Merle Witvoet''s home is not a castle. It''s not even a cottage. The word "shack" would more appropriately describe the 208-square-foot dwelling tucked behind a larger main house on Spruce in Pacific Grove. The ceilings are so low that the 6-foot-4-inch Witvoet can''t stand up straight in his living room.

But it''s home. His three tiny rooms are stuffed with the possessions of a rich life--books, family photos, postcards pinned to the refrigerator with magnets, sports equipment, a classical guitar.

However, Witvoet won''t be living here much longer. He makes too much money. Drawing an income of $33,000 annually, Witvoet ekes out a living as an auto mechanic on the increasingly expensive Monterey Peninsula. Each month he shells out $530 for the low roof over his head. Yet his income is almost twice the limit the city of Pacific Grove has set for single tenants of secondary units, or "granny units," illegally built behind many P.G. homes. On August 3, the city sent his landlord a notice giving Witvoet and his two cats six months to vacate their home of two years.

Single, middle-income, middle-aged, white, and male, Witvoet is a man caught in the middle. "No one is going to feel sorry for me," he says. "I don''t feel sorry for myself. I''m pissed off."

On June 21, the Pacific Grove City Council adopted an interim policy that would allow renters of illegal units to stay until December. But after that, the tenants must prove to be very low income or else they have to go. And earlier this month, the City Council also authorized a study to assess the number and status of illegal units within P.G. Current estimates put the number at several hundred.

While home prices have skyrocketed and rental housing has become scarcer over the years, some Pacific Grove homeowners have built small secondary units behind their homes to bring in a few extra bucks. But many of these units violate zoning codes in neighborhoods where only one single family home is allowed per lot. Moreover, because they were built without permits, many of them violate health and safety codes.

The city has been backlogged with complaints about illegal units for years. Neighbors complain of added traffic, noise, and reduced parking caused by the units. At the same time, the units also provide some of the only affordable housing in P.G., where longtime residents, many of them senior citizens on fixed incomes, are being priced out of their homes.

"There''s two things that are conflicting--the incredible pressing need not only for low-income housing but affordable housing," says Pacific Grove Mayor Sandy Koffman. "The other is R1 [single-family home] zoning.

"I don''t want to see people displaced out of their homes. On the other hand, we have rules and regulations that have been developed over the years that are the very fabric of our community."

The reasons for building the units vary. Some homeowners are struggling to pay a mortgage. Others have built them to house family members. Still others rake in a profit, taking advantage of the housing crunch.

"It''s often argued that these illegal units are a source of affordable housing," says P.G. Community Development Director Dennis Boehlje. "[But] in some cases, people are overcharging for a little shack or a little room."

It''s unfair, Koffman says, for owners of illegal units to reap financial benefits from breaking the law at the expense of their neighbors'' quality of life.

"What we''re trying to tackle is providing affordable housing and protecting the R1 zoning, and create equity for people who have knowingly done something illegal and those who have refrained from doing something illegal."

In order to achieve some sort of compromise, the council decided to permit units that meet health and safety codes, but landlords must rent to very low income tenants and charge reduced rent. For example, Witvoet''s place could be rented to a single person making less than $17,600 per year, but his landlord would have to lower the rent to $440 a month.

"We tried to look at the most critical need," Koffman says. "I get calls every month from people whose rent has been raised and they can''t afford to live in Pacific Grove anymore. Many are seniors and many are disabled."

That leaves a regular working guy like Merle Witvoet, who makes a decent living, out of home. He''ll probably find another place to live, he admits. Nevertheless, he feels squeezed into a no-man''s land between the haves, who can afford housing in this inflated market, and the have-nots, who qualify for financial assistance and lowered rent.

He could quit his job and become low income, he muses. That would leave him more time for his passions--traveling to disc golf tournaments and playing his guitar--and he could stay in his home. Or he could work harder, pay more rent, and have no time for those things that make life worth living.

But Witvoet is pretty sure of one thing: He could never afford a home of his own in P.G., or anywhere else on the Peninsula, for that matter. The cheapest house for sale in P.G. would eat up his entire monthly take-home pay. "I thought middle-class was someone who could buy a house in America," he sighs.

"He''s definitely caught in the middle," Koffman says. "It''s not easy on the Peninsula in general."

Merle Witvoet invites readers to share comments with him at guitar@mbay.net.