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

Upzoning

Here is a relatively-neutral look at the unaffordability problem in America’s bigger cities, and implementing the idea of upzoning to fix it. Backyard accessory homes could really help out here:

Tiny Fest

It always seemed to me that if ADUs were selling for $50,000 or less, there would be lots of interest.  Literally the first one I ran into (below) at the Tiny Fest was priced at $50,000, and people were standing in line to experience this 8.5 ft x 30 ft home with kitchen and full bath (seen in right window).

https://backporchhomes.lpages.co/back-porch-homes-companion-gallery/

This one was tall enough that it had two lofts:

https://www.tinymountainhouses.com/

For those who want to do it themselves, these guys will sell you the kit for $63,000.  The vaulted ceiling added some extra luxury:

https://www.volstrukt.com/

This was my favorite granny flat because of the porch. The upgraded version costs $65,000:

https://prefabtinyhomes.org/

This was the deal of the day.  For $15,000 you get the building with full bath and the trailer:

www.bosstinyhouse.com

Here’s my tour of the homes:

Container Homes

This 3,000-square-foot home in Phoenix is made up of stacked shipping containers, but you’d never know it once you walked inside. It’s modern, open designed interiors matches the style and spaciousness of any other single-family home today.

Homes constructed of shipping containers are drawing more attention in the building industry. These homes are flood and fire-proof, eco-friendly, energy efficient, and there’s certainly no shortage of them to transform. Worldwide, an estimated 24 million empty shipping containers are retired, just waiting to find a new purpose. Could real estate be it?

Some housing experts predict shipping containers to make up a bigger footprint of homes and buildings in the future. One shipping container can be transformed into a tiny home, several molded together could form a standard-sized single-family home, and hundreds stacked together in a Lego-like way could make for an apartment complex. Shipping containers can also be transformed as add-ons to existing homes, such as a garage.

But can a shipping container be stylish? Shara Terry, a real estate pro with Berkshire Hathway HomeServices Arizona Properties in Phoenix, certainly thinks so. She’s listing a three-bedroom, four-bath single-family, shipping container home for $610,000. The home, which is a hybrid of two stacked containers on its east side and two stacked on its west side, is designed by engineer Jorge Salcedo and Colombian architect Gregorio Baquero.

“A lot of people who’ve visited it have been curious, and they can’t believe it used to be a shipping container once they step inside and they see how open and seamless it is inside,” Terry says. “There really are only two subtle reminders in the interior that show a portion of the red container,” but even those have been blended into the overall decor. The exterior includes some writing on the containers that were preserved for character, including a stamp in Vietnamese showing its former location.

Link to Full Article

SD Approves Tiny Houses

Here’s how we can get the cost of ADUs down (hopefully):

San Diego officials say they plan to begin allowing movable “tiny houses” in backyards across the city, to help address the local homelessness and affordable housing crises.

The tiny houses, which are similar to granny flats but smaller, can be built more quickly and cheaply than granny flats and will create a new source of low-cost housing — without any government subsidies, city officials said this week.

“I think this is a good, common-sense solution that provides some possibilities for non-subsidized, market-rate type housing,” Councilman Scott Sherman said Wednesday during a meeting of the council’s Land Use and Housing committee. “It’s one small step in dealing with our housing crisis.”

The committee voted unanimously to direct City Attorney Mara Elliott to draft an amendment to San Diego’s municipal code that would allow movable tiny houses as long as property owners adhere to a long list of restrictions and requirements.

Under San Diego’s proposed regulations, movable tiny houses would range in size from 150 to 430 square feet. They would have fire-resistant roofs and would need to be connected to sewer, water and electricity.

While movable tiny houses have wheels, city officials said, they aren’t like a conventional trailer or recreational vehicle. Instead, they are built like a traditional home, with interior space geared for daily living.

They could not be rented out for fewer than 30 days at a time, so they can’t be used as short-term vacation rentals.

Property owners would not be required to provide an on-site parking spot for the tiny house.

They would have to be registered with the Department of Motor Vehicles, but they couldn’t move under their own power. And the wheels couldn’t be removed because they’re needed to support the structure.

Despite the tiny houses being potential competition, the local development community supports the effort.

“Everyone pretty much agrees that the old ways of doing things are not going to get us out of this crisis,” said Matt Adams, vice president of the local chapter of the Building Industry Association. “It’s creative, it’s innovative and you have other jurisdictions around the nation exploring it.”

A property owner can have a movable tiny house installed on their property within 30 to 45 days, much less time than the six to 18 months it typically takes to add a granny flat, said Barrett Tetlow, Councilman Sherman’s chief of staff.

