ADU State and Local Law

We’ve been long-time supporters of the Pacific Legal Foundation, a nonprofit legal organization that defends Americans’ liberties when threatened by government overreach and abuse. My brother worked there after he and the PLF Executive Vice President, John Groen went to school at Claremont Men’s College (the three of us played on the rugby team for two seasons!).  Our good friend Larry Salzman is their director of litigation, and I appreciate him passing along the latest links to the ADU laws below.

AB68 is the state law that overrides local building and zoning codes, requiring ADUs to be permitted throughout the state subject to various conditions about health, safety, and nuisance.  It allows for one attached, and one detached ADU be added to every SFR property. Here is the law:

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB68 

The was augmented last year by AB 670, which prohibits homeowner’s associations from unreasonably withholding their permission to allow their members to develop ADUs in HOA-run communities.

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB670 

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PLF just petitioned this case to the California Supreme Court, asking it to decide whether all power to restrict ADUs is preempted by state law or whether local governments retain some discretion to deny the permit applications that meet state law standards.

The city of San Marino adopted building code restrictions that forbid homeowner Cordelia Donnelly from adding an ADU over her garage. Because state law dealing with ADUs fully preempts local restrictions, Cordelia has asked the California Supreme Court to recognize her right to create more housing. Story here:

https://pacificlegal.org/case/donnelly-v-city-of-san-marino/

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Larry has also found a ADU builder he likes who has just opened a local office:

https://www.gjgardner.com/orange-county-home-builders/granny-flats.aspx

ADU As Investment Property

A two-year-old, Culver City, California-based startup called United Dwelling aims to tackle the affordable housing problem using data, creativity, and underutilized garages and backyards.

United Dwelling plans to eventually build thousands of Accessory Dwelling Units, which are basically 369-square-foot studio homes. The company said its units benefit homeowners who are looking for ways to supplement their income as well as tenants looking for low-cost housing options.

United Dwelling uses data to identify potential lots that would be suitable for its units. It targets mostly low-and middle-income neighborhoods, with some exceptions for workforce housing. The company at first was going to just remodel garages but discovered quickly it’s much easier to tear down old ones and start fresh. So that’s what it does. It replaces those garages with small, affordable and zero net carbon homes in low-density neighborhoods with no out-of-pocket costs to property owners.

It then sets a rental price for the newly built unit and manages the property on the homeowner’s behalf, keeping a share of the rental income. Upon completion of construction, United Dwelling gives the homeowner the option to buy the unit back from the company for just under $88,000. To keep the costs of construction down, United Dwelling aims to build at least five units within a two-mile radius in the same time frame. Its initial focus is on the Los Angeles region with plans to eventually expand to the Bay Area and other locations once its solidifies its process, according to Dietz.

Specifically, the company plans to build over 150 of its detached studio homes in Southern California in 2020 and over 1,500 in 2021 (assuming construction can continue moving forward as an essential function per Los Angeles COVID-19 policy).

“Affordable housing is one of the most daunting challenges facing California and other parts of the county that is both entirely man-made and completely solvable,” Dietz said. “Here, we can do something that’s incredibly relevant. The opportunity is truly immense. Affordable housing is pretty easy. All you need is inexpensive land and construction, and capital.”

Link to Article

Affordable Housing?

When developer Ginger Hitzke first proposed an affordable housing complex on a parking lot in Solana Beach, she envisioned building 18 new homes for low-income families and adults at a cost of $414,000 per apartment.

More than a decade later, her project has shrunk in size by nearly half and become more than twice as expensive.

At $1.1 million per apartment, the Pearl is the priciest affordable housing project in the state and, likely, the country. It also serves as an alarming example of how political, economic and bureaucratic forces have converged to drive up the cost of such housing at a time when growing numbers of Californians need it.

“I have sticker shock,” Hitzke said. “It’s insane.”

Miguel Zamora’s saga, which is also the Pearl’s, began 30 years ago in a rundown, 1920s motel in Solana Beach, where he lived with his wife and four children. Hot water came and went, the roof leaked and toilets overflowed. Cockroaches, fleas and rats infested the rooms.

“It was all dirt. It wasn’t even paved. And it was quite ugly,” said Zamora, who worked in construction and as a dishwasher and gardener. “When it rained, it was really very cold. Everything would get damp.”

