For decades, the transit center in downtown Palo Alto has served as a focal point in the city's ambitious plans for office developments, housing construction and railway improvement.

Now, with the city drafting a plan to accommodate 6,086 new dwellings between 2023 and 2031, the site is once again in the spotlight. Stanford University, which owns the property, had identified it as one of three sites that could collectively accommodate about 1,000 apartments, along with a site on Pasteur Drive, near the Stanford University Medical Center, and the property at 3128 El Camino Real, which is near Palo Alto Square and which currently houses a McDonald's restaurant.

Of the three, the University Avenue site that includes the Palo Alto Transit Center holds the most potential, given its role as a gateway between Stanford and downtown Palo Alto and its status as the city's most transit-friendly area. Yet it is also the biggest wild card, given the city's ever evolving plans for improving rail crossings, an effort that may involve realigning the Palo Alto Avenue crossing so that the street would no longer intersect with the tracks.

"This site is like a gold mine for us," Planning Director Jonathan Lait said at a recent discussion of adding housing to the transit center site. "It wants to do everything that we want to do in Palo Alto because of its proximity to transit. I think there are so many interests in how it might be developed — not just from the housing standpoint but the transportation and sustainability interests."

Yet any new development is guaranteed to stoke familiar arguments over height, density and parking restrictions. In presenting their concept for the transit center site, Stanford officials made it clear that any new development would go well above the city's 50-foot height limit and would likely require the city to relax its height and density restrictions. The most conservative alternative presented by Stanford calls for a seven-story building with a height of 75 to 85 feet in which the bottom two stories are devoted to parking and which would accommodate between 180 and 270 apartments.

A slightly more ambitious concept includes a 105-foot-tall building — the same height as Hoover Pavilion — with between 360 and 425 apartments.

The most intense alternative would feature a 137-foot building with between 465 and 530 apartments.

In making their case to the city's Housing Element Working Group, a citizen panel that is helping the city craft its new housing vision, Stanford officials argued that the site is ideally suited for greater height and density.

"It's hard to imagine a more appropriate site for high-density housing," Jessica von Borck, director of land use at Stanford University, said during an Oct. 21 presentation. "It's located at the train station, it's next to downtown, it's across the street from Stanford Shopping Center and the Stanford campus, which are two major employment centers, and it's a place where it also makes sense to explore greater heights, potentially."

Yet city leaders also recognize that any major development would inevitably encounter opposition. That was the lesson that they learned in 2012, when developer John Arrillaga proposed to build four office towers — some of them taller than 100 feet — along with a theater and a host of bike improvements near the transit center. The City Council quickly scuttled the plan after a public outcry about the scale of the project and the city's lack of transparency in negotiating with Arrillaga.

Now, staff are taking a considerably more cautious approach. Even as they acknowledged the site's tremendous potential, city staff and the majority of the Housing Element group indicated last week that they are in no rush to redevelop the transit center. In a decision that frustrated housing advocates, the panel voted 9-4 on Nov. 18 not to include the transit center site in the city's housing inventory for the 2023-2031 cycle. Members also agreed, however, that the city and Stanford should continue to collaborate on developing a longer-term plan for the site, which will likely involve housing.

The biggest issue for the majority of the panel was parking. Stanford University is suggesting that for the development to be financially feasible, the city would have to lower its parking standards, which typically require one parking space for each studio and one-bedroom apartment and two parking spaces for each apartment with two or more bedrooms. Stanford's plan calls for limiting all apartments, including those with two or more bedrooms, to one parking space.

Several working group members, including Kathryn Jordan and Keith Reckdahl, questioned the premise that residents at the transit-rich site would not buy cars. Working group member Randolph Tsien said he was concerned that adding housing to 27 University Ave. could require some of the transit services to relocate. Another working group member, Hamilton Hitchings, said the city should figure out its grade-separation plans before considering a significant housing redevelopment at the transit center.

"I don't know how we can do this while we're doing grade separation," Hitchings said at the Nov. 18 meeting.

Hitchings and Reckdahl also argued that the residential development should be 100% affordable housing, a stipulation that is at odds with Stanford's plans. And they noted that even if the city doesn't include the site in its next Housing Element, that doesn't mean it can't plan for housing here.

Others characterized the decision of the group not to include the site in the city's Housing Element as a lost opportunity. Working group member Sheryl Klein, who was one of four dissenters, said she was disappointed by the group's decision not to include the site in its housing plans.

"Given the city's environmental goals, this is such a perfect site for some sort of housing," said Klein, who serves as chief operating officer at the housing nonprofit Alta Housing. "We don't have to commit to the height, but I think this is a great site for housing and it's in a great location — people can walk to downtown stores and amenities. I can't believe that we're taking it off and we're going to push it off into the future."

While the panel also endorsed including the Pasteur and El Camino sites that Stanford owns in the new Housing Element, its decision to punt on transit center plans frustrated some residents and housing advocates. Robert Chun, a board member at the advocacy group Palo Alto Forward, noted that the working group had endorsed at previous meetings the concept of building housing near Caltrain stations. Given that position, he urged group members to include the transit center in the city's housing plans.

"No matter what this Caltrain site looks like, we can't let Palo Alto's most popular option for housing die so quickly," Chun said.

The decision on whether to include the downtown transit center in the city's housing plans will ultimately fall to the council, which is scheduled to adopt the Housing Element in fall 2022. Early signs suggest that Stanford's proposal will be a hard sell. A council ad hoc committee made up of Mayor Tom DuBois and council members Eric Filseth and Greer Stone has considered the university's housing concept and generally agreed that the city's 50-foot height limit should remain in place, according to a report from Tim Wong, who is leading the Housing Element update. While this position would effectively kill Stanford's proposal, Lait suggested that the city and the university will continue discussing ways to increase residential development in the area.

"I think we're all interested in seeing housing here," Lait said. "It's a great place for housing, but it might be a great place for other things too. So how well do those things come together? I don't think we're going to solve that immediately."