San Jose relies on ADUs to meet housing goals
San Jose is behind on its 2017 pledge to build 25,000 new housing units, including 10,000 affordable, by 2022.
Now, officials are looking for solutions to the deficit and hope to revive the construction of accessory housing units (ADU).
To meet its goal of 25,000 new units in five years, the city needed to build around 5,000 units per year. Instead, there have been on average just over 2,400 new housing permits each year since 2017.
The city is expected to more than double its annual permit and home construction approval rate to meet its target next year.
Many San Jose leaders believe that backyard homes can help address this shortfall. A new pilot program aims to facilitate the construction process.
It’s just a matter of building these units, executives say. But the costs are still borne by homeowners despite the easing of permit restrictions in recent years.
In an attempt to address this hurdle, San Jose this week announced it is launching a program to provide 0% interest short-term loans to enable and build UDAs in the city. The program is a collaboration between the city, builder Prefab ADU and private investment firm 29th Street Capital.
The loan would cover 100% of the permit and construction costs. Backyard homes average $ 150,000 for a renovation to $ 250,000 for custom work.
The program is in a pilot phase, so only 20-30 eligible applicants will receive the loan. From there, the city and its partners will monitor and refine the program as it unfolds. The hope, according to city officials, is to expand the program as quickly as possible.
After the initial start-up loan, 29th Street Capital will help homeowners find longer term financing to complete the project.
“It’s no secret, like many suburban towns in the western United States, we are largely single-family homes,” said Mayor Sam Liccardo. “And since this is the nature of the majority of our plots, it is essential to be able to densify and support more residents on these single-family plots to face our affordable housing crisis and our challenges in terms of housing construction. affordable.
In coordination with the pilot program, PrefabADU announced its goal of building 200 affordable garden houses over the next year. The company is one of seven pre-approved builders with floor plans who don’t have to go through the city’s master plan approval process.
Officials struggled to figure out how to encourage the development of ADU. In 2019, San Jose City Council considered a $ 5 million loan program to cover the costs of permits and fees, but abandoned the plan after housing officials said it may not be. not enough to entice owners.
One of the goals to facilitate the construction of an ADU, according to city officials, is to help increase the stock of affordable housing.
The current market
An informal analysis from the San Jose Planning Department in October 2019 showed a total of 23 ADUs for rent in South Bay on Craigslist. The rent for these units was, on average, just over $ 1,800 per month.
A follow-up analysis by San José Spotlight examined more than 50 listings available on Craigslist in Santa Clara County in March. Data shows that the average rent for an ADU in Santa Clara County is around $ 1,900; the average size is around 460 square feet. The average rent in San Jose, where there were 20 listings, was just under about $ 1,700 per unit.
The average rent for a two-bedroom apartment in San Jose is just over $ 2,300, according to a city report. The city says renters have to earn $ 50 an hour ($ 103,560 per year) to afford it.
“(ADUs are) a piece of the puzzle with others… and that piece seems to be working well,” Mathew Reed, Policy Officer at Silicon [email protected], said San José Spotlight, “and has real potential to have a continuing and lasting impact.”
Last year, the city received more than 600 applications for permits to build ADUs, which allows homeowners to build smaller single-family homes on their property. ADUs represent one-third of all new housing construction in San Jose, Liccardo said.
“It’s a proven solution, a critical solution,” Liccardo said.
The city is set to receive around 1,000 applications to build ADUs by the end of the year.
Even though ADU programs require the owner’s time, space and money, it doesn’t necessarily shift the responsibility of building housing from the city to private residents, Reed said.
“It’s a market response to the new opportunities created by the changes in the law,” Reed said.
Ultimately, the city is learning from the owners and meeting the challenges they face, he added.
“To the city’s credit, they’ve worked continuously over the past two years to make this easier, more accessible, more visible and (they) streamline it,” Reed said. “This (loan program) is another piece that aims to remove some of the barriers.”
To find out more about the program, contact the city’s planning department.
Contact Madelyn Reese at [email protected] or follow @MadelynGReese on Twitter.