State of the City: Palo Alto earmarks $52 million for housing

Mayor Stone said Palo Alto boasts the "second-largest inventory" of affordable units in Santa Clara County.

In his State of the City address Wednesday night, Palo Alto Mayor Greer Stone said the city’s housing challenges should be framed as an “affordability crisis” rather than a “housing crisis.”

During his speech at the Palo Alto Arts Center, Stone highlighted the city’s decision to earmark $52 million since 2017 to produce more affordable housing units to address the problem.

“We don’t have a housing crisis. Palo Alto and the state consistently meet our market-rate housing quotas. Our challenge lies in meeting our affordable-housing quotas,” Stone said. “This, of course, requires significant government intervention through mechanisms like inclusionary zoning, subsidies, and state and federal financial backing.”

While the city could still improve its production of affordable units, Stone said that Palo Alto boasts the “second-largest inventory” of affordable housing in Santa Clara County.

“Over the past several years, Palo Alto has earmarked $52 million to bolster the production of affordable housing units, a testament to our unwavering commitment to addressing housing needs,” the Palo Alto mayor said.

Stone said the city is committed to building 6,000 homes over the next decade, including building more housing on California Avenue, one of the city’s two downtown areas.

Aside from California Avenue, Stone mentioned several projects already under construction in the city.

In October of last year, Palo Alto broke ground on a Homekey project on San Antonio Road, which will provide 88 units of transitional housing for up to 200 unhoused residents.

He also trumpeted niche housing projects for residents with intellectual and development needs, as well as those for teachers working in the city.

Mitchell Park Place, which received a $3 million allocation from the city in collaboration with Eden Housing and the Santa Clara County Housing Authority, broke ground last month. It will offer 50 units for residents with intellectual and development needs.

Construction on 231 Grant Ave., a housing project of 110 affordable units for for educators, began last August.

Meanwhile, on economic recovery, Stone said while sales tax revenues have returned to pre-pandemic levels, the city still faces challenges.

“We have progressed beyond the initial recovery phase from the pandemic’s aftermath and are now confronted with the task of adapting to a more enduring economic landscape,” Stone said. “However, it is important to acknowledge that not all sectors of the economy have experienced the same level of recovery.”

According to studies by city staff, if a majority of employees continue to work from home, it “will result in a reduction in retail demand in Palo Alto by about 100,000 square feet.”

Stone said the reduction in demand for retail space can also be attributed to competition from other shopping districts and oversupply.

The key to addressing this, however, he said, is integrating housing plans with revitalizing the local economy.

“This influx of new residents will bring thousands of potential customers to shop, dine and engage in recreational activities in Palo Alto,” he said.

Small businesses on California Avenue, once a bustling retail and dining area frequented by employees of tech companies and other businesses in the area, generally have not seen their profits return to the levels they used to enjoy before the shift to remote work.

Shop owners this news organization previously spoke with mentioned lackluster marketing efforts on the city’s end after the street closed permanently to vehicles as their primary complaint.

On the sidelines of the address, Stone said the City Council is currently in dialogue with small business owners to address this issue.

“We’re trying to find common-sense short-term solutions that we can implement while working on a final permanent plan. This plan, I believe, will transform California Avenue into a true destination,” he said.

Stone capped off his address by putting the spotlight on youth mental health, a topic that once brought national attention to Palo Alto due to its high number of youth suicides.

During the start of his term as mayor, the council put together a mental health task force to tackle the problem.

“The task force mission was to identify the greatest needs of our city’s youth, assess gaps in services and propose policies and programs to be able to address this pressing issue to the City Council,” he said.

Julia Lee, a 16-year-old student at Gunn High School, volunteered to join the task force earlier this year.

“I noticed that this is a community that can be really open about talking about mental health,” Lee said.

This was a contrast from her home country, South Korea, where she grew up before immigrating to the United States with her family, which settled in Palo Alto about two years ago.

Reacting to the State of the City speech, Lee said it summarized how she feels about her home, “that people here have the heart and the mindset to really improve things together.”

“Regardless of the background or age, people are really open to listen to each other,” the high school student said. “We improve together, support each other. That’s the vibe I get from Palo Alto.”