California lawmakers are looking to ADUs as an affordable housing solution to the state’s expanding population as housing demand and prices soar. Accessory Dwelling Units (ADUs) may be a way for residents of the Bay Area to afford housing and homeowners with space to build them.
The Bay Area Council started the Casita Coalition in April 2019 to promote the building and use of ADUs to increase the ratio of affordable housing in the city and surrounding areas. Cities in California are permitted to include ADUs in their calculations for regional housing needs allocation as a form of affordable housing.
You might be eligible for a grant from the California Housing Finance Agency (HFA) for up to $40,000 towards the pre-development of an ADU if you want to build one on your property.
ADUs and Affordable Housing Laws
Every city in the state of California, including San Francisco, is required to plan and zone for its fair share of housing, which amounts to more than 2.5 million units overall. In September 2021, California Governor Gavin Newsome signed 31 housing bills to increase affordable housing in urban areas.
“It is absolutely imperative to meet these housing goals if we are serious about building an equitable future,” said Governor Newsom. And it is similarly imperative to meet these housing targets because unaffordable housing leads to hours-long car commutes—directly inhibiting our efforts to meet our climate goals. Creating denser housing closer to major employment hubs is critical to limiting California’s greenhouse gas emissions. “
These bills are a piece of the California Comeback Plan. They include $100 million in grants for low to moderate-income homeowners to build ADUs on their property. These grants are income-restricted and help cover the cost to pre-develop the land for an ADU. Predevelopment includes site prep, architectural designs, soil tests, permits, property surveys, impact fees, and energy reports.
In order to obtain the grant funds, homeowners should contact one of the ADU Grant Program lenders. Private loan officers are authorized to distribute the state’s grants to qualified homeowners.
ADU Income Caps by Bay Area County
With the aid of these grants, many homeowners in the Bay Area are turning to ADUs as a source of revenue. ADU construction in the area typically costs $225,000. The average cost to build an ADU is between $200 and $300 per square foot.
Alameda County - ADU Grant Income Cap
In Alameda County, the annual income cap for an ADU grant is $282,000 per year. In Berkeley, ADUs or Junior ADUs are allowed on properties with existing or planned single-family dwellings. All ADUs require a building permit and are eligible for grants up to $40,000 from the CalHFA’s ADU Grant Program.
The City of Oakland allows ADUs to be built on the same property as multi-family or single-family homes. According to the calculator provided by the city, a 600-square-foot ADU costs $257,000 to develop and can generate $1,915 per month in rent.
San Francisco County - ADU Grant Income Cap
In San Francisco County, the income limit for the ADU Grant Program is $300,000 annually. ADUs can be added to single and multi-family properties within the city. However, junior ADU’s (less than 500 square feet) can only be added to properties with existing single family homes. ADUs must be a minimum of 220 square feet and have plans by a design professional.
Contra Costa Country - ADU Grant Income Cap
In Contra Costa County, ADU’s are also eligible for the CalHFA ADU Grant Program. The annual income limit for the grant is $282,000.
San Jose - ADU Grant Income Cap
Get Started on Your ADU
Decide what your ADU is intended to accomplish first. Will you be using the structure for additional income or for your own family’s needs? This can help you determine the design and budget for your structure. Always check local and city codes and regulations before you begin. If you are going to use the space as a rental, consider your upfront costs and monthly expenses to maintain the building.
If you’re thinking of adding an ADU to your property, contact Drafting Cafe Architects. We can provide you with an estimate for your project. Our team will help you navigate codes and planning, come up with the best design for your ADU, and see you through the building process from start to finish.