California’s Bonus ADU Program Allows Apartment Buildings in Backyards

In California, there is a trend now, a lot of people are building housing units in their backyards called ADUs because the housing costs are so much, a lot of younger people don't afford housing. So family members are building and investors are building. But San Diego, which was ranked one of the most expensive places in the country, comparing the housing costs to the income, now has a new program that allows a lot of ADUs, if some of them are affordable, in one lot. In some cases, over 100 units in one lot. Our guests today are Dana Givitt and Jeff Huber, who are San Diego residents that have been following this closely. They're here to tell us how this bonus ADU program works and the impacts of it on the community. We also have Dennis Robinson, who's an ADU developer. He's gonna tell us his perspective on what's happening there and across the state. I'm Siamak Korami, welcome to California Insider. Dana, Jeff, great to have you on, welcome. Thank you. There's something going on in San Diego. You guys are seeing a lot of ADUs getting developed, but these are not the ADUs like single and multiple ones. In late 2020, during the pandemic, the city passed what they called the bonus ADU program, which instead of just allowing one or two ADUs, you know, with a so-called granny flats or general density, they said you can build as many ADUs as you can fit on your lot. And so it's gone from the initial projects of three or four ADUs to five ADUs to 10 ADUs, 20, 30, 40, and now we're up to over 180 ADUs being proposed on a single project. And I think everybody can agree that that doesn't really fit what everybody thinks about when they think about so-called granny flats. So how do they work? Like 180 ADUs, does the land have to be really big? Is it going up tall? It mostly works by, you get, there's something called a floor area ratio. And one of the things that really makes it hard for the public to understand and react to is there's a lot of technical jargon. So there's something called a floor area ratio, which says that if you have a typical single family parcel that you're allowed 60% of the area of the lot can be turned in, can be allocated to ADUs. And so you start doing these spreadsheet types formulas that if you have a two or three acre lot that you can get up to 180 ADUs. On a typical lot in a city that might be five, 6,000 square feet, your typical sort of 50 wide by 100 feet deep, a typical neighborhood lot, you can still get four or five ADUs on that property. And right now the city law says that you can build them 30 feet high. They can be three stories high and they can go, depending on how tall they are, they can go all the way to the side yard lot line and the rear yard lot line right up to your neighbors. Or if they're above 16 feet or one story, they can only be set back by four feet and you can have neighbors' ADUs peering into your backyard up to three stories high. We have unlimited density, not the gentle density that people were promised, but unlimited bonus ADUs that are no longer granny flats instead what you have are literally apartment complexes in the backyards of single family homes. How big is each unit? So it's very variable, right? The minimum size can be 150 square feet and they can go up to 1,200 square feet. So one of the things that makes it unpredictable is if you have 3,000 square feet of development that can either be 20 ADUs or 150 square feet or it could be three units that are 1,000 square feet. And so it's just kind of all over the map, but the typical size is about 450 square feet. And the reason that's a sweet spot is because you get the most amount of units that somebody usually is willing to rent, which is a studio apartment. And the fees are structured in a certain way to make that attractive. The state law requires that you do something to incentivize the building of affordable ADUs. It doesn't say they have to be deed restricted. It doesn't say how you have to do this. So most cities, and now it's state law, require that you have to produce pre-approved plans for the ADUs. So now everybody in California is producing these pre-approved plans. But in addition to that, they want you to do other things. So many cities are promoting low-interest loans. They're providing one-stop shops where they'll help you expedite the production of your ADUs. They're helping to guide you through the process. But as far as we know, over the last four and a half years, no one is giving you bonus ADUs. The way the project and the policy works in San Diego is if you produce a deed-restricted ADU, and they're calling it an affordable ADU, then you get a bonus ADU. So it's a pair, generally. And so if you produce an ADU that is deed-restricted at 110% of the area median income, right now in San Diego, for a family of four, that is $130,800 a year, then you get a market rate ADU for which you can charge whatever rent you want. And so they build them in pairs. And right now, the biggest project is somewhere between 116 and 126 ADUs. On one lot? On one lot. And what's the process to get this approved? It's a ministerial process. And by that, I mean they submit it to the Development Services Department, and the neighbors don't have to be made aware of it. The plans don't have to be made public. You can, the public, when they hear about it, which is generally when some kind of offense