Hundreds of backyard additional dwelling units (ADUs) across Menlo Park, Atherton, Portola Valley, and surrounding cities are illegally discharging their waste into the sewer system, resulting in millions of dollars of cost overrun for the West Bay Sanitary District (WBSD).
“This is revenue we need. I mean, we deserve it,” WBSD Treasurer Roy Thiele-Sardiña said. He and other board members expressed frustration that some homeowners are collecting what one WBSD director described as “crazy rents” without paying their fair share of the sewer bill.
Across California, ADUs have become one of the fastest-growing sources of new housing, accounting for approximately one in five new homes built in recent years.
A San Mateo County civil grand jury report from 2023 found that towns like Atherton, Portola Valley, and Woodside are relying heavily on ADUs to meet up to 80% of their state-mandated affordable housing goals. However, because the county can approve ADU building permits without continually sending plans to WBSD, a significant portion of West Bay’s housing units bypass the crucial review process. As a result, no one verifies sewer capacity or confirms the condition of plumbing pipelines before people move in.
To prevent this from happening in the future, West Bay staff said they have notified Atherton, Menlo Park, and Portola Valley about the unreported ADUs in their jurisdictions and the urgent need to coordinate permits and billing. They are also meeting with planning and permitting departments to review dozens of unbilled units and confirm that every ADU is built with WBSD’s approval.
For homeowners, this audit could result in a new line item on the property tax bill. WBSD directors acknowledged that some residents, especially those with small attached units, may be upset when they receive retroactive charges. “That’s going to wrinkle somebody’s underwear. That’s not going to be very popular, but it is what it is,” one WBSD director said during a meeting. Others argued that allowing hundreds of fully equipped rental units to use the system for free is unfair to the 55,000 other residents who pay the full annual charge.
“I’d like to see [the criteria and payment plan] all laid out so it’s completely defensible,” WBSD President Fran Dehn said, asking staff to return with detailed standards before any bills or additional policies are issued.
If the board ultimately signs off on a five-year investigative lookback and begins adding the missing units to its tax rolls, West Bay could recover seven figures in revenue without raising rates for the average person and finally make its so-called “ghost” ADUs appear on the books.
Beyond West Bay, unreported ADUs present a broader problem in California’s housing strategy. Cities across the state are counting backyard units toward their state-mandated housing goals to comply with California’s Regional Housing Needs Allocation (RHNA) requirements, which require every city to plan for enough new homes at various income levels. However, basic infrastructure agencies like WBSD are only now locating many of these homes, raising concerns about the reliability of the reported housing increase.
