The Planning and Zoning Law provides for the creation of accessory dwelling units by local ordinance, or, if a local agency has not adopted an ordinance, by ministerial approval, in accordance with specified standards and conditions. Existing law prohibits an accessory dwelling unit from being considered a new residential use for purposes of calculating certain fees, including local agency connection fees or capacity charges for utilities.

This bill would express the intent of the Legislature to enact legislation that would reduce impact fees and other existing barriers for homeowners seeking to create accessory dwelling units for the purpose of creating additional residential housing within their neighborhoods.

 UNFINISHED BUSINESS  

Bill No: SB 13

Author: Wieckowski (D), et al.

Amended: 9/6/19

Vote: 21

SENATE HOUSING COMMITTEE: 10-0, 4/2/19

AYES: Wiener, Bates, Caballero, Durazo, McGuire, Moorlach, Roth, Skinner, Umberg, Wieckowski

NO VOTE RECORDED: Morrell

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/10/19

AYES: McGuire, Moorlach, Beall, Hertzberg, Hurtado, Nielsen, Wiener

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SENATE FLOOR: 34-2, 5/22/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Grove, Hertzberg, Hill, Hueso, Hurtado, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Skinner, Stone, Umberg, Wieckowski, Wiener, Wilk

NOES: Glazer, Stern

NO VOTE RECORDED: Jackson, Rubio

ASSEMBLY FLOOR: 52-4, 9/13/19

(ROLL CALL NOT AVAILABLE)

SUBJECT: Accessory dwelling units

SOURCE: Author

DIGEST:

This bill makes a number of changes to law governing accessory dwelling units (ADUs).

Assembly Amendments

reinstate the existing law requirement for an ADU ordinance to apply only in single-family or multifamily zones; modify the minimum size requirements that may be imposed on an ADU; remove the five-year specification on the amnesty period, leaving it instead to the discretion of the local building official; and address chaptering issues.

ANALYSIS:

Existing law:

1. Provides that if a locality adopts an ADU ordinance in areas zoned for single-family or multifamily, it must do all of the following:
   1. Designate areas where ADUs may be permitted.
   2. Impose certain standards on ADUs such as parking and size requirements.
   3. Prohibit an ADU from exceeding the allowable density for the lot.
   4. Require ADUs to comply with certain requirements such as setbacks.
2. Requires ministerial approval of an ADU permit within 120 days.
3. Allows a locality to establish minimum and maximum unit sizes for both attached and detached ADUs.
4. Restricts the parking standards a locality may impose on an ADU.
5. Allows a local agency to require that an applicant be an owner-occupant or that the property be used for rentals of terms longer than 30 days.
6. Provides that an ADU shall not be considered by a local agency, special district, or water corporation to be a new residential use for purposes of calculating connection fees or capacity charges for utilities, including water and sewer service.
7. Requires a local agency to submit a copy of its ADU ordinance to HCD within 60 days of adopting it and authorizes HCD to review and comment on the ordinance.

This bill:

1. Provides that when a garage, carport, or covered parking structure is demolished in conjunction with an ADU or converted into an ADU, a local agency shall not require that those off-street parking spaces be replaced.
2. Reduces the application approval timeframe to 60 days and provides that if a local agency has not acted upon the submitted application within 60 days, the application shall be deemed approved.
3. Prohibits a local ordinance from requiring an applicant for an ADU to be an owner occupant.
4. Provides that a local ADU ordinance that establishes minimum or maximum ADU size must allow an ADU of up to 850 square feet, or up to 1,000 square feet if the ADU provides more than one bedroom. Provides that any other minimum or maximum size imposed by a local ordinance must allow for an ADU of at least 800 square feet and 16 feet in height, with four-foot side and rear yard setbacks.
5. Provides for a tiered schedule of impact fees based on the size of the ADU as follows:
   1. Zero fees for an ADU of less than 750 square feet
   2. 25% of impact fees for an ADU of 750 square feet or more.
6. Revises the definition for when a local agency, special district, or water corporation may require a separate utility connection.
7. Requires HCD, after a local ADU ordinance is adopted, to submit findings to the local agency as to whether it complies with ADU law. If HCD finds it does not, HCD shall provide the local agency up to 30 days to respond before taking any other action. The local agency shall consider HCD’s findings and may either change the ordinance to comply or make findings as to why the ordinance complies despite HCD’s findings. Authorizes HCD to notify the Attorney General but requires HCD to first consider whether a compliant local ordinance was adopted between January 1, 2017 and January 1, 2020.
8. Authorizes HCD to review, adopt, amend, or repeal guidelines to implement uniform standards and criteria that supplement or clarify the terms, references, and standards in ADU law.
9. Authorizes, explicitly, a local agency to count an ADU for purposes of identifying adequate sites for its housing element.
10. Requires a local agency notice of a violation of any building standard to an ADU owner to include a statement of the owner’s right to request a delay in enforcement. Requires a local agency, upon request of the owner, to delay enforcement for five years if correction is not necessary to protect health and safety and the ADU was built before January 1, 2020 or the ADU was built prior to that date in a local jurisdiction that had a compliant ADU ordinance at that time. Sunsets this provision on January 1, 2025.

Background

ADUs, also known as accessory apartments, accessory dwellings, mother-in-law units, or granny flats, are additional living spaces on single-family lots that have a separate kitchen, bathroom, and exterior access independent of the primary residence. These spaces can either be attached to, or detached from, the primary residence.

According to a UC Berkeley study, Yes in My Backyard: Mobilizing the Market for Secondary Units, second units are a means to accommodate future growth and encourage infill development in developed neighborhoods. Despite existing state law, which requires each city in the state to have a ministerial process for approving second units, the study found that local regulations often impede development. The study, which evaluated five adjacent cities in the East Bay, concluded that there is a substantial market of interested homeowners; cities could reduce parking requirements without contributing to parking issues; second units could accommodate future growth and affordable housing; and that scaling up second unit strategy could mean economic and fiscal benefits for cities. This bill relaxes several requirements to the construction and permitting of ADUs.

Comments

1. Purpose of the bill. The author states that California is in a severe housing crisis. The largest driver of this crisis is a lack of supply. One significant step toward increasing the supply of affordable housing is to build more ADUs. ADUs are inherently affordable; they cost less to build than a regular unit, are financed and managed by the homeowner, and require no public subsidy. However, a significant number of homeowners interested in building ADUs on their property are prevented from doing so due to prohibitively high impact fees and other barriers. This bill creates a tiered fee structure which charges ADUs based on their size, to take into consideration that the impact of an ADU on a neighborhood’s infrastructure and services is different from the impact created by single-family homes or multifamily buildings. This bill also addresses other barriers such as lowering the application approval timeframe, creating an avenue to get unpermitted ADUs up to code, and enhancing an enforcement mechanism allowing HCD to ensure that localities are following ADU statute. This bill is an important step in resolving the housing crisis by reducing excessive impact fees and other barriers to ADUs and allowing Californians to build affordable housing in their back yards.
2. Impact fees. Local governments can charge a variety of fees to a development. These fees, commonly known as impact or mitigation fees, go toward infrastructure development (such as adding lanes to roads or supporting additional traffic) or other public benefits (such as new parks, schools, or affordable housing). In the wake of the passage of Proposition 13 in 1978 and the loss of significant property tax revenue, local governments have also turned to development fees as a means to generate revenue. Given that California cities have tightly restricted funding sources, fees are one of the few ways cities can pay for the indirect costs of growth.

In 2016, the Legislature revised ADU law to reduce duplicative fees and reduce other barriers to the construction and approval of ADUs. As a result, ADU permit applications throughout the state have dramatically increased. A report by UC Berkeley’s Terner Center of Housing Innovation recently discovered, however, that development and school fees, as well as lot size requirements and code standards, continue to suppress the construction of ADUs. ADUs are often charged with the same impact fees that a new home would be subject to. These fees can range anywhere between $5,000 and $60,000 and would not be charged to a homeowner for simply building an additional bathroom or bedroom.

Existing law prohibits an ADU from being considered a residential use for purposes of calculating fees charged for new development. Fees were the subject of significant discussion in relation to last year’s ADU bills. This bill provides for a tiered structure of impact fees ranging from zero for an ADU of under 750 square feet, to 25% of impact fees for an ADU of 750 square feet or more.

1. Size of ADUs. Existing law requires an ADU ordinance that provides for minimum and maximum ADU size, to allow for at least an efficiency unit. This bill increases that minimum to an 850 square foot unit, or 1,000 square feet if the ADU includes more than one bedroom.
2. Elimination of owner occupancy requirement. Existing law allows a local ordinance to require owner occupancy for either the primary dwelling or the ADU. Some jurisdictions have required the owner of the property to reside in the main home or in the ADU. The author has provided examples of lenders who have stated in writing that these covenants can preclude the lender from occupying the property if lenders must foreclose on the property. One letter states that if a property owner agrees to such a covenant, the owner could already be in violation of their deed of trust on the property and it “effectively transfers some of the rights from the property to the City, which could trigger a due on sale clause.” Thus, this bill prohibits owner occupancy requirements.

The American Planning Association, California Chapter (APA), writing in opposition to this bill, raises a concern that eliminating the owner occupancy requirement altogether could potentially encourage institutional investors or speculators to purchase a home with an existing ADU, or purchase single-family homes without ADUs, at a premium with the intention of adding an ADU which would then be rented at any price the market will bear. APA notes that the city of Santa Rosa waives its owner occupancy requirement if the owner puts an affordability requirement on the ADU.

1. Amnesty. According to a 2016 report by McKinsey and Company entitled A Tool Kit to Close California’s Housing Gap: 3.5 Million Homes by 2025, one way to encourage homeowners to add ADUs is to create an amnesty path for ADUs that are not properly permitted. According to the report, as many as 8% of ADUs in San Francisco are illegal. The report concludes that legitimizing these units would boost building compliance and raise property tax revenue.

This bill creates an amnesty program for substandard ADUs. This bill grants an ADU owner with a non-compliant ADU a delay to make the necessary changes to bring the ADU up to code. The delay applies to changes that, in the judgement of the local building official, and in consultation with fire and code enforcement officials, is not necessary to protect the health and safety of the building residents.

1. HCD oversight. Existing law requires a local agency to submit its ADU ordinance to HCD for review and allows HCD to review and provide comments. This bill strengthens oversight over local ADU ordinances by allowing HCD, after adoption of an ADU ordinance, to submit findings to the local agency as to whether the ordinance complies with ADU law. If HCD finds that the ordinance does not substantially comply, HCD shall notify the local agency and may notify the Attorney General.
2. Other ADU bills. Multiple ADU bills have been introduced again this year. The two bills that overlap most with this bill are AB 881 (Bloom) and SB 13 (Wieckowski). The authors have amended the three bills so that they no longer conflict.

Related/Prior Legislation

AB 68 (Ting, 2019) makes a number of changes to ADU law. This bill is on the Senate Floor.

AB 69 (Ting, 2019) revises ADU law in relation to HCD determination of compliance of local ADU ordinances and requires HCD to propose building standards for ADUs and small homes. This bill is on the Senate Inactive File.

AB 587 (Friedman, 2019) authorizes an ADU to be sold separately from the primary residence under certain conditions. This bill is in Engrossing and Enrolling.

AB 881 (Bloom, 2019) makes several changes to ADU law. This bill is on the Senate Floor.

SB 831 (Wieckowski, 2018) would have made a number of changes to ADU law. This bill died in the Assembly Local Government Committee.

AB 2890 (Ting, 2018) would have made a number of changes to ADU law. This bill died on the suspense file of the Senate Appropriations Committee.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Assembly Appropriations Committee:

• HCD estimates ongoing staffing costs of approximately $328,000 (GF) annually to provide technical assistance, review and comment on ordinances, and refer ordinances that violate state law to the Attorney General.
• The Department of Justice (DOJ) anticipates ongoing staffing costs of $1.1 million (Legal Services Revolving Fund) annually for increased litigation regarding enforcement of the bill’s provisions. The costs are fully reimbursable through direct billings to its client, HCD.
• Local state-mandated costs are not reimbursable by the state because affected local agencies have the authority to charge various permit, planning and developer fees to offset any increased costs imposed by the bill.

SUPPORT: (Verified 9/12/19)

Bay Area Council
Bay Area Regional Health Inequities Initiative
California Apartment Association
California Association of Realtors
California Building Industry Association
California Chamber of Commerce
California Forward Action Fund
California State Retirees
California YIMBY
Casita Coalition
Eden Housing
LA-Mas
Long Beach Conservation Corps
Los Angeles Conservation Corps
Oakland Chamber of Commerce
PreFabADU
San Francisco Housing Action Coalition
San Jose Conservation Corps & Charter School
Santa Cruz YIMBY
Silicon Valley at Home
South Bay YIMBY
Southern California Rental Housing Association
SPUR
Terner Center for Housing Innovation at the University of California, Berkeley
Urban Conservation Corps Inland Empire

OPPOSITION: (Verified 9/12/19)

American Planning Association, California Chapter
California Special Districts Association
California State Association of Counties
City of Chino Hills
City of Downey
City of Fullerton
City of Monterey Park
City of Morgan Hill
City of Rancho Cucamonga
City of San Dimas
City of San Mateo
City of Thousand Oaks
City of Torrance
Coalinga-Huron Recreation And Park District
Desert Water Agency
El Dorado Irrigation District
Hayward Area Recreation And Park District
League of California Cities
Leucadia Wastewater District
Mt. View Sanitary District
Oceano Community Services District
Ojai Valley Sanitary District
San Ramon Valley Fire Protection District
Solano County Board Of Supervisors
Templeton Community Services District
Town Of Discovery Bay Community Services District
Urban Counties of California
Ventura Council Of Governments

ARGUMENTS IN SUPPORT: Supporters state that ADUs are an important part of the solution to California’s housing crisis, as they are the most widely supported approach to get thousands of low-cost units on the market quickly. This bill will ease a significant barrier to ADU production across the state by largely limiting the amount of fees that can be levied on ADUs; because ADUs have minimal impact on infrastructure and services, it is not appropriate to levy the same fees on them as for large development projects. Many local governments continue to place burdens, from zoning to fees, that effectively prevent the construction of ADUs; addressing these issues will result in greater ADU production and help ease the state’s housing shortfall.

ARGUMENTS IN OPPOSITION: Opponents cite a number of concerns with this bill, including the elimination of replacement parking when there is a conversion of an existing structure such as a garage or carport; its limitations on the impact fees that can be charged on an ADU; its prohibition on owner occupancy requirements; and an overall concern with implementing further changes to ADU statute even as many cities and counties are still implementing all the 2016 and 2017 changes.

Prepared by: Erin Riches / HOUSING / (916) 651-4124

9/13/19 16:45:36

**** END ****

SENATE THIRD READING

STR Bill Id:SB 13

Author:(Wieckowski)

As Amended Ver:September 6, 2019

Majority vote

SUMMARY:

Makes a number of changes to law governing accessory dwelling units (ADUs).

