Atherton is sending its housing element to the state, leaning on accessory dwelling units (ADUs) and SB 9 applications to meet its housing goals through 2031 while shying away from zoning for multifamily housing.

The town will rely on ADUs to fulfill its state-mandated housing requirements following a council decision to remove multifamily housing overlays from the plan during its Wednesday, July 27, meeting. Mayor Rick DeGolia said he realized over the last month that it's infeasible to build affordable townhouses in a place where land sells for $8 million per acre. Townhouses would sell for about $5 million in town, he noted.

"I think they want to put us in a box," Vice Mayor Bill Widmer said of the state's ask that towns include multifamily housing in their housing plans. "We're not all San Francisco. It's inappropriate because we are doing a lot for housing and getting people off the streets. I don't know why it has to be constrained. It's BS."

The town must plan for the development of 348 new housing units, per its 2023-31 Regional Housing Needs Allocation, which is a large jump from its designation of 93 units during the previous eight-year cycle.

City Manager George Rodericks warned the council that the town is going to make itself a target not only of the state, but also of housing advocacy groups, if its excuse for not including multifamily housing is the high value of the land. For example, YIMBY Action plans to hold a demonstration during the Menlo Circus Club's Charity Horse Show on Aug. 12 to ask Atherton to build more housing.

Keith Diggs, a housing elements advocacy manager for YIMBY Law, a group that helps enforce state housing laws, said he'd be "shocked" if the state approves the town's plan as-is.

"Whatever fair housing is, it's not prohibiting multifamily (housing) across a jurisdiction," he said. "We're in a massive housing shortage. Their intent is just to remain the same wealthy, single-family (home) community they've had for the last century. … It still remains the center of the hottest sector of the economy. I don't see what they have to worry about in terms of property values falling."

The bulk of the element: ADUs

With the town's current pace of ADU applications, the town forecasts the development of 280 new ADUs over the next planning period, according to a town staff report. That's about 35 new ADUs built per year.

To achieve this, the town plans to expand its ADU program to include pre-approved ADU plans and establish an ADU rental program. In 2021, the town issued 32 permits for ADUs, the same number as in 2020. The town projects 40 ADUs will be permitted this year, according to staff.

The town will amend its zoning code to eliminate a provision that prevents pool houses and guest houses to be rented out as ADUs, further increasing the potential number of rental units. Council members also directed staff to include a note in the draft element that it would eliminate the ADU application fee of $1,032 to encourage residents to build units.

The town also plans to partner with a nonprofit organization (such as HIP Housing) to facilitate rental advertising, screening and pairing renters with homeowners.

Council members were disappointed on Wednesday to hear from staff that existing pool houses will not count toward RHNA figures the upcoming eight-year cycle unless they are modified (like with the addition of a kitchen). They still supported changing the town's rental policy to allow for pool houses to be rented out for more than 30 days, as that can help bolster the amount of longterm housing in town that counts toward RHNA.

Dropped multifamily housing overlays

The new overlay zone would have between six and 16 units per acre. The multifamily housing overlays proposed in the town's draft prior to its removal included the following locations:

Diggs of YIMBY Law said there are provisions of state law that allow developers to designate part of multifamily housing projects for market-rate units for teachers or others. Building, no matter the cost, still adds housing inventory, he said.

"It is true newer housing tends to be more expensive than older housing, but it's not an argument not to build housing," he said. "If they simply continue banning multifamily (housing) it's never going to get better. I don’t believe the fact that some new units would be expensive should be a reason not to build. We can’t ignore this problem."

SB 9 projects

The town predicts it can produce 96 units under Senate Bill 9 during the upcoming cycle. The state's so-called duplex law, which 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 minimal side and rear setbacks.

Before SB 9 was adopted, the minimum resulting lot size for a subdivision in Atherton was 1 acre. By contrast, the state law requires a minimum lot size of 1,200 square feet per parcel following a lot split.

The town approved its first application at 2 Lowery Drive near Menlo-Atherton High School.

So far there have been four applications for SB 9 projects in town, according to the draft element. Property owners at 47 Santiago Ave., 190 Selby Lane and a 4-acre site at 170 Atherton Ave. (a site originally included in the multifamily housing overlay) have also expressed interest in lot splits.

Local developer Pacific Peninsula Group has shown interest in developing 170 Atherton Ave., where a total of 16 new housing units could be developed. Pacific Peninsula is considering a conventional subdivision of the 4-acre parcel into four 1-acre parcels, then using SB 9 to further subdivide the property, and develop each resulting parcel with two units.

The existing single-family residence will be demolished, yielding a net 15 new housing units. The units would likely be priced for above-moderate income households.

"The town anticipates that SB 9 applications will be more common on lots of at least 1 acre in size that contain an older residence," according to the staff report.

The town found that there are 606 lots of an acre or greater with a residence built before 1970.

"These lots present a tremendous pool of homeowners who may be interested in pursuing SB 9 lot splits," staff wrote. "The town expects sites selected for SB 9 lot splits and the creation of additional units to be distributed throughout the town."

Schools

There are eight schools in town that could develop housing on their properties.

Menlo School has acquired an apartment building locally for faculty housing, according to staff. Its faculty prefers to live close to campus, but not on campus.

The school has considered acquiring land adjacent to the school and developing 10 to 20 units within this housing element cycle, according to the town.

Sacred Heart Schools, Atherton, has five apartment complexes on campus for retired nuns at Oakwood. It anticipates the facility will be renovated in the next 15 to 20 years to add faculty rental housing, but that won't come in time to count toward the 2023-31 housing element, according to staff.

Menlo College has 25 units of housing for faculty and staff on campus. The school has signaled interest in adding more housing, but it would need additional funding.

The college is exploring a few options for building new housing on campus, according to a July letter from the college. Demand exists to "easily fill" an additional 18 units on campus, and possibly as many as 40 additional units, according to the school. It estimates such a project would cost about $20 million, which could be paid for through a tax measure.

"The greatest likelihood for moving an apartment and parking project forward for Menlo College faculty and staff would be for the town of Atherton to support the cost of constructing housing and parking on campus through the identification of a new source of funding, possibly a bond issue that could be supported with a parcel tax," Menlo College officials said in the letter.

Upcoming demonstration in Atherton

YIMBY Action planned to attend an Atherton polo match earlier this month and demonstrate in favor of housing growth, but the polo club canceled the match when they heard the organization was coming, Leora Tanjuatco Ross said in a July 21 email to the group's members.

"Atherton is the richest ZIP code in the entire country, but they are hoarding the opportunities that come with that wealth," she wrote. "They've blocked new homes from being built for decades, preventing more neighbors from moving in. They've gone to great lengths to make sure that their community stays exclusive, including closing their train station and fighting against their state-mandated housing goals."

The Atherton City Council voted to shut down the historic station in October 2020 because of low ridership over the years and desire to safeguard the town from future legislation similar to the recent Senate Bill 50, which would have required cities to allow high-density housing development near public transit.