When should the City of Palo Alto forbid the construction of second-story additions in a neighborhood dominated by single-story homes?

That question has become an increasingly emotional and divisive one in south Palo Alto, and on Monday the issue approached a boiling point as neighbors within the 203-home Royal Manor housing tract in the Palo Verde neighborhood squared off in the packed City Council chambers.

One group of neighbors, who had organized a petition to request a single-story "overlay" zone for the tract, argued that the restriction was necessary to protect the character of the Joseph Eichler-developed neighborhood and head off a progression of remodels that would intrude on neighbors' privacy.

Another group of residents, who expressed dismay and some anger about the petition process, said that limiting their ability to build a second floor that would otherwise conform to the area's zoning would be unfair and a violation of their property rights.

There were so many speakers that the council put off any decision until its May 2 meeting. The neighborhood division suggests, as does the city staff, that the process for bringing these proposals to the city needs to be reevaluated.

With unprecedented high local real-estate values, smaller single-story homes in south Palo Alto are among the more affordable in the city and are often purchased by buyers intending to increase the square footage by adding a second floor. Particularly in neighborhoods with Eichlers, which were designed with large floor-to-ceiling windows and extensive exposure to and from the outside, many longtime owners are utilizing city-established processes to seek approval of restrictive single-story overlay zones to block second-story additions or new two-story homes.

The process for establishing these single-story restrictions dates back to 1992 and has resulted in more than a dozen areas becoming restricted after petitioning by residents. Each brought some amount of controversy but none as intense or divisive as the current proposal.

The Royal Manor proposal, which initially achieved the required threshold of 70 percent approval of residents when submitted the application to the city, has seen a steady drop in support as homeowners have asked to be removed from the petition after learning more about the issue. Some who signed say they were misled by overlay proponents.

Apart from the neighborhood petition process, in Palo Alto any second-story addition or new home must currently go through what is called an "individual review" during which neighbors are given an opportunity to object to the architecture and the intrusion into their privacy. Ultimately, disagreements can go before the City Council on appeal.

Voluntary design guidelines, developed many years ago, are intended to assist homeowners and their architects to develop plans acceptable to neighbors, but a number of heated debates over individual home proposals have fueled neighborhood efforts to impose blanket restrictions through the overlay-zone process.

The City Council has been loath to go beyond voluntary design guidelines for second-story construction and has often struggled when considering applications for single-story overlay zones for entire neighborhoods.

By the May 2 council meeting it is likely that the desired neighborhood super-majority support for restrictions in Royal Manor will have dropped well below the 70 percent level and the council will deny the application. Under the current rules and guidelines, that's the correct outcome.

But the entire process needs to be re-evaluated. No one benefits from a system that pits groups of neighbors against each other and depends on a petition process vulnerable to misunderstandings. While the overlay-zone process can be improved and should still remain available in cases of near neighborhood consensus, what's needed is a tightening of the existing individual-review process required for all second-story additions or new homes, regardless of neighborhood.

Especially in vulnerable neighborhoods such as Eichler tracts, the voluntary guidelines need to be transformed into specific minimum requirements addressing setbacks, daylight plane, window glazing and neighborhood compatibility that go beyond current recommendations.

Last year, at the urging of councilmembers Tom DuBois and Karen Holman, the council voted to look at establishing specific districts that would be subject to specific architectural styles, but City Manager Jim Keene, stating that the planning staff already had too much on its plate, made clear nothing would be done anytime soon.

The council cannot let this problem fester. Like the community's reaction to commercial development, changes to neighborhood character is a looming political time bomb.