goes up around the property, the public can go in and make an appointment for 30 minutes to go in and take a look at the plan through a Plexiglas window. They can't take any pictures. They can't say no. They have no vote. They have no voice. It doesn't go through the community planning groups. The community has nothing to say about it. The project just proceeds, assuming that it meets the criteria that are established by the city. What about parking? Because a lot of people have told us parking is an issue with ADUs in general, but these are essentially a lot of them in one lot. So currently, there's no requirement to provide parking for a single unit. So basically, and it's been sold on the idea that these are being located near public transit, and therefore, the residents won't need cars. But in San Diego, you can build as far away as a mile away from a transit line, and it doesn't even have to be an existing transit line. It can be some future imagined transit line. And as we always say, it's one thing to ask somebody to walk a mile to a bus. It's another thing to ask them to wait 20 years for the bus to arrive. By now, you should know that we are part of the Epoch Times newspaper. Having this paper associated with us, we are able to get story ideas and a lot of sources. Now, this week's paper had one amazing story about what's happening with the Tijuana sewage crisis. We actually have been covering this crisis on the show. Now we are hearing that the sewage is actually going airborne, and miles and miles away into the San Diego coast, up to even La Jolla. There's also another story that's fascinating in the paper. It's about equitable grading. Remember, California Insider, we covered equitable grading from all perspectives, from the parents to the teachers, the people that actually created equity grading program, and superintendents of schools who implemented it. Now, San Francisco just rejected the equity grading method for the school district, and the paper has the story in it. We have a special deal for you. You can subscribe for a dollar a week for the digital edition. You can also get the print. You will be surprised by the quality of journalism that goes into this paper. Now let's go back to the interview. When you're putting these many units inside of a street, so let's say some that have 10 units, what about the water and the infrastructure side of things? Well, the problem is that San Diego's doing nothing to upgrade the infrastructure. The units aren't paying for any infrastructure upgrades because the city's not charging any kind of development impact fees or community enhancement fees. They're considering that now. There are 24 homes on both sides of my street, and the state requires that the city allow a total of 96 additional total units on that with the three additional units on each one. Two years ago, the city replaced the 80-year-old pipes on my street, water and sewer. They replaced them with exactly the same size pipes that they took out. So there was no accommodating infrastructure for the growth they want to put in the backyards. I think the arguments that are always made is, you know, if we let all this development happen, then we'll get more property tax revenue, and then maybe we'll have revenue for infrastructure upgrades and parks, but frankly, we never see those upgrades happening. Now let's go to Dennis Robinson. He's an ADU builder in the LA and Orange County area. He has a different perspective. I do develop ADUs, although my market isn't San Diego. Orange County and Los Angeles, they don't allow that kind of numbers. However, I do have friends that are in the area. I have developer friends, builder friends, you know, and then just people that live in the neighborhood. So I get a little bit of perspective from each of them. So I'm very split internally on all of that. Yes, obviously everybody knows California needs housing. We're out of land to just build, so it has to come somewhere. On the other hand, you know, taking over full streets, neighborhoods may not be the best situation for people living on that street, you know, but again, we gotta have housing. So a lot of different thoughts go into it. Personally, as far as where I've focused my business is responsible building, and so seeing 10 to 12 just in the middle of a neighborhood is kind of against what I personally believe in or focus on. People have to live. I mean, there's nowhere to live. A lot of my customers start because their children can't afford a house. They can't even afford rent, but they could afford a payment on a loan to build an ADU. It's a lot cheaper. They already own the land. You know, they're increasing their property value by doing it there. It's kind of a win-win situation for everybody. In recent times, because of the way that they've tweaked the SB9 law, we're able to build two or three ADUs on properties locally, Orange County and Los Angeles, in my market. Which is the normal California law, right? That is correct, yeah, for SB9. Now, I am currently a part of about four different projects that they're building two ADUs on their properties, and in those ones, I don't think it's gonna negatively affect the neighborhood. First of all, two of them, they're already in very close proximity to large apartment buildings. It's a larger lot. We're able to, we added a little driveway. We did the things that we could do, but realistically, there's already cars