Major Provisions

1. Expands the area in with an ADU can be built to include attached garages, storage areas, and accessory structures.
2. Provides that a local ADU ordinance cannot establish a maximum ADU size less than 850 square feet for an ADU with one or less bedrooms, or up to 1,000 square feet if the ADU provides more than one bedroom.
3. Provides that when a garage, carport, or covered parking structure is demolished in conjunction with an ADU or converted into an ADU, a local agency must not require that those off-street parking spaces be replaced.
4. Removes, for five years, the ability for local jurisdictions to have owner-occupancy requirements for the ADU or primary residence.
5. Reduces the application approval timeframe to 60 days for an ADU and provides that if a local agency has not acted upon the completed application within 60 days, the application shall be deemed approved.
6. Provides for a tiered schedule of impact fees based on the size of the ADU as follows:
   1. Zero fees for an ADU of less than 750 square feet; and
   2. Proportional to the size of the primary dwelling unit for an ADU of 750 square feet or more.
7. Requires the Department of Housing and Community Development (HCD), after a local ADU ordinance is adopted, to submit findings to the local agency as to whether it complies with ADU law. If HCD finds it does not, HCD shall notify the local agency and may notify the Attorney General. The local agency shall consider HCD's findings and may either change the ordinance to comply or make findings as to why the ordinance complies despite HCD's findings.
8. Requires a local agency to delay enforcement for five years of a violation of any building standard, if correction is not necessary to protect health and safety, for all ADUs built before January 1, 2020 and those built thereafter in jurisdictions that, at the time the ADU was built, were not in compliance with the state's ADU statutes.

COMMENTS:

ADUs have been identified as an important piece of the solution to California's housing crisis. This bill makes major changes to the ADU statute to facilitate the development of more ADUs and address perceived barriers to ADUs. This includes that it:

1. Allows ADUs to be built in the non-habitable part of existing or proposed dwelling units, such as storage areas;
2. Precludes local ordinances from establishing a maximum ADU size of less than 850 square feet for an ADU with one or less bedrooms, or up to 1,000 square feet if the ADU provides more than one bedroom;
3. Bans the requirement of off-street replacement parking when parking is demolished in the creation of an ADU;
4. Removes, for five years, the ability for local jurisdictions to have owner-occupancy requirements for the ADU or primary residence.
5. Allows no more than 60 days to ministerially consider and approve an ADU permit from the time of application;
6. Greatly reduces impact fees that can be charged to ADUs, to be zero fees for an ADU of less than 750 square feet, and proportional to the size of the primary dwelling unit for an ADU of 750 square feet or more;
7. Creates an enforcement mechanism over local ordinances that do not comply with state law, allowing HCD to notify the Attorney General; and
8. Requires a local agency to delay enforcement for five years of a violation of any building standard, if correction is not necessary to protect health and safety, for all ADUs built before this bill is enacted (i.e., January 1, 2020) or when the ADU was built when the local jurisdiction was not in compliance with the state's ADU statutes.

According to the Author:

"California is in a severe housing crisis. The largest driver for this crisis is a lack of supply. One significant step to increase the supply of affordable housing is to build more ADUs. ADUs are inherently affordable: they cost less to build then a regular unit, are financed and managed by a homeowner, and require no public subsidy. SB 13 is an important step in resolving the housing crisis by reducing excessive impact fees and other barriers for ADUs and allowing Californians to build affordable housing in their backyards."

Arguments in Support:

According to the California Chamber of Commerce, "Constructing ADUs is the only widely supported approach to expeditiously bringing thousands of low-cost housing units on the market. ADUs provide lower cost and low-carbon footprint homes in existing neighborhoods consistent with architectural traditions. Studies demonstrate that ADUs cost less to build and rent for less than new market rate housing, making ADUs affordable by design. ADUs are great for low- and middle-income renters, small families, and align with California climate change goals."

Arguments in Opposition:

In to the City of Beverly Hills, "this bill would strip local governments of long-held land use authorities, which form the bedrock of local government and their ability to regulate the construction of accessory dwelling units (ADUs) in their jurisdiction. Capping [impact] fees would result in jurisdictions being unable to provide public improvements and necessary public services to residents living in newly constructed ADUs."

FISCAL COMMENTS:

According to the Assembly Appropriations Committee:

1. HCD estimates ongoing staffing costs of approximately $328,000 (General Fund) annually to provide technical assistance, review and comment on ordinances, and refer ordinances that violate state law to the Attorney General.
2. The Department of Justice (DOJ) anticipates ongoing staffing costs of $1.1 million (Legal Services Revolving Fund) annually for increased litigation regarding enforcement of the bill's provisions. The costs are fully reimbursable through direct billings to its client, HCD.
3. Local state-mandated costs are not reimbursable by the state because affected local agencies have the authority to charge various permit, planning and developer fees to offset any increased costs imposed by the bill.

VOTES:

SENATE FLOOR: 34-2-2

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Grove, Hertzberg, Hill, Hueso, Hurtado, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Skinner, Stone, Umberg, Wieckowski, Wiener, Wilk

NO: Glazer, Stern

ABS, ABST OR NV: Jackson, Rubio

ASM HOUSING AND COMMUNITY DEVELOPMENT: 6-0-2

YES: Chiu, Diep, Gloria, Kiley, Maienschein, Quirk-Silva

ABS, ABST OR NV: Gabriel, Limón

ASM LOCAL GOVERNMENT: 8-0-0

YES: Aguiar-Curry, Lackey, Bloom, Boerner Horvath, Ramos, Gonzalez, Robert Rivas, Voepel

ASM APPROPRIATIONS: 14-1-3

YES: Gonzalez, Bloom, Bonta, Brough, Calderon, Carrillo, Diep, Eggman, Fong, Eduardo Garcia, Maienschein, Obernolte, Quirk, Robert Rivas

NO: Bigelow

ABS, ABST OR NV: Chau, Gabriel, Petrie-Norris

UPDATED:

VERSION: September 6, 2019

CONSULTANT: Steve Wertheim / H. & C.D. / (916) 319-2085 FN: 0002162

SENATE THIRD READING

STR Bill Id:SB 13

Author:(Wieckowski)

As Amended Ver:September 3, 2019

Majority vote

SUMMARY:

Makes a number of changes to law governing accessory dwelling units (ADUs).

Major Provisions

1. Expands the area in with an ADU can be built to include attached garages, storage areas, and accessory structures.
2. Provides that a local ADU ordinance cannot establish a maximum ADU size less than 850 square feet for an ADU with one or less bedrooms, or up to 1,000 square feet if the ADU provides more than one bedroom.
3. Provides that when a garage, carport, or covered parking structure is demolished in conjunction with an ADU or converted into an ADU, a local agency must not require that those off-street parking spaces be replaced.
4. Reduces the application approval timeframe to 60 days for an ADU and provides that if a local agency has not acted upon the completed application within 60 days, the application shall be deemed approved.
5. Provides for a tiered schedule of impact fees based on the size of the ADU as follows:
   1. Zero fees for an ADU of less than 750 square feet; and
   2. Proportional to the size of the primary dwelling unit for an ADU of 750 square feet or more.
6. Requires the Department of Housing and Community Development (HCD), after a local ADU ordinance is adopted, to submit findings to the local agency as to whether it complies with ADU law. If HCD finds it does not, HCD shall notify the local agency and may notify the Attorney General. The local agency shall consider HCD's findings and may either change the ordinance to comply or make findings as to why the ordinance complies despite HCD's findings.
7. Requires a local agency to delay enforcement for five years of a violation of any building standard, if correction is not necessary to protect health and safety, for all ADUs built before January 1, 2020 and those built thereafter in jurisdictions that, at the time the ADU was built, were not in compliance with the state's ADU statutes.

COMMENTS:

Background: ADUs have been identified as an important piece of the solution to California's housing crisis. According to the Terner Center for Housing Innovation at UC Berkeley, the average cost to build an ADU is relatively inexpensive at $156,000. Because of their size and lower cost to construct, the Terner Center found that 58% of ADUs are rented out at below market rate.

Facilitating new ADUs: This bill makes major changes to the ADU statute to facilitate the development of more ADUs and address perceived barriers to ADUs. This includes that it:

1. Allows ADUs to be built in the non-habitable part of existing or proposed dwelling units, such as storage areas;
2. Precludes local ordinances from establishing a maximum ADU size of less than 850 square feet for an ADU with one or less bedrooms, or up to 1,000 square feet if the ADU provides more than one bedroom;
3. Bans the requirement of off-street replacement parking when parking is demolished in the creation of an ADU;
4. Allows no more than 60 days to ministerially consider and approve an ADU permit from the time of application;
5. Greatly reduces impact fees that can be charged to ADUs, to be zero fees for an ADU of less than 750 square feet, and proportional to the size of the primary dwelling unit for an ADU of 750 square feet or more;
6. Creates an enforcement mechanism over local ordinances that do not comply with state law, allowing HCD to notify the Attorney General; and
7. Requires a local agency to delay enforcement for five years of a violation of any building standard, if correction is not necessary to protect health and safety, for all ADUs built before this bill is enacted (i.e., January 1, 2020) or when the ADU was built when the local jurisdiction was not in compliance with the state's ADU statutes.

According to the Author:

"California is in a severe housing crisis. The largest driver for this crisis is a lack of supply. One significant step to increase the supply of affordable housing is to build more ADUs. ADUs are inherently affordable: they cost less to build then a regular unit, are financed and managed by a homeowner, and require no public subsidy. SB 13 is an important step in resolving the housing crisis by reducing excessive impact fees and other barriers for ADUs and allowing Californians to build affordable housing in their backyards."

Arguments in Support:

According to the California Chamber of Commerce, "Constructing ADUs is the only widely supported approach to expeditiously bringing thousands of low-cost housing units on the market. ADUs provide lower cost and low-carbon footprint homes in existing neighborhoods consistent with architectural traditions. Studies demonstrate that ADUs cost less to build and rent for less than new market rate housing, making ADUs affordable by design. ADUs are great for low- and middle-income renters, small families, and align with California climate change goals."

Arguments in Opposition:

In to the City of Beverly Hills, "this bill would strip local governments of long-held land use authorities, which form the bedrock of local government and their ability to regulate the construction of accessory dwelling units (ADUs) in their jurisdiction. Capping [impact] fees would result in jurisdictions being unable to provide public improvements and necessary public services to residents living in newly constructed ADUs."

FISCAL COMMENTS:

According to the Assembly Appropriations Committee:

1. HCD estimates ongoing staffing costs of approximately $328,000 (GF) annually to provide technical assistance, review and comment on ordinances, and refer ordinances that violate state law to the Attorney General.
2. The Department of Justice (DOJ) anticipates ongoing staffing costs of $1.1 million (Legal Services Revolving Fund) annually for increased litigation regarding enforcement of the bill's provisions. The costs are fully reimbursable through direct billings to its client, HCD.
3. Likely costs, potentially in the millions of dollars, to cities, counties and special districts to provide services such as public safety, fire protection and parks, among others, to new ADUs due to the reduction or elimination of the authority to charge local impact fees on ADUs.
4. Local state-mandated costs are usually not reimbursable by the state because affected local agencies have the authority to change various permit, planning and developer fees to offset any increased costs. However, this bill eliminates or reduces a local agency's authority to levy fees to cover many of the costs associated with ADU's, thus making these costs potentially reimbursable to the state.

VOTES:

SENATE FLOOR: 34-2-2

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Grove, Hertzberg, Hill, Hueso, Hurtado, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Skinner, Stone, Umberg, Wieckowski, Wiener, Wilk

NO: Glazer, Stern

ABS, ABST OR NV: Jackson, Rubio

ASM HOUSING AND COMMUNITY DEVELOPMENT: 6-0-2

YES: Chiu, Diep, Gloria, Kiley, Maienschein, Quirk-Silva

ABS, ABST OR NV: Gabriel, Limón

ASM LOCAL GOVERNMENT: 8-0-0

YES: Aguiar-Curry, Lackey, Bloom, Boerner Horvath, Ramos, Gonzalez, Robert Rivas, Voepel

ASM APPROPRIATIONS: 14-1-3

YES: Gonzalez, Bloom, Bonta, Brough, Calderon, Carrillo, Diep, Eggman, Fong, Eduardo Garcia, Maienschein, Obernolte, Quirk, Robert Rivas

NO: Bigelow

ABS, ABST OR NV: Chau, Gabriel, Petrie-Norris

UPDATED:

VERSION: September 3, 2019

CONSULTANT: Steve Wertheim / H. & C.D. / (916) 319-2085 FN: 0001667

Date of Hearing: August 21, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 13

Author:(Wieckowski) – As Amended Ver:August 12, 2019

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill places additional restrictions on the conditions local governments may impose on accessory dwelling units (ADUs), including (a) limiting the ability to charge developer fees, impose specified parking standards and establish minimum square footage requirements, (b) prohibiting, for five years, the imposition of owner occupancy requirements and (c) reducing the timeframe for ministerial approval of ADU permits.

The bill also authorizes the Department of Housing and Community Development (HCD) to review local ADU ordinances, submit written findings and refer violations of ADU law to the Attorney General.

FISCAL EFFECT:

1. HCD estimates ongoing staffing costs of approximately $328,000 (GF) annually to provide technical assistance, review and comment on ordinances, and refer ordinances that violate state law to the Attorney General.
2. The Department of Justice (DOJ) anticipates ongoing staffing costs of $1.1 million (Legal Services Revolving Fund) annually for increased litigation regarding enforcement of the bill’s provisions. The costs are fully reimbursable through direct billings to its client, HCD.
3. Local state-mandated costs are not reimbursable by the state because affected local agencies have the authority to charge various permit, planning and developer fees to offset any increased costs imposed by the bill.

COMMENTS:

1. Purpose. This bill intends to further facilitate the production of ADUs. According to the author:

Under existing law, any property owner has the ability to a construct an ADU on their property should they meet certain zoning and building requirements. However, a significant number of homeowners interested in building ADUs on their property are prevented from constructing these units due to prohibitively high impact fees and other barriers. [This bill] is an important step in resolving the housing crisis by reducing excessive impact fees and other barriers for ADUs and allowing Californians to build affordable housing in their backyards.

1. Background. ADUs are additional living quarters that are independent of the primary dwelling unit on the same lot. ADUs are either attached to or detached from the primary dwelling unit and provide complete independent living facilities for one or more persons, including separate access from the property’s primary unit. This includes permanent provisions for living, sleeping, eating, cooking and sanitation.

