Atherton will have to continue to refine its state-mandated housing plan after receiving feedback from the state housing department that its plan still doesn't pass muster.

In a 12-page, April 4 letter to the town, the state Department of Housing and Community Development tells the town it failed to submit a housing element that "substantially" meet state law. The town posted the letter to its website on Thursday, April 13.

The town must plan for the development of 348 new housing units, per its 2023-31 Regional Housing Needs Allocation (RHNA). The council scrambled to approve a plan by the Jan. 31 deadline, fearing fees, lawsuits and the threat of the state taking over development in town. Atherton's first draft of the plan was sent back to the town on Oct. 31, 2022.

Mayor Bill Widmer said in an email that the City Council and town staff are disappointed to get this feedback and rejection.

"I had felt we made some concessions in zoning but it seems that it is not enough for HCD," he said. "The council is reviewing options for addressing this and will do a CEQA (California Environmental Quality Act) analysis prior to our next submittal, which will be a few months down the road."

Among the major pieces of additional information the state would like from the town are:

• An evaluation of sites identified as developable and their capacity for development of low-income housing

• Demonstration of zoning that accommodates housing for lower income households in sufficient number to meet the state mandate

• Listing all identified Senate Bill 9 split-lot sites and demonstrate the likelihood of redevelopment, including a demonstration of interest from the property owners

• Reconciling backyard accessory dwelling unit (ADU) trends with HCD records

• Analyzing and demonstrating realistic opportunities for multi-family zoning development

• Identifying actions to be taken to facilitate and encourage the development of a variety of housing types for all income levels, including multi-family rental housing, factory built housing, mobile homes, etc.

The council has been meeting since the plan's submittal in early February to come up with alternative housing sites in the case that the state rejected it.

The owners of 97 Santiago Ave. have expressed interest in building multi-family housing on their property and council members are considering building housing in the area where the Gilmore House sits in Holbrook-Palmer Park. The town also would like to work with the Menlo Park Fire Protection District to see if a property it owns in Atherton could be developed into multi-family housing.

On Wednesday, April 19, the City Council is set to hear the feedback from the Ad Hoc City Council Subcommittee on Housing. The subcommittee is tasked with evaluating and selecting additional housing sites for the housing element.

The Planning Department will present its review of the April 4 HCD letter and next steps to the council on May 17.

View the second draft the town submitted to the state here.