In 1992, the city of Solana Beach filed a criminal complaint against the motel’s Beverly Hills-based owner. As part of the settlement, the city demolished the motel, but agreed to provide Zamora’s family and more than half a dozen other residents new affordable housing by 1999.

Zamora and the others also received federal housing assistance vouchers, which helped him find an apartment five miles away from the old motel. His family has been living there for the last two decades, but the apartment they never received still weighs on his mind.

Should the Pearl or other low-income housing ever get built in the city, Zamora has the right to move in first. He longs to bring his family together in a place that feels more like home.

“I’d like to enjoy my grandchildren,” said Zamora, 67. “Because being apart is hard.”

Even though the deadline to provide the affordable housing was 1999, it took almost another 10 years for Solana Beach’s leaders to take the first step of asking developers to pitch projects.

(more…)

“Wealth is the Vector.”

Rich people will get a lot of the blame…..

“Wealth is the vector.” That’s what sociologist Tressie McMillan Cottom tweeted last week, in reference to the spread of COVID-19 across both the globe and the United States.

Wealth is not the cause of every concentrated outbreak dotting the United States. But it’s the common denominator of so much of its spread outside of major urban areas. It’s the reason why so many of the coronavirus hot spots in the Mountain West — Sun Valley, Idaho; Gunnison County, Colorado; Summit County, Utah; Gallatin County, Montana — overlap with winter playgrounds for the wealthy. The virus travels via people, and the people who travel the most, both domestically and internationally, are rich people.

A party in the tony bedroom community of Westport, Connecticut, all the way back on March 5, became what one epidemiologist referred to as a “super-spreading event,” with infected attendees dispersing throughout Connecticut and New England, and one party-goer falling ill on a plane ride back to South Africa. In Idaho’s Blaine County, home to Sun Valley, more than half of the residential properties are second homes or rental properties, and more than 30,000 people fly into the regional airport during ski season alone. As of March 31st, 187 people in the county of 22,000 have tested positive, including local emergency room physician Brent Russell. Two people have died. The town’s small hospital has two ICU beds and a single ventilator.

“People come here from all over the world,” Russell told the Idaho Statesman. “Especially this time of year. When I’m in the ER, I get people from New York, Washington D.C., San Francisco, Seattle. Every week there’s people from those places. Most likely someone from an urban area or multiple people from urban areas came here and they just set it off.”

All over the United States, people are fleeing urban areas with high infection rates for the perceived safety and natural beauty of rural areas. Some of them own second homes in those areas; others are paying upwards of $10,000 a month, depending on the area, for temporary housing. The common denominator among those populations is, again, wealth — either their own or their families’. They can flee the city because their jobs can be done remotely, or they don’t work at all. They either had a vacation house already, or they can afford to fork over what amounts to a second rent, or second mortgage.

Not everyone leaving a big city because of the pandemic is heading for a vacation home; many people with mobile jobs are relocating to stay with family in suburban and rural hometowns. And many of the rural places that will eventually be hardest hit by the coronavirus are not upscale ski and beach towns, but small and often poor communities that have no tourist economy — or any of the infrastructure that comes with it. The resort areas seeing an influx of potentially virus-carrying city dwellers now are a kind of canary in the coal mine: a preview of how desperately overwhelmed rural areas across the country will be by the coronavirus, whenever it arrives.

From the coast of Maine to the North Shore of Lake Superior, hundreds of thousands of people have either already arrived or are scrambling to find vacant rentals. Some are taking precautions when they leave their primary dwellings, fully isolating themselves for 14 days or more in their new, temporary towns, as the White House has recommended for anyone leaving New York City. But many, presumably, are not.

“The worst part is that these second-home owners are coming up and acting like isolation is a vacation,” said Jen, 39, who lives in the northwest Colorado Rockies.

Link to Full Article

Airbnb Rental Scam

An elaborate short-term rental scheme in Carlsbad tricked a young renter and property owner into losing thousands, according to the victims.

The victims, property owner Nick Foster and renter Courtney Hulla, told NBC 7 the scammer used both Airbnb and Craigslist to carry out the scheme.

On Saturday, Hulla found a Carlsbad condo available to rent on Craigslist, or so she thought.

“$650 deposit, $650 rent. We were like it’s a nice area. That seems too good to be true,” said Hulla.

She contacted a man named David, who told her he was the owner of a rental near the Carlsbad Village. He even invited her to the condo, Hulla told NBC 7.

