@John A Murray thank you for your reply. I hadn't heard of JADU mostly just ADUs.
And surprisingly after doing some deeper research - the basement is permitted addition, but was not permitted as a secondary apartment just an extra space. I got a copy of his diagram for it as well. Took a picture of it. It's not exactly like this the laundry room does not open this way and instead opens to the outside. The storage area is actually the bedroom.
However, a JADU needs to be 500 sqft or less. And even as is it looks like it may actually be closer to 600+. The washer and dryer area is actually separated to a common opening so no door going to it.
Sounds like I need to wait and see from the surveyor if the land is capable of an ADU before touching the basement JADU space as that would potentially be quite a bit more cashflow.
I'm just trying to figure out what OR-1-1 really means.. my understanding is land you cannot really do anything with.