Insisting that they are just saying that as an excuse because they don’t like town houses seems uncharitable at best. Considering the sources pushing this story I’d call it more like a bad-faith political hit job vs. Prof. Reich. E.g. your link is from a far-right “think tank” in North Carolina full of climate denialists, funded by Art Pope, GOP megadonor and close friend of the Koch brothers. Not exactly the people I would trust to fairly evaluate Berkeley’s decisions on which buildings should be landmarks.
In any case, the city council decided that the house isn’t important enough to qualify as a landmark, and the project is going through; the building will be torn down.