The production of Accessory Dwelling Units (ADU) is a new emphasis at the state level, effective this year. The City’s zoning ordinance is currently being updated to comply with new State law and will be in place prior to starting this program.
Accessory Dwelling Units are housing that is created when garages are converted into legal dwelling units or when a standalone building with a permanent foundation is constructed on the property of an existing single-family home. Junior units are those that are created by remodeling an existing single-family home to create a new separate legal dwelling unit within the home’s existing square footage. Junior units will have a 500 square foot dimension limit.
Under the City’s program, the ADU/JADU units will be created with income-qualified homeowners. The new units will then be rented to income-qualified tenants at rents that fall within state and federal affordability limits. Additionally, the proposed City program will be slightly more limited than the ADU improvements permitted by State law in that it will only provide funding to certain improvements. Providing loans only for newly constructed units and rooms rather than funding modular units is the key distinction of the City’s program.
The attached Draft Program Guidelines more fully describe how the Program would operate, loan limits for ADU and JADU construction, procedures for approving borrowers, income limits for participants, construction management, etc. If selected for funding, the City’s guidelines must be submitted to HCD for approval. They are attached here in draft form for reference and would be subject to any changes required by HCD. They will be submitted for final City Council adoption after HCD’s comments are incorporated.
The State Department of Housing and Community Development offers the CalHome Grant Program with multiple affordable housing activities. That program has added ADU and JADU construction as an eligible activity in their grant program. The CalHome Program issued a NOFA soliciting grant applications for the construction of new housing units at existing owner-occupied, single-family homes.
The City is proposing a pilot program with a grant-funded activity that will assist approximately 11 homeowners with the creation of ADU/JADU’s on their property. If funded, the program will offer fully deferred loans at three percent interest to qualifying homeowners. The loans will have a due on sale provision in the event the home is sold, transferred or ceases to be the principal residence of the borrower. The loans will cover the entire cost of each project with no requirement for borrower funds.