in the parking lot from the neighboring apartment buildings. And the other two, they're just two small one-bedroom ADUs, 450 square feet on the bottom, 450 square feet on the top. The homeowner, they still plan on living there. Maybe short-term, I'm not exactly sure. But they're gonna rent out those two units, and it's gonna more than pay their mortgage. So those, I stand behind. I do think there possibly should either be a limit or maybe certain zones, as opposed to San Diego saying anywhere in San Diego, if that is the case. But I definitely think something has to happen because although ADUs obviously are extremely popular, doing one or two at a time isn't really gonna solve any real problems, in my opinion. You mentioned you're focused on responsible building. How do you go about that? If your neighborhood is already in an area that has a lot of cars on there, we can put a few more on. It's not gonna negatively impact the neighborhood. If we're in a very small cul-de-sac area, we're gonna do our best to try to get parking on their property. It's a little difficult, and I had mentioned it before, but I think the cities need to do a better job to allow homeowners to put more parking on their property. To bring the cars inside, right by the ADUs. Yeah, they're very restrictive as far as what they allow. I understand we can't just pave full front yards and just let 12 cars be on their front yard, but what me and my homeowners are asking, let's widen our driveway a little bit and let us fit two. One or two cars. From what I'm seeing, when it's a parent and their child and maybe their wife are moving in, a lot of them only have one car that they share between them. So that may not even make an impact on the neighborhood to begin with, just one car, but having one extra space probably wouldn't negatively affect the aesthetics of having a little eight foot or nine foot wider driveway. So I think that's something that the city can do that would mitigate a lot of the people's complaints saying it's gonna cause all this parking. Well, work with us. Let us figure it out. The other thing they say is about the infrastructure. I hear that a lot. All these houses and the water and the pipes. Yeah, water, sewer. We all pay a lot of money in property taxes. Like, fix the sewers if that's a problem. I'm not the expert on it, but so far what I've seen is it's not negatively impacting it. And the cities that are trying to add, they are upgrading all their systems. So you'll see giant trenches and they're upgrading what they have to do because they're making an effort to add it. So I know it's possible. People can do, you said, two to three if they have the space? It's very, very simple now to do two to three additional on your property. You can't just build like three 1,500 square foot on your land, but in general, you could build one larger size and then a couple like smaller ADU style. But that's if you have a big property. A normal size property, 7,500 square feet, 7,000 square feet, adding two, two bedroom, two bath units is a pretty common thing now. In order to do so, we can get it passed. It's not easy and quick to get passed through the cities. They take about six, seven months now, but we get them passed. And the amount of rent that these homeowners are collecting from adding that is, you know, it's just so great for the families. In my experience, they're charging less rent because they're looking for good quality tenants as opposed to who's paying the highest amount. So in my personal experience, those homeowners are the ones that are lowering rent prices. Who are the type of people that are building these ADUs now? A lot of my clients are homeowners, either looking for their children or their parents to live on their property because they can't afford rent or to purchase their own house at the current time, or it just makes more financial sense, or they want them closer. I have been on this television show twice before. I've had several of your viewers reach out to me saying we saw you on California Insider. We really like that you guys are focused on responsible building. You know, we're aligned in very similar ways. So I did want to thank you for that, aligning me with customers that I prefer to deal with, you know, that we have the same sort of values. We can kind of design things with the same things in mind. So I did want to offer some sort of incentive to some of your viewers that if they did reach out and wanted to get a consultation, I do have some special incentives for them. And thank you for that. The San Diego residents that we interviewed are concerned about this program, the bonus ADU program, that people are building so many, and one of their concerns they have that this is gonna be a statewide. What are your thoughts on that? It's a very, very real concern. I think that just like even at the smaller scale of being able to add two or three to certain neighborhoods, I think it should be very selective when you get beyond that. Adding 10, 12, personally, I believe could be destructive in certain areas, but I do think it's needed. Some of my first thoughts when I see the photos of that is as a developer, all the neighboring houses, yes, I know it's very unfortunate, you know, for the people that live in those houses, but as a developer, my first thought is their property probably just doubled in value because other developers can see, you know, the potential