|
Getting your Trinity Audio player ready...
|
Palo Alto used to build neighborhoods. Now we build housing. It costs money to build neighborhoods, and the state wants us to focus on housing. For now we are still able to collect fees from (most) new development to support parks, libraries, and community centers. (1) But those fees are being threatened. As part of the city’s negotiation with the state on new housing, we promised to conduct an economic feasibility study of our fees by the end of this year and lower them if the study “demonstrates that development impact fees are acting as a constraint on housing production.” (2) This is somewhat ironic since the fees we use today do not reflect the full cost of land here. More on that below…
Land in California is expensive. So a state senator from Orinda proposed a bill last year, Senate Bill 315, that would waive all parkland requirements for new developments within a half-mile of a park. (3) California YIMBY and SPUR promoted it, but it stalled in the legislature in face of opposition from the California Association of Recreation and Park Districts. The bill is likely to come back in 2026. Consider the massive development recently approved at 3150 El Camino Real, just south of Page Mill Road. It is within a half-mile of Boulware Park. So is the large development proposed for 3400 El Camino Real one block south. Despite adding over a thousand new residents, the bill would waive any parkland requirement.
Since that bill has not yet passed, you would think we would be able to collect parkland fees from the developers. The parkland dedication fees are priced assuming land is $6.7M/acre. That is less than what land here costs ($10-$20M/acre), but the consultant setting the fees felt the actual cost of land was not reasonable, so they lowered the amount we could collect. The parkland fees for this building would add up to $16.6 million at that discounted land rate.
However, I was surprised to learn that this building is exempt from parkland fees (4). Instead the developers pay park impact fees, which can be used for both parkland acquisition and for park improvements. It turns out those fees, which are based on interior square footage, cost less than the parkland fees for buildings with smaller units. The complex at 3150 El Camino Real has 74 below-market units which pay no park fees. It also has 294 market-rate units. Many are on the smaller side (studios and 1-bedrooms), and on average they are 911 sf. As a result, the developers are paying only $11.6 million in fees for parks. That is in effect a $4.7M/acre price. And that is why, even without new laws and possibly even lower fees, we are struggling to build local parks for new residents.
Much of the area in South Palo Alto near El Camino, which we have targeted for development, has no easy access to a park. Our Parks Master Plan identifies this area, noted as area “E” in the map below, as a location where residents are not within a short walk to a park. Of the five areas highlighted in the plan, this is the one with the highest population density, and that density will only grow.
We have just $2.2 million put away to date for parkland dedication, with another $1.7 million for park development. In 2007 Mountain View bought six homes for just over $2 million in order to create Del Medio park in an underserved area. In 2015, Mountain View bought one home for $2.7 million in order to create 0.9-acre Wyandotte Park. Unfortunately a few million dollars doesn’t buy much land in Palo Alto these days. Worse, since we have upzoned areas where we want to encourage development, the land prices there are extra high.
Many housing advocates will say that while parks are nice, housing is more important. It is better to have housing without parks than to have no housing. They reason that since we need all the housing we can get, it is fine to do without local parks. Proponents of SB 315 take a slightly different tack, saying that they do value parks but parks are underused, so we should waive fees for new developments near existing parks. “Parks are a beloved part of our neighborhoods and quality of life — but they are of greater value when people can actually live near them.”
Do people need local parks? Certainly people can live without parks. But parks keep us healthy while fostering strong families, strong neighborhoods, and strong communities. People gather there, relax there, and play together there. At all times of day there are people playing with their kids, doing tai-chi, exercising their dogs, playing sports, and just hanging out. Individual people may not need parks, but communities absolutely need parks.
And I think developers should pay for them. In response to state mandates, Palo Alto has upzoned large swaths of land along El Camino and San Antonio. Upzoning is, among other things, a massive gift to property owners in those areas. Overnight their land became much more valuable. Moreover, the more we reduce impact fees and lower costs for developers, the greater the appeal of those properties.
Why does all of the wealth we are creating have to go to property owners and developers rather than into benefits for residents like local parks and other amenities? These buildings are high-density complexes on busy arterials. Local parks are essential. If we both upzone land and decrease impact fees, it will certainly have the effect of encouraging land sales and development. But where is the balance between the vast sums of wealth that accrue to property owners, and the facilities and services that new residents can enjoy? Why can’t we put some pressure on land values by keeping our expectations for new developments at the neighborhood standard and not at the bedroom standard?
Strong societies are not built on housing. They are built on communities, with shared natural spaces where people can recreate together and nourish their physical and emotional health. A strong ecosystem is not built on concrete, steel, and asphalt. Our wildlife critically depends on canopy, shrubs, flowers, creeks, and healthy open space.
As we develop the San Antonio Area Plan, and as we build up El Camino Real, what can we do for our new residents, and for the wildlife we value? I would love to hear your thoughts on the value of local parks and sources of funding for them.
Notes
1. There are fee exemptions in some cases. Only properties that subdivide to create new subdivisions, like some multi-family ownership developments, need to pay for new parkland. Impact fees (including park impact fees) are also waived for affordable housing and smaller ADU’s.
2. See our approved Housing Element, pages 4-64 to 4-66 and page 5-14.
3. This bill is specifically about new parkland dedication. It does not address park impact fees. In Palo Alto, new developments pay one or the other (or sometimes neither). The impact fees are considerably less expensive for smaller units.
4. 3150 El Camino Real, with 368 new units, is replacing a restaurant but nevertheless requires no parkland dedication fees. City staff explained that “The subdivision map for the project merges the parcels and does not create more parcels or units. No subdivision for the units is proposed as the project is a rental development. Therefore, the park impact fees apply rather than the parkland dedication fees.” Park impact fees are assessed at $44.50 per square foot for a building like this. Parkland dedication would have cost the developers 43% more.
