more persons) have difficulty in securing and/or af-
fording housing units of 3 or more bedrooms partially because of an insufficient supply of
3+ bedroom units. Large renter families, in particular, have difficulty in finding rental hous-
ing stock that is appropriate for their household size and affordable. The 1990 data indicate
that there were 1,356 households in Palo Alto that had 5 or more persons. Approximately
16 Housing Technical Document: Chapter 2
37% of these households or 500 households total were renter households. Moreover, small
households in Palo Alto have difficulty in finding appropriate size rental housing due to the
high cost of housing.
b) Resources Available to Overcrowded Households
The 1990 U.S. Census data indicate that there were 1,920 rental units that had 3 or more
bedrooms in the City of Palo Alto. These 1,920 units represent 18.4% of all rental units in the
City at that time. The same data source reported that there were 1,356 large households
(households of 5 or more persons) and that 500 of these households were renter house-
holds. Therefore, the raw statistics would indicate that there appear to be sufficient existing
units that are appropriate in size for large households. However, the cost to rent these units
may be prohibitive for some households. For example, 78% of these 3+ bedroom rental
units identified above had monthly gross rents in excess of $1000 per month.
There are units in some of the assisted housing developments in the City that are both large
in size and affordable. As an example, the Arastradero Park development includes fourteen
3-bedroom units and four 4-bedroom units.
c) Housing Needs of Overcrowded Households
The most obvious need, of course, for large and overcrowded households is the need for
housing units that are large and adequately sized for the family. Typically, there is a need for
3, 4 and 5 bedroom housing units for households that are overcrowded due to family size.
Because these type of units are usually expensive to rent or buy, overcrowded households
are also in need of affordable and large housing units. And, as noted above, small house-
holds in Palo Alto are also overcrowded because of the high cost of housing. Therefore,
affordable housing is a significant need for overcrowded households.
5. Homeless Households
a) Description of Homeless Households in Palo Alto
It is very difficult to develop a precise and realistic description of homeless households in a
community. This is due to several reasons but one of the more significant is the lack of good
data on the number and type of homeless households. The 1990 U.S. Census attempted to
identify homeless households during their “S-Night” count on March 20-21, 1990. During
the evening hours of March 20 and the early morning hours of March 21, census takers at-
tempted to count the number of persons in emergency shelters and persons visible in street
locations. However, even the Census Bureau cautions users of this data that the data is not
considered to be complete and that there were probably many more homeless persons than
reported in this survey. Indeed, in Palo Alto, the 1990 U.S. Census data reported that there
were only 13 persons in shelters and 11 persons visible in street locations. It is generally
acknowledged by homeless service providers that these numbers under-estimate the ac-
tual count of homeless in Palo Alto.
In June, 1991, the Urban Ministry performed a one night count of homeless individuals and
families seeking shelter and other services. Listed below are the results of that count for Palo
Housing Technical Document: Chapter 2 17
Illustration #9: Homeless Count in Palo Alto, 1991
TOTAL Found Shelter Unsheltered
Families 20 10 10
Total Number of Persons in Families 50 25 25
Single Adults 70 45 35
Source: City of Palo Alto, “ Consolidated Plan, 1995-2000”, Pg. 20
An additional source of data that attempts to describe homeless households is the “1995
Overview of Homelessness in Santa Clara County,” a report prepared by the Santa Clara County
Homeless Coordinator’s Office. This report presents the results of a countywide survey of
the homeless population undertaken in January, 1995. That survey resulted in the following
• approximately 1,700 homeless persons were estimated to be without shelter at
the time the survey was taken,
• the total “sheltered” at the time of the survey was estimated at 2,024 resulting in a
total homeless count of 3,724,
• the number of children who are homeless comprised 23% of the total sample
• the number of working homeless has more than doubled from 12% identified in a
1989 report to 25% in the 1995 report, and
• mental illness and substance abuse are problems that continue to be a significant
factor for the County’s homeless population.
The 1995 report further estimates that, based on turnover rates in shelters and adding in the
approximately 8,800 AFDC single head of household with children who requested homeless
assistance for fiscal year 1994-95, there probably were a total of 16,300 persons in the County
who experienced a period of homelessness for that year.
b) Resources Available to Homeless Households
The City of Palo Alto participates in the Santa Clara County Collaborative on Housing and
Homeless Issues, which represents homeless shelters, service providers, advocates, non-profit
housing developers and local jurisdictions. The City and the Collaborative follow a “Con-
tinuum of Care” approach in addressing the needs of homeless persons. The continuum
consists of the following steps in providing homeless resources:
i) Prevention Services
ii) Emergency Shelter
iii) Transitional and Permanent Affordable Housing
Listed below is a description of the resources available to Palo Alto households according to
the “Continuum of Care” approach.
18 Housing Technical Document: Chapter 2
i) Prevention Services:
The goal of this first level of resources is to prevent households from becoming homeless.
Households who are “at risk” for becoming homeless are those who are lower income and
who have a difficult time paying for their existing housing. Traditionally, these include house-
holds who “overpay” for housing (paying more than 30% of their income for housing) as well
as households who experience job termination or reduction or marital separations. Part of
the prevention resources are the provision of emergency food and clothing funds as well as
emergency rent funds and rental move-in assistance.
In Palo Alto, the Urban Ministry of Palo Alto is the primary resource available to homeless
households. The Urban Ministry, at their morning drop-in center, coordinates the provision
of supportive services, counseling, job labor referral, transportation vouchers, shower passes,
mental health services and maintains a message and mails system. On a daily basis, the
drop-in center is visited by about 140 persons. Since the drop-in center is located a short
walk from the San Mateo County line and adjacent to a major inter-County transit terminal,
it is reasonable to assume that some of their clients have connections to other communities
and do not solely represent Palo Alto households. The Urban Ministry also coordinates the
provision of groceries for needy households through the Food Closet located at All Saints
Episcopal Church in downtown Palo Alto. The Food Closet serves an average of 90 persons
ii) Emergency Shelters
The Urban Ministry of Palo Alto operates the “Hotel de Zink” shelter out of twelve churches,
using a different church each month of the year. A maximum of 15 adults nightly can be
provided with emergency shelter. Meals are also provided as part of the service.
Within the County of Santa Clara, there are approximately 682 emergency year round shel-
ter beds. During winter months, the three armories in the County (Sunnyvale, Gilroy and San
Jose) provide shelter and the number of beds increases to 1,272 countywide. However, in
1997 the armories will be closed to use as emergency shelters and the County is currently
working on efforts to replace 250 of the 590 beds that will be eliminated when that occurs.
iii) Transitional and Permanent Affordable Housing
There are currently no transitional housing shelters in the City of Palo Alto but there are
transitional shelters in nearby communities. Listed on the following page are four transi-
tional shelters that could serve Palo Alto households as well as households in the commu-
nity in which they are located.
Housing Technical Document: Chapter 2 19
Illustration #10: Transitional Housing Shelters (in Nearby Areas), 1995
Name Operator Capacity Clientele Other
(No. of Beds) Services
Haven Family Shelter 60 Families Yes, at site
Redwood Family Shelter 40 Families Yes, at site
Santa Clara Emergency 200 Families Yes, at site
Family Living Ctr., Housing
Santa Clara Consortium
Illinois St. House Innovative 8 Single Yes
East Palo Alto Housing Parents
Source: City of Palo Alto, “ Consolidated Plan, 1995-2000”, Pg. 23
There are two facilities in the City of Palo Alto that provide supportive shared housing op-
portunities. These facilities are oriented to families with children and are typically occupied
by single parent households.
Illustration #11: Supportive Shared Housing Facilities,
City of Palo Alto, 1996
Name Operator Capacity Clientele
Pine St. Innovative 3 Households Families with
House Housing and Children
Palo Alto Housing
Edgewood Innovative 4 Households Families with
House Housing Children
Source: City of Palo Alto, “ Consolidated Plan, 1995-2000”, Pg. 24
A third facility, Bowdoin House, was closed in 1996 due to funding cutbacks at Innovative
c) Housing Needs of Homeless Households
One of the major causes of homelessness is the lack of affordable housing. Most homeless
households are on limited or fixed incomes and cannot afford a housing unit in California’s
housing market and, especially, in the Bay Area housing market. Permanent affordable hous-
ing is the single most important housing need for homeless households.
20 Housing Technical Document: Chapter 2
Chapter 3: Housing Stock
Inventory of Housing Units
As of December 31, 1996, there were 25,588 residential units in Palo Alto. This was an in-
crease of 400 units from 1990 when there were a total of 25,188 units in the City.
Illustration #12: Total Number of Housing Units, City of Palo Alto
Total Number of Units
Total # of Units 26,000
1980 23,747 22,000
1990 25,188 20,000
1996 25,588 18,000
(as of 12/31/96)
Source: U.S. Census, 1970, 1980, 1990; State of California, Dept. of Finance 1996
In evaluating the rate of housing production from an historical perspective, there has been a
noticeable decrease in the rate of housing produced in the City of Palo Alto in recent years.
During the decade from 1970-80, the City’s housing stock increased by 2,409 units or ap-
proximately 240 units per year. From 1980-90 this rate decreased to an average of 144 new
units per year or a 10 year total of 1,441 new units added to the housing stock. The 1990-96
data identified above reflects an even lower rate of housing unit production dropping to
less than 50 units per year.
Illustration #13: Rate of Annual Housing Production, 1970-95
1970 - 80 1980 - 90 1990 - 95
Housing Technical Document: Chapter 3 21
Chapter 4: Existing Affordable Housing
The City of Palo Alto has been very active in promoting and supporting the provision of
affordable housing. This chapter of the Housing Element Technical Document describes the
various housing programs and policies operative in the City at the time this Element was
prepared (1996-97). Also included in this chapter is an inventory of the existing affordable
housing units in the City and a description of the various social service agencies that receive
City funding and provide housing support services.
City Housing Programs and Policies
1. Below Market Rate (BMR) Program
One of the most significant housing programs adopted by the city is the “Below Market
Rate” (BMR) Program. The BMR program was initiated in 1974 as a mechanism to increase
the supply of housing affordable to individuals and families with low- to moderate-incomes.
When first adopted, the BMR program applied to projects of 20 or more units. In 1976, this
was lowered to projects of 10 or more units. In 1990, the threshold was further reduced to
apply to projects of 3 or more units. With the adoption of the 1997 Comprehensive Plan and
this Housing Element, the threshold is placed at three units for for-sale housing and five
units for rental housing. The raising of the threshold for rental projects is being done in order
to facilitate construction of small rental projects, where the BMR program has limited impact
The BMR program requires that, in for-sale projects of three or more units and rental projects
of five or more units, at least 10% of the units be provided at housing costs that are afford-
able to low- and moderate-income households. Developments on sites greater than 5 acres
in size are required to include a 15% BMR component. The priority for the program is to
include units spread throughout the community and in all projects. An alternative allows for
the developer paying an “in-lieu” fee to the City rather than actually providing the units. These
“in-lieu” fees are then deposited in the City’s “Housing Development Fund. ” (See the follow-
ing page for a further description of this fund. ) Program H-21 of the 1998-2010 Comprehen-
sive Plan recommends the adoption of a revised density bonus program that allows for the
construction of up to three additional market rate units for each BMR unit above that nor-
mally required, up to a maximum zoning increase of 25 % in density and allows an equiva-
lent increase in square footage for projects that meet this requirement. Because of the need
for affordable housing, the BMR Program represents the only assessment of impact fees made
by the city on new housing construction.
The BMR Program was initiated in 1974. From 1974-97, there were a total of 144 ownership
units and 33 rental units generated by the program. Sales and resales of BMR units are ad-
ministered under contract to the City by the Palo Alto Housing Corporation (PAHC), a private,
non-profit organization. PAHC maintains a waiting list of interested households, manages
the resale of ownership units and oversees the tenancy of the rental units.
The goal of the BMR program is to have the initial sales price of BMR ownership units afford-
able to households whose incomes do not exceed 100% of the median income, adjusted for
family size, as established periodically by HUD for Santa Clara County. Certain restrictions are
Housing Technical Document: Chapter 4 29
recorded with the grant deed to ensure that there will be continued occupancy and owner-
ship of the unit by low- and moderate-income persons. When a BMR owner wishes to sell the
unit, he or she must give the City the right of first refusal to purchase it. The City exercises its
option and assigns the right to purchase the unit to a buyer selected by the PAHC (according
to guidelines approved by the City). The price at which a unit is resold is calculated based on
the increase in the “Consumer Price Index” for the San Francisco Bay Area during the period
of ownership. Currently, one-third of the percentage increase in the Index is applied to the
purchase price to determine the resale price. For example, if a unit was purchased initially for
$100,000 and if the Index rose 15% during the period of ownership, then the resale calcula-
tion would be $100,000 + (1/3 x 15% x 100,000) = $105,000. Certain substantial improve-
ments and depreciation factors are also taken into consideration in calculating the resale
PAHC maintains a waiting list of people interested in purchasing a BMR unit. According to
City policy, priority for ownership of BMR units is given to applicants who live or work in Palo
Alto. Further, the household’s income cannot exceed 100% of the median income and there
are certain asset limitations.
The BMR program also applies to rental projects. At least 10% of the units in a rental project
must be provided as BMR units to households earning between 50% and 80% of the County
median income, adjusted for family size. The rents are initially established based on HUD
Section 8 Fair Market Rents and may be adjusted annually based on one-third of the Con-
sumer Price Index, or other similar formula as adopted by the City Council. Alternatives in-
clude payment by the developer of an annual in-lieu fee to the City’s Housing Development
Fund based on the difference between the initial Section 8 fair market rents and the market
rate rents of the units, or a one-time fee based on 5% of the appraised value of the rental
portion of the project.
2. City Housing Funds
The City maintains a “Housing Development Fund” which is capitalized from several different
resources and contains several “sub-sets” of funds. Basically, the Housing Development Fund
consists of the following:
a) Residential Housing In-lieu funds,
b) Commercial Housing In-lieu funds, and
c) Federal or State housing funds (i. e. CDBG and HOME) as well as program income
from past loans or projects.
The Residential Housing In-lieu fund consists of fees paid by developers of residential projects
and any miscellaneous revenues designated for housing. When a sufficient level of funds
accrue in this account, the City utilizes the funds for affordable housing development.
The Commercial Housing In-lieu fund is capitalized with fees paid by developers/ owners of
new or expanded commercial or industrial developments, as required by Chapter 16. 47 of
the Palo Alto Municipal Code. The fees are intended to off-set the below-moderate-
incomeresidential demands resulting from the increased work force that will be generated
by the development. Currently (1997), the fee charged is $3. 63 per square foot. The fee is
charged only on new construction that exceeds 20,000 square feet or expansions to existing
30 Housing Technical Document: Chapter 4
buildings of 2,500 square feet or more. Similar to the Residential Housing Reserve fund, the
City allocates these funds to affordable housing developments within the community.
The third component of the “Housing Development Fund” is State or Federal housing funds
and the program income from any past housing loans or projects. For example, the City re-
ceives program income from loans made with CDBG funds in previous years. From 1990-96,
the City has received an average of $100,000 per year in program income from previous
CDBG loan awards, primarily to applicants in the City’s housing rehabilitation program.
Federal and State Housing Resources
The City of Palo Alto is an “entitlement” community under the federal Community Develop-
ment Block Grant (CDBG) Program. As such, the City receives an annual allocation of CDBG
funds to assist with affordable housing opportunities as well as economic development and
public services in the community. On an average annual basis, the City has been receiving
approximately $700,000 each year in CDBG funds. Traditionally, the City has used about 15%
of its annual CDBG allocation, per federal regulations, to help fund various social service agen-
cies who provide support services to low- and moderate-income households. Examples of
some recently funded activities with social service agencies include fair housing counseling,
homeless assistance and housing information and referral. In addition, over 50% of CDBG
funds are used by the City to provide assistance in the development of housing that is af-
fordable to lower income households. The City directs the CDBG funds to the City’s “Housing
Development Fund,” which is then used for pre-development expenses, acquisition of land
or existing buildings and rehabilitation costs of affordable housing projects.
The City is also eligible to apply for State of California housing funds. One of the more popu-
lar State funds in recent years is the “HOME” program. HOME funds are federal funds that are
directly allocated to large urban areas as well as to State governments to then distribute to
local communities. The HOME program is a very competitive program with many communi-
ties applying to the State for a limited amount of funds. The HOME funds can be used for a
variety of activities, including the development or rehabilitation of renter or owner occupied
housing that is affordable to very low- and low-income households. The City was successful
in securing $1 million in HOME funds in 1992 for the acquisition and rehabilitation of the 26
unit Barker Hotel.
The City has also worked closely with local non-profits to secure other state and federal fund-
ing. One of the most desirable programs is the federal Low Income Housing Tax Credit Pro-
gram. The Palo Alto Housing Corporation used Low Income Housing Tax Credits to build the
California Park Apartments project and has received an award for construction of the Alma
Place SRO. In addition, Community Housing, Inc. received federal Section 202 funds for the
construction of the Lytton Courtyard project, and Mid-Peninsula Housing Coalition received
federal Section 811 funds to construct 24 units of housing for the developmentally disabled.
The City intends to continue to pursue all sources of funding and to assist local agencies in
applying for and securing additional financing opportunities.
Affordable Housing Unit Inventory
There are several different “types” of affordable housing units in the City of Palo Alto. Some
affordable rental units are owned by non-profit or for-profit developers and, because of the
Housing Technical Document: Chapter 4 31
affordability restrictions imposed by funding sources, are affordable to a certain household
income level for a fixed period of time. In addition, there are 144 BMR ownership units that
are privately owned but are restricted with regard to resale and price to only other low- and
moderate-income households and another 33 units in the BMR rental housing program. A
listing of the locations of these units can be found in Appendix # B of this document. Finally,
the Section 8 rental subsidy program is operated by the Santa Clara County Housing Author-
ity and provides a rental subsidy to landlords of units who rent to eligible low-income house-
holds. Any rental unit in the City can be eligible for occupancy in this program as long as the
unit meets certain health, safety and occupancy requirements. According to staff at the Hous-
ing Authority, there were a total of 55 households in Palo Alto receiving Section 8 rental
subsidy assistance as of October 1996. Of these 55 households, 21 were elderly and/or dis-
abled and the remaining 34 households were family households.
In April1998, there were a total of 25 housing developments in the City that included 1,234
units of subsidized rental housing. These developments are owned primarily by non-profits,
such as the Palo Alto Housing Corporation, but some are owned by for-profit owners. Ap-
pendix # A includes a table with the addresses and number of units in each of these 25
Housing Support Services
There are many non-profit groups and organizations that provide housing related support
services in Palo Alto. For example, the Palo Alto Housing Corporation (PAHC) was established
in 1969 and was formed to encourage and develop low- and moderate-income housing in
the City. PAHC has been very active in assisting the City with the BMR Program, acting as a
developer/owner of other affordable housing projects, and providing extensive information
and referral services on housing in the region. Other organizations that have received City
funding assistance to provide housing related support services include the Urban Ministry
of Palo Alto, Catholic Charities of Santa Clara County (Long Term Ombudsman Program),
Emergency Housing Consortium, Innovative Housing, Outreach and Escort, Mid-Peninsula
Citizens for Fair Housing, Senior Coordinating Council (Senior Repair Program), Community
Association for Rehabilitation, American Red Cross (Rental Assistance, Single Parent Services),
Miramonte Mental Health Services, Peninsula Area Information and Referral (tenant-land-
lord counseling) and Support Network for Battered Women.
The City has provided funding to the agencies mentioned above through CDBG funds as
well as City General funds. Palo Alto has a tradition of assisting non-profit groups with fund-
ing so that these groups and organizations can also provide support services and direct
assistance to low- and moderate-income households in the City.
32 Housing Technical Document: Chapter 4
Chapter 5: Future Housing Needs
According to State Housing Element Guidelines, Housing Elements should include an analy-
sis of the number of housing units to be built, rehabilitated and/or conserved in order to
meet the community’s current and future housing needs. Following is an analysis of Palo
Alto’s new construction, rehabilitation and conservation needs.
New Construction Needs
The Association of Bay Area Governments (ABAG) has developed estimates of housing need
for communities in the San Francisco Bay Area. The ABAG document,“Housing Needs Deter-
mination” (January, 1989), provides information thatidentifies regional housing needs and
responsibilities and provides communities with estimates of projected housing needs from
1988-95. The estimates were developed by taking into account the following six factors:
• market demand for housing,
• employment opportunities,
• availability of suitable sites and public facilities,
• commuting patterns,
• type and tenure of housing, and
• housing needs of farmworkers.
Using available data and projections based on future employment and population trends,
the 1989 ABAG document estimates that the total projected housing need for Santa Clara
County is 73,138 new units for 1988-95. Palo Alto’s original share of that total need was 1,809
units or 2.5% of the County’s total need.
In 1990, the City amended and then adopted a revised Housing Element, which was later
certified by the State Department of Housing and Community Development as being in
compliance with State Housing Element Law. In the 1990 Housing Element, the original ABAG
estimate was revised to reflect the new housing units added to the City’s housing stock from
1988-90. The revised ABAG figure was adjusted from 1,809 units to 1,597 units for the re-
maining time period of 1990-95 (page 43 of the 1990 Housing Element).
