Portola Valley Council Shapes Its First $2M Affordable Housing Offer

Portola Valley is getting ready to spend its affordable housing fund for the first time. At the Sept. 24 meeting, the Town Council spent more than an hour debating who should get the money. The session was a study session with no vote. Councilmembers sent the draft $2M funding notice back to staff and consultants with three requests: target lower incomes more deeply, build a parallel loan program for accessory dwelling units (ADUs), and design a process small builders can realistically use.

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• $2M of the $4.83M housing fund is slated for the town's first funding notice. The council returned the draft for revisions.
• Council divides on moderate-income subsidies. The mayor favors low and very low incomes, while Wolter backs a broader mix.
• Habitat for Humanity and Ladera Community Church plan two homes and ask the town to fix how sales prices are calculated.
• Pressure builds for ADU loans for homeowners alongside the developer-focused offer.
• Conflict of interest code adopted by roll call. Whether the Finance Committee must file disclosures will come back later.

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A Small Fund Faces Big Choices

The basics: A notice of funding availability (NOFA) invites developers to apply for subsidies. Portola Valley's fund is made up of inclusionary in-lieu fees, which developers pay instead of building affordable units on site. A 2023 policy governs how the fund is used. The town has no permanent in-lieu fee structure.

Where things stand: The draft was prepared by staff and HART (Housing Endowment and Regional Trust) of San Mateo County. It would offer $2M of the fund's $4.83M balance. Per-unit subsidies would be capped at $300,000 for rentals and $400,000 for ownership units, with $100,000 more per unit on three housing element priority sites. The minimum award would be $20,000 per unit. Rentals would serve households up to 80% of area median income (AMI) and ownership units up to 120%. A scoring rubric would reward features such as accessible units.

Tim Davis, director of HART's Housing Consulting Services Program, said the rubric matters mainly if several developers compete. Mayor Craig Taylor underscored that the council keeps final say: "There's no requirement that if they get 90 points that we're funding them." Town Manager Darcy Smith called "the NOFA the first step in many, many steps."

Why it matters: At the maximum $400,000 cap, $2M covers just five units. That makes every choice about income targeting and subsidy size consequential.

Income targeting divides the dais: Taylor wants the money focused on the neediest households. "I'm not such a fan of supporting moderate income. I think we really should be focusing on low and very low," he said.

Davis explained why HART set the rental limit at 80% AMI: "It is our experience that 120% of AMI rentals are actually kind of close to market rent." Vice Mayor Mary Hufty questioned the 120% ownership level but ended with "I'm in full support."

Councilmember Helen Wolter backed including moderate incomes and warned against developers holding land without building. "I would like to see the housing built, so I don't want to encourage land banking in these cases," she said.

The other side: Some members questioned whether the offer fits Portola Valley's builders at all. "I do worry a little bit that this sort of seems directed at big developers, and one developer in theory could use $2 million," Taylor said. Councilmember Rebecca Flynn questioned whether applying is worth a developer's effort for what she called "embarrassingly little money." Councilmember Judith Hasko called the draft "a good framework" and backed $2M as a starting point.

Two public commenters pushed on how the money gets used. Karen asked whether to spend quickly on a few units or hold more money back to fund more units later. Christy asked about long-term income monitoring, deed restriction length (including 55 or 99 years), lower subsidy caps to stretch the money, and plainer language on terms like median income.

What's next: Staff and HART will revise the draft and return. Council requests included:

• Tiered subsidies favoring lower incomes
• Fair housing language
• More time for staff
• Clarity for small developers
• Answers on the remaining $2.8M and the Willow Commons precedent

No return date was set.

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Habitat and a Church Line Up Two Homes

Where things stand: Tim Clark of Ladera Community Church said the church plans two units on an adjacent lot, with Habitat for Humanity as its partner. He said the church is not leading the financing and found the policy sensible.

Robert Smith, project manager for Habitat for Humanity Greater San Francisco, said the scoring matches Habitat's program and that Habitat plans to apply. He flagged one problem: "The one amendment that we would potentially ask for would be to amend the way that the sales price is calculated."

