A fundamental problem in the Palo Alto Process is that bad decisions result from people compelled to make a decision - any decision - despite knowing that they don't have the appropriate information. This may seem strange for a process that is routinely, and correctly, vilified for slow decision-making.
But what happened was that the City adopted a system that made the symptoms less visible rather than attempting to treat the disease. The focus is on moving proposals forward, not getting them right ("right" meaning "good enough" not "perfect"). If a proposal is really bad, try to fix only a few of the worst aspects and then pass it forward. If the sponsor is recalcitrant and refuses to fix the problems, pass it forward anyway.
This continues all the way through to City Council. If you listen to Council meetings, you will periodically hear a Council member acknowledge that they feel trapped by this system: They indicate strong opposition to a proposal, but say they feel obliged to approve it because it has gone through so many steps before getting to them.
The analogy is "social promotion" in schools - students who fail a grade are none-the-less promoted to the next grade to stay with their peer group. The theoretical justifications for this are not borne out in practice, and you can wind up with high-school graduates who function below sixth grade level.
Council routinely tries to fix bad proposals during their sessions. Despite long experience, and basic management science, Council resolutely refuses to accept that this is likely to fail. They are a committee that is too large for such deliberations (nine, where six is the accepted maximum). They have a chair but no leader (the mayor is a very temporary first-among-equals). The rules and personalities inhibit meaningful discussion. They have very limited time, and Council members are usually already exhausted when these deliberations begin.
Limited time and energy also mean that Council can only attempt to fix the one or two worse aspects of a bad proposal, letting all the rest slide by.
Consider a small example that would have seemed to be a "no-brainer." In my neighborhood a developer will be building houses on a property that was occupied by a tree care company for four decades. Large quantities of pesticide were present, and an unknown amount leaked into the ground (during storage, mixing and cleaning of the tanks). The company went out of business when pesticide exposure inflicted severe neurological damage on the owner, confining him to a wheelchair. The developer bought the property from the widow and had ready access to this history. Yet, his Environmental Impact Report claimed that the garages and storage sheds were "Barn and hay storage". The neighbors repeatedly pointed out this and other significant errors in the report at multiple points in the process. (Under various conditions, pesticides can persist in the environment for decades longer than earlier thought, something I became aware of because it is a major problem where I grew up).
You would think that the City would have told the developer that he had failed to meet the prerequisites, and not to come back until he had a legitimate application. You would think the City would have been especially concerned because this site is immediately adjacent to an elementary school and a creek. You would be wrong. The City approved the report, thereby forfeiting their primary chance to get a competent assessment of what the risks were and what testing was needed during excavation (for basements). Council chose to not even address this problem, possibly because it could not be fixed within the confines of a Council session, possibly because there were multiple other serious problems with the proposal, and this was not the one they were going to fix.
Those familiar with the Palo Alto Process have long recognized that Council members are so sensitive to the charge of indecisiveness that they can be stampeded into making what they acknowledge are ill-considered decisions. The recent Alma Plaza decision is a vivid example. Despite the developer having said for weeks that he had presented his final proposal, he presented a new proposal to Council at the beginning of the meeting, leaving Council no time to think about it, much less get the assessment of staff. Although multiple Council members acknowledged the folly of voting on it that night, they did anyway. And then several said "Never again," a promise oft-made, never kept.
This was but an extreme version of a highly successful tactic for getting controversial projects approved. Since Council doesn't enforced submission deadlines, one can withhold required documents that have been completed for months, delivering them to Council members' homes over the weekend. City staff gets the document only the morning of the meeting, and the public doesn't get access until the meeting begins. This subversion of the fundamental principle of transparency indicates that the applicant is attempting to avoid scrutiny of his project. Does this result in increased skepticism by Council? Not that I have ever seen: Council routinely, and meekly, accepts these reports.
When I have asked Council members about this, they have cited their obligation to move projects forward, and that unless substantial objections are raised to those documents, they have to accept those documents as authoritative. When I ask how one can be expected to challenge a long, highly technical document when you can barely skim it in the time available, I have never gotten a meaningful response.
Every now and again, a project will be rejected by Council, but never because it has violated the process. These rejections result from political opposition to the project (which is sometimes fueled by outrage of residents over those violations). In 1995, a small developer attempted to get a major exception to the zoning ordinance via an obvious "a self-induced hardship," producing vigorous broad-based community opposition. More recently, the Council eventually killed a proposed refuse transfer facility (labeled the "Environmental Services Center") after strong public opposition at meeting after meeting plus a report by the City Auditor undercutting many of the advocates' claims and the sponsors' continuing inability to answer basic questions. Although the City staff had repeatedly and consistently withheld critical documents requested by the Council members, this was treated only as a personal irritation and not a sign that there were serious problems with the proposal.
The Palo Alto Process invites abusive behavior: There are well-known, easily exploited flaws, payoffs for success can be huge, risk of failure is small, and penalties that are virtually non-existent.
To break this cycle, we need a City Council that, instead of rewarding the subversion of the system, will resist it. They need to adopt an attitude of "We can't prevent you from attempting to game the system, but if you do, be prepared to lose, big-time." For proposals that don't meet minimum standards, Council needs to empower and support Staff in simply rejecting them early in the process, rather than letting them clog up the system.