P/TOD: California Avenue Pedestrian/Transit Oriented Development
Comments by Doug Moran, 790 Matadero Avenue
City Council Meeting of 2006-07-17


The staff proposal has improved greatly over this sequence of hearings and meetings, and they are to be congratulated on that.

My concerns are not with the results of this process, but with what was ruled outside the scope of this deliberation. The work plan for the Planning staff seems to have been focused on implementing the directive that appeared on an introductory transparency at multiple presentations: "Encourage redevelopment as [high-density] residential."

My recommendation: Other than the Housing Opportunity Sites (Essex and Holbach properties), there is no need to approve the P/TOD overlay now instead of making it part of a (pending) more comprehensive treatment of this area:

  1. The argument that it is OK to approve the P/TOD now because staff does not anticipate it being used in the interim is actually an argument to defer formal approval to be part of the comprehensive solution. Piecemeal updates risk creating unintended incentives for undesirable change.
  2. I strongly support the City's stated intention of retaining Fry's Electronics. For their current and likely customer base, the best location in our transportation grid seems to be the area of their current store.
    I cannot understand the argument that extending the area of the P/TOD to cover the Fry's site advances this goal. Fry's is operating under a temporary exception to the underlying zoning which allows only residential at that site. While the P/TOD zoning rules would allow some retail, the total retail allowed would be less than half of what Fry's is seeking (numbers from staff report). And it is unclear whether even a store of this size could be accommodated after factoring in practical parking requirements.
    If I were Fry's, my view of the approval of the extension of the P/TOD to the Fry's site would be They knew that they needed to change the zoning of that site to retain us, but when they did the rezoning, the limits continued to exclude us. We're gone.
    Note: The City Manager's Report contains a statement on the Fry's site (page 3) that is unjustifiably positive:
    The property owner for the Fry's site spoke in support of the PTOD district at the P&TC meeting and indicated that the zoning would open the door for meaningful discussions with the City about the future of Fry's.
    My interpretation of his remarks was very different. I would have characterized the property owner's testimony as a euphemistic A journey of a thousand miles begins with a single step, and we are encouraged that you (Palo Alto) no longer seem adamantly opposed to taking that first step.

Key topics addressed below

Note on page number references: This document refers to the page numbers used in the hardcopy. For people who downloaded attachments from the City's web site, the Appendix provides the correspondence between these page numbers and the page count in the PDFs (the attachments are split into two PDFs of roughly 10MB each).

My Participation/Background

I have been extensively involved in the discussions of the P/TOD:

Danger of deferring major issues to decisions by Council during consideration of individual projects

When concerns about the impacts of the bonuses in the P/TOD zoning were raised, a too frequent response by staff was that the P/TOD overlay was optional and thus Council could simply refuse to allow the project to use the P/TOD overlay.

I believe that this expectation is unrealistic. For a developer to bring a project to Council involves considerable time and expense. It is unfair to the developer to incur these expenses pursuing an option encouraged by the City only to be told "Not in this case." The awareness of this unfairness creates substantial momentum to approve such projects.

My assessment is that claiming that issues that affect the whole district (for example, traffic capacity) will be dealt with as part of the decision on whether to allow requests for the P/TOD overlay is effectively an abdication of decision-making on these issues.

Counter-intuitive Scope of the Cal Ave P/TOD

The California Avenue District is commonly regarded as roughly the area between Page Mill Road/Oregon Expressway and the far side of Cambridge Avenue stretching from the Caltrain tracks to a block beyond El Camino, with some additions along El Camino.

However, according to staff, the underlying zoning for this area is more permissive than the P/TOD, and hence there would be no practical reason for property owners in this district to choose to use the P/TOD overlay. Consequently, consideration of the effect of the P/TOD on the California Avenue District was irrelevant.

The driving force behind the P/TOD is the status of the properties between the Caltrain tracks and Park Blvd just south of Oregon Expy (the Essex and Holbach properties).

Detail: Legal issues arising from state requirements related to the Housing Opportunity Sites in the CompPlan's Housing Element, the conversion of GM-B zones into GM zones, and the prohibition of new housing in GM zones.

Effectively, the P/TOD applies to most of what has been referred to as the Cal-Ventura area — the area between Page Mill/Oregon Expy and Lambert Avenue and between the Caltrain tracks and El Camino.

Deferred Issue: Mixed Use Mix?

Much of the previous presentations use retail as the example of the non-residential portion of mixed-use. However, offices would seem to be more likely: They currently provide better Return-on-Investment and their parking patterns are complementary to residential (Retail has significant overlap in the early evening, allowing for less reduction in space required for parking).

Remember that there is no requirement for ground floor retail in the area affected by the P/TOD (Cal-Ventura). During the various meetings there were questions about how the various bonuses (FAR, ...) would affect developers' choices. Staff's answer is that requirements for the mix would be done on a case-by-case basis (staff recommendation, Council approval). This creates the difficult situation where staff and Council may have to tell a developer that:

Questionable Assumptions on Improving Retail Viability

One of the repeated claims for the P/TOD is that it will improve the viability of the retail in the California Avenue Business District. This is questionable for two reasons:

  1. The proponents talk about housing above the stores and restaurants on California Avenue and the nearby streets, when in fact the bulk of the residential development will be far away, much of it on the current Fry's site.
  2. The proponents reject concerns about the shopping patterns of people living in high-density housing, and whether they would generate significant additional business for this district.