The ABAG estimate of new units needed in Palo Alto was originally for the period from 1988-
95. At the time that the estimate was produced in 1988, it was assumed that ABAG would
issue new figures for the time period after 1995. Due to various reasons, however, ABAG has
not produced new figures and in March, 1996, the State Legislature in SB 1073 extended the
required update deadline for ABAG and Palo Alto to 1999. Since this document is for the five
year period from June, 1998 to June, 2003, the existing ABAG numbers are extended to that
time period. Should new ABAG numbers be available prior to 2003, an amendment to the
Housing Element will be prepared.
Housing Technical Document: Chapter 5 33
1. Need Addressed to Date (1990-96) and Revised Estimate (1988-
As of January 1, 1997 the total number of housing units in Palo Alto was 25,541 units (State
of California, Department of Finance data). This is an increase of 353 units from the 1990 U.S.
Census figure of 25,188. Therefore, the 1,597 new construction need estimate has to be ad-
justed to 1,244 units needed after accounting for the units added to the housing stock from
1990 to December 31, 1995.
Illustration #18: Revised ABAG New Construction Estimate (1988-2002)
1,597 ABAG Revised Projected Need for Palo Alto
(353) Units Added to Palo Alto Housing Stock,
(January 1, 1990-December 31, 1995)
1,244 Remaining Need for January 1,1996-June 30, 2003
2. Household Need by Income Level
In addition to projecting overall housing needs, the ABAG Housing Needs Plan projects hous-
ing needs by income category. The intent of this action is to more equitably distribute the
type of households by income category throughout a region so that no one community is
“impacted” with a particular household income group. The 1990 Housing Element adjusted
the ABAG original household income distribution levels (page 43 of the 1990 Housing Ele-
ment) and the following illustration reflects the household need categories, as revised in
Illustration #19: ABAG New Construction Need by Household
Income Level, as adjusted in 1990 Housing Element
Very Low-Income Households 338
Low-Income Households 232
Moderate-Income Households 347
Above Moderate-Income Households 680
The household income distributions noted above represent objectives that communities
should strive to achieve in meeting ABAG’s projected new construction need. Since 1990,
Palo Alto has successfully produced additional housing units affordable to various income
groups. In identifying Palo Alto’s estimated need for the remaining 1996-2003 time frame, it
is important to account for units that have been provided from 1990 to December 31, 1995.
Listed on the following page is a summary of those units.
34 Housing Technical Document: Chapter 5
Illustration #20: Revised ABAG New Construction Need
by Household Income Level (1990-2003)
Very Low-Income Need (1990-2003)
338 1990-95 Total Need
(51) Lytton IV
(3) BMR Program (Promenade and Jacobs Ct.)
(5) Barker Hotel (5 units added to existing 21 unit
(3) 330 Emerson Street
276 REMAINING NEED (1996-2003)
Low-Income Need (1990-2003)
232 1990-95 Total Need
(8) BMR Program (Camino Place, Charleston
Village, Christensen Ct., Promenade)
(1) 330 Emerson Street
(15) Estimated Units Provided by Private Sector
208 REMAINING NEED (1996-2003)
Moderate-Income Need (1990-2003)
347 1990-95 Total Need
(8) City of Palo Alto “Below Market Rate” Program
(Charleston Village, Camino Place, Spanish Villas,
Jacobs Court, Promenade)
(40) Estimated Units Provided by Private Sector
299 REMAINING NEED (1996-2002)
Above Moderate-Income Need (1990-2003)
680 1990-95 Total Need
(219) Units Produced, 1990-96
461 REMAINING NEED (1996-2003)
In summary, there were 353 units added to the housing stock from January 1, 1990 to De-
cember 31, 1995. Of those 353 units, 62 were affordable to very low-income households, 24
to low-income households, 48 to moderate-income households and the remaining 219 units
were affordable to above moderate-income households. Therefore, the revised new con-
struction need of 1,244 units can be distributed by household income category as illustrated
Illustration #21: Summary of Revised New Construction Need
by Household Income Levels, 1996-2003
276 Units Very Low-Income Need (22.2%)
208 Units Low-Income Need (16.7%)
299 Units Moderate-Income Need (24.0%)
461 Units Above Moderate-Income Need (37.1%)
1,244 Units Total New Construction Need (100%)
Housing Technical Document: Chapter 5 35
It is estimated that the rehabilitation need in Palo Alto is low compared to many other Cali-
fornia communities. As indicated on page 25 of this document, the 1988-91 “Housing Assis-
tance Plan” estimated that 3% of the City’s owner-occupied housing stock or approximately
428 units were substandard at the time the report was prepared.
A review of 1990 U.S. Census data indicated that 598 units in the City were occupied by very
low- and low-income homeowners and that these units were more than 50 years old (units
built prior to 1940). Another 1,320 very low- and low-income homeowners occupied hous-
ing units that were constructed between 1940-59. This data provides an “upper range” or
maximum ceiling of rehabilitation need for owner occupied units using the assumption that
very low- and low-income households often cannot afford on-going maintenance and repair
as their units “age” and that these are the type of units most often in need of rehabilitation. The
1,918 units (598 + 1,320 = 1,918) represent 7.76% of all housing units in the City in 1990.
Overall, the rental housing stock in the City was built more recently than the owner occupied
units. Information on pages 25-26 of this document summarizes 1990 U.S. Census data and
indicates that the “upper range” of rental units that are older and occupied by very low- and
low-income households is 1,449 units total or 5.8% of the City’s housing stock.
There do not appear to be any areas in the City that have concentrations of units that need
rehabilitation. In fact, Palo Alto consistently has neighborhoods where the housing units are
well-maintained and, in many cases, reflect a high degree of pride in ownership. While the
census data provides an indication of the range of units that could need rehabilitation using
household income data and age of units,“drive-by” inspections of units in Palo Alto indicate
that the majority of the housing stock is in very good condition. The only area of the City that
appears to have higher than average incidence of units that may need repair or replacement
is the Buena Vista Mobile Home Park, which contains primarily older trailer or mobile home
1. Energy Conservation
By owning and operating its own utilities system, the City is committed to offering its resi-
dents a high quality of utility services at the lowest possible cost. The Utilities System at-
tempts to invest in a mix of new energy and water supply projects, operating efficiencies,
and consumer-oriented conservation and solar services, which together will enable local resi-
dents to meet their resource needs at a lower cost than in neighboring communities. Energy
Services staff of the City have an active role in design review for all new construction, exclud-
ing individual single family homes. Through this review, energy efficiency is assessed and
modifications made. Landscape standards are in place that require efficient outdoor water
use. Energy services staff are available to assist property owners, architects, and builders, in-
cluding single family, in evaluating building plans and making recommendations for improv-
ing energy and water use efficiency.
36 Housing Technical Document: Chapter 5
2. Conservation of Existing Affordable Housing
Conservation of the existing affordable housing stock is critical in today’s economic climate.
Because of the high cost and lack of vacant land to construct new affordable housing, it is
extremely important to preserve and protect those affordable housing units that already
exist in a community. State Housing Element Law requires communities to conduct an in-
ventory of affordable units that might be “at risk” of converting to market rate units within a
10 year time frame of the Housing Element. The inventory is to include all multi-family rental
units that have been funded with federal, state or local assistance. A review of multi-family
units in Palo Alto indicates that the only units that are at risk are those that have been as-
sisted with federal funds. The only State funded project is the Barker Hotel which was as-
sisted with State of California HOME funds and those units have affordability controls until
2033. Regarding local assistance, the City does not have a Redevelopment Agency and has
not issued any mortgage revenue bonds. The City does have a “Below Market Rate” (BMR)
program that requires 10% of units to be affordable in projects of 3+ units or the payment of
an in-lieu fee. The units in the BMR program have resale and affordability controls for 59
years and renew each time the property title is transferred and, therefore, are not at risk of
converting to market rate.
Palo Alto has 728 units in 13 developments of very low- and low-income housing that are to
varying degrees subject to increases in rent or conversion to market rate housing. These
projects are listed in Illustration # 22 on the following page. These projects are assisted in
part by HUD with Section 8 project-based rental assistance in which a direct subsidy is pro-
vided to the owner. The future of the Section 8 program is in question. By 2008, the subsidies
on these developments either expire or come up for renewal. The three projects with for-
profit owners are considered most at-risk. The remaining units are owned by non-profits
and, for various reasons such as relatively low mortgage debt and the non-profits’ commit-
ment to maintain affordable housing, are considered less at risk of being lost as affordable
housing; however, the loss of Section 8 subsidies could result in increased rents, making the
units less affordable to very low- and low-income households.
Housing Technical Document: Chapter 5 37
Illustration #22: Summary of Government Assisted Units "At Risk" for Conversions
Units Subject to
Project Owner/ Contact Government
For Profit Ownership
Palo Alto Gardens Goldrich & Kest
648 San Antonio Rd. 5150 Overland Ave. 221(d)(3) Title 1994: Title VI
156 156 &
Palo Alto, CA Culver City, CA VI Section 8 1998: Section 8
Sheridan Apts. Sheridan Assoc.
360 Sheridan Ave. c/o Reilly Mortgage Group 221(d)(4) Section 8 Opt:
Palo Alto, CA 2000 Corporate Rd #925
57 57 Elderly
Section 8 1999
McLean, VA 22102
Terman Apartments Goldrich & Kest Family
221(d)(4) Section 8 Opt:
655 Arastradero Rd. 5150 Overland 92 72 &
Palo Alto, CA Culver City, CA Section 8 2004
SUB-TOTAL 305 285
Lytton Gardens I Community Housing Inc.
656 Lytton Ave. 656 Lytton Avenue 236(j)(1) Section 8 Opt:
Palo Alto, CA Palo Alto, CA Section 8 1996-97, 1998
Colorado Park Colorado Park Corp.
236(j)(1) Section 8 Opt:
1141 Colorado Ave. 1141 Colorado Ave. 60 25 Family
Palo Alto, CA Palo Alto, CA Section 8 1996-7, 1998
Adlai Stevenson House Palo Alto Senior Housing
Section 202 Section 8 Opt:
455 E. Charleston Ave. 455 E. Charleston 120 24 Elderly
Palo Alto, CA Palo Alto, CA Section 8 1999
Elm Apartments Palo Alto Housing Corp
Section 8 Section 8 Opt:
129 Emerson St. 725 Alma St. 11 8 Family
Palo Alto, CA Palo Alto, CA 94301 Mod-Rehab 1997
Ferne Apartments Palo Alto Housing Corp
Section 8 Section 8 Opt:
101-131 Ferne Ave. 725 Alma St. 16 5 Family
Palo Alto, CA Palo Alto, CA 94301
38 Housing Technical Document: Chapter 5
Units Subject to
Project Owner/ Contact Government
Non-Profit Ownership (continued)
Lytton Gardens II Community Housing Inc.
Section 202 Section 8 Opt:
656 Lytton Ave. 656 Lytton Avenue 100 100 Elderly
Section 8 1999
Palo Alto, CA Palo Alto, CA
Emerson South Palo Alto Housing Corp
Section 8 Section 8 Opt: Small
3067 Emerson St. 725 Alma St. 6 5
Mod-Rehab 2000 Family
Palo Alto, CA Palo Alto, CA 94301
Arastradero Park Apts. Arastradero Park Apts.
574 Arastradero Rd. c/o Palo Alto Housing Corp Section 8 Section 8 Opt: Family
Palo Alto, CA 725 Alma St. 66 48
Sec.236(j)(1) 2000 & Senior
Palo Alto, CA 94301
Curtner Apartments Palo Alto Housing Corp
Section 8 Section 8 Opt:
300-310 Curtner Ave. 725 Alma St. 9 9 Family
Palo Alto, CA Palo Alto, CA 94301 Mod-Rehab 2001
Oak Manor Townhomes PAHC Apartments, Inc
630 Los Robles Ave. c/o Palo Alto Housing Corp Section 8 Section 8 Opt:
33 23 Family
Palo Alto, CA 725 Alma St. Mod-Rehab 2008
Palo Alto, CA 94301
TOTAL 946 728
Housing Technical Document: Chapter 5 39
3. Description of “At Risk Units”
The developments listed on the previous two pages can be divided into two categories: those
that are Title VI eligible and those that have Section 8 Project Based Subsidies. The develop-
ments that have Section 8 Project Based subsidies are organized according to their funding
source in the paragraphs that follows.
Title VI Eligible Project:
Title VI refers to Title VI of the National Housing Act of 1990 or the “Low-Income Housing
Preservation and Resident Home Ownership Act” (LIHPRHA). The 156 unit Palo Alto Gardens
project is the only remaining development in Palo Alto’s subsidized housing inventory that
is a Title VI project and is still subject to prepayment of the HUD insured mortgage, termina-
tion of the low-income use agreement and conversion to market rate housing. Arastradero
Park, the other Title VI project, was acquired by the Palo Alto Housing Corporation in April,
1995 with HUD assistance under LIHPRHA procedures and is now considered preserved as
affordable, low-income housing.
The owners of Palo Alto Gardens were eligible to prepay in April, 1994. In October of 1994,
they filed a notice with HUD under the Title VI regulations in effect at that time to retain
ownership and extend the low-income use restrictions in return for various federal financial
incentives. That process was initiated and an appraisal and rehabilitation needs assessment
of the property was conducted by HUD. In April, 1996, HUD issued its determination of the
project’s appraised value as about $11.4 million and the owner’s equity at about $9.6 million.
However, on March 28, 1996, new federal legislation became effective (the “Housing Oppor-
tunity Extension Act of 1996”) which ended the right of owners to refinance Title VI projects
and retain the low-income use restrictions. The new law established a brief window of op-
portunity, and one-time HUD funding, for owners to sell to non-profits for the purpose of
preserving the projects as subsidized, low-income housing.
The owners of Palo Alto Gardens declined the opportunity to sell under the new law and
instead, in July, 1996, filed a notice with HUD of their intent to prepay their HUD mortgage
and terminate the HUD regulatory agreement. All of the units in Palo Alto Gardens are as-
sisted under a project-based Section 8 rental assistance contract which expires June 30, 1998.
The owners cannot cancel the Section 8 contract, so the current tenants living in Section 8
assisted units appear to be protected from rent increases and eviction until the Section 8
contract expires. As of April 1998, the future of Palo Alto Gardens as low-income, affordable
housing is unknown. The new Title VI law has a provision to provide eligible tenants with
tenant-based Section 8 vouchers, it is not clear if the property owner will be required to
continue to rent to these households. It is also not clear if Congress will provide sufficient
funding to provide vouchers to all the tenants throughout the country who are eligible and
the vouchers are only being renewed on an annual basis. In addition, if the tenants must
move from these projects, it is very unlikely, in tight rental markets such as Palo Alto’s, that
these households, most of whom are elderly, disabled or large, minority families, will be able
to locate housing even with the assistance of having a Section 8 voucher. Under the new law,
there is no requirement that the owners offer the project to a non-profit buyer. The owners
are free to sell on the open market or to convert the units to market rate housing.
40 Housing Technical Document: Chapter 5
Expiration of Section 8 Project Based Subsidies:
Section 8 rental subsidies are subsidies provided directly to the project owner and the amount
of the subsidy is typically determined based on the tenant’s income and the rent charged.
The subsidy helps tenants “afford” their monthly rent by paying a portion of the rent for
them to the property owner. HUD and the property owner enter into a contract for a speci-
fied period of time during which Section 8 rental subsidy assistance will be provided. The
owner may renew the Section 8 assistance in periods of 5-15 years, depending on the con-
tract. However, the future of continuing the Section 8 rental subsidy program in the form
that it has been operative in the past is now in question. At the time of the preparation of this
Housing Element, HUD was still determining its policy with regard to renewing and/or ex-
tending Section 8 rental subsidies. In the meantime, HUD has been renewing Section 8 assis-
tance on a year-to-year basis, subject to Congressional funding.
During the 1995-2005 time frame, a number of projects in Palo Alto will have their current
Section 8 Project Based Subsidy contracts either expiring or up for renewal. The effect of a
loss of Section 8 subsidies differs depending on many factors including the underlying mort-
gage assistance, the percentage of households receiving rental assistance and their income
levels, and each project’s annual operating costs. Following is a description of the principal
types of mortgage assistance which financed the affected projects.
Sec. 221 (d) (4) Projects
The following projects have Section 221 (d) (4) market rate mortgages with Section 8 project
based subsidies: Sheridan Apartments and Terman Apartments. The 221 (d) (4) projects are
market rate mortgages with FHA insurance. This type of mortgage has no underlying mort-
gage prepayment restriction which requires continued affordability. Therefore, the units in
these projects could be rented at market rate and there would be no requirement that the
tenants be low-income.
In addition to receiving federal assistance, the Sheridan Apartments also received local assis-
tance. The development was built on land originally owned by the City of Palo Alto. When the
City sold the land, deed restrictions were included that 1) require the property to be used for
low- and moderate-income residential rental purposes for 40 years or until the year 2018
and for the first 20 years of that period (or until June, 1998), the property must be used as
rental housing under the Section 8 program. After June, 1998, however, if there are no avail-
able rental subsidies, the owner may use the site for any lawful residential purpose. The rents
charged may not be higher than necessary to keep the project “financially self-supporting”
and to allow the owner a “reasonable rate of return.” The City also required that it be given
the right to repurchase the property if it should be for sale during the full 40 year period. If
there are no additional Section 8 subsidies available in 1998, it may be possible that the rents
will increase and the apartments will no longer be affordable.
Section 236 (j) (1)
There are two developments in Palo Alto that have Section 236 (j) (1) financing: these are
Lytton Gardens I and Colorado Park. The owners of both of these developments are non-
profit owners. Projects with 236 (j) (1) mortgages are usually locked into their low-income
use restriction for the full mortgage terms. Therefore, if the Section 8 project based subsidy is
no longer available, the low-income use requirements would continue but there is a real
Housing Technical Document: Chapter 5 41
concern that the project owners may have a difficult time sustaining the economic viability
of the project The owners of Lytton Gardens I notified HUD on May 10, 1996 of their inten-
tion to apply for renewal of their Section 8 contract. The owners of Colorado Park Apart-
ments have sent notices to tenants and are applying for renewal.
Lytton Gardens II and the Adlai E. Stevenson House are developments for the elderly that
were financed with Section 202 financing. Owners of both of these developments are non-
profit organizations. Similar to Section 236 (j) (1) above, the owners would be economically
constrained if the Section 8 Project Based subsidies were not renewed, although the impact
would be greater on the Lytton Gardens II project since all of its units have Section 8 assis-
Section 8 Moderate Rehabilitation Program Projects
Under this HUD program, HUD offered 5 to 10 year contracts for Section 8 assistance to own-
ers of existing rental housing occupied by eligible very low- and low-income households, if
the owner performed at least a minimum amount of property rehabilitation. In many cases,
the rehabilitation work was funded by loans from local housing programs using CDBG funds
or other HUD funds. The effect of a loss of Section 8 assistance depends on the specific finan-
cial circumstances of each project, especially the degree to which the owner’s ability to cover
debt service and operating costs depends on the revenue from the Section 8 rental con-
All of the Section 8 Moderate Rehabilitation Projects in Palo Alto are owned, or controlled by,
Palo Alto Housing Corporation. Four projects, totaling 27 units, are smaller rental properties
that were acquired and rehabilitated with substantial City assistance. The Section 8 contract
assistance enables PAHC to provide affordable housing to very low-income households. With-
out the Section 8 assistance, PAHC would need to increase the rents paid by the tenants,
which would mean that occupancy would shift to somewhat higher income households
over time. However, since these properties carry relatively low amounts of amortized mort-
gage debt, PAHC should be able to maintain them as affordable rental units for low-income
households even without the Section 8 assistance. The most recent information (February
1997) from the County Housing Authority is that HUD intends to offer owners of 5 or more
units a one year extension of their Section 8 contract.
PAHC controls two larger projects which would be much more seriously affected by
nonrenewal of their Section 8 contracts. These projects are Arastradero Park Apartments
and Oak Manor Townhomes. Both projects were acquired and rehabilitated by PAHC under
complicated financing structures in which loans, funded from tax-exempt bonds, covered a
major portion of the costs. Rental income, on par with the current Section 8 contract level, is
needed for PAHC to continue to meet operating costs and repay the loans. In the case of
Arastradero Park, the current Section 8 contract rents exceed the rental value of the units on
the open market. Since the FHA insured the Arastradero Park mortgage, HUD would prob-
ably be forced to offer PAHC some type of mortgage reduction in return for loss of the rental
subsidies to avoid a default and a claim on the FHA insurance fund.
42 Housing Technical Document: Chapter 5
4. Cost Analysis
The cost to conserve the units in the 13 developments that have Project Based Section 8
Subsidies as very low- and low-income housing, is as varied as the projects themselves. Some
of the developments have zoning controls or deed restrictions, some have longer term con-
tracts and some have low mortgage debt; however, as noted previously, replacement is ex-
tremely difficult given the scarcity of available land. The units most at risk are those in the
developments owned by for-profit corporations. In 1995, the City of Palo Alto assisted in the
purchase and conservation of Arastradero Park Apartments as very low-income units. This
66-unit development was originally financed in 1974 with a 236(j)(1) mortgage which the
for-profit owners could choose to terminate in 1994. The owners did choose this option and
the project was at risk of converting to market rate housing.
