Calif’s new granny unit law & ADU flips: is CA the next Portland?

[Marissa Myers]

I am happy that California has passed a new law that eases restrictions on secondary units, effective January 1. When Portland did something similar, it sparked an ADU boom. Permitted ADU projects skyrocketed, and a cottage industry sprung up, including ADU designers, owner/developer consulting, ADU breakeven calculator. With our new law, I see opportunity to build:

• zero step, accessible units for aging parents and retirees
• micro-units for students (CSU Hayward, Berkeley)
• ADU's for millennial professionals who are still saving for down payment
• garage conversions (I'm planning for this)
  
  

I'd love to get your opinions: 

1. Are you ADU's as part of your strategy – househacking, flips, BRRRs?
2. How do you think the new regulations will impact real estate investing in the Bay Area?

CA Granny unit law: Summary

• no extra parking space required for ADU if it's within ½ mile of a public transit stop, or part of an existing primary residence, or part of an existing accessory structure, or in an area requiring on-street parking permits
  
• parking can be tandem on existing driveway
  
• when a garage is demolished or an ADU and off-street parking spaces must be replaced, they can be anywhere on lot, including tandem
  
• no set back required for a garage conversion; side/rear setback of 5 feet max for ADU above a garage
  
• no extra utility, water or sewage hookup fees
• detached ADU's shall not exceed 1200 sq ft

 CA Granny Unit law: Background docs

• bill text
• legal brief

[Marissa Myers]

@Ryan Hopkins I’m reading and re-reading it, trying to wrap my head around it. According to an Oakland law firm’s summary of SB 1069, if a city imposes requirements beyond those in the new state law, those local provisions are preempted as of January 1, and only the new state standard may be enforced! And, If a city FAILS to adopt an ADU ordinance in accordance with state law, that city is required to approve an ADU application applying only the standards in the new state law!

For example: I want to buy a property in Castro Valley and do a garage ADU conversion. Most of Castro Valley is zoned for ADUs. It's an unincorporated area of Alameda County, so I talked to an Alameda County planner about a property I'm considering buying. He said I can build an ADU, but the county requires four independently accessible parking spots (i.e. they cannot be tandem). Well, there's no way I can fit four spaces on that property : ( Similarly, an Oakland city planner told me that Oakland's parking requirements are the #1 ADU killer there.

Enter the new law. Section 65852.2 states that: 

• parking requirements shall not exceed one parking space per unit  
• spaces may be provided as tandem parking on an existing driveway  (yay! - all I need is a long driveway)
• no setback is required for an existing garage that is converted to an ADU (yay!)

Clearly, that’s a game-changer for anyone who wants to do a garage conversion. Alameda County’s parking requirements are NOT compliant with the new state law. The county attorney is wrestling with this right now. I can’t wait to see what the county submits to the state on January 1!

No doubt, a lot will be hashed out in practice, and it may get contentious. For instance, Section 65852.2 says that cities can establish minimum and maximum size requirements for ADUs. But the law also says its intent is that local ADU ordinances don't make unit size requirements "so arbitrary, excessive, or burdensome so as to unreasonably restrict the ability of homeowners to create ADUs in zones in which they are authorized by local ordinance." How will that be interpreted and enforced?

For instance, suppose the City of Fremont submits their revised ADU ordinance to the state on January 1, and keeps its 300 sq ft max. Would the state redline it as "burdensome" and require revision? Would a homeowner ultimately have to sue a city like Redlands if its ADU ordinance doesn't comply with the new state standard?

There’s a lot to think about here . . . and potential business opportunities for architects who understand the new state standard and specialize in ADUs. There's a lot of demand out there for ADUs.

You mentioned the bill text applies only where there “are currently none.” Where are you seeing that in the bill text? Are you referring to paragraphs 3-5, which state that “existing law, when a local agency has not adopted an ordinance governing 2nd units as so described, requires the local agency to approve or disapprove the application ministerially, as provided [meaning: as provided in this new state law]. This bill would instead require the ordinance for the creation of accessory dwelling units to include the provisions described above [i.e. the new state law] . . . This bill would incorporate . . . changes in Section 65852.2 of the Government Code . . . on January 1, 2017.” Like the Oakland law firm, I read that to mean that cities must adhere to the new standards laid out in Section 65852.2, which is the meat of the new standards.