Buoyed by a recent boom in accessory dwelling units, the Palo Alto City Council agreed on Monday to make further revisions to the city's zoning laws, with the goal of encouraging even more such units at a time when other housing types are in short supply.
Historically, the city has only received four permits per year for accessory dwelling units (ADUs), also known as granny units or secondary units. But since the council passed a new law in May 2017 to relax its zoning standards for such units, the pace of construction has accelerated. Planner Clare Campbell told the council that since the change, the city has seen about four permit applications for ADUs per month, with a total of 64 going through the city's process since the zone revisions were made.
For the council, which is trying to raise the city's housing production, this is a rare bit of good news on the housing front. Councilman Greg Scharff observed that the number of new ADUs is higher than the total number of units that Palo Alto had approved in the prior year, before the zoning changes were made. And because these units are spread out in neighborhoods throughout the city, their traffic and parking impacts aren't focused in any particular area, he said.
"I haven't heard about complaints about neighborhoods being impacted," Scharff said. "Not a single person has written to me and said, 'I can't believe you allowed ADUs.'"
But while council members agreed that the city's ADU program is showing signs of success, they had different ideas about what the city should do to make it even more successful. While some called for making zoning laws even more permissive, others noted that the impacts of the new units haven't been fully felt yet (since many are still under constructions) and urged a more cautious approach.
As in prior discussions, the council's votes reflected the split. The most meaningful change that the council made was removing a "minimum lot size" provision, which limited ADUs to lots of 5,000 square feet or greater. That change was made by a 5-4 vote in which Councilman Tom DuBois joined the more growth-friendly colleagues Councilmen Adrian Fine, Greg Scharff, Greg Tanaka and Cory Wolbach.
The council also fell one vote shy, however, of making another significant change: removing a requirement in the existing ordinance that requires the homeowner to occupy either the main residence or the ADU. John Kelley, a housing advocate who said he is considering building an ADU, noted that situations may arise in which the homeowners want to get away for a year or downsize to a smaller place. Would the council, he asked, kick out the tenants in the ADU because of these circumstances?
The council struggled to reach an agreement on this issue. Scharff and others who wanted to eliminate the provision characterized it as an unnecessary barrier that discourages construction of ADUs. Vice Mayor Eric Filseth countered that without the owner-occupied provision, homes with ADUs "essentially become a purely financial instrument, an instrument for out-of-town investors."
He cited the example of a house near his, where the owner passed away and the property passed on to her relative, who now rents out the main house and the ADU separately. Each, he said, is very expensive, with the ADU rent at about $4,000 per month. Having the provision in place helps ensure that some of the units will go to caregivers, parents and children. Doing away with the provision, he said, will effectively create an incentive for these ADUs to "go to market rates and go to the highest bidders."
Filseth also argued that the owner-occupancy provision is what keeps management of these things local. It is also the only thing that keeps R-1 zones (which are designated for single-family residences) from becoming denser R-2 zones.
"I'm aware there are a number of people in town, and some regionally, who think R-1 zoning is an anachronism and we ought to get rid of it at this time because of housing pressures," Filseth said. "I don't think the majority of Palo Altans think that."
Scharff argued that such an argument is "hyperbolical" and suggested that Filseth is making it because he is running for re-election.
The move to kill the provision barely faltered when Councilman Cory Wolbach joined his four colleagues on the more slow-growth side – Filseth, DuBois, Karen Holman and Lydia Kou – to defeat the amendment. The council also opted not to allow ADUs to have basements that encroach into the rear yard setback of the neighboring home – a proposal that was supported by Councilman Greg Tanaka, Scharff and Fine.
The council was more united on several other issues, including the topic of waiving permit fees for new ADUs, which at times add up to nearly $10,000. Rather than making the change, however, the council directed staff to perform a financial analysis to better understand the impact of waiving fees, particularly for those homeowners who agree to rent out their ADUs at below-market rates (the council also specified that staff should consider an "opt-in" provision that would allow homeowners who no longer want to provide their units at affordable rates to pay the previously waived fees).
The council also agreed that the city should establish ADU template plans to provide homeowners with "off-the-shelf approvable projects" and to create a partnership program that would link homeowners with architects who specialize in ADUs.
All these reforms moved ahead by an 8-1 vote, with Councilwoman Lydia Kou dissenting. Kou strongly criticized the council for moving too aggressively on the new measures and for even considering policies like the removal of the owner-occupancy requirement – policies that she called "completely wrong." The city, she said, doesn't measure the traffic and parking impact of the new ADUs, some of which are not online. Nor does it have any safeguards for making sure they aren't used for Airbnb.
The policies, Kou argued, were "hastily made" and have no regard for preserving and protecting the characters of neighborhoods.