With considerable work by the Palo Alto Housing Corporation, City staff and others, various
sources of financing were obtained (bond financing, HUD and City funds, etc.) allowing for
the purchase of Arastradero Park Apartments by PAHC. The average cost to acquire, rehabili-
tate and conserve the units for very low-income use was approximately $140,000 per unit.
This included an average of $106,500 per unit for acquisition, $12,000 per unit for rehabilita-
tion cost and about $21,500 per unit for other costs such as sponsor fees, transaction costs,
financing including the bond issuance and establishing reserve funds. Although this cost is
high and may not be representative for all units at risk, it does provide a basis for estimating
the possible cost to conserve or replace the three projects owned by for-profit corporations.
Illustration #23: Cost Analysis to Conserve “At Risk” Units
Owned by For-Profit Corporations
Project Name # of Units Total Cost to Conserve
Palo Alto Gardens 156 units $21,840,000
Sheridan Apartments 57 units $ 7,980,000
Terman Apartments 72 units $10,080,000
Because the remaining units are owned by non-profits, it is highly unlikely that they would
have to be replaced or purchase at market rates. They are in danger of losing their Project
Based Section 8 rental assistance, which would likely result in a modified mortgage arrange-
ment with HUD and/or some increase in rents, but remaining well below market rates. In
addition, because of the quality and desirable location of the projects, tenants receiving Ten-
ant Based Section 8 Subsidies are likely to continue living in the properties for some time.
Potential funding sources to pay for the cost of conserving these units are limited. Similar to
the Arastradero Park project, City staff would assist in pursuing such funding sources as bond
financing, State of California housing program funds, HOME funds, CDBG funds and City funds.
Other potential funding sources might include Low Income Housing Tax Credits and Afford-
able Housing Program Funds from the Federal Home Loan Bank. All of these funding sources
are, however, limited.
Housing Technical Document: Chapter 5 43
Chapter 6: Housing Constraints
Housing development can be affected by economic forces in the private market as well as
regulations and policies imposed by public agencies. These constraints primarily impact the
production of new housing but can also affect the maintenance and/or improvement of
existing housing. The discussion below, and on the following pages, analyzes both the gov-
ernmental and non-governmental (“market”) constraints that can affect the housing market
in Palo Alto.
1. Land Use Controls
The City’s Zoning Ordinance is the primary tool used to manage the development of resi-
dential units in Palo Alto. Residential Districts that are allowed in Palo Alto include the RE:
Residential Estate District, R-1: Single Family Residence District, R-2: Two Family Residence
District, RMD: Two Unit Multiple Family Residence District, RM-15: Low Density Multiple-Fam-
ily Residence District , RM-30: Medium Density Multiple-Family Residence District, RM-40:
High Density Multiple-Family Residence District and the Planned Community District. More-
over, residential development is permitted in all other zones except the PF: Public Facilities
Zone. Permitted densities, setback requirements, minimum lot sizes and other factors vary
among the residential districts. Listed below are some of the more significant factors of each
of the districts.
RE Residential Estate District
The RE District is intended to create and maintain single family living areas compatible with
natural terrain and native vegetative environment. The minimum site area is one acre. Only
one residential unit, plus an accessory dwelling or guest cottage, is permitted on any site.
The maximum size house on a conforming lot is 6,000 square feet.
R-1 Single Family Residence District
The R-1 district is intended for single family residential use. Typically, only one unit is allowed
per R-1 lot although, under certain conditions, accessory or cottage units may be allowed in
addition to the primary unit. (Please see page 56 of this document for more information on
cottage units in Palo Alto.) Generally, the minimum lot size for the R-1 district is 6,000 square
feet. However, there are certain areas of the City where the minimum lot sizes historically
have been larger than 6,000 square feet and these larger lot sizes are being maintained
through the Zoning Ordinance by specific R-1 zone combining districts.
Illustration #24: R-1 Districts and Minimum Site Areas
Type of R-1 District Minimum Site Area
R-1 General 6,000 Square Feet (557 square meters)
R-1 (650) 7,000 Square Feet (650 square meters)
R-1 (743) 8,000 Square Feet (743 square meters)
R-1 (929) 10,000 Square Feet (929 square meters)
R-1 (1858) 20,000 Square Feet (1,858 square meters)
Housing Technical Document: Chapter 6 45
The R-1 District zoning regulations also specify lot coverage maximums (typically a maxi-
mum of 35% lot coverage is allowed) and Floor Area Ratios (the ratio of the house size to the
lot size). Generally, the maximum floor area on a single family lot is not allowed to exceed a
floor area ratio of .45 for the first 5,000 square feet of lot area and .30 for any portion of lot
area in excess of 5,000 square feet. In addition, there are certain height restrictions that may
also limit development potential. “Daylight Plane” restrictions apply that are height limita-
tions controlling development on residential properties. In certain areas of the City where
there are predominantly single-story “Eichler “ homes, there may also be limitations on add-
ing second stories to single-story units.
R-2 and RMD Residential Districts
There are two residential districts that allow two units on a site. The R-2 Two Family Resi-
dence District allows a second dwelling unit under the same ownership as the initial dwell-
ing unit in areas designated for single family use with regulations that preserve the essential
character of single family use. A minimum site area of 7,500 square feet is necessary for two
dwelling units in this district. The RMD Two Unit Multiple-Family Residence district also al-
lows a second dwelling unit under the same ownership as the initial dwelling unit in areas
designated for multiple-family uses. The minimum site area for two units is 5,000 square feet
and the maximum density in this district is 17 units per acre.
Multiple-Family Density Districts
The Zoning Ordinance provides three categories of multiple family residential use: low den-
sity (RM-15), medium density (RM-30) and high density (RM-40). In the RM-15 district, the
permitted density range is from 6-15 units per acre. The minimum site area is 8,500 square
feet and there are setback, floor area ratio, lot coverage and height limitations also. The RM-
30 district allows a range of 16-30 units per acre while the RM-40 allows a range of 31-40
units per acre. In both of these districts, there are minimum site areas, height limitations, lot
coverage and floor area ratios. In addition, all of the multiple-family zones have open space
and BMR (“Below-Market Rate”) requirements. Further discussion of BMR requirements is
included later in this chapter.
PC Planned Community District
In addition to the specific residential districts noted above, there is also the “Planned Com-
munity District” that is intended to accommodate developments for residential, commercial,
professional or other activities, including a combination of uses. It allows for flexibility under
controlled conditions not attainable under other zone districts. The Planned Community
District is particularly intended for unified, comprehensively planned developments that are
of substantial public benefit. A constraint to the PC zone related to housing is a requirement
for a finding of public benefit. In a high cost area such as Palo Alto, additional public benefits
discourages residential PC zone proposals. The City, in Program H-5, calls for the develop-
ment of a Planned Development Zone similar to the PC zone, but without the public benefit
Residential Uses in Commercial Districts
All of the City’s Zone Districts allow for residential development except the Public Facilities
zone. In the 1970s and 1980s, several mixed use projects were developed in the commercial
zones that included significant numbers of residential units. However, during the late 1980
46 Housing Technical Document: Chapter 6
and 1990s, financing of mixed use projects became more difficult and the City has seen a
decline in mixed use proposals. In addition, the zoning ordinance requirement for site and
design review of mixed use projects and a requirement that the more restrictive zoning re-
quirement of either the commercial or residential zone apply, have resulted in a constraint
on the production of housing units in commercial zones. In this Housing Element, the City
has adopted Program H-11 which calls for the elimination of the requirement for site and
design review of mixed use projects. Policy H-4 and Programs H-8, H-9 and H-10 are intended
to encourage mixed use projects and to implement a review of the mixed use requirements
with the intent of simplifying the zoning requirements and adding incentives that will en-
courage further residential and mixed use development in the commercial zones.
Site Development Regulations
In certain instances, the City’s site development regulations can be viewed as constraints to
the development of housing. The City recognizes that its residential neighborhoods are dis-
tinctive and wants to preserve and enhance their special features. Since Palo Alto is basically
a “built-out” community, most new single family residential development is going to occur
in existing neighborhoods through either infill lots or demolition/remodeling of existing struc-
tures. Therefore, the regulations guiding development are intended to ensure that much of
what Palo Alto cherishes in its residential areas, such as open space areas, streetscapes with
mature landscaping and variety in architectural styles, is preserved and protected.
Several site development regulations, however, are recognized in the Goals, Policies and Pro-
grams of this Housing Element as needing assessment and possible revision to reduce the
constraints on developing housing. Currently, the City does not have a zoning district that
permits the development of single family detached units on lots of less than 6,000 square
feet. Program H-6 calls for amending the zoning regulations to permit residential lots of less
than 6,000 square feet where appropriate. The proposed Planned Development zone would
allow for small lot developments. Program H-7 calls for modifying parking requirements to
allow higher densities of housing in areas where jobs, services, shared parking and transit
will reduce the need for parking. Program H-1 calls for allowing increased density around
commercial areas and near transit centers. Program H-2 calls for considering minimum den-
sity requirements which could result in more housing, as well as more affordable housing.
The City’s Zoning Ordinance allows a range of residential densities from very low density
single family to 40 units per acre multiple-family. Residential uses are also allowed in com-
mercial districts as well as planned developments within the “Planned Community District.”
While certain requirements within the Zoning Ordinance (floor area ratios, height limitations,
etc.) may be viewed as constraints to development, the City has adopted these requirements
as a means of ensuring that 1) the distinctive residential qualities of the existing neighbor-
hoods are preserved and, 2) new development reflect a certain level of quality that is indi-
vidual and yet blends in with Palo Alto’s community character. Moreover, through the adop-
tion of the policies and programs in this Housing Element, the City is seeking to reduce the
Housing Technical Document: Chapter 6 47
2. Local Processing and Permit Procedures
There are various levels of review and processing of residential development applications,
depending on the size and complexity of the development. For example, single family use
applications that require a variance or home improvement exception can be handled by the
Zoning Administrator. More complicated applications, such as subdivision applications or
rezoning, require review and approval by the Planning Commission and City Council and, in
some instances, the City’s Architectural Review Board.
Residential Development applications that fall under the responsibility of the Zoning Ad-
ministrator are usually processed and a hearing held within 6-8 weeks of the application
submittal date. This includes review by the Architectural Review Board, which is required for
all residential projects except singly developed single family houses and duplexes. Rezonings
and minor subdivision applications typically have a longer time frame since they must be
heard before both the Planning Commission and the City Council. Generally, an application
will be heard by the Planning Commission 7-10 weeks after application submittal. Local ordi-
nance requires the City Council to consider the Planning Commission recommendations
within 30 days; therefore, there would be a maximum of 30 more days after the Planning
Commission hearing for the City Council’s action on the application. If the application is for a
major site and design or Planned Community rezoning then the Architectural Review Board
will conduct a hearing after the Planning Commission Hearing and this could affect the time
frame. Further, all of the time frames referenced above assume that all environmental assess-
ment and/or studies have been completed for the development. Additional time will be re-
quired if there are any environmental issues that need to be studied or resolved as a result of
the environmental assessment.
Architectural Review Board (ARB) approval is required for all residential projects except sin-
gly-developed single family homes and duplexes. The ARB sets certain standards of design
in order to keep the high quality of housing in Palo Alto. This includes a preference for natu-
rally weathering materials, and “genuine” materials such as true clay tiles. The ARB process
may add time and may result in requiring a higher level of design, materials and construc-
tion, which can be a constraint to the development of housing; however, the level of review
and the upgrade in materials has the long term benefit of lower maintenance and higher
retention of property values. Moreover, the construction of thoughtful and well-designed
multi-family housing has sustained community support for higher density projects and has
resulted in community support for residential projects at all income levels. The preferences
on materials are sometimes waived for affordable housing projects.
In regard to codes and enforcement, the City has adopted the Uniform Building Code (UBC),
published by the International Conference of Building Officials, which establishes minimum
construction standards. Although a locality may impose more stringent standards, it cannot
adopt any that are less restrictive than those of the UBC. Thus, the City cannot modify the
basic UBC requirements. The City also administers certain State and Federal mandated stan-
dards in regards to energy conservation and accessibility for disabled households. In review-
ing these standards, certain requirements especially in regard to handicapped accessibility
may be viewed as a constraint to housing production. The City has no direct control over
these types of requirements other than working with local legislators on a federal and state
level to modify and make the requirement more realistic.
48 Housing Technical Document: Chapter 6
The City’s development fee structure does not appear to be a significant impediment to
residential development. Residential developments are charged fees according to the value
of the project for building, planning and fire review fees. For example, a residential unit with
a value of $200,000 would be charged $2684 for building, planning and fire fees. For infill
and individual single family development, the public works fees are minimal and estimated
to be less than $500 per unit. For a residential subdivision, the most significant public works
fee would be the fee for a Street Work Permit, which is 5% of the value of the street improve-
ments. The City’s Utility Department does charge for sewer and water hook-ups . The City has
joined with 26 other cities, and San Mateo and Santa Clara Counties to implement proce-
dural changes that will standardize modifications to the Uniform Building Code and submit-
tal requirements for building permits and building permit fees.
Other public service districts of course may charge fees that are outside of the control of the
City. The most significant of these fees in Palo Alto are school impact fees. The Palo Alto Uni-
fied School District adopted a fee schedule in July, 1996 that specifies a fee of $1.84 per
square foot for residential units. Los Altos School District services a small portion of the City
of Palo Alto and their school impact fee is $1.23 per square foot.
3. Below Market Rate (BMR) Program
The City’s BMR Program has been in existence since 1974 and has produced 144 for-sale
residential units and 33 rental units. The program was initiated to fill a gap in affordable
housing between households making above moderate-income, who it was felt could afford
their own housing, and low-income households, who could be assisted by other state and
federal programs. The program has built-in provisions that result in the units in the program
being more affordable over time when compared to market rate units and median income,
The BMR Program could be considered a constraint. However, in high cost cities such as Palo
Alto, this type of program is a necessity to augment the production of moderate cost hous-
ing. The BMR program has several options for the developer and allows for the developer to
recoup the direct construction and financing costs of the unit excluding land, marketing, off-
site improvements and profit. In addition, the City does not apply any other impact fees,
such as park or transportation fees, to residential projects. Finally, the City requires that BMR
units be included in for-sale residential projects of three or more units and for-rent residen-
tial projects of five or more units, and the units be mixed throughout a project. The result is a
diversity of income within housing developments throughout the City.
4. Land Availability
Palo Alto is basically a “built-out” community. Only 1.4% of the City’s land area is vacant. In
fact, 46 acres of the 72 acres in the “Stanford West” Sand Hill Road site is the only piece of
vacant, residentially zoned land greater than 10 acres in size remaining in the City. The lack of
vacant land, however, has resulted in an effort to “recycle” land parcels with commercial or
industrial zoning that are vacant or have other land uses that are economically marginal. The
City’s long-term policy to discourage the rezoning of residential land to commercial use,
while encouraging the rezoning of commercial lands for residential use, has resulted in 46
sites being rezoned from commercial to residential since 1978. During the same time period,
only 10 sites have been changed from residential to commercial. This policy continues in this
Housing Technical Document: Chapter 6 49
In preparation of this Housing Element, the City again reviewed commercial sites for pos-
sible residential use. The aggressive stance taken by the City in the past limits the additional
sites, although several sites are considered as having potential to be converted to residential
during the term of this Housing Element. Since identification of sites other than those zoned
residential is problematic, the City is not including these in identifying land available to meet
regional housing needs. However, since the City encourages residential development on
commercial lands, neither the zoning designation nor the City’s policies are seen as con-
straints to residential development of commercial/industrial lands.
The City has compiled a land inventory of sites with the potential for residential develop-
ment from 1996-2003. The inventory includes both vacant land parcels as well as other par-
cels that may have other uses currently but have the potential for residential use. (The inven-
tory of residentially zoned sites is reproduced in Appendix # C in this document.) The chart
that follows summarizes the range of units that could be developed on these parcels. The
chart does not include potential singly developed single family housing or second units,
such as in-law or cottage units. The chart indicates that there is available land in the City at
appropriate zoning categories to meet the City’s 1996-2003 regional housing new construc-
Illustration #25: Land Inventory, Potential Residential Development
Total Acreage Zone Category Estimated Range of Units
1.8 Acres R-1 7- 8
2.5 Acres RM-15 15- 40
50.8 Acres RM-30 and RM-40 707-791
35.5 Acres PC/PF/Mixed 652-842
TOTAL UNITS 1,381-1,681
Source: City of Palo Alto, Dept. of Planning and Community Environment, August, 1996
Information in Chapter 5 of this document summarizes the number of new residential units
needed to meet Palo Alto’s estimated “Regional Housing Needs” new construction alloca-
tion. The information on pages 33-35 indicates that Palo Alto’s new construction estimate is
1,244 units for the 1996-2003 time frame. From the data in Illustration #25 above, it appears
that there currently is sufficient land zoned residential to meet that need. The estimated
number of units that could be developed on parcels currently zoned residential is 1,381-
1,681 units. It should be noted, however, that 1,088 of the units are on the Sand Hill Road
land owned by Stanford University. At the time that this Housing Element was being devel-
oped, the development application for these parcels was being challenged in court and the
exact number of units to be developed is to be determined.
The 1,244 unit estimate is also sub-categorized into units needed by household income level.
According to the information on page 35 of this document, following are the sub-categories
of housing need estimates for Palo Alto by household income level.
276 Units Very Low-Income Need (0-50% of Median)
208 Units Low-Income Need (51-80% of Median)
299 Units Moderate-Income Need (81-120% of Median)
461 Units Above Moderate-Income Need (120%+ of Median)
1,244 Units TOTAL NEW CONSTRUCTION NEED
50 Housing Technical Document: Chapter 6
This housing need by income level will be reduced over the period to 2003 by several known
projects. They include the Alma Place SRO, which added107 units of very low-income hous-
ing and the Page Mill Court housing for the developmentally disabled, which will add 24
units of very low-income housing. As currently approved, the Stanford West project will pro-
vide 159 units of rental housing for low-income households in compliance with the City’s
Based on past performance, it is anticipated that approximately 50 units of very low-income
housing and l75 units of low-income housing will be added through cooperative efforts of
the City and local non-profits prior to 2003. In addition, the City’s BMR program will result in
17 to 48 units of moderate-income housing, depending on the number of market rate units
built. The City has established and is proposing as part of this Housing Element, numerous
policies and programs to encourage the additional development of housing, particularly
housing affordable to very low-, low- and moderate-income households. These include al-
lowing for increased densities near transit; consideration of requiring minimum densities;
zoning incentives for smaller, more affordable housing; evaluation of second dwelling unit
regulations to encourage the creation of more units; revised regulations to allow residential
lots of less than 6,000 square feet and modifications to reduce parking requirements when
houses are located near jobs, services and transit.
However, even with the strong commitment of the City to provide affordable housing, it is
unlikely that Palo Alto can provide that many units for very low- and low-income house-
holds. The primary reasons are a lack of available land and the limited availability of subsidy
funds. The City will continue to use public and private resources to make a good-faith effort
to provide as many units as it can in meeting the State required need, as well as, the City’s
own commitment to provide housing for all income groups and a diversity of housing
throughout the City.
The City of Palo Alto is an older and well-established community in terms of infrastructure.
The City owns and manages its utilities, including water and electrical. According to staff
from the City Public Works Department, there are no significant infrastructure constraints
that would affect anticipated residential development. The City’s wastewater and water sys-
tems both have sufficient capacity to serve expected residential growth, although some lo-
cal service lines need expansion or extension. On-going maintenance and repair of existing
storm drainage, water, and wastewater improvements are identified as part of the City’s Capital
Improvement Plan (CIP). Needed repairs are prioritized in the CIP and projected over a multi-
While there appear to be no significant infrastructure constraints on a citywide basis, there
may be constraints on a site-by-site basis depending on the site’s proximity to existing utility
and service lines and whether there would be a need to provide additional connections or
upgrades to those lines. These types of improvements would typically be the responsibility
of the property owner/developer.
There are some areas in the City that have specific environmental areas of concern. There are
approximately 12 sites in the foothill area of the City that are within a specific earthquake
fault zone area. These sites require in-depth soils reports and peer review as part of their
Housing Technical Document: Chapter 6 51
development use approval. Moreover, the entire City is subject to moderate to severe earth
movement during a seismic event. According to the City Public Works Department staff, ap-
proximately 25-30% of the City is within the flood hazard zone. Structures within this zone
must meet certain building requirements when expanding or improving the property if the
improvement is greater than 50% of the value of the property. Some areas of the City have
isolated cases of pollution of the soil and groundwater that may require clean-up, and the
close proximity of groundwater to the surface may limit excavation and require additional
foundation stabilization. Finally, many available sites are limited by noise constraints from
vehicular traffic and railroad trains. Sound walls or additional noise barriers may be required
to reduce noise to acceptable levels for residential use. These requirements could be viewed
as constraints in that they increase the cost and may prohibit owners from undertaking im-
provements. The City, however, has limited control over these requirements since they are
primarily regulated by state and federal agencies.
There are a number of costs involved in the development of housing. These include land and
construction costs, sales and marketing, financing and profit. Because these costs are so “mar-
ket sensitive,” it is difficult for a local government to reduce them in any way. Listed below are
some of the more significant market related issues.
