In CA the taxable rate is assessed at time of sale, and that tax basis is used to determine the taxes until the property is either sold or has permitted improvements (there is an inflation-adjusted increase allowed, but the starting # is the FMV at time of sale).

But how do you know if an addition is permitted or not?

Closing dates are unknown per their Agents, largely because the area is such as massive building zone and they are held up in permitting. 

Permits are a huge pain.

Does anyone have any insight into the timeline and costs of getting a garage conversion permitted by the City?

David Greene points out you should look for population growth, job growth (and what kind of jobs), vacancy rate, average income, and building/construction permits.  

And newcomers are welcomed? 

Might also b that they saw activity without permits pulled so they targeted the property.

All loan types are eligible for a declining prepayment-penalty schedule and yield maintenance.Subordinate debt is permitted, subject to a non-negotiated Freddie Mac subordination agreement, and acceptable subordinate lenders are limited to governmental entities, community development financial institutions and nonprofits.

In my part of California, a 2 unit (or 2 home) property with only one meter is a red flag that one of the units/houses is not permitted.