ADUs - The Second California Goldrush....
… so I heard investors describe the new ADU laws that are in effect since January 1, 2020.
What actually is an ADU?
ADU stands for Accessory Dwelling Unit, a term that describes what in the past has been referred to as granny flats, in-law suites or second units, for example. The definition of an ADU in the 2020 law has changed from its 2017 predecessor. Now ADUs can also be built on multifamily lots. Here is the current definition:
Accessory Dwelling Unit (ADU)
means an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling is or will be situated. An accessory dwelling unit also includes an efficiency unit and a manufactured home.
Where can these ADUs be built?
An ADU can be an addition to the main house, a standalone and new structure in the back or side, a garage conversion a second level on top of a garage or a conversion of other structures on the property. AN ADU can also be created by repurposing existing space within a primary residence that is converted into an independent living unit. Property owners are even encouraged to convert non-permitted structures to ADU by bringing them up to building code. Here are a few visuals for what’s possible:
Junior Accessory Dwelling Unit (JADU)
A JADU is a unit that is no more than 500 square feet in size and contained entirely within a single-family residence. A junior accessory dwelling units are typically bedrooms in a single-family home that have an entrance from the main home and an entrance from the outside. A JADU may include separate sanitation facilities or may share sanitation facilities with the existing structure. This means a JADU must have an efficiency kitchen but it is not required to have a private bathroom.
Let’s step back and look at the laws and what actually happened
California ADU laws have been around since 2017 to address California’s housing crisis but few have been built. Creative interpretation of the law by many cities has prevented the building of these additional housing units in residential zoned areas. These cities have accomplished the exact opposite with their nimbyism and uninspiring leadership. Many city leaders acknowledged the housing crisis but created inhibitive laws to avoid these units being built. Huntington Beach and El Segundo are examples of failed leadership with their decision to rather waste tax dollars on lawsuits than supporting the implementation of the new housing law in a way to tackle our housing shortage.
The state turned around and changed the ADU law as of January 1, 2020 to eliminate barriers many cities have created. I would say the refusal of many cities to support additional housing in single-family communities has backfired terribly for them.
PLEASE BE AWARE THAT A LOT OF INFORMATION ONLINE IS OUTDATED AND STILL REFLECTS THE OLD LAWS. ALWAYS VERIFY WHAT YEAR THE INFORMATION WAS CREATED AND THE EFFECTIVE DATE THE LAW REFERS TO (SHOULD BE 2020). EVEN THE CALIFORNIA GOVERNMENT PAGE FOR ADUs STILL REFLECTS THE OLD LAW (AS OF 01/28/2020)
New California ADU laws effective January 1, 2020
Governor Newsom signed the following bills to eliminate barriers to building Accessory Dwelling Units (ADUs). All of them are in effect since January 1, 2020.
- AB 68 makes major changes to reduce barriers to ADU approval and construction, which will increase the production of these low-cost, energy-efficient units and add to California’s affordable housing supply.
- AB 881 removes impediments to ADU construction by restricting local jurisdictions’ permitting criteria, clarifying that ADUs must receive streamlined approval if constructed in existing garages and eliminating local agencies’ ability to require owner-occupancy for five years.
- AB 587 provides a narrow exemption for affordable housing organizations to sell deed-restricted land to eligible low-income homeowners.
- SB 13 creates a tiered fee structure that charges ADUs more fairly based on their size and location. The bill also addresses other barriers by lowering the application approval time frame, creating an avenue to get unpermitted ADUs up to code, and enhancing an enforcement mechanism allowing the state to ensure that localities are following ADU statute.
- AB 671 requires local governments’ housing plans to encourage affordable ADU rentals and requires the state to develop a list of state grants and financial incentives for affordable ADUs.
These bills invalidate local ADU ordinances across the state and replace them with state-mandated rules. This means that it has become easier than ever to build Accessory Dwelling Units in California, The key highlights of the new law are summarized below. This summary was created by Californians For Homeownership.[intense_content_box title=”Summary of Key Provisions” icon=”thumb-tack” icon_stack_color=”#ee5921″]
Reduced Costs and Burdens for Developing ADUs
- Cities must approve ADU applications within 60 days, without a hearing or discretionary review.
- For ADUs permitted by 2025, cities cannot require the owner to live at the property.
- Cities cannot charge any impact fees for ADUs under 750 sqft; fees for larger ADUs are limited.
- Homeowners associations must allow the construction of ADUs.
- ADUs can be developed at the same time as a primary unit, under most of the same rules.
- A city must delay code enforcement against an existing unlawful ADU to allow it to be legalized.
- For areas where development is county-controlled, all of these same rules apply to counties.
ADUs Subject to Automatic Approval — No Local Limits
Cities must permit certain categories of ADU without applying any local development standards (e.g., limits on lot size, unit size, parking, height, setbacks, landscaping, or aesthetics), if proposed on a lot developed with one single-family home. ADUs eligible for this automatic approval include:
- An ADU converted from existing space in the home or another structure (e.g., a garage), so long as the ADU can be accessed from the exterior and has setbacks sufficient for fire safety.
- A new detached ADU that is no larger than 800 sqft, has a maximum height of 16 feet, and has rear and side setbacks of 4 feet.
- Both of the above (creating two ADUs), if the converted ADU is smaller than 500 sqft.
ADUs Subject to Ministerial Approval — Minimal Local Limits
Even if not subject to automatic approval, a city generally must approve any attached or detached ADU under 1,200 sqft unless the city adopts a new ADU ordinance setting local development standards for ADUs. If a city adopts such an ordinance, it must abide by the following restrictions:
- No minimum lot size requirements.
- No maximum unit size limit under 850 sqft (or 1,000 sqft for a two-bedroom ADU).
- No required replacement parking when a parking garage is converted into an ADU.
- No required parking for an ADU created through the conversion of existing space or located within a half-mile walking distance of a bus stop or transit station.
- If the city imposes a floor area ratio limitation or similar rule, the limit must be designed to allow the development of at least one 800 sqft attached or detached ADU on every lot.
Adding Units to Multifamily Properties
For the first time, the new laws allow units to be added to multifamily buildings. Cities must permit these types of units in multifamily buildings without applying any local development standards:
- New units within the existing non-living space of a building (e.g., storage rooms, basements, or garages). At least one unit and up to ¼ of the existing unit count may be created this way.
- Two new homes on the same lot as the multifamily building but detached from it, with 4-foot side and rear setbacks and a 16-foot maximum height.
Californians for Homeownership also created a pdf version of this summary, annotated with references to the new law.[/intense_content_box]
In some way, this means the end of single-family zoning. In general, residential zoning as we know it is obsolete. It has a very different meaning now. You can now build 2 additional dwelling units on a single-family lot! And if you own a multi-family property, like duplex or triplex or more, guess what, you can now add ADUs on these properties as well, proportional in quantity to the existing main units. No surprise investors see a great opportunity to cash in.
This article describes the California state laws that provide a pretty rigid framework statewide. Each city might still adopt its own ADU ordinance with slight variances to the state law.As a property owner or investor, you have to make sure to familiarize yourself with the nuances of the city’s ADU laws your property resides in.