When Roger Fields pitched a plan two years ago to build a 49-condominium development on Lambert Avenue in the Ventura neighborhood, he received a decidedly mixed reaction from the Palo Alto City Council.

Some council members, including Pat Burt and Greer Stone, generally supported the plan with its mix of one-, two- and three-bedroom units. Others, including Lydia Kou, sided with Ventura residents who alleged that project represents a giveaway to the developer that will bring few benefits to the neighborhood.

"It's very hard for me to look at this and say that the city or the residents of Palo Alto are getting very much out of this," Kou said in 2021.

At the time, the council's support was crucial for Fields because he was seeking permission to rezone the site to "planned home" zoning, which allows builders to exceed zoning regulations and negotiate with the city over standards such as height, density and parking. The council had wide discretion to deny the project or to require significant revisions.

That, however, is no longer the case. On March 22, Fields's company, Peninsula Land & Capital, submitted a new application for a 65-foot tall building with 45 condominiums (down from 49) and nine dwellings designated for below-market-rate use (down from 10).

Most crucially, however, the developer is no longer seeking to use the city's "planned home" zoning. Instead, his project is the first in Palo Alto to invoke "builder's remedy," a provision of state law that prohibits cities that don't have a complaint Housing Element from denying residential projects, even those that fail to comply with local zoning standards. The long list of cities that are out of compliance with state housing laws includes Palo Alto.

Shifting power dynamics

The revised Lambert Avenue proposal illustrates the shifting power dynamics between cities and builders in jurisdictions that have failed to adopt a plan to meet their housing quotas, as defined by the Regional Housing Needs Allocation process. Palo Alto submitted its draft Housing Element to the state Department of Housing and Community Development in late December but was directed by the state agency on March 23 to make significant revisions to the document.

Because the deadline for adopting a compliant Housing Element was Jan. 31, Palo Alto is one of many cities now officially out of compliance. On the Peninsula, only Redwood City has so far secured the agency's state of approval.

With the Lambert application, Palo Alto is also now part of a growing list of cities, which include Mountain View and Los Altos, that are dealing with the chief consequence of their delinquency: loss of leverage over proposed developments.

In the new application, Fields indicates that he is relying on both builder's remedy, which allow builders to effectively bypass the city's approval process, and on Senate Bill 330, a recently adopted law that freezes development standards and limits the review process to five public hearings.

Several other developers have also indicated that they will rely on SB 330. These include The Sobrato Organization, which is planning a 74-townhouse development at 200 Portage Ave.; SummerHill Homes, which recently won approval for its 48-unit condominium project at 2850 W. Bayshore Road; and, most recently, Dividend Homes, which is relying on SB 330 to build 16 townhomes at 420 Acacia Ave., also in Ventura.

Relying on the builder's remedy, the 300 Lambert Ave. project would, exceed numerous local zoning provisions: The proposed height of 65 feet would surpass Palo Alto's 50-foot height limit. And the setback of 5 feet and 7 inches on its right side falls short for the city's 10-foot setback requirement, according to project plans.

The five-story building would replace two existing one-story commercial buildings that were constructed more than 50 years ago and that were most recently used for automotive repair shops. It would include two floors of below-grade parking with 85 stalls and storage areas, according to the application.

In announcing the revised application, city officials acknowledged their reduced ability to deny or modify projects like the one proposed by Fields.

"Until the city has adopted a new Housing Element compliant with state law, it cannot deny certain qualifying housing projects regardless of their non-compliance with zoning standards or the comprehensive plan," the city's announcement stated.