Chapter 17.57 — INCLUSIONARY HOUSING

Sections:

• 17.57.010 Purpose. 17.57.020 Definitions. 17.57.030 Exemptions. 17.57.040 Basic Affordable Housing Requirements. 17.57.050 In-Lieu Fee. 17.57.060 Provision of Affordable Units. 17.57.070 Alternative Means of Compliance. 17.57.080 Application and Review Procedures. 17.57.090 Affordable Housing Fund. 17.57.100 Administrative Relief. 17.57.110 Enforcement. 17.57.120 Appeals.

The purposes of this chapter are to:

A. Enhance the public welfare by establishing policies to provide affordable housing, meet the town’s regional share of housing needs, and implement the goals and objectives of the general plan and housing element.

B. The adoption of a citywide inclusionary housing program will also assist in alleviating the use of available residential land solely for the benefit of households that are able to afford market rate housing because such market-rate development will be required to contribute to the provision of affordable housing for the entire

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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Atherton community, and will assist in alleviating the impacts of the service needs of households in new marketrate residential development by making additional affordable housing available.

C. Encourage the development of inclusionary units to be located upon the same site as market rate residential development to provide for integration of Very Low, Low, and Moderate Income households with households in market rate neighborhoods and to disperse inclusionary units throughout the Town where new residential development occurs.

D. To provide the residential development community with alternatives to construction of the inclusionary affordable units on the same site as the market rate residential development through a range of alternative options to constructing inclusionary units. Nothing in this Chapter shall deem or be used to deem the compliance options, including, but not limited to, the in-lieu fee, as an ad hoc exaction, as a mandated fee required as a condition to developing property, or as a fee subject to the analysis in Building Industry Association of Central California v. City of Patterson (2009) 171 Cal.App.4th 886. (Ord. 677 § 1, 2026)

The definitions set forth in this section shall govern the application and interpretation of this chapter. Words and phrases not defined in this section shall be interpreted so as to give this chapter its most reasonable application.

A. “Affordable housing agreement” means an agreement in conformance with section 17.57.080(B) between the town and an applicant, governing how the applicant shall comply with this chapter.

B. “Affordable housing cost” means the maximum purchase price that will be affordable to the specified household at the specified income level, calculated in accordance with California Health and Safety Code Section 50052.5. The affordable sales price shall include a reasonable down payment, and monthly housing payments (including interest, principal, mortgage insurance, property taxes, homeowners insurance, homeowners association dues, property maintenance and repairs, and a reasonable allowance for utilities), all as determined by the town.

C. “Affordable housing fund” means a fund or account designated by the town to maintain and account for all monies received from residential project applicants pursuant to this chapter.

D. “Affordable housing plan” means a plan containing all of the information specified in and submitted in conformance with section 17.57.080(A) specifying the manner in which affordable units will be provided in conformance with this chapter.

E. “Affordable rent” means the total monthly housing expenses for a rental affordable unit not exceeding the rents specified by Section 50053 of the California Health and Safety Code and California Code of Regulations Title 25, Division 1, Chapter 6.5, Sections 6910 through 6924. As used in this chapter, “affordable rent” shall include the total of monthly payments by the tenant for all of the following: (1) use and occupancy of the affordable unit and facilities associated with the affordable unit, including but not limited to parking, bicycle storage, storage lockers, and use of all common areas; (2) any additional separately charged fees or service charges assessed by the owner,

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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other than security deposits; (3) a reasonable allowance for utilities paid by the tenant as established by the San Mateo County Housing Authority, including garbage collection, sewer, water, electricity, gas, and other heating, cooking, and refrigeration fuel, but not telephone service; and (4) any possessory interest, taxes, or other fees or charges for use of the land and associated facilities and assessed by a public or private entity other than the owner, and paid by the tenant.

• F. “Affordable unit” means a dwelling unit affordable to very low, low, or moderate income households.

G. “Applicant” or “developer” means a person, persons, or entity that applies for a residential or nonresidential project and includes the owner or owners of the property if the applicant does not own the property on which development is proposed.

