As Atherton works toward state approval of its housing element, the town continues to emphasize the role that accessory dwelling units will play in earning the state’s seal of approval.
The town hopes to fulfill approximately 80% of its state-mandated housing requirements through construction and rental of ADUs. Atherton has maintained this plan, despite a letter from a 2023 San Mateo County Civil Grand Jury, which called out several wealthy Peninsula towns, including Atherton, for using ADUs to shirk their affordable housing responsibilities.
ADUs, also known as in-law units or granny flats, are small homes or apartments that share single-family lots with a primary residence. These small residences allow for more square footage on a single plot of land.
Every eight years, each municipality in California is required to update its housing plans to account for its assigned Regional Housing Needs Allocation. This determines the number of housing units each town is required to develop at a variety of affordability levels. In the current housing cycle, Atherton must plan for 348 new residential units between now and 2031, 148 of which must be set aside for low-income housing.
An internal town survey of Atherton residents was sent out to determine whether ADUs are being rented out, and if they are being rented, at what rate they are being rented for.
The survey, which was sent out to Atherton residents through multiple channels, concludes that ADUs in Atherton are “rented for a median of $0 — that is, the property not charging rent on the occupant — and an average rent of $765.”
Jeremy Levine, the policy manager for the Housing Leadership Council of San Mateo County, said in an interview that ADUs are often not as affordable as Atherton is making them out to be.
“If you look for an ADU in Atherton on Zillow for rent, it costs much more than the estimates in their report, and ADUs that are not listed, which is the vast majority of ADUs, are either pool houses or houses for people’s families. And they do not further fair housing goals.”
Atherton has been in the midst of a drawn-out housing element update process since 2022, and is still not in compliance with state requirements after the town’s plans were rejected by the state in April 2023.
Tracking ADU usage in town
Based on the rate at which ADUs were constructed in Atherton over the last three years, the town expects 280 new ADUs to be built during this housing cycle. Atherton’s housing element plan says that the town predicts that 112 of those units will be produced for households in the very-low to low-income brackets, and 56 for households with moderate income. In other words, the town estimates that 50% of its ADUs will be rented to residents in low- and moderate- income categories.
Atherton seems to have already seen success with its ADU program. In the most recent draft of its Housing Element, Atherton says that it was able to entirely fulfill its RHNA goal for low-income housing in the prior period (2015-22) due to its ADU program.
Atherton is hoping to see even higher rates of ADU construction and rental for its current housing cycle.
“We’re on target to build 35 or 40 per year,” Atherton City Manager George Rodericks told this news organization.
Atherton Town Planner Brittany Bendix agreed during the May 20 ADU workshop that rates of ADU construction are looking good for the town.
“We’re on track, so things are looking good,” she said. “But this is kind of our first push since we’ve adopted the ordinance … to really get those numbers coming in year after year.”
The survey has informed the town that people have been building ADUs and that there are a lot of ADUs out there available for rental, but not many people are actually renting them, said Rodericks.
According to the U.S. Census Bureau’s American Community Survey Data, 67% of rental units in Atherton rent for more than $3,000 per month. Atherton’s internal survey data paints a different picture of housing stock in the town than the Census data.
The town’s housing element acknowledges and explains this difference: “as implied by the low rents, these ADUs are often rented to a close friend or family member and may be difficult to find for workers or other community members.”
In order to encourage further production and rental of ADUs in town, Atherton has implemented and is planning to roll out more ADU-focused programs over the course of its housing element update process. These programs include an updated ADU ordinance, expanding community outreach programs to help residents build and rent ADUs, waiving planning fees for ADUs that meet certain requirements and adopting an affordable housing impact fee on newly constructed single family homes that choose not to build ADUs.
To help residents rent their ADUs to low-income families and individuals, Atherton has partnered with an organization called HIP Housing. This San Mateo County-based program helps match Atherton residents with spare rooms with pre-vetted tenants.
“They’ve (HIP Housing) been doing a lot of the work of background checks and reviews up front to help make it easier for you to find people to rent the unit,” said Bendix.
