In a radical departure from recent trends, Palo Alto officials endorsed on Monday, July 9, a new vision for housing development that prizes taller buildings with smaller units and minimal changes to existing zoning laws.

This vision is encoded in the Housing Element, a state-mandated broad document that lays out the city's strategy for responding to regional housing mandates. Palo Alto is required by state law to plan for -- though not actually build -- 2,860 housing units during the planning period of 2007-14. The City Council has consistently argued that this mandate is grossly unrealistic and impossible to attain in a built-out city with astronomical real estate prices. But to comply with state law, the council agreed on Monday to forward the new Housing Element to the state Department of Housing and Community Development for review.

Perhaps the most remarkable thing about the city's new housing strategy is its break from the past. The City Council had previously encouraged housing developments by allowing dense residential complexes to be built on commercially zoned sites. Over the past decade, this policy has spurred a boon in residential complexes in south Palo Alto, with major housing projects such as Vantage, Altaire and Echelon recently going up in the area of East Meadow Circle. This trend has left city planners and council members concerned about the lack of amenities and transportation options to support the explosion in residential units.

The new Housing Element, by contrast, eschews major zoning changes and targets areas around major transportation hubs for new growth. The new vision calls for protecting single-family residential neighborhoods from additional housing and for targeting new growth at dense, transit-rich sites such as downtown, El Camino Real and California Avenue. In some cases, this could mean transcending the city's longstanding 50-foot height limit for new developments -- a policy that would be explored at select sites near Caltrain stations under the new strategy.

The strategy also calls for smaller units, which are both more affordable and "typically generate fewer impacts to many of the City's infrastructure and services, including roads, water, sewer and schools," according to a report from Planner Tim Wong. This is particularly critical given the aging of the local population.

"As Palo Alto's senior population continues to increase, the need for smaller senior units is important as many senior households have become 'empty nesters' and would prefer to downsize," Wong wrote.

The vision statement in the Housing Element also alludes to the recent trends and the council's recent emphasis on protecting existing neighborhoods and making sure new developments are supported by nearby stores, buses and trains. The vision reads: "Our housing and neighborhoods shall enhance the livable human environment for all residents, be accessible to civic and community services and sustain our natural resources."

Wong alluded in his report to the city's prior policy of allowing multi-family residential uses on commercially zoned parcels (a policy that the council restricted in 2007). He noted that this policy "supported the entitlement and construction of more than 1,000 residential uses" on commercially zoned sites but "jeopardized the economic viability of some commercial areas."

The new Housing Element identifies 2,976 units. Of these, 1,192 have already been either constructed since January 2007 or are in the entitlement process. The remaining 1,784 are potential new housing units that are scattered around major transit hubs, including the Caltrain stations near University and California avenues.

The list of potential housing units includes 1,335 that could be placed in commercial districts capable of accommodating mixed-use developments. It also includes 264 units on sites that are currently zoned for residential use.

The city had previously considered allowing new residential units to be built at city-owned parking lots, provided the amount of parking spots does not get reduced. But that proposal was shot down by the council's Regional Housing Mandate Committee, which had reviewed the Housing Element over two meetings in June.

"We thought it was premature to turn city parking lots into multi-unit housing at this time, with so much unsettled with parking and development in those areas," said Councilman Greg Schmid, a member of the committee.

Councilwoman Gail Price disagreed and argued that the city should keep the parking-lot policy in its Housing Element. She dissented in the final vote after the rest of the council decided to scrap this proposal.

"I do feel that this particular program ... provides flexibility and opportunity and that's what Housing Elements and Comprehensive Plans should be all about -- not closing doors but opening doors to opportunity," Price said.

The new document also relies on local hotels to help the city meet its housing mandate. Turning some hotel rooms into condominiums could provide 113 housing units, Planning Director Curtis Williams said.

But even as they prepared to submit the document to the state, council members continued to bash the housing-allocation process, which is directed by the Association of Bay Area Governments. Councilman Larry Klein urged the city to include in its submission to the state a statement noting the city's opposition to the process.

Klein's colleagues shared his frustrations with the state mandates. Councilwoman Nancy Shepherd alluded to the tension inherent in the city's journey toward adopting the Housing Element. On one hand, the city is required to submit a document to remain qualified for state grants and to avoid potential litigation. On the other hand, the community wants to maintain its independent power to set its own density objectives. The document, she said, is a major source of "angst" in the community.

The council's decision to forward the Housing Element to the state will now prompt a dialogue between city and state officials about the policies in the document. Once the state signs off, the council can adopt it and integrate it into its Comprehensive Plan, the city's official land-use bible. But planners won't be able to rest for long. The planning period for the newly approved Housing Element stretches from 2007 to 2014. This means the city will have to start working on a similar document for the next seven-year cycle within the next year, Williams said.