The Creekside Inn on El Camino Real could be demolished and replaced with two, six-story buildings with a total of 382 apartments under a redevelopment plan that the property owner submitted to the city last month.

If approved, the project known as "The Residences at Matadero Creek," would be the largest to date to take advantage of a new zoning process known as "planned home zoning," which lets residential developers negotiate zoning exceptions in exchange for a provision of housing. The property owner, SF Creekside LLC, is requesting exemptions from Palo Alto's height and density regulations, as well as a reduction or elimination of impact fees that a developer would typically have to pay.

As a "planned home zoning" project that requires a zone change to proceed, the new proposal gives the City Council wide discretion when it comes to requesting revisions or denying the application. The council will hold a pre-screening hearing on the project to offer its initial comments and help the applicant determine whether to submit a formal application.

To date, most of the developers who have requested such a zone change ultimately have opted not to proceed after the initial council hearing. In some cases, such as the 290-apartment complex that a developer had proposed for 3997 Fabian Way, council members argued that the project was too big and did not offer enough below-market-rate units. A much smaller project, which called for 24 apartments in College Terrace, was rejected after the council agreed that the zoning process should never apply in areas zoned for single-family homes.

Ted O'Hanlon, the consultant representing SF Creekside LLC, is hoping for better luck with the new proposal, which would be located at 3390, 3400 and 3490 El Camino Real, the current sites of Cibo Restaurant and Bar, Creekside Inn and the Driftwood Deli and Market. In a letter he submitted last month as part of the application, he argued that the location is perfect for an apartment project, particularly since it involves rezoning a commercial area for residential use — a key strategy that the council is employing to meet a state mandate for new housing. The developer is also proposing to create a meandering path with seating areas that would be open to the public along Matadero Creek, which runs diagonally across the property.

The development, O'Hanlon wrote, "proposes a unified and coherent design that creates a sense of order and a desirable environment for occupants, visitors and the community."

He also acknowledged in the letter that almost none of the projects that the council had previously considered through the "planned home zoning" process had moved forward.

"The City has learned from and continues to learn from these applications. However, it is time to do more than learn — the Council needs to encourage formal applications to come forward that include the necessary modifications to see the actual development of housing in Palo Alto," O'Hanlon wrote.

In this case, the modifications include exceeding the city's 50-foot height limit to allow the two 64-foot-tall buildings. The city would also need to allow a floor-area-ratio of 2.49 (the ratio of a building's floor area to the land), whereas the current zoning allows zoning between 0.5 and 2.0. And it would have to allow the developer to build at a density of 106 dwellings per acre. Typically, the city allows residential developments at a maximum of 40 dwellings per acre at its most dense multi-family zoning district, RM-40.

The council has, however, made some exceptions in recent past. O'Hanlon notes that the Wilton Court project at 3703 El Camino Real has a density of 128 dwellings per acre and the Alta Locale project on the corner of El Camino and Page Mill Road was developed at 127 units per acre.

Unlike Wilton Court, the Creekside Inn project would not be dedicated exclusively to affordable housing. According to the application, 76 of the dwellings would be subject to the city's below-market-rate program and distributed across four income categories, according to O'Hanlon. This means that 5% of the apartments, or 19 apartments, would be available to residents in the "very low" income category. The same share would be dedicated as "low," "moderate" and "workforce housing" units. The 76 units in these four categories would dispersed throughout the two buildings.

The two buildings would have 44 studios, 243 one-bedroom apartments, 86 two-bedroom apartments and nine three-bedroom apartments, according to the application.

The project also includes 4,000 square feet of retail space. O'Hanlon told this news organization that property owners have had discussions with Driftwood Deli & Market, a longtime fixture on the El Camino block, to be the occupants of this retail space.

O'Hanlon had also requested that the city waive some of the impact fees that developers are normally required to pay, including the park impact fee of $42,468 per unit. Given the high number of units in the proposed development, this fee would add up to $16.2 million. (The developer had also initially requested that the city waive the $7 million in housing impact fees, though O'Hanlon said staff later clarified that the developer would not have to pay these fees because it is proposing to provide below-market-rate housing).

"These are preliminary fee estimates, but they illustrate the magnitude of fees that are likely to be imposed on a project of this scale and that would make the provision of housing on-site infeasible," O'Hanlon wrote.

Referring to the Oxford Capital Group, which owns the Creekside Inn, he continued: "Therefore, as part of the PHZ rezoning ordinance, Oxford is proposing the Council support reducing or eliminating certain fees based on project considerations such as the provision of affordable housing or publicly accessible open space."

Editor's note: The story was updated to reflect the project's modified proposal for affordable housing and the developer's withdrawal of its request that housing impact fees be waived.