Habitat sells homes at appraised market value and pairs them with a 0% mortgage sized to what the buyer can afford. Smith said the draft formula would cap eligible buyers near 70% AMI. Felix, Habitat's chief real estate officer, said Habitat sizes mortgages at 30% of the buyer's income. He praised the NOFA and suggested tiering caps by income: "We could see a moderate homeownership project receiving, say, $300,000 maximum instead of $400,000."

Why it matters: The Ladera project is a live potential applicant. The NOFA's design could decide whether it moves forward.

Decisions and stakeholder impacts: Hasko and Taylor asked staff to understand Habitat's equity model. Flynn said staff and HART need to learn how Habitat's system works. Smith also explained that the Ladera lot is not a priority site because it was already in the housing inventory, so it would not qualify for the extra $100,000 per unit.

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ADU Loans Gain Traction

Where things stand: HART said the NOFA targets developers. Loans for individual homeowners building ADUs would require a separate council action.

HART pointed to two models:

• Foster City's $800,000 ADU program, which carries an 80% AMI restriction and, as recalled, a 10-year deed restriction
• A possible San Mateo County ADU Center loan program, which the town could join for around $500,000

Why it matters: Portola Valley has little land for large projects. Officials see ADUs as the likelier path to meeting housing goals, so a separate loan program could produce more units than the NOFA.

Decisions and stakeholder impacts: Members offered different approaches:

• Hasko wants supplements for private-owner ADUs worked out.
• Wolter suggested setting aside about $200,000 for deed-restricted ADUs.
• Taylor floated a traditional loan with a deed restriction lasting through the loan term.

Christy also asked that ADU financing be included. A program like this would bring homeowners into a fund otherwise aimed at developers and nonprofits.

What's next: Staff is expected to explore ADU financing alongside the NOFA revisions. Any program would require separate council action.

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Conflict Code Passes, Finance Committee Question Deferred

Where things stand: Item 6E, an update to the town's conflict of interest code, was pulled from the consent agenda for discussion.

• Form 700 scope: Flynn asked whether Form 700 requires disclosing only relevant financial interests. Staff said the new version cross-references the state form.
• The ASCC: Hasko asked why the ASCC was added. Staff said it was a redesignation, not a new burden.
• The Finance Committee: Hasko pressed on whether the council must decide now on adding the Finance Committee. "I would have a hard time approving this via the consent agenda, not having more information or a discussion of what criteria are," she said.

Staff member Katherine explained the state requirement: "It must at a minimum do so every 2 years." She said the town's deadline is the end of 2026 and that she knew of no adverse consequences from a short delay. Wolter asked about Parks and Rec filing and asked staff to return in December, after the election.

Decisions and stakeholder impacts: Hasko accepted adoption with Finance Committee findings to follow. The resolution passed by roll call, with five ayes heard (For: 5, Taylor, Hufty, Flynn, Hasko, Wolter; Against: 0; Absent: 0). If the council adds the Finance Committee, its volunteer members could become a new group of Form 700 filers.

What's next: Staff will return with findings before the end-of-2026 deadline.

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Minor Items

• Housing element: Town Manager Smith said the state housing department found the town's amendments "are in substantial compliance with state law." The amendments drop the North Park and Open Space site and move its units to three other sites.
• Consent items: Items 6A, 6B and 6D passed 5-0. Item 6C, a $400 Intergov University training, also passed 5-0 after Flynn questioned the renewal while the town is moving away from Intergov.
• Shuttle cuts and Skyline safety: Wolter reported "we are going to lose approximately 13 shuttles" countywide. Construction of a four-way stop at Highways 35 and 84 is set to start in two weeks.
• El Niño prep: Smith urged residents to prepare for a likely strong El Niño. Resident JD Mahaffey praised the Sept. 11 emergency drill.
• Proclamations: The council recognized Woodside Fire's Fire Prevention Week, which focuses on lithium-ion battery safety, and Age Up's 25 years of long-term care ombudsman service.

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Looking Ahead

• Oct. 14: The regular council meeting is canceled. A special meeting is possible.
• Oct. 20: Two completed audits go to the Finance Committee at 4 p.m. The same day, a Skyline safety meeting with state legislators and Supervisor Ray Mueller is scheduled.
• Oct. 28: The Finance Committee's audit recommendation comes to the council.