Uncategorized

In July, the City of Redwood City enacted ordinances imposing height and privacy restrictions on ADUs in response to a spate of objections from local residents who raised concerns about the increase in second-story ADUs in their neighborhoods, which has resulted from changes in local codes encouraging ADUs in that city.

Since 2015, Redwood City has vigorously promoted the construction of ADUs.  That year, the City Council completely overhauled its existing accessory dwelling law to encourage the development of ADUs in selected zoning districts in the city.  In 2017, the City further amended its ordinance to harmonize it with then-recent state law changes intended to relax California’s regulation of ADUs.

Those changes resulted in a substantial increase in the number of ADUs built in Redwood City.  Previously, the City had received about three ADU applications per year. Since 2016, however, it has received 146 ADU applications, and 19 of those were second-story ADUs built above detached garages.

Although many Bay Area cities have prohibited these structures, Redwood City will continue to allow second-story ADUs on top of detached garages, subject to the following new restrictions enacted by the City Council:

• They shall be no taller than 20 feet (but the zoning administrator may allow a taller roof so that its slope is compatible with the main house’s).
• They may not have roof decks, balconies or exterior stairs that face nearby neighbors.
• Second-story ADU windows that face nearby side and rear neighbors must be opaque.

Offsetting these restrictions, the City Council adopted additional measures to make single-story ADUs easier to build, including the following provisions:

• They are now exempt from the 50% coverage limit for rear lots.
• Their rear-yard setback requirement was reduced from 10 feet to 6 feet.
• Their maximum size was raised from 800 square feet to 1000 square feet.
• Detached garages and other structures may now be converted into single-story ADUs up to 14 feet tall.

At the City Council meeting at which these changes were approved, several residents raised objections to the continued authorization of second-story ADUs, contending that they would interfere with residential privacy and the character of their neighborhoods.  Other participants at the council meeting, however, spoke out in favor of ADUs and this legislation.   “ADUs are actually affordable housing in many cases [so r]estricting ADUs really means restricting affordable units….[L]ook at the big picture…, which is…acting on the needs of the many renters in Redwood City who are housing insecure,” said Matt Larson, who also noted that several ADUs in Redwood City were being offered on Craigslist at below market rates.

In partnership with the Housing Trust of Silicon Valley, Mayor Sam Liccardo of San Jose has introduced a proposal to spur construction of ADUs to help address the housing crisis.  The city’s “Yes in My Backyard” program would waive impact fees and provide forgivable loans to homeowners in San Jose who build an ADU or convert a garage into a dwelling unit and agree to restrict rents to a level that is affordable to low-to-moderate income households.  These loans would be capped at a reasonable amount (e.g., $20,000) to ensure that that city processing fees would not add to the cost of ADU development, and could be used for the purpose of paying for permit fees and construction costs.

Mayor Liccardo directed the City Manager to evaluate the allocation of up to $5 million from the City’s Multi-Source Housing Fund for this loan program. To participate in the program, interested homeowners would agree to deed-restrict their ADU for low- to mid-income households in return for a forgivable loan they could use to pay permit fees and construction costs.  A portion of the loan would be forgiven over the term of the loan on an annual basis (e.g., over the course of five years) as homeowners establish that they have complied with the deed restriction.  This proposal would need to be approved by the San Jose City Council; if approved, implementation would occur later in 2019.

The program is outlined on the city’s website  and is supported by several members of the San Jose City Council.

On June 18, the San Jose City Council voted unanimously to approve several zoning code amendments that are intended to make it easier for people to build ADUs on their property in that municipality.  Effective July 27, these changes will include:

• Increasing the maximum size of allowable ADUs from 800 square feet to 900 square feet
• Allowing two-story ADUs (either stand-alone or atop a garage or accessory structure)
• Allowing ADUs to be built on lots zoned for high-density residential development
• Allowing ADUs that are at least 800 square feet in size to have two bedrooms
• Reducing the minimum lot size required to be allowed to build an ADU from 5,444 square feet to 3,000 square feet

According to the Housing Trust of Silicon Valley, these new rules will significantly expand the potential for construction of ADUs.  Currently, there are 103,000 lots in San Jose where ADUs are allowed; when these new changes take effect, there will be an additional 18,000 lots on which ADUs may be built in the city (http://homebrik.com/what-are-adus/).

 

California’s ongoing housing crisis continues to draw a great deal of attention and focus from a variety of quarters.  Governor Newsom has made addressing this situation a significant piece of his 2019-20 budget.

Recently, a Southern California startup company has come up with a novel approach to dealing with this situation, by attempting to transform certain garages into living spaces en masse.  Steven Dietz, a former venture capitalist who co-founded Upfront Ventures, has now moved into the role of entrepreneur as the CEO of United Dwelling, a business dedicated to turning a significant portion of the approximately 250,000 detached two-car garages located within Los Angeles County, a vestige of California’s postwar car culture, into ADUs.

United Dwelling’s business model is to bring efficiencies and economies of scale to the work of making rental ADUs out of garages.  By leveraging Dietz’s access to capital, the company can mobilize the cash needed to fund the leasing of underutilized garages and the construction costs of building ADUs out of them on a large scale; then, by leasing out these units on behalf of the homeowners, the company can generate sufficient revenues to make a profit as well as provide homeowners with a stream of income about as large as they would have enjoyed had they taken on the conversion projects themselves.

To market these rental ADUs to low-income households, United Dwelling plans to build them in areas within a half mile of public transportation or ride-share pickup locations, which would also reduce parking demand, given that ADUs don’t require parking under state law.  To further advance the goal of making these new ADUs affordable to those who are homeless or at risk of becoming homeless based on their economic situation, United Dwelling will also rent these units out at below-market rates and will accept Section 8 housing vouchers.

In order to make its approach attractive to homeowners, United Dwelling will share about $6,000 of the annual rental income with them, which should more than offset the homeowners’ anticipated increase in annual property taxes of about $400.  To further sweeten the pot, United Dwelling will handle property management and maintenance of these units.  By the end of 2019, Dietz is hopeful that he will be on a pace to start twenty conversions a week. “That’d be a thousand a year, which is a drop in a bucket compared to the six hundred thousand the city needs,” he said.  It will be interesting to see what United Dwelling will be able to accomplish by year’s end.

In a bid to spur the construction of ADUs and combat San Diego County’s housing crisis, including an acute shortage of affordable housing, the San Diego County Board of Supervisors voted in January to adopt a five-year trial program to waive fees for ADUs. In the wake of the City of San Diego’s fee waiver in July 2018, this program is expected to reduce construction costs for ADUs by approximately $14,000.

“This is a really big deal,” said Board of Supervisors Chairwoman Dianne Jacob. Together with efforts at the state level to limit regulations on ADU development, the fee waiver creates an economic motivation for developing ADUs. “We talk a lot about housing, the need for housing, and the need for affordable housing. This is the easiest and quickest way to get there,” remarked Board Chairwoman Jacob.

In recent years, rents in the region have increased substantially and the vacancy rate has dropped to 3.3%, exacerbating housing pressures. Due at least in part to costly development impact fees (for, e.g., electrical hookups, road construction, sewer connections, and public school support), ADU construction in San Diego and its environs has lagged despite the adoption of Senate Bill 1069, which was intended to encourage such projects. Given these facts, advocates for affordable housing and others are anxious for this trial program, for which San Diego County is providing $11 million to offset lost fee revenues, to promote the building of ADUs.