For residents of downtown Palo Alto, the city's new residential parking program has proved to be an effective -- if imperfect -- way to limit the daily intrusion of commuter vehicles on neighborhood streets.

But for some downtown employers, including dozens of local dentists, a recent proposal to modify the program to further limit employees' ability to park in the neighborhoods poses nothing less than an "existential threat." By gradually reducing the number of employee permits, the city's latest plan threatens to drive these businesses out of the city entirely, dentists and business owners argued in recent weeks.

On Monday night, the City Council tried to mollify both sides by making the pilot program permanent but by stripping out its most controversial provision: a plan to gradually stop selling permits to employees altogether. Instead, after debating for more than three hours and weighing several competing proposals, the council settled on a more cautious and open-ended approach. And in a nod to some of the program's most vocal critics, the council directed staff to give priority in the program's future phases to neighborhood-serving businesses such as medical offices, dental clinics and senior-care providers.

By a 7-1 vote, with Councilman Greg Tanaka dissenting and Mayor Greg Scharff recusing himself, the council signed off on the next phase of what is known as the Residential Preferential Parking (RPP) program -- a program that made its debut on downtown streets in September 2015 and that is now in the final month of its second "pilot" phase. The program established two-hour parking limits on downtown's residential streets that traditionally allowed free all-day parking. Only cars with permits are immune from the restriction, and the city only sells permits to people who live and work in the RPP district.

To date, the most controversial element of the new plan has been the proposal to reduce by 10 percent a year the number of employee permits, from the initial level of 2,000, with the idea of eliminating employee permits altogether in a decade. The plan galvanized the local business community, with dozens of dentists attending recent council meetings and more than a 1,000 people signing a petition by dentist Christian Lee, who described the proposed program as "an existential threat to your local access to care."

Dozens reiterated these concerns Monday night and argued that their employees and patients would be impacted by the change. Reza Riahi, an endodontist with a practice on Middlefield Road, told the council that phasing out permits without providing parking alternatives would be "devastating" and noted that thanks to the existing parking program, dentists already have a hard time filling positions that are open.

Christopher Joy, a dentist who said he spends $3,000 per year on permits for his team, called the proposed reduction an "existential threat to our community of dentists." Dentist Earl Whetsone agreed and told the council that "hiring has become virtually impossible."

"We are just asking you to consider the modified form that would provide dentists the opportunity to continue to purchase parking permits in zones located near their offices," Whetstone said.

Dentists weren't the only concerned parties. Abigail Wittmayer, a manager at Whole Foods, said her business requires 250 people to operate. It currently has 198. Hiring has become more difficult, she said, with transportation joining housing as major obstacles for potential employees. That became harder with the recent parking program, Wittmayer said, which forced many employees to either park in two-hour zones or take long walks to their designated parking zones.

"We want nothing more than to find a common ground," Wittmayer said. "Currently, this is not working for us."

Judy Kleinberg, president of the Palo Alto Chamber of Commerce, wrote to the council that the proposed program "will make the situation much worse and endanger the viability of the very businesses that serve our residents and visitors." And Georgie Gleim, president of Gleim the Jeweler and resident of Crescent Park, said she is "very concerned" about the suggestion to "completely zero out downtown employee parking permits."

Gleim, who buys permits for her three downtown employees, wrote to the council that the current permit structure is not practical for many businesses, particularly restaurants with part-time employees.

"Unless the city provides alternate parking in a remote location with frequent shuttles, we are telling the businesses downtown that they must operate with no place for their employees to park," Gleim wrote. "I would like to challenge anyone not currently running a downtown business to make a go of it under those circumstances."

Faced with the chorus of complaints, the council opted for a more touch-and-go approach. It directed staff to immediately reduce the number of employee permits from 2,000 to 1,500 (a change that is not expected to have a major impact, given that the city had sold fewer than 1,400 last year) and to come back in a year to discuss further reductions. Rather than specifying the reduction, the council voted to reassess the reduction in one year, based on the results of the Palo Alto Transportation Management Association -- a new nonprofit tasked with reducing traffic -- and other parking-management programs.

Tanaka, the sole dissenter, favored simply continuing the existing parking program and to re-evaluate it at a later date, as part of a more "holistic" discussion about parking management. He also urged staff to reconsider its pricing structure so that garage parking is cheaper and so that those blocks closest to the downtown core would require more expensive permits for all-day parking. This would address the problem of too many cars clustering on residential streets near University Avenue, he said.

"We should use economics," Tanaka said. "We should push people toward garages rather than having higher prices for garages and pushing them to the streets."

The rest of the council agreed to proceed apace, albeit with some disagreements about the details. Councilmen Tom DuBois and Eric Filseth, who crafted the winning motion, supported creating an official goal of limiting car saturation on every residential block to 50 percent or less, so that half the spaces are open. That proposal died by a 4-4 vote, with Karen Holman and Lydia Kou joining them. But their broader proposal, with its wait-and-see approach toward employee permits, ultimately carried the day.

"What we have here is a scarce resource with more demand here than there is supply," Filseth said. "The days in which everyone who wants to park in Professorville has a space -- those days are gone and probably won't come back. So we'll have to manage this resource."

Meanwhile, Councilmen Adrian Fine and Cory Wolbach lobbied for an alternate proposal that would have reduced the number of permits to employees by 100 in each of the next two years (half the rate in the original plan). That motion failed by a 3-5 vote, with only Tanaka joining them. Even with his motion defeated, Fine fully supported reconsidering the issue of worker permits in a year and to base the number on traffic conditions.

"The RPP is working," Fine said. "We do have some flexibility to reduce employee permits annually. I think the council should continue looking at it annually, based on parking impacts and the mode split."