H. “Area median income” or “AMI” means the annual median income for San Mateo County, adjusted for household size, as published periodically in the California Code of Regulations, Title 25, Division 1, Chapter 6.5, Section 6932, or its successor provision, or as established by the Town of Atherton in the event that such median income figures are no longer published periodically in the California Code of Regulations.

I. “Building permit” includes full structural building permits as well as partial permits such as foundation-only permits.

J. “City manager” means the City Manager of the Town of Atherton or his or her designee.

K. “Common ownership or control” refers to property owned or controlled by the same person, persons, or entity, or by separate entities in which any shareholder, partner, member, or family member of an investor of the entity owns ten percent or more of the interest in the property.

L. “Decision-making body” means the town staff person or body authorized to approve or deny an application for a planning or building permit for a residential project.

M. “Density bonus units” means dwelling units approved in a residential project pursuant to California Government Code Section 65915 that are in excess of the maximum allowable residential density otherwise permitted by the Town of Atherton.

N. “Extremely low income” are those households whose income does not exceed the extremely low income limits applicable to San Mateo County as defined in California Health and Safety Code Section 50106 and published annually pursuant to Title 25 of the California Code of Regulations, Division 1, Chapter 6.5, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between fifteen percent and thirty percent of area median income.

O. “First approval” means the first of the following approvals to occur with respect to a residential project: planning permit or building permit.

P. “In-lieu fee” means the fee paid by developers of residential projects to mitigate the impacts that such developments have on the demand for affordable housing in the town.

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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Q. “Lower income households” or “low income households” are those households whose income does not exceed the low income limits applicable to San Mateo County as defined in California Health and Safety Code Section 50079.5 and published annually pursuant to Title 25 of the California Code of Regulations, Division 1, Chapter 6.5, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between fifty percent and eighty percent of area median income.

R. “Market rate unit” means a new dwelling unit in a residential project that is not an affordable unit.

S. “Moderate income households” are those households whose income does not exceed the moderate income limits applicable to San Mateo County as defined in California Health and Safety Code Section 50093 and published annually pursuant to Title 25 of the California Code of Regulations, Division 1, Chapter 6.5, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between eighty percent and one hundred twenty percent of area median income.

T. “Planning permit” means any discretionary approval of a residential project, including but not limited to a general plan adoption or amendment, rezoning, tentative map, parcel map, conditional use permit, or variances.

U. “Residential project” means any development for which a planning permit or building permit is required that includes the creation of one or more new dwelling units or includes the conversion of nonresidential uses to dwelling units.

V. “Very low income households” are those households whose income does not exceed the very low income limits applicable to San Mateo County as defined in California Health and Safety Code Section 50105 and published annually pursuant to Title 25 of the California Code of Regulations, Section 6932 (or its successor provision) by the California Department of Housing and Community Development, generally households with incomes between thirty percent and fifty percent of area median income. (Ord. 677 § 1, 2026)

The following development projects are exempt from the provisions of this chapter:

A. Residential projects consisting of the construction of a single primary unit with accessory dwelling units permitted by chapter 17.52.

• B. Residential projects resulting from Urban Lot Splits permitted by chapter 17.53. (Ord. 677 § 1, 2026)

The provisions of this section shall apply to all residential projects resulting in the development of five or more dwelling units, except for any residential project exempt under section 17.57.030.

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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Unless an alternative is approved as described in section 17.57.070, residential projects shall provide the following:

A. For residential projects in the Multifamily Overlay District (RM-10), a minimum of fourteen percent of the dwelling units in the residential project shall be made available at affordable sales or rental prices to very low- or low-income households.

B. For residential projects in the Multifamily Overlay District (RM-20/40) a minimum of twenty percent of the dwelling units in the residential project shall be made available at affordable sales or rental prices to very low- or low-income households.

C. For all other projects located outside the RM-10 and RM-20/40 Overlay Districts, twenty percent of the dwelling units in the residential project shall be made available at affordable sales or rental price to very low-, low-, and moderate-income households.

