State orders Palo Alto to revise laws on backyard dwellings

In a city where building homes is famously costly and often onerous, accessory dwelling units offer Palo Alto’s housing advocates a small bit of promise.

Bolstered by recent state laws, the backyard structures are quietly but consistently doing their part in helping the city meet its housing goals. Palo Alto had issued 125 permits for accessory dwellings units in 2024, as well 125 in 2023 and 120 in 2022, according to a recent report from the city’s Department of Planning and Development Services. These numbers more than double the projections in the city’s Housing Element, a document that lays out plans to add 6,086 dwellings by 2031.

While the little structures represent a small share of the city’s housing stock, their growth over the past decade has been exponential. In 2016, city planners issued just five permits for ADUs. In 2018, there were 36 permits; in 2021, there were 89.

But even with the recent successes, Palo Alto planners are preparing to make further changes to local zoning laws on accessory dwelling units. According to the state Department of Housing and Community Development, the local code fails to fully comply with recent state laws that relaxed restrictions on building backyard dwellings and junior accessory dwelling units, which are carved out of existing living spaces.

In October, the state agency informed the city that it should either change its laws to comply with the state’s ADU law or adopt a resolution explaining why the city believes that it complies with state law, despite the HCD’s findings. The agency suggested that it’s not messing around.

“If the City fails to take either course of action and bring the Ordinance into compliance with State ADU Law, HCD must notify the City and may notify the California Office of the Attorney General that the City is in violation of State ADU Law,” wrote Jamie Candelaria senior housing accountability unit manager at the HCD’s Housing Policy Development Division.

The agency’s letter lists 20 ways in which the city’s ordinance fails to comply with state law, some technical and minor, others more substantive. The height limit is in the latter category. The city’s current code restricts the height of an 800-square-foot ADU to 16 feet. That doesn’t gibe with the 18 feet permitted by state law. Also, local law limits the number of additions at a single-family lot to two: one ADU and one JADU. The HCD believes this conflicts with the state law, which could allow a JADU and two ADUs, one detached and another attached one created by converting a portion of an existing space.

The HCD also wants the city to change its rules about converting a non-conforming structure to a code-compliant one. Currently, code forbids the new structure to increase the degree of non-compliance. But state law grants property owners the right to add 150 square feet to the ADU to accommodate ingress and egress.

Of particular concern is the HCD’s insistence that the city is improperly adopting special requirements for properties listed on the local Historic Inventory. State law, however, only allows cities to impose objective standards on ADUs for things like heights, setbacks and maximum size – not historic status.

“Therefore, the use of a local historic register such as the Palo Alto Historic Inventory would be inconsistent with state ADU Law,” the letter states. “The City must remove this reference.”

According to the city, the HCD’s finding would impact the roughly 350 properties that are on the local historic registry but not on the state ones. The local list organizes the historic properties into four categories, with the first two being the most historically significant. Existing law requires any exterior alteration to a historic site in the first two categories to be reviewed by the Architectural Review Board and the Historic Review Board.

“By removing this provision, any attached ADU/JADU proposed on a Category 1 or 2 property may result in modifications that impact the integrity of these local resources, without a remedy,” Principal Planner Garrett Sauls wrote in a report. “While the City does not have the authority to require additional changes based on the language in State law, it is important to note there could be impacts to the integrity of existing and future local resources.”

So far, the city has offered a mixed response to HCD’s directives. In a November letter to the agency, Planning Director Jonathan Lait vowed to update the zoning code to support some of the agency’s findings, including ones relating to historic properties and the maximum number of ADUs and JADU dwellings allowed by lot.

Lait also suggested that other findings are based on a misunderstanding of the city’s ordinance. For example, the city’s law requires that ADU include a kitchen that includes a range with two burners, an oven or convection microwave, counter space and freezer and refrigerator combination unit. Kitchens shall also include counter space for food preparation equal to a minimum 24-inch depth and 36-inch length, and a sink that facilitates hot and cold water. The HCD concluded that the details are too stringent, noting that state law only requires these units to have “permanent provisions for living, sleeping, eating, cooking, and sanitation” with no further specification.

Lait argued that removing the specific requirements would force the city to use “subjective criteria to assess reasonableness and introduce discretionary decision-making.”

“If HCD has objectively defined a reasonableness standard, please share, otherwise, the City does not believe a change is warranted,” Lait wrote.

To date, the city has not received a response from the HCD to its November letter. But rather than waiting any longer, city planners are proposing moving ahead with the changes that the agency requested. The Planning and Transportation Commission plans to review the proposed modifications at its April 9 meeting.

“While staff believes that there are strong arguments in support of the City’s position on these issues, it is possible that HCD’s eventual response will require further modifications to the ordinance. Given the uncertainty around when the City can expect a detailed response from HCD, staff recommends proceeding with the updated ordinance,” Sauls wrote.

This story originally appeared in Palo Alto Weekly. Gennady Sheyner covers local and regional politics, housing, transportation and other topics for the Palo Alto Weekly, Palo Alto Online and their sister publications.