In a state that has a chronic housing shortage California’s new Accessory dwelling unit (ADUs) Law may turn out to be a win win for both homeowners and the state.
An Accessory dwelling unit is a small (typically less than 1200 square feet) secondary living area, separate from the main house. It is often called a Mother-daughter or Grandparent unit . This year no fewer than 5 bills were signed into law expanding Californian’s options for how, when and where they could build such units.
The five bills are
AB 68 (Assembly Member Phil Ting) / AB 881 (Assembly Member Richard Bloom) Processing Timelines, Ordinance Prohibitions and Triplexes requires local agencies to either approve or deny an ADU project within 60 days of receiving a complete building permit application on a ministerial (CEQA-exempt) basis.
SB 13 (Sen. Bob Wieckowski) Owner-Occupancy Prohibitions and Fee Limitations provides, until Jan. 1, 2025, that cities may not condition approval of ADU building permit applications on the applicant being the “owner-applicant” of either the primary dwelling or the ADU.
AB 587 (Friedman) Separate Conveyances provides that local agencies may now allow ADUs to be sold or conveyed separately from a primary residence if certain conditions are met.
AB 670 (Friedman) HOA Limitations prevents homeowners’ associations from barring ADUs.
AB 671 (Friedman) Local Government Assistance requires local governments to include in their General Plan housing elements plans to incentivize and promote the creation of affordable ADUs.
A strategy to ease California’s housing shortage
State Sen. Bob Wieckowski, who is a Democrat from the Bay Area and champion of ADU’s says there’s been an increase in production in cities such as San Diego, San Jose and Los Angeles. Cities that are all woefully in need of more affordable housing.
On October 9, 2019 he wrote in a tweet: PhilTing’s #AB68 is now law. #AB68 effectively ends single family zoning in California. It’s now easier to build not one, but two ADUs across the state. Thank you @GavinNewsom for removing red tape around ADU construction & effectively ending single family zoning!
Sen. Wieckowski sees ADU’s as part of a broader, multi-pronged strategy to ease California’s housing shortage “If 10 percent of homeowners built an ADU, that would be roughly 900,000 new units. In the San Francisco Bay Area, that would amount to 150,000 new homes, mixed in throughout existing neighborhoods, at no cost to taxpayers.”
Between 2017 and 2018 approximately 7000 permits were issued for ADU’s and it’s estimated that that figure could rise to 10,000 by 2025. According to figures from Dan Bertolet, at the Sightlines Institute that accounted for one in five of LA’s building permits in 2018.
Rental ADU’s
One benefit of ADU’s that should not be overlooked is the opportunity to make owning a home more affordable. If your house includes an ADU it is perfectly reasonable to use it as a rental property and host a tenant. I have a friend of mine who owned a home (in New York) that featured, what was the equivalent of an ADU, he told me that the tenant was actually paying almost three quarters of his mortgage!
The only drawback, of course was that he was now the landlord and one phone call away from any problem the tenant might have. However it’s easy to see how an ADU can help defray the costs of home ownership, especially for first time home owners.
Financing Issues
While it seems that the future of ADU’s is rosy the one fly in the ointment is financing. Banks do not seem to know how to approach ADU’s. The fall somewhere between new home construction and renovation and are not exactly either of the two.
There’s a huge opportunity here, but ADU construction is usually done by the homeowner, rather than highly capitalized construction firms, so they usually take longer to build and it’s not unusual; to see a “stop-start” schedule.New laws seek to help; State Bill 13, which was backed by Sen. Wieckowski, eliminated excessive developer fees, which can often run up to one-half the total cost of a new ADU.
If you’d like to learn more here are a few useful sites
California’s 2020 Housing Laws: What You Need to Know
LA Counties Department of Regional Planning
