“[L]iterally, ‘Yes in My Backyard’”: Boosting the construction of rent-controlled ADUs in San Jose

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.