Development Services Manager Justin Murphy told the council that $7,500 is in line with what residents of other nearby communities pay for secondary units.
The city assesses approximately $5,000 for a 500-square-foot unit, with the remaining $2,500 going toward fees charged by outside agencies such as the fire and water districts, he said. This is generally in line with costs in Palo Alto, Sunnyvale, San Bruno and other Peninsula cities, according to the staff report. East Palo Alto charges more — $11,000 to $18,000.
"If we over-encourage" construction of granny units, the impacts on neighborhoods and infrastructure might be felt faster than expected, Mayor Ray Mueller said, while explaining his resistance to lowering the fees. Since staff time must be paid for, he said, that would equate to using taxpayers who can't build secondary units to subsidize those who can build them.
The question arose as to whether those building the units could qualify for assistance from Menlo Park's below-market-rate fund. City Attorney Bill McClure explained that technically it was possible, although the property owners would have to sign a commitment to restrict the unit to low-income levels for 55 years.
Councilwoman Kirsten Keith noted that she supported 100 percent cost recovery for staff time spent reviewing plans and issuing permits for granny units, but asked if less time might be spent overseeing a 500-square-foot unit as opposed to a 5,000-square-foot house, thereby justifying a lower administrative fee. The staff responded that may be feasible but would first have to be researched.
Holding out for reducing the fees, Councilman Peter Ohtaki argued that reducing the permitting costs would encourage the owners of secondary units built before the city legalized them to make safety upgrades and bring the units into compliance. "I think that is, in my opinion, worth doing," he said.
The mayor, who had earlier noted that housing advocates were pointing out that secondary units would rent for market rates — currently around $2,000 — and thereby not contribute to the supply of affordable housing, commented that he thought people were more likely to build a new unit instead of paying to bring an illegal one into compliance. "They're already enjoying the one without a permit," Mr. Mueller said.
The council also approved a new $100 fee to register granny units for property owners that plan to rent out both the main dwelling and the secondary unit, with a $50 annual fee for up to four more years after the initial registration.
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