1. Financing Costs
Financing costs are primarily dependent on national economic trends and policy decisions.
At the time this Housing Element was prepared (1997), fixed mortgage rates for single family
residential housing varied from 8.2% for a 30 year fixed conforming loan to 8.5% for a 30 year
fixed jumbo loan. (The maximum loan amount to qualify as a conforming loan is $207,000;
loans over that amount would be considered a jumbo loan.) Adjustable rate loans were lower
ranging from starting rates of 3.5% up to 5% and with maximum lifetime caps in the 11-12%
range. Financing from both mortgage brokers and retail lenders (banks, savings and loans) is
available in the Palo Alto area. The availability of financing, then, is not a constraint to the
purchase of housing in Palo Alto, although financing for development of condominiums,
rental housing and mixed use projects, can still be difficult to obtain. Financing costs for
subsidized housing are more difficult, as the competition for the limited available funds is
2. Land and Construction Costs
The actual costs of developing and building housing in Palo Alto could be viewed as a con-
straint to housing, especially affordable housing. Vacant land is scarce in Palo Alto — less
than 2% of the City’s land is vacant. The only large site of vacant, residentially-zoned land in
the City is the “Stanford West” site, which is approximately 46 acres. Because of the lack of
vacant parcels, it is anticipated that under-utilized sites or sites zoned for commercial/indus-
trial uses will become more feasible for re-use to residential designations. The City continues
to review non-residentially designated areas and underutilized sites for potential residential
uses and is encouraging the integration of residential use into commercial/industrial areas.
The scarcity of vacant land has resulted in increased costs of purchasing any available land.
Residentially zoned property can sell for $50 per square foot or more depending on its loca-
tion and development potential. Individual single family lots, if available, are typically $300,000
52 Housing Technical Document: Chapter 6
or more in price for a 5,000 to 16,000 square foot lot. Commercially zoned land (outside of
the downtown core) is valued at over $45 per square foot. Thus, a one acre site would be
worth in excess of $2 million.
Construction costs in Palo Alto are also expensive but are similar to those of surrounding
communities. Discussions with private and non-profit developers and City staff indicate that
residential construction costs can range from approximately $75 per square foot to $100-
200+ per square foot depending on amenities and the quality of construction materials. It
becomes difficult to build housing, particularly affordable housing, with this range of con-
struction cost. For example, using $100 per square foot as an estimate, a 2,000 square foot
home would cost $200,000 just for construction costs and excluding land costs, off-site im-
provements, processing fees and financing costs. Even with the “economies of scale” of multi-
family construction, costs are still high for those units also. Unfortunately, construction costs
are dependent on many factors including labor costs, material costs and competition in the
market place and are beyond the control of the City. In order to develop housing that is
affordable, especially to very low- and low-income households, costly public subsidies are
routinely required because of the high cost of land and construction.
Housing Technical Document: Chapter 6 53
There are several reasons for the decrease in housing unit production rates. First, the City of
Palo Alto is essentially “built out.” Less than 2% of the City’s land area is vacant. The opportu-
nity to annex additional land to the City is limited because the City is surrounded on the east
and west by the Cities of Mountain View, East Palo Alto, Menlo Park and Los Altos. The San
Francisco Bay frames the northeast boundary while Stanford University borders the south-
west boundary. Stanford University is located in the unincorporated area of the County of
Santa Clara but also owns parcels of land in the City. In fact, one of the more significant
housing approved during the preparation of this Housing Element is the “Stanford West”
development on Stanford property adjacent to Sand Hill Road. This development could gen-
erate approximately 600-700 rental units and a senior housing complex with over 400 units.
While this site represents the largest potential for residential units in the City, it also repre-
sents one of the last opportunities for large scale residential development. The “Stanford
West” development is currently held up by court challenges.
A second reason for the decrease in housing unit production is the generally negative eco-
nomic climate that first surfaced in the late 1980s and continued into the 1990s. The reces-
sion during that time definitely affected the housing market . “Downsizing” of corporations
resulted in job layoffs and job insecurity which then had the domino effect of decreasing
consumer demand for housing or new housing debt. Financing costs and development costs
continued to increase during this time also, which affected the motivation of potential de-
velopers of new housing.
The future production of new housing units in the City is also going to be affected by the
two factors discussed above. Availability of land and economic issues are going to continue
to be important variables in determining the rate of new housing produced in the City. Ad-
ditional information on land availability and estimates of new housing to be produced dur-
ing the time frame of this Housing Element can be found in Chapter 5 (“Future Housing
Needs”) and Chapter 6 (“Housing Constraints”) of this document.
Housing Units by Type and Tenure
The majority of housing units in Palo Alto are single family units. Approximately 64% of the
total housing stock in 1990 was single family units with 94% of those single family units
being single family detached units and the remainder were single family attached units (e.g.
condominium and townhouse units). Multi-family units in structures of 2-4 units represented
6.5% of the housing stock in 1990 and approximately 28% of the housing stock consisted of
multi-family units in structures of 5 and more units. Mobile homes represented less than 1%
of the total housing stock. The illustration bellow reflects the 1990 mix of housing types in
Illustration #14: Housing Stock by Type, City of Palo Alto, 1990
Single Family 16,166
2-4 Units 1,625
5+ Units 7,074
Other (includes 109 mobile homes) 323
Source: U.S. Census, 1990 (STF3)
22 Housing Technical Document: Chapter 3
Approximately 57% of the occupied units in the City are owner-occupied. Homeowners live
in 13,735 of the City’s occupied units and the remaining 10,471 are occupied by renter house-
holds. The percentage of owner-occupied units has been slowly but steadily increasing. In
1970, 54% of the City’s units were owner-occupied and by 1980 that percentage had in-
creased to 55%. The 1990 owner-occupied percentage of 57% continues this upward trend.
It is interesting to note that the percentage of owner-occupied and renter-occupied units in
the City’s housing stock is fairly similar to the proportion of owner and renter units in Santa
Clara County as a whole. The County’s housing stock consisted of 41% renter-occupied and
59% owner-occupied units in 1990. In comparing Palo Alto to some adjacent communities,
it is apparent that Palo Alto is more “suburban” in character (higher home ownership rates
and increased number of single family units) than Mountain View but less than Los Altos.
Illustration #15: Housing Units by Tenure, Palo Alto
and Surrounding Communities, 1990
% of Renter- % of Owner-
Occupied Units Occupied Units
Mountain View 62% 38%
Los Altos 12% 88%
Palo Alto 43% 57%
Santa Clara County 41% 59%
Source: U.S. Census, 1990 (CHAS Table 3)
Most of the owner occupied units in the City are three bedrooms and larger in size. Approxi-
mately 77.5% of all owner-occupied units are three bedrooms or larger. The average num-
ber of bedrooms in an owner-occupied unit is 3.15 bedrooms while the average bedroom
size of a renter-occupied unit is 1.64 bedrooms per unit.
Vacancy rates have traditionally been used as a gauge to measure the health of a community’s
housing market. Low vacancy rates (typically defined as anything less than 3% for home-
owner units and 5% or less for renter units) can indicate a tight housing market with few
vacant units that then creates a high demand for those vacant units.
Data from the 1990 U.S. Census indicate that a total of 982 units were vacant out of a total
housing stock of 25,188 units. This reflects an overall vacancy rate of 3.9%. However, in
looking at this data more closely, only 707 of the 982 units were available for sale or rent. The
remaining 275 units were vacant but were being used for seasonal, recreational or other
uses. Therefore, the real vacancy rate when evaluating units available for rent or sale is actu-
Housing Technical Document: Chapter 3 23
Of the 707 units available, 432 units were available for rent and 275 units were for sale. If the
432 available rental units is added to the rental housing stock in 1990 of 10,471 occupied
rental units, then the total number of rental units (occupied and vacant) in 1990 was 10,903
units. The 432 vacant units then represent 4% of the rental housing stock. By using the same
method, the homeowner vacancy rate in 1990 was 2% (275 vacant units + 13,735 owner
occupied units = 14,010 units total).
The City’s Condominium Conversion Ordinance requires the City to calculate vacancy rates
semi-annually. These vacancy rates are calculated for the purpose of regulating conversions
of rental housing to condominiums in structures of 3 or more units. The City’s tabulation of
vacancy rates utilizes additional factors not included in census data, including utilizing only
structures of 3 or more units, utility records and phone surveys. The more conservative ap-
proach used by the City results in a generally lower vacancy rate. According to the May, 1996
vacancy rate calculation conducted by the City there were 6,754 rental units in structures of
3 or more units. Approximately 15 of those units were vacant resulting in a vacancy rate of
less than 1%. According to information from the City’s 1990 Housing Element (pg. 3) the
rental apartment vacancy rate in the City has been below 1.2% since April, 1976.
Housing Age and Condition
Like many other California communities, Palo Alto experienced a huge spurt of growth in the
decade after World War II. Approximately one-third of the City’s current (1996) housing stock
was built in the decade between 1950-60. The 1990 U.S. Census data confirmed this by indi-
cating that the median year in which a typical Palo Alto housing unit was constructed was
1955. In fact, the City’s housing stock appears to be divided into three periods of construc-
tion or age. The 1990 U.S. Census data showed that roughly one-third of the units (8,255
units) were constructed prior to 1949, another one-third (8,385 units) were constructed be-
tween 1949-59 and the remaining one-third (8,548 units) were built after 1959.
Illustration #16: Year Structure Built, City of Palo Alto, 1990
Pre- 1949 1960 -1990
Source: 1990 U.S. Census
24 Housing Technical Document: Chapter 3
By looking at census data indicators only, Palo Alto’s housing stock is not substantially at risk
for having severely deteriorated units. The majority of the City’s units were built after World
War II and so there are limited numbers of very old housing units (50+ years) in the City.
Further, the census data indicate that in 1990 only 51 of the City’s 25,188 total units lacked
complete plumbing facilities.
While a formal “windshield” survey has not been conducted in Palo Alto in recent years, there
have been periodic and extensive drive-throughs of the neighborhoods in Palo Alto by both
staff and consultants. Because of the high market value and income levels in many Palo Alto
neighborhoods, the units generally appear to be in good condition and there appears to be
few, if any, pockets of deteriorating units. The City’s 1988-91 “Housing Assistance Plan” esti-
mated that only 3% of the City’s owner occupied housing stock is substandard. The 3%
figure was based on information from the City’s Housing Improvement Program, which has
now been discontinued, and is the most accurate information available on substandard hous-
ing. City staff observations indicate minimal change in the amount of substandard housing
since 1988. City staff has also observed that, in Palo Alto, there does not appear to be a
correlation between the age of a structure and deterioration.
Therefore, the 3% estimate can be used to determine an approximate number of substan-
dard units. Using 1988 State Department of Finance figures, the total housing stock in 1988
in Palo Alto was 25,024 units. Since the Department of Finance does not estimate
owner-occupancy rates, the figures from the 1990 U.S. Census data on owner-occupancy
rates are the most relevant source and that data indicate that 57% of the City’s units were
owner-occupied. Therefore, the total estimate of owner occupied units in 1988 is 14,263
(25,024 x 57%=14,263) and 3% of the owner-occupied units results in an estimate of 428
A review of the 1990 U.S. Census data indicates that only 4.5% (598 households total) of all
owner occupants are very low- and low-income and live in housing units built prior to 1940.
Another 10% of owner occupants (1,320 households total) are very low- and low-income
and live in units built between 1940-59. This data provides an “upper range” or maximum
ceiling of rehabilitation need for owner occupied units using the assumption that very low-
and low-income households often cannot afford on-going maintenance and repair as their
units “age” and that these are the type of units most often in need of rehabilitation. The 1,918
units (598 + 1,320 = 1,918) represent 7.6% of all housing units in the City in 1990.
One site which may contain a greater than average proportion of units needing rehabilita-
tion or replacement is the Buena Vista Mobile Home Park. This 4+ acre development con-
sists of both mobile home/trailers and studio rental units. The 1990 U.S. Census reported
that there were 109 mobile homes/trailers in the City and it is estimated that 104 of these
units are located at Buena Vista. The census data reported that, in 1990, 86 of these 109 units
were occupied and of those occupied units 91% were owner occupied. Many of the units at
Buena Vista are older “trailer” units. Typically, these older trailers lack adequate insulation,
roofing and foundation and may also have outdated plumbing and electrical systems. Addi-
tionally, accessibility (exterior doors and stairs, hallways) is also a concern especially for older
and/or disabled occupants.
Housing Technical Document: Chapter 3 25
The City’s rental housing stock is “younger” than the total housing stock. The median year
that a renter-occupied unit was built is 1960 while the median for all occupied units is 1955.
70% of the renter-occupied units in 1990 were in structures of 3 or more units. Assuming
that very low- and low-income renters might be more likely to live in substandard units be-
cause of their limited income for housing costs, a review of income status and age of housing
was conducted of the 1990 U.S. Census data. This review indicates that the majority of very
low- and low-income tenants occupied units built after 1960. 60% of all very low- and
low-income renters occupied units built after 1960. Another 28% (987 households total) of
very low- and low-income tenants were living in units built between 1940-59 while the re-
maining 13% (462 households total) of very low- and low-income renters lived in units built
prior to 1940. Therefore, the census data indicate that most very low- and low-income ten-
ants in Palo Alto live in “newer” units (units built after 1960) and these units are typically
assumed to be in no serious threat of being substandard. There are 462 very low- and
low-income tenants living in units over 50 years of age and these units are the most likely to
be substandard and in need of rehabilitation. There are also 987 very low- and low-income
tenants living in units built between 1940-59 and some of these units could also be in need
of repair or rehabilitation. The 1,449 total units (462+987=1,449 units) represent 5.8% of all
housing units in the City in 1990.
While it does not appear then that there is a serious problem with the condition of rental
units, it should be noted that the City has been active in trying to maintain the condition of
the existing rental housing stock. Using federal funds and bond authority, several rental
housing developments in Palo Alto have been rehabilitated in recent years. In 1995, the City
assisted with the acquisition and rehabilitation of the 66 unit Arastradero Park Apartments.
With City assistance, the Palo Alto Housing Corporation rehabilitated the 10 unit Plum Tree
Apartments in 1991 and the 26 unit Barker Hotel project in 1994. The City intends to con-
tinue to monitor the maintenance and repair needs of the rental housing stock.
Cost and Affordability of Housing
Housing costs continue to be a concern for California communities, especially in the San
Francisco Bay Area. Palo Alto is a very desirable community and, consequently, the cost of
housing is especially high. Unless publicly subsidized in some manner, home ownership in
Palo Alto is available only to households with above moderate-incomes. For example, the
median price of a single family detached home in the City of Palo Alto during 1996 was
$490,000. For the same time period, the median price of a condominium or townhouse in
Palo Alto was $264,000. (Source: Multiple Listing Service Summary, Peninsula West Valley
Association of Realtors) Assuming a standard 20% down payment and an 8% mortgage
with a 30 year term, a household would need to have an annual income of approximately
$134,000 to afford the median sales price of $490,000 for a single family detached home. The
monthly payment for principal, interest, taxes and insurance is estimated to be $3,350 per
month and it is assumed that the household would pay no more than 30% of their income
for housing costs. Using the same assumptions, the household income required to purchase
the medium price condominium or townhome in Palo Alto would be approximately $78,800
per year. This assumes a monthly payment of about $2000 per month for principal, interest,
taxes, insurance and homeowner association dues.
The information in the above paragraph indicates that households either need a high house-
26 Housing Technical Document: Chapter 3
hold income to afford the median priced housing units in Palo Alto in 1996 or else would
need to have a substantial amount of funds for a large down payment so that the monthly
mortgage costs would be reduced. Low- and moderate-income households do not have the
household incomes needed to afford these units and, typically, do not have access to large
amounts of funds to use for down payments. Therefore, it is very difficult for low- and
moderate-income households to afford home ownership in Palo Alto.
Similar to owner-occupied housing, housing costs for rental units are also expensive in the
Palo Alto housing market. An April, 1995 market analysis conducted by Bay Area Economics
for the Palo Alto Housing Corporation (“Market Analysis for 753 Alma Street,” April 21, 1995)
surveyed some existing rental units in the Palo Alto area for monthly housing costs. The
focus of the survey was on single-room occupancy (SRO) units but the report also included
other types of rental units. The results of that survey indicate that existing SRO units in Palo
Alto have monthly housing costs ranging from a low of $250 per month for a unit without a
bathroom to $616 for a unit with a bathroom. Typical studio rentals range from approxi-
mately $500-800 per month.
In 1996, the average apartment rental in Palo Alto was $1,365 per month. This information is
provided by REAL FACTS, a data collection agency located in the Bay Area. Based on a monthly
survey of 16 apartment complexes representing a total of 2,078 units in Palo Alto, REAL FACTS
reported that the average apartment unit was 902 square feet and rented for $1.51 per square
foot or $1,362 per month. The average rent for a 1 bedroom was $1,140; a 2 bedroom, 2 bath
average rent was $1,826; and, the 3 bedroom, 2 bath was $1,881 per month.
Using 1996 median income figures for Santa Clara County, a household of 4 persons could
have an income of no more than $33,700 per year to qualify as a very low-income house-
hold. By applying the formula that a household should spend no more than 30% of their
income for housing, then the very low-income 4-person household should spend no more
than $842 per month for housing costs, including utilities.
Illustration #17: 1996 Income Limits/Housing Affordability
County of Santa Clara, 4-Person Household
Maximum Income Maximum Housing
Limit Cost (30% of Income)
0-50% of Median $33,700 $842/month
51-61.7% of Median $41,600 $1040/month
80% of Median $53,920 $1348/month
100% of Median $67,400 $1685/month
120% of Median $80,880 $2022/month
* In areas with very high median incomes, HUD caps the low-income limit based on the national median
income rather than the traditional 80% of County median income.
Source: U.S. Department of Housing and Urban Development
Housing Technical Document: Chapter 3 27
The chart on the previous page indicates household income levels and maximum “afford-
able” housing costs for a four person household. In comparing maximum affordable hous-
ing costs to the average 1996 apartment rent of $1362 per month, it appears both the very
low- and low-income households are completely priced out of the market. Neither of those
households can theoretically afford the average apartment rent. These households either
have to find a much smaller unit (i.e. studio unit or 1 bedroom unit possibly) or pay more
than 30% of their income for housing costs. In regard to home ownership, both of these
income groups are also unable to compete for home ownership units since their household
incomes are significantly below the median priced townhome/ condominium or the median
priced single family, detached home.
The 4 person moderate-income household appears to be able to afford typical rental rates in
Palo Alto; however, home ownership is out of reach for most of them. The only
moderate-income household group that could theoretically afford to purchase a housing
unit in Palo Alto would be the household income group at 120% of median, or a maximum of
$80,880 annual income. As noted earlier, the median priced townhome/condominium in
Palo Alto in1996 had a median purchase price of $264,000. Assuming a 20% down payment
and 8% mortgage, a household would need $78,800 in annual household income. There-
fore, only the households at the very top of the moderate-income household group would
be able to possibly afford a townhome/condominium. Purchase of a single family, detached
home would definitely be out of reach of all moderate-income households.
In summary, home ownership in Palo Alto is expensive and available principally to house-
holds with higher than average incomes. Without a public subsidy in some manner, the aver-
age home ownership units in the City require minimum household incomes of
$78,800-$134,000 depending on unit type. Moderate-income households can “afford” typi-
cal rental unit housing costs, but low- and very low-income households have a much more
difficult time. Very low-income households, in particular, are much more challenged in find-
ing a rental unit that is affordable and appropriately sized for their household. These trends
have continued through 1997 and into 1998 with rental costs and homeownership costs
showing significant increases.
28 Housing Technical Document: Chapter 3
Chapter 7: Review of 1990 Housing
State Housing Element Guidelines require that communities evaluate their previous Hous-
ing Elements according to the following three criteria:
• Effectiveness of the Element,
• Progress in Implementation, and
• Appropriateness of Goals, Objectives and Policies.
The City’s most recent Housing Element was amended and adopted in 1990-91. On October
21, 1991, the State of California, Department of Housing and Community Development, found
the Housing Element to be in compliance with State Housing Element law. Therefore, the
1990 Housing Element was the most current Housing Element of the City at the time that
this 1998 Housing Element Technical Document was prepared . The following pages evalu-
ate the policies, programs and goals of the 1990 Element.
Program Policies, Programs and Goals
There were 16 policy statements in the 1990 Housing Element that reflected the City’s over-
all goals for addressing housing needs. Within each policy statement, the 1990 Element iden-
tifies specific housing programs to implement each of the policy statements. A summary
table (Table J on page 64, 1990 Housing Element) then quantifies specific objectives for hous-
ing programs according to income categories of the households to be assisted. Following
the outline of the 1990 Housing Element, the following analysis of the 1990 Element evalu-
ates each of the 16 policy statements and the programs and objectives quantified for each
of the policy statements.
Policy 1: Maintain the general low-density character of existing single family
Policy 2: Preserve older single family homes and small apartment buildings.
Program 1: In areas adjacent to the downtown shopping area, maintain single
family and duplex areas and have multiple-family housing close to shops and
Program 2: Continue using minimum lot size standards for single family neigh-
borhoods to discourage splitting of larger lots.
