The ADU equation: Are relaxed ‘granny unit’ rules helping solve Santa Cruz County’s housing crisis?

An ADU on Santa Cruz's Westside.
(Courtesy Santa Cruz County Planning Office)

California has made it far easier to build accessory dwelling units and people are making use of those relaxed laws. However, costs have gone way up so it’s not a cheap endeavor in Santa Cruz County.

Few issues divide people like so-called “granny flats” — the backyard cottages bureaucratically known as Accessory Dwelling Units, or ADUs.

Even in an area like Santa Cruz County where the housing and affordability crunch is top of mind, creative ways to add units to available lots via ADUs — or through a separate, currently illegal avenue, “tiny houses” on wheels — spark fierce debate.

Advocates claim backyard dwellings reduce sprawl, and provide affordable housing without taxpayer subsidies. Opponents say they degrade single-family neighborhoods with density, renters and too many cars.

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But love ‘em or hate ‘em, Californians and Santa Cruzans are going to be seeing a lot more ADUs in the coming years. A building boom is already underway, thanks to state legislation slashing local restrictions on ADUs and granting most California homeowners the right to build one in their yard.

“Oh my gosh, I’ve done so many ADUs in the past couple years,” said Patrick Powers, a home designer in Santa Cruz. “There’s just a ton of demand. I’m designing ADUs all over the county, and three or four in the city right now. And probably 75 percent of the new homes I’ve done recently include an ADU in the plans.”

But even if the process of building and ADU has gotten easier, the costs of building have skyrocketed.

“Building costs are so high right now,” said Santa Cruz Architect William Kempf. “It’s kind of crazy.”

A ‘ridiculously overbuilt’ foundation

Micah Posner is building a 750 square foot ADU in Santa Cruz.
(Kevin Painchaud/Lookout Santa Cruz)

Former Santa Cruz City Council member Micah Posner is busy building a 750-square-foot ADU in his backyard, construction that was not allowed under the city’s previous rules.

“They didn’t allow ADUs in a multi-family residential zone, which is where I live,” he said. “There was really no good reason for that. The state forced them to make that change as of January [2020].”

More than four years ago, Posner was censured by his council colleagues for renting an illegal unit in his backyard. He apologized and the unit was abated. While he’s happy that the new rules allow him to build a legal ADU, Posner has found the process remains demanding and expensive.

Despite doing much of the labor himself, he expects the building to cost $350,000, due to high cost for materials and stringent city building requirements.

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For example, because the property is located a block away from the San Lorenzo River, the city building department required a massive cement foundation costing $50,000, Posner said, dwarfing the foundation that has supported his nearby house for 100 years.

“There’s $4,000 worth of rebar in that foundation,” he said. “It’s ridiculously overbuilt.”

While a $350,000 cottage doesn’t seem affordable, it’s a fraction of the cost of existing homes in the city, which currently average close to $1 million. Architects, designers and builders interviewed for this story say new construction costs for ADUs in Santa Cruz County average $400 to $500 per square foot of floor space.

Converting an existing garage into living space is a relative bargain with project costs potentially in the $100,000 range. If and when permitting is changed in the county to allow tiny homes, those will also make the cost less prohibitive.

“People used to complain about the fees,” said Kempf. “But the fees are now such a small fraction of the building costs, I’m not hearing complaints like I used to.”

While state action has forced communities to lower fees on new ADUs, other costs remain high. Building plans, energy calculations, soil engineering and surveying, when required, have to be done before a building permit is issued.

“At a minimum, all those consultant costs for getting a project permitted — not built, just permitted — is going to cost $20,000 to $30,000,” Kempf said.

An ADU on Santa Cruz's Westside.
(Courtesy Santa Cruz County Planning Office)

A cute casita rather than a big dead lawn

In Santa Cruz, city leaders legalized ADUs more than 30 years ago, one of the first California cities to do so. But the rules were so restrictive that few were ever built.

Only 83 ADUs were built between 1986 and 2002, according to city records — fewer than five per year, on average. A rewrite of the code in 2002 loosened some requirements but added an owner-occupancy rule, resulting in about 24 new units annually between 2003 and 2016.

But in recent years, fed-up state legislators have struck down restrictive ADU building rules statewide, including those in Santa Cruz. Legislators hope to ease the state’s critical housing shortage by encouraging average homeowners to invest and build.

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“We are 1.3 million units short of housing in this state, and ADUs won’t take care of all of that,” said state Sen. Bob Wieckowski, D-Fremont. “But there are a gazillion single family homes out there on big lots, and families with boomerang kids, and extended family, and older people wanting to age in place.

