Palo Alto's controversial "planned-community" process, which allows developers to barter with the city over zoning exceptions, will remain suspended for what could be years as officials continue to wrestle with ways to restore public trust in what they acknowledge is a "broken" system.

The City Council agreed early Tuesday morning not to adopt the reforms recommended by planning staff for the contentious zoning tool, which has been around since 1951 and has enabled about 100 developments, from the Opportunity Center on Encina Avenue to the new Edgewood Plaza on Embarcadero Road.

Instead, the council voted to defer any action on planned-community (PC) zoning until after the city adopts its long-term vision document, the Comprehensive Plan. Once that happens, a specially appointed council committee will begin to rehabilitate the deeply unpopular zoning mechanism.

Initially used for affordable-housing projects and social-service developments, PC zoning has grown more contentious in recent years as developers have increasingly relied on it to build office projects at greater heights and densities than the city's zoning code would otherwise allow. In exchange, they have offered "public benefits," such as public plazas, affordable-housing units, public art and funding for parking programs.

The SurveyMonkey headquarters at 101 Lytton Ave. and the College Terrace Centre project at 2180 El Camino Real both won approval under this designation. The housing development proposed for a site on Maybell Avenue, which included 60 units for low-income seniors and 12 market-rate homes, also sought and won the council's approval for a PC zone before voters overturned it in 2013.

The Maybell referendum prompted the council to adopt a "time out" on planned-community projects to consider ways to reform it. For that past year and a half, planning staff and the Planning and Transportation Commission picked apart every aspect of the current ordinance and proposed a set of reforms that includes a new "pre-screening" requirement for all applications;" a "monitoring and enforcement" plan that must be included in each application; an economic analysis that must be performed before a project is approved; and a new definition of "public benefits."

The goal was to add some transparency and predictability to the process. The council agreed late Monday night that the proposed reforms fall short of that goal.

In considering future changes for planned communities, the council split over whether the process is worth saving at all. Councilmen Tom DuBois, Eric Filseth and Greg Scharff favored killing the process entirely, while Councilwoman Liz Kniss cited the community's frustration with planned communities and declared it "broken beyond repair."

"It's pretty clear to me that the community is saying, 'We're kind of done with PCs,'" Kniss said. "We'll find something else in the future, but at the moment, I think it's finished."

Yet Kniss and five of her council colleagues ultimately agreed to pursue the reforms anyway. In an unusual split within the council's slow-growth "residentialist" wing, Mayor Karen Holman and Councilman Pat Burt each made a case for preserving and fixing PC zoning.

The reforms proposed by the commission and staff, Burt argued, fall short of the council's direction. He proposed forming an ad hoc committee to take another look at possibly reforming the PC process or, failing at that, putting the final nail in its coffin.

"I think we need to go through the additional analysis to make a good, quality decision," Burt said. "If that decision is to eliminate it, I'm fine with that. I don't think we've gotten to that point."

Holman agreed and said that there are "systemic issues" the city needs to deal with to improve its review process. These issues, she said, are not specific to PC zoning but involve broader conversations about enforcement and zoning exceptions. She agreed with Burt that it would be worthwhile to create a committee that would consider these fixes.

"I believe there have been some beneficial projects in this community that have been PCs," Holman said. "Many have been affordable-housing projects."

DuBois and Filseth, whose views on new development generally align with Holman's and Burt's, took the opposite stance and urged abolition. DuBois said the city has other incentives on the books for encouraging affordable-housing projects, such as the state-mandated density bonus that such projects are entitled to.

The city can also create master plans or "concept-area plans" that include affordable housing or, if needed, resuscitate the PC zoning in the future. For now, he said, staff and the council would be better off spending its energies on other issues.

"To me, this process, even with the cleanup suggested, is not worth the cost-benefit of actually having PCs," DuBois said.

Filseth agreed and said the city should look for other ways to get the type of developments it wants. At this point, he said, most voters in Palo Alto see planned-community projects as "loophole bombs that are more trouble than they're worth."

"I think we should kill them and focus on finding out how to get what we really want for the community in the future," Filseth said. "If a future council decides PCs are a good way to do it, they can always be brought back."

Scharff said he believes that there's currently no trust within the community in the PC process and this feeling won't ever change. Even projects that offer significant public benefits, such as Jay Paul's proposal to build a new police headquarters for the city in exchange for permission to build two commercial buildings at 395 Page Mill Road, faced an intense backlash from the public.

"I just don't think it's possible to reform the PC process," Scharff said. "I think any ordinance they bring back to us, people will send us 100 emails saying why it's bad."

There's no trust in violating zoning or selling zoning exceptions for cash, a practice that is deeply unpopular but that would have been allowed (and codified) under the the planning commission's reform proposal.

"All PC projects will either have trivial benefits ... or be so big that people will hate them," Scharff said.

But rather than kill the process, the council ultimately agreed to keep it on life support. With four members of the council's slow-growth "residentalist" faction evenly split (DuBois and Filseth favoring abolition and Burt and Holman resisting it), it fell to the fifth to make a compromise that effectively ensured that PC zoning won't be back any time soon.

Vice Mayor Greg Schmid made a proposal to delay the reform process until the city completes its Comprehensive Plan update, a process that was launched in 2006 and that the city hopes to complete by the end of 2016. Only once that's done will the city embark on a long, committee-driven process of reviving PC zoning.

Schmid's amendment was approved 6-3, with Burt and Holman, and Councilman Cory Wolbach dissenting. The vote means that it will be at least a year and a half before the long process of rehabilitating PC zoning can even begin.

Despite the late hour of the discussion, which stretched well past midnight, more than a dozen residents stuck around to voice their opinions about the PC process. Almost all of them blasted the way the process has been used and criticized the changes proposed by the planning commission and staff.

Robert Smith, a resident of Greer Road, called the existing PC ordinance "a failure" and said it should either be repealed or "very substantially altered."

"The proposed changes are window dressing and simply signal a return to business as usual," Smith said.

Cheryl Lilienstein, president of the citizens group Palo Altans for Sensible Zoning, said the group favors eliminating PC zoning, which she said "has been abused and used to circumvent the zoning regulations that help protect us all."

Land-use watchdog Bob Moss called the process a "racket," cited several examples of public benefits that never materialized and noted that the city has never fined a developer for failing to deliver the promised benefits (that could change after Sept. 30, when the city plans to start fining the developer of Edgewood Plaza $500 per day for failing to keep a grocery store at the plaza, as required under the PC zone. The store at the site has been vacant since Fresh Market left in late March).

Among the speakers Monday, Patricia Saffir was the lone exception. Zoning regulations, she said, "are by nature inflexible and arbitrary."

"We need a way to respond to unforeseen opportunities," Saffir said. "PC zoning has done that for us over the years, resulting in numerous projects that have been a credit to the city."