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What’s All the Ruckus About ADUs?

Author: Amy Steinfeld

Author: Wendy Nwosu

This article was originally published in the November 2017 issue of Santa Barbara Lawyer, a publication of the Santa Barbara County Bar Association.

Many Californians are wondering whether their neighbor’s new tiny home will house grandma or become a new rental. Advocates of accessory dwelling units (“ADU”) claim they’ll provide millennials and seniors with alternative housing options and homeowners with a new source of income. Opponents fret ADUs will alter neighborhoods and strain resources.

Senate Bill 1069 (Wieckowski, D-Fremont) and Assembly Bill 2299 (Bloom) were signed into law on Sept. 27, 2016, and went into effect on Jan. 1, 2017, (collectively, “ADU law”). The law aims to reduce regulatory barriers for homeowners seeking to convert space or add backyard structures for use as an ADU. ADUs, otherwise known as “in-law units, “back houses” or “granny flats” are secondary dwelling units with independent living facilities that can be either attached (“Interior ADU”) (by repurposing an existing space) or detached (“Exterior ADU”) from an existing home, and must be less than 1,200 square feet.[1] Regardless of an ADU’s shape or size, it remains part of the same property as the main home and cannot be sold separately.

Enactment of the ADU law has sparked a robust public conversation. Supporters believe the ADU law will create more affordable housing (especially in high-rent areas like Santa Barbara), flexibility for the state’s aging and growing population, and more jobs for architects, planners and contractors. Homeowners in favor of the law believe it gives them more freedom to develop their properties. Adversaries argue the ADU law will strip power from local agencies to regulate ADUs, could negatively affect neighborhood character, and will strain limited off-street parking and water supplies. Further, they believe local agencies are more adept than states in considering ADU permit applications based on local information and context. For example, housing needs in Santa Barbara are significantly different from those in Indio. There is also nothing in the law that precludes ADUs from being used as short-term vacation rentals rather than to house locals.

Shift of Regulatory Power

The ADU law removes obstacles imposed by local agencies that block or make it costly for homeowners to build ADUs. Two important changes pertain to water/sewer connections and parking. Water and sewer agencies are precluded from charging hookup fees for Interior ADUs.[2] Any fees imposed on Exterior ADUs must be proportionate to the added burden the ADU places on the local agency’s sewer system.[3] Further, local agencies are not permitted to require new parking spots for certain ADUs, including those units that are part of an existing primary residence and units located within a half-mile from public transportation.[4] Homeowners can now build a backyard cottage without carving out a space for additional cars.

Historically, the state has allowed local agencies to regulate zoning within their respective jurisdictional limits. So why is the state suddenly limiting local regulatory power? Likely reasons include:

  1. Increase Vacancy Rates

In 2016, rental and homeowner vacancies were shockingly low throughout California. The rental vacancy rate declined from 4.1 percent in 2015 to 3.6 percent in 2016 while the homeowner vacancy rate declined slightly from 1.2 percent in 2015 to 1.1 percent in 2016.[5] Santa Barbara is the least affordable county in California; only 14 percent of residents are able to afford a median-priced home of $930,000. In order to offset the decline in vacant rental units and address increasing rents, cities must allow more new construction, which has already occurred in major cities like Los Angeles and San Francisco. In Santa Barbara, the vacancy rate is at a historic low of less than 1 percent, forcing rent prices—already some of the highest in the country—to spike another 20 percent from 2015 to 2016.[6] Santa Barbara’s current vacancy rate is now approximately 1.3 percent. Economists assert that a 5 percent vacancy rate represents a healthy market equilibrium.[7]

2015 2016
California Rental Vacancy Rate 4.1% 3.6%
California Homeowner Vacancy Rate 1.2% 1.1%
Santa Barbara Rental Vacancy Rate 0.5%[8] 0.5%

 

  1. Ease Burden of Building ADUs

Discretionary permits are commonly required for the approval of housing development. Discretionary permits require analysis under the California Environmental Quality Act (“CEQA”). The new permit process should (in theory) be an easy ministerial process that is exempt from CEQA. The ADU law requires that a permit to be issued within three months if the applicant meets all requirements.[9]

  1. Adopt Uniform System

The state believes they can streamline ADU construction and provide uniform permitting procedures across the state.

