It's easy for a reasonable person to conclude that rehabilitation and demolition are not the same thing. One preserves a building; the other knocks it down.

But things get murky in the world of zoning. And on Monday night, the Palo Alto City Council had to weigh this very question — Should demolition count as rehabilitation? — when confronted with a development proposal that is seeking a density bonus through the city's seismic rehabilitation program, despite the fact that the project calls for knocking down an old brick structure and building a new two-story building in its place.

In considering the proposed development 233 University Ave., council members acknowledged that their decision goes well beyond this particular building, which houses Mills Florist, the Tap Room and Hookah Nites Lounge. It would also influence how the city deems future proposals that involve demolishing — rather than refurbishing — old structures. Even more broadly, the debate centered on whether city planners should be creating a new policy, a function that the City Council generally reserves for itself.

The hearing was triggered by an appeal from three former council members — Karen Holman, Pat Burt and Greg Schmid — who all felt that planning staff had overstepped its boundary in allowing the demolition of the unreinforced masonry building to move ahead while still providing a density bonus of 2,500 square feet. The three challenged the interpretation that Planning Director Jonathan Lait published in June, which allowed demolition to count as "rehabilitation" when an applicant proves that actually rehabilitating the building would be infeasible.

Lait made the interpretation despite also acknowledging that, under a stricter application of the municipal code, a building would have to be "seismically rehabilitated, or retained and strengthened to contemporary structural standards" to qualify for the bonus. Since at least 2014, the city has been following that strict interpretation. Now, it was proposing a looser one and establishing it as a new precedent for judging future projects.

In explaining the decision, Lait noted that the Mills family, which owns the building, had presented ample evidence, including reports from structural engineers, showing that its earlier plan to rehabilitate the brick building would be infeasible. Staff had spent months talking to the property owners and reviewing technical reports, he said.

"At the end of the day, what we ended up with was a rehabilitation effort that seemed impractical and had the same, or very similar result to a building that, if it were demolished and rebuilt, would look similar to the one that would be rehabilitated," Lait told the council. "But it wouldn't have the added benefit of meeting other safety measures in the building code, and constructing it would not be as easy and, in and of itself, would pose some risks and some challenges for rehabilitation."

The council agreed that the University Avenue project, as approved, should move ahead. Like Lait, council members acknowledged that, zoning issues aside, the goal of the seismic rehabilitation program is to promote safety by reducing the risk posed by unreinforced masonry buildings. Reconstructing the vulnerable building would accomplish that.

But the council also agreed with the three appellants that the broader decision on whether demolition should count as rehabilitation for the purpose of the bonus program is a policy change. As such, it should be an issue that is settled by the council, not through an interpretation of a specific development application.

By a 6-1 vote, with Council member Liz Kniss dissenting, the council voted to support a motion from Vice Mayor Tom DuBois that allows Lait's current interpretation to stand for up to a year and that also directs staff to return to the council with a zoning amendment. The amendment would specify that demolition qualifies as rehabilitation when applied to downtown's unreinforced masonry buildings, provided the applicant provides all the necessary technical data showing that rehabilitation is not feasible.

Mayor Adrian Fine proposed simply rejecting the appeal and letting Lait's interpretation stand as the new law of the land. That proposal fell by a 3-4 vote, with only Kniss and Council member Greg Tanaka joining him.

"The purpose of this program is to promote public safety and mitigate risk from seismic events," said Fine, who supported DuBois' motion after his own failed. "Sometimes you can't do that with an old building."

Council member Eric Filseth suggested that planning staff exercised the "right instinct" in agreeing to approve the proposal at 233 University Ave., which will mitigate the seismic risk. But both he and Council member Lydia Kou also noted that the interpretation is in fact a policy change. Holman and Burt made a similar argument in their appeal to the council.

"Staff has the authority to interpret when there is an ambiguity," Holman said at the Monday hearing. "There is no ambiguity here. … It is a clear policy measure, and this should not set a precedent for staff to set policy."

Burt noted that when the council decided in 2014 to follow a strict interpretation of the seismic program, the intent was to have staff re-evaluate the program and return with revisions that would make it more effective. Development Services staff had begun the work under former department Director Peter Pirnejad, but the revision was never completed. Staff had determined that it would require additional consultant services. Given the city's ongoing budget challenges, staff had deferred completing the work.

Burt, who served on the council along with Holman and Schmid when these discussions were taking place, said that the council's goal at the time was to have a report that would allow them to design a new program through a combination of mandates and incentives for seismic rehabilitation.