Preservation Incentives

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Local Development Incentives

The Palo Alto Building Code (PABC) and the Palo Alto Municipal Code (PAMC) offer development incentives that assist historic resource owners in preserving, rehabilitating and improving historic structures and sites, compatible with the Secretary of the Interior’s Standards for Rehabilitation.  With the exception of the California State Historical Building Code, which applies to all resources designated at the Local, State, or Federal levels, the local development incentives apply only to locally designated resources listed in the Palo Alto Historic Inventory. 

Palo Alto's incentive program for historic preservation is found in various locations in the Municipal Code, the South of Forest Area Coordinated Area Plan and in the Palo Alto Comprehensive Plan. Projects that are consistent with City codes and compatible with the Standards for Rehabilitation may receive the following development incentives.

Palo Alto Building Code

The PABC (Chapter 16 of the Palo Alto Municipal Code) includes the following incentives for historic preservation. 

  • The Historic Building Code (PABC 16.04.350) grants all designated historic resources flexible alternatives to meeting the Building Code.
  • Section 16.09.160 exempts Category 1 and 2 buildings from the general prohibition of copper replacement roofing and gutters.
  • Section 16.04.250 adopts the California Historical Building Code (CHBC) which provides alternative solutions to building code issues raised in the course of preserving and rehabilitating qualified historic buildings. While these alternative solutions are intended to protect historic buildings from the adverse impacts of certain requirements of the regular building code, they also translate into cost-effective incentives as described by the California Office of Historic Preservation: 
    • The "triggers" for full upgrading to current standards, with respect to length of vacancy, change of occupancy, or percentage of value of the work proposed, and which exist in other codes, are not recognized by the CHBC, which concentrates instead on the preservation-sensitive resolution of genuine safety considerations.
    • Structural/Seismic upgrading issues are governed by the CHBC, permitting design based on real values of archaic materials, and solutions based on engineering principles and professional judgment, rather than solutions limited to codified prescriptive formulas.   This flexibility usually translates into a higher degree of retention of historic fabric.
    • Because most qualified historical buildings cannot conform to California's energy standards without the alteration or loss of historic features, they are categorically exempt from those standards. To the degree practicable, new construction associated with the historic resource should conform.
    • With respect to qualified historical buildings, both ADA and the CHBC make provisions for reasonable levels of equivalency for, and under special circumstances exemption from, accessibility mandates. Sections 16.52.040(a)(20), 16.52.040(a)(36) and (a)(36)(B), and 16.52.130 provide exemption from flood hazard area regulations for Category 1 and 2 buildings, contributing buildings in National Register historic districts, and buildings individually listed on the National and California Registers.

Palo Alto Municipal Code

The Palo Alto Municipal Code's Chapter 18 includes the following incentives and exceptions to encourage the preservation and rehabilitation of Historic Inventory buildings.

  • Section 18.04.030 (a) (65) grants gross floor area exemptions for locally designated historic low-density residences in the R-E, R-2, and RMD Districts. Category 1 and 2 buildings may have an attic up to 500 sf. Category 1 to 4 buildings may have a basement (no limit).
  • Sections 18.10.130, 18.12.140 and 18.13.040 provide minimum lot size exceptions to locally designated historic resources in the R-1, R-E, R-2, RMD, RM-15, RM-30, and RM-40 districts. Lots containing one historic residence may have a minimum lot size of 4,000 sf (or 80% of minimum lot size in sub districts). Lots containing two historic residences may have a minimum lot size of 2,000 sf.
  • Sections 18.10.110 and 18.12.120 allow excess floor area for home improvements for locally designated historic single-family residences in the R-1, R-E, R-2 and RMD Districts. Category 1 through 4 buildings may have up to 250 sf of excess floor area above the maximum.  
  • Section 18.18.070 grants locally designated historic resources in the Downtown Commercial (CD) District FAR exemptions as follows: up to 25% or 2,500 sf for Category 1 and 2 buildings and up to 200 sf for Category 3 and 4 buildings.
  • Section 18.18.080 allows locally designated historic resources in the CD District and South of Forest Areas (SOFA) to transfer developable floor area offsite (within zone). Category 1 and 2 buildings are allowed to transfer up to 10,000 sf of additional floor area (with FAR limitations). This incentive is not available for Category 3 and 4 buildings.
  • Sections 18.49.060 and 18.49.100 provide for Bonus Floor Area, exempt from on-site parking requirements, in exchange for historic rehabilitation of Category 1 and 2 buildings in the CD Commercial Downtown Zone District.
  • Section 18.49.100 also provides for exemption from on-site parking requirements for conversion of residential Category 1 and 2 buildings (50 feet or less in height) to commercial use in exchange for historic rehabilitation (existing on-site parking must be maintained, however).
  • Section 18.49.060 and Chapter 18.87 establish a Transferable Development Rights program that provides for parking-exempt bonus floor area to be transferred from historically rehabilitated Category 1 or 2 buildings in the CD Commercial Downtown Zone District to specified non-historic receiver sites in the CD or specified Planned Community Districts.  