An alternative is to increase the amount of retail in this area in order to bring in more shoppers — and indirectly restaurant customers — but this was outside the scope of the P/TOD discussion. The P/TOD formulation was to facilitate inclusion of retail if the developer so chose, and to provide bonuses to provide some incentives. However, there were no projections of how effective such incentives would be. Nor was there any provision to encourage coordination of retail across projects. Since retail depends upon clustering and critical mass, it is questionable that the P/TOD will provide a conducive environment for much beyond trivia retail (coffee shop, convenience mart, ...).

Note: It has long been recognized that Palo Alto does a poor job of "harvesting" the retail potential of the employees in the Research Park. The diagnosis has been that it is partly a matter of those people not being aware of what is available and partly a matter of not having enough contiguous destinations (critical mass) to bring the threshold down to the point where people make side-trips.

Deferred Issue: Traffic Impacts

Residents of the area surrounding the P/TOD expressed great skepticism that the traffic generated from the amount of housing envisioned could be handled without significant upgrades to the surrounding streets. The staff response was that they were evaluating the situation, but it was outside the scope of the P/TOD.

The situation for Cal-Ventura is complicated by it being hemmed in:

Traffic congestion is not just a matter of trip counts, but when trips occur. Replacing Fry's with housing moves trips into the peak hours, and in one of most congested areas of the city.

The City's approval of reduced front setbacks for a new building at the site of the Old Pro suggests that the City has abandoned the plan add a right turn lane from northbound El Camino to eastbound Page Mill/Oregon Expressway. This is the only remaining proposal that I was aware of to reduce traffic congestion in the area around this intersection.

As part of the P/TOD process, the staff did respond to residents' concerns about the intersection of Park Blvd and Page Mill Road:

  1. Vehicle congestion on Park Blvd during afternoon peaks.
  2. Hazardous situations created for bicyclist and pedestrians on Park Blvd created by the vehicle congestion.

Staff included measures in the P/TOD to reduce the latter, but the former is a direct consequence of congestion on eastbound Oregon Expy — congestion on Oregon causes a backup on the entrance ramp, which extends onto southbound Park, sometimes for two blocks.

Other than this modification, traffic circulation was almost entirely ignored in the P/TOD proceedings. Evidence of this can be seen in the Draft Ordinance (Attachment A) in Figure 1.1 at the bottom of page 12. This figure shows a pedestrian and bicycle connection across Page Mill Road at Ash (just as the 4-lane changes name from Page Mill to Oregon Expressway and descends to the underpass). Residents have repeatedly pointed out that such a crossing was both impractical and undesirable (and verging on suicidal). Staff responded that the diagram was merely "conceptual" — showing how the northern and southern portions of the P/TOD "interrelated." Residents countered that such a diagram could mislead people about the true situation, especially the critical role played by Park Blvd, but staff dismissed this concern.
Note: This misleading figure can be found in other places in the attachments to the CMR, e.g., Attachment B on the first (cover) page and on the third page.

Questionable claims: Caltrain ridership — doing the math

Background: The ridership ranking and figures used in the staff report is based on data gathered before the initiation of the "Baby Bullet" trains, and the related significant cutback in service to the California Avenue station (Attachment D, bottom of page 8). Judging from the stunning drop in cars in the station's parking lot, there appears to have been a substantial drop in riders originating in Palo Alto.

Some of the primary justifications/motivations for the P/TOD relate to Caltrain ridership:

  1. Residents of the housing built in the P/TOD area will substantially utilize Caltrain, reducing traffic impact of that housing.
  2. The increase in ridership will encourage Caltrain to improve the frequency of trains stopping at this station.

Much of the housing anticipated for the P/TOD will be on the Fry's site, estimated at 380 dwelling units (Attachment D, page 12). The estimates provided during the meetings on the P/TOD (and similar projects) are that ridership is about 3% of the households, with it reaching 9% under very favorable conditions. Since all but a sliver of the Fry's site is beyond the 2000-foot boundary that is regarded as more likely to generate riders, 4% ridership seems an appropriate estimate, yielding 15 Caltrain commuters from the 380 units.
Question: Are 15 additional riders going to cause Caltrain to increase the scheduled stops at this station?

Because of the constraints of the envisioned configuration:

It seems likely that the commercial space would be office with a small amount of retail. Assuming that Palo Alto loses $1,000,000/year in sales tax from the displacement of Fry's and the other businesses on this site, that works out to over $65,000/year per new Caltrain rider. Even if the 9% of the 380 dwelling units generate riders, the cost is roughly $30,000/year each.

