The concept grew from a pitch by Councilman John Drayman to scrap the on-site option entirely and instead require the fee after city attorneys determined that developers.
Under the current policy, two planned projects have designed on-site art plans and one small project has paid into the fund, officials said.
"Because there was an interest on the council of building up the urban art fund, they wanted to make an incentive for people simply to pay the fee," said Alan Loomis, the city's principal urban designer.
But planning commissioners said they were worried the new rules would discourage developers from incorporating art into their buildings.
"The architecture is going to suffer and the buildings are going to suffer, because they no longer have the incentive or the requirement to do something with their building," said Commission Chairman Bill Kane.
In floating the proposal, city officials pointed to the City Council's push to expand the city's ability to provide arts programming.
Similar programs in other Southern California support public concerts like those at the Santa Monica Pier and in downtown Los Angeles, and urban art installations in Little Tokyo.
"These are so many different ways that art can be present in Glendale using the funds," said Planning Director Hassan Haghani.
He added that officials predict large developments will still choose the public art component.
"They know it will eventually add to the value of their property," Haghani said.
Drayman has said the money generated could help support such projects as renovations at the Brand Library art galleries or the development of a new civic gallery downtown.
Despite initial concerns, the Planning Commission voted 4 to 0 to recommend the City Council approve the expanded requirement, adding that the City Council should review the 1% versus 2% requirement.
"The unforeseen consequences really need to be challenged on that," Kane said.