A divisive proposal to ban new two-story homes in the Royal Manor neighborhood faltered at the finish line Monday night when Palo Alto officials decided after a long debate not to move ahead with a zone change requested by more than 60 percent of neighborhood residents.

Instead, after hearing from dozens of people who live in the Joseph Eichler-developed neighborhood in south Palo Alto, the City Council directed the city's planning staff to focus its efforts on a broader and more complex solution: special design guidelines that would apply to new homes in Eichler tracts.

In directing staff by a 7-0 vote (with Councilmen Greg Schmid and Cory Wolbach recusing because they live in Royal Manor) to start working on design guidelines, the council attempted to offer some reassurance to residents in neighborhoods where opposition to two-story homes has become particularly vehement in the last year.

Proponents of a what's known as a "single-story overlay" zone have argued that two-story homes clash with the Eichler aesthetic and deprive neighbors of their privacy.

The same argument was made in recent months by residents of Los Arboles and Greer Park North, Eichler neighborhoods that recently achieved the zone change. But things went askew in Royal Manor, where waning support for the zone change ultimately dogged the petition effort. Though initially, 70 percent of the property owners signed a petition supporting the overlay (the exact threshold for the zone change), more than a dozen subsequently reversed their position and asked that their signatures be removed. By Monday, the level of support ebbed to 63 percent.

Even so, supporters of the zone change were within a single vote of getting the overlay passed. Ultimately, after a lengthy debate, the council voted 4-3 not to move ahead with the change, with council members Tom DuBois, Karen Holman and Liz Kniss recommending that the city adopt the ban for up to a year. A temporary overlay zone would serve as a moratorium while the city works on a permanent solution that would be more universally embraced within the neighborhood, the three said.

The council's division mirrored the community's. DuBois observed that the petition had the needed 70 percent support at the time the application was submitted. Because it technically met the requirement, DuBois said, the city should grant residents the single-story overlay.

"Even though support has dropped, we still have a large majority of 63 percent," DuBois said. "I think we need to provide some interim protection."

The four council members who opposed banning two-story homes -- Councilmen Marc Berman and Eric Filseth, Vice Mayor Greg Scharff and Mayor Pat Burt -- cited problems with Royal Manor's petition drive and maintained that the city's existing appeals process is sufficient in protecting the neighborhood from what residents refer to as "two-story teardowns."

One problem was the "Frequently Asked Questions" paper that was distributed early in the process, which incorrectly implied that those signing the petition were only enabling a formal vote at a later date. Though overlay supporters corrected this error, some Royal Manor residents argued that the discrepancy created a false impression and effectively made the petition effort illegitimate.

Burt called the Royal Manor application the most difficult single-story overlay submittal that he had encountered in his nearly two decades on the council and the city's planning commission. Because, under the existing rules, ban supporters are the ones in control of the petition process, making the signatures binding is problematic, he said.

"I think the assertion that people should not be allowed to rescind their support between the time they're first presented -- whenever they are presented -- and when it comes to the council is really to me not appropriate," Burt said.

Berman agreed and said the petition did not garner the needed support for approval. Approving an ordinance despite the problems with the petition drive would be "going in the wrong direction," he said, from the process, government and public-perception standpoints.

Much like on April 25, when the council first took up the subject, dozens of residents addressed their elected leaders to make their case for and against the ban on two-story buildings. Proponents stressed that an overlay is the best way to protect Eichlers from getting demolished and replaced with taller buildings that would allow their inhabitants to peer into their neighbors' backyards and living quarters.

"An SSO (single-story overlay) is an important way of preserving the neighborhood and defend against teardowns, even if we're in the process of developing a better way for Palo Alto in the future to ensure the maintenance of these classic homes," Richard Willits said.

Opponents at Monday's meeting noted that 19 of the neighborhood's 203 homes are already two stories in height.

"It really boggles my mind how they can vote yes on the SSO and enjoy the benefits (of a second-story home) and, on the other hand, I'm robbed of the same privilege that they used and enjoyed for decades," said Hobart Sze, who lives between two two-story homes on Loma Verde Avenue.

Unmesh Vartak argued that the petition never had the required 70 percent of support and lamented the "misinformation" that was spread during the petition effort. Many Royal Manor residents, he told the council, live on small lots that are located in the flood plain and face setback restrictions that would make expansion virtually impossible if two-story additions were prohibited. He noted that Royal Manor has many multi-generation families that need the extra space.

"If there is no room to grow, the families will be pushed out," Vartak said.

Overlay opponents clapped and cheered after the council voted not to move ahead with the zone change, even on an interim basis. But for the proponents, the effort wasn't a total loss. By pledging to revise the design guidelines, the City Council is adopting an approach used in cities like Sunnyvale and Cupertino, which already have special rules for Eichler neighborhoods. These rules aim to ensure that when a two-story home is built, its design is such that it doesn't affect the sunlight and privacy of neighbors.

Burt and his colleagues acknowledged that the city's existing "individual review" process for new two-story homes isn't stringent enough to ensure architectural compatibility. He and his colleagues all supported taking a closer look at revising design guidelines to ensure better compatibility -- a change that also has broad support from both sides of Royal Manor's contentious debate.

"If I were going forward with allowing second-story homes in Eichler neighborhoods, I'd want much stronger guidelines on privacy and mass and all of those issues," Burt said.

Related content:

• Palo Alto's Eichler uprising: City looks for ways to promote architectural — and neighborhood — harmony