There are many sources of urban river degradation from channel straightening and culverting for flood control and development, to point and non-point source pollution, and altered flow regimes due to urbanization and increased impervious surfaces. In this study, we focus on the hydrologic impact of impervious surfaces in an urban watershed in the East Bay area. We used the Water Framework Directive (WFD), recent legislation in Europe, to understand how a watershed approach and systematic waterbody characterization can guide restoration efforts. Specifically, we applied the WFD to Sausal Creek Watershed and developed a conceptual restoration plan that incorporates watershed-scale low impact designs (LID) to restore a natural flow regime and in-stream restoration to enhance the physical habitat. We modeled the change in runoff due to urbanization, and calculated the total area required to mitigate for stormwater. Our results show a nearly two-fold increase in peak flow from pre-development to today. To mitigate for increased impervious surfaces 38-57% of the basin would need to drain to LID sites. We compared the cost of LID with the cost of in-stream restoration and found in-stream restoration of the entire three mile channel would be equivalent to treating one-sixth of the watershed with LID. Finally, we developed a short-term and long-term program of measures to restore Sausal Creek.