Wealthy Bay Area town makes a charter bid to sidestep mandated housing |
In 2023, residents packed a Peninsula town’s council chambers decked out in custom red T-shirts expressing their discontent with the town for considering allowing multifamily housing in their neighborhoods. In the pressure cooker setting, council members grumbled in agreement that they wished they didn’t have to meet the state’s increasing demands to build more housing.
Those concerns have not disappeared in the three years since that meeting. The wealthy town of Atherton, home to 7,000 residents, including mega-rich pro athletes and tech CEOs about 30 miles south of San Francisco, is considering becoming a charter city to stifle some of the state’s control. Others have considered the move, dubbed “home rule,” too, because the designation gives jurisdictions greater local control over governance, land use and finances. Yet it isn’t necessarily going to exempt the town from housing mandates.
“We had initiated this because people were thinking it was a solution for some of our housing issues, and it’s become very, very clear to us that it is not a fix for that,” Mayor Stacy Miles Holland noted during an October 2025 council meeting. Councilmember Eric Lane, the only council member to vote against advancing the process to explore becoming a charter city, said there must be downsides if every city is not choosing to become one.
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But the town is trudging forward with this plan, drafting a simple two-page charter city draft, because there may be other benefits. Atherton could save money if it didn’t have to pay prevailing wages — which require contractors to pay workers local, union-negotiated wages and benefits rates on public works projects — set by the state for general law cities, residents noted during a January workshop to gather public input on becoming a charter city. Because of these state regulations, the town has already paid too much for project contracts, like one to build a train museum, they said.
Daylight shines on a tree-lined street in Atherton, Calif.
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“When a small city has a big project, a new city hall or a library, and they have to pay prevailing wages, that can be the difference between being able to do the project or not,” explained Chris Clark, a lecturer in Cal Poly San Luis Obispo’s city and regional planning department, during a phone call with SFGATE.
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The California Supreme Court has been more lenient on prevailing wages, City Attorney Mona Ebrahimi said during a January charter city workshop meeting.
“It’s a stark contrast to housing — because housing is in short supply in California and a matter of statewide importance,” Ebrahimi said later in the meeting. “To a certain extent we really are on the beck and call of what the Legislature establishes to be important right now.”
What’s a charter city?
In 1949, California enacted legislation that established the framework for general law cities, with at least five city council members, a clerk, treasurer, police chief and fire chief, and set state statutes for the cities to operate under. Charter cities, on the other hand, have more leeway to decide their form of governance and set local rules.
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A major reason cities decide to become charter cities is that they can levy special taxes on their citizens. Generally measures like this are a “tougher sell” for voters because they ultimately cost residents, Clark said.
FILE: A car passes by the Atherton city limits sign July 12, 2005, in Atherton, Calif.
Charters can also have more control over local services and operations, according to an Atherton staff presentation. For example, they can decide how many police officers and staffers to hire. They can also set their park, permit and building fees.
Some 126 of the approximately 480 cities and towns in the state are charter cities as of 2024, according to the San Francisco Chronicle, including San Francisco, San Mateo, San Jose, Berkeley, Hayward and Oakland. (The Chronicle and SFGATE are both owned by Hearst but have separate newsrooms.)
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Charter cities on the Peninsula include: Palo Alto, chartered in 1909; Mountain View; and Redwood City.
This is the third time Atherton has considered the designation in the past 15 years, according to city manager George Rodericks.
“As a small jurisdiction, the question is: ‘Is there enough bang for the buck becoming a charter city?’” he asked the council.
If Atherton’s City Council decides to place the charter on the November 2026 ballot it would need to do so in May or June. The measure wouldn’t cost the town any additional money — elections cost $25,000 to $30,000 in town, to put on the ballot since it would roll it in with the normal council election, according to Rodericks.
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Chartering to evade housing laws
Atherton’s pursuit of charter status to have more control over its land use isn’t coming out of thin air. In the past, other California cities have found success evading state housing laws using their charter city status.
A man runs past a large gate blocking a private driveway in Atherton, Calif., Thursday, July 25, 2019.
For example, a judge ruled that, as charter cities, Redondo Beach and other Southern California cities did not have to allow homeowners to split their houses into separate units despite a 2021 state law, according to CalMatters.
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But with the housing crisis, the state is pushing back on exemptions to charter cities for building mandates. In 2019, a California appellate court found that San Jose, despite its charter status, has to follow the state’s Surplus Land Act, which requires jurisdictions to prioritize the sale or lease of its excess land for affordable housing, the San Jose Mercury News reported.
Chartering due to money troubles
Atherton is not the only Bay Area jurisdiction contemplating the move. Just 6 miles away, Portola Valley is considering becoming a charter city so it can create a new tax to raise money in light of its financial woes, a move that is also potentially on the November 2026 ballot. A survey published in November 2025 of some of its approximately 4,500 residents found that between 59% and 61% would support enacting a real estate transfer tax, meeting the threshold needed (a simple majority) to pass a tax imposed on the value of real estate that is sold.
FILE: A mansion is seen July 12, 2005 in Atherton, Calif.
To even bring this type of tax to voters, the town would also need to become a charter city. The town polled 200 residents on how they would respond to a tax of $10 per $1,000 paid by buyers and sellers of property, which would raise about $2 million in annual funds, according to a consultant presentation.
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However, Howard Jarvis Taxpayers Association has proposed a statewide ballot initiative that, if passed, could restrict charters from assessing their own transfer taxes.
This possible initiative is a reminder that the exemptions and powers charter cities receive aren’t set in stone. Atherton’s attorney Ebrahimi has noted that “what applies today may not apply tomorrow” when it comes to what the state allows charter cities to do.
“We can have further restrictions on powers,” she said in January.
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