of what's allowed. So that is one side of it. But again, I think it goes back to just responsible building. You know, I'm not too much into the regulation of cities telling me you can do this or you can do that, but if they're gonna allow it to get to a certain extent, I think zones and very specific zones could be very helpful to that and say you're allowed to do it, but you're gonna be here and it can't just be the entire state. So that's my opinion on it. Now we go back to Dana and Jeff to hear more of what's happening on the ground in San Diego. What are your concerns about these developments? These developments are too big for where they want to put them. We are very willing to accept four units on a single family lot. Four units is consistent with what HUD, the Federal Housing and Urban Development Department, defines as a single family lot. That would be the house, two state mandated ADUs and one bonus city ADU, which could be deed restricted. That would be gentle density. That's what the state talks about, gentle density for us to absorb. We have about a half a million single family lots in San Diego. That would fulfill our RHNA requirements. We would meet what we have to provide for the state. We're willing to accept that. And the bonus ADU program can live on in the multifamily zones. And San Diego can continue to produce the housing that it needs for the residents. But right now, what we're seeing is the affordable homes, the smaller homes, the starter homes are being bought up by developers. They're paying more than market rate. They're coming in, they're outbidding the would-be homeowners, and they're driving up the price of single family homes. And then they're building these 20, 10, 20 unit apartment complexes. Those starter homes are taken off the market. They will never be for sale units anytime soon. And the market is just disappearing for those people. And I think the other part of it is, we're not asking the question of what kind of housing do we wanna be building where, right? We just say, we have a housing crisis. We need as many units as possible, no matter where they are. So let's put extremely dense 450 square foot studios in the middle of automobile-dependent residential neighborhoods, as opposed to taking a step back and saying, what's the biggest need we have in San Diego? And there was a study that was done by a consultant called London Motor, who does a lot of work for the city as part of their community plan updates. And they said, look, what we really need is we need family-sized housing. We need two, three bedroom apartments because what's happening today is, we're flooding the market with all these 450 square foot, one bedroom studio apartments. Now, those single people say, I wanna form a family and they look around, there's no place for them to live. And so that's really where we're losing population. And the thing they emphasize is, we shouldn't just be asking for how many units we need, we should be asking what type of units we need. And our way of thinking, and we've gone through it, where we live in single family neighborhoods and we've got that generational wealth and we've got the environment that's conducive to raising families, this should really be a family-oriented program. And the way they've structured the fees, the way they've given them the incentives, even something, we talk a lot about the regional housing needs allocation, and it's just total units, but not what type of units. And I think our position would be that we're just trying to get people to think about putting the family back in single family neighborhoods. You guys brought some photos for us to see what these look like, can you show us? Yeah, I think because it's hard to visualize sometimes, we did bring a couple of photos. So this looks like it's two stories, 10 units, right? In just somebody's backyard. Yeah, there's 10 units. There's also another ADU in the house. So altogether there's 11 ADUs plus the house. So 12 units where there used to be one. It's on a cul-de-sac in a very high fire hazard severity zone. And there's supposed to be a 20 foot road access, 20 feet wide for a fire truck to come. We've actually measured this one with two cars parked on either side. There's actually only 16 feet and nine inches for a fire truck to get in there. So it's a very dangerous situation and we're trying to get the code changed so that this would not be allowed in the future. And you have another one you brought us, right? Yes, that one's even bigger. That one sits on a canyon. And this is again, two stories. This is like 16, right? That's 16. There's a 17th unit you can't see in front of it plus the house. So there's 18 units. It's on a canyon under a San Diego Gas and Electric line easement. And once again, totally legal. People didn't know it was being built until somebody put a fence around it. Yeah, and then again- And this is essentially more than the number of homes that are probably on this street, right? Yes. So yeah, they've probably virtually doubled the number of homes on the street. And that's a big part of this with the fires that we saw in Southern California. And in fact, even in the neighborhood I live in, there's requirements that people haven't been paying attention to in terms of the evacuation routes, evacuation planning, just something like how far apart are your fire hydrants has a different requirement in a multifamily zone versus a single