Pactio Project

Are in-law units improving Palo Alto’s affordable housing problem?

By November 14, 2018 December 11th, 2018 No Comments
(Photo by Tom Rumble on Unsplash)

This is a very timely issue and one that has become an ongoing issue for Palo Alto’s City Council. Formally, in-law units, granny units, second units, etc., are called accessory dwelling units (ADUs), and Palo Alto has taken steps this year to encourage people to rent them out.

Before we get into the politics of ADUs, let me first tell you how they’re defined because that’s an important part of this conversation.

  1. A detached ADU: a free-standing structure not connected to the house
  2. A junior ADU or JADU: an existing part of the house, such as a garage or a few rooms, that is converted into an ADU
  3. An attached ADU: a new dwelling unit that is built attached to the house

State and local laws

In 2016, California passed SB 1069, which says ADUs are essential to California’s housing supply. The bill loosened parking requirements and also prohibits water and sewage agencies from charging extra fees for units that already exist, making it easier for homeowners to build and rent out ADUs.

The city was averaging four permits a year for these units, but they changed the zoning laws in 2017 to make it easier for people to apply for permits. This initiated a boom, and the city started averaging four permits a month.

Coming up

One of the most significant changes is the council’s steps toward eliminating development permit fees for JADUs and garage conversions. These fees can be up to $10,000 according to Councilman Cory Wolbach, and city staff started working on a financial analysis in early October. The fee waiver may be provided to those who are willing to rent at below market rate housing.

Wolbach believes eliminating these fees would encourage even more JADUs. “One of the criticisms (about ADUs) is that it’s just more built space,” Wolbach said. “And for people who do not want to see a lot more new buildings, and a new external ADU is a new small building, whereas a garage conversion or JADU doesn’t carry that impact.”

Here are some reasons why ADUs as seen as an answer to the housing crisis:

ADUs cannot be rented out as short-term units. Some officials, including Councilwoman Lydia Kou, have expressed concern that ADUs will be rented out short term on sites such as Airbnb. Zoning laws prohibit ADUs being rented out for less than 30 days. Kou declined to comment on this, but Chief Planning Official Amy French said short-term rental violations are difficult to monitor. The city has two officers who deal with the issue and they handle violations on a complaint basis. French told me they have to focus on pressing safety cases first.

ADUs can make housing more affordable for homeowners. Planning and Transportation Commission member William Riggs, who is also an assistant professor at the University of San Francisco’s School of Management, said ADUs are beneficial for homeowners, even if they are used for short-term rentals. He also noted that some ADUs aren’t even rented out as they may be used for housing parents or other family members.

“I actually think that you know, one of the assets an ADU presents is as a revenue source for an owner or a resident who, who needs additional revenue to make that property cost-effective,” he said. “So to limit use of that unit from a from a short-term rental standpoint, may be a little counterintuitive to reducing the cost of housing overall.”

ADUs provide cheaper housing options. The housing shortage in Silicon Valley is a serious problem and it’s driving up prices, but ADUs add more units to the market assisting with this issue. Additionally, ADUs “are an innovative, affordable, effective option for adding much-needed housing in California,” according to the California Department of Housing and Community Development. These units are generally more affordable in part because they are usually rented out to people the homeowner knows. They are also more affordable, because they are more affordable to build, which means owners can make the money back in a timely fashion without charging outrageous rent. While ADUs can be an affordable option, it doesn’t mean that every unit will be affordable, which leads to some of the concerns.

Here are some of the concerns:

The first concern is that these units are not generally seen as a quick solution to the housing crisis. California’s statewide housing assessment determined California has a need for 180,000 new units annually, and, while they can help, ADUs alone cannot meet that need, especially at the pace Palo Alto is granting permits.

There are also concerns over growth and development. While SB 1069 eliminated the parking requirement in certain cases, such as if ADUs are within half a mile of public transportation, some still worry about parking and traffic. Riggs addressed this saying “If we get beyond the local politics, at the end of the day a city like Palo Alto has to stop viewing itself as a village and has to get serious about housing the people who want to live in it.”

To give you a better idea of where your $50 contribution went, our team spent four hours preparing this story. For additional reading, here are three articles we read in responding to your question:

  1.  Council lauds rise of ‘accessory dwelling units’
  2. One answer to the lack of affordable apartments might begin at home
  3. Palo Alto profiting from unauthorized short-term rentals

This answer was produced by Pactio and journalist Ashlyn Rollins. Now, it’s time for you to ask your question.

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