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Housing Element Update

Uploaded: Feb 8, 2023
The state Housing and Community Development (HCD) agency has assigned a reviewer
for the Palo Alto draft Housing Element (HE). The reviewer has until the end of March to submit a review letter.

Council approved a draft HE in mid November 2022, which triggered a 30 day public comment period after which staff had 10 days to respond. Staff forwarded the draft HE to HCD at the end of the year including a summary of public comments and their response.

Prior to the November approval by council of the draft HE, staff worked with council, the PTC and the Housing Element Working Group during 2022. Some potential sites were removed during the year and others added. Staff continually worked to identify constraints and develop programs to address the RHNA and HE goals.

I do not know what the HCD review letter will say but HCD letters to other cities regularly have asked for more and detailed economic feasibility information with regard to sites, more specificity in delineating programs and generally have expressed concerns about the commitment to being proactive with respect to fair housing goals.

I expect Palo Alto could receive similar comments.

The review letter will begin a process of back and forth with HCD and the staff and with the staff, PTC, council and the public. According to what I know from other jurisdictions and from our Planning Director, that will probably take more than one round over several months. Right now meetings are planned through June with the PTC and council, which would be the earliest to submit a compliant HE.

Whether or not our HE is compliant is determined by HCD not by me or staff or posters on the Weekly online or our council.

I believe HCD and our staff have a good relationship and that HCD wants to work collaboratively to get a compliant HE and avoid serious penalties and possible lawsuits.

What is it worth to you?


Posted by Allen Akin, a resident of Professorville,
on Feb 8, 2023 at 4:25 pm

Allen Akin is a registered user.

"Whether or not our HE is compliant is determined by HCD..."

Unless HCD is timely, transparent, and consistent across all participants throughout the process, I suspect compliance will be determined by the courts rather than HCD. Could take a while.

Posted by stephen levy, a resident of University South,
on Feb 8, 2023 at 8:20 pm

stephen levy is a registered user.

You may be right but I think it is more likely courts or DOJ get involved on projects not on adjudicating compliance. Like in Cupertino.

Posted by Allen Akin, a resident of Professorville,
on Feb 8, 2023 at 8:59 pm

Allen Akin is a registered user.

I don't think you're wrong, but I had something different in mind. If HCD doesn't have well-defined transparent standards for compliance, or applies them inconsistently, or simply responds too slowly, I could see cities and counties having reason to take action. Enforcement attempts would give them standing.

Posted by Steven Goldstein, a resident of Old Mountain View,
on Feb 8, 2023 at 9:54 pm

Steven Goldstein is a registered user.

Just a Observation,

We need to just wait and see if Any current city that has neither an approved plan or is still working on it, regarding getting approval.

From what I have seen so far the ABAG RHNA methodolgy was published, the performnce metrics are nbot good, and now we are going to have a surplus of luxury units becasue of the current white collar job cuts, especially in IT.

And this is NOT a small dip, but a long term trajectory. The inflation is going to stay strong, but earnings are going to drop like a rock.

Without MANDFATORY INVLUSIONARY HOUSING STANDARDS the housing market here is going to wind up with excess vacancies, developers and landlord going out of business.

I have been talking about this for years, no one wants to listen.

Posted by Online Name, a resident of Embarcadero Oaks/Leland,
on Feb 9, 2023 at 10:09 am

Online Name is a registered user.

"Development (HCD) agency has assigned a reviewer
for the Palo Alto draft Housing Element (HE). The reviewer has until the end of March to submit a review letter."

Then why all the lawsuits? Aren't they premature or are they just a publicity gimmick?

Posted by stephen levy, a resident of University South,
on Feb 9, 2023 at 10:19 am

stephen levy is a registered user.

I am not a party to any lawsuits and not an attorney.
My sense is they are trying to encourage developers to submit proposals and test whether missing the deadline makes approval easier.
This is not coming from HCD and my focus is on the city working with HCD to adopt a compliant HE and avoid penalties and lawsuits.

Posted by Steven Goldstein, a resident of Old Mountain View,
on Feb 9, 2023 at 11:55 am

Steven Goldstein is a registered user.

JUst an Obsaervation,

From what I read the DEADLINE was Jan 31, for the HE approval. But the City did not provide it in time to get approaval before the deadline, and it looksl ike they do not have an extension filed.

"According to a state report, Santa Clara County has not submitted any housing element proposal. All counties and cities should have submitted an initial plan to the state for review at least 90 days prior to adopting the final proposal by Jan. 31. County officials started the process last July and have hosted seven meetings with community stakeholders and residents. The county has not produced a plan as of this week, according to the county's website. Gelfand said the organizations reached out to County Executive Jeff Smith in December and threatened the county with litigation, but received no response."