Caveat/Acknowledgement: Computing the revenue loss and gains to the City is extremely difficult, so this is simply a rough-order-of-magnitude estimate. The $1M loss of sales tax is probably low because it is based on the current Fry's store, not the new, greatly expanded store that is the alternative. For property tax revenue, the comparison is not between new homes and the existing commercial building, but new homes and a new set of commercial buildings. With no estimates to work with and the complexities created by Prop 13, I ignore this.

Traffic-Reducing Resident Priority Program

Attachment F Palo Alto PTOD Traffic Reducing Housing has not be subject of any hearing that I was aware of. It is an advocacy document that has not had its assumptions and arguments scrutinized. It should be dismissed as unprepared for discussion at the level of the City Council.

Questionable assumption: Traffic Reduction

Traffic reduction has been cited as a benefit of redeveloping the PTOD area as residential. This is based on two grossly over-simplified notions:

  1. Commercial use generates traffic. This is often true of uses such as offices, but is false for business that serve nearby residents and businesses. The dominant parcel for redevelopment — the Fry's site — is in the latter category: It draws its customers from Palo Alto residents and businesses. The trips created by forcing these customers to drive to East Palo Alto or Mountain View would likely more than offset any gains from putting housing on the site.
  2. Putting housing near businesses reduces trips. There is no evidence that the occupants of housing at this site would have different employment patterns than Palo Altans as a whole (unless a plan such as Attachment F was implemented). The estimate is that for every Palo Altan who works (somewhere) in Palo Alto, two Palo Altans work outside Palo Alto. Even people who choose their residence to be near their job find themselves commuting to other cities because their job moved.

Even with the most optimistic estimates for mass transit use, adding housing increases congestion.

Displacement effects ignored

Questions by residents and Commissions concerned that the P/TOD would create unexpected incentives for property owners to replace existing businesses with housing was meet with "We don't think so." in the early meetings. The attitude of staff (Lusardi) was that any businesses that would be replaced were "marginal" businesses, and he did not seem to understand the concerns based upon experience with shifting economics.

Park Blvd has a concentration of auto dealers and auto service facilities because the first Comprehensive Plan designated this as a prime area for these types of business to move to from El Camino. Where these businesses will be displaced to (other than out-of-town) was ignored during the P/TOD consideration, as was the effect of residents having to travel further for such services.

Fry's is not just a generator of sales tax. It is a major service provider for residents — both people and businesses. During a discussion of Fry's, one acquaintance noted that the majority of his taxable spending in Palo Alto was at Fry's. This intrigued me, so I looked at my spending and found the same thing (This was trivial because I track my spending in Quicken. I fudged a bit, assuming that all groceries were non-taxable). Several other friends found the same thing. Although part of this is that Fry's is a major source of what we buy, a bigger part is that much of what we shop for has already been pushed out of Palo Alto.

Status of Fry's

The testimony of Robert Wheatley, the manager of the Fry's site (for WSJ Properties) is in Attachment E (the transcript for the P&TC hearing of 2006-May-10), with the primary testimony starting on page 21 at line 10 (thru page 22 line 23) with follow-ups starting on page 29 line 25 with questions from Commissioners Holman and Burt.

Reading the transcript has a very different effect from listening to the testimony with its tone, emphasis, pauses and body language. My reaction to the first part of the testimony (lines 19-30) came across as a statement that WSJ's plans were to redevelop the site as primarily residential — they saw advantage of PTOD-style residential over the current underlying RM-30. His enumeration of the many things he found positive about the P/TOD were heavily in favor of a predominantly residential development.

His statements about Fry's staying in Palo Alto seemed to have a lot of deliberate ambiguity about where it would be located, leading me to infer he meant "elsewhere," although he did seem to leave open the possibility of Fry's staying on that site.

Also, in the statements about the future of Fry's I interpreted his statements to the Commission as saying that it was all but certain that Fry's was leaving, and that Palo Alto would have to move quickly and aggressively if it were to keep Fry's somewhere in Palo Alto. This was also part of his follow-up. My interpretation was that he knew the situation, but didn't want to/couldn't speak for Fry's, but also wanted to be on record of having warned the City that they were about to lose Fry's.

The statement paraphrased in the CMR that "... the zoning would open the door for meaningful discussions with the City about the future of Fry's." can be found on page 21 at line 33. I interpret that sentence much more negatively when reading it in context. He states that the P/TOD zoning is better than RM-30 because the RM-30 zone excludes the very possibility of retail, not that it provides what Fry's would need (he mentions multiple exceptions).

Notice that on line 20 of page 22, Chairman Burt asks if the FAR allowed in the P/TOD would be adequate for Fry's and the answer is "Probably not. ... no." with a non-clarifying clarification in his follow-up (page 30, lines 6-16). Remember that what is stated as Fry's need (190,000 sqft) is more than double what staff says would be allowed under the P/TOD (87,500).

Following up with people who I presumed would be knowledgeable about the state of negotiations with Fry's produced a surprising range of answers:

This does not bode well.

Appendix — Page number correspondence

CMR Attachment Page PDF Attachment Set PDF Page
A 12 1 12
B 1 1 29
B 3 1 31
D 8 1 50
D 12 1 54
E 21 2 111
E 29 2 119