SAN FRANCISCO — Tech industry titans have navigated lots to get where they’re today — the dot-com bust, the 2008 recession, a backlash against tech power, the pandemic. They’ve overcome boardroom showdowns, investor power struggles and regulatory land mines.
But this summer, a few of them encountered their most threatening opponent yet: multifamily townhouses.
Their battle took place in one among Silicon Valley’s most exclusive and wealthiest towns: Atherton, Calif., a 4.9-square-mile enclave just north of Stanford University with a population of seven,500. There, tech chief executives and enterprise capitalists banded together over the specter that multiple home could exist on a single acre of land in the overall vicinity of their estates.
Their weapon? Strongly worded letters.
Faced with the potential of recent construction, Rachel Whetstone, Netflix’s chief communications officer and an Atherton resident, wrote to the City Council and mayor that she was “very concerned” about traffic, tree removal, light and noise pollution, and college resources.
One other local, Anthony Noto, chief executive of the financial technology company SoFi, and his wife, Kristin, wrote that robberies and larceny had already turn out to be so bad that many families, including his, had employed private security.
Their neighbors Bruce Dunlevie, a founding partner on the investment firm Benchmark, and his wife, Elizabeth, said the developments were in conflict with Atherton’s Heritage Tree Ordinance, which regulates tree removal, and would create “a town that is not any longer suburban in nature but urban, which is just not why its residents moved there.”
Other residents also objected: Andrew Wilson, chief executive of the video game maker Electronic Arts; Nikesh Arora, chief executive of Palo Alto Networks, a cybersecurity company; Ron Johnson, a former top executive at Apple; Omid Kordestani, a former top executive at Google; and Marc Andreessen, a outstanding investor.
All of them were fighting a plan to assist Atherton comply with state requirements for housing. Every eight years, California cities must show state regulators that they’ve planned for brand spanking new housing to satisfy the expansion of their community. Atherton is on the hook so as to add 348 units.
Many California towns, particularly ones with wealthy people, have fought higher-density housing plans lately, a trend that has turn out to be generally known as NIMBYism for “not in my backyard.” But Atherton’s situation stands out due to extreme wealth of its denizens — the typical home sale in 2020 was $7.9 million — and since tech leaders who live there have championed housing causes.
The businesses that made Atherton’s residents wealthy have donated huge sums to nonprofits to offset their impact on the local economy, including driving housing costs up. A few of the letter writers have even sat on the boards of charities geared toward addressing the region’s poverty and housing problems.
Atherton residents have raised objections to the developments though the town’s housing density is incredibly low, housing advocates said.
“Atherton talks about multifamily housing as if it was a Martian invasion or something,” said Jeremy Levine, a policy manager on the Housing Leadership Council of San Mateo County, a nonprofit that expressed support for the multifamily townhouse proposal.
Atherton, which is a component of San Mateo County, has long been known for shying away from development. The town previously sued the state to stop a high-speed rail line from running through it and voted to shutter a train station.
Its zoning rules don’t allow for multifamily homes. But in June, the City Council proposed an “overlay” designating areas where nine townhouse developments might be built. The vast majority of the sites would have 5 or 6 units, with the most important having 40 units on five acres.
That was when the outcry began. Some objectors offered creative ways to comply with the state’s requirements without constructing recent housing. One technology executive suggested in his letter that Atherton try counting all of the pool houses.
Others spoke directly about their home values. Mr. Andreessen, the enterprise capitalist, and his wife, Laura Arrillaga-Andreessen, a scion of the true estate developer John Arrillaga, warned in a letter in June that multiple residence on a single acre of land “will MASSIVELY decrease our home values, the standard of lifetime of ourselves and our neighbors and IMMENSELY increase the noise pollution and traffic.” The couple signed the letter with their address and an apparent reference to 4 properties they own on Atherton’s Tuscaloosa Avenue.
The Atlantic reported earlier on the Andreessens’ letter.
Mr. Andreessen has been a vocal proponent of constructing all types of things, including housing within the Bay Area. In a 2020 essay, he bemoaned the shortage of housing inbuilt the USA, calling out San Francisco’s “crazily skyrocketing housing prices.”
“We should always have gleaming skyscrapers and spectacular living environments in all our greatest cities,” he wrote. “Where are they?”
Other enterprise capital investors who live in Atherton and oppose the townhouses include Aydin Senkut, an investor with Felicis Ventures; Gary Swart, an investor at Polaris Partners; Norm Fogelsong, an investor at IVP; Greg Stanger, an investor at Iconiq; and Tim Draper, an investor at Draper Associates.
A lot of the most important tech corporations have donated money toward addressing the Bay Area’s housing crisis lately. Meta, the corporate formerly generally known as Facebook, where Mr. Andreessen is a member of the board of directors, has committed $1 billion toward the issue. Google pledged $1 billion. Apple topped them each with a $2.5 billion pledge. Netflix made grants to Enterprise Community Partners, a housing nonprofit. Mr. Arora of Palo Alto Networks was on the board of Tipping Point, a nonprofit focused on fighting poverty within the Bay Area.
Mr. Senkut said he was upset because he felt that Atherton’s townhouses proposal had been done in a sneaky way without input from the community. He said the potential for increased traffic had made him concerned in regards to the safety of his children.
“In the event you’re going to should do something, ask the neighborhood what they need,” he said.
Mr. Draper, Mr. Johnson and representatives for Mr. Andreessen, Mr. Arora and Mr. Wilson of Electronic Arts declined to comment. The opposite letter writers didn’t reply to requests for comment.
The quantity of responses led Atherton’s City Council to remove the townhouse portion from its plan in July. On Aug. 2, it as a substitute proposed a program to encourage residents to rent out accessory dwelling units on their properties, to permit people to subdivide properties and to potentially construct housing for teachers on school property.
“Atherton is indeed different,” the proposal declared. Despite the town’s “perceived affluent nature,” the plan said, it’s a “cash-poor” town with few people who find themselves considered in danger for housing.
Rick DeGolia, Atherton’s mayor, said the difficulty with the townhouses was that they’d not have fit the state’s definition of inexpensive housing, since land in Atherton costs $8 million an acre. One developer told him that the units could go for at the least $4 million each.
“Everybody who buys into Atherton spent an enormous amount of cash to get in,” he said. “They’re very concerned about their privacy — that’s obviously. But there’s a distinct focus to get inexpensive housing, and that’s what I’m focused on.”
Atherton’s recent plan needs approval by California’s Department of Housing and Community Development. Cities that don’t comply with the state’s requirements for brand spanking new housing to satisfy community growth face fines, or California could usurp local land-use authority.
Ralph Robinson, an assistant planner at Good City, the consulting firm that Atherton hired to create the housing proposal, said the state had rejected the overwhelming majority of initial proposals in recent times.
“We’re very aware of that,” he said. “We’re aware we’ll get this feedback, and we can have to revisit some things in the autumn.”
Mr. Robinson has seen similar situations play out across Northern California. The important thing difference with Atherton, though, is its wealth, which attracts attention and interest, not all of it positive.
“Persons are less sympathetic,” he said.