D. For residential projects that convert existing rental housing to condominiums, convert other residential or nonresidential space, or that remove existing rental housing, twenty percent of the dwelling units in the project shall be made available at affordable sales price to very low-, low-, and moderate-income households.

E. Calculations of the number of affordable units required by this section shall be based on the number of dwelling units in the residential project, excluding any density bonus units. Residential projects shall not receive credit for any existing dwelling units demolished as part of the project.

F. When the affordable housing requirements described in this section result in a fractional unit, an in-lieu payment as specified in section 17.57.050 may be made for the fractional unit instead of providing an affordable unit. The in-lieu fee for a fractional unit shall be calculated as described in section 17.57.050. If a fractional unit of one-half or greater (i.e., equal to or more than one-half a unit) is required, the applicant may elect to round up to the nearest whole number when calculating the required number of affordable units to be provided instead of paying the in-lieu fee. In any instance where a fractional unit of less than one-half units (i.e., less than one-half a unit) is required, the in-lieu fee shall apply to the fractional unit less than one-half units. (Ord. 677 § 1, 2026)

A. Fees. The amount of any in-lieu fees shall be established from time to time by ordinance or resolution of the city council and shall be reflected in the town’s master fee schedule. In-lieu fees shall not exceed the cost of mitigating the impact of residential projects on the need for affordable housing in the town. The in-lieu fee shall be based on the adopted calculation method in the nexus study as adopted by the town council. For purposes of the 2023-2031 housing element cycle, the “point of indifference” calculation method as described in the 2024 BAE study will be used as the upper limit for fee adoption.

B. Fee payment. In-lieu fees, if required, shall be paid prior to issuance of any building permit for a development project subject to this chapter or at a time otherwise specified by city council ordinance or resolution. All fees collected under this Section shall be deposited in the Affordable Housing Fund established pursuant to this Chapter.

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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C. Fee review. The town will review its in-lieu fees every four years to determine how much it has collected and identify projects for uses for which the fees will be made. This review will ensure that in-lieu fees are used for their intended purpose and addressing the goals and programs set forth in the town’s housing element. The town will endeavor to identify anticipated fees and amounts to complete such programs and projects. The study in support of the in-lieu fee shall be reviewed and updated every eight years. The town will endeavor to conduct such update contemporaneously with each new housing element cycle. (Ord. 677 § 1, 2026)

A. Standards for affordable units.

1. Affordable units shall be comparable in exterior appearance and overall quality of construction to market-rate units in the same housing development. Interior finishes and amenities must equal those provided in the base model market-rate units.

2. The number of bedrooms and the size of the affordable units shall be comparable to the average number of bedrooms in the market-rate units, except that in a single-family detached development, the decision-making body may allow smaller affordable units or duplex affordable units, if permitted in the zoning district, when this furthers the provision of on-site affordable units. The affordable units shall be reasonably dispersed within the residential project, with unit locations comparable to those of the marketrate units, or, subject to the approval of the planning and community environment director, may be clustered within the residential project when this furthers affordable housing opportunities.

3. The affordable units shall have the same amenities as the market rate units, including the same access to and enjoyment of common open space, parking, storage, and other facilities in the residential project.

B. Timing of construction. The affordable units shall be constructed in proportion to construction of the marketrate units. No building permit shall be issued for any market-rate unit unless a proportional number of building permits have been issued for affordable units, and no certificates of occupancy or final inspections shall be issued for any market-rate units unless a proportional number of certificates of occupancy or final inspections have been issued for affordable units. An alternative phasing plan may be approved as part of the approval of the affordable housing plan described in section 17.57.080.

• C. Continued affordability.

1. All affordable units provided under section 17.57.040 shall be subject to a resale restriction, deed of trust, and/or regulatory agreement recorded against the property for execution by the city manager in a form approved by the city attorney, to ensure the continued affordability of the affordable units.

2. Notwithstanding section 17.57.060(A), to be considered as affordable units under this chapter, all affordable units shall remain affordable to the targeted income group for fifty-five years.

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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3. Any household that occupies an affordable unit must occupy that unit as its principal residence, unless otherwise approved in writing by the city manager for rental to a third party for a limited period of time due to household hardship, as determined by the town.

