San Jose: Mayor proposes new ADU program to boost housing

To boost San Jose’s supply of affordable housing, Mayor Sam
Liccardo wants to reward homeowners who are willing to build and
rent accessory dwelling units to low-income people.

In a new memo, Liccardo proposed creating a new program to offer
forgivable loans and waive fees for residents willing to construct
and lease accessory dwelling units — also known as ADUs or granny
flats — to low- and moderate-income renters for at least five
years.

“We need to do more to take advantage of the untapped
potential for adding compatible housing within our dispersed,
sprawling neighborhoods,” Liccardo wrote. “We are hearing,
however, that construction costs and financing may deter many
homeowners, and city fees are not an insignificant barrier
either.”

Several years ago, the mayor laid out a goal to build 25,000
homes, including 10,000 affordable homes, by 2022. But the city has

struggled to get affordable homes
built. And while San Jose is
set to devote around $100 million to about a dozen
affordable housing projects
that will add more than 1,000 units
across the city in the next few years, voters in 2018 rejected a
housing bond that would have directed more funding toward
addressing the city’s housing crisis.

Encouraging more people to build granny flats or convert their
garages into housing are lower cost and faster ways to tackle the
issue.

In the memo, Liccardo suggests devoting up to $5 million to the
program and having a partner like the Housing Trust Silicon Valley
manage it. Residents, he suggested, could get up to $20,000 to
cover permit fees and construction costs, with a portion of the
loan forgiven on an annual basis in exchange for five years of rent
restrictions. People wouldn’t be allowed to put units on Airbnb
or similar sites during that time, either.

“There’s definitely a gap of financing out there,” said
Vianey Nava, who manages the ADU program at the Housing Trust.

And addressing that gap, Nava said, will help more people who
are interested in putting a granny flat in their backyard actually
get one built. More than 100,000 homeowners in San Jose are
eligible to build ADUs, but last year, Nava said, few were
completed. After San Jose relaxed rules around ADUs in 2018 —
reducing lot size requirements and allowing two-bedroom granny
flats — interest climbed, Nava said.

“All these small things, they’re all tying together,” Nava
said of last year’s changes and the mayor’s new memo. “Now
people feel a little bit more confident about investing in the
process.”

The mayor’s memo could come before the City Council as early
as June, but even if it is approved, it would likely be months
before such a program is up and running.

Liccardo said he wants the city to consider expanding the
program using private funds in the future, and to work with
organizations like the Silicon Valley Leadership Group to explore
the possibility of putting together a short list of ADU
manufacturers who can offer all-inclusive packages, with the aim
being to “rapidly scale” production.

While they may be known as granny flats, and plenty of people
build them for aging parents or grandparents, San Jose residents
are also building ADUs for boomerang children and disabled family
members who may be ready to move out, but not far away, Nava
said.

Related Articles

Carl Guardino, the head of the Silicon Valley Leadership Group,
said he has an ADU on his own property that is currently occupied
by a young couple “trying to afford the Bay Area.” Before that,
an elderly woman lived in the unit before moving into an assisted
living facility.

“I think we’re going to see much greater interest in San
Jose and beyond for a thoughtful ADU effort than we might even
imagine,” Guardino said. “People are concerned about the crisis
and they’re looking for a new approach to helping solve the
crisis. And accessory dwelling units are going to be part of that
solution if we do it in a thoughtful, coordinated way.”

Source: FS – All – Real Estate News 1
San Jose: Mayor proposes new ADU program to boost housing