“People complain about losing ‘neighborhood character’, but you could have a cute little casita behind your house instead of a big dead lawn,” Wieckowski said. “Once people realize what is possible, a lot of them are going to build ADUs of their own.”

Construction of an ADU in Santa Cruz.
(Courtesy Santa Cruz County Planning Office)

Two recent Wieckowski bills, SB 1069 and SB 13, broadly limit communities’ ability to charge fees or deny permits for an ADU.

Communities must now allow ADUs in all single-family and multi-family zones. Homeowners are entitled to an ADU of 800 square feet, no matter the size of their lot. Required setbacks may be no more than four feet wide.

Homeowners are entitled to create a “junior” ADU inside an existing home, or convert an existing garage, carport or accessory building into living space.

Communities may not require fire sprinklers for ADUs if the main house does not have them. They may not require public hearings or take longer than 60 days to approve a “completed” permit.

ADUs and tiny homes: Two different things for now

To be clear, ADUs are not tiny homes, which remain illegal in Santa Cruz County. First District County Supervisor Manu Koenig campaigned on a platform of creating a permitting process for tiny homes, and county officials are now considering the idea.

Under the county’s current rules, dwellings the size of a tiny home would generally need an ADU permit before being built. But putting wheels on such structures — which is common when it comes to tiny homes — “would, under our current ordinances, make these structures today illegal,” Koenig recently said.

Also, under current county rules, ADUs can be no smaller than 150 square feet. Tiny homes are often smaller than that.

A measure approved by the Board of Supervisors last month directs the county’s planning department “to explore a permitting process for tiny homes to include, but not be limited to, the addition of tiny homes within the county’s Accessory Dwelling Unit ordinance and/or the recognition of tiny homes as primary residences within a new standalone ordinance.”

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Numbers on the rise with looser restrictions

When it comes to legal ADUs, on-site parking is not required if the property is within a half-mile of any public transit stop, or car share service. Replacement parking is not required when a garage or carport is converted into living quarters.

Impact fees are forbidden on ADUs smaller than 750 square feet and are limited for larger units.

And for ADUs built between January 2020 and January 2025, communities may not require “owner occupancy” — permanent deed restrictions requiring that the property owner live on-site for the ADU to be rented.

Existing illegal ADUs can receive a five-year amnesty from abatement, as long as the unit is safe to live in. The state is currently writing building codes specifically for ADUs, Wieckowski said, with the expectation that those units will be legalized when the amnesty period ends.

Since the new state rules took effect in 2017, 114 new ADUs have been built in Santa Cruz city, with a record 50 units completed in 2019. Completion of new ADUs statewide rose from 1,984 in 2018 to 6,668 in 2019, according to the Terner Center for Housing Innovation at UC Berkeley, which expects those numbers to soar in coming years.

Santa Cruz County offers a variety of online tools to help homeowners plan and build an ADU. If you live in the incorporated cities of Scotts Valley, Santa Cruz, Capitola or Watsonville, check with your city planning department for further information. To get started, go to http://www.sccoplanning.com/ADU.aspx

IF YOU BUILD IT

Six things to know if you're thinking about an ADU

California has made it easier for homeowners to build ADUs by lowering fees and standardizing regulations statewide. While construction costs in many areas are still prohibitive, here are some of critical rules that have been relaxed or eliminated:

➤ ADUs are allowed in all areas zoned for single-family and multi-family housing, and may be freestanding or attached to an existing home, garage or storage structure. A Junior ADU may be built inside an existing home.

➤ Homeowners are entitled to build an 800 square foot ADU up to 16 feet in height with 4-foot side and rear yard setbacks, no matter the size or coverage of their lot. Larger units are generally allowed, but smaller units receive some crucial breaks. Units smaller than 750 square feet are exempt from local impact fees, and single-story units 500 square feet or smaller are exempt from costly soil engineering reports in much of Santa Cruz County.

➤ On-site parking is not required for ADUs located within a half-mile of transit, including bus stops or a car-share service. Homeowners converting a garage or carport into housing do not have to replace lost parking spaces.

➤ Owner-occupancy may not be required for ADUs built between Jan. 1 2020 and Jan. 1 2025.

➤ Fire sprinklers may not be required for an ADU if the existing home does not have them.

➤ Some special rules apply for homes in historic districts and in the state’s official Coastal Zone. Check with your local planning department to see if additional rules apply to your property.