family zone. And it gets back to the infrastructure consideration and what does it mean to be multifamily housing that none of these things are really being considered with these projects. They just say, it's great to have all this housing. You know, you've got 18 units there. Is that 18 times three, which is 54 trash cans that are gonna be out on trash day. You know, we're not thinking of that. The fire gap, you know, we saw the pictures in LA where people had to bring forklifts in and throw cars out of the way in order to serve a fire. You know, these things are real considerations that people just aren't thinking about. And, you know, are you supposed to have an onsite manager? You know, are you supposed to have offsite trash location? There's a bunch of requirements that we have for multifamily housing that are just being ignored here. And it gets back to that same question of, well, either we're requiring too much of our multifamily housing, or there's things here that we should be requiring that we're just not requiring. Well, California state law says that if you have 16 units or more in an apartment building, you have to have an onsite manager. There are gonna be 18 units on that last project we showed you. But because they're ADUs, accessory dwelling units, they're not apartments, there is no onsite manager required. The one that's gonna have 116 or 126 units, they're ADUs, they're not apartments. So legally, they wouldn't be covered by the law that says, if you have more than 16 or more apartments, you need an apartment manager. That one's designed with a built-in swimming pool, barbecues, but do they need an onsite manager? Not under the current law. These projects are skirting all sorts of multifamily zoning laws because they're being built in single family zones. There's a problem. There's a problem when apartment complexes are being built in single family zones, not in multifamily zones. And this is a San Diego City law. It doesn't include the county, right? This is a city ordinance, right? Yeah, just the San Diego City, the larger county adheres to the state regulations. And one thing to point out to people statewide is we have a department called Housing and Community Development. And last year, they decided that everybody was entitled to a second ADU on their property. So if you think about the 7 million homes in all of California, by fiat, they added the capacity to build 7 million more ADUs. And that's so much more than we need just to meet our RENA numbers. We don't need to keep amplifying and amplifying it. A lot of solving, addressing our housing needs is about hitting singles and doubles as opposed to trying to solve the whole housing crisis on a single lot. And that's the whole concept of what's called missing middle housing. And infill housing is that you build new structures that are compatible with the existing neighborhood. It's just trying to blow up the scale of individual developments and getting these things that are vastly out of scale. Have you guys talked to your city council members about this? So we spent a lot of time trying to talk to the city council. We show up at public meetings where they're considering changes to the ADU laws. And in fact, we're in the middle of something right now. So as a response to certain neighborhoods being over-targeted with bonus ADU projects, particularly lower income neighborhoods that have been typically had less investment in terms of infrastructure and parks. So that finally awakened the city council to realize that this was a real issue. And the city council started a process to make some changes. It first went to the planning commission and they recommended some changes. Then it went to what we call our land use and housing committee a few weeks ago. And then they sort of punted it to the full council because this is the kind of thing that they know is highly unpopular and nobody wants to take a vote until they have to. And as of coming up on June 16, the full city council is gonna be considering some changes. Now, the problem is, is we're going from something that's horrible and the changes are just bad. What would the changes do? Well, instead of allowing, so the 180 new projects, you wouldn't be able to build more than say 10 to 15, but that seems like a restriction, but 10 to 15 units, that's an apartment building going in next to you. So it still hasn't addressed the underlying issue of just what's the right scale for these. And I think one of the things that's important is we don't oppose ADUs. We have a lot of our supporters actually have ADUs, whether it's a new unit installed in their backyard or a converted a garage or something converted in their house. We have a lot of our supporters do that. We've had somebody on our board who was an actual ADU developer of these single homeowner driven projects. And again, 98% of all the projects, the creation of ADUs are within projects that we think are of appropriate scale. And so the city has put a lot of political capital into these outlying projects with what we consider to be a limited benefit. I mean, basically it's not near transit, so we're not addressing climate change. The rents that they're charging are effectively above market rate in a lot of parts of the city. So if we're just building market rate housing anywhere, that should be done under a little more consideration of existing conditions in neighborhoods as opposed to somehow