Options expand for financing, permitting California ‘granny units’ to ease housing shortage

Financing and construction permitting options are improving for accessory dwelling units, also called “granny units,” one way advocates say will help ease California’s housing shortage.

Gov. Gavin Newsom signed several key new laws last year, according to Scott Johnson, a consultant with the Napa Sonoma ADU Center, which was created last year to help homeowners undertake such projects. The new legislation covers expands on laws adopted in 2017 and clarifies where ADUs can be located, who can build them, how much parking they need and what fees local permitting agencies can charge:

• ADUs don’t have to be owner-occupied, as long the building permit is issued before Jan. 1, 2025.
• Residential lots can have both an ADU and a junior ADU.
• Many fees are waived for ADUs smaller than 750 square feet.
• Homeowner associations can’t ban ADUs.
• Parking requirements are reduced. No more than one space is required, and replacement parking isn’t necessary for garage conversions or within a half-mile of a transit stop.
• For units with less than 850 square feet, they can have setbacks as little as 4 feet side and rear, and minimum height can be 16 feet.

Junior ADUs, or JADUs, are legally defined as a separate rentable dwelling created within the walls of a proposed or existing single-family residence, without expanding the existing occupancy of the property. These units can have no more than 500 square feet, and they can share features with the main property, such as heating and plumbing, can have small plug-in appliances and share a bathroom.

California Health and Safety Code section 65583(c)(7) requires local governments create plans that incentivize and promote creation of ADUs, according to the Housing and Community Development Department. And as of January of this year, the state has expanded the availability of grants and other financial incentives to build ADUs.

The city of Ukiah is among the local agencies that has already tapped those funds to launch programs such as pre-designed plans that are available to homeowners at a lower cost and with quicker permit processing.

Johnson said at the Business Journal’s Building the North Bay virtual construction industry conference Wednesday that there are also private and nonprofit sector programs in the offing to help homeowners afford to add these secondary units. Those sources include some North Bay lenders that are looking to launch financing tools later this year.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.