ADUs have been identified as an important piece of the solution to California’s housing crisis. According to the Terner Center for Housing Innovation at UC Berkeley, the average cost to build an ADU is relatively inexpensive at $156,000 (based on Terner Center’s report from December 2017). Because of their size and lower cost to construct, the Terner Center found that 58% of ADUs are rented out at below-market rate.

Over the past few years, the Legislature has passed a number of bills to ease zoning restrictions and expedite approval processes at the local level, which has contributed to the increased supply of ADUs throughout the state. For example, in the City of Los Angeles, since 2017 a total of 9,247 applications have been received for ADUs. This represents an approximately 30-fold increase as compared to the citywide average in the many years well before the state law changed. Similarly, the City of Santa Rosa received 118 applications for ADUs in 2018, compared to 54 total from the years 2008-2016.

1. Related Legislation. There are several ADU bills under consideration in the current session. All of the following are pending in the Senate Appropriations Committee:

AB 68 (Ting) makes several changes to further reduce barriers to production of ADUs, including expanding the definition of owner-occupancy to include members of trusts as well as units owned by a non-profit and deed restricted for affordability. The bill also increases enforcement capacity against local jurisdictions regarding their ADU ordinances.

AB 69 (Ting), requires HCD to propose building standards for ADUs and junior ADUs, as specified.

AB 671 (Friedman) would require a city or county’s housing element to include a plan that incentivizes and promotes the creation of affordable ADUs.

AB 881 (Bloom) makes several changes to further reduce barriers to production of ADUs, including removing the ability for local jurisdictions to impose owner occupancy requirements for ADUs for a period of five years.

1. Prior Legislation.

SB 1069 (Wieckowski), Chapter 720, Statutes of 2016, made several changes to reduce the barriers to the development of an ADU and expanded capacity for their development, including changes to parking, fees, fire requirements and process.

AB 2299 (Bloom), Chapter 735, Statutes of 2016, required a local government to ministerially approve ADUs if the unit complies with certain parking requirements, the maximum allowable size of an attached ADU and setback requirements.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: July 10, 2019

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

SBPCA Bill Id:SB 13

Author:(Wieckowski) – As Amended Ver:July 1, 2019

SENATE VOTE: 34-2

SUBJECT: Accessory dwelling units.

SUMMARY: Makes a number of changes to accessory dwelling unit (ADU) law. Specifically, this bill:

1. Requires the Department of Housing and Community Development (HCD) to notify the city, county, or city and county, and allows HCD to also notify the office of the Attorney General that the city, county, or city and county if that city or county has taken an action in violation of ADU law.
2. Defines the following terms:
   1. “Accessory structure” as a structure that is accessory and incidental to a dwelling located on the same lot;
   2. “Efficiency unit” as it is defined in Section 17958.1 of the Health and Safety Code;
   3. “Public transit” as a location, including, but not limited to, a bus stop or train station, where the public may access buses, trains, subways, and other forms of transportation that charge set fares, run on fixed routes, and are available to the public.
3. Prohibits a local agency from requiring the replacement of off-street parking spaces when a garage, carport, or covered parking structure is demolished in conjunction with an ADU or is converted to an ADU.
4. Expands the area in which an ADU can be built to include attached garages, storage areas, and accessory structures.
5. Specifies that ADUs are not required to provide fire sprinklers if they are not required for the primary residence.
6. Reduces the application approval timeframe to 60 days for an ADU and stipulates that if a local agency has not acted upon the completed application within 60 days, the application shall be deemed approved.
7. Prohibits a local agency from establishing a maximum square footage requirement less than 850 square feet for an ADU or less than 1,000 square feet for an ADU that provides more than one bedroom.
8. Specifies that a local agency shall not impose parking standards for an ADU if the ADU is located within a traversable distance of ½ mile of public transit.
9. Prohibits a local agency from requiring owner occupancy for either the primary unit or the ADU. Prohibits a local agency from requiring owner occupancy as a condition for issuing a building permit for an ADU. Specifies that an agreement with a local agency to maintain owner occupancy as a condition of issuance of a building permit for an ADU shall be void and unenforceable.
10. Prohibits a local agency, special district, or water corporation from imposing any impact fee (except any connection fee or capacity charge) on the development of an ADU if that fee, in the aggregate, exceeds the following:
    1. An ADU less than 750 square feet will be charged zero impact fees; and,
    2. An ADU 750 square feet or more shall be charged 25% of the impact fees otherwise charged for a new single-family unit on the same lot.
11. Revises the basis for how a connection fee or capacity charge can be charged in proportion to the burden to the proposed ADU using either square footage or the number of its drainage fixture unit values, as defined in the Uniform Plumbing Code adopted and published by the International Association of Plumbing and Mechanical Officials, as specified.
12. Allows HCD, after an ordinance is adopted, to submit written findings to the local agency as to whether the ordinance complies with current law, as follows:
    1. Requires, if HCD finds that the ordinance is out of compliance, HCD to notify the local agency and may notify the office of the Attorney General that the local agency is in violation of state law; and,
    2. Requires the local agency to consider findings made by HCD. Allows the local agency to either change the ordinance to comply with ADU law or include findings in its resolution adopting the ordinance that explain the reasons the local agency believes the ordinance complies despite HCD’s findings.
13. Allows HCD to review, adopt, amend, or repeal guidelines to implement uniform standards or criteria that supplement or clarify the terms, references, and standards in ADU law.
14. Allows a local agency to count an ADU for the purposes of identifying adequate sites for its housing element, subject to authorization by HCD and compliance with Planning and Zoning law.
15. Requires a local agency, upon request of the owner of an ADU built before January 1, 2020, to delay enforcement of an ADU building standard, subject to 16), below.
16. Establishes an amnesty program for ADUs built before January 1, 2020, as follows:
    1. Requires an enforcement agency, until January 1, 2030, that issues an owner of an ADU a notice to correct a building standard, to include a statement that the owner of the unit has a right to request a delay in enforcement;
    2. Allows the owner of an ADU that receives a notice to correct violations or abate nuisances to submit an application to the enforcement agency requesting the enforcement be delayed for five years on the basis that correcting the violation is not necessary to protect health and safety;
    3. Requires the enforcement agency to grant an application, until January 1, 2035, if it determines that correcting the violation is not necessary to protect health and safety. Requires the enforcement agency to consult with the entity responsible for enforcement of building standards and other regulations of the State Fire Marshal, as specified;
    4. Prohibits the enforcement agency from approving any applications on or after January 1, 2030. Specifies that any delay approved by the enforcement agency before January 1, 2030, shall be valid for the full term of the delay that was initially approved; and,
    5. Sunsets these provisions as of January 1, 2035.

EXISTING LAW:

1. Allows a local agency, by ordinance, to provide for the creation of ADUs in areas zoned to allow single-family or multifamily use. Provides that the ordinance shall do all of the following:
   1. Designate areas where ADUs may be permitted. Specifies that the designation of areas may be based on criteria that may include, but are not limited to, the adequacy of water and sewer services and the impact of ADUs on traffic flow and public safety;
   2. Impose standards on ADUs that include, but are not limited to, parking, height, setback, lot coverage, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. Allows a local agency to reduce or eliminate parking requirements for any ADU located within its jurisdiction;
   3. Provide that ADUs do not exceed the allowable density for the lot upon which the ADU is located, and that ADUs are a residential use that is consistent with the existing general plan and zoning designation for the lot;
   4. Require the ADUs to comply with all of the following:
      1. The unit may be rented separate from the primary residence, but may not be sold or otherwise conveyed separate from the primary residence;
      2. The lot is zoned to allow single-family or multifamily use and includes a proposal for existing single-family dwelling;
      3. The ADU is either attached or located within the living area of the proposed or existing primary dwelling or detached from the proposed or existing primary dwelling and located on the same lot as the proposed or existing primary dwelling;
      4. The total area of floorspace of an ADU shall not exceed 50% of the proposed or existing primary dwelling living area or 1,200 square feet;
      5. The total area of floorspace for a detached ADU shall not exceed 1,200 square feet;
      6. No passageway shall be required in conjunction with the construction of an ADU;
      7. No setback shall be required for an existing garage that is converted to an ADU or to a portion of an ADU, and a setback of no more than five feet from the side and rear lot lines shall be required for an ADU that is constructed above a garage;
      8. Local building code requirements that apply to detached dwellings, as appropriate;
      9. Approval by the local health officer where a private sewage disposal system is being used, if required;
      10. Parking requirements for ADUs shall not exceed one parking space per unit or per bedroom, whichever is less. Spaces may be provided as tandem parking on a driveway. Provides that offstreet parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible, as specified; and,
      11. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an ADU or converted to an ADU, and the local agency requires that those offstreet parking spaces be replaced, the replacement spaces may be located in any configuration on the same lot as the ADU, including, but not limited to, covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile lifts, as specified.
2. Requires, when a local agency that has not adopted an ordinance governing ADUs receives an application for a permit to create an ADU, the local agency to approve or disapprove the application ministerially without discretionary review 120 days after receiving the application.
3. Requires a local agency to establish minimum and maximum unit size requirements for both attached and detached ADUs. Provides that no minimum or maximum size for an ADU, or size based upon a percentage of the proposed or existing primary dwelling, shall be established by ordinance for either attached or detached dwellings that does not permit at least an efficiency unit to be constructed in compliance with local development standards. ADUs shall not be required to provide fire sprinklers if they are not required for the primary residence.
4. Prohibits, notwithstanding any other law, a local agency, whether or not it has adopted an ADU ordinance, from imposing parking standards for an ADU in the following instances:
   1. The ADU is located within ½ mile of public transit;
   2. The ADU is located within an architecturally and historically significant historic district;
   3. The ADU is part of the proposed or existing primary residence or an accessory structure;
   4. When on-street parking permits are required but not offered to the occupant of the ADU; or,
   5. When there is a car share vehicle located within one block of the ADU.
5. Requires a local agency to ministerially approve an application for a building permit to create within a zone for single-family use one ADU unit per single-family lot if the unit is contained within the existing space of a single-family residence or accessory structure, including, but not limited to, a studio, pool house, or other similar structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. Specifies that ADUs shall not be required to provide fire sprinklers if they are not required for the primary residence. Allows a city to require owner occupancy for either the primary or the ADU created through this process.
6. Provides for fees charged for the construction of ADUs, in accordance with specified provisions of existing law.

FISCAL EFFECT: This bill is keyed fiscal and contains a state-mandated local program.

COMMENTS:

1. Background. ADUs are additional living quarters that are independent of the primary dwelling unit on the same lot. ADUs are either attached or detached to the primary dwelling unit, and provide complete independent living facilities for one or more persons, including separate access from the property’s primary unit. This includes permanent provisions for living, sleeping, eating, cooking, and sanitation.

ADUs have been identified as an important piece of the solution to California’s housing crisis. According to the Terner Center for Housing Innovation at UC Berkeley, the average cost to build an ADU is relatively inexpensive at $156,000 (based on Terner Center’s report from December 2017). Because of their size and lower cost to construct, the Terner Center found that 58% of ADUs are rented out at below market rate.

Over the past few years, the Legislature has passed a number of bills to ease zoning restrictions and expedite approval processes at the local level, which has contributed to the increased supply of ADUs throughout the state. For example, in the City of Los Angeles, since 2017 a total of 9,247 applications have been received for ADUs. This represents an approximately 30-fold increase as compared to the citywide average in the many years well before the state law changed. Similarly, the City of Santa Rosa received 118 applications for ADUs in 2018, compared to 54 total from the years 2008-2016.

1. Bill Summary. This bill makes a number of changes to ADU law. In addition to some more minor provisions, this bill:
   1. Eliminates the ability of a local agency to impose owner occupancy requirements on either the main house or the ADU, and also provides that an agreement with a local agency to maintain owner occupancy as a condition of issuance of a building permit shall be void and unenforceable;
   2. Eliminates impact fees, in the aggregate, for an ADU less than 750 square feet, and reduces the impact fees for an ADU larger than 750 square feet to 25% of the impact fees otherwise charged for a new single-family dwelling on the same lot;
   3. Requires HCD to notify the city and/or county and allows HCD to also notify the office of the Attorney General that the city and/or county if HCD finds that the housing element or an amendment to this element, or any action or failure to act as prescribed, does not substantially comply with ADU law; and,
   4. Requires a local agency, upon request of the owner of an ADU, to delay enforcement of an ADU building standard for a specified amount of time.

This bill is author-sponsored.

1. Author’s Statement. According to the author, “California is in a severe housing crisis. The largest driver for this crisis is a lack of supply. One significant step to increase the supply of affordable housing is to build more ADUs. ADUs are inherently affordable: they cost less to build then a regular unit, are financed and managed by a homeowner, and require no public subsidy. Under existing law, any property owner has the ability to construct an ADU on their property should they meet certain zoning and building requirements. However, a significant number of homeowners interested in building ADUs on their property are prevented from constructing these units due to prohibitively high impact fees and other barriers. SB 13 takes into consideration that the impact of an ADU on a neighborhood’s infrastructure and services is inherently different from the impact created by single family homes or multifamily buildings. SB 13 also addresses other barriers such as lowering the application approval time to 60 days, creating an avenue to get unpermitted ADUs up to code, and enhancing an enforcement mechanism that would allow the California Department of Housing and Community Development to ensure local agencies are following the law on ADUs. SB 13 is an important step in resolving the housing crisis by reducing excessive impact fees and other barriers for ADUs and allowing Californians to build affordable housing in their backyards.”
2. Policy Considerations. The Committee may wish to consider the following:
   1. Owner-Occupancy Requirements. State law allows local jurisdictions to create their own ADU ordinances subject to certain requirements, or if no local ordinance exists, approval of ADUs are subject to state statute. Existing law allows a city to require owner occupancy for either the primary or the ADU created through this process. The local agency may even require that the applicant for the ADU permit be an owner-occupant. This requirement pre-dates 2016’s SB 1069 (Wieckowski) and AB 2299 (Bloom), the bills considered largely responsible for the sizable growth in ADU applications in the past two years.

Proponents for retaining a local agency’s ability to impose owner-occupancy have articulated that this regulation helps ensure oversight of the ADU and increases the potential for it to be rented out affordably to family and friends. They have also cited concern that removing owner occupancy would lead to more speculative development of ADUs by large corporations.

Opponents of the owner-occupancy requirements have conveyed that ADUs should not be treated as a separate class from other forms of housing, for which such requirements do not exist. They argue that there is little to no evidence that these requirements have indeed reduced ADU rents or that this has led to an increase in home speculation. Finally, they site the negative implications of the owner-occupancy requirement, which includes the increased difficulty in transacting sales involving properties with ADUs, as the uniqueness of this requirement in the housing market creates onerous terms. They also cite concerns that, were the owner to move out, the ADU would be required to be demolished.