South of Forest Area Coordinated Area Plan (SOFA)

The regulations for the special zone districts established by the South of Forest Area Coordinated Area Plan (SOFA CAP) Phases 1 (approved 2000) and 2 (approved 2003) provide the following incentives for the rehabilitation of identified historic buildings (see the SOFA CAP on file at the Planning Department for details):

  • Bonus floor area
  • Transferable development rights
  • Reduction of on-site parking requirements
  • Exemption from on-site parking requirements
  • Exemption from required minimum densities
  • Continuance of non-conforming uses
  • Special provisions for second units in the SOFA 2 R-2 zone

Palo Alto Comprehensive Plan

The following Comprehensive Plan policies and programs provide incentives for historic preservation.

  • Policy L-7.3 Actively seek state and federal funding for the preservation of buildings of historical merit and consider public/private partnerships for capital and program improvements.
  • Policy L-7.7 Streamline, to the maximum extent feasible, any future processes for design review of historic structures to eliminate unnecessary delay and uncertainty for the applicant and to encourage historic preservation.
  • Program L7.8.1 Promote and expand available incentives for the retention and rehabilitation of buildings with historic merit in all zones and revise existing zoning and permit regulations to minimize constraints to adaptive reuse.
  • Program L7.8.2 Create incentives to encourage salvage and reuse of discarded historic building materials.
  • Policy L-7.9 Allow compatible nonconforming uses for the life of historic buildings.
  • Policy L-7.12 Maintain the historic integrity of building exteriors. Consider parking exceptions for historic buildings to encourage rehabilitation.
  • Program L7.12.1 Review parking exceptions for historic buildings in the Zoning Code to determine if there is an effective balance between historic preservation and meeting parking needs.
  • Policy L-7.13 Encourage and assist owners of historically significant buildings in finding ways to adapt and rehabilitate these buildings, including participation in state and federal tax relief programs.
  • Policy L-7.14 Continue to use a TDR Ordinance to allow the transfer of development rights from designated buildings of historic significance in the Commercial Downtown (CD) zone to non-historic receiver sites in the CD zone. Consider revising the TDR Ordinance so that transferred development rights may be used only for residential development on the receiver sites.

Subdivision Code

Palo Alto’s subdivision code contains a section addressing historic resources. Palo Alto Municipal Code Title 21 (subdivisions) section 21.20.301 Items (a)(2) and (b)(1) allow for creation of a flag lot, including in the R-1 zone, that does not exceed minimum lot size (as normally required) when a Preservation covenant is placed on the historic home on the lot, and clarifies that it is not necessary to process a parcel map with exception to do this (just a parcel map).

Federal Investment Tax Credit

In addition to the above local incentives, a Federal income tax credit may be granted to commercial properties that are listed on the National Register of Historic Places, and on which “substantial rehabilitation” is performed. You may learn more by reviewing our Federal Investment Tax Credit Overview or by viewing the Federal Historic Preservation Tax Incentives web page.