The character of the City’s single family neighborhoods has been protected primarily through
the City’s Zoning Ordinance. Restrictions in the RE, R-1 and R-2 zones control minimum lot
sizes (ranging from 6,000 square feet to 20,000 square feet), setbacks, height regulations and
lot coverage. Certain older neighborhoods which have single-story units also have restric-
tions controlling second story additions in order to preserve the character and original ar-
chitecture of the neighborhood. In addition, during the 1990-95 time period, the City devel-
Housing Technical Document: Chapter 7 55
oped and distributed a helpful guidebook entitled “Single Family Residential Design Guide-
lines for Palo Alto” (September, 1991), which assists the property owner with design deci-
sions for remodeling or new construction.
Program 3: Continue the cottage provision in R-1 zones, ensuring that new
development fits in with the existing single family properties.
Since 1990, the City has continued to allow cottage units in R-1 zones. From 1990 through
December 31, 1995, 15 cottage units had been approved by the City through the “Condi-
tional Use Permit” process. Three units had been denied in that same time period. The cot-
tage unit is a second unit allowed on RE and R-1 parcels under certain conditions including:
1. minimum lot sizes must be 35 percent larger than the minimum lot area in the respec-
tive R-1 or R-1 combining district,
2. the cottage unit must be detached from the original dwelling unit, limited in living area
to 900 square feet, subject to height restrictions and providing at least 200 square feet in
covered parking area, and
3. must be architecturally compatible with the main residence.
The small number of cottage units built from 1990-95 may reflect several factors. First, many
California communities are finding that cottage or accessory units are not as feasible as origi-
nally envisioned. Cost is one factor affecting the attractiveness of cottage units. Assuming
construction costs of approximately $75 per square foot, a 900 square foot cottage unit could
cost $67,500 to construct. Unless a property owner had the objective of building the unit for
a family member, it may not be cost effective to build such a unit and then rent it at market
rents. Another factor may be lack of public knowledge about the cottage unit provision and
it may be that there needs to be more of an effort to inform residents about the possibility of
cottage units in their neighborhoods. Finally, a third factor may be the restrictions imposed
in the Zoning Ordinance regarding minimum lot sizes, covered parking requirements and
height limitations. These restrictions, while regulating the quality of the development, limit
the number of potential lots where cottage units could be added. In the 1998-2010 Compre-
hensive Plan to be adopted with this Housing Element, this program has been modified to
require an assessment of the cottage provisions with the intent of liberalizing them to make
the creation of cottage units more likely.
Policy 3: Protect and enhance those qualities which make Palo Alto’s
neighborhoods especially desirable.
Program 4: Use the Zoning Ordinance, other codes and specific plans to main-
tain high-quality neighborhoods.
Palo Alto residents are justifiably proud of their neighborhoods. There is a wealth of architec-
tural diversity and character in the various Palo Alto neighborhoods. Bungalow and crafts-
man style homes can be found in the Professorville, Community Center and Old Palo Alto
neighborhoods. Large estate homes with Tudor or Mediterranean style architecture are typi-
cal of the Crescent Park neighborhood while Eichler and ranch style homes predominate in
the Charleston neighborhoods. As noted in the paragraphs above, the City’s Zoning Ordi-
nance and Design Guidelines help to protect these existing neighborhoods by establishing
guidelines for lot coverage, minimum lot sizes, height regulations, streetscape and landscap-
ing, and architectural styles. It is expected that the City will continue to enforce and interpret
these type of guidelines in the 1998-2003 time frame of the Housing Element.
56 Housing Technical Document: Chapter 7
Policy 4: Support locally assisted housing rehabilitation with public and
Program 5: Encourage housing rehabilitation in residential areas by continu-
ing the Citywide inspection and enforcement program.
Program 6: Provide rehabilitation assistance to low-income households in Palo
From 1990-97, the City has utilized various public funding sources to assist with the rehabili-
tation of existing housing, including the Rental Rehabilitation Program, the Community De-
velopment Block Grant (CDBG) Program, HOME funds, City funds and bond funds.
The federally-funded Rental Rehabilitation Program (RRP) administered by the U. S. Depart-
ment of Housing and Urban Development provided funds in 1992-93 to rehabilitate the 10
unit Plum Tree Apartments, owned by the Palo Alto Housing Corporation. The existing multi-
family structure was purchased by the Corporation in 1991 primarily with CDBG funds and
then RRP funds were used to finance rehabilitation costs of the family apartments. RRP funds
were also provided for the rehabilitation of a 3 unit structure on Everett Avenue, 6 units on
Kipling Avenue and one single family structure. In total then, 20 units were rehabilitated
using Rental Rehabilitation Program funds.
The City also provides rehabilitation assistance on an “as needed” basis for units occupied by
very low- and low-income homeowners and in need of rehabilitation. From 1990-96, five
units have been rehabilitated. Financing has been provided through program income from
previous CDBG rehabilitation loans. CDBG funds have also been allocated to the Senior Co-
ordinating Council for their Senior Home Repair Program. These funds are provided to eld-
erly homeowners for minor repairs to their homes. From 1990 through 1994, an average of
316 elderly households were assisted annually through this program.
The City of Palo Alto and the Palo Alto Housing Corporation also successfully secured HOME
funds, City funds and bond financing to acquire and rehabilitate the 66 unit Arastradero
Park Apartments and the 26 unit Barker Hotel. The Arastradero Park Apartments was a Title
VI eligible project that was at risk of converting from affordable units to market rate units.
The Arastradero Park project required considerable financial resources including a $7. 5 mil-
lion bond issuance, HUD funding and $300,000 in City funds. The Barker Hotel was also reha-
bilitated during the 1990-95 time frame with the Palo Alto Housing Corporation again ac-
quiring and rehabilitating the property and adding 5 new units to the existing 21 unit struc-
ture. HOME and CDBG funds were used for the rehabilitation and acquisition of the Barker
Hotel, which is primarily occupied by formerly homeless and disabled households.
In total, then, publicly funded programs assisted in the rehabilitation of 112 units from 1990-
95 (20 units in the Rental Rehabilitation Program, 5 units with CDBG funds, 66 units in the
Arastradero Park Apartments, and 21 rehabilitated units in the Barker Hotel). In addition, 316
elderly households were assisted annually with minor repairs to their homes through the
Senior Home Repair Program.
In addition to publicly funded programs, there is a considerable amount of privately financed
rehabilitation and remodeling in Palo Alto. During 1995, the Palo Alto Building Department
issued 729 permits for repairs or alterations to single family residences and 41 permits to
multi-family structures of five or more units. Permits for additions to 191 single family units
Housing Technical Document: Chapter 7 57
were also approved during 1995. There is also a privately-funded assistance program called
“Christmas in April” which assists with repairs to homes for households who have limited
financial means. It is estimated that this program assists 1-2 households annually in Palo Alto.
With the lack of available land for new construction and the older housing stock in the City,
rehabilitation and remodeling activities are expected to continue to be popular in the com-
Policy 5: Increase affordable housing supply through better use of existing
Program 7: Continue support for Shared Housing Programs.
From 1990-95 the City has provided CDBG funds and General Funds to two non-profit agen-
cies to administer Shared Housing Programs that benefit Palo Alto residents.
The Senior Coordinating Council administers a shared housing program that matches eld-
erly residents with other residents in shared housing arrangements. From 1990 to 1993, the
City contributed CDBG funds to assist with this effort. Since 1993, the City has provided Gen-
eral Fund monies to help with the administrative costs of the Shared Housing Program. Ac-
cording to the program coordinator, the Shared Housing Program completed 148 “matches”
between 1990 and mid-1995. These matches included at least one elderly household with
another household, which may or may not be elderly. Of the total 296 households matched
(148 “matches” x 2 = 296), 60 percent were very low-income (177 households), 23 percent
were low-income (67 households) and the remaining 17 percent (52 households) were mod-
erate-income. Clearly, this type of housing program is effective in providing alternative hous-
ing solutions for lower income households, especially for elderly households.
In addition to the Senior Coordinating Council, the City has provided CDBG funds during the
1990-95 time period to Innovative Housing, Inc. to administer a shared housing program.
Innovative Housing, Inc. negotiates a “master lease” with the owner of a rental unit and then
rents out individual bedrooms in the unit to households, typically single parent households
with one small child and, in some instances, two small children. In 1995, rents averaged ap-
proximately $300-400 per household and all households must qualify as low-income, al-
though the majority are actually very low-income. Approximately 40 percent of the single
parent households assisted are male parents and the remaining 60 percent are female par-
ents. From 1990-95, approximately 50-75 households in Palo Alto were assisted with shared
housing and the program maintains a waiting list of households requesting assistance.
Policy 6: Maintain at least the present number of multiple-family rental units
while working to increase the overall supply of rental housing.
Program 8: Continue the adopted Condominium Conversion Ordinance.
Rental units are an important component of the City’s housing stock; in some instances, pro-
viding affordable housing opportunities. In 1974, the City adopted a Condominium Conver-
sion Ordinance (Chapter 21. 40 of the Palo Alto Municipal Code) which regulates the conver-
sion of rental housing to condominiums. In specific, this Ordinance controls the conversion
in housing developments of three or more units. An application for conversion can be con-
sidered only if there is a Citywide rental vacancy rate that exceeds 3 percent or, regardless of
the vacancy rate, if:
• one below market rate rental unit is provided for every two non-below market rate units
to be converted
58 Housing Technical Document: Chapter 7
• the tenants of at least two-thirds of the rental units consent to the conversion.
City staff monitors the vacancy rate and calculates the rate on a semi-annual basis. In De-
cember, 1997, the City’s vacancy rate for developments of three or more rental units was less
than 2 percent. From 1990-97 there were no conversions of rental units to condominiums.
The City intends to continue to regulate the potential conversion of rental units by continu-
ing to implement the Condominium Conversion Ordinance.
Program 9: For any residential development in multiple-family zones which
causes the loss of rental housing units, subdivision approval (including condo-
minium maps) may be granted if any two of the following three circumstances
1. The project will result in a significant net gain to the City housing supply
(defined as 100 percent more units than those previously existing on the
site) and comply with the City BMR program,
2. The number of rental units to be provided by the projects is at least equal to
the number of existing rental units,
3. Not less than 20 percent of the units provided are BMR units.
This program was adopted with the intent to limit the loss of rental housing units. Loss of
rental units due to demolition has been monitored by the City during the 1990-97 time frame
in order to ensure their compliance with City requirements. For example, the Jacobs Court
development included the demolition of six rental units. Prior to receiving approval for the
construction of new units, the developers agreed to provide an extra BMR unit in addition to
the two BMR units required. In the Times-Tribune project, four rental units were demolished
and the developers agreed to replace those with “garage units” in four of the newly con-
structed homes. These units are second units of approximately 670 square feet that have
been built above the garages in the four homes.
Program 10: The City should discourage conversion of lands designated as
residential to non-residential use.
The policy of discouraging conversion of lands from residential to non-residential has been
a long-standing policy in Palo Alto. Since 1981 only 10 sites within the City have been changed
from residential to non-residential land use, and only 4 since 1990. They are:
1. 351 Homer Avenue The Williams House site, donated to the City, was changed from
Single Family Residential to Major Institution/Special Facilities and has become a mu-
seum. (City Council approval on 9/29/92).
2. Portion of block bounded by Bryant/Ramona/Channing/Homer A portion of the
Palo Alto Medical Foundation site was changed from Multiple Family Residential to Ma-
jor Institution/Special Facilities. (City Council approval on 7/22/91) With the approved
proposal to relocate the Medical Foundation to El Camino Real, this property will likely
revert to housing.
3. 2650 El Camino Real A portion of the former Mayfield School site, as part of an even
land area exchange with 620 Page Mill Road, was changed from Multiple Family Resi-
dential to Research/Office Park with no net change in residential land. (City Council ap-
proval on 2/16/93).
4. 1050 Arastradero Road A vacant site located between Hillview Avenue and Deer Creek
Road was changed from Multiple Family Residential to Research/Office Park (City Coun-
cil approval on 10/25/93).
Housing Technical Document: Chapter 7 59
The 1050 Arastradero site (5. 9 acres) was zoned Limited Manufacturing but had a Compre-
hensive Plan designation of Multi-family Residential. The residential designation was changed
to Research/Office Park to allow development that conformed to the zoning of the parcel.
An extraordinary housing fee was required in addition to the standard Housing Impact Fee.
Policy 7: Encourage and foster the development of new and existing housing
units affordable to low-, moderate- and middle-income households, especially
those households with children.
Program 11: Continue support for the Palo Alto Housing Corporation in the
provision of low-, moderate- and middle-income housing, with primary empha-
sis on the low- and moderate-income sectors.
The Palo Alto Housing Corporation (PAHC) was established in 1969 to encourage and de-
velop low- and moderate-income housing in Palo Alto. The PAHC has been very active in
acquiring, rehabilitating, building and managing affordable housing in the City.
During the time period of 1990-95, the PAHC has successfully completed the following
• Barker Hotel: Acquisition of 21 unit SRO (Single Room Occupancy) and new construc-
tion of 5 units for handicapped households. All occupants are very low-income house-
• Arastradero Park Apartments: Acquisition and rehabilitation of 66 unit apartment
project that provides affordable housing for very low-income and low-income families.
• Plum Tree Apartments: Acquisition and rehabilitation of 10 unit apartment complex
providing affordable housing for very low-income families.
• Emerson North Apartments: Acquisition and rehabilitation of 6 studio unit apartments
for very low- and low-income elderly and small families.
• Alma Place SRO: Construction of 107 unit SRO project; providing very low- and low-
In addition to the above projects, the PAHC manages other affordable housing developments
and administers the City’s Below Market Rate (BMR) Program. Between 1990-97, there were
19 new BMR units provided and the PAHC staff reviewed and evaluated applications for house-
holds to purchase and occupy those units. The PAHC monitors resales of the total inventory
of BMR units (144 for sale units) and manages the resale of those units according to the
terms and conditions of the BMR program. Further, the PAHC monitors the occupancy of 33
rental units in 3 different developments that were provided under the conditions of the BMR
program. PAHC staff reviews the income levels of tenants and monitors rent increases, ac-
cording to the terms of the BMR contract with the property owners.
Program 12: To make multiple-family housing attractive for families with
children, such housing should provide suitable open space areas for children’s
Regarding the provision of open space for family housing, the City’s Zoning Ordinance re-
quires a minimum percentage of permanent open space for multi-family developments. In
the RM-15 zoning category, a minimum of 35 percent of the lot area is required to be devel-
oped into permanently maintained open space. In the RM-30 and RM-40 there is also a re-
quirement for a certain percentage of the ground floor area to be developed into perma-
nently maintained commonly used open space as well as private usable open space areas.
The Ordinance further allows part or all of the required private usable open space in RM-30
60 Housing Technical Document: Chapter 7
and RM-40 to be added to the common usable open space in order to increase play areas for
Program 13: In housing developments of three or more units, not less than ten
percent of the units should be provided at below-market rates to low- and
moderate-income families (for projects of three to nine units a proportionate in-
lieu payment will be accepted). For each BMR unit provided over and above
the requirement, a developer shall be permitted to build one additional market-
rate unit up to a maximum unit increase over the allowable zoning of 15
percent, and consistent with all other zoning requirements.
As noted previously, the City has implemented the Below Market Rate (BMR) program since
1974. The City’s 1990 Housing Element continues to stress the importance of the BMR pro-
gram and suggests (page 30 of the 1990 document) the following assumptions in regard to
the level of household income assisted by public and private programs, especially as related
to the BMR program:
• Federal subsidy programs would eventually provide housing for those households with
incomes less than 80 percent of the County median.
• The Below-Market-Rate Program would offer housing for those households with incomes
between 80 and 100 percent of the County median.
• The private market would provide housing for those households with incomes above
100 percent of the County median.
From 1990-97, the City’s BMR Program produced 19 new units in 8 different housing devel-
opments and the payment of an in-lieu fee from one housing developer. All of the units
produced in the BMR program during the 1990-97 time frame were condominiums and were
either 2 or 3 bedroom units. Sales prices ranged from $83,000 to $126,200 and at least 4 of
the purchasers utilized Mortgage Credit Certificates in purchasing their units. Surprisingly,
12 of the 19 purchasers had household incomes under 80 percent of median income and 3
of those 11 purchasers were very low-income (with incomes under 50 percent of median
income). Generally, BMR units are targeted to moderate-income households, however, lower
prices were established for some units in 1981 when a project with 8 BMR units received
voter approval. The remaining 7 of the 19 purchasers from 1990-97 were moderate-income
with income levels ranging from 81-120 percent of median income. In translating this infor-
mation to real dollar terms, households assisted from 1990-97 ranged from a very low-in-
come household of 2 persons with an annual income in 1993 of $18,400 to a 3 person house-
hold with an annual income in 1993 of $57,500.
This information indicates that the BMR program from 1990-97 was actually “reaching” even
lower household income levels than anticipated. Over half of all the purchasers in the Pro-
gram were low- or very low-income households. With the decline in federal subsidy pro-
grams, it has become even more significant for local programs, like the BMR program, to
assist very low- and low-income households in addition to moderate-income households.
In addition to the 18 BMR units produced, there was an “in-lieu” fee contribution by the Gaspar
Court development, which contributed approximately $400,000 to the City’s in-lieu fee hous-
The City will continue the BMR program in the 1998-2003 time period. However, several is-
sues regarding the BMR program surfaced during the evaluation of the 1990 Housing Ele-
Housing Technical Document: Chapter 7 61
ment and the preparation of the 1998 Housing Element. First, there is a need to conduct an
overall review and evaluation of the program. The program was initiated in 1974. Since that
time, changes have been made in the program to respond to changing conditions and to
rectify problems. For example, the deed restrictions have been modified several times and
the number of units to which the program is applicable has been changed from 20 to ten to
three, and in this Housing Element is proposed to be set at three for for-sale projects and five
for rental projects. However, there has not been a systematic evaluation and review of the
administration and management of the program.
Some of the issues that need to be addressed are the target households for BMR ownership
and rentals, paying for administrative costs of the program, a further review and establish-
ment of the threshold number of units to which the program is applicable, a review and
updating of all BMR documents, development of procedures and guidelines for the negotia-
tion process, review of the philosophy of preferring units over fees, review and modifications
to ensure consistency of all documents related to the program, refinement of procedures
and guidelines for sales and resales, review and revisions to the rental program and, review
of the term and type of restrictions.
The City recognizes the success the BMR program has had in producing affordable units
since its inception and fully intends to continue the program. However, as with all programs
as they age and mature, it appears to be an appropriate time to review program accomplish-
ments in light of program goals. Revisions and interpretations of the program in the past few
years need to be consolidated and there should be consistency in program requirements as
interpreted in all City documents.
Program 14: Encourage the development of Limited Equity Housing Coopera-
tives and Co-Housing Projects.
During the 1990-95 time period, there were no limited equity or co-housing projects pro-
posed in the City of Palo Alto. The City intends to continue to encourage alternative types of
affordable housing like these should any proposals be presented for review by the City.
Program 15: Provide zoning flexibility to encourage the development of smaller
units affordable to low- and moderate-income persons.
The City’s “Planned Community” (PC) zoning category was designed to provide flexibility on
lot sizes, coverage, height, etc. in order to encourage more innovative projects. An example
of a project built with this type of zoning during the 1990-95 time period is Lytton Courtyard,
a subsidized elderly housing development. The 51 unit project was built on a 30,000 square
foot site with a density of 74 units per acre. The Planned Community zone requires a finding
of public benefit. For the Lytton Courtyard, the public benefit to the community was very
low-income housing for seniors. However, to encourage market rate and family housing, the
City is recommending that a Planned Development zone be created that would encourage
the construction of smaller lot housing without the public benefit finding. In general, hous-
ing cannot bear the burden of additional public benefits. Other recommendations for Ordi-
nance changes to encourage higher densities and relaxed regulations are also included. (See
programs and policies in Chapter 8 of this document. )
Program 16: Study surplus school and institutional sites to determine possibil-
ity of more affordable housing.
Program 17: Evaluate commercial and industrial properties with the intention
of rezoning to housing where appropriate.
62 Housing Technical Document: Chapter 7
As identified in the 1990 Housing Element, there were three surplus school sites which were
currently being leased for a variety of interim uses. The Cubberley and Ventura school sites
are still being used for interim purposes. The Jordan school site has been reopened as one of
two middle schools in Palo Alto, serving grades 6 through 8.
Since 1978, which includes the City amortization of many commercial properties to residen-
tial, the City has converted 46 properties from commercial, public facilities or industrial use
to residential use. This effort will continue although the available opportunities are limited.
Area studies are proposed for the sites to be vacated by the Palo Alto Medical Foundation
and the Cal-Ven change area. Housing will be a goal for both these study areas.
Program 18: Continue to require developers of employment-generating com-
mercial and industrial developments to contribute to the supply of low-and
The Commercial Housing In-lieu fund is capitalized with fees paid by developers/owners of
new or expanded commercial or industrial developments. The fees are intended to off-set
the residential demands resulting from the increased work force that will be generated by
the development. Currently (1997), the fee charged is $3. 63 per square foot . The fee is charged
only on new construction that exceeds 20,000 square feet or expansions of 2,500 square
feet or more to existing buildings. The City allocates these funds to affordable housing de-
velopments within the community.