SB 13 removes the ability of a local agency to impose owner-occupancy requirements, and makes void and unenforceable an agreement with a local agency to maintain owner occupancy, if it is a condition of issuance of a building permit for an ADU. The Committee may wish to consider whether it is prudent to undo owner occupancy restrictions retroactively, and how that might work with deed-restricted properties in which the owner-occupancy restrictions were recorded as part of the title.

• 1. Impact Fees. Local governments can charge impact fees to a development to mitigate the impact of new development on local infrastructure, such as sewers, roads, parks, and schools. The Mitigation Fee Act, passed in 1989, requires cities to identify the purpose of a fee, the use of the fee, and show that there is a “reasonable” nexus between the fee amount and the impact of the project. Local agencies also charge fees to fund open space and parks, school fees, water and sewer fees, and project-specific fees through negotiated development agreements. The passage of Proposition 13 and the loss of property tax revenues have fueled cities’ dependence on fees to fund infrastructure and services.

For several reasons, the impact fees on new ADUs vary greatly by local jurisdiction. While the demands for infrastructure from new development are often similar, nexus studies are often art as much as science, and can reach very different conclusions about the infrastructure burden of new development. Additionally, many local governments do not charge fees based on the nexus (which sets the upper bound of what is legally allowed), but on the ability of a development to pay, which will reflect both the varying market conditions between jurisdictions and the local appetite to facilitate new development. Finally, a new ADU likely will be subject to fees from multiple different sources, including special districts, schools, and the city or county. Fees from these different sources are often calculated in isolation and by different government entities. This can result in ADU fees from multiple sources that are individually economically feasible, but cumulatively prohibitive.

This bill would eliminate impact fees for ADUs of less than 750 square feet. ADUs that are 750 square feet or larger would be charged 25% of impact fees for new single-family dwellings. This change would have the benefit of making it less expensive and therefore easier to build ADUs. However, there would be commensurate strain to local infrastructure, creating concerns about safety, and reduction of quality of life. This policy would also penalize local agencies that “right-size” their impact fees based on actual costs, ability-to-pay, and unit size. In addition, this bill does not differentiate between impact fees charged by cities and counties and special districts that must pass through unmet costs to ratepayers. As a result, it incentivizes jurisdictions and special districts to raise their fees and rates for all housing units to compensate.

This bill also does not distinguish that some impact fees are charged on a per unit basis, whereas some are charged per square feet. Where impact fees are charged on a per unit basis, there is strong justification for reducing the fees for ADUs, which are substantially smaller than typical homes. However, when fees are charged on a per square foot basis, the smaller size of the ADUs itself brings down the cost of fees (for example, a 500 square foot ADU would pay 25% of the fees of a 2,000 square foot single-family home).

The challenge of determining the “appropriate” amount of impact fees has been the source of much discussion in the Legislature in the last several years. To help understand the current landscape of fees and provide recommendations for policy changes, AB 879 (Grayson, 2017) directed HCD to complete a study to evaluate the reasonableness of local fees charged to new developments, including findings and recommendations regarding potential amendments to the Mitigation Fee Act to substantially reduce fees for residential development. This study was to be completed by June 30, 2019.

1. City of Santa Rosa. The author uses the City of Santa Rosa as an example of a jurisdiction that has successfully lowered ADU fees and has based some of the bill’s contents on policies adopted by Santa Rosa.

The City proactively reduced development impact fees, including both capital facilities fees and parks fees. For units up to 750 square feet, no impact fees are assessed. For up to 950 square feet, the impact fees are 25%, and for up to 1200 square feet, the impact fees are 50%.

The City also specifies that no new or separate utility connection, or related connection fee or capacity charge will be required for ADUs that are internal conversions of existing space within a single-family residence or an accessory structure, or new ADUs (detached or attached) that are 750 square feet or smaller.

Santa Rosa requires either the main residence on the site or the ADU to be occupied by the property owner. Prior to occupancy of an ADU or JADU, the property owner is required to file with the County Recorder a deed restriction which addresses owner occupancy of one of the units on site. In lieu of the owner-occupancy restriction, the property owner may execute an affordability contract with the City’s Department of Housing and Community Services, requiring the rental of one of the units on the property to low income households at restricted rents.

1. Committee Amendments. The Committee may wish to consider the following amendments:
   1. Alignment of Owner Occupancy Provisions with AB 881 (Bloom). To be consistent with the policy adopted in AB 881, the Committee may wish to consider placing a five-year sunset on SB 13’s provisions, from January 1, 2020, to January 1, 2025, and to also delete the language that provides that an agreement on owner occupancy shall be void and unenforceable, if it was a condition of issuance of a building permit.
   2. Impact Fees.  The Committee may wish to make the following changes to provisions of SB 13 dealing with impact fees:
      1. Retain the provisions prohibiting any impact fees to be charged for ADUs under 750 square feet and strike the provisions related to impact fees being charged at 25% for anything over 750 square feet; and,
      2. Insert language giving direction to local agencies that for any impact fees charged for an ADU above 750 square feet, that those fees must be charged proportionately in relation to the square footage of the primary dwelling unit.
2. Related Legislation. There are several other ADU bills pending in the current session:

AB 68 (Ting) would make several changes to further reduce barriers to production of ADUs. It would expand the definition of owner-occupancy to include members of trusts as well as units owned by a non-profit and deed restricted for affordability. It would increase enforcement capacity against local jurisdictions regarding their ADU ordinances.

AB 881 (Bloom) would make several changes to further reduce barriers to production of ADUs. It would remove the ability for local jurisdictions to impose owner occupancy requirements for ADUs for a period of five years.

AB 671 (Friedman) would require a city or county’s housing element to include a plan that incentivizes and promotes the creation of affordable ADUs

1. Prior Legislation:

SB 831 (Wieckowski, 2018) would have made a number of changes to ADU law. This bill failed passage in the Assembly Local Government Committee.

AB 2890 (Ting, 2018) would have made a number of changes to ADU law. After being approved in Senate policy committees, the bill was referred to Senate Rules Committee, where it was held.

SB 1069 (Wieckowski), Chapter 720, Statutes of 2016, made several changes to reduce the barriers to the development of ADUs and expanded capacity for their development, including changes to parking, fees, fire requirements, and process.

AB 2299 (Bloom), Chapter 735, Statutes of 2016, required a local government to ministerially approve ADUs if the unit complies with certain parking requirements, the maximum allowable size of an attached ADU, and setback requirements.

1. Arguments in Support. According to the California Chamber of Commerce, “Constructing ADUs is the only widely supported approach to expeditiously bringing thousands of low-cost housing units on the market. ADUs provide lower cost and low-carbon footprint homes in existing neighborhoods consistent with architectural traditions. Studies demonstrate that ADUs cost less to build and rent for less than new market rate housing, making ADUs affordable by design. ADUs are great for low- and middle-income renters, small families, and align with California climate change goals by lowering greenhouse gas emissions through smaller footprint housing units and reduced single occupancy vehicle miles traveled.”
2. Arguments in Opposition. In their joint letter, the Fire Districts Association of California, the California Fire Chiefs Association, and the California Special District Association argue, “Special districts provide millions of Californians with essential local services, such as fire protection, parks and recreation, flood control, libraries, and more…Given that revenue for local governments is tightly restricted by the California Constitution, fees are one of the few ways that special districts can offset for the indirect costs of growth. It is irresponsible to promote growth with no plan to address the impact of that growth or mechanism to fund the needs of the new residents. If legislation succeeds in spurring development of ADUs by prohibiting fees, the families inhabiting the new ADUs and their neighbors would suffer from inadequate public safety, parks, and other fundamental services. We would be trading one crisis for another.”
3. Double-Referral. This bill was heard in the Housing and Community Development Committee on June 19, 2019, and passed with a 6-0 vote.

REGISTERED SUPPORT / OPPOSITION:

Support

ADU Task Force East Bay

Association of Bay Area Governments (ABAG) (if amended)

Bay Area Council

Bay Area Regional Health Inequities Initiative (BARHII)

California Apartment Association

California Association of Realtors

California Building Industry Association (CBIA)

California Building Officials (CalBO) (if amended)

California Chamber of Commerce

California Forward Action Fund

California State Retirees (CSR)

California YIMBY

Casita Coalition

Conservation Corps of Long Beach (CCLB)

Eden Housing

LA-Más

Los Angeles Business Council (LABC)

Los Angeles Conservation Corps (LACC)

Maxable Space, LLC

Metropolitan Transportation Commission (MTC) (if amended)

Non-Profit Housing Association of Northern California (NPH)

Oakland Chamber of Commerce

PrefabADU

San Francisco Housing Action Coalition

San Jose Conservation Corps & Charter School

Santa Cruz YIMBY
South Bay YIMBY

Southern California Mountains Foundation

Southern California Rental Housing Association

SPUR (SAN Francisco Bay Area Planning and Urban Research Association)

SV @ Home

Terner Center for Housing Innovation at the University of California, Berkeley

The Norris Group

United Dwelling

Urban Conservation Corps of the Inland Empire

Opposition

American Planning Association, California Chapter (unless amended)

Auburn Area Recreation and Park District (ARD)

California Fire Chiefs Association

California Special Districts Association (CSDA)

California State Association of Counties (CSAC) (unless amended)

Cities of: Anaheim, Beaumont, Burbank (unless amended), Camarillo, Chino Hills, Cupertino, Downey (unless amended), El Segundo, Garden Grove, Los Alamitos (unless amended), Morgan Hill (unless amended), Rancho Cucamonga (unless amended), San Dimas, San Marcos, Santa Clarita, Thousand Oaks, Torrance (unless amended), Vista (unless amended)

Coalinga-Huron Recreation and Park District

Cosumnes Community Services District

Discovery Bay Community Services District

East Contra Costa Fire Protection District

Fire Districts Association of California

Georgetown Divide Recreation District

Hayward Area Recreation and Park District

League of California Cities (unless amended)

McKinleyville Community Services District

Meeks Bay Fire Protection District

Menlo Park Fire Protection District

Oceano Community Services District

San Ramon Valley Fire Protection District

Santa Maria Public Airport District

Santa Margarita Water District

Solano County Board of Supervisors

Templeton Community Services District

Urban Counties of California (UCC) (unless amended)

Ventura Council of Governments

Analysis Prepared by: Debbie Michel / Itzel Vasquez-Rodriguez / L. GOV. / (916) 319-3958

Date of Hearing: June 19, 2019

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

SBPCA Bill Id:SB 13

Author:(Wieckowski) – As Amended Ver:May 17, 2019

SENATE VOTE: 34-2

SUBJECT: Accessory dwelling units

SUMMARY: Makes a number of changes to law governing accessory dwelling units (ADUs). Specifically, this bill:

1. Deletes the requirement for an ADU ordinance to apply only in areas where housing is a permissible use.
2. Expands the area in with an ADU can be built to include attached garages, storage areas, and accessory structures.
3. Provides that when a garage, carport, or covered parking structure is demolished in conjunction with an ADU or converted into an ADU, a local agency shall not require that those off-street parking spaces be replaced.
4. Reduces the application approval timeframe to 60 days for an ADU and provides that if a local agency has not acted upon the submitted application within 60 days, the application shall be deemed approved.
5. Removes the authority for a local ordinance to require an applicant for an ADU to be an owner occupant and prohibits a local agency from requiring owner occupancy as a condition for issuing a building permit for an ADU.
6. Provides that a local ADU ordinance cannot establish a maximum ADU size less than 850 square feet for an ADU with one or less bedrooms, or up to 1,000 square feet if the ADU provides more than one bedroom.
7. Specifies that, in measuring one-half mile from public transit for purposes of applying parking requirements, the traversability of this distance is accounted for.
8. Provides for a tiered schedule of impact fees based on the size of the ADU as follows:
   1. Zero fees for an ADU of less than 750 square feet; and
   2. Twenty-five percent of impact fees charged for a new single-family dwelling for an ADU of 750 square feet or more.
9. Requires the Department of Housing and Community Development (HCD), after a local ADU ordinance is adopted, to submit findings to the local agency as to whether it complies with ADU law. If HCD finds it does not, HCD shall notify the local agency and may notify the Attorney General. The local agency shall consider HCD’s findings and may either change the ordinance to comply or make findings as to why the ordinance complies despite HCD’s findings.
10. Authorizes HCD to review, adopt, amend, supplement, or repeal guidelines to implement uniform standards and criteria that supplement or clarify the terms, references, and standards in ADU law.
11. Authorizes, explicitly, a local agency to count an ADU for purposes of identifying adequate sites for its housing element.
12. Requires a local agency, upon request of the owner of an ADU, to delay enforcement for five years of a violation of any building standard, if correction is not necessary to protect health and safety.

EXISTING LAW:

1. Provides that if a locality adopts an ADU ordinance in areas zoned for single-family or multifamily, it must do all of the following:
   1. Designate areas where ADUs may be permitted.
   2. Impose certain standards on ADUs such as parking and size requirements.
   3. Prohibit an ADU from exceeding the allowable density for the lot.
   4. Require ADUs to comply with certain requirements such as setbacks.
2. Requires ministerial approval of an ADU permit within 120 days.
3. Allows a locality to establish minimum and maximum unit sizes for both attached and detached ADUs.
4. Restricts the parking standards a locality may impose on an ADU.
5. Allows a local agency to require that an applicant be an owner-occupant or that the property be used for rentals of terms longer than 30 days.
6. Provides that an ADU shall not be considered by a local agency, special district, or water corporation to be a new residential use for purposes of calculating connection fees or capacity charges for utilities, including water and sewer service.
7. Requires a local agency to submit a copy of its ADU ordinance to HCD within 60 days of adopting it and authorizes HCD to review and comment on the ordinance.

(Government Code Section 65852.2)

FISCAL EFFECT: Unknown

COMMENTS:

Purpose of the Bill: According to the author, “California is in a severe housing crisis. The largest driver for this crisis is a lack of supply. One significant step to increase the supply of affordable housing is to build more ADUs. ADUs are inherently affordable: they cost less to build then a regular unit, are financed and managed by a homeowner, and require no public subsidy.

Under existing law, any property owner has the ability to a construct an ADU on their property should they meet certain zoning and building requirements. However, a significant number of homeowners interested in building ADUs on their property are prevented from constructing these units due to prohibitively high impact fees and other barriers. SB 13 is an important step in resolving the housing crisis by reducing excessive impact fees and other barriers for ADUs and allowing Californians to build affordable housing in their backyards.”

Background: ADUs are additional living quarters that are independent of the primary dwelling unit on the same lot. ADUs are either attached or detached to the primary dwelling unit, and provide complete independent living facilities for one or more person, including separate access from the property’s primary unit. This includes permanent provisions for living, sleeping, eating, cooking, and sanitation.

ADUs have been identified as an important piece of the solution to California’s housing crisis.

According to the Terner Center for Housing Innovation at UC Berkeley, the average cost to build an ADU is relatively inexpensive at $156,000. Because of their size and lower cost to construct, the Terner Center found that 58% of ADUs are rented out at below market rate.

