ADUs for me and you

Whether you agree with Bernie Sanders that Apple “helped create the housing crisis,” or with Forbes columnist Roger Valdez that...

Whether you agree with Bernie Sanders that Apple “helped create the housing crisis,” or with Forbes columnist Roger Valdez that San Francisco “doesn’t have a housing crisis, it has a governance crisis,” there’s no getting around the fact that the Bay Area’s housing…issues are rightly at the forefront of everyone’s consciousness. For myriad reasons, there simply isn’t enough housing for our growing population.

Now, help is on the way. But how much help?

Without boring you (or me) too much with the fine print, Senate Bill 13, a bill sponsored by state Sen. Bob Wieckowski (D-Fremont) and signed by Gov. Gavin Newsom on Oct. 9, seeks to streamline and ease the financial burden of the process of approving and building accessory dwelling units (ADUs), those rental spaces known alternately as “in-laws,” “granny flats,” “guesthouses,” and, locally, as “illegal units.” The thinking here is that one-off units can release a little steam on the housing teapot while we figure out what to do about the large-scale development that could make an actual dent in the shortage.

Here in San Francisco, local politicians have already taken steps to address what has frankly been a historically complicated relationship with ADUs. Once The City and proximate region’s dirty little secret (“Lock the basement door! The inspector’s coming!”), ADUs are now seen as an important tool for easing housing congestion, so much so that mayors Ed Lee and London Breed issued executive directives in successive years aimed at making it easier to build them.

The most recent directive, issued July 30, 2018, sought to expedite a backlog of some 900 permit applications first by simplifying the permit process. It has, in the year since, been quite successful. More than 400 of the backlogged applications have been processed. Recently proposed legislation, which would eliminate permitting fees for ADUs and 100 percent affordable housing projects, should further incentivize prospective ADU builders.

But is it enough — enough incentive and enough new units — to actually mean something?

Let’s start with the easy question: efficacy. In a city with a housing shortage that leads mayors to pledge to build 30,000 new units in six years, as Lee did in 2014, are a few hundred backyard ADUs going to make a real impact? Certainly there’s no downside to adding some new units (save for issues of residential zoning), but in a comprehensive housing solution package, streamlining the ADU permitting process should be a footnote, not a centerpiece.

As for incentives, the thinking here is that waiving permitting and/or impact fees (which are no joke and can range into six figures) and making the process easier will encourage would-be mini-developers to leap into action, thus adding rental units and savingThe City.

But is that enough? What about long-term financial incentives? So far, according to the mayor’s office, “more than 90 percent of the 377 ADUs permitted to date will be rent-controlled.” Any unit built within an already rent-controlled building will be rent controlled. What does this mean for single-family rental homes, which are not not subjected to rent control, that become multi-unit buildings — which are? Rent control is an effective tool for ensuring affordable housing, but the prospect of a future as a below-market rate landlord isn’t the greatest motivating tool.

In fact, it might lead our would-be builder to start considering turning that new unit into an AirBnB. Or an actual mother-in-law unit, occupied by an actual mother-in-law, or a just-graduated adult offspring who hasn’t a prayer of moving back to her hometown otherwise.

One more thing: Hopefully we’ve already figured out how to replace the revenue lost by waiving all of those fees, or at least pinpointed something wasteful we can cut to make up for the loss.

There are always questions, and yes, a percentage of those new ADUs will never hit the rental market, but that doesn’t mean steps taken to encourage new ADUs aren’t good for San Francisco (and California). Are they significant steps, though? Or are they the Toyota Prius of the housing crisis, 10 percent “I’m doing something to help” and 90 percent “look at me doing something to help?” The real help, I’m afraid, requires some very heavy lifting — and perhaps a long look in the mirror.

The Market Musings real estate column appears every other Wednesday. Larry Rosen is a San Francisco-based writer, editor, podcaster and recovering former Realtor. He is a guest columnist and his viewpoint is not necessarily that of the Examiner.

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