Update: I forgot to mention earlier there's ample parking at the Stanford Shopping Center. From there it's a quick walk to Palm Drive where you can view the end of the individual time trials.
Street parking is completely prohibited on University, Hamilton, Lytton and the cross streets between those three avenues along the race route in Palo Alto. The parking garages will also be closed on race day, so a lot of your parking options are not available. Plan on taking transit then walking or biking to the venue.
I also mentioned watching the race from the Caltrain platform above University Avenue. That section of the platform is closed off due to construction.
The Amgen Tour of California kicks off on Sunday with the individual time trial prologue through downtown Palo Alto and into Stanford University. Each cyclist rides individually, competing against the clock as he zips from Palo Alto city hall up Hamilton Avenue, around to University Avenue through Palo Alto's downtown area, across El Camino Real to Palm Drive and around the Stanford Oval.
Streets will be closed early for the event and parking in Palo Alto is limited so arrive early. Caltrain Palo Alto is directly adjacent to the race route; University Avenue passes directly beneath the train platform. VTA bus routes 22 and 522 stop in Palo Alto near El Camino Real and University. VTA 35 and 88 from Mountain View also serve downtown Palo Alto. For those coming from San Mateo County, SamTrans 280, 281, 297, 390, and 397 all stop at the Palo Alto Transit Center adjacent to the Caltrain station. (I'm not too familiar with SamTrans so check their schedules to ensure Sunday service).
If you drive, arrive early enough to find a parking spot. Parallel parking is permitted along stretches of El Camino Real south of University. Small surface lots are also scattered around the Palo Alto central business district. The streets will be closed hours before the actual race so arrive early and don't expect to park in the spaces along University and Hamilton. Lytton Avenue will also be closed.
Once you arrive, you can view the time trial from the sidewalks along the entire race route. University Avenue is lined with restaurants with outdoor seating. City Hall has a large plaza that can accomodate a few hundred people. Palm Drive also has plenty of room for spectators to view the race.
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Teams are all over Palo Alto. At lunch today I spotted a couple guys from Credit Agricole and 2 riders from High Road came in to Taxi's right after me for burgers and HGH shakes. (kidding about the shakes). They were on really nice Giants and just leaned them up on the side of the building. This is so awesome!