Over the past few years, the legislature has passed a number of bills to ease zoning restrictions and expedite approval processes at the local level, which has contributed to the increased supply of ADUs throughout the state. For example, in the city of Los Angeles, since 2017 a total of 9,247 applications have been received for ADUs. This represents an approximate 30-fold increase as compared to the citywide average in the many years before the state law changed to reduce barriers to ADUs. Similarly, the city of Santa Rosa received 118 applications for ADUs in 2018, compared to 54 total from 2008-2016.

Relation to Other ADU Bills: This bill makes major changes to the ADU statute to facilitate the development of more ADUs and address perceived barriers to ADUs. The amendments proposed in this bill are the same as or similar to those that are proposed in other ADU bills that have been heard in this Committee this year – particularly AB 68 (Ting) and AB 881 (Bloom). This includes:

• Removes the authority for a local ordinance to require an applicant for an ADU to be an owner occupant;
• Allows ADUs to be built in the non-habitable part of existing or proposed dwelling units, such as storage areas;
• Bans the requirement of off-street replacement parking when parking is demolished in the creation of an ADU;
• Allows no more than 60 days to ministerially consider and approve an ADU permit from the time of application;
• Precludes local ordinances from establishing a maximum ADU size of less than 850 square feet for an ADU with one or less bedrooms, or up to 1,000 square feet if the ADU provides more than one bedroom;
• Creates an enforcement mechanism over local ordinances that do not comply with state law, allowing HCD to notify the Attorney General; and
• Authorizes HCD to provide guidelines to help implement uniform standards for ADU law.

Impact fees. Local governments may charge impact fees to a development to mitigate the impact of new development on local infrastructure, such as sewers, roads, parks, and schools. The Mitigation Fee Act, passed in 1989, requires cities to identify the purpose of a fee, the use of the fee, and show that there is a “reasonable” nexus between the fee amount and the impact of the project. Local agencies also charge fees to fund open space and parks, school fees, water and sewer fees, and project specific fees through negotiated development agreements. The passage of Proposition 13 and the loss of property tax revenues have fueled cities’ dependence on fees to fund infrastructure and services.

For several reasons, the impact fees on new ADUs vary greatly by local jurisdiction. While the demands for infrastructure from new development are often similar, nexus studies are often art as much as science, and can reach very different conclusions about the infrastructure burden of new development. Additionally, many local governments do not charge fees based on the nexus (which sets the upper bound of what is legally allowed), but on the ability of a development to pay, which will reflect both the varying market conditions between jurisdictions and the local appetite to facilitate new development. Finally, a new ADU likely will be subject to fees from multiple different sources including special districts, schools, and water corporations. Fees from these different sources are often calculated in isolation and by different government entities. This can result in ADU fees from multiple sources that are individually economically feasible, but cumulatively prohibitive.

This bill would eliminate impact fees for ADUs of less than 750 square feet. ADUS that are 750 square feet or larger would be charged twenty-five percent of impact fees for new single-family dwellings. This change would have the benefit of making it less expensive and thus easier to build ADUs. However, there would be commensurate strain to local infrastructure, creating concerns about safety, and reduction of quality of life. This policy would also penalize local agencies that “right-size” their impact fees based on actual costs, ability-to-pay, and unit size. In addition, this bill does not differentiate between impact fees charged by cities and counties, that can use general fund dollars to backfill costs, and special districts that must pass through unmet costs to ratepayers. As a result, it incentives jurisdictions and special districts to raise their fees and rates for all housing units to compensate.

This bill prohibits a local government from charging an ADU of less than 750 square feet any impact fees. There is no justification made for this methodology. Nor does the bill distinguish that some impact fees are charged on a per unit basis, whereas some are charged per square feet. Where impact fees are charged on a per unit basis, there is strong justification for reducing the fees for ADUs, which are substantially smaller than typical homes. However, when fees are charged on a per square foot basis, the smaller size of the ADUs itself brings down the cost of fees (for example, a 500 square foot ADU would pay 25 percent of the fees of a 2,000 square foot single-family home).

The challenge of determining the “appropriate” amount of impact fees has been the source of much discussion in the Legislature in the last several years. To help understand the current landscape of fees and provide recommendations for policy changes, AB 879 (Grayson, 2017) directed HCD to complete a study to evaluate the reasonableness of local fees charged to new developments, including findings and recommendations regarding potential amendments to the Mitigation Fee Act to substantially reduce fees for residential development. The study is required to be published by June 30, 2019.

Given the issues raised with the bill’s proposed fee structure, and the imminent publication of HCD’s fee study, the committee may wish to consider if the issue of fees requires more discussion and refinement.

Zoning and ADUs: Existing law requires that applications ADUs be ministerially approved on lots that permit residential uses that has an existing or proposed residential unit. The bill proposes to eliminate the requirement that the site be zoned for housing. Most developable land in California is zoned for housing, but other areas are zoned exclusively for non-residential uses such as retail, office, and industrial. In those areas, there are occasionally residential uses that were built legally but are now not in conformance with the zoning. Those units may be mutually incongruous with their surroundings, such as units in industrial areas that have to deal with, and potentially register complaints about, the inherent operations of those uses. While it may in some circumstances be beneficial to add units in those locations, such additions should be deliberated. As such, the Committee may wish to consider amending the legislation to eliminate the change that allows ADUs to be approved ministerially in zoning that does not otherwise permit new housing, and instead to clarify that an ADU can be built on a lot that is zoned to allow housing and includes housing. Because there is only a limited number of housing already located in such areas, it is not anticipated that this change would demonstrably change the overall amount of ADUs that could be built in the state.

ADU Approval Process: As discussed above, this bill proposes to reduce the maximum period by which a local jurisdiction must ministerially consider an ADU permit application from 120 days after receiving the application to 60 days. Like other building and planning applications, it is not uncommon for applications for ADU permits to be submitted with incomplete or inaccurate information. While the reduced timeframe for review would help expedite the process, local jurisdictions should not be held accountable for processing incomplete applications. As such, the Committee may wish to consider specifying that the 60-day time period for considering an application begins when the jurisdiction receives a “complete” application.

Amnesty. According to a 2016 report by McKinsey and Company entitled A Tool Kit to Close California’s Housing Gap: 3.5 Million Homes by 2025, one way to encourage homeowners to add ADUs is to create an amnesty path for ADUs that are not properly permitted. Often, the reason that these are not properly permitted is that they were not permissible until the change in state law came into effect in 2017. According to the report, as many as eight percent of ADUs in San Francisco are illegal. The report concludes that legitimizing these units would boost building compliance and raise property tax revenue.

This bill creates a ten-year amnesty program for substandard ADUs. This bill grants an ADU owner with a non-compliant ADU a five-year delay to make the necessary changes to bring the ADU up to code before enforcement would occur. The delay applies to changes that, in the judgement of the local building official, and in consultation with fire and code enforcement officials, is not necessary to protect the health and safety of the building residents.

While the bill’s amnesty program is designed to help older, illegal ADUs become properly permitted, it would also afford this amnesty to newly built ADUs. Such amnesty should not be necessary for newly constructed ADUs. As such, the Committee should consider amending the bill to only apply this amnesty to ADUs constructed before January 1, 2020, to better reflect the period before state law made ADUs broadly permissible.

Arguments in Support: According to the UC Berkeley Terner Center for Housing Innovation, “the adoption and expansion of accessory dwelling unit (ADU) policies has proven to be an effective means of creating low-cost, low-impact housing for the state of California. By largely limiting the amount of fees that can be levied on ADUs, SB 13 will greatly ease a significant barrier to ADU production across the state. Past research by the Terner Center reveals that fees—which can comprise up to half the total cost to build an ADU—are a significant deciding factor for homeowners considering building an ADU.”

Arguments in opposition: According to the League of California Cities, SB 13 “completely disregards the Mitigation Fee Act (MFA), which strictly regulates how local agencies impose impact fees. Under the MFA, impact fees must be limited to the particular service and can only cover the cost of providing that service. Arbitrarily capping these fees would result in an inability to provide the public improvements and public services necessary to meet the needs of the residents living in the newly constructed ADU.”

Committee Amendments: To address the issues raised above, the Committee may wish to consider the following amendments:

• Remove the ability for ADUs to be built ministerially on lots that do not otherwise permit residential zoning, and instead clarify that an ADU can be built on a lot that is zoned to allow housing and includes housing;
• Specify that the 60-day time period for considering an ADU application begins when the jurisdiction receives a “complete” application;
• Apply the five-year amnesty program only to ADUs constructed before January 1, 2020.

Related Legislation:

AB 68 (Ting)(2019): This bill would make several changes to further reduce barriers to production of ADUs. It would expand the definition of owner-occupancy to include members of trusts as well as units owned by a non-profit and deed restricted for affordability. It would increase enforcement capacity against local jurisdictions regarding their ADU ordinances. This bill is pending hearing in the Senate Committee on Housing.

AB 69 (Ting)(2019): This bill revises ADU law in relation to HCD determination of compliance of local ADU ordinances and requires HCD to propose building standards for ADUs and small homes. This bill is pending hearing in the Senate Committee on Housing.

AB 670 (Friedman) (2019): This bill would make it illegal for new or amended governing documents of common interest developments to prohibit the construction of ADUs or JADUs. This bill was approved by the Senate Housing Committee 8-0 and is pending hearing in the Senate Judiciary Committee.

AB 881 (Bloom)(2019): This bill would make several changes to further reduce barriers to production of ADUs. It would remove the ability for local jurisdictions to create owner occupancy requirements for ADUs. This bill is pending hearing in the Senate Housing Committee.

Prior Legislation

SB 831 (Wieckowski, 2018) would have made a number of changes to ADU law. This bill died in the Assembly Local Government Committee.

AB 2890 (Ting, 2018) would have made a number of changes to ADU law. This bill died on the suspense file of the Senate Appropriations Committee.

SB 1069 (Wieckowski), Chapter 720, Statutes of 2016: This bill made several changes to reduce the barriers to the development of ADUs and expanded capacity for their development, including changes to parking, fees, fire requirements, and process.

AB 2299 (Bloom), Chapter 735, Statutes of 2016: This bill requires a local government to ministerially approve ADUs if the unit complies with certain parking requirements, the maximum allowable size of an attached ADU, and setback requirements.

Double referred: This bill was also referred to the Assembly Committee on Local Government where it will be heard should it pass out of this committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Association of Bay Area Governments

Bay Area Council

Bay Area Regional Health Inequities Initiative

California Apartment Association

California Association of Realtors

California Building Industry Association

California Chamber of Commerce

California Forward Action Fund

California State Retirees

California YIMBY

Casita Coalition

Eden Housing

La-Mas

Long Beach Conservation Corps

Los Angeles Conservation Corps

Maxable

Metropolitan Transportation Commission

Non-Profit Housing Association of Northern California

Oakland Chamber of Commerce

PrefabADU

San Francisco Housing Action Coalition

San Jose Conservation Corps & Charter School

Santa Cruz YIMBY

Silicon Valley @ Home

South Bay YIMBY

Southern California Rental Housing Association

SPUR

Terner Center for Housing Innovation at the University of California, Berkeley

The Norris Group

Urban Conservation Corps Inland Empire

Opposition

Auburn Area Recreation and Park District

California Fire Chiefs Association

California Special Districts Association

City of Beaumont

City of Camarillo

City of Downey

City of El Segundo,

City of San Dimas

City of San Marcos

City of San Marcos

City of Thousand Oaks

Coalinga-Huron Recreation and Park District

Cosumnes Community Services District

Desert Water Agency

Dublin San Ramon Services District

East Contra Costa Fire Protection District

El Dorado Irrigation District

Fire Districts Association of California

Hayward Area Recreation and Park District

Leucadia Wastewater District

Mckinleyville Community Services District

Menlo Park Fire Protection District

Mt. View Sanitary District

Oceano Community Services District

Ojai Valley Sanitary District

San Ramon Valley Fire Protection District

Santa Margarita Water District

Santa Maria Public Airport District

Solano County Board of Supervisors

Templeton Community Services District

Town of Discovery Bay Community Services District

Individual(s) - 1

Oppose Unless Amended

American Planning Association, California Chapter

Association of California Water Agencies

California Association of Sanitation Agencies

California Municipal Utilities Association

California State Association of Counties

City of Burbank

City of Garden Grove

City of Los Alamitos

City of Rancho Cucamonga

City of Torrance

City of Vista

League of California Cities

Urban Counties of California

Ventura Council of Governments

Analysis Prepared by: Steve Wertheim / H. & C.D. / (916) 319-2085

 THIRD READING  

Bill No: SB 13

Author: Wieckowski (D), et al.

Amended: 5/17/19

Vote: 21

SENATE HOUSING COMMITTEE: 10-0, 4/2/19

AYES: Wiener, Bates, Caballero, Durazo, McGuire, Moorlach, Roth, Skinner, Umberg, Wieckowski

NO VOTE RECORDED: Morrell

SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/10/19

AYES: McGuire, Moorlach, Beall, Hertzberg, Hurtado, Nielsen, Wiener

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SUBJECT: Accessory dwelling units

SOURCE: Author

DIGEST:

This bill makes a number of changes to law governing accessory dwelling units (ADUs).

ANALYSIS:

Existing law:

1. Provides that if a locality adopts an ADU ordinance in areas zoned for single-family or multifamily, it must do all of the following:
   1. Designate areas where ADUs may be permitted.
   2. Impose certain standards on ADUs such as parking and size requirements.
   3. Prohibit an ADU from exceeding the allowable density for the lot.
   4. Require ADUs to comply with certain requirements such as setbacks.
2. Requires ministerial approval of an ADU permit within 120 days.
3. Allows a locality to establish minimum and maximum unit sizes for both attached and detached ADUs.
4. Restricts the parking standards a locality may impose on an ADU.
5. Allows a local agency to require that an applicant be an owner-occupant or that the property be used for rentals of terms longer than 30 days.
6. Provides that an ADU shall not be considered by a local agency, special district, or water corporation to be a new residential use for purposes of calculating connection fees or capacity charges for utilities, including water and sewer service.
7. Requires a local agency to submit a copy of its ADU ordinance to HCD within 60 days of adopting it and authorizes HCD to review and comment on the ordinance.

