Atherton studies proposed inclusionary housing ordinance; staff to take draft to planning commission

The Atherton Town Council held a special study session to review a draft inclusionary housing ordinance and options for implementation, hearing a presentation from Town Planner Britney Bendix and consultants from M Group and BAE Urban Economics on Nov. 29, 2024 (special meeting date in packet). The council heard detailed feasibility and in-lieu fee analyses, discussed the interaction with the state density bonus program and HCD review, and gave staff direction to move a draft to the Planning Commission on Jan. 29, 2025 and then to the City Council in February or March for hearings; no formal ordinance vote occurred at the meeting.

The discussion matters because Atherton’s adopted housing element references inclusionary requirements and the town must show consistent programs to the California Department of Housing and Community Development (HCD) as part of certification and ongoing RHNA obligations. The council emphasized three trade-offs: how deep to target affordability (very low vs. low AMI), whether to apply requirements to multifamily zones (RM-10 and RM-20/40) and single-family construction, and whether to set an in-lieu fee large enough to fund off-site affordable housing without making on-site construction infeasible.

Town Planner Britney Bendix opened the session with the staff report and explained the legal and program context. “This is a local policy. It’s optional. It’s not required by the state,” Bendix said, then reviewed how state law and the State Density Bonus Program interact with a local inclusionary program. Consultants Asher Cohn (M Group) and Stephanie Hager (BAE) detailed the BAE study, which modeled four development prototypes (multifamily rental, townhome for-rent, townhome for-sale and single-family new construction), tested density-bonus scenarios, and calculated a range of per‑square‑foot in-lieu fees under three approaches: nexus, cost-of-construction, and a point-of-indifference (the fee that would make on-site construction financially comparable to paying a fee).

Key facts presented and discussed

- Set-aside and affordability targets: Bendix noted the town’s housing element referenced a 20% inclusionary set-aside in some contexts (for example, RM-20/40 scenarios), and the staff/BAE materials used 20% as a working example. BAE’s modeling assumed very-low-income targeting for some multifamily rental prototypes and low- to 70% AMI targeting for for-sale prototypes to reflect how the State Density Bonus Program affects developer choices.

- Density bonus interactions: Consultants and staff explained that projects with five or more units are eligible to use the state density bonus program and that providing deeper or greater quantities of affordable units generally increases the state bonus and potential waivers/concessions. Asher Cohn said the density bonus calculations were modeled for each prototype and noted the bonus can materially increase total units (for example, a 70% bonus on a 30-unit base density raises the total modeled units to 51 in the study’s example).

- In-lieu fees and feasibility: BAE presented three fee approaches. Staff emphasized that a single fee approach need not apply uniformly to every housing type; the town could adopt different fee bases for single-family versus multifamily projects. The consultants noted single-family owners often prefer to build ADUs; staff and council discussed using fee levers to incentivize deed-restricted ADUs versus permitting an in-lieu payment.

- Data inputs and uncertainty: BAE used San Mateo County AMI figures (2024 AMI cited in the presentation: $186,000) and local proxy land values. Bendix and the consultants said some inputs — unit sizes, construction costs, and the scope of projects the study should cover (for example, whether to include additions or SB 9 splits) — could be refined with further study. Council members repeatedly asked staff and consultants to confirm unit-size and cost assumptions against recent, local projects such as developments in Menlo Park and Palo Alto.

Council discussion and public comment

Council members pressed on the practical impacts of density-bonus waivers and concessions on local design standards. Town Attorney Mona (last name not specified in the record) advised that waivers or concessions may be available under the density bonus provisions but that the town’s discretion to deny an incentive or concession is limited: “If the town could demonstrate that the types of incentives and concessions that they’re asking for don’t actually result in identifiable, cost reductions that further affordable housing development, then it’s something that we would be able to preclude,” she said. The attorney also noted that a jurisdiction can make written findings that a specific concession would cause an adverse health or safety impact.

Several council members voiced concern about unintended outcomes if the town requires an inclusionary percentage that makes using the state density bonus attractive to developers. Council member DeGolia said: “I don’t wanna see a multifamily site go up on one of these one‑acre properties that’s all market‑rate housing. If we have to have a multifamily site next to our currently single‑family resident properties, there’s got to be affordable housing in it.” Other council members said they wanted to distinguish between the RM‑10 sites and the RM‑20/40 sites when crafting requirements.

Public commenters urged care and time to refine the analysis. Jeff Morris (resident) recommended finishing HCD’s requested housing element items first before finalizing an inclusionary ordinance. Kelly Martin (resident adjacent to rezoned Ravenswood properties) urged the council to consider excluding RM‑10 parcels from an inclusionary requirement if that would undermine the design standards that neighbors and the council had recently adopted.

Council direction and next steps

No ordinance or fee was adopted at the study session. Staff reported the next procedural steps the council can expect: a special Planning Commission meeting on Jan. 29, 2025 to review an ordinance draft; subsequent City Council hearings (introduction/first reading and second reading) in February and/or March 2025 if the commission and council choose to proceed. Bendix and staff said they will move forward with housing element fixes required by HCD while developing draft inclusionary ordinance language for the Planning Commission to consider. The record shows the council requested additional information on fee methodologies, unit‑size and construction cost assumptions, and legal constraints tied to density‑bonus incentives and waivers.

No formal votes or binding policy decisions were recorded at the session; the meeting was a study session to receive analysis, take public input, and provide policy direction to staff.

Ending

Staff will prepare a draft inclusionary ordinance and supporting findings for review by the Planning Commission at the January 29 special meeting and then return to the City Council for hearings in early 2025. Council members asked staff to provide clearer cost and unit‑size assumptions, to analyze how a program would apply to RM‑10 versus RM‑20/40 areas, and to outline options for incentivizing deed‑restricted ADUs versus collecting in‑lieu fees.