Right now, we are in the crosshairs of a severe housing shortage and a disinvestment in affordable housing. Too many Berkeley residents – including seniors, individuals with disabilities, teachers and families with children – struggle to keep a roof over their heads. Waitlists for affordable housing number in thousands and stretch into years.
The limited amount of affordable housing that has been developed in the past few decades has mostly been small units in large apartment buildings. These units are being built at increasingly unsustainable costs. Large projects in Berkeley, Emeryville and San Francisco now cost well over $500,000 per unit to develop. In fact, a recent affordable housing project in Emeryville cost nearly $700,000 per unit. The multi-year rebuild of thousands of homes lost in Santa Rosa, Texas, Florida, and Puerto Rico will result in a further increase in cost as the labor shortage grows and home building materials become more scarce.
Accessory Dwelling Units (ADUs) present an alternative, grassroots solution to the housing affordability crisis. ADUs — also known as granny flats, backyard cottages, or in-law suites — are a special type of secondary unit that shares the same lot as a single-family home.
If built affordably, ADUs can reduce housing costs for both owner and tenant, thereby preventing displacement of both. ADUs can provide housing for a variety of reasons (rental income, affordable housing, extended families, senior living, children, college students, etc.). They can be built in virtually every neighborhood, with minimal impacts to neighborhood character. They are one of the most sustainable housing choices, with among the lowest climate impact. Moreover, ADUs have the additional advantage of being able to equitably distribute the impact of development.
Over the past year, we’ve taken steps to facilitate growth in ADU build rates in Berkeley. We set a target of 3,000 ADUs, convened an ADU Task Force, advocated for code changes to make it easier and less costly to build additional ADUs, sponsored ADU Awareness Workshops, and implemented an ADU Survey. But no housing strategy will be complete unless it harnesses the benevolence of Berkeley’s 10,000+ single-family homeowners.
Our survey results show that half of homeowners who want to build an ADU want to do so to house a low-income person, including seniors, artists, teachers or public employees.
This makes sense, because ADUs tend to rent below market rate.
So what incentives can we put in place to help maximize the number of affordable ADUs?
