ATHERTON — The council for the richest town in America has begrudgingly agreed to rezone parts of its “poverty pocket” of multi-million dollar homes to make way for more affordable housing amid a pressing deadline to submit its state-mandated housing plan.

If the state rejects Atherton’s updated plan — which also includes a property adjacent to Redwood City — it could lose local development control altogether, putting at risk the bucolic mansion-studded small-town vibe it’s worked years to preserve.

More commonly known as upzoning, some properties will be rezoned to allow more housing — a hot topic since the California HOME Act, which makes it easier for homeowners to subdivide an existing lot, went into effect at the beginning of last year. Gov. Gavin Newsom and legislators are pushing to increase the state’s supply of affordable, multi-family housing and slow-growth, but affluent Bay Area suburbs such as Atherton are pushing back.

Some have tried creative approaches to avoid increasing their housing density — Woodside, for example, declared itself a mountain lion habitat. But most have taken Atherton’s tack of assuaging pushback from residents about apartment construction in their neighborhood by relying on granny flats or school sites to try to meet the state-mandated construction of hundreds of new units of housing over the next eight years.

Tasked with where to put its 348 required new homes, Atherton leaders have spent the last year and a half squabbling with their super-rich neighbors over one plan or another. As council member Rick DeGolia put it: “Wherever you propose to do it, whoever lives around that area objects. That’s the constant we’ve experienced in the last year and three months.”

While spending months devising a plan that puts much of the new-housing burden on Menlo School, Menlo College and other public school sites within Atherton, the council had tried to avoid upzoning any of the town for multi-family housing.

But after the town’s housing consultant cautioned that their plan would likely be rejected by the state because it does not include multi-family zoning nor address homes for low- and very low-income families, council members went back to the drawing board to reconsider previously rejected drafts.

“I’ve lived in Atherton over 20 years, and I don’t want to destroy Atherton’s character, but the rationale is to look at locations that will have the minimal impact on the remaining town,” council member Elizabeth Lewis said. “We’ve really tried to not do a multi-family upzoning situation, but it looks like we need to take another look at our housing element before we submit.”

Atherton has until Jan. 31 to submit a housing plan to the state; if it’s rejected, the town will be subject to the “builder’s remedy,” which would allow landowners to build dense housing without the oversight or approval of local officials.

Already one homeowner on Oakwood Boulevard, near the border with Redwood City, has said he’s interested in building multiple units there, though some council members are wary that it will cause too much traffic in a part of town that’s dominated by single-family homes. If the state rejects Atherton’s housing plan, that could mean that owner could build a much denser project with no oversight from town officials. By zoning it as multi-family, the council believes they’ll have much more control on what gets built there.

“Personally I think that one of our best opportunities is 23 Oakwood with whatever clauses we want to put in to guarantee we’re going get something that helps meet our need,” Mayor Bill Widmer said.

The council also decided to upzone 17 houses along El Camino Real, from Stockbridge Avenue to the Redwood City border, for multi-family housing and single-family homes on smaller lots at the edge of a town predominated by acre lots with some of the Bay Area’s largest mansions — an area jokingly referred to as the “poverty pocket” by locals, despite the presence of multi-million-dollar homes.

But the council couldn’t agree on developing an acre-sized area in Holbrook-Palmer Park currently housing the chief of police in a historic 1930s Mediterranean-style home. The Holbrook-Palmer estate was donated to the town in March 1958 after the death of Olive Holbrook Palmer — but for recreational uses only. The town attorney said there’s a clause in the will that says if the town ever uses it for anything other than recreation — potentially including housing — ownership of the land would go to Stanford University.

While the council did manage to upzone parts of town, Councilmember DeGolia said he fears that no developer would be able to afford the pricey land, saying, “I don’t believe you can reasonably build affordable housing” in Atherton.

Even if housing gets built, the town’s council isn’t envisioning that just anyone will be able to live in their exclusive ZIP code. On multiple occasions Wednesday, council members referred to teachers at local schools, town officials and employees, and older renters as the ideal make-up of the town’s future citizens.

DeGolia said that what the town really needs to focus on is “housing for teachers and members of the community that need affordable housing,” and Widmer said the town should continue to pursue “activities over at the college” for housing and fill the “need for staffing housing here.”

But for housing advocates such as Jeremy Levine, the question for councilmembers is simple: “Is affordable housing possible in Atherton, and, if so, what can the city actually do to make it happen?”