This bill:

1. Removes the requirement for an ADU ordinance to apply only in single-family or multifamily zones.
2. Provides that when a garage, carport, or covered parking structure is demolished in conjunction with an ADU or converted into an ADU, a local agency shall not require that those off-street parking spaces be replaced.
3. Reduces the application approval timeframe to 60 days and provides that if a local agency has not acted upon the submitted application within 60 days, the application shall be deemed approved.
4. Removes the authority for a local ordinance to require an applicant for an ADU to be an owner occupant and prohibits a local agency from requiring owner occupancy as a condition for issuing a building permit for an ADU.
5. Provides that if a local agency has not adopted an ADU ordinance, an ADU application must be approved within 60 days. If it is not acted upon within that timeframe, the application shall be deemed approved.
6. Provides that a local ADU ordinance that establishes minimum or maximum ADU size must allow an ADU of up to 850 square feet, or up to 1,000 square feet if the ADU provides more than one bedroom.
7. Provides for a tiered schedule of impact fees based on the size of the ADU as follows:
   1. Zero fees for an ADU of less than 750 square feet
   2. 25% of impact fees for an ADU of 750 square feet or more.
8. Revises the definition for when a local agency, special district, or water corporation may require a separate utility connection.
9. Requires HCD, after a local ADU ordinance is adopted, to submit findings to the local agency as to whether it complies with ADU law. If HCD finds it does not, HCD shall notify the local agency and may notify the Attorney General. The local agency shall consider HCD’s findings and may either change the ordinance to comply or make findings as to why the ordinance complies despite HCD’s findings.
10. Authorizes HCD to review, adopt, amend, or repeal guidelines to implement uniform standards and criteria that supplement or clarify the terms, references, and standards in ADU law.
11. Authorizes, explicitly, a local agency to count an ADU for purposes of identifying adequate sites for its housing element.
12. Requires a local agency notice of a violation of any building standard to an ADU owner to include a statement of the owner’s right to request a delay in enforcement. Requires a local agency, upon request of the owner, to delay enforcement for five years if correction is not necessary to protect health and safety.

Background

ADUs, also known as accessory apartments, accessory dwellings, mother-in-law units, or granny flats, are additional living spaces on single-family lots that have a separate kitchen, bathroom, and exterior access independent of the primary residence. These spaces can either be attached to, or detached from, the primary residence.

According to a UC Berkeley study, Yes in My Backyard: Mobilizing the Market for Secondary Units, second units are a means to accommodate future growth and encourage infill development in developed neighborhoods. Despite existing state law, which requires each city in the state to have a ministerial process for approving second units, the study found that local regulations often impede development. The study, which evaluated five adjacent cities in the East Bay, concluded that there is a substantial market of interested homeowners; cities could reduce parking requirements without contributing to parking issues; second units could accommodate future growth and affordable housing; and that scaling up second unit strategy could mean economic and fiscal benefits for cities. This bill relaxes several requirements to the construction and permitting of ADUs.

Comments

1. Purpose. The author states that California is in a severe housing crisis. The largest driver of this crisis is a lack of supply. One significant step toward increasing the supply of affordable housing is to build more ADUs. ADUs are inherently affordable; they cost less to build than a regular unit, are financed and managed by the homeowner, and require no public subsidy. However, a significant number of homeowners interested in building ADUs on their property are prevented from doing so due to prohibitively high impact fees and other barriers. This bill creates a tiered fee structure which charges ADUs based on their size, to take into consideration that the impact of an ADU on a neighborhood’s infrastructure and services is different from the impact created by single-family homes or multifamily buildings. This bill also addresses other barriers such as lowering the application approval timeframe, creating an avenue to get unpermitted ADUs up to code, and enhancing an enforcement mechanism allowing HCD to ensure that localities are following ADU statute. This bill is an important step in resolving the housing crisis by reducing excessive impact fees and other barriers to ADUs and allowing Californians to build affordable housing in their back yards.
2. Trying again. This bill is similar to SB 831 (Wieckowski, 2018), which died in the Assembly last year. Unlike SB 831, however, this bill does not: allow local agencies to designate areas where ADUs may be excluded for fire and life safety purposes; prohibit consideration of the square footage of a proposed ADU when calculating an allowable floor-to-area ratio for the lot; prohibit a setback requirement for an ADU conversion; or limit setback requirements to three feet for ADUs not converted from an existing structure. In addition, unlike SB 831, this bill provides for a tiered system of impact fees that may be imposed on ADUs.
3. Impact fees. Local governments can charge a variety of fees to a development. These fees, commonly known as impact or mitigation fees, go toward infrastructure development (such as adding lanes to roads or supporting additional traffic) or other public benefits (such as new parks, schools, or affordable housing). In the wake of the passage of Proposition 13 in 1978 and the loss of significant property tax revenue, local governments have also turned to development fees as a means to generate revenue. Given that California cities have tightly restricted funding sources, fees are one of the few ways cities can pay for the indirect costs of growth.

In 2016, the Legislature revised ADU law to reduce duplicative fees and reduce other barriers to the construction and approval of ADUs. As a result, ADU permit applications throughout the state have dramatically increased. A report by UC Berkeley’s Terner Center of Housing Innovation recently discovered, however, that development and school fees, as well as lot size requirements and code standards, continue to suppress the construction of ADUs. ADUs are often charged with the same impact fees that a new home would be subject to. These fees can range anywhere between $5,000 and $60,000 and would not be charged to a homeowner for simply building an additional bathroom or bedroom.

Existing law prohibits an ADU from being considered a residential use for purposes of calculating fees charged for new development. Fees were the subject of significant discussion in relation to last year’s ADU bills. This bill provides for a tiered structure of impact fees ranging from zero for an ADU of under 750 square feet, to 25% of impact fees for an ADU of 750 square feet or more.

1. Size of ADUs. Existing law requires an ADU ordinance that provides for minimum and maximum ADU size, to allow for at least an efficiency unit. This bill increases that minimum to an 850 square foot unit, or 1,000 square feet if the ADU includes more than one bedroom.
2. Zoning modification. This bill requires ministerial approval of ADUs on any lot that includes a proposed or existing single-family dwelling. Moving forward, the author may wish to consider amendments to clarify that ADUs must be located in zones that allow residential use, including mixed use.
3. Elimination of owner occupancy requirement. Existing law allows a local ordinance to require owner occupancy for either the primary dwelling or the ADU. Some jurisdictions have required the owner of the property to reside in the main home or in the ADU. The author has provided examples of lenders who have stated in writing that these covenants can preclude the lender from occupying the property if lenders must foreclose on the property. One letter states that if a property owner agrees to such a covenant, the owner could already be in violation of their deed of trust on the property and it “effectively transfers some of the rights from the property to the City, which could trigger a due on sale clause.” Thus, this bill prohibits owner occupancy requirements.

The American Planning Association, California Chapter (APA), writing in opposition to this bill, raises a concern that eliminating the owner occupancy requirement altogether could potentially encourage institutional investors or speculators to purchase a home with an existing ADU, or purchase single-family homes without ADUs, at a premium with the intention of adding an ADU which would then be rented at any price the market will bear. APA notes that the city of Santa Rosa waives its owner occupancy requirement if the owner puts an affordability requirement on the ADU.

1. Amnesty. According to a 2016 report by McKinsey and Company entitled A Tool Kit to Close California’s Housing Gap: 3.5 Million Homes by 2025, one way to encourage homeowners to add ADUs is to create an amnesty path for ADUs that are not properly permitted. According to the report, as many as 8% of ADUs in San Francisco are illegal. The report concludes that legitimizing these units would boost building compliance and raise property tax revenue.

This bill creates a five-year amnesty program for substandard ADUs. This bill grants an ADU owner with a non-compliant ADU a five-year delay to make the necessary changes to bring the ADU up to code. The delay applies to changes that, in the judgement of the local building official, and in consultation with fire and code enforcement officials, is not necessary to protect the health and safety of the building residents.

1. HCD oversight. Existing law requires a local agency to submit its ADU ordinance to HCD for review and allows HCD to review and provide comments. This bill strengthens oversight over local ADU ordinances by allowing HCD, after adoption of an ADU ordinance, to submit findings to the local agency as to whether the ordinance complies with ADU law. If HCD finds that the ordinance does not substantially comply, HCD shall notify the local agency and may notify the Attorney General.

Related/Prior Legislation

AB 68 (Ting, 2019) makes a number of changes to ADU law. This bill passed out of the Assembly Appropriations Committee.

AB 69 (Ting, 2019) revises ADU law in relation to HCD determination of compliance of local ADU ordinances and requires HCD to propose building standards for ADUs and small homes. This bill passed out of the Assembly Appropriations Committee.

AB 587 (Friedman, 2019) authorizes an ADU to be sold separately from the primary residence under certain conditions. This bill is pending hearing in the Senate Housing Committee.

AB 881 (Bloom, 2019) makes several changes to ADU law. This bill is pending committee assignment in the Senate.

SB 831 (Wieckowski, 2018) would have made a number of changes to ADU law. This bill died in the Assembly Local Government Committee.

AB 2890 (Ting, 2018) would have made a number of changes to ADU law. This bill died on the suspense file of the Senate Appropriations Committee.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, HCD estimates ongoing staffing costs of approximately $328,000 annually to provide technical assistance, review and comment on ordinances, and refer ordinances that violate state law to the Attorney General. (General Fund)

SUPPORT: (Verified 5/16/19)

Bay Area Council
California Apartment Association
California Association Of Realtors
California Building Industry Association
California Chamber Of Commerce
California Yimby
Casita Coalition
Eden Housing
LA-Mas
Long Beach Conservation Corps
Oakland Chamber Of Commerce
PrefabADU
San Francisco Housing Action Coalition
San Jose Conservation Corps & Charter School
Santa Cruz YIMBY
Silicon Valley At Home
South Bay YIMBY
Southern California Rental Housing Association
SPUR
Terner Center For Housing Innovation At The University Of California, Berkeley

OPPOSITION: (Verified 5/16/19)

American Planning Association, California Chapter
California Special Districts Association
California State Association of Counties
Coalinga-Huron Recreation And Park District
Desert Water Agency
Downey; City Of
El Dorado Irrigation District
Hayward Area Recreation And Park District
League of California Cities
Leucadia Wastewater District
Mt. View Sanitary District
Oceano Community Services District
Ojai Valley Sanitary District
Racho Cucamonga; City Of
San Ramon Valley Fire Protection District
Solano County Board Of Supervisors
Templeton Community Services District
Thousand Oaks; City Of
Town Of Discovery Bay Community Services District
Urban Counties of California
Ventura Council Of Governments

ARGUMENTS IN SUPPORT: Supporters state that ADUs are an important part of the solution to California’s housing crisis, as they are the most widely supported approach to get thousands of low-cost units on the market quickly. This bill will ease a significant barrier to ADU production across the state by largely limiting the amount of fees that can be levied on ADUs; because ADUs have minimal impact on infrastructure and services, it is not appropriate to levy the same fees on them as for large development projects. Many local governments continue to place burdens, from zoning to fees, that effectively prevent the construction of ADUs; addressing these issues will result in greater ADU production and help ease the state’s housing shortfall.

ARGUMENTS IN OPPOSITION: Opponents cite a number of concerns with this bill, including the elimination of replacement parking when there is a conversion of an existing structure such as a garage or carport; the prohibition on a local agency, special district, or water corporation from considering an ADU to be a new residential use for purposes of calculating connection fees or capacity charges for utilities; its limitations on the impact fees that can be charged on an ADU; its prohibition on owner occupancy requirements; and an overall concern with implementing further changes to ADU statute even as many cities and counties are still implementing all the 2016 and 2017 changes.

Prepared by: Erin Riches / HOUSING / (916) 651-4124

5/20/19 10:12:48

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 13 (Wieckowski) - Accessory dwelling units

Bill Summary:

SB 13 would place additional restrictions on the conditions that local governments may impose on accessory dwelling units (ADUs), including limiting the ability to charge developer fees, prohibiting the imposition of owner occupancy requirements, and reducing the timeframe for ministerial approval of ADU permits. The bill also authorizes the Department of Housing and Community Development (HCD) to review local ADU ordinances, submit written findings, and refer violations of ADU law to the Attorney General, as specified.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 16, 2019

Fiscal Impact:

• HCD estimates ongoing staffing costs of approximately $328,000 annually to provide technical assistance, review and comment on ordinances, and refer ordinances that violate state law to the Attorney General. (General Fund)

Author Amendments:

• Add co-authors.
• Clarify that local ADU ordinances cannot establish a minimum square footage requirements, and that any maximum requirements cannot be less than 850 square feet, or 1,000 square feet.
• Authorize an ADU owner to apply for delayed enforcement for code violations for a five year period, rather than a ten year period, and sunsets this provision on January 1, 2035, rather than 2040.
• Make other technical and clarifying changes.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 13 (Wieckowski) - Accessory dwelling units

Bill Summary:

SB 13 would place additional restrictions on the conditions that local governments may impose on accessory dwelling units (ADUs), including limiting the ability to charge developer fees, prohibiting the imposition of owner occupancy requirements, and reducing the timeframe for ministerial approval of ADU permits. The bill also authorizes the Department of Housing and Community Development (HCD) to review local ADU ordinances, submit written findings, and refer violations of ADU law to the Attorney General, as specified.

Fiscal Impact:

• HCD estimates ongoing staffing costs of approximately $328,000 annually to provide technical assistance, review and comment on ordinances, and refer ordinances that violate state law to the Attorney General. (General Fund)

Background:

Accessory Dwelling Units (ADUs), also known as accessory apartments, accessory dwellings, mother-in-law units, or granny flats, are additional living spaces on single-family lots that have a separate kitchen, bathroom, and exterior access independent of the primary residence. These spaces can either be attached to or detached from the primary residence. This form of housing is often used by additional family members, students, the elderly, in-home health care providers, the disabled, and others, at below market prices within existing neighborhoods. In 1982, the Legislature first provided a framework for local governments to enact ordinances that permit the construction of ADUs, while preserving local government flexibility to regulate the units as necessary. Initially, fewer ADUs than anticipated were developed; in response, the Legislature significantly amended ADU law to address some of the barriers that local agencies imposed on property owners proposing an ADU (AB 1866, Wright, 2002). Specifically, AB 1866 allowed local governments (1) to adopt an ordinance that allows the creation of ADUs in single-family and multi-family residential zones, and (2) to set standards on the units regarding parking, height, setback, maximum size, and potential adverse impacts on historic places. AB 1866 also prohibited local agencies from adopting an ordinance that entirely prohibits ADUs unless it made specific findings regarding adverse impacts from the units. Nevertheless, some local governments continued to impose onerous requirements or prohibit ADUs entirely.

In 2016, the Legislature again revised ADU law to address some of the barriers to ADU creation that had been adopted by local governments (SB 1069,Wieckowski, and SB 2299, Bloom). These laws, as well as subsequent cleanup legislation, prohibited local ordinances that entirely ban ADUs and required a local agency to do the following: (1) designate areas within the jurisdiction where ADUs may be permitted, (2) impose standards on ADUs, including minimum lot sizes and requiring ADUs to be set back from the property line, (3) consider permit applications within 120 days, (4) approve or disapprove an application for an ADU ministerially without discretionary review if the local government does not have an ADU ordinance when it receives a permit application, and (5) approve building permits to create an ADU ministerially if the ADU is within an existing residence, has independent exterior access, and meets certain fire safety requirements. These bills also limited local agencies’ ability to require new utility connections for water and sewer, and required the fees to be proportionate to the burden created by the ADU.