being something that should have no regulation whatsoever. The other thing I wanted to say is those studies we were referring to and the city council and the mayor, they refer to these bonus ADU projects as missing middle housing. But if you investigate missing middle housing and Optikos and Daniel Parolek, who's the gentleman that coined the terms missing middle, those projects are supposed to fit literally seamlessly into the neighborhoods. So when you think about the projects we showed you, those obviously don't fit seamlessly into the neighborhood. You're not supposed to be able to look at one of these missing middle projects and know whether there is one house there or whether there are four homes there that are under one roof. That's not what the bonus ADU program is. It is apartment complexes and backyards. They are not missing middle projects. They're supposed to be similar in size, scale, scope, and footprint to a single family home. And that is not what the bonus ADU program is. Jeff, do you think this is something that people may wanna push it across the state? I think there's been, so San Diego has been a big bellwether for this program. And I think people statewide are hoping that the backlash that we've seen in San Diego can be sort of tamped down so that they can then start to promote this as a statewide initiative. I just don't see where that's really gonna happen. A lot of people look at- Because there's a lot of backlash in San Diego. I think at this point people realize that what they're getting in return, and here's a way to think about it. We tear down more homes in San Diego every year, existing apartments, than we build as bonus ADUs in San Diego, right? What we're really getting from this specific program as opposed to the thousands and thousands of ADUs that get built without the program is a pretty marginal return. And like I said, it's a lot of political capital is at stake on something that isn't a significant return. Particularly if people would start thinking about saying, what is it that we're really trying to do? Are we trying to create family housing? Are we trying to create for-sale opportunities? And just the fact that we have this bonus ADU program meant that San Diego is derailed on considering for-sale ADUs. Because if you don't follow state rules, then when the state changes and goes a certain path, then you've deviated and your code is hard to align with other state initiatives. We have something else going on. I think that's kind of a bellwether for what might happen with trying to go statewide with the bonus ADU program. There's something called SB-79, which would allow up to 65 feet and a half mile away as a crow flies from any transit stop. And if that goes through, then obviously people haven't awoken yet enough to realize that they should be opposing this. But if that gets shut down, I think it kind of tells you where the trend is in terms of public awareness of the acceptability of these programs. There's a certain amount where homeowners have been made to be the scapegoats of a lot of other statewide housing issues, whether it's a construction defect litigation, which makes it so you can't build condos, whether it's project labor agreements would drive up the cost of housing. And the RAND Institute just did a study on the cost of housing, and it costs four times as much to build an affordable unit in California as it does to build a market rate unit in Texas. And they smartly point out that we're getting four times less housing for our public housing dollars than we could be getting if we did that more efficiently. So there's all these hidden costs that are being put in just permitting times. The big thing that Turner Center focused on is they said, well, because I just go down to the development services, the building department, and I say, I would like a permit for this project, and they go, okay, that takes 30 days, right? And it might take you for the same project to be built in a multifamily zone, it might take 22 months. And time is money, and we have sympathy for developers. We're not trying to drive up the cost of development. We're just trying to make sure it gets done in the places where it makes the most sense. What we found is very interesting about what we do is we have no financial incentive in this. We're people who just see what the city's doing from a planning standpoint, and we think they could be doing a lot better. And I think it provides an interesting dynamic because people even ask us, sort of how are you guys getting paid? We can advocate for what makes the most sense, and as opposed to saying, well, I'm a paid transit consultant, or I'm a paid housing consultant, or I'm an affordable housing builder. You know, everybody's got a certain financial, and we don't, right? And that- We're just volunteers. We do this because we think it's the right thing to do for San Diego's neighbors and residents. Dana Givitt and Jeff Huder, with Neighbors for Better San Diego, it was great to have you on California Insider. Great to be here. Thank you for having us. We appreciate you covering this important issue. What do you think of the bonus ADU program in San Diego? Do you think it's excessive, or do you think it's necessary? You can always email me at siamak.californiansider.com, or comment. We read all of your emails and comments. I'm Siamak Khorrami, this is California Insider, and we'll see you next time.