To the Council and Staff of the City of Palo Alto,

On May 18th, 2021,  we presented the Wellesley project in a pre-screen study session to the City Council. The Wellesley project consists of 19 Moderate Income units and 5 Low Income and Very Low Income units-- all without any government subsidy. It was proposed in a neighborhood with a mix of single-family and (more than 30) multi family homes, and the site itself is surrounded by multifamily buildings.With a walk score of 91, our site is walkable to Caltrain, the El Camino bus line, schools, retail, job centers, Stanford University and three grocery stores. Our goal would be to target this housing for Palo Alto’s essential workers. Our teachers, our healthcare workers and others who serve our community every day. We believe they deserve to be our neighbors, too, versus literally traveling hours every day.

In the Bay Area, we face a housing affordability crisis, one where rents dramatically outpace wage growth. The conundrum is intensified with inflated building costs and limited land space to build. Cato made the City of Palo Alto an unprecedented offer:  Cato committed to ZERO profits for the period of 20 years vowing to keep the rents as low as possible. This reinforces our affordable housing mission as we literally put our money where our mouth is.

This would be a welcomed scenario for any city. However, instead of rolling out the red carpet for our subsidy-free affordable housing proposal, the Council instead put up a blanket red light. The City Council’s reaction could be summed up in three words: “Sorry, wrong location.” Put another way, Not In College Terrace’s BackYard. 

Back in February of 2020, it looked like Palo Alto was going to get more serious about building housing. The city had fallen short of its own Comprehensive Plan’s housing production goals every year since it had passed, and there looked to be an appetite for change. The City Council passed on a 7-0 vote the Planned Home Zone (PHZ) to spur housing production, bringing back PC Zoning for housing proposals citywide. While some have since said it was never meant to apply to R1 zoned areas, no member of the Council stated this, and this information was not written into the PHZ. As a property owner or developer, we can only go by what was said by Council and what is written down-- not what someone later wishes they had said at the time. To say the PHZ was never meant to be in R1 neighborhoods is nothing short of a revisionist history.

Despite the misinformation claiming “curious process”, we engaged  with city staff months prior to submitting the Wellesley proposal in January 2021. Originally we were given a pre-screen date of April 12. A week later, city staff told us they would have to move us to a later date. On April 12, we watched as the City Council substantially changed the PHZ to no longer include the Wellesley project. Simply put, the Council changed the rules in the middle of the game. 

We understand change can be scary for some. But this is just one more apartment building in a neighborhood that already has more than 30 multi family homes. College Terrace saw many apartment buildings constructed, right up until the point that it was down zoned to R1. But even if it had always been R1, what’s the problem with building housing that is affordable to essential workers in these neighborhoods? Why has our essential worker housing proposal created such intensity (as cited by Council Members Cormack and Stone)? No one has really ever answered that question. The Mayor has cited that folks had a certain expectation of neighborhood character when they bought their house-- which, in this neighborhood, has a median home price of $2.8 million. Multifamily housing is not disruptive to neighborhood character and studies show that it actually increases single family home values.The stance that Council is taking is essentially holding up a “Not Welcome” sign to those who serve our community. We believe, as Councilmember Cormack does, that we ARE better than this. 

What is so scary about one more apartment building in a neighborhood that is surrounded by apartments?   This is but a question du jour, as Palo Alto prepares to zone for more than 6,000 units in the upcoming RHNA cycle. If Palo Alto doesn't make progress on housing it risks State intervention, which would be a far less desirable outcome.


Cato Investments, LLC