California’s production of housing continues to lag demand. This lack of housing is impacting affordability; average housing costs in California exceed the rest of the nation. As affordability becomes more problematic, people drive longer distances between a home that is affordable and where they work, or double up to share space, both of which reduces quality of life and produces negative environmental impacts. Consequently, ADUs are gaining in popularity, and the recent efforts to promote ADU construction and limit local constraints have resulted in substantial increases in permit applications in some jurisdictions.

Proposed Law:

This bill would, among other things, do the following:

• Remove a requirement that an ADU ordinance apply only in areas zoned for single-family or multifamily use.
• Eliminate the ability for a local jurisdiction to require the replacement of an off street parking space that is eliminated by the construction of an ADU.
• Reduce the time period for ministerial approval of an ADU building permit from 120 days to 60 days, and deem approved any application for construction of an ADU that is not ministerially approved within the prescribed 60 day period.
• Remove the authority for a local ordinance to require an applicant for an ADU to be an owner occupant, and prohibit a city from requiring owner occupancy for either the primary unit or ADU. Any agreements with a local agency to maintain owner occupancy as a condition for issuance of a building permit for an ADU would be void and unenforceable.
• Require local ADU ordinances to permit at least an 850 square foot ADU, or a 1,000 square foot ADU if the unit contains more than one bedroom.
• Prohibit a local agency, special district, or water corporation from imposing any impact fees on ADUs of under 750 square feet, and limit the impact fees on ADUs of 750 or more square feet to 25% of the impact fees otherwise charged for a new single-family dwelling.
• Authorize HCD to review, adopt, amend, or repeal guidelines for reviewing ADU ordinances that supplement or clarify state ADU law. These guidelines would not be subject to the Administrative Procedures Act, as specified.
• Authorize HCD, after a local ADU ordinance is adopted, to submit written findings regarding whether the ordinance is in compliance with ADU law. If the ordinance is not in compliance, HCD must notify the local agency and may notify the Attorney General that the local agency is in violation of ADU law. A local agency that receives findings from HCD must consider them and either revise the ordinance or adopt it with findings explaining the reasons the agency believes its ordinance is in compliance with state law.
• Require local building officials to delay enforcement of any building code requirements applicable to an ADU for at least ten years, upon request of an ADU owner, if the local official finds a substandard ADU poses an imminent risk to the health and safety of its residents, but that enforcement is not necessary to protect the health and safety of those residents.
• Prohibit a local building official from approving an enforcement delay after January 1, 2030, but allows for the full ten-year enforcement delay if it was approved prior to that date. This provision would sunset on January 1, 2040.

Related Legislation:

AB 68 (Ting), which is pending in the Assembly Appropriations Committee, would make a number of changes to ADU law, including expanding ministerial approval of ADUs, restricting local authority to impose certain standards and owner-occupancy restrictions, and authorizing additional HCD review of ADU ordinances.

AB 69 (Ting), which is pending in the Assembly Appropriations Committee, would require HCD to propose building standards for ADUs and Junior ADUs, as specified.

AB 881 (Bloom), which is pending on the Assembly Floor, would make a number of changes to ADU law, including expanding ministerial approval of ADUs, and removing owner-occupancy requirements, as specified.

Last year, the Legislature considered three bills that would make various changes to ADU law in an effort to streamline approvals and remove barriers to development. SB 831 (Wieckowski) was held in the Assembly Local Government Committee, SB 1469 (Skinner) was held on the Suspense File in this committee, and AB 2890 was held in the Senate Rules Committee. Staff notes that SB 831 was amended when it was approved by this committee to include certain provisions from SB 1469.

Staff Comments:

While this bill is keyed as a state-mandated local program, local costs are not state-reimbursable because affected local agencies have the authority to charge various permit, planning, and developer fees to offset any increased costs associated with the higher level of service imposed by the bill.

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SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2019 - 2020 Regular

Accessory dwelling units

Imposes additional restrictions on ordinances and developer fees pertaining to accessory dwelling units.

Background

The Legislature has long identified accessory dwelling units (ADUs), also known as second units, in-law apartments, or “granny flats,” as a valuable form of housing for family members, students, the elderly, in-home health care providers, the disabled, and others, at below market prices within existing neighborhoods. In 1982, the Legislature first provided a framework for local governments to enact ordinances that permit the construction of ADUs, while preserving local government flexibility to regulate the units as necessary. When fewer ADUs than anticipated were developed, the Legislature significantly amended ADU law to address some of the barriers that property owners encountered while trying to develop them (AB 1866, Wright, 2002).

Among other provisions, AB 1866 allowed local governments to adopt an ordinance that allows the creation of ADUs in single-family and multi-family residential zones and to set standards on the units regarding parking, height, setback, maximum size, and potential adverse impacts on historic places. AB 1866 also prohibited local agencies from adopting an ordinance that entirely prohibits ADUs unless it made specific findings regarding adverse impacts from the units. Some local governments continued to impose onerous requirements or prohibit ADUs entirely.

Recent ADU law changes. The Legislature revised ADU law in 2016 to address some of the barriers to ADU creation that had been adopted by local governments (SB 1069,Wieckowski and AB 2299, Bloom). These laws prohibited local ordinances that entirely ban ADUs and required a local agency to, among other provisions:

• Designate areas within the jurisdiction where ADUs may be permitted;
• Impose standards on ADUs, including minimum lot sizes and requiring ADUs to be set back from the property line (“setbacks”);
• Consider permit applications within 120 days;
• Approve or disapprove an application for an ADU ministerially without discretionary review if the local government does not have an ADU ordinance when it receives a permit application; and
• Approve building permits to create an ADU ministerially if the ADU is within an existing residence, has independent exterior access, and meets certain fire safety requirements.

These bills also limited the cases when local agencies could require new utility connections for water and sewer, and limited the fees to be proportionate to the burden created by the ADU. In 2017, the Legislature made further changes to ADU law to clarify portions of the law (SB 229, Wieckowski and AB 494, Bloom).

Boom in ADU permitting. ADU permit applications have increased substantially following the enactment of these recent changes. A December 2017 report on ADUs by the Terner Center for Housing Innovation found that in 2017 alone, approximately 2,000 ADU permit applications were submitted in the City of Los Angeles and 600 were submitted in San Francisco, representing an increase of 25x and 12x, respectively, over prior years.

However, some local agencies continue to impose restrictions and developer fees on ADUs that make them more difficult to build. For example, the Terner Center’s report argued that developer fees are a disincentive to ADU creation. In addition, a brief review by the California Department of Housing and Community Development (HCD) has found that some jurisdictions appear to impose minimum lot size restrictions on a much larger lot than the average lot in a jurisdiction, essentially prohibiting ADUs. Finally, other issues have hindered ADU creation. Some jurisdictions, as authorized under existing law, have required the owner of the property to reside in the main home or in the ADU. But some lenders have argued that these covenants could preclude the lender from occupying the property if the lender must foreclose on the property.

The author wants to address these remaining barriers.

Proposed Law

Senate Bill 13 adds new constraints on the requirements that local agencies may impose on ADUs.

Additional restrictions on local ADU ordinances. Current law allows ADU ordinances to specify minimum and maximum sizes of attached and detached ADUs, but requires local agencies to allow at least an efficiency unit to be constructed. SB 13 requires local ADU ordinances to permit at least an 850 square foot ADU, or a 1,000 square foot ADU if it contains more than one bedroom.

Current law restricts the new parking that a local agency may require for an ADU, including to allow parking on the same lot in any configuration if the local agency requires replacement parking for an ADU that results in the loss of a garage or carport. SB 13 prohibits a local agency from requiring parking in these situations.

Current law requires a local agency to act on a permit for an ADU ministerially within 120 days of receiving an application. SB 13 requires a local agency to act on the permit within 60 days and deems the permit approved if the local government fails to act within that timeframe. SB 13 also prohibits local agencies from using other laws to delay permitting.

Current law allows a local agency to require owner occupancy of either the primary residence or the ADU or to require an applicant for an ADU permit to be an owner occupant. SB 13 repeals these provisions and voids an agreement with a local agency to maintain owner occupancy as a condition for issuance of a building permit for an ADU as against public policy.

Current law requires a local agency to approve an ADU that meets certain minimum criteria and is contained within an existing living space or accessory structure. SB 13 requires approval if the ADU is substantially contained within an existing living space or accessory structure.

Current law provides that sprinklers are not required for ADUs if the primary dwelling is not required to have sprinklers. SB 13 repeals this provision.

Prohibition on developer fees. Under current law, when approving development projects, counties and cities can require the applicants to mitigate the project's effects by paying fees. The California courts have upheld these mitigation fees for water and sewer service, sidewalks, parks, school construction, and many other public purposes. Current law prohibits cities, counties, special districts, and water districts from considering an ADU to be a new residential use. It also prohibits those entities from requiring a new connection or imposing connection fees on many attached ADUs and conversions, and limits the connection fees for other ADUs to the proportionate burden imposed by the proposed ADU.

SB 13 prohibits all impact fees on ADUs of under 750 square feet, including school district fees, connection fees, capacity charges, and any other fees levied by a local agency, school district, special district, or water corporation. SB 13 also prohibits local agencies from charging in aggregate more than 25% of the fees otherwise charged to a new single-family dwelling on the same lot.

Review and challenges to local ordinances. SB 13 requires a city or county to submit a copy of its ADU ordinance to HCD within 60 days of adopting it. HCD can submit written findings to the city or county on whether the ordinance complies with state ADU law. If HCD determines that the ordinance does not comply, SB 13 directs HCD to notify the city or county and allows HCD to notify the Attorney General that the city or county is in violation of state law. A city or county that receives findings from HCD must consider them, and must adopt findings of its own if it believes that its ordinance complies with state law.

SB 13 allows HCD to develop guidelines for reviewing ADU ordinances that supplement or clarify state ADU law and specifies that these guidelines are not subject to the statutory processes for adopting regulations under the Administrative Procedures Act (APA).

Amnesty program. SB 13 requires where a building official finds that a substandard ADU presents an imminent risk to the health and safety of the building’s residents, upon request by an ADU owner, a building official, in consultation with local fire and code enforcement officials, must approve a delay of not less than 10 years of any California Building Standards Code requirement that is not necessary to protect the health and safety of the building’s residents. If a building official issues a notice to correct to an ADU owner, they must also notify the owner of their right to request a delay in enforcement. The building official cannot approve a delay on or after January 1^st, 2030, and the program sunsets on January 1^st, 2040.

SB 13 defines its terms and makes other technical and conforming changes.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. California continues to face a housing affordability crisis, despite changes to state housing element law, incentives for infill development and high density developments, and other state laws intended to allow for the construction of new, affordable housing. Research by multiple groups has found that ADUs are a key strategy for increasing affordable housing stock. The Legislature has taken great strides in recent years to encourage the development of ADUs with the passage of SB 1069 and AB 2299 in 2016. However, some local governments continue to impose unreasonable constraints on ADUs, including artificially limited areas where ADUs are permitted, lot size standards that exclude most parcels within certain cities, development fees that are as high as those charged to new homes, and owner occupancy requirements that jeopardize the loans that property owners have used to finance construction of ADUs. SB 13 opens up new areas of cities and counties to ADU development by eliminating restrictive zoning requirements. It eliminates unnecessary developer fees that have minimal relation to the impact of the ADU on the community, and it ensures that ADU construction can be financed by prohibiting owner occupancy requirements. SB 13 continues the good work of the Legislature on enabling this important source of housing to reach its full potential.

2. Round four. Local governments are still working to comply with the sweeping changes to ADU law that the Legislature enacted in 2016. Before the ink was dry on SB 1069 and AB 2299, the Legislature made additional changes that set locals back further. The most recent changes have only been in force for just over a year. Last year, the Legislature considered, but did not adopt, more changes, leaving local governments on tenterhooks. SB 13 continues what has become an annual tradition of moving the goalposts on local ADU ordinances.

3. Fair’s fair. Local governments have seen their sources of revenue slashed by a series of propositions, while demand for public services has increased. As a result, cities and counties follow a simple principle: new developments should pay for the impacts that they have on the community and the burden they impose on public services. Developer fees pay for important public services, including schools, new infrastructure for water and wastewater, roads, transit, and parks. Accessory dwelling units can be as large as, or larger than, new multi-family housing units, which must pay full freight. But SB 13 prohibits all developer fees from being charged to ADUs. This raises several concerns:

• Developer fees must already meet stringent constitutional and statutory controls that: (1) require developer fees to bear a reasonable relationship to the impact of the new development, and (2) limit school fees to $3.69/square foot or, in some cases, up to only half of construction costs, as long as state bond funds for school construction are available. If additional controls are necessary, a more appropriate solution would be a comprehensive look at the Mitigation Fee Act, which governs developer fees. Fortunately, AB 879 (Grayson, 2017) directs HCD to study developer fees and report with recommendations for changes by June 30^th, 2019. SB 13’s prohibition may be premature.
• ADUs already receive preferential treatment relative to other development when it comes to utility connection fees. Under a deal struck in SB 1069, local governments may only impose connection fees on a subset of ADUs and limits those fees to the proportionate burden caused by the ADU. SB 13 undoes this deal after only three years by entirely prohibiting connection fees on any ADUs.
• Advocates for ADUs argue that they can rapidly be deployed at scale to make a meaningful contribution to housing supply. If this occurs, the cumulative impacts of new ADUs will put significant pressure on water systems, sewer systems, schools, and other public infrastructure. SB 13 would prevent local governments from charging the same fees as similarly sized single family homes, no matter how large the ADUs are and how they are used.
• Limiting impact fees could dampen other housing development as local governments look elsewhere to make up the losses in impact fees caused by SB 13. One readily available source is to increase developer fees on other new developments, which increases costs to builders of other types of housing. SB 13 privileges accessory dwelling units over other types of potentially more desirable housing, such as multi-family units near transit.
• SB 13 removes owner occupancy requirements and contains no affordability restrictions, allowing for-profit developers and landlords to make money off of them. Shouldn’t they be required to pay their fair share?

For the above reasons, the Committee may wish to consider amending SB 13 to strike the fee provisions from the bill and instead insert placeholder language on the intent to address unreasonable fee burdens once the AB 879 study is finalized.