The process takes less time because the movable tiny houses are pre-fabricated and then shipped to property owners, while granny flats are typically constructed on-site and require a lengthier approval process.

Tetlow said a tiny house will typically cost about $85,000 total, compared to somewhere between $100,000 and $150,000 for a granny flat, which is usually between 500 and 1,000 square feet in size.

With tiny houses renting for an estimated $900 per month, Tetlow said, a property owner would recover their initial investment in about eight years. After that, the rent from the tiny house could help cover their mortgage payment or other expenses.

The tiny houses would become a new rung on the housing ladder, above homelessness and potentially above subsidized low-income housing, Tetlow said.

Link to UT article

Encinitas ADU and PRADU

For Encinitas homeowners who are considering a granny flat – or buyers who want to purchase a suitable property – this is a 7-minute primer from one of the architects who helped guide the city to their current policy (which is the most flexible in North County).

He quotes the costs to build a granny flat to be between $75,000 to $300,000, depending on size, which still sounds like too much for most people.  But he thinks that in the long run the benefits are so great that homeowners who have the right-sized property will build one.

http://encinitasca.gov/pradu

There are a lot of visual distractions in the video so just listening to the audio might be better.

Granny Flat Rent-Sharing

These guys are only operating in the Bay Area, but this is an idea that could spread, especially if they could buy the granny flats for less than $100,000.  They mention the company Node, who is charging $200,000 for a ready-built and installed 600sf ADU if you were to buy direct from them.

https://www.rentthebackyard.com/

If you are looking for a reasonably-priced granny flat, Amazon has dozens of kits for sale if you don’t mind assembling it yourself – the House-in-a-Box:

Link to Amazon Granny Flats

Carlsbad’s Low-Income Housing

The City of Carlsbad needs to build 2,094 very-low and low-income homes over the next ten years.  Hope they get busy on approving those granny flats!

CARLSBAD — Housing is arguably the most pressing issue in the state.

As such, every eight years the state determines the number of housing units, known as the Regional Housing Needs Assessment (RHNA), and distributes those totals to each county. From there, the county breaks down the total for each jurisdiction.

In San Diego County, the region was mandated to 171,685 new units for the 2021-29 cycle, according to the California Housing and Community Development Department (HCD). The San Diego Association of Governments presented the numbers during its July 26 board meeting.

For Carlsbad, it means 3,873 new units must be constructed by the deadline. The council also approved a letter to SANDAG in support of the new methodology during its Aug. 20 meeting.

“Those comments will be considered by the SANDAG board on Sept. 6,” said Debbie Fountain, Carlsbad director of community and economic development. “We did prepare the letter … and is recommending support for that methodology.”

The goal is to increase the housing supply, as California is suffering from a housing shortage. According to the state methodology, 65% of RHNA is distributed to each municipality’s relative to its share of transit stations and stops and 35% is based on the share of jobs.

Carlsbad has no major stops per the methodology, but is the region’s third largest employer at 4.76%. And since Carlsbad has a higher average income than most of the county, more affordable housing units are required.

However, the city’s RHNA allotment decreased by 1,126 units compared to the last cycle.

The proposed methodology requires the city to construct 1,310 very-low income housing, 784 low-income, 750 moderate and 1,029 above-moderate units.

The city’s very-low income housing increased by 398 units over the previous cycle, while moderate and above-moderate units decreased by 312 and 1,303, respectively. The county saw an increase of 9,695 units compared to the fifth cycle.

“We also wanted to get some acknowledgement of the great work Carlsbad has been doing for providing low-income housing,” Fountain added.

Councilwoman Cori Schumacher asked Fountain to provide clarification for the public between the fifth and sixth assessments. Fountain said if approved by SANDAG, the city would be responsible for more very low- and low-income units in the sixth cycle compared to the fifth.

Schumacher said the focus this time around is on jobs, while Fountain added the state set specific standards, such as housing being concentrated around job and transit centers.

“It’s a 65-35 split,” Fountain added. “They looked at the jobs-housing balance. They came down to this more data-driven formula.”

One change the city will face is addressing its density requirements under the Housing Element, Fountain said. As such, she said the city will struggle “a lot” with its Growth Management Plan due to the new housing requirements and methodology.

The city’s letter supports the methodology, but also states the city has made significant strides over the past 25 years due to its Inclusionary Housing Ordinance.

https://www.thecoastnews.com/carlsbads-rhna-allotment-decreases/

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