  1. Take Credit for “Doing Something” About Housing

With the end of redevelopment in California, local agencies have lost the ability to use tax increment financing to build affordable housing. CEQA compliance and litigation are daunting obstacles to the approval of housing projects subject to discretionary permitting. Although there are ongoing discussions in Sacramento regarding a possible provision of funding to local agencies for housing, such funding has not been provided in the past. Some think the California Legislature believes that streamlining ADU approvals will allow them to take credit for helping to solve the state’s housing crisis.

What Are Local Agencies Doing?

Until a local agency adopts its own ADU ordinance, it is required to ministerially approve ADUs if the unit complies with the ADU law. Many cities and counties are now proposing to adopt local development rules that will regulate, pursuant to the state law, certain aspects of ADUs.

  • County of Santa Barbara

Santa Barbara County’s draft ordinance was presented to its board on Sept. 12. The draft ordinance is currently more stringent than state law. For example, the draft language provides that the main property shall be owner-occupied and the ADU may not be rented for less than 30 days.[10] At the meeting, most of the public opposed the restrictive nature of the ordinance, claiming that it fails to comply with the ADU law. The draft ordinance was rejected 4 to 1. The board instructed the planning department to revisit various issues, such as the design review process and water/sewer connections, especially in light of new ADU laws that await the governor’s signature.[11]

  • City of Santa Barbara

Since the ADU law’s enactment, Santa Barbara has received over 170 ADU applications.[12] For comparison, Santa Barbara only approved 16 ADUs between 1993 and 2016. Most of the new applicants reside in the Lower Riviera, Upper Eastside and San Roque neighborhoods.[13] The city is currently considering an ADU ordinance that will address applicability within high fire hazard areas, zoning designations, minimum lot size and maximum unit size. A draft was presented to the Planning Commission on Sept. 7.[14] At the meeting, numerous opponents of the draft ordinance claimed that its restrictions on ADUs in certain zones and its 600-square-feet maximum size restriction violate the ADU law. The Planning Commission instructed staff to research the rationale of the proposed ordinance and determine whether it complies with the ADU law. The city continues to actively seek public input and has scheduled another public hearing for late October.

  • Goleta

The City of Goleta is currently working on a draft ordinance that will address junior units, owner-occupancy requirements, and amnesty for unpermitted ADUs. Goleta estimates that over 5,000 of its homes could support an ADU. The draft will go before council soon, but the exact timing is unclear. Once the council weighs in on the draft ADU ordinance, staff will continue the drafting process. As of September, the city had received many inquiries but no complete ADU applications.

We will continue to track this issue as it unfolds in each jurisdiction.


[1] California Department of Housing and Community Development, Accessory Dwelling Unit Memorandum, (December 2016) http://www.hcd.ca.gov/policy-research/docs/17Jan30-ADU-TA-Memo.pdf

[2] Gov. Code, § 65852.2(f)(2)(A).

[3] Gov. Code, § 65852.2(f)(2)(B).

[4] Gov. Code, § 65852.2(d).

[5] http://journal.firsttuesday.us/nobodys-home-california-residential-vacancy-rates/7094/

[6] http://www.independent.com/news/2016/nov/08/rents-jump-20-percent/

[7] http://www.independent.com/news/2017/aug/01/great-vacancy-rate-debate/

[8] https://www.noozhawk.com/article/short_term_vacation_rentals_santa_barbara_housing_market_20150510

[9] Gov. Code, § 65852.2(a)(3).

[10] http://sbcountyplanning.org/PDF/boards/MPC/05-17-2017/16ORD-00000-00015/Staff%20Presentation.pdf

[11] The proposed laws are Senate Bill 229 (Wieckowski) and Assembly Bill 494 (Bloom). These laws aim to clarify ADU parking requirements, connection fees, and maximum unit size. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB229; https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=201720180AB494.

[12] Noozhawk, “Santa Barbara Inundated With Granny Unit Applications as City Develops Local Regulations” https://www.noozhawk.com/article/santa_barbara_inundated_granny_unit_applications

[13] Noozhawk, “Santa Barbara Inundated With Granny Unit Applications as City Develops Local Regulations”

[14] Noozhawk, “Santa Barbara Inundated With Granny Unit Applications as City Develops Local Regulations”

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