Atherton is also working on drafting and implementing a new inclusionary housing ordinance. This ordinance would require at least 20% of any proposed multifamily development to be set aside for lower-income housing.
New ADU ordinance
On March 20, the town passed a new ADU ordinance, which makes it easier to build ADUs in the town. It also hosted a workshop for residents interested in adding an ADU to their property on May 20.
At the March 20 meeting, the Atherton council passed a new ADU ordinance, which encourages development of the structures by establishing a bonus ADU program and allowing for ADUs above detached garages, among other things.
Atherton’s new ADU ordinance also brings the town into compliance with California’s new ADU laws. This includes provisions that exempt ADUs and junior ADUs from the town’s Heritage Tree Ordinance as long as the structures are 800 square feet or less, or 500 square feet or less respectively, as required by state law.
“Over the past year, the town, the Planning Commission and the City Council have had a number of hearings to kind of refine the adopted ADU ordinance in a way that meets the state’s requirements and aligns with state law but also gives the town’s some local influence,” said Bendix at the ADU workshop.
ADUs are now allowed above detached garages in Atherton as long as the units meet town height restrictions and requirements for fencing and screening.
Additionally, the ordinance created a bonus ADU program, which allows homeowners with lots over 2 acres to build a second accessory structure on their property, as long as that second structure is deed restricted to either a low-income household for 15 years, or a very-low income household for 10 years.
This program comes with the caveat that the bonus unit cannot be rented for a period of less than nine months. According to a March 20 staff report, Atherton hopes that this program will “incentivize the development and documentation of ADUs that are available to lower income households.”
“The town didn’t have to allow ADUs located above detached garages,” said Bendix at the ADU workshop. “Bonus ADUs, that’s another thing that the town wasn’t required to do by state law. But they’re using that not just as a means to facilitate the required setbacks, but to try and get more affordability out of the ADU program that counts towards the RHNA numbers and hopefully enables Atherton to meet the housing objectives set by the state.”
Are ADUs affordable housing?
These updates to Atherton’s ADU program come in the wake of a June 2023 report from a San Mateo County Civil Grand Jury, which called out affluent towns such as Atherton, Portola Valley, Woodside and Hillsborough for using ADUs in their housing plans to avoid building multifamily, low-income housing.
“Although their intentions have been good, the State has neglected to include any form of regulation to ensure low-income tenants ultimately use these ADUs as planned,” the report states. “Because owners often rent their ADUs to family and friends, they can exacerbate patterns of segregation and exclusion. And perhaps most importantly – counting ADUs as affordable housing will likely result in cities issuing permits for fewer deed-restricted low-, very low-, and moderate-income apartments and homes.”
Levine of the Housing Leadership Council also said that Atherton’s internal town surveys are not accurately capturing the state of ADU rentals in the town.
“They’re only surveying what the rents are at the time that the permit application is approved. They don’t have ongoing monitoring,” he said. “They have no idea what the actual market is for ADUs in their community. And the reporting is biased because the city is telling people we need evidence to demonstrate that we can build enough ADUs is to meet our RHNA”
Atherton argues in the most recent draft of their housing element that renting to family members or close relatives can actually help prevent displacement, and free up other low-income housing.
“Based on existing precedent, these units are often used for housing for a senior family member, employees of the homeowner, students, or in other similar circumstances where the renter would otherwise be unable to find similar accommodations locally,” the housing plan states “Consequently, the ADU occupants do not displace others from low-income housing that is available locally.”
Levine acknowledged that ADUs are ultimately an important aspect of any town’s housing element, but that they should not be the primary mode of meeting RHNA requirements.
“Portola Valley had a lot of ADUs in their housing element, but it was just a much smaller proportion compared to Atherton. … It’s like 20 or 25% of their total RHNA instead of 80%. … The RHNAs are pretty similar, but Portola Valley is approaching it with a lot more multifamily zoning. And they also have a site that could be actually realistic.”
Currently, Atherton is still working with residents and the state Department of Housing and Community Development to identify potential sites for multifamily housing and finalize revisions to the town’s zoning ordinances.
You can follow along with Atherton’s housing element update process on the town website at ci.atherton.ca.us/627/Housing-Element-Update.