The Benefits of Adding Market-Rated Housing in Palo Alto | Invest & Innovate | Steve Levy


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By Steve Levy

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About This Blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and lived in the Duveneck school district for nearly 30 years. Our children went to Paly. We moved… (More)

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Uploaded: Sep 22, 2022

Adding housing for residents who earn more than 120% of the area’s median income is the largest component (2,621 of 6,086) or more than 40% of Palo Alto’s RHNA housing goal. These units will almost all be apartments, townhouses, condominiums and ADUs. Due to their small size, most will be found in the
Range from 1 to 2 million dollars for sale and the equivalent for rental.

I understand that many residents, council members and candidates place a higher priority on increasing the number of BMR units, but the two goals are in fact complementary and not in conflict.

And the addition of market-priced housing has also added benefits.

Market-priced housing helps add BMR units

Under the Planned Housing Zones (PHZ) scheme adopted by the council, applicants must include 20% BMR units. And other moves at market rate must include at least 15% BMR units.

The council recently heard 3 shortlists for projects that include 20% BMR units under the PHZ program which allows the council to waive certain development standards to make the project feasible. The Council was generally supportive and I hope this will lead to real applications. And next week, the board will hear a shortlist on a project at ECR and Matadero that would include 76 BMR units, more than the Wilton Court project.

And before that, the board approved 2 projects with 15% BMR units – in San Antonio and West Bayshore.

All new projects will still be assessed by the board if applications are made, but the link between market rate and BMR units is clear.

Market-priced housing adds higher-income customers for our small businesses

Along with many/most residents, council members and candidates, I support adding housing for low-income residents.

Yet I often hear on Town Square and elsewhere about adding mostly or only BMR housing paired with a call for more retail. I don’t think it works economically. Many small businesses are grappling with the loss of customers to online shopping, the pandemic and, especially for our restaurants, the loss of daytime customers working from home.

Adding housing to the benchmark rate will help attract higher income customers, which I think will be appreciated by small businesses and the city budget.

Once again, the combination of BMR and housing at market price makes it possible to achieve several of the City’s objectives.

Market-priced housing can help avoid school closures and program cuts

K-12 enrollment has continued to decline in the new school year, even as COVID cases decline and schools return to normal. This is especially true in the lower grades. These declines will continue, absent a large number of new homes, as birth rates continue to decline.

This is not a money problem for the district since we are funded by property taxes, but it can lead to the closing or consolidation of schools that are too small to operate effectively and cuts to programs where attendance is too low to sustain all programs. So some students will likely lose their neighborhood school unless enrollment starts to increase.

For many years, the discourse on housing and schools was that more housing would create burdens. This narrative is now reversed. More housing is probably the only way to avoid inconvenience for parents, students and the district.

This is true for all slots, including BMR slots.

Market-priced housing can give seniors an opportunity to downsize and stay in Palo Alto

Most of our friends our age still live in their single-family homes. But some, like us, have sold their house and bought smaller, cheaper accommodation, often close to services and shops. And some have moved to places like Channing House.

Over the years, more and more seniors no longer want or need their larger single-family home and want to stay in Palo Alto, but in a setting with less maintenance and more access.

I think there will be a market for housing like the downtown condo we live in that will help seniors downsize and at the same time open up bigger homes for families. And I wonder if the market is there for another facility like Channing House.

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