By most accounts, Palo Alto's yearlong experiment with permit parking on downtown's residential streets has been a mixed success, with some blocks finally experiencing relief after years of chronic curbside congestion and others suddenly transformed into commuter-parking hot spots.

The most obvious flaw with the city's new Residential Preferential Parking (RPP) program is that it doesn't just alleviate the problem, it also shifts it to other areas.

That's one of the challenges that the City Council tried to address Tuesday night, when it endorsed a set of changes to the program, which sells parking permits only to people who live or work downtown.

According to a new report from city planning staff, the first phase of the program, which stretched from Sept. 15 to March 31, reduced parking in the downtown district by about 300 to 400 vehicles.

The second phase, which took effect on April 1, capped the number of employee permits at 2,000 and made each permit specific to one of 10 geographic zones, with the intent of spreading employee vehicles throughout downtown.

The program has reduced the number of parked cars in areas immediately adjacent to the downtown core and the South of Forest Avenue area, also known as SOFA. Surveys conducted in June indicated that cars aren't clustering in these areas with as much frequency as they used to, the new report states. And most blocks were at or below 85 percent occupancy, with at least one or two open parking spaces available.

Yet some blocks remain badly congested. Downtown resident Michael Hodos, who served on a stakeholders group that helped design the parking program, was one of several speakers to highlight the program's deficiencies Tuesday night.

"While there is no question that phase two significantly improved the quality of life for many of the residents in Downtown North and Downtown South, it did not do so in an equitable and fair manner," Hodos said.

"As a result, and somewhat ironically I might add, the very groups of residents who initiated the RPP program several years ago ... are now the ones suffering the most thanks to the continuing poor distribution of non-resident parking closest to the downtown business core," he said.

Hodos joined several other members of the stakeholders group in proposing a set of program changes. These include prioritizing permits for lower-income workers; setting as a standard an 80 percent parking-saturation level in Downtown North and 60 percent in other downtown areas; and halting sales of worker permits in the two Crescent Park zones (east of the downtown core), where demand for permits from employees has been particularly low.

Some council members raised concerns about the lattermost proposal, which -- while preventing the spread of commuter parking -- would also establish a different type of parking program in Crescent Park than in the rest of downtown.

Councilwoman Liz Kniss argued that designating this area as "resident-only" parking will prompt other neighborhoods to come forward with the same request. But Kniss and Councilman Eric Filseth were the only dissenters in a 6-2 vote that created this distinction for the two Crescent Park zones.

For Crescent Park residents, the overall permit-parking program has been a mixed blessing at best. It both caused parking congestion on their streets and represents the most promising solution to that problem. So while residents have not been thrilled about seeing the sudden onrush of commuters parking near their homes, they have been increasingly open to joining the program (most recently, the 500 block of Chaucer Street and the 1000 and 1100 blocks of Hamilton Avenue have petitioned to join the parking district).

Norm Beamer, president of the Crescent Park Residents Association, told the council that being in the zone is "better than nothing."

Beamer supports the idea of not issuing more non-resident permits to downtown's outer areas, including Zones 9 and 10 and whatever new Crescent Park blocks end up joining the program in the months to come.

After much discussion and debate, the council took two votes spelling out the framework for the third phase of the program, which is set to begin early next year. With exact details yet to be fleshed out, the council agreed with the idea of setting "quantitative objectives" for determining an acceptable level of parking saturation, and a formal set of goals.

The third phase will also include policies aimed at encouraging downtown businesses to get their employees to take other modes of transportation, thus lessening the demand for parking. Permits would be less costly for businesses that participate in the downtown Transportation Management Association, a nonprofit charged with reducing downtown's rate of solo commuters.Also, priority for parking permits will be given to lower-wage employees and, unlike today, only businesses eligible in the Business Registry Certificate program would be allowed to buy the permits.

Also, the five-day employee parking pass, which is offered in the current program, will no longer be sold (this is partly because there have been no takers), the council decreed.

The council endorsed all these changes by an 8-0 vote, with Vice Mayor Greg Scharff recusing himself because he owns property downtown. But even though council members were unanimous when it came to most of the changes, there was a general recognition that the parking program remains an imperfect tool and that every round of changes will bring forth new wrinkles and fresh ripples.

Councilman Marc Berman made a plea to the community to be "as understanding as possible as we try to get this as right as we can."

"I think it's promising," he said. "It's not perfect, but I think it's another step in the right direction."