4. No household may begin occupancy of an affordable unit until the household has been determined to be eligible to occupy that unit by the city manager.

5. Any rent regulatory agreement for rental units in a residential ownership project shall include provisions for sale of the affordable units and relocation benefits for tenants of the affordable units if the owner of the residential ownership project later determines to offer the affordable units in the residential project for sale to moderate-income households at an affordable sales price. (Ord. 677 § 1, 2026)

The developer of a residential project may request an alternative means of compliance, as described in this section, as a component of the affordable housing plan required by section 17.57.080.

A. In-Lieu Fee. The affordable housing requirement may be satisfied by the payment of a fee, pursuant to section 17.57.050, and subject to consideration by the City Council.

B. Dedication of land in lieu of construction of affordable units. The provision of affordable units may be satisfied by the dedication of land in lieu of constructing the affordable units if the City Council determines that all of the following criteria have been met:

1. Marketable title to the site is transferred to the Town, or an affordable housing Developer approved by the Town, prior to the commencement of construction of residential project pursuant to an agreement between the Developer and the Town and such agreement is in the best interest of the Town.

2. The site has a General Plan designation that authorizes residential uses and is zoned for multifamily development at a density to accommodate at least the number of otherwise required affordable units, and conforms to the Town’s development standards.

3. The site is suitable for development of the Affordable Units in terms of configuration, physical characteristics, location, access, adjacent uses, and other relevant planning and development criteria including, but not limited to, factors such as the cost of construction or development arising from the nature, condition, or location of the site. In order to be eligible for the dedication of land use alternative, the minimum lot size for dedication is two thousand four hundred square feet of land in order to feasibly facilitate future construction of housing.

4. Infrastructure to serve the dedicated site, including, but not limited to, streets and public utilities, must be available at the property line and have adequate capacity to serve the maximum allowable residential development pursuant to zoning regulations.

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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5. Environmental review of the site has been completed for the presence of hazardous materials and geological review for the presence of geological hazards and all such hazards are or will be mitigated to the satisfaction of the Town prior to acceptance of the site by the Town.

6. The value of the site upon the date of dedication is equal to the in-lieu fee in effect at the date of dedication multiplied by the number of otherwise required Affordable Units within the Residential Project.

C. With respect to sites dedicated pursuant to Subsection B of this section, the Town shall not be required to construct restricted income units on the site dedicated to the Town, but may sell, transfer, lease, or otherwise dispose of the dedicated site in accordance with the requirements of this Chapter and state law. Any funds collected as the result of a sale, transfer, lease, or other disposition of sites dedicated to the Town shall be deposited into the Affordable Housing Fund and used in accordance with the provisions of section 17.57.090.

D. In considering requests from a developer for alternative compliance to creating affordable units, the City Council’s consideration will include whether creating the affordable units would render the overall project financially infeasible under then current economic conditions. To that end, the developer may, at its option and at its own expense, provide its project financial information to an independent third-party housing/real estate analyst retained by the Town to conduct a financial feasibility analysis. The independent analysis will be conducted utilizing the applicant’s data, and any additional information that may be required of the developer to complete a thorough assessment. The independent analyst shall employ recognized best practices for the industry and render a detailed recommendation to the City Council to support its conclusions. Any of the developer’s sensitive proprietary information shall be redacted before making the report public to the extent permitted by law. (Ord. 677 § 1, 2026)

• A. Affordable housing plan.

1. All residential projects proposing to provide affordable units under the provisions of section 17.57.060 shall submit an affordable housing plan concurrently with the application for the first approval of the project. The affordable housing plan must include information demonstrating compliance with section 17.57.060. The town shall provide an application form specifying the contents of the affordable housing plan. If an affordable housing plan is required, no application for a first approval of the project may be deemed complete until a complete affordable housing plan is submitted. The cost of reviewing any proposed alternative, including but not limited to the cost to the town of hiring a consultant to review the application, shall be borne by the applicant.

