Palo Alto is still at least two years away from adopting a new plan to accommodate a surge of housing on San Antonio Road, but developers aren’t waiting that long to pitch projects that would blow well past the existing zoning barriers.
This includes two builders on adjoining sites near the Mountain View border who have already received the city’s approval for housing projects before making the unusual move of halting them and proposing developments with more apartments and greater density.
The larger of the two, which is proposed by Grubb Properties, would be eight stories in height and include 168 apartments at 788 San Antonio Road. The 85-foot building would be significantly taller than any other structure in the area and it would only provide 73 parking spaces, well below the 199 spaces that would normally be required under the zoning code.
On a nearby site at 800 San Antonio Road, Yorke Lee of Time Space Group is hoping to build a five-story, 120-apartment building with a garage containing 179 spaces. The council had previously approved a five-story, 75-condominium project at this site.
Both developers are looking to capitalize on the city’s newfound appetite for residential development on and around San Antonio Road, an area that is expected to accommodate nearly a third of Palo Alto’s state mandate of 6,086 new dwellings by 2031. A key component of the city’s strategy is to rezone commercial zones in this area for residential use, with significant height and density bonuses to make construction more feasible and lucrative.
Both Grubb Properties and Time Space are leaning on the city’s “planned home zoning” process, a rebranded and housing-focused version of the “planned community” process that allows builders to exceed zoning regulations in exchange for public benefits – in this case, housing. The City Council will provide early feedback on both requests at its May 19 meeting.
In making its case for another zone change, Grubb Properties pointed to the significant cost escalation that the project experienced since winning approval in 2020. Since then, the city has hiked its impact fees for new projects, raising them from $4,116 per unit in 2020 to $48,302 today, according to a letter from Megan Watson, senior director at Grubb.
Construction costs have also jumped, increasing by 14% in 2021 and by 15.8% in 2022.
“On top of the unprecedented escalation, The Fed has sustained its high-interest rate policy making the cost of capital for housing projects prohibitively expensive,” Watson wrote to the council in March.
The project Grubb is now pitching would have far more density than the approved one, with a floor-area-ratio of 3.31 where 2.0 is typically allowed. The proposed height of 85 feet exceeds the city’s 50-foot height limit. The only project with comparable height is the 79-foot development with 198 housing units pitched by Acclaim Companies for another nearby site, 762 San Antonio Road.
Grubb’s pivot to a larger project isn’t a total surprise. The proposal at 788 San Antonio Road was initially approved under the city’s newly established “housing incentive program,” which relaxed zoning standards for residential projects in certain commercial corridors. In March, as the council was considering modifications to the program, Ted O’Hanlon, an advisor to the developer, urged city leaders to think bigger. He proposed allowing floor-area-ratio of 4.0 and excluding above-grade parking from density calculations.
In reviewing the revised application, Palo Alto’s planning staff concluded that its design does not comply with the city’s guidelines relating to massing and that it would require landscape screening to ensure privacy for nearby buildings. The developer would also be required to provide at least 24 units at below market rate to comply with the planned home zoning process, which requires that 20% of the total units meet affordability requirements.
While the Time Space project similarly seeks to increase its unit count, its project at 800 San Antonio is doing so by spreading out rather than shooting up. Like the previously approved “planned home zone” project, this one would be 55 feet in height, with five stories over a two-story above ground garage. But while its former project consisted predominantly of two-bedroom apartments, the new one has a mix that includes 23 studios, 41 one-bedroom units, 50 two-bedroom units and six three-bedroom units.
According to a report from planning staff, the project would intrude on the 25-foot “special setback” along San Antonio Road, which city officials hope to preserve for future transportation improvements such as bike lanes and bus lanes.
“To allow the plan the maximum flexibility in designing streets, bikeways, sidewalks and related facilities to meet the demands of existing and new residents and visitors, it is important to maintain the existing special setbacks along San Antonio Road as much as possible during this time prior to plan adoption by the City Council,” a report from the Department of Planning and Community Services states.
The two projects reflect the council’s main challenge when it comes to San Antonio. To win state approval for its Housing Element, council members committed to undertaking in short order a list of zone changes that would boost housing, even in areas that are short on parks, retail and safe transportation alternatives. With those zone changes in place, developers are looking to build housing before the city adopts its area plan for making the area suitable for residential use.
The San Antonio area plan seeks to transform a 275.3-acre area near the Mountain View border to create an opportunity for “cohesive mixed-use neighborhoods with safe access to transportation, employment, community services, and recreation,” according to a report from city planners.
The city is now in the process of forming a community advisory group to help steer the process, which is expected to conclude in late 2027 or early 2028. At an April 24 discussion of housing, Planning Director Jonathan Lait said that in crafting the San Antonio plan, the city will be relying on “specific plan” provisions in state law rather than the more extensive “coordinated area plan” process in the local code. This, he said, will allow the city to be nimbler as it crafts its new vision for San Antonio Road.
“There’s a lot of uses and competing interests on San Antonio that will require a lot of thought and planning,” Lait said.
