AHEAD ADU Breakthroughs

from SF Apartment Magazine July 2023

by sfaa1917

on for

written by M. BRETT GLADSTONE, ESQ.

This article will update readers on changes in State Accessory Dwelling Unit laws since the time this column last analyzed ADU laws in the January 2023 issue of SF Apartment Magazine (sfaa.org/Magazine).

Since 2108, there has been a proliferation of ADUs statewide. A recent study confirmed that existing state ADU legislation has created marketfeasible potential to build close to 1.5 million new housing units. The Terner Center in Berkeley has stated that between 2018 and 2019, ADU permits increased from almost 6,000 to almost 16,000. During that same period, ADU completions more than tripled from 2,000 to almost 7,000. Part of this increase is due to the fact that California lawmakers have, during the last year, passed numerous pieces of legislation that have loosened restrictions on constructing ADUs.

The previous article mentioned above explained the basic rules for construction of ADUs on a lot with a rental apartment building (or a condominium building): (1) If 4 or fewer legal dwelling units are on the lot, one ADU within the building and one new detached ADU is allowed; and (2) If 5 or more legal dwelling units are on the lot, an unlimited number of ADUs is allowed. Even if a building contains 4 or fewer dwelling units on the lot, there is no limit on the number of ADUs allowed for a building if it is undergoing a Mandatory or Voluntary Seismic upgrade (under San Francisco

Administrative Bulletin 094). ADUs added to apartment buildings will often not be subject to rent control even though the apartment building to which they are added may be.

The San Francisco ADU program offers waivers, or administrative exceptions, to some of the Planning Code requirements when ADUs are added to existing buildings. However, when such waivers are obtained, the City will most often require that the ADU be subject to rent control indefinitely. While local apartment buildings built prior to a certain date are generally already subject to rent control, new dwellings added to lots with apartment building are not generally subject to rent control. Obtaining waivers from Planning Code requirements will, however, make a new ADU subject to rent control.

In San Francisco, most new ADUs in apartment buildings are built in storage areas, garages, and laundry rooms—but only when tenants do not currently have rights to use such spaces under their leases. To make these conversions more feasible, the San Francisco Department of Building Inspection and the San Francisco Fire Department have written building code “equivalencies” (exceptions) to address common issues that come up when adding units to an old building. These allow for alternate ways of addressing Building Code requirements in buildings where it would not be feasible to build new units under the letter of the current code because of existing non-conforming conditions. Use of the State Historic Building Code may also assist in obtaining equivalencies.

Recent State bills such as AB 68 and AB 881 removed many restrictions imposed by local agencies on ADUs. Below is a discussion of the most important changes brought by these laws that have made building an ADU simpler and more affordable. As one example, pre-existing laws permitted only one ADU per single-family lot. But under AB 68, municipalities are required to approve multiple ADUs attached to an existing multifamily structure and two detached ADUs.

If one wants to build an ADU, one no longer needs to live in the primary home or the ADU itself. This change will help landlords and investors build ADUs on their rental/investment properties. Under the new laws, the State no longer allows municipalities to set limitations for minimum lot size, ADU lot coverage, floor area ratio and similar restrictions.

Impact fees are fees imposed by local agencies that pay for the costs of providing public services (electricity, water, sewer, etc.) to a newly created unit. Under new legislation, ADUs that are up to 750 square feet in size are exempt from paying impact fees. For larger ADUs, the fees are proportional and calculated based on the footage of the ADU and the primary dwelling unit.

The local agency is now required to approve or deny an ADU permit application within sixty days after receiving it, which is much less than the time imposed by pre-existing laws. Recent legislation known as AB 2221, AB 916,

AB 561, and SB 897 benefit both owners of apartment buildings and single-family homes as follows:

Two-story ADUs will now be allowed for the first time, up to eighteen feet in height.

Front setbacks are no longer required for ADUs built under the State ADU program when such front setback will preclude construction of an ADU of a certain minimum size.

Currently, one can add an ADU to a pre-existing multi-family building, but one cannot add one to a proposed multifamily building. As a result, developers have had to complete their multi-family building project and then start ADU development once their original project is complete. An amendment to the law now makes it possible for builders to propose and build new ADUs in new multi-family housing concurrently.

Many cities currently prohibit homeowners from developing ADUs if there is unpermitted work on their property. This can include non-conforming zoning conditions, building code violations, or unpermitted structures. New law eliminates these restrictions unless the unpermitted work is deemed a safety or health concern.

The construction of an ADU currently triggers a Group R occupancy change to one’s property, triggering the need to install fire sprinklers in the primary dwelling. A new law eliminates the occupancy change, resulting in no mandatory fire sprinkler requirements in the primary dwelling.

Developers and apartment building owners are starting to add units to existing apartment buildings by building in open side yards and/or rear yards, and/or by adding a floor or two. While ADU law does not allow an owner to exceed an existing building’s height limit, this can be done through use of the fairly new State Density Bonus law (DBL). Similar to the ADU law, it also allows a greater number of units than allowed by existing zoning and allows units to be built in locations on a lot where San Francisco zoning laws typically forbid building, such as in rear yard open space. An apartment building owner wishing to add units beyond what the zoning allows should carefully weigh the advantages and disadvantages of the ADU and DBL programs. For example, an apartment building owner should keep in mind that while units created by the DBL program can be created as condominiums, ADU units cannot be (although tenancies in common are possible). Also, ADUs are limited in size, and in certain circumstances, new ADUs can be subject to rent control, which is not true of new units created under the DBL program.

The maximum density bonus under the DBL can be up to an additional 50% above the zoning’s base density (number of units allowed per lot). However, a developer should consider adding fewer than 50% more units if the number of affordable units triggered by additional DBL units makes the ratio of affordable units to market rate units too high. There is a delicate balance that will be different for each project.

Like ADU laws, the DBL program allows new units to be built in the required open rear yard. That is made feasible by use of a waiver request, and no longer the required formal variance application. Variances are traditionally difficult to obtain because they require a showing of several hard-to-show factors including a “hardship.”

On the other hand, grounds for denial of units created through the DBL program must be related to unusual public health and safety concerns.

Brett Gladstone Esq. is an attorney at Goldstein, Gellman, Melbostad, Harris and McSparran (G3MH). He and represents investors, developers, homeowners, and non-profits in land-use proceedings and CEQA compliance concerning residential and mixed-use developments throughout the Bay Area. This includes land subdivisions and condominium law. For the last 39 years, Brett has made regular appearances before Bay Area Planning Commissions, City Councils, Boards of Supervisors, and Historic Boards. Recently, Governor Newsom appointed Brett to the California Architects Board.