2. Any affordable housing plan shall be processed concurrently with all other permits required for the development project. Before approving the affordable housing plan, the decision-making body shall find that the affordable housing plan conforms to this chapter. A condition shall be attached to require recordation of an affordable housing agreement, as described in subsection B of this section, prior to the approval of any final or parcel map or building permit for the development project.

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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3. The approved affordable housing plan may be amended prior to issuance of any building permit for the development project. A request for a minor modification of an approved affordable housing plan may be granted by the town planner if the modification is substantially in compliance with the original affordable housing plan and conditions of approval. Other modifications to the affordable housing plan shall be processed in the same manner as the original plan.

• B. Affordable housing agreement.

1. Affordable housing agreements acceptable to the city manager and approved as to form by the city attorney shall be recorded against the project prior to approval of any final or parcel map, or issuance of any building permit, whichever occurs first, unless the project solely uses an alternative to housing construction.

2. The affordable housing agreement shall specify the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential purchasers or renters of units, and resale control mechanisms, including the financing of ongoing administrative and monitoring costs, consistent with the approved affordable housing plan and any affordable housing guidelines, as determined by the city manager.

3. The city council, by resolution, may establish fees for the ongoing administration and monitoring of the affordable units, which fees may be updated periodically, as required.

4. The Town Planner may adopt affordable housing guidelines to implement this chapter, and may update those guidelines periodically as required. (Ord. 677 § 1, 2026)

A. All housing in-lieu fees or other funds collected under this chapter shall be deposited into the town’s affordable housing fund.

B. The monies in the affordable housing fund and all earnings from investment of the moneys in the affordable housing fund shall be expended exclusively to provide housing affordable to very low-income, lower-income, and moderate-income households in the town, consistent with the goals and policies contained in the town’s housing element and for administration and compliance monitoring of the inclusionary housing program. (Ord. 677 § 1, 2026)

A. As part of an application for the first approval of a residential project, a developer may request that the requirements of this chapter be waived, adjusted, or reduced by the city council, based upon a showing, supported by substantial evidence, that applying the requirements of this chapter would result in an unconstitutional taking of property or would result in any other unconstitutional result. Full compliance shall be

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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required unless the applicant expressly demonstrates otherwise in accordance with the requirements of this section.

B. The request for a waiver, adjustment, or reduction shall set forth in detail the factual and legal basis for the request.

C. Any request for a waiver, adjustment, or reduction shall be reviewed and considered at the same time as the project application or any affordable housing plan.

D. The waiver, adjustment, or reduction may be approved only to the extent necessary to avoid an unconstitutional result, after adoption of written findings by the town, based on substantial evidence, supporting the determinations required by this section. If a waiver, adjustment, or reduction is granted, any change in the project may require a new application. (Ord. 677 § 1, 2026)

A. The town, including but not limited to the city attorney, shall be authorized to enforce the provisions of this chapter and all affordable housing agreements, regulatory agreements, and all other covenants or restrictions placed on affordable units, by civil action and any other proceeding or method permitted by law.

B. Failure of any official or agency to fulfill the requirements of this chapter shall not excuse any developer or owner from the requirements of this chapter. No permit, license, map, or other approval or entitlement for a residential project shall be issued, including without limitation a final inspection or certificate of occupancy, until all applicable requirements of this chapter have been satisfied.

C. The remedies provided for in this section shall be cumulative and not exclusive and shall not preclude the town from any other remedy or relief to which it otherwise would be entitled under law or equity. (Ord. 677 § 1, 2026)

Any person dissatisfied with the application of this Chapter may file an appeal pursuant to sections 17.06.100(C) through (E). Any decision by the town planner may be appealed to the planning commission. Any decision of the planning commission may be appealed to the city council. Failure to comply with the procedures in this Section is jurisdictional. The action of the city council is final on the date of decision and may not be further appealed. A person may seek judicial review of a final decision of the town in accordance with applicable sections of the California Government Code or Code of Civil Procedure. (Ord. 677 § 1, 2026)

The Atherton Municipal Code is current through Ordinance 677, passed February 18, 2026.

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