Policy 8: Encourage and foster a diversity of affordable housing opportunities
for senior citizens, including housing which may provide a variety of services
for special health, social and transit needs.
Program 19: Continue support for the Palo Alto Housing Corporation, Senior
Coordinating Council and other agencies that provide low-, moderate- and
middle-income housing that incorporates facilities and services to meet the
health, transit or social needs of senior citizens.
The 1990 U. S. Census data indicate that 15. 6 percent of Palo Alto’s population at that time
was over the age of 65 years. It is expected that, with longer life spans and age expectancies,
the percentage of elderly in Palo Alto will continue to increase in the future.
During the 1990-97 time period, several developments were completed which provide eld-
erly housing opportunities. For example, the 51 unit Lytton Courtyard elderly project devel-
oped by Community Housing Inc. (CHI) was approved in 1991 and occupied in 1995. In 1994-
95 the Palo Alto Housing Corporation (PAHC) acquired the Barker Hotel. The PAHC rehabili-
tated 21 of the units and constructed five new handicap accessible units in this project, which
has some elderly tenants. The 6 unit Emerson North project was acquired by Palo Alto Hous-
ing Corporation during this time period and rehabilitated to provide studio units for elderly
and small households. The 66 unit Arastradero Park Apartments, acquired by Palo Alto Hous-
ing Corporation and rehabilitated with HUD and City assistance, provides 13 units for elderly
households. During 1992-95, the City provided CDBG assistance to the Adlai E. Stevenson
House, an existing 128 unit affordable development for the elderly. The funds were used to
provide accessibility improvements, walkway/driveway repairs, floor improvements and up-
grading of the facility’s fire alarm and medic alert system. CDBG funds were also allocated to
Lytton Gardens I and II, elderly housing developments, to provide for access improvements
to the two facilities as well as an emergency back up generator.
Housing Technical Document: Chapter 7 63
In addition to the construction or rehabilitation of affordable units, the City has also pro-
vided CDBG or General funds to the Senior Coordinating Council from 1990-97 to admin-
ister the Senior Shared Housing Program. A total of 296 households were “matched” in
shared housing arrangements from 1990 to mid-1995 and at least 50 percent of those
households were elderly households. Further, CDBG funds are provided to the Senior Co-
ordinating Council to administer the Senior Home Repair Program. An average of 316 eld-
erly households were annually assisted through this program from 1990-94. The City has
also provided CDBG funds during the 1990-95 time period to the following agencies/or-
ganizations that have assisted elderly persons:
• Catholic Charities of Santa Clara County
Long Term Care Ombudsman Program for complaint investigation and advocacy ser-
vices to Palo Alto’s elderly residents living in nursing and residential care facilities.
• Outreach and Escort, Inc.
Transportation subsidies for eligible lower income residents.
• Community Association for Rehabilitation
Funds to provide accessibility modifications to Betty Wright Swim Center, a warm water
therapy pool which provides aquatic services to children and adults with disabilities.
• Peninsula Center for the Blind and Visually Impaired.
Rehabilitation services for lower income blind or visually impaired residents.
• Palo Alto Senior Center
Design costs for seismic upgrade of the facility.
It is expected that the City will continue in the 1997-2002 time frame to support and assist
agencies and organizations in the provision of services to elderly residents.
Policy 9: Support local and regional housing assistance agencies in addressing
the needs for emergency shelter and transitional housing.
Program 20: Review and adopt ordinance (by July, 1992) to waive applica-
tion fees and assist local agencies and non-profit organizations in obtaining
funding and conditional use permits to operate emergency shelters and tran-
The City has not adopted an Ordinance to waive fees for emergency shelters and transi-
tional housing facilities. Instead of waiving fees, the City has decided to provide assistance
on a case by case basis to shelter providers.
The City of Palo Alto participates in the Santa Clara County Collaborative on Housing and
Homeless Issues. A “continuum of care” has been defined and articulated by the Collabora-
tive. The continuum includes a multi-level approach in addressing the needs of homeless
as well as those “threatened with homelessness. ” Pages 17-20 in Chapter 2 of this Housing
Element describe the resources available in Palo Alto that have been developed to assist
homeless households and households at risk of being homeless.
From 1990-97, the City has provided financial assistance to agencies that assist with the
needs of the homeless. The City has consistently provided CDBG funds to the Emergency
Housing Consortium (EHC) for temporary and emergency shelter and supportive services
for homeless. Funds have been provided to EHC for administrative costs and services as
well as a $50,000 contribution of funds to assist in renovating a building as a regional emer-
gency shelter. In addition to EHC, approximately $315,000 in CDBG funds during fiscal years
64 Housing Technical Document: Chapter 7
1990-97 have been allocated by the City to Urban Ministry, which provides support services
and recovery programs for homeless individuals.
The City has provided General Fund assistance to two agencies that assist homeless or po-
tentially homeless households. General fund monies have been provided for administrative
costs to Casa Say (Social Advocates for Youth) for the Youth Runaway and Homeless Shelter
in Mountain View. In 1992-93 and 1994-95, the City provided CDBG funds to help Casa Say
rehabilitate the shelter facility. City of Palo Alto General Funds have been provided to the
American Red Cross to administer the Rental Assistance Program. This program provides
financial assistance and counseling to families who are in threat of losing their rental unit
and are at risk of becoming homeless.
Policy 10: Encourage preservation, rehabilitation and construction of Single-
Room Occupancy hotels.
Program 21: Work with SRO hotel owners and local housing assistance groups
to obtain federal, state and local subsidies and loans to maintain and upgrade
existing SROs, to construct new SROs, and to provide social services to SRO
Program 22: Explore methods to discourage conversion or demolition of exist-
ing SRO hotels.
Program 23: Consider construction of new SRO hotels in suitable locations.
A significant achievement during the 1990-97 time frame was the acquisition and rehabilita-
tion of the Barker Hotel, a 26 unit Single Room Occupancy (SRO) facility. Using HOME funds
and City assistance, the Palo Alto Housing Corporation (PAHC) acquired the existing struc-
ture, rehabilitated it and added 5 new handicap accessible units. The project was completed
in 1995 and is located in the downtown area. During the same time period, the City assisted
the PAHC in the “Alma Place” SRO project, a 107 unit new construction project. The $8 million
dollar project is designed to provide SRO apartments with baths and some cooking facilities
at rents that will average approximately $375 per unit. The project was funded with City
housing development funds and received a Low Income Tax Credit award. It opened in April
Policy 11: Encourage and participate in low-and moderate-income housing
programs financed by local and other levels of government.
Program 24: Continue the land bank program.
Program 25: Actively pursue re-establishment of federal and state rental sub-
sidy programs and reinstate the local rent supplement (piggyback) program
upon the availability of appropriate federal or state housing programs.
Program 26: Assist in the efforts towards long term preservation of low-income
units at risk of becoming market rate housing.
Program 27: Support the Rental Housing Acquisition Program under which the
Palo Alto Housing Corporation acquires, rehabilitates if necessary, and oper-
ates existing rental housing primarily for low- and moderate-income persons.
Program 28: Maintain the high priority for housing programs in the allocation
of Community Development Block Grants.
Housing Technical Document: Chapter 7 65
Program 29: Recognize the Buena Vista Mobile Home Park as an important
resource for low- and moderate-income housing opportunities.
The City has actively encouraged and participated in the provision of additional low- and
moderate-income housing during the 1990-97 time frame. On a staff level, the City has two
staff positions within the Department of Planning and Community Environment that deal
exclusively with housing and community development policies and projects. These staff
persons have spent considerable time and effort working with local non-profit groups in
delivering housing-related services. For example, City staff worked intensively with the Palo
Alto Housing Corporation and the Santa Clara County Housing Authority in arranging fi-
nancing for the purchase of Arastradero Park Apartments, a 66 unit existing development at
risk of converting from affordable to market rate units. City staff has assisted with the acqui-
sition and rehabilitation of other affordable housing developments such as the Plum Tree
Apartments (1991), Barker Hotel (1994) and Emerson North (1994).
One of the major sources of funding for affordable housing that the City can control is the
Community Development Block Grant (CDBG) program. During fiscal years 1990-97, there
was approximately $6. 3 million dollars in CDBG funds (including program income) that was
allocated by the City Council to various programs. CDBG funds have been used to support
agencies and organizations that provide housing-related services such as the Senior Home
Repair Program, Shared Housing Programs, Homeless Services and Fair Housing Information
and Counseling services. In addition, CDBG funds have been allocated to assist specific af-
fordable housing projects such as Arastradero Park, Adlai E. Stevenson House and Lytton
Gardens. The City Council allocated approximately 36 percent of all the CDBG funds during
the 1990-97 fiscal year period to “New Housing Development, Rental Housing Acquisition
and Land Banking” activities. The $1,992,660 in funds allocated to these activities are de-
signed to support projects that assist in providing affordable housing units in the City. Over-
all, 86 percent of the CDBG funds during the 1990-96 fiscal years were used to directly assist
housing developments, support housing programs and fund administrative costs.
The City continues to support the use of Section 8 rental vouchers and certificates in the
Palo Alto housing market, as administered by the Santa Clara County Housing Authority. In
1995, the Housing Authority reported a total of 58 Palo Alto households receiving Section 8
rental assistance. The City supports the use of Section 8 project based assistance and the
Palo Alto Housing Corporation has obtained Section 8 Moderate Rehabilitation assistance
as available in their projects. The City has not re-introduced the piggyback rent supplement
program, mainly due to the high cost of administering such a program. In regard to “at risk”
units in the City, there is considerable discussion of these units on pages 40-43 of this docu-
ment. During 1990-95, the City assisted Palo Alto Housing Corporation in purchasing and
rehabilitating the Arastradero Park Apartments. The City intends to continue to monitor the
status of other “at risk” projects and to assist whenever feasible.
The Buena Vista Mobile Home Park continues to be the only mobile home park in the City.
The site contains many older trailers and coaches that provide housing opportunities for
lower income households, including elderly households. There are a total of 116 units on the
site, 104 mobile homes and 12 studio rental units. Average rents for mobile home pads range
from $350-$390 per month. The Park continues to operate as a legal, non-conforming use
under existing zoning regulations but primary oversight of the park is controlled by the State
66 Housing Technical Document: Chapter 7
Policy 12: Encourage innovative housing finance techniques to make more
Program 30: Use federal and state tax credits, mortgage revenue bonds, and
mortgage credit certificates to reduce the cost of housing finance.
During 1990-95, the City assisted various non-profit developers in securing financing for af-
fordable housing. The Arastradero Park Apartments was financed primarily with bond pro-
ceeds as well as City and other funding. The Palo Alto Housing Corporation, with City help,
obtained funding from multiple sources for the Alma Place SRO Project. The City has partici-
pated in the Mortgage Credit Certificate program through the County of Santa Clara. As of
August, 1996, 50 Palo Alto households had been assisted with Mortgage Credit Certificates
since 1990. The City intends to continue to encourage and assist in securing all types of hous-
ing financing to provide more affordable housing.
Policy 13: Increase funding sources used to provide affordable housing.
Program 31: Develop ways to obtain greater contributions from commercial
and industrial developers.
Program 32: Develop local revenue sources to address funding for afford-
As described on pages 30-31, the City maintains a Housing Development Fund. A part of the
City’s Housing Development Fund includes in-lieu fees from the construction of commercial
projects that impact housing. The Commercial fund was the recipient of significant funding
during the commercial build-up in the 1980s with a slowing of funding during the 1990s.
During the period from 1990 to 1997, approximately $2,170,000 was expended from the
commercial fund for such projects as Lytton Courtyard ($400,000), Barker Hotel ($400,000),
Alma Place SRO ($1,100,000) and BMR administration ($194,000).
A second part of the Housing Development Fund is the Residential- Miscellaneous account.
The Residential-Miscellaneous account is funded by residential projects that provide an in-
lieu fee instead of BMR units and miscellaneous funds provided by the City, such as a portion
of proceeds from the sale of surplus City lands. The residential fund has received the bulk of
funding in the 1990s due to two housing developments and the sale by the City of two
surplus well sites. During 1990-97, expenditures from the Residential- Miscellaneous account
included purchase of Oak Manor Apartments by PAHC ($1,685,000) and purchase of 3053
The base fee collected for these accounts is adjusted annually by the Consumer Price Index
so they have kept pace with inflation. During the 1990-97 period of the Housing Element,
the City was the recipient of some additional funds by inclusion in a Development Agree-
ment for the property at 1050 Arastradero Road, but identification of new sources was lim-
ited. With the limited development opportunities in Palo Alto, the City intends to continue to
review existing sources of affordable housing funds and seek new sources.
Policy 14: Support the mixing of residential uses in commercial and industrial
Program 33: Evaluate existing incentives for encouraging residential use on
land zoned for commercial and industrial use to determine whether incentives
implemented to date are effective and should be maintained, and determine
Housing Technical Document: Chapter 7 67
what new incentives should be provided. Evaluate any disincentives that dis-
courage residential use on land zoned for commercial and industrial use , and
if necessary, eliminate or mitigate such disincentives.
Program 34: Continue to consider development of residential units on air space
over selected public and private parking lots.
Program 35: Work with local employers to encourage the development of
housing for persons working in Palo Alto.
The City allows residential use in all commercial zones and utilizes the site-specific Planned
Community (PC) zone to encourage mixed use housing projects. With the scarcity of avail-
able residential land in the City, there had developed an even increased awareness during
the 1990-97 time period to look to commercial and industrial areas for potential residential
uses. A review of the mixed use regulations during this time period has indicated that mixed
use development is not occurring as the City might like. Some of the reasons include market
conditions and financing, however, the City has found that the lack of a specific mixed use
zone, or at a minimum, revisions to the existing zoning to decrease the need for variances
and modifications to the site development regulations, would help increase the potential
for mixed use developments.
The City encourages the development of housing over existing parking lots as a way to in-
crease the utilization of land. Three projects that were developed between 1990 and 1996
were developed as a result of utilizing existing parking lots. The Times-Tribune project
constructed two levels of underground parking that allowed the existing parking lot to be
developed as small lot, single family housing. The 4-unit 330 Emerson Street project was
developed on an existing parking lot, when the need for the parking lot was relinquished.
The developmentally disabled housing at 2700 Ash Street will replace a surplus County park-
ing lot with 24 units of HUD subsidized rental units.
The City intends to continue to pursue modifications to the zoning regulations to encour-
age mixed use housing projects and better utilization of available land. Items to be consid-
ered include reuse of parking lots, incentives, reduced parking requirements, horizontal mixed
use, and greater efforts to work with employers to obtain additional housing development.
Policy 15: Work towards the elimination of discrimination based on race,
religion, national origin, age, sex, marital status, or physical handicap, and
other barriers that prevent choice in housing.
Program 36: Seek better state and federal enforcement of fair housing laws.
Program 37: Continue to contract with such groups as Mid-Peninsula Citizens
for Fair Housing to provide fair housing services.
Program 38: Continue the City-supported Rental Housing Mediation Task Force,
a program of the Human Relations Commission, to prevent or remedy condi-
tions which lead to problems between landlords and tenants.
Program 39: Continue the efforts of the Human Relations Commission to com-
bat discrimination in rental housing.
Program 40: Work to effectively carry out the intent of the adopted age dis-
68 Housing Technical Document: Chapter 7
During 1990-97, the City continued to work towards elimination of discriminatory activities
in all aspects of housing. The City has annually allocated CDBG funds to Mid-Peninsula Citi-
zens for Fair Housing to provide services to promote fair housing, including complaint inves-
tigation, counseling and advocacy. During the 1990-97 fiscal years, the City allocated over
$125,000 to this agency to provide fair housing services. In addition, the City has allocated
CDBG funds for rental information and mediation services and continues to support the
Housing Mediation Task Force. CDBG funds have been used to support ombudsman activi-
ties to assist with complaints related to elderly residents living in nursing homes in the City.
The City intends to continue these types of activities in the 1998-2003 time period.
Policy 16: Continue efforts which reduce the cost of housing by promoting
energy efficiency and resource conservation for new and existing housing.
Program 41: Continue staff support and technical assistance in energy conser-
vation to architects and developers.
Program 42: Continue City energy and water resource management services
The City of Palo Alto is fortunate to own and manage its water, gas, wastewater and electric
utility systems. Conservation of these resources is a high priority for the City. The City has a
full time staff person who provides assistance with water and energy conservation. The “Resi-
dential Energy Auditor” works primarily with existing residential occupants and helps to evalu-
ate their energy/water use and make recommendations for more efficient operations. Fur-
ther, this staff person is available to work with developers or architects of new construction
projects to design energy conservation features during the planning stages of the project.
The City also offers on a promotional basis programs that offer rebates for more efficient
refrigerators or the use of energy efficient fluorescent lighting supplies.
Illustration #26: 1990-95 Housing Goals and Results
(Housing Goals identified below are reproduced from the City’s 1990
Housing Element, Page 64, Table J)
Very Low-Income Low-Income Moderate-Income
Goals Results Goals Results Goals Results
Rent 35 59 85 16 25 30
Own 20 3 40 8 200 68
Discussion of New Construction Table:
The City exceeded its goal for new construction of rentals for very low-income households.
The 59 units constructed as rentals include 51 units at Lytton Courtyard, 5 new units at the
Barker Hotel and 3 units at 330 Emerson Street. The low-income rental goals were not met.
The 16 new rentals units includes an estimated 15 units of private sector housing and 1 unit
at 330 Emerson Street. The 30 units of moderate-income housing are estimated from the
private sector, including some cottage units and small apartment projects.
For owner occupied units, the goal of 200 moderate-income units included an original esti-
mate in the 1990 Housing Element of 160 of those units to be produced through the BMR
Housing Technical Document: Chapter 7 69
program. This large number of units was not constructed because of the small number over-
all of any type of unit being built (only 353 units were added to the housing stock from 1990
to December 31, 1995). The 160 units also anticipated that the Stanford West project might
result in for-sale housing. In fact, the Stanford West BMR units will be rentals. The 79 units
credited in the table represent 19 BMR units, 50 Mortgage Credit Certificates issued to mod-
erate-income households and an estimated 10 units in the private sector.
Very Low-Income Low-Income Moderate-Income
Goals Results Goals Results Goals Results
Rent 125 195 95 33 15 26
Own 475 312 435 261 626 1,161
Conservation of 279 66 11 8
“At Risk” Units
Discussion of Existing Housing Table:
The City exceeded its goal for rental housing in the very low-income and moderate-income
categories. The units attributable to the 195 very low-income rental units include the reha-
bilitation of Arastradero Park (66 units), Barker Hotel (21 units), Rental Rehabilitation Pro-
gram (20 units) and 88 Shared Housing households. Shared Housing households accounted
for 33 households achieved in the low-income rental category and 26 households in the
The owner occupied housing category includes 312 households that are very low-income.
These 312 households include 224 households assisted in the Senior Home Repair Program
and 88 Shared Housing households. The 261 low-income households include 5 homeowner
rehabilitations funded through CDBG, 33 Shared Housing households and 223 Senior Home
Repairs. Finally, the moderate-income results are attributable to 1,135 households assisted
through the Senior Home Repair Program and 26 Shared Housing households.
The only units that were “at risk” of converting to market rate housing during the 1990-95
time frame were the Arastradero Park Apartments. The City assisted in the acquisition of
these units with financial and technical assistance and the units continue to be used as hous-
ing affordable to lower income households.
Effectiveness of 1990 Housing Element and Implications
for 1998 Housing Element
As the information on the previous pages demonstrates, the City of Palo Alto has been active
in encouraging and supporting the development and preservation of housing, especially
affordable housing. From 1990-97, there were 19 “Below Market Rate” units added to the
inventory, 20 units rehabilitated through the Rental Rehabilitation Program and 5 units re-
habilitated with CDBG assistance. The City assisted non-profit owners in the acquisition and
rehabilitation of the Arastradero Apartments, the Barker Hotel and Emerson North. Lytton
Courtyard and Alma Place SRO were constructed during this time period. In addition, the
City provided considerable technical and financial support to non-profit agencies providing
housing related support services such as homeless assistance, shared housing, fair housing
information and mediation services and senior home repair programs.
70 Housing Technical Document: Chapter 7
For the 1998-2003 time frame, the City will continue the basic direction of the 1990 Housing
Element. New construction projects of 3 or more units will continue to be required to in-
clude affordable units/in-lieu fees and the preservation of existing units will continue to be
encouraged and monitored. The City will continue to support the work of non-profit groups
and agencies in providing affordable housing opportunities. With limited land and develop-
ment opportunities in the future, however, the City will review its existing housing programs
and ordinances to ensure that the maximum number of affordable housing opportunities
are provided in new construction applications. The City will place an increased emphasis on
expanding the opportunities for residential development in commercial, industrial or other
areas not traditionally considered for residential use. The City will continue to emphasize the
importance of maintaining the existing diversity of the housing stock in terms of rental and
multi-family units and in supporting the opportunities for households of all income levels to
have access to affordable housing.
The appendix that follows, Appendix A, is a duplication of Chapter 4 of the City's Compre-
hensive Plan for the1998-2010 time frame. It contains the goals, policies and programs that
specify in more detail the actions that the City will take to achieve the objectives noted in
the paragraph above.