NBC 7 is not publishing the alleged scammer’s last name because he has not been charged with any crime at this point in time.

“Walked up to the place and checked it out. He was doing laundry at the time,” said Hulla. “He said ‘Check out the place,’ you know, ‘You can walk around. I’m packing stuff up and leaving for Chicago on Thursday. This person bailed. Let me know if you like it. We can start moving forward.’

Hulla met David in person twice and said the man shared details about his life, his work and even signed a lease agreement with her.

She paid him one month’s rent and a deposit, as agreed, totaling $1,300. He gave her a set of keys.

“There’s no way this guy’s trying to do anything, scam me. He’s being too real about it,” said Hulla.

Hulla still felt uneasy, so she went to test out the keys at the condo. She noticed a light on inside and texted David, the so-called owner.

“‘I think that there are people, there are people in there. Can you explain that?’ He was like, ‘Oh they’re my aunt and uncle, just don’t scare them,’” Hulla said.

Turns out that the couple had rented the place through Airbnb from the real condo owner, Nick Foster, a Carlsbad resident.

“He made the condo his own. He acted like he owned it to sell his con to someone,” Foster said.

Foster told NBC 7, David, who had rented the condo through Airbnb before, also stole two portable AC units and other belongings over his two-week stay.

Both Hulla and Foster have reported the incident to the police. Foster has also contacted Airbnb.

“You have a conman on your platform and that he’s clearly done this before and he’s gonna do it again,” said Foster.

Neither has heard from David again.

Hulla was not able to cancel the payments she had made through the Facebook app and PayPal.

NAR Top 10 Outperforming Markets

Whether you move there or just buy rental properties, these are NAR’s hotspots:

In offering its list, NAR tracked ongoing data including domestic migration, housing affordability for new residents, consistent job growth relative to the national average, population age structure, attractiveness for retirees and home price appreciation.

The 10 markets that made the cut were, in alphabetical order: Charleston, S.C.; Charlotte, N.C.; Colorado Springs, Colo.; Columbus, Ohio; Dallas-Fort Worth; Fort Collins, Colo.; Las Vegas; Ogden, Utah; Raleigh-Durham-Chapel Hill, N.C.; and Tampa-St. Petersburg, Fla.

“Some markets are clearly positioned for exceptional longer term performance due to their relative housing affordability combined with solid local economic expansion,” said NAR’s Chief Economist Lawrence Yun. “Drawing new residents from other states will also further stimulate housing demand in these markets, but this will create upward price pressures as well, especially if demand is not met by increasing supply.”

“Potential buyers in these 10 markets will find conditions especially favorable to purchase a home going into the next decade,” added NAR President Vince Malta, broker at Malta & Co. Inc. in San Francisco. “The dream of owning a home appears even more attainable for those who move to or are currently living in these markets.”

Link to Article

Statewide Rent Control Bill 1482

Governor Newsom signed Assembly Bill 1482 into law on October 8.

Quick Summary of the law:

Rent Cap

Rent increases are capped at 5 percent plus inflation, or up to a hard cap of 10 percent, whichever is lower.

All rent increases since March 15, 2019 will count toward the rent cap, and if above the permissible rent cap, will have to be rolled back effective January 1, 2020.

Just Cause

Landlords may only evict for “just cause.” There is a list of 15 reasons.

The just cause reasons are divided into two categories:

“At fault” termination of tenancy is generally based upon a tenant’s breach of the lease, among other reasons, and does not require the payment of relocation assistance.

“At fault” reasons include non-payment of rent, nuisance, criminal activity, refusal to allow entry, and breach of a material term of the lease.

“No fault” termination of tenancy is allowed when the tenant has not breached the lease and will require the landlord to pay one month’s rent in relocation assistance.

“No fault” reasons include owner occupancy, withdrawal from the rental market, substantial remodeling and compliance with government order to vacate the property,

Just cause eviction only applies to tenants who have been continuously and lawfully occupying the property for 12 months.

Exemptions

Exempts single family properties and condos if:

  • Notice of the exemption is provided to the tenants and;
  • The owner is not a REIT, a corporation, or an LLC where an owner is a corporation

Other exemptions include:

  • Housing that has been issued a certificate of occupancy within previous last 15 years
  • Owner occupied duplexes
  • Owner occupied single-family properties renting no more than two bedrooms including Accessory Dwelling Units (“ADU”s). (This exemption applies only to just cause but not the rent cap).

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