As Palo Alto prepares to adopt a new plan to guide future development, some of the city's largest companies are rising up against proposed policies that would regulate employee numbers and require businesses to obtain special permits before they could build new office facilities.

This week, a group of major Stanford Research Park employers submitted letters arguing that the new restrictions will threaten their businesses and deter new companies from setting up shop in the city. Representatives from some of the major employers also attended the Tuesday meeting of the City Council to reinforce their concerns about the city's proposed zoning changes, which seek to address Palo Alto's worsening traffic congestion and parking shortages.

The proposed zone changes are identified in the Draft Environmental Impact Report (EIR) that the council recently commissioned as part of an ongoing upgrade of the city's land-use bible, the Comprehensive Plan. The council held a long, wide-ranging and, at times, tense discussion on the document and agreed to continue the debate to a future meeting.

The EIR considers four different planning scenarios for Palo Alto's future, with varying degrees of job and housing growth (two other planning scenarios will be considered in a supplemental report). Three of these scenarios in the current EIR call for zoning amendments, including one that would require a "conditional -use" permit for new office and research-and-development uses "in order to regulate employment densities," according to the document.

But while the zone changes are still a long way from being implemented, it is already stoking fear among large companies, particularly those in Stanford Research Park. The list of companies protesting the new policies, includes Lockheed Martin, VMware, Palo Alto Research Center, Jazz Pharmaceuticals and Machine Zone. Each has argued that the proposals to require conditional-use permits for new office space and to limit employment density would carry unintended consequences that would threaten the prosperity of both the Research Park and the city at large.

These concerns are amplified in a letter from Tiffany Griego, manager of Stanford Research Park, and Jean McCown, Stanford University's associate vice president for government and community relations.

Commenting on the draft EIR, Griego and McCown argued that the document's proposed trip-reduction measures "could have detrimental and perhaps unintended consequences for the economic vitality of the Stanford Research Park."

Specifically, the letter stated, density regulations and conditional-use permits would "discourage new companies from locating in the SRP."

"If business leaders believe they may be hindered from hiring new employees as their business needs change, or hindered form sub-leasing space if their business contracts, they will certainly consider locating elsewhere," the letter stated. "For a company to decide to locate in Palo Alto, their leaders need predictability and flexibility to grow and/or contract within existing space, repurpose existing space to meet evolving business needs, or 'exit' space by sub-leasing excess space to another entity, whose employee headcounts would be outside of their control."

The new restrictions would also impair the Research Park's ability to support "the most vibrant and broad mix" of research-and-development businesses, which over recent decades transitioned from goods to services to "innovation industries," which reflect the "convergence between technology and content," according to the letter. In addition, the policies could require companies to build larger facilities elsewhere to accommodate job growth.

"Such a policy cuts against current thinking about sustainability land use, and could result in an inefficient increase in energy consumption of building materials associated with new buildings elsewhere," the letter states. "Equally important, concentration of employee density is a necessary factor in achieving successful trip reduction programs."

The companies in the Research Park offered their own critiques of Palo Alto's proposed traffic-management solutions. Marshall Case, vice president for infrastructure services at Lockheed Martin, said the company is "continually investing in our facilities to perform renovations or updates to respond to changes in our business operations."

"Not being able to depend upon a consistent process or timeline has the potential to negatively impact our ability to perform our operations within our current facility," Case wrote.

Ronald Malouf, director of facilities at Jazz Pharmaceuticals, expressed concerns about what he called in a letter "quotas on headcounts," a policy that he said would "restrict our ability to hire professionals required to guide a new drug through clinical trials and FDA approval."

He noted that on March 30, the FDA approved the company's new drug, Defitelio, which is used to treat patients with hepatic veno-occlusive disease (a life-threatening organ dysfunction following stem-cell transplantation."

The company, he said, had hired dozens of specialists in Palo Alto to "design, administer and manage the clinical trials and approval to ensure Defitelio would be available for patients in dire need of the life-saving drug.

"Having the ability to ramp up our headcount for special projects is very important to us," Malouf wrote.

VMware, meanwhile, took issue with the city's ongoing exploration of a possible tax measure that would fund transportation improvements. The measure, which could potentially appear on the November ballot (the city is in the midst of polling), would likely establish a business tax based on employee headcount.

LindaMarie Santiago, VMware's director for real estate and workplace, wrote that the company is concerned that it will be forced to divert "a substantial share" of the financial resources it currently uses to fund traffic-reduction efforts to pay for the new tax. The company has recently joined other major employers at the Research Park to work on new transportation-demand-management (TDM) programs aimed at reducing the rate of solo drivers.

"For VMware, a head count tax of $100 per person per year drastically undermines our ability to fund our own transportation management programs and SRP (Stanford Research Park) TDM programs, all of which are proving to be effective in reducing traffic impacts in SRP and beyond," Santiago wrote.

It's not just Stanford Research Park companies that are concerned. Judy Kleinberg, CEO of the Palo Alto Chamber of Commerce, joined them in criticizing the conditional-use permit idea, which she said would "hinder the ability to thrive in Palo Alto and damage how a business operates."

"We believe the city should focus on impacts and mitigations, not limiting employment density and jobs reduction," she said at Tuesday's meeting.

The council for its part gave little sign of abandoning these proposed zone changes. Its discussion was broad in scope and vague in content, with some members taking the opportunity to recite their long-standing philosophical positions about the city's high ratio of jobs to housing or to question the financial analysis of the four planning scenarios being evaluated (each would result in modest revenue growth, according to the analysis).

After more than two hours of debate, with several council members still not having spoken, the council voted unanimously to resume the hearing at a future date.

Vice Mayor Greg Scharff was one of the few council members to address the businesses' concerns. He concurred with the speakers that local businesses need "flexibility" for their research-and-development and office facilities. He also said he was concerned about creating "uncertainty in the process," with businesses not having a clear idea of what they can do with their properties.

"I think we can really damage the business environment by creating uncertainty," Scharff said. "Businesses need certainty more than anything else."