Emboldened by a positive response from the Palo Alto City Council, a developer has filed a formal application to construct a four-story building with 70 apartments and ground-floor office space on University Avenue. Of the apartments, 20% would be rented out as affordable housing.

Smith Development has filed a formal application for 660 University Ave., a project that calls for consolidating three lots near the intersection of University and Middlefield Road and demolishing two single-story office buildings, including the present location of Palo Alto Dental. The dental practice plans to relocate to another location within the city.

The council got its first look at the development during a "pre-screening" meeting in October, at which point most council members generally supported Smith’s concept but suggested that the developer provide more apartments for low-income individuals.

The project is advancing under the council's "planned home" zoning process, which allows builders to exceed the city’s development standards in exchange for providing housing. The process also gives the council greater discretion to accept or reject proposals.

In discussing the project on Oct. 25, most council members generally lauded the Smith plan for bringing housing to downtown, an area where the city has been trying to encourage more residential development through various zoning reforms. By contrast, the council has been generally dismissive of planned-home projects proposed in single-family neighborhoods.

Council member Alison Cormack said during the council's October discussion that the project is "in the right place."

"It fits in with the other four-story multifamily buildings that are nearby and it does represent some change," Cormack said.

While most of her colleagues agreed that the location is suitable for housing, residents of the adjacent condominium community, The Hamilton, have argued that the project is too dense for the area. Chris Ream, president of The Hamilton Homeowners Association, argued that the project will make traffic and parking congestion in the area much worse.

The project proposed by Smith would include two levels of below-grade parking and 9,115 square feet of office space. Vehicles would enter from Middlefield Road, according to plans that Smith submitted last month.

In a nod to the council's feedback, Smith agreed to revise the income categories for the below-market-rate units in the development. Under the new plans, 14 of the 70 apartments would be designated as affordable housing. Of those, six would be designated for the "moderate" income category, four for the "low" income category and four for the "very low" income category.

That's a shift from the prior plan, which designated four apartments for the "workforce housing" category, which applies to residents making up to 120% of area median income.

The project would also include a roof terrace for residents and an outdoor deck near an existing oak tree.

The new development "responds to the context of the neighboring single-family use lot through setbacks along the common property line," Smith wrote in a letter accompanying the application. The project, the letter states, "is designed to be a high-quality addition to Palo Alto."

The project will now have to go through Palo Alto's typical approval process, which will involve hearings in front of the Architectural Review Board, the Planning and Transportation Commission and the council.