Housing Technical Document: Chapter 7 71
A. Reprint of the Housing Element of the Comprehensive Plan (Chapter 4))
B. Table of Subsidized Rental Housing Developments
C. Table of Summary of Below Market Rate (BMR) Units
D. Table of Land Inventory, Potential Residential Development: 1997-2002
E. Acknowledgements of Resource Persons Contacted During
Housing Technical Document: List of Appendices
Chapter 7 73
P alo Alto will aggressively pursue a variety of housing opportunities
that enhance the character, diversity and vitality of the City.
The City is committed to increasing the development of affordable
and market-rate housing. Existing housing, particularly rental units, will be
conserved and rehabilitated or replaced. Palo Alto will continue its strong
commitment to supporting agencies that assist households with special
needs. The City will foster an environment free of discrimination and the
barriers that prevent choice in housing. It will place special emphasis on
family housing and housing that addresses the health care, child care,
transit, recreation and social service needs of all Palo Alto residents.
State law mandates that the Housing Element contain specific data, address certain topics, and
The applicable State
establish a workable strategy for meeting the City’s share of the region’s housing needs. The
Housing Element law is
Element must be periodically reviewed for certification by the State Department of Housing
Article 10.6 of the
and Community Development. Because much of the information required for State certification
is statistical and must be updated every five years, Palo Alto has prepared a separate Technical
Document that supplements the Comprehensive Plan. This document includes the data re-
quired for State compliance, is incorporated by reference as part of the Comprehensive Plan
and is included in the appendix.
This chapter begins with a synopsis of the more detailed information found in the Technical
Document. It proceeds with the City’s housing goals, policies, and programs. Additional text on
the City’s programs, including targets for housing production and conservation, may be found
in the Technical Document.
Palo Alto’s population has been very stable during the last 25 years. The number of residents
was virtually the same in 1995 as it was in 1970—roughly 56,000. While the average number
of people per household declined from 2.7 in 1970 to 2.24 in 1990, the number of housing
Although many ethnic groups are represented in Palo Alto, 82 percent of the population is
white. Asians and Pacific Islanders make up 10 percent of the population, while 5 percent are
Hispanic and 3 percent are black. Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
1990 Population by Age 1990 Population by Race
The percentage of Palo Alto
under 5 Hispanic
Black residents over 65 has been
5 to 17 Asian/Pacific on the rise, but increases
18 to 44 Islander
over have also been noted in
65 45 to 64 children under five and
woment of child-bearing age.
18 to 44 – 44.5% White – 82%
45 to 64 – 22.4% While the bulk of Palo Alto's
Islander – 10%
over 65 – 15.6% Hispanic – 5% population is white, racial
diversity has increased in
5 to 17 – 12.5% Black – 3%
the last decade.
under 5 – 5%
Source: 1990 US Census
The median age of Palo Alto’s population has increased dramatically over the last few decades.
In 1970, the median age was 29.5 for men and 33.7 for women. By 1990, these figures had
increased to 36.7 and 40.0 respectively. The increase in median age has been accompanied by
an increase in Palo Alto’s senior population; the number of persons over 65 increased from 10
to 16 percent of the population between 1970 and 1990. The number of older adults is ex-
pected to continue to increase in the future. At the other end of the age spectrum, the number
See page C-2 for school of children under five and the number of women at child bearing age have both increased
enrollment information markedly after declining during the 1970s and 1980s. This has resulted in an increase in the
number of children entering child care and school.
1990 Housing Units by Type 1990 Housing Units by Age
more 2 to 4 units
Other The predominant housing
than 5 Before 1949 1949 to 1959
units type is single family detached
1960 to 1995
Housing production was
Single Family – 64% 1960 to 1995 – 34% highest in the 1950's and
More than 5 units – 28% Before 1949 – 33% has slowed since, primarily
2 to 4 units – 7% due to lack of vacant land.
1949 to 1959 – 33%
Other – 1%
Source: 1990 US Census
As of December 31, 1996, there were 25,588 housing units in Palo Alto. This was an increase
of 400 units from 1990. About one-third of the City’s homes were built during the 1950s, the
period of greatest housing construction in Palo Alto’s history. Since 1960, the rate of production
has generally declined. From 1970 to 1980, homes were added at a rate of about 240 units per
year. By the 1990's, the annual rate had decreased to less than 50 units per year as a result of
Palo Alto Comprehensive Plan
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
Trends in Population, Household Size and Household Units
70 62,880 Population
55,966 58,800 61,040
60 55,225 55,900
50 Housing Units
25,588 26,541 27,341 Persons per
30 21,338 23,747 25,000
10 2.7 2.3 2.2 2.3 2.3 2.3
1970 1980 1990 1996 2000 2010
Source: 1970, 1980 & 1990 figures from US Census; 1996 figure from State
Department of Finance; and 2000 & 2010 projections from the Palo Alto Planning
Population, household size,
and the number of housing Trends in Income, Rent and House Values
units have remained fairly 50
constant since 1970, and
are projected to increase Legend:
only slightly; however, 40 Median House
income and housing costs Values
have risen dramatically.
30 Median Rent
$33,900 $348 $77,500
1970 1980 1990 1996
Source for Median House Values: Realfacts and West Valley Realtors Association
Source for Median Rent: 1970, 1980, 1990 figures from US Census; 1996 figure
from City of Palo Alto Planning Division
Source for Median Income: 1970, 1980, 1990 figures from US Census; 1996 figure
from US Dept. of Housing & Urban Development.
Palo Alto is an affluent community with incomes considerably higher than the regional aver-
age. In 1996, median family of four income was $77,500, compared to $67,400 in Santa Clara
County. However, the City also has a significant number of lower-income households. In 1990,
about 20 percent of Palo Alto’s households reported an income of under $25,000 which was
almost the same proportion as in the County as a whole. There is also a disparity between
income levels based on the type of household. For instance, the average income for married
couples in 1990 was nearly three times the figure for female-headed single parent households.
Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
Housing in Palo Alto is expensive. The median sales price for a single family detached home in
1996 was $490,000. Using traditional underwriting criteria, an annual income of approxi-
mately $134,000 would be required to purchase such a home. Even the median priced condo-
minium, at $264,000, would require an annual income of $79,000. Home ownership is only
affordable to households with above moderate incomes. The cost of rental housing has also
risen sharply. At the same time, vacancy rates have remained low, traditionally less than 3
percent for both owner- and renter-occupied units.
Palo Alto has a limited supply of vacant residential land. Most of the City’s development poten-
tial consists of infill on small vacant lots, redevelopment of existing properties, and new mixed
use projects. The City will continue to seek opportunities to rezone commercial lands to resi-
dential and strongly discourage the conversion of residential lands to commercial. Within the
Centers, mixed use will be encouraged to provide housing opportunities. Although the City’s
1978 Zoning Ordinance recognizes mixed use as a viable housing type, the lack of clear mixed
use zoning regulations has been an obstacle to housing production in such projects. This Com-
prehensive Plan is receptive to innovative ideas for creating new housing, including mixed use
zoning, the use of smaller lots, live/work projects, and other emerging housing prototypes.
Palo Alto has been very active in promoting and supporting affordable housing. Since the late
1960s, the City has aggressively used local, state, and federal housing assistance programs for
very low-, low-, and moderate- income households. These programs resulted in the construc-
tion of 745 subsidized affordable units in the 1970s, 196 in the 1980s, and 79 through 1995.
Curtailment of many state and federal programs during the 1980s and 1990s has meant fewer
affordable housing opportunities and greater reliance on local funding to supplement state and
Local programs include the City’s Inclusionary Housing or Below Market Rate (BMR) program.
The program was initiated in 1974 as a means of increasing the supply of housing affordable to
individuals and families with low to moderate incomes. It continues to be an extremely impor-
tant part of the City’s strategy to meet its housing needs. The City also maintains a “Housing
Development Fund” that can be used for acquisition, construction, and rehabilitation of hous-
ing. The funds are primarily available to nonprofit groups who agree to maintain the long-term
affordability of the housing units.
State Housing Element law requires that localities provide for their “fair share” of the region’s
housing need. The Association of Bay Area Governments (ABAG) determined that Palo Alto’s
projected need for 1988-1995 was 1,809 units. This number has been reduced to 1,244 by new
construction through the end of 1995. It was originally intended that ABAG would issue new
numbers for the time period after 1995. For various reasons, generally related to the State
budget and recession, ABAG has not produced new figures. The State legislature in 1996
extended the date for ABAG to issue new numbers to 1999. In the absence of revised figures,
the 1988-1995 timeframe has been extended for the foreseeable future. The City’s fair share
housing numbers are presumed to be extended through 2002, covering the five-year period
(1997-2002) of this Housing Element. Should new numbers be received, the Housing Element
will be updated to reflect the new requirements.
Palo Alto Comprehensive Plan
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
Housing Needs by Income Level
In addition to projecting overall housing needs, ABAG also projects housing needs by income
category. The intent of this action is to equitably distribute households by income category so
that no one City or County is “impacted” with a particular income group. Four income catego-
ries are defined by the federal government and are used by ABAG, as defined in the following
Standard definitions of Household Income (1997)
Very Low-Income: Households with incomes between 0 and 50 percent of areawide median family
income. 1997 limit for a family of 4: $35,100.
Low-Income: Households with incomes between 51 and 80 percent of areawide median family
income. 1997 limit for a family of 4: $56,160.
Moderate-Income: Households with incomes between 81 and 120 percent of areawide median
family income. 1997 limit for a family of 4: $84,240.
Above Moderate-Income: Households with incomes greater than 120 percent of areawide median
family income: over $84,240.
Some agencies and programs use different definitions of household income. In Palo Alto, the follow-
ing modifications applied in 1997: For the HUD Section 8 rental programs and the CDBG Program,
the 1997 limit for a family of four was $43,500. For the Low-Income Housing Tax Credit and HUD
HOME Programs, the Low-Income maximum is 60 percent of the areawide median. The 1997 limit
for a family of four was $42,120. For the City of Palo Alto BMR Program, Moderate-Income for home
ownership is 80 to 100 percent of the areawide median. The 1997 limit for a family of four was
The table below shows how the City of Palo Alto’s 1990 Housing Element allocated the ABAG
new construction need. Since 1990, the 353 units that were added fell short of the 1,597 units
called for by ABAG. The shortage was greatest for very low-, low-, and moderate-income levels.
Between January 1, 1990 and December 31, 1995, 62 units affordable to very low-income
households, 24 units for low-income households, 48 units for moderate-income households,
and 219 units for above moderate-income households were built in the public and private
sectors. The revised new construction need from 1996 through 2002 is 1,244 units.
ABAG Fair Share
Housing Needs Table
Income Level 1990-2002 1990-1995 Unmet
(Standard Definition) Need Production Need
Very Low 338 62 276
Low 232 24 208
Moderate 347 48 299
Above Moderate 680 219 461
TOTAL 1,597 353 1,244
Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
Goals, Policies, and Programs
In Projections1998, the GOAL H-1: A Supply of Affordable and Market Rate Housing
Association of Bay Area That Meets Palo Alto’s Share of Regional Housing Needs.
estimated the Palo Alto/ The Mid-Peninsula area of the San Francisco Bay region has limited housing opportunities
Stanford employment at relative to the number of jobs. The Comprehensive Plan’s policies and programs promote a
90,260 jobs while variety of housing opportunities for all income ranges. Housing diversity will enhance Palo
households numbered Alto’s social and economic strength. A commitment to the increased production of housing for
29,280. all income levels will help the City continue to be a distinctive, diverse and desirable place to
live. Residents will benefit from an increased awareness about housing needs, diversity and
See also Policy L-13 and POLICY H-1:
Meet community and neighborhood needs as the supply of housing is
associated programs, and
Programs L-10, T-1 and
T-3 Increasing the housing supply meets an important citywide need. However, to be truly benefi-
cial for all Palo Altans, new housing must be designed and located in a way that enhances the
character of existing neighborhoods. Increases in the housing supply should be accomplished
without diminishing the quality of City services or surpassing the capacity of infrastructure and
Consider a variety of strategies to increase housing density and diversity in
Allow for increased housing density immediately surrounding commercial areas
and particularly near transit centers.
Palo Alto has a variety of commercial areas, two multi-modal transit centers, and a network of
bus routes serving its commercial areas. Allowing increased density in these areas achieves a
number of important objectives. It allows the housing supply to be increased while minimizing
visual and physical impacts on nearby lower density areas. It also encourages the use of transit,
reduces auto dependency, and supports the City’s air quality goals.
Consider enacting minimum density requirements in multiple family zones.
Most recent housing developments in Palo Alto have not been constructed to the maximum
densities allowed by zoning. Market conditions, bank financing, and insurance requirements
have favored the construction of single family detached houses. To increase housing supply
and obtain densities closer to those envisioned by zoning policies, the City should explore
requiring minimum densities in the multiple family zones. This is particularly important given
the limited number of vacant multifamily sites remaining in Palo Alto and their potential con-
tribution towards meeting the City’s housing needs.
Evaluate zoning incentives that encourage the development of diverse hous-
ing types, including smaller, more affordable units and two- and three-bed-
Palo Alto Comprehensive Plan room units suitable for families with children.
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
A variety of housing types is desired in Palo Alto to address the broad spectrum of needs. By
providing incentives to develop housing units of less than 1,200 square feet, the affordability
and number of potential units can be increased. Incentives to develop such housing should be
pursued. Incentives might include reduced parking or open space requirements, density bo-
nuses, reduced lot coverage standards, or City financial participation. Certain locations near
schools, parks, and quiet streets provide the best sites for households with children.
Nontraditional housing, such as
courtyard units and small lot
single family homes, promote
interaction among residents,
provide privacy, and allow for
joint use of land and facilities.
Evaluate the provisions for second dwelling units in single family areas to
determine how additional units might be provided.
Second units can provide additional rental housing that is both desirable and unobtrusive. The
current cottage regulations should be evaluated to determine how additional units might be
provided through increased flexibility in the regulations such as reduced parking require-
ments, limiting the maximum size of the unit, allowing for attached units, and reducing the
minimum lot size requirement. Appropriate development controls and review procedures should
ensure compatibility with adjacent properties.
Create a Planned Development zone that allows the construction of smaller
lot single family units and other innovative housing types without the require-
ment for a public benefit finding.
A designation similar to the existing “Planned Community” zone would allow flexibility in
design while providing a highly inclusive public review process. Because there is such a strong See also Program L-13 on
need for housing in the City, the requirement for a public benefit finding can be eliminated if “Village Residential”
the project significantly increases the housing supply over what would otherwise be allowed by zoning
existing zoning. While new zoning regulations are anticipated to implement the “Village Resi-
dential” land use designation, it is not possible to predict all of the prototypes the market will
invent. Therefore, a flexible zoning designation is desirable.
Amend zoning regulations to permit residential lots of less than 6,000 square
feet where smaller lots would be compatible with the surrounding neighborhood.
Many Palo Alto neighborhoods have lots that are smaller than the 6,000 square foot minimum
currently required by zoning. Allowing additional smaller lots would result in more units and
create greater housing opportunities. Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
Modify parking requirements to allow higher densities and reduced housing
costs in areas appropriate for reduced parking requirements.
The President Hotel and Laning Chateau are good examples of high density housing projects
that do not have parking.
Support the designation of vacant or underutilized land for housing.
Encourage mixed use projects as a means of increasing the housing supply
while promoting diversity and neighborhood vitality.
Commercial areas and parking lots offer some of the best
opportunities for new housing. Residences can be built over
stores, offices, parking lots and even some industrial build-
ings. Parking lots may be able to serve a dual purpose, serv-
ing businesses by day and residences by night. Mixed use
projects should not be limited to “vertical” integration in a
single building, but should also include locations where
residential and commercial uses exist side by side.
This project, built in the early 1980s, is
Photo courtesy of Carrasco & Associates (taken by Jane Lidz)
across the street from the Downtown
Multi-modal Transit Station. It was
constructed on the site of a public
parking lot, and includes two levels of
underground parking (one private and
one public), commercial ground floor
uses, and residential units above. It
makes a significantly greater
contribution to Downtown urban
design and vitality than the former
surface parking lot.
See also Program L-10 PROGRAM H-8:
Evaluate the effectiveness of existing incentives that encourage mixed use and
residential development on commercially zoned land and determine additional
incentives to be provided.
See also Goal G-5 and The City’s current zoning regulations have been ineffective in encouraging mixed use projects
associated policy and
and often require many variances before mixed use development can be approved. The regula-
programs, and Programs
tions should be evaluated and revised to improve clarity and provide new incentives for mixed
L-22, L-25, L-30, and L-32 use.
for references to specific
coordinated area plans PROGRAM H-9:
Use coordinated area plans and other tools to develop regulations that
support the development of housing above and among commercial uses.
Coordinated area plans are intended to provide more specific guidance for development in
areas where change is desired.
Palo Alto Comprehensive Plan
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
PROGRAM H-10: See also Policy B-18
Encourage the development of housing on parking lots by adopting incentives
that will lead to housing production while maintaining the required parking.
Eliminate the requirement for Site and Design review for mixed use projects.
Presently, mixed use projects require site and design review by the Architectural Review Board
(ARB), Planning Commission, and City Council. Eliminating this requirement would expedite
project approval and remove an impediment to housing production. Projects would still be
subject to ARB review, providing opportunity for public comment.
Between 1978 and 1995,
Discourage the conversion of lands designated as residential to nonresidential
uses, unless there is no net loss of housing potential on a community-wide the city rezoned 46 sites
basis. from commercial to
residential while only 10
Residentially-zoned land is a valuable commodity that should be preserved whenever possible.
sites were changed from
Since the 1960s, Palo Alto has changed the zoning of many parcels from non-residential to
residential to commercial.
residential. The reverse situation—rezoning residential land for other purposes—should only
be approved when new housing opportunities that exceed the number of potential units lost can
Support the reduction of governmental and regulatory constraints to the
production of affordable housing.
Zoning requirements, development review and approval procedures, fees, and building codes
and standards will be reviewed regularly to eliminate barriers to affordable housing construc-
Where appropriate and feasible, allow waivers of development fees as a means
of promoting the development of housing affordable to very low- and low-
GOAL H-2: Conservation and Maintenance of Palo Alto’s Existing
Housing Stock and Residential Neighborhoods.
Palo Alto has many fine neighborhoods with a variety of housing styles and types. Conserving
and maintaining this housing will help preserve the character of the City’s neighborhoods.
Promote the rehabilitation of deteriorating or substandard residential
The general condition of the housing stock in Palo Alto is very good, partially due to the high
price of homes. However, there are isolated structures and small sections of the community that
may begin to turn downward unless the normal processes of deterioration are reversed. These
areas need rehabilitation now, before major problems arise.
Continue the citywide property maintenance, inspection, and enforcement
program. Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
The State Comprehensive PROGRAM H-14:
Enact development regulations that encourage rehabilitation of historic resi-
Historic Preservation Plan
dential buildings, remodeling of older multifamily rental buildings and reten-
encourages the preservation
tion of smaller single family residences.
of historic housing. See
Goal L-7 and associated The City promotes code inspection as a service to residents and a deterrent to neighborhood
policies and programs deterioration. The City formerly operated a voluntary program to assist very low- and low-
income households in making repairs. Although the program was significantly curtailed in
1990 due to the limited demand from eligible homeowners, it could be reinstated in the future
if demand warrants.
On-going maintenance and
inspection programs promote
health and safety and can
extend the useful life of housing
Maintain the number of multifamily rental housing units in Palo Alto at no
less than its current level while supporting efforts to increase the rental
Palo Alto has a limited supply of rental housing relative to market demands. Very few private
market rental projects have been built since the 1960s. Not surprisingly, the City’s residential
vacancy rate has consistently been below three percent over the last 20 years. Recent sharp
increases in rents indicate that the City should continue to take the steps necessary to retain
the supply of rental units and encourage the construction of new units.
Chapter 21.40 of the Palo Continue implementation of the Condominium Conversion Ordinance.
Alto Municipal Code limits This Ordinance, enacted in 1974, restricts the conversion of apartments to condominiums and
the conversion of rental
thereby helps the City maintain its rental stock. Palo Alto has not had a condominium conver-
units to condominiums. sion since 1980.
Where a proposed subdivision or condominium would cause a loss of rental
housing, grant approval only if at least two of the following three circum-
• The project will produce at least a 100 percent increase in the number of
units currently on the site and will comply with the City’s Below Market
Rate (BMR) program (described in Program H-20); and/or
Palo Alto Comprehensive Plan
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
• The number of rental units to be provided on the site is at least equal to the
number of existing rental units; and/or
• No less than 20 percent of the units will comply with the City’s BMR pro-
Many existing developments in Palo Alto contain units that are smaller and more affordable
than those that would be built today. This program limits the removal of such units unless there
is a significant net gain of housing or a replacement of rental units or affordable units. The
program applies to the most recent number of rental units on the site whether or not they have
been demolished. All units after the first unit are considered rentals.
Encourage community involvement in the maintenance and enhancement
of public and private properties and adjacent rights-of-way in residential
Create community volunteer days and park cleanups, plantings, or similar
events that promote neighborhood enhancement.
Conduct City-sponsored cleanup campaigns for public and private properties.
Palo Alto residents take pride in
Photo courtesy of City of Palo Alto Human Services Division
the well-kept appearance of
their neighborhoods and City.
Their involvement and
participation in local issues is
one of Palo Alto's hallmarks.
