The idea of building housing on downtown parking lots in Palo Alto hasn't always enticed city leaders, who briefly considered and quickly discarded the proposal when they were devising the city's housing plans in 2018.

The suggestion of constructing large parking structures on these lots has fared only slightly better, with the City Council spending more than $1.3 million to design a five-story, 324-space structure that was supposed to occupy the surface lot on 375 Hamilton Ave., only to pivot away from the project in 2019.

On Monday night, however, both concepts resurfaced with a vengeance as the council endorsed the concept of building housing over parking at one or more of the city's 12 downtown parking lots. And while the location has not been finalized, the lot at 375 Hamilton Ave., across the street from the post office, remains a leading contender, the council indicated on Monday as it directed staff to issue a request for proposals from developers.

The council's 6-1 vote, with Eric Filseth dissenting, reflected members' growing recognition that city-owned parking lots may represent the city's best shot at actually constructing housing, particularly at affordable levels. The city is facing a regional mandate of building 6,086 housing units between 2023 and 2031, up from 1,988 units in the current eight-year cycle. With city officials and citizen volunteers now developing a strategy for building these units, housing over parking has reemerged as a promising solution.

The concept has picked up fresh momentum in recent months thanks to the efforts of architects Peter Baltay and David Hirsch, who have spent months evaluating downtown lots and who estimate that the city can build more than 1,000 housing units on downtown's 12 lots without losing any parking spaces. One potential project that they sketched out is a five-story housing complex at 375 Hamilton Ave. with 83 apartments and 130 underground parking spaces.

Baltay and Hirsch, who both serve on the city's Architectural Review Board but who pitched the proposal in their individual capacities, both stressed that because the city owns the downtown lots, it would have all the leverage when it comes to attracting exactly the type of housing development that it wants to see. Hirsch noted that the project would also bring the added benefit of supporting existing downtown retailers, who have been pummeled during the COVID-19 pandemic.

"What we would be doing is building in a population that would additionally support commercial that is here already," Hirsch said in a September interview.

Much like the Housing Element Working Group, which voted 12-3 in September to advance the idea, the council broadly agreed on Monday that it's worth pursuing. At the same time, council members rejected the proposal of simply reviving the old garage project for the Hamilton lot.

In addition to supplying land for the potential housing and parking project, the city would also provide some funding to would-be partners. Palo Alto already has about $6.3 million in in-lieu parking fees that it has collected from developers and these funds, by law, must be used to increase parking supply. The city is expecting to receive another $9.2 million in in-lieu fees from the Adventurous Journeys Capital Partners, which is redeveloping the historic President Hotel building at 488 University Ave. into a boutique hotel.

"We do need to spend those fees for that purpose or we'll have to return them at some point," City Attorney Molly Stump said Monday.

Yet despite the city's growing wherewithal, the idea of actually building the garage has been falling out of vogue even before the pandemic. The council included a downtown garage on its 2014 list of infrastructure priorities, a list that also includes a new California Avenue garage, a pedestrian/bike bridge over U.S. Highway 101 and a rebuilt fire station at Rinconada Park. But while all three of those projects have already been completed and the largest project on the list — a $118 million public safety building — is now in the works, the prospect of building a new downtown garage fizzled in February 2019, when the council agreed to halt the project and explore more comprehensive solutions to the area's parking shortages.

With housing now added to the mix, the council is now preparing to resurrect and modify those garage plans. While some members, most notably Mayor Tom DuBois and council member Greg Tanaka, suggested that they would be interested in supporting a parking structure even without housing, most of their colleagues strongly favored alternatives that include both housing and parking. Even Filseth, who dissented, said he generally supports the idea — just not the order of the city's operations.

"The danger is it's going to get driven by, 'We've got money and maybe some land, what can we do with it?' as opposed to the other way around, where we say, 'We identified what our needs are in this area and how can we use this money and this land to accelerate stuff that we've already determined we need?" Filseth said. "My intuition is it's the right direction, but I think we're doing it out of sequence."

Others characterized downtown lots as a great opportunity to make progress on both housing and parking.

"Our surface parking lots are one of a few candidate locations in both downtowns, where we can over time provide the land for affordable housing sites and so I think that's what we'd need to do …" Vice Mayor Pat Burt said.

Unlike some members of the Housing Element Working Group, who insisted that residential development on city-owned lot should exclusively consist of below-market-rate housing, the council indicated that it would entertain proposals that include a market-rate component.

"I am open the idea of some market-rate housing, but I think it does need to require a substantial but meaningful requirement of deed restricted below-market-rate units if the city is going to commit to this investment of city resources," said council member Greer Stone, who also indicated that he would not consider developments that don't include housing.

While the suggestion of adding housing proved generally popular, some residents urged the council not to build any more large parking structures. Andrea Gara, a member of 350.org's Palo Alto's chapter, which advocates for environmental sustainability, noted that the business climate has changed during the pandemic, with significant implications for parking demand.

"We could be spending a lot of money to build a garage that is going be permanently underutilized," Gara said. "It seems like it would be great to put some of that money toward some of our other goals, particularly sustainability goals."

But while most council members and residents focused on housing, John Shenk, CEO of property manage company Thoits Brothers, argued parking remains a major problem and that a new downtown garage is sorely needed, particularly as businesses return after the pandemic. He noted that the area has lost 79 parking spaces during the pandemic, with restaurants converting these spaces into parklets to accommodate outdoor dining.

"We need parking in the long run," Shenk said. "Getting going on this garage that you all have already invested a tremendous amount of money in is smart, (as is) taking advantage of the in-lieu fees that you have … before they must be returned."