Since 2014, Menlo Park has been on a trajectory to reverse its reticence toward housing growth. According to one metric, the "Regional Housing Needs Assessment," a state-mandated requirement laying out how much housing each city should plan for in order to meet regional housing needs, Menlo Park has already granted permits far surpassing the net number of units it is supposed to plan for by 2022.

Since 2014, it has approved permits for 885 housing units, whereas the city was required to plan for an additional 655 units by 2022.

"We're making up ground for some lack of production, like the rest of San Mateo County," said Jim Cogan, the city's housing manager. "What's exciting is how the City Council, Planning Commission and Housing Commission have all embraced the production of affordable housing."

Part of the turnaround is due to a 2012 lawsuit filed by Peninsula Interfaith Action, Urban Habitat and Youth United for Community Action against the city. The suit alleged that Menlo Park was in violation of state law, which mandates that each city update its "housing element" – the portion of a city's general plan that lays out housing policies – every seven years. Menlo Park hadn't updated those documents since 1992.

Housing report

In settling the suit, Menlo Park agreed to update its housing element and lay out plans to meet its fair share of regional housing needs, which includes affordable housing. The city in its housing element made plans to enable the addition of 655 units: 233 for very low-income households, 129 for low-income households, 143 for moderate-income households, and 150 for above-moderate households.

Three years into the seven-year cycle, though, an annual housing report approved by the Menlo Park City Council on March 14 shows that high-cost housing units being built far outnumber those that would be affordable for lower-income households, and that the actual breakdown by income levels does not follow the state-mandated breakdown of how much housing should be built for people in each income category.

Of the 885 new housing units permitted since 2014, a total of 729 units fall into the category of being affordable for households with more than than 120 percent of the county's median income – $90,480 for a single person or $129,240 for a family of four. Since the city was only supposed to plan for 150 such units, the goal has already been exceeded by 579 units.

In the same period, Menlo Park granted permits for 130 units for very low-income households and 26 for low-income households – and not one unit considered affordable for "moderate" income households, as defined in San Mateo County as a four-member household making between $107,700 and $129,240, or a single person household making $75,400 to $90,500. Based on the suggested distribution of how many units at each income level Menlo Park should plan for, the city is still short 143 units for moderate-income households, 103 units for low-income households, and 103 units for very low-income households.

The trend translates to the city producing about 6 high cost units to every one unit that's affordable to a family household making under $129,250.

Mr. Cogan pointed out that it can be difficult to provide incentives for housing construction affordable to low-income households – but moderate-level housing may be hardest of all to get built from a financing perspective. Available government subsidies tend to go to housing construction at low, very low- and extremely-low income levels, and tax credit financing typically also only applies to low-income housing developments, he said.

In addition, under state laws, Menlo Park can't require developers to build affordable housing in all situations. In some cases, the developer has to agree to build at a higher density than the city would otherwise allow for the city to enact such requirements.

The recent completion of Menlo Park's general plan update could ease the process to develop moderate-income housing, but it's "not certain," according to Mr. Cogan. "It's tough because we zone for the units, but it's up to developers to build what they're going to build."

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