“I don’t see a huge win in creating an entirely new mechanism with comparatively few advantages over SB 9, some disadvantages compared to SB 9 and probably greater risk of unintended consequences,” Akin said at the meeting.

Since SB 9 went into effect in 2022, only approximately 30 properties have used it for the purpose of a lot split, Principal Planner Garrett Sauls told the commission. By comparison, 137 ADUs were built in Palo Alto in 2025, according to the city’s housing dashboard. The city estimates it would need to build 512 ADUs by 2031 to meet its eight-year housing goals.

Commission Chair Bryna Chang said the primary distinction between SB 9 and the ADU policy is that the former can split the lot in two where each new parcel could have an ADU, and the latter allows the separate sale of an ADU on the same parcel as the primary home — in other words, as a condo.

Because the ADU condo law only went into effect this year, most of the commissioners said there is not enough data to justify its incorporation, especially given the apparent lack of demand under SB 9.

But proponents of the idea said ADU condos can create new starter home opportunities for young families and allow older adults to downsize without losing the lower property tax benefits afforded by Proposition 13, which caps property tax rates and limits their annual increase until the property changes ownership.

“The goal of ADU condo-ization should be to make it so that a regular homeowner who wants to downsize, or a small builder who wants to use the local code rather than a big state law like builder’s remedy, can take advantage to build neighborhood-scale housing that fits with Palo Alto’s goals,” said Jeremy Levine, executive director of local housing nonprofit Palo Alto Forward.

Only two of the six commissioners on the planning commission appeared sympathetic to that view: Commissioners Bart Hechtman and Cari Templeton.

While the commission voted against recommending the separate sale of ADUs to the City Council, commissioners found common ground in the idea that if the council went forward, it should do so with certain considerations in mind.

For example, the commission wrote in its recommendation that there should be no minimum lot size requirement in the ADU policy, and that the policy should be restricted to residential areas and residential uses.

“This was an opportunity for us to be a little more innovative about housing,” Templeton said after the vote. “It’s a way to integrate these new families into Palo Alto in the way that we already enjoy our community instead of something separate, off to the side or down by San Antonio Road.”

The council’s decision on the issue has also run into a few snags.

At first, the separate sale ADU policy was lumped in with other ADU development standards including square footage. The council approved the development standards in a 4-3 vote on Aug. 27 and sent the separate-sale portion back to the planning commission.

At the second reading of the development standards on Sept. 9, which would have codified the language, the council deferred the item to allow for further discussion instead.

Housing advocates wrote to the council that the development standards as written regarding floor area ratio, a measure of density, create negative incentives for the primary homeowners.

“We treat homeowners who do a teardown plus an ADU more favorably than a homeowner who just wants to build an ADU without a teardown,” Councilmember Julie Lythcott-Haims said at the Sept. 9 meeting.

Lythcott-Haims said when someone simply wants to add an ADU, it will count toward their overall floor area ratio limits. If a project includes a teardown, the backyard home would be exempt. This, they said, is “inequitable on its face.”

YIMBY Law, a pro-housing nonprofit that sues cities for noncompliant housing rules, suggested in a letter to the council that the development standards could have the effect of limiting ADU development in a potential violation of state law.

Lythcott-Haims and five other councilmembers voted to pull the development standards item at the Sept. 9 meeting for further discussion. Councilmember Ed Lauing was the sole person who did not.

It remains unclear when the council will next take up the ADU development standards and the separate sale policy. Some residents have suggested that the council should consider additional revisions.

“Having reviewed the ADU item on your agenda, it seems clear this will penalize those who are adding ADUs to existing homes while favoring developers who are building a wholly new property,” wrote James Taylor, a Greenmeadow resident. “I don’t believe this was ever the intent of ADUs.”

This story originally appeared in Palo Alto Weekly. Riley Cooke is a reporter at Palo Alto Weekly and Palo Alto Online focusing on city government.