GOAL H-3: Housing Opportunities for a Diverse Population,
Including Very low-, Low- and Moderate-income Residents, and
Persons with Special Needs.
The City will use public and private resources to provide housing that meets the City’s “fair
share” of the region’s housing needs. These needs can not be met by the private market alone.
Local, state, and federal resources will help the City achieve this goal.
Encourage and foster diverse housing opportunities for very low-, low-,
and moderate-income households.
Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
Provide for increased use and support of tenant/landlord educational and
Implement the “Action Plan” of the City of Palo Alto’s Consolidated Plan or
its successor documents.
The Consolidated Plan is a required document for the receipt of federal funds through the U.S.
Department of Housing and Urban Development (HUD). It outlines actions to be taken to pro-
vide housing opportunities for very low- and low-income households. The overall Plan is up-
dated every five years. The Plan and the Annual Action Plan are adopted by the City Council.
See text box below
Continue implementation of the City’s “Below Market Rate” (BMR)
Inclusionary Housing Program that requires at least ten percent of all hous-
ing units built in for-sale projects of three units or more and rental projects of
five units or more to be provided at below market rates to very low-, low-, and
The Palo Alto Below Market Rate (“BMR”) Program
Developers of for-sale housing projects with three or more units or rental projects of five or more units,
must comply with Palo Alto’s BMR requirements. For an application to be determined complete, the
developer must agree to one or a combination of the following alternatives:
For each ten units developed, not less than one of the units must be provided as a BMR unit. The BMR
units must be comparable to other units in the development. The initial sales price for the BMR units
should be consistent with what a household making 80 to 100 percent of the Santa Clara County median
income can afford in housing expenses, such as mortgage payment, taxes, insurance and association
dues. Further, the price should be sufficient to cover the developer’s estimated direct construction and
financing cost of the unit, exclusive of land, marketing, off-site improvements, and profit. If on-site
BMR units are not feasible, the second priority is for off-site units. In such cases, one BMR unit must be
provided for each nine units developed, or vacant land suitable for affordable housing must be provided
to the City. Off-site units may be new or rehabilitated existing units and must be pre-approved by the
City. The third priority is a cash payment in-lieu of providing BMR units. The in-lieu payment is equal
to 5 percent of the greater of the actual sales price or fair market value of each unit sold and must be
paid to the City’s Housing Development Fund at the time of first sale or transfer of the unit.
At least 10 percent of the units in a rental project must be provided as BMR units to households earning
between 50 and 80 percent of the County median income. The rents are initially established based on
HUD Section 8 (or its successor program) Fair Market Rent and may be adjusted annually based on
one-third of the Consumer Price Index or other comparable formula agreed to by the City. Alternatives
include payment by the developer of an annual in-lieu fee to the City’s Housing Development Fund
based on the difference between the initial Section 8 Fair Market Rent and the market rate rents of the
units, or a one-time fee based on 5 percent of the appraised value of the rental portion of the project.
Palo Alto Comprehensive Plan
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
Preservation of existing housing
units, particularly affordable
units like these at Atrastradero
Park, is a key component of the
City's housing programs.
Sites Larger Than Five Acres:
Projects on sites larger than five acres in size, except in the OS District, will provide a 15 percent BMR
Subdivision of Vacant Land to be Sold Without Development:
Vacant land that is subdivided into three or more lots and sold without construction of housing must
provide buildable parcel(s) equivalent to 10 percent of the development to the City or the City’s designee.
The land is to be used for the purpose of developing affordable housing units. The City may sell the
property, with the funds placed in the City’s Housing Development Fund for future housing development.
A comparable in-lieu fee may be agreed to by the City and the developer based on 5 percent of the greater
of the actual sales price or fair market value of the improved lots with houses.
For projects of ten or more units, an in-lieu payment to the City’s Housing Development Fund may be
made for the fraction of units over multiples of ten for which an actual BMR unit is not provided. The
in-lieu fee percentage rate will be the same as that ordinarily required for the project, usually 5 percent.
For-sales or rental projects of less than ten units, the BMR requirement may be satisfied by the payment
of an in-lieu fee on each of the units using a sliding scale beginning at 3.25 percent for three for-sale units
and 3.75 percent for five rental units, and increasing by 0.25 percent for each additional unit to 5 percent
for ten or more. The in-lieu fee percentage rate will be applied to the greater of the actual sales price or fair
market value of the units. The fee on for-sale projects will be paid upon the sale of each unit in the project
excluding any BMR units. For rental projects, the fee shall be paid prior to occupancy.
The BMR program objective is to obtain actual housing units or buildable parcels within each develop-
ment rather than off-site units or in-lieu payments. However, the City may consider equivalent alterna-
tives to any of the above provisions.
Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
The City of Palo Alto’s BMR program is intended to increase the supply of for-sale housing and
See Map H-1 for the
rental housing for individuals and families whose incomes are less than the median income.
location and distribution
Since the program was initiated in 1974, 143 for-sale units and 33 rental units have been
of below-market rate
created. Continued affordability of the units is a major goal of the program. Deed restrictions
housing in Palo Alto
control the resale price and limit rent increases. Occupancy for BMR units is determined ac-
cording to City Council guidelines. The Palo Alto Housing Corporation, under contract to the
City, has administered the program since its inception.
Adopt a revised density bonus program that allows the construction of up to
three additional market rate units for each BMR unit above that normally
required, up to a maximum zoning increase of 25 percent in density. Allow an
equivalent increase in square footage (Floor Area Ratio) for projects that
meet this requirement.
Recognize the Buena Vista Mobile Home Park as providing low-, and
moderate-income housing opportunities.
Support agencies and organizations that provide shelter, housing, and related
services to very low-, low-, and moderate-income households.
The City should work with nonprofit housing organizations and the local development commu-
nity to ensure that all affordable housing, including family housing and units for seniors on
fixed incomes, remains affordable over time. Palo Alto is committed to providing continued
support to local groups that serve the housing needs of lower income households.
Promote legislative changes and funding for programs that facilitate and sub-
sidize the acquisition, rehabilitation, and operation of existing rental housing
by housing assistance organizations, nonprofit developers, and for-profit de-
Use existing agency programs such as Senior Home Repair to provide reha-
bilitation assistance to very low- and low-income households.
Support the preservation of existing group homes and supported living facili-
ties for persons with special housing needs. Assist local agencies and non-
profit organizations in the construction or rehabilitation of new facilities for
See Map H-2 for the POLICY H-13:
Pursue funding for the construction or rehabilitation of housing that is
locations and distribution
affordable to very low-, low-, and moderate-income households. Support
of subsidized rental
financing techniques such as land banking, federal and state tax credits,
housing in Palo Alto mortgage revenue bonds, and mortgage credit certificates to subsidize the
cost of housing.
In the past, the development of affordable housing has relied primarily on federal and state
funding sources. While the City should continue to pursue such funds, local funding options
should be broadened.
Palo Alto Comprehensive Plan
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
Maintain a high priority for the acquisition of new housing sites, acquisition
and rehabilitation of existing housing, and housing-related services in the al-
location of Community Development Block Grant (CDBG) funds or similar
Support and expand the City’s Housing Development Fund or successor pro-
Palo Alto has established its Housing Development Fund largely from housing mitigation fees
from commercial and industrial developers, and residential developers who provide funds in-
lieu of BMR units. Other housing-related revenues also have been placed in the fund. With
funding becoming more limited, the City should seek to expand opportunities for additional
On an on-going basis, seek funding from state and federal programs, such as
the HOME program and HUD Section 202 and 811 (or successor programs), Chapter 16.47 of the Palo
to support the development or rehabilitation of housing for very low-, low-, or Alto Municipal Code
moderate-income households. requires provision of a
housing unit or in-lieu fee
PROGRAM H-29: for new commercial/
Continue to require developers of employment-generating commercial and industrial floor space
industrial developments to contribute to the supply of low- and moderate-
greater than 20,000
Commercial and industrial development generates new jobs, thereby increasing the demand
for housing. Some of these jobs will be filled by lower-income wage earners, increasing the
demand for more affordable units. Developers who contribute to the current jobs/housing im-
balance and the accompanying housing shortage should assist the City in solving this problem.
This has been accomplished by a City Ordinance that requires developers of commercial and
industrial projects of more than 20,000 square feet of new floor area to either provide housing
units or pay an in-lieu fee to the Housing Development Fund for any new floor area.
Encourage the preservation, rehabilitation, and construction of Single Room
Occupancy (SRO) hotels and SRO housing.
Sketch courtesy of Rob Wellington Quigley, FAIA
Single Room Occupancy housing
like the 107-unit Alma Place
project provides low-income
housing to working adults and
seniors on limited incomes.
View from Homer Ave.
Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
SROs are hotels or residential structures that provide short-term and transitional housing. They
may or may not have kitchens or bathrooms within each individual unit. Palo Alto has three
SROs (Barker, Craig, and Palo Alto Hotels) and they are a valuable, necessary part of the
housing stock. A fourth SRO with 107 rooms and sponsored by the Palo Alto Housing Corpora-
tion opened for occupancy in March of 1998. The City should work with SRO owners to ensure
the continued viability of these projects and should support opportunities for new SROs in
Support opportunities for Shared Housing and other innovative housing
forms to promote diversity and meet the needs of different household types
and income levels.
Shared housing for seniors and single parent households has been supported through a portion
of the City’s Community Development Block Grant (CDBG) Funds. Other housing types might
include co-housing and limited equity partnerships.
Support housing that incorporates facilities and services to meet the health
care, transit, or social service needs of households with special needs,
including seniors and persons with disabilities.
Support family housing that addresses resident needs for child care, youth
services, recreation opportunities and access to transit.
Meeting the housing needs of seniors may require selecting sites near shopping areas, social
activities, medical services, and transit lines. Housing needs for people who are physically
disabled must be addressed in the design of all projects. Other groups with special needs
include homeless persons, persons with AIDS, people with emotional or mental disabilities,
and victims of domestic abuse. Family housing may require locations near schools and parks
and provisions for child care. Amenities for youth, such as transportation and recreation, should
Support legislation, regulatory changes, federal funding, and local efforts
for the permanent preservation of HUD-assisted very low- and low-income
units at risk of conversion to market rate housing or loss of federal rental
Palo Alto has 728 units in 13 projects of very low- and low-income housing that are to varying
degrees subject to increases in rents or possible conversion to market rate housing. The future
of the HUD Section 8 Program and its funding is uncertain. Preservation of these units as
affordable housing is a priority and will require coordination and cooperation, as well as imagi-
Support the provision of emergency shelter, transitional housing and ancillary
services to address homelessness.
Emergency shelters located in places of worship or National Guard Armory sites provide im-
mediate, emergency short-term housing. There is also a need for transitional housing with
supportive services to bridge the gap between emergency beds and community reintegration.
The types of services that are most helpful are the basic necessities of food, clothing, mail, job
Palo Alto Comprehensive Plan
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
training, counseling, case management, payee services, physical and mental health services,
vocational training, job placement and permanent, affordable housing.
POLICY H-20: See also Goal G-3 and
Provide leadership in addressing homelessness as a regional issue.
Work closely with appropriate agencies in the region to develop and
implement policies and programs relating to homelessness.
Continue to participate in the Santa Clara County Homeless Collaborative as
well as work with adjacent jurisdictions to develop additional shelter oppor-
The Homeless Collaborative provides a regional approach to homelessness prevention based
on the federal continuum care model.
Continue to participate with and support agencies addressing homelessness.
GOAL H-4: An End to Housing Discrimination on the Basis of
Race, Religion, National Origin, Age, Sex, Sexual Orientation,
Marital Status, Physical Handicap, or Other Barriers that Prevent
Choice in Housing.
Palo Alto has a long-standing record of supporting and working towards the elimination of all Any business displaying this
barriers to housing. Discrimination in any form is not acceptable. The City is committed to- symbol is stating that they
wards improving access to housing for all of its citizens. operate in conformance with
the Federal Fair Housing Act
POLICY H-22: of 1988 as amended.
Support programs and agencies that seek to eliminate housing discrimination.
Work with appropriate state and federal agencies to ensure that fair housing
laws are enforced.
Continue to support groups that provide fair housing services, such as Mid-
Peninsula Citizens for Fair Housing.
Palo Alto Municipal Code
Chapter 9.74 prohibits
Continue the efforts of the Human Relations Commission to combat discrimi-
discrimination in renting
nation in rental housing, including mediation of problems between landlords
and tenants. or leasing housing based
on age, parenthood,
PROGRAM H-35: pregnancy, or the
Continue implementation of the City’s Ordinances prohibiting discrimination potential or actual
in renting or leasing housing based on age, parenthood, pregnancy or the presence of a minor child.
potential or actual presence of a minor child.
Embracing the New Century
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element)
GOAL H-5: Reduced Housing Expenses for Energy
Reduce the cost of housing by promoting energy efficiency, resource
management, and conservation for new and existing housing.
By owning and operating its own utility system, Palo Alto can offer its residents high quality
service at the lowest possible cost. The City has invested in a mix of new energy and water
supply projects, provided consumer-oriented conservation and solar services and programs,
and promoted operating efficiencies that allow residents to meet their resource needs at a lower
cost than in most cities in the region.
Continue providing staff support and technical assistance in energy conser-
vation and demand management to architects, developers, and utility cus-
Palo Alto Comprehensive Plan
Housing Technical Document: Appendix A (Reprint of the Comprehensive Plan Housing Element
City of Palo Alto
Subsidized Rental Housing Developments (April 1998)
Project Date Total Subs. Type
Stevenson House, 455 East Charleston 1968 120 120 Senior
Colorado Park, 1141 Colorado Ave. 1972 60 60 Family & Senior (8 units)
Palo Alto Gardens, 648 San Antonio Rd. 1973 156 156 Family/Senior (128 units)
Arastradero Park , 574 Arastradero Rd. 1974 66 66 Family & Senior
Lytton Gardens I, 656 Lytton Ave. 1975 218 218 Senior
Family, Senior (4 units) Handicapped
Webster Wood, 941 Webster Street 1978 68 41
Senior (50 Independent Living; 50
Lytton Gardens II, 656 Lytton Avenue 1979 100 100
Sheridan Apts, 360 Sheridan Ave 1979 57 57 Senior, Handicapped
Pine St. Shared Lvg House, 1259 Pine St. 1981 1 1 Family
Elm Apts, 129 Emerson St. 1982 11 11 Family
Terman Apts, 655 Arastradero Rd. 1985 92 72 Family & Senior (24 units)
Ferne Apts, 101-131 Ferne Ave. 1984 16 10 Family
Emerson South, 3067 Emerson St. 1985 6 6 Small Family
Curtner Apts, 300-310 Curtner Ave. 1986 9 9 Family
Waldo Apts, 3039 Emerson St. 1987 6 3 Family
California Park Apt., 2301 Park Blvd. 1989 45 45 Family, Handicapped (1 unit)
Oak Manor Townhome, 630 Los Robles 1991 33 24 Family
Plum Tree Apts, 3020 Emerson St. 1991 10 10 Family
Lytton IV, 330 Everett Ave. 1994 51 51 Senior
Barker Hotel, 439 Emerson St. 1994 26 26 Adults, Handicapped (5 units)
Emerson North, 3051-3061 Emerson St. 1994 6 6 Small Family & Senior
Emerson House, 330 Emerson St. 1996 4 4 Small Family, Handicapped & Senior
Ventura Apts, 290-310 Ventura Ave. 1997 12 7 Family
Alma Place SRO, 753 Alma St. 1998 107 107 Single Adults & Handicapped
Page Mill Court, 2700 Ash Adults with Developmental
1998 24 24
(under construction) Disabilities
TOTALS 1,304 1,234
Housing Technical Document: Appendix B
City of Palo Alto
Summary of Below Market Rate Program Units (August 1997)
Year Initial of
Development Number of Units
BMR Purchase Units
Foothill Green 1975 4
Villas de San Alma 1975 8
Greenhouse I 1975, 1983, 1987 14
Greenhouse II 1976 10
Channing Place 1976 2
410 Sheridan 1977 5
Villas de la Plazas 1978 4
Vista Townhouses 1979 2
San Antonio Village 1979 2
Barron Square 1979 6
Palo Alto Greens 1981 4
Colorado Place 1981 2
Palo Alto Redwoods 1983 12
Cedar Terrace (Oregon Green Offsite) 1984 1
Birch Court - BMR 1984 5
Palo Alto Central 1984 7
Loma Verde Village 1985 4
Loma Verde Townhomes 1985 2
Channing Court 1985 1
Ashby Duplex 1985 2
Abitare 1985 9
Ortega Duplex 1986 2
Talisman Duplex 1987 2
Bautista Duplex 1987 2
The Hamlet 1988 6
Terrace Bay Homes 1988 2
The Rosewalk 1988 4
Ramona Courts 1989 1
Charleston Village 1990 2
737 Loma Verde (Christensen Court) 1992 1
Camino Place 1992 4
Spanish Villas 1993 1
Jacobs Court 1993 3
Promenade 1994 7
Everett Townhome 1997 1
TOTAL OWNERSHIP UNITS 144
BMR Rental Units
Southwood Apartment Homes 1985 10
1100 Welch Road Apartments 1987 11
Mayfield Apartment - 345 Sheridan 1987 9
Mayfield Apartment - 345 Sheridan 1989 3
TOTAL RENTAL UNITS 33
Housing Technical Document: Appendix C
City of Palo Alto
Land Inventory, Potential Residential Development
Residentially Zoned Sites 1998-2003
Site Address Common Name Current use Zoning size
321 Vacant Land &
Tan Lots R-1 0.8 ***3 (net)
Byron 3 Res. Units
4277 Convalescent Vacant
R-1 1 4--5
Miranda Center Center
4100 Clemo Vacant
RM-15 1.8 10--30
Clemo Ave. Orchard Land
4146 Juan Vacant Single
RM-15 0.7 5--10
El Camino Real Property Family House
Rudolpho’s RM-30 1.2 10--40
El Camino Real Restaurant
4050 El Camino Vacant
RM-30 0.4 5--14
El Camino Real Veterinary Hosp. Veterinary Hosp.
Cameo Club RM-30 1.3 10--30
El Camino Real Card Room
Tan Lots RM-30 0.6 ***13
600-1000 Stanford West Vacant
RM-30 46 **630
Sand Hill Road Apts. Land
2700 Page Mill/ Unused County
RM-40 0.7 *24
Ash Street Ash Site Parking Lot
440 Linus Pauling Vacant
RM-40 0.6 15-40
Page Mill Road Institute Research Bldg.
300 Homer + Palo Alto PAMF Main & R-1, PC,
various Medical Found. Accessory Bldgs. RM-15, Rm-30
753 Alma Place Vacant
PC 0.4 *107
Alma Street SRO Commercial
651 Office &
The Hamilton PC 1.1 ***32 (net)
Hamilton Ave. 4 Residential Units
520-700 Former Children’s Temporary
Sand Hill Road Hosp. @ Stanford Offices PF 26 **458
TOTALS 90.6 1,381--1681
*** Under Construction
Housing Technical Document: Appendix D
Resource Persons Contacted
During Preparation of 1997 Housing Element
Jim Gilliland, Department of Planning and Community Environment
Catherine Siegel, Department of Planning and Community Environment
Suzanne Bayley, Department of Planning and Community Environment
Michael Bills, Department of Planning and Community Environment
Fred Herman, Department of Planning and Community Environment
Leah Zaner, Department of Human Services Division
Richard Engel, Department of Resource Planning
Jim Harrington, Department of Public Works
Scott Ward, Classic Communities, Inc.
Marlene Prendergast, Executive Director, Palo Alto Housing Corporation
David Easton, Board Member, Palo Alto Housing Corporation and Project Manager,
Alma Place SRO Project
Ann Sturdevant, Senior Coordinating Council
Leslee Coleman, Innovative Housing
Tim Gisser, Owner and Manager, Buena Vista Mobile Home Park
Housing Technical Document: Acknowledgements
Association of Bay Area Governments (ABAG), Housing Needs Determination,
Bay Area Economics, Market Analysis for 753 Alma Street, April 21, 1995
City of Palo Alto, Consolidated Plan, July 1, 1995 - June 30, 2000
City of Palo Alto, Housing Element of the Comprehensive Plan, 1990
City of Palo Alto, Municipal Code, Chapter 18, 1992-93 (Revised)
City of Palo Alto, Single Family Residendial Design Guidelines for Palo Alto,
City of Palo Alto, Zoning Guidebook for the R-1 Property Owner and Builder,
County of Santa Clara, Office of the Homeless Coordinator, 1995 Overview of
Homelessness in Santa Clara County, March 10, 1995
HomeBase, Homelessness in the Bay Area, 1990
Lapkoff & Gobalet Demographic Research, Inc., Demographic Analysis and
Enrollment Forecasts for the Palo Alto Unified School District, December 1992
State of California, Department of Finance, Household and Population Reports,
State of California, Department of Housing and Community Development,
California Statewide Housing Plan Update, 1990
United States, Bureau of the Census, 1970, 1980 and 1990 U.S. Census
United States, Department of Housing and Urban Development, CHAS Tables
United Way of Santa Clara County, United Way Needs Assessment for Santa
Clara County, 1993-94
Housing Technical Document
Housing Technical Document: Bibliography