There was every indication going into a Wednesday, July 20, City Council meeting that Atherton intended to meet its state-mandated housing allocations, in part, through new multifamily overlay zones, a shift away from the town's history as a community with only single-family homes. There was a 300-page report outlining plans for future development in Atherton, including designating land for townhouses. A note from staff saying that the state won't support a housing element without multifamily housing.

Then City Manager George Rodericks spoke.

He said he reviewed the plan, called a draft housing element, with each member of the council before the meeting and they all wanted to make significant changes to it. The most notable: Removing the proposal for multifamily housing overlays in town. The town must plan for the development of 348 new housing units, per its 2023-31 state allocation, which is a large jump from its designation of 93 units during the previous eight-year cycle.

"I don't want Atherton to change," said Councilwoman Elizabeth Lewis. "It is just heartbreaking and sickening to think we’re facing this from the state."

Council members said they heard the complaints about a shift away from life as a single-family home community "loud and clear." The council had gone back and forth over the last couple of months debating which parcels of land to include for future development of multifamily units.

Mayor Rick DeGolia said he realized over the last month it's infeasible to build affordable townhouses in a place where land sells for $8 million per acre. About 85% of the 300 written comments the town received were in opposition to multifamily housing overlays.

"The only way you can reasonably offer affordable housing in Atherton is if you offer it on the existing land people own," DeGolia said. "For most of us that are residents, that means ADUs (accessory dwelling units) and it means offering them at below fair market value." He noted, for instance, that Sacred Heart Schools, Atherton, could build on its 60 acres of land, but it's not going to be able to afford to buy adjacent land and build affordable units. "That's a real serious revelation."

Town can't meet housing goals with focus on ADUs

Rodericks explained that the town wants to focus its housing efforts on creating more accessory dwelling units (ADUs). However, even with a successful ADU program, Atherton will still fall short of the 348 units required by the state, he said. This can only happen if residents rent them at affordable rates and through an affordability program that will require the collection of rental and income data of their tenants. Since the town revised its ADU ordinance in the last few years, production of the backyard units, sometimes called granny cottages, has "skyrocketed," he said.

"I believe that our success here is achievable but again, only with the full support of this community to follow through on the rental of those units," he said. "If ADU production and rental goes as projected, we will fall short at the very low and above moderate income categories for housing production," he said. "To meet these objectives we will need to show housing production through lot splits under Senate Bill 9 and the development of vacant lots in town."

The state Housing and Community Development will be far more aggressive about the town providing proof that ADUs are being rented out, Rodericks said.

The town predicts it can produce 80 units under SB 9 during the upcoming cycle. The state's so-called duplex law that took effect in January requires local agencies to grant ministerial approval to certain lot splits and allow up to two primary units on each resulting lot, with 4-foot side and rear setbacks.

So far, the town has received four applications for SB 9 lot splits — at 78 Cebalo Lane, 2 Lowery Drive, 125 Glenwood Ave. and 94 Palmer Lane. There are three pending applications, at 47 Santiago Ave., 190 Selby Lane and 197 Glenwood Ave. Atherton expects to see about nine to 32 net new dwelling units per year with SB 9, according to staff.

Councilman Bob Polito said a lot of the arguments against multifamily were just "plain NIMBY" (an acronym for Not In My Backyard, referring to neighbors opposed to development near their homes), but a lot are not. Polito, who ultimately agreed with the plan to remove multifamily overlays from the plan, said a well-managed project for townhouses for seniors wouldn’t negatively impact the town as "we know it."

"I rather see a few good projects that get us to where we need to be by law than rely on the wild, wild west," he said, referring to SB 9 and ADU projects.

Although there is faculty and student housing at some schools in town, multifamily housing has never been seen outside of those narrow uses.

Pool houses are not currently allowed to be rented out for more than 30 days in Atherton and Councilwoman Diana Hawkins-Manuelian said changing that could really help bolster numbers. She also thinks the town should allow housing units to be built on top of garages.

Menlo College has on-campus dorms and is interested in building a significant amount of faculty housing, but that likely won’t happen during this housing cycle, for example, Lewis said.

The council also opted to remove a suggestion that schools in town rent their housing to the general public.

The council directed staff to come back in a week, on July 27, with an updated plan, which includes dumping the multifamily overlay zones.

What would have been a big change for Atherton

Of the roughly 300 comments on the draft housing element the town received, greatest volume, 85%, discussed the proposed multifamily zones, and voiced opposition to the use of overlay zoning to meet the requirements of the state mandate, according to the town.

Only a handful of residents spoke at the meeting, most in opposition to Menlo College and Menlo School acquiring land in the Victoria Manor neighborhood and disrupting their way of life. Others said they were "relieved" the council members listened to neighbors who didn’t want townhouses in Atherton.

Many of the comments in opposition spoke to safety concerns for pedestrians from increased traffic congestion, the ability of existing infrastructure to support additional housing units, and the impacts of construction.

There were also letters from housing advocates prodding the town to include more multifamily housing.

DeGolia noted that many Atherton residents are on vacation right now after two previous summers of restricted travel due to the COVID-19 pandemic. He said he'd rather engage them when the state's comments on the draft housing element come back in September or October.

"We shouldn't penalize them by creating some sort of dramatic policy," he said.

Hawkins-Manuelian said she'd like to see an ad hoc housing element committee formed to tackle the issue. Nearby Portola Valley formed a similar group earlier in the process, about a year ago, which met over a dozen times and ultimately came up with recommendations to the council.

Last week, both Portola Valley and Woodside's town councils approved draft housing elements, which included areas for multifamily housing units.