So the city was supposed to file the report by the end of November 2022, but it appears they didn't meet the deadline. If the review required 30 days and it was done in mid November, than the earliest to would be submitted is mid December. So this lawsuit has a case.

Posted by MyFeelz, a resident of another community,
on Feb 10, 2023 at 7:26 pm

MyFeelz is a registered user.

According to HCD's housing element review and compliance report here > Web Link < there are almost half of the jurisdictions out of compliance as there are those that are in. The lawsuits are low hanging fruit and laid out there where anyone can see them. Where they lack transparency, HCD makes up for it in leaving a trail to the buried treasure.

Posted by Anne, a resident of Midtown,
on Feb 11, 2023 at 2:03 pm

Anne is a registered user.

No to unfunded state mandates taking away local control.

Posted by Annette, a resident of College Terrace,
on Mar 10, 2023 at 2:39 pm

Annette is a registered user.

Stephen, since you are more deeply involved in this than the average resident, perhaps you can shed light on a few issues.

First, what is HCD's incentive to timely respond to all the HE that have been submitted?

Second, if deadlines pass and the reason for that is that HCD hasn't provided a response, cities in that situation are in a sort of limbo with compliance being out of their control. What then?

Third, what is the responsible response to the concern raised by Mr. Goldstein? Demand has changed and since all demolition and construction has multiple impacts, including GHG, it is, arguably, irresponsible on many levels to build excessive amounts of expensive housing when we know demand has decreased. This is especially concerning when there's such a shortage of affordable housing. I know housing is complicated issue and expect to hear that developers can only build affordable units if the cost of providing those can be offset by market rate units, but that explanation doesn't really address the problems created by building pricey housing that is not needed.

Posted by stephen levy, a resident of University South,
on Mar 10, 2023 at 9:09 pm

stephen levy is a registered user.


Like many cities, Palo Alto did not have a compliant HE on Jan 31. But we did submit our draft at year end and HCD will respond by end of this month. Then the city and HCD will start a round of negotiations and revisions that could take a while.
I know of no instance when HCD has not responded in a timely manner. The staff wants HEs to be compliant and offers assistance.
Cities that are not compliant now do face some vulnerability but not from HCD.
I expect Palo Alto can adopt a compliant HE if council wishes without any legal challenge from HCD.
We should stay cool and work with HCD.
Goldstein is just wrong on all his arguments..

Posted by Steven Goldstein, a resident of Old Mountain View,
on Mar 11, 2023 at 8:34 pm

Steven Goldstein is a registered user.


You should read this update

Web Link

"Like all but a handful of Bay Area cities, Palo Alto failed to have its new Housing Element certified by the state Department of Housing and Community Development (HCD) by the Jan. 31 deadline. While the city submitted its draft to the HCD on Dec. 23, it has not yet received a response from the state agency."

That means that Palo Alto is late, it is hopeful to get approval, but so far until it is done, there is no certification.

"This leaves the city in a legally precarious position. Last month, Palo Alto was one of several cities " along with Belvedere, Burlingame, Cupertino, Daly City, Fairfax, Martinez, Novato, Pinole, Pleasant Hill and Richmond " to get hit with a lawsuit from housing advocacy groups that were called out for failing to get their Housing Elements certified by the Jan. 31 deadline."

Please be more careful?

Posted by stephen levy, a resident of University South,
on Mar 11, 2023 at 9:40 pm

stephen levy is a registered user.


Annette was asking about your first post and I stand by my comment. Your rant is just your own opinion and my experience with the ABAG methodology that I explained in an earlier blog and with current and past layoffs is that you are just wrong. And calling apartments that rent for $3 or $4 K a month luxury housing shows some prejudice when home prices are $2M or more.

With regard to your second comment, I said above we do face some vulnerability but not from HCD, which is true.

I think we can have a compliant HE if council wishes before any lawsuits come to trial or are decided.

We will have their review letter shortly and that will start a collaborative process. HCD wants compliant HEs not lawsuits.

Posted by stephen levy, a resident of University South,
on Mar 12, 2023 at 7:58 am

stephen levy is a registered user.

Palo Alto has not done anything like, say, Huntington Beach or Woodside that would prompt legal action by the state.

We have not illegally denied a project or adopted provisions that violate state law.

We can work with HCD to adopt a compliant Housing Element if council wants to.

Posted by Bystander, a resident of Another Palo Alto neighborhood,
on Mar 12, 2023 at 4:00 pm

Bystander is a registered user.

There is a single family home, probably built in the 50s, at 3202 Maddux still standing and there is a listing for a 7 bed 6 bath home available May 2024 already for sale. This is on a small cul de sac. The present house will obviously be demolished to make room for the new house but already the new home is listed for sale.

This is obviously not going to be a single family home. Will it be used for corporate housing? Will it be used for renting to tech workers? How many cars will this 7 bed home produce? As for utilities, the questions keep coming? Are the present neighbors aware of any of this?

How will this fit into the housing element?

Posted by Annette, a resident of College Terrace,
on Mar 13, 2023 at 10:04 am

Annette is a registered user.

@Steve Levy: your statement "And calling apartments that rent for $3 or $4 K a month luxury housing shows some prejudice when home prices are $2M or more" also shows some prejudice. $3 - $4 K a month is out of reach for many people, but it is probably comfortable for well-paid tech workers. What is the real need of housing like that? Two developments relevant to the tech sector - layoffs and WFH - should be factored into the RHNA and every Silicon Valley HE. That this is not happening suggests to me that there is an agenda regarding housing that is not in the best interest of residents or those with the greatest need for housing. But probably is in the best interests of developers and many politicians.

I would like to see some leadership around the housing issue that calls for a sensible approach to housing that focuses on building what is truly needed and what can be supported infrastructure-wise.

Posted by Steven Goldstein, a resident of Old Mountain View,
on Mar 22, 2023 at 1:33 am

Steven Goldstein is a registered user.

Just an Observation,

When the median income household, (2 person incomes not one) in Palo Alto is only $177,000 and that means for those earning less than $87,000 a year (very low income) can properly AFFORD 30% of that income for housing, that mean rents would have to be $2,175 a month, for less than 80% (low income) housing it would be less than $139,000 a year and that rent would have to be $3,480.

According to the ABAG RHNA standards. So if you are claiming that rents that are 2 to 3 times as high are just for "standards" housing, that is simply a joke. The ABAG RHNA clearly identifies that the housing inventory of Palo Alto and the area is skewed where there is 2 to 3 times the available luxury housing (120% area median income) and as much as a 50% shortage of the rest. You know this right?

So what you are doing is trying to force higher prices on the market where the market affordability is so bad you are seeing record drops in demand. Especially where this area is seeing so many "Tech" workers being let go, and they are leaving.

So you can try to misinform all you want, but the proof is out there. No, a rent of $3-4K a year and housing prices at $2M are unrealistic In fact recent news indicates the property values are dropping as much as 30% and this is before the banking crisis that is starting up.

Redfin reports sales in properties in Palo Alto is down 50% and lost $500,000 YOY in prices from $4M to %3.5M a 13.7% drop. So many here are underwater with regards to their homes. Current interest rates have trapped them.

Posted by stephen levy, a resident of University South,
on Mar 22, 2023 at 11:43 am

stephen levy is a registered user.

Thank you Annette and Steven for confirming what I posted.
It is true that new apartments renting for $3-4,000 a month are not affordable to many, e.g., lower income households, but that implies (correctly as Steven acknowledges) that they ARE affordable to some middle income and all higher income households, which was the point I was making.

We can all agree that providing housing affordable for low income households is a priority and also a serious challenge.

But our housing goals call for adding housing (a great amount) also for middle and higher income households.

This is important for content reasons but also as part of a compliant Housing Element to avoid lawsuits and possible loss of local control as HCD has warned.

Our Palo Alto goal for housing for very low income residents was
691 units for the 2015-22. We permitted
218 units and our 2023-2031 goal is
1,556 units so lots or work to do here
For low income residents comparable numbers are 432, 65 and 896 units so lots of work to do here also
For moderate income residents comparable numbers are 278, 43 and 1,013 a very poor performance and a large increased goal in the new RHNA
Bur housing for higher income residents also got a very large increase and is the largest share of our new RHNA goal. We met our 2015-22 RHNA target permitting 763 units against a goal of 587 but the new goal is more than 4 times as large at
2,621 units.
These market rate units have another benefit--most provide 20% of the units to be deed restricted for lower income residents. And they should take some pressure off the recent surge in rents, partly the result of an overall shortage.
I support meeting all of these housing goals, not just the ones for low income residents though they have suffered the most.

Posted by Steven Goldstein, a resident of Old Mountain View,
on Mar 22, 2023 at 4:38 pm

Steven Goldstein is a registered user.

Just an Observation,

You want to give priority to the luxury housing market, but admit the affordable housing market is in such bad shape.


Face it, if the housing element DOES NOT have a path to rectify the affordable housing elements, it WILL fail.

That was the whole point of the requirement under state law.

This is proving that your selective approach to addressing the market needs is never going to work.

And now that the fed is increasing the rate by .5% by the end of the year, with a warning, TIGHTEN CREDIT STANDARDS or ELSE.

I suspect the housing market won't do it. Because without selling properties or buying properties, mortgage companies will go down. The real estate market is already seeing record drops in transactions due to DEMAND collapse.

I suspect by June we will be seeing another possible .25% increase above the current target.

The situation must be solved NOW, not LATER. We put it off since 2008.

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