4. Regulation by fiat. The APA establishes rulemaking procedures and standards for state agencies in California. The APA is designed to provide the public with a meaningful opportunity to participate in the adoption of state regulations and to ensure that regulations are clear, necessary, and legally valid. SB 13 borrows from language adopted in last year’s housing package to allow HCD to review local ADU ordinances for compliance with state laws without having to follow the APA when developing their guidelines for doing so. In essence, this allows HCD to adopt regulations without going through the state’s process for ensuring that the rules are fair and limits opportunities for comment by the public. As HCD’s regulatory authority over local land use expands, shouldn’t it be subject to the same rules that other state agencies have to follow? Furthermore, SB 13 allows HCD to supplement state ADU laws in their guidelines. It is unclear what additional regulations HCD would be allowed to impose under this provision. The Committee may wish to consider removing the ability for HCD to supplement ADU laws without going through a traditional rulemaking process.

5. Rewind. Recent amendments to SB 13 in the Senate Housing Committee inadvertently repealed a provision of ADU law that says sprinklers are only required in an ADU if they are required in the primary residence. The Committee may wish to consider amending SB 13 to return this provision to existing law.

6. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because SB 13 requires local governments to perform new activities related to land use regulation, Legislative Counsel says that it imposes a new state mandate. SB 13 states that if the Commission on State Mandates determines that the bill imposes a reimbursable mandate, reimbursement must be made pursuant to existing statutory provisions.

7. Incoming! The Senate Housing Committee approved SB 13 at its April 2^nd meeting on a vote of 10-0. The Senate Governance and Finance Committee is hearing SB 13 as the committee of second reference.

8. Related legislation. SB 13 is one of several ADU bills introduced in the Legislature this year. Another ADU bill, AB 68, contains additional restrictions on the zoning standards that local governments may apply to ADUs, allows owner-occupancy requirements that meet certain conditions, requires local governments to permit 800 square foot ADUs instead of up to 1,000 square feet, and adds a number of additional types of ADUs that are permitted notwithstanding other laws, including local ordinances. AB 68 is currently pending in the Assembly Housing and Community Development Committee.

Last year, the Legislature considered three ADU bills: SB 831 (Wieckowski), SB 1469 (Skinner), and AB 2890 (Ting). Those bills contained similar provisions to SB 13, plus many of the provisions included in AB 68. SB 831 was held in the Assembly Local Government Committee; SB 1469 was held in the Senate Appropriations Committee; and AB 2890 was held in the Senate Rules Committee.

Support and Opposition

(4/5/19)

Support: Bay Area Council; California Apartment Association; Eden Housing; LA-MAS; PrefabADU; Silicon Valley at Home (SV@Home); Terner Center for Housing Innovation at the University of California, Berkeley; 1 individual.

Opposition: American Planning Association, California Chapter.

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SENATE COMMITTEE ON HOUSING

Senator Scott Wiener, Chair

2019 - 2020 Regular

Bill No: SB 13 Hearing Date: 4/2/2019

SUBJECT: Accessory dwelling units

DIGEST: This bill makes a number of changes to law governing accessory dwelling units (ADUs).

ANALYSIS:

Existing law:

1. Provides that if a locality adopts an ADU ordinance in areas zoned for single-family or multifamily, it must do all of the following:
   1. Designate areas where ADUs may be permitted.
   2. Impose certain standards on ADUs such as parking and size requirements.
   3. Prohibit an ADU from exceeding the allowable density for the lot.
   4. Require ADUs to comply with certain requirements such as setbacks.
2. Requires ministerial approval of an ADU permit within 120 days.
3. Allows a locality to establish minimum and maximum unit sizes for both attached and detached ADUs.
4. Restricts the parking standards a locality may impose on an ADU.
5. Allows a local agency to require that an applicant be an owner-occupant or that the property be used for rentals of terms longer than 30 days.
6. Provides that an ADU shall not be considered by a local agency, special district, or water corporation to be a new residential use for purposes of calculating connection fees or capacity charges for utilities, including water and sewer service.
7. Requires a local agency to submit a copy of its ADU ordinance to HCD within 60 days of adopting it and authorizes HCD to review and comment on the ordinance.

This bill:

1. Removes the requirement for an ADU ordinance to apply only in single-family or multifamily zones.
2. Provides that when a garage, carport, or covered parking structure is demolished in conjunction with an ADU or converted into an ADU, a local agency shall not require that those off-street parking spaces be replaced.
3. Reduces the application approval timeframe to 60 days and provides that if a local agency has not acted upon the submitted application within 60 days, the application shall be deemed approved.
4. Removes the authority for a local ordinance to require an applicant for an ADU to be an owner occupant and prohibits a local agency from requiring owner occupancy as a condition for issuing a building permit for an ADU.
5. Provides that if a local agency has not adopted an ADU ordinance, an ADU application must be approved within 60 days. If it is not acted upon within that timeframe, the application shall be deemed approved.
6. Provides that a local ADU ordinance that establishes minimum or maximum ADU size must allow at least an 800-square-foot ADU.
7. Provides for a tiered schedule of impact fees based on the size of the ADU as follows:
   1. Zero fees for an ADU of less than 750 square feet
   2. 25% of impact fees for an ADU between 750-1,000 square feet
   3. 50% of impact fees for an ADU larger than 1,000 square feet
8. Revises the definition for when a local agency, special district, or water corporation may require a separate utility connection.
9. Requires HCD, after a local ADU ordinance is adopted, to submit findings to the local agency as to whether it complies with ADU law. If HCD finds it does not, HCD shall notify the local agency and may notify the Attorney General. The local agency shall consider HCD’s findings and may either change the ordinance to comply or make findings as to why the ordinance complies despite HCD’s findings.
10. Authorizes HCD to review, adopt, amend, or repeal guidelines to implement uniform standards and criteria that supplement or clarify the terms, references, and standards in ADU law.
11. Explicitly authorizes a local agency to count an ADU for purposes of identifying adequate sites for its housing element.
12. Requires a local agency notice of a violation of any building standard to an ADU owner to include a statement of the owner’s right to request a delay in enforcement. Requires a local agency, upon request of the owner, to delay enforcement for 10 years if correction is not necessary to protect health and safety.

COMMENTS

1. Purpose. The author states that California is in a severe housing crisis. The largest driver of this crisis is a lack of supply. One significant step toward increasing the supply of affordable housing is to build more ADUs. ADUs are inherently affordable; they cost less to build than a regular unit, are financed and managed by the homeowner, and require no public subsidy. However, a significant number of homeowners interested in building ADUs on their property are prevented from doing so due to prohibitively high impact fees and other barriers. This bill creates a tiered fee structure which charges ADUs based on their size, to take into consideration that the impact of an ADU on a neighborhood’s infrastructure and services is different from the impact created by single-family homes or multifamily buildings. This bill also addresses other barriers such as lowering the application approval timeframe, creating an avenue to get unpermitted ADUs up to code, and enhancing an enforcement mechanism allowing HCD to ensure that localities are following ADU statute. This bill is an important step in resolving the housing crisis by reducing excessive impact fees and other barriers to ADUs and allowing Californians to build affordable housing in their back yards.
2. What is an ADU? ADUs, also known as accessory apartments, accessory dwellings, mother-in-law units, or granny flats, are additional living spaces on single-family lots that have a separate kitchen, bathroom, and exterior access independent of the primary residence. These spaces can either be attached to, or detached from, the primary residence.
3. Relaxing ADU requirements. According to a UC Berkeley study, Yes in My Backyard: Mobilizing the Market for Secondary Units, second units are a means to accommodate future growth and encourage infill development in developed neighborhoods. Despite existing state law, which requires each city in the state to have a ministerial process for approving second units, the study found that local regulations often impede development. The study, which evaluated five adjacent cities in the East Bay, concluded that there is a substantial market of interested homeowners; cities could reduce parking requirements without contributing to parking issues; second units could accommodate future growth and affordable housing; and that scaling up second unit strategy could mean economic and fiscal benefits for cities. This bill relaxes several requirements to the construction and permitting of ADUs.
4. Trying again. This bill is similar to SB 831 (Wieckowski) of 2018, which died in the Assembly last year. Unlike SB 831, however, this bill does not: allow local agencies to designate areas where ADUs may be excluded for fire and life safety purposes; prohibit consideration of the square footage of a proposed ADU when calculating an allowable floor-to-area ratio for the lot; prohibit a setback requirement for an ADU conversion; or limit setback requirements to three feet for ADUs not converted from an existing structure. In addition, unlike SB 831, this bill provides for a tiered system of impact fees that may be imposed on ADUs.
5. Other ADU bills. Multiple ADU bills have been introduced again this year. The two bills that overlap most with this bill are AB 68 (Ting) and AB 881 (Bloom). A comparison of major provisions among the three bills is below.

1. Impact fees. Local governments can charge a variety of fees to a development. These fees, commonly known as impact or mitigation fees, go toward infrastructure development (such as adding lanes to roads or supporting additional traffic) or other public benefits (such as new parks, schools, or affordable housing). In the wake of the passage of Proposition 13 in 1978 and the loss of significant property tax revenue, local governments have also turned to development fees as a means to generate revenue. Given that California cities have tightly restricted funding sources, fees are one of the few ways cities can pay for the indirect costs of growth.

In 2016, the Legislature revised ADU law to reduce duplicative fees and reduce other barriers to the construction and approval of ADUs. As a result, ADU permit applications throughout the state have dramatically increased. A report by UC Berkeley’s Terner Center of Housing Innovation recently discovered, however, that development and school fees, as well as lot size requirements and code standards, continue to suppress the construction of ADUs. ADUs are often charged with the same impact fees that a new home would be subject to. These fees can range anywhere between $5,000 and $60,000 and would not be charged to a homeowner for simply building an additional bathroom or bedroom.

Existing law prohibits an ADU from being considered a residential use for purposes of calculating fees charged for new development. Fees were the subject of significant discussion in relation to last year’s ADU bills. This bill provides for a tiered structure of impact fees ranging from zero for an ADU of under 750 square feet, to 25% of impact fees for an ADU between 750-1,000 square feet, to 50% of impact fees for an ADU larger than 1,000 square feet. The author states that this tiered structure is based on that adopted by the City of Santa Rosa in its ADU ordinance, and notes that in addition, the City of Reedley has cut impact fees for ADUs by 50%, regardless of size.

To address committee concerns about ensuring that fees are not a barrier, the author will accept amendments to provide for zero fees for an ADU of under 750 square feet and 25% of impact fees for an ADU of 750 square feet or larger.

1. Size of ADUs. Existing law requires an ADU ordinance that provides for minimum and maximum ADU size, to allow for at least an efficiency unit. This bill increases that minimum to an 800 square foot unit. To address committee concerns about providing as much housing as possible, including for families, the author will accept amendments to instead provide for a minimum 850 square foot unit, or 1,000 square feet if the ADU includes more than one bedroom.
2. Zoning modification. This bill would require ministerial approval of ADUs on any lot that includes a proposed or existing single-family dwelling. Moving forward, the author may wish to consider amendments to clarify that ADUs must be located in zones that allow residential use, including mixed use.
3. Elimination of owner occupancy requirement. Existing law allows a local ordinance to require owner occupancy for either the primary dwelling or the ADU. Some jurisdictions have required the owner of the property to reside in the main home or in the ADU. The author has provided examples of lenders who have stated in writing that these covenants can preclude the lender from occupying the property if lenders must foreclose on the property. One letter states that if a property owner agrees to such a covenant, the owner could already be in violation of their deed of trust on the property and it “effectively transfers some of the rights from the property to the City, which could trigger a due on sale clause.” Thus, this bill would prohibit owner occupancy requirements.

The American Planning Association, California Chapter (APA), writing in opposition to this bill, raises a concern that eliminating the owner occupancy requirement altogether could potentially encourage institutional investors or speculators to purchase a home with an existing ADU, or purchase single-family homes without ADUs, at a premium with the intention of adding an ADU which would then be rented at any price the market will bear. APA notes that the city of Santa Rosa waives its owner occupancy requirement if the owner puts an affordability requirement on the ADU.

1. Amnesty. According to a 2016 report by McKinsey and Company entitled A Tool Kit to Close California’s Housing Gap: 3.5 Million Homes by 2025, one way to encourage homeowners to add ADUs is to create an amnesty path for ADUs that are not properly permitted. According to the report, as many as 8% of ADUs in San Francisco are illegal. The report concludes that legitimizing these units would boost building compliance and raise property tax revenue.

This bill creates a 10-year amnesty program for substandard ADUs. This bill grants an ADU owner with a non-compliant ADU a 10-year delay to make the necessary changes to bring the ADU up to code. The delay applies to changes that, in the judgement of the local building official, and in consultation with fire and code enforcement officials, is not necessary to protect the health and safety of the building residents.

1. HCD oversight. Existing law requires a local agency to submit its ADU ordinance to HCD for review and allows HCD to review and provide comments. This bill would strengthen oversight over local ADU ordinances by allowing HCD, after adoption of an ADU ordinance, to submit findings to the local agency as to whether the ordinance complies with ADU law. If HCD finds that the ordinance does not substantially comply, HCD shall notify the local agency and may notify the Attorney General.
2. Opposition concerns. APA, writing in opposition to this bill, notes a number of concerns, including; its elimination of replacement parking when there is a conversion of an existing structure such as a garage or carport; the authorization for guidelines to supplement standards in the law; and the lack of a definition of “substantially” in the provision requiring ADUs to be “substantially contained” within the existing dwelling or structure. APA also expresses an overall concern with implementing further changes to ADU statute even as many cities and counties are still implementing all the 2016 and 2017 changes.
3. Additional amendments. The author is also amending the bill to add a coauthor and to revise the definition of “accessory structure” to make it consistent with state building code.
4. Double-referral. This bill is double-referred to the Governance and Finance Committee.

Related Legislation:

AB 68 (Ting, 2019) — makes a number of changes to ADU law. This bill will be heard in the Assembly Housing Committee on April 3^rd.

AB 69 (Ting, 2019) — revises ADU law in relation to HCD determination of compliance of local ADU ordinances and requires HCD to propose building standards for ADUs and small homes. This bill will be heard in the Assembly Housing Committee on April 3^rd.

AB 587 (Friedman, 2019) — authorizes an ADU to be sold separately from the primary residence under certain conditions. This bill will be heard in the Assembly Housing Committee on March 27^th.

AB 881 (Bloom, 2019) — makes several changes to ADU law. This bill will be heard in the Assembly Housing Committee on April 3^rd.

AB 1074 (Diep, 2019) — authorizes, upon voter approval, the issuance of $500 million in general obligation bonds to finance an Accessory Dwelling Unit Construction Program under HCD.

SB 831 (Wieckowski, 2018) — would have made a number of changes to ADU law. This bill died in the Assembly Local Government Committee.

AB 2890 (Ting, 2018) — would have made a number of changes to ADU law. This bill died on the suspense file of the Senate Appropriations Committee.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

POSITIONS: (Communicated to the committee before noon on Wednesday,

March 27, 2019.)

SUPPORT:

California Chamber of Commerce

Eden Housing

PrefabADU

Silicon Valley at Home

OPPOSITION:

American Planning Association, California Chapter

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