Palo Alto will have to revise its new laws pertaining to accessory dwelling units after the California Department of Housing and Community Development determined that they are too restrictive and run afoul of state regulations.

The department announced its findings in a December letter from David Zisser, the agency's assistant deputy director for local government relations and accountability. The determination means that the city will now have to modify the ordinance it adopted in October 2020 to ease restrictions related to height, setbacks and permitted square footage for accessory dwelling units (ADUs).

Palo Alto is one of just 13 cities or counties in California that have received "review letters" from the state department notifying them that they need to revise their ADU plans. Atherton, Santa Cruz and Pittsburg are the only other Bay Area municipalities that have received such warnings.

One flaw that the state identified in the city's ordinance is a table that establishes a maximum size of an accessory dwelling unit at 800 square feet. While state law prohibits cities from denying ADUs that are with a floor area of 800 square feet, it also sets a limit of 850 square feet for attached units with more than one bedroom and 1,000 square feet for detached units with more than one bedroom, according to the department.

The state agency also took issue with the height limit that Palo Alto established for ADUs in flood zones. State law requires cities to allow building heights of at least 16 feet. The department notes, however, that in flood zones, the city allows most residential structures to exceed established heights so that buildings can be elevated for protection. This accommodation, the state department notes, has not been extended to ADUs. In fact, the city's ordinance includes the caveat: "Units built in a flood zone are not entitled to any height extensions granted to the primary dwelling."

"In many instances, this would operate as an impermissible restriction on ADUs," the state department's letter states.

The city's rules pertaining to basements also conflict with state regulations, the agency has found. The Palo Alto ordinance states that "no basement or other subterranean portion of an ADU/JADU (junior accessory dwelling unit) shall encroach into a setback required for the primary dwelling." This, according to the department, can conflict with a state law prohibiting cities from establishing rear- and side-yard setbacks greater than 4 feet.

The state agency found this clause problematic for two reasons, the letter states.

"First, setbacks may not be required for JADUs as they are constructed within the walls of the primary dwelling," the department's letter states. "Second, this requirement imposes excessive restrictions on ADUs converted from an existing area of the primary dwelling or accessory structure with a basement or subterranean space."

The state agency also took issue with the city's suggestion that daylight plane requirements, which aim to protect neighbors' access to light and air, can act as a limit on ADU heights. While this would not be a problem in many instances, the restriction cannot be used to limit the height to less than 16 feet. And it faulted the city's ordinance for counting covered parking in its calculation of the accessory dwelling unit's square footage.

"Covered parking should not count toward the total floor area of the site as it would unduly limit the allowable size of an ADU established by state law, nor should it directly count toward the area available for the ADU," Zisser wrote. "Although standards within an underlying zone may apply when noted in the adopted ADU ordinance, they may not be more restrictive than those contained in state statute."

While the city has agreed to modify its ordinance and clarify many of the provisions that the state department has flagged, it is pushing back against the agency over its findings on basements and daylight planes. In a response letter that city Planning Director Jonathan Lait submitted to the agency earlier this month, he disputes that the city's failure to grant ADUs in flood zones the same type of height allowances that it grants to primary residences is unduly restrictive.

"It is unclear to the City how the failure to provide additional height above 16 feet represents an impermissible restriction on ADU," Lait wrote.

The state department had indicated that it would prefer to have as few restrictions as possible on ADU production.

"The only restriction here is on finished floor height in the flood zone, which cannot be waived or relaxed without impacts in health and safety," Lait wrote. "Even in areas requiring the most extreme height above the base flood elevation, an ADU remains feasible within the 16-foot height limit."

When it comes to basements, Lait challenged the state department's findings, noting that the city has "significant concerns" about basements, particularly their impacts on street trees and on groundwater pumping. Even though state law prohibits cities from imposing a setback of greater than 4 feet for ADUs, he argued that the setback could be greater for basements as long as it remains feasible for the unit to be of at least 800 square feet.

Placing ADUs with basements close to the property line, Lait argued, may jeopardize the health of trees that serve to enhance privacy between properties.

"The trees could fail, which would both diminish the tree canopy — important for our environment and adaptation to climate change — and diminish the privacy between properties," Lait wrote.

He also pushed back against the agency's findings on counting garage space toward square footage, noting that the property owner "may always choose to provide a detached garage, uncovered parking, or no parking at all for the ADU."

Lait alluded to the department finding earlier this month, when he told the council during its Feb. 5 retreat that the city will have to make some adjustments to its ordinance to make sure it complies with state law.

"It's mostly some minor aspects, and mostly clarifications," Lait said.

But two local architects who have been working to build accessory dwelling units in Palo Alto told this news organization that the city's failure to comply with state law have already had the effect of deterring some homeowners and creating major delays for many others. The proliferation of new restrictions not only conflicts with specific state requirements but runs counter to the law's intent, which is to make ADU production quick and simple, they said in an interview.

Jessica Resmini, CEO of the company ADU Collective, has been trying to warn the city about the about the discrepancy between its new ordinance and state laws since October 2020, with very limited success. Since the council adopted its ordinance, she and local architect Randy Popp had submitted numerous letters to the city requesting adjustments to the ordinance and have held meetings with city staff and state department officials to discuss the city's recent requirements.

The process for getting an ADU approved has become increasingly complex, said Resmini, who has 64 ADU projects currently in the works between San Francisco and Orange. When she submitted a site plan for her first ADU, it consisted of five pages. Since then, it has grown to 31 sheets. The amount of money it takes to get through planning makes it unaffordable to many people who are looking to build the additional unit.

"It's totally and completely over the top," Resmini said.

At times, the feedback she has been getting from planning staff is frustratingly vague and subjective. She gave an example of an ADU she was working on at Greenwood Avenue, which is south of Eleanor Pardee Park. The owners wanted to convert a garage and add an extension to create an ADU. The property included a redwood tree close to the project site and which would have been preserved under the plans. Despite their efforts to avoid the redwood, the city's Urban Forestry Division declined to sign off on the project.

"They got so many runarounds from Urban Forestry that they stopped the project," Resmini said. "It was just too much for them."

Popp sits with Resmini on the ADU Task Force, a coalition of architects that has been working with the city on its ADU laws. In January 2020, when the city adopted its initial urgency ordinance on ADUs, he submitted a complaint to the state department that identified discrepancies between Palo Alto's new rules and the state ordinance. Popp told this news organization that the complaint is the only avenue that residents have to point out areas where local laws don't align with the state.

Popp has written numerous letters urging the city to revise its laws, including the one that prohibits basements at new ADUs. He mentioned one project in which an ADU is on a hillside and the owner wanted to press the first floor into the ground by about 24 inches. The city found that this was not allowable.

"The city has added a lever of complexity that is really disincentivizing new development," Popp told this news organization.

Popp said he sees the creation of ADUs as an effective method to build more housing in a way that does not create major impacts to the immediate neighborhood. And while the city sees the recent proliferation of ADUs as a victory of sorts, he believes the number could have been far higher if the city's laws were less stringent and more consistent with the state's intent.

"I happen to believe that sprinkling ADUs through the city and through the state is a very gentle way to create housing that does not create as significant an impact as, for example, a 150-unit apartment building on the corner, where you have a density of people who weren't there before," Popp said. "When you're talking about the 89 ADUs built around PA — the impact of that is not measurable. You can't say that the traffic at Charleston is worse because there are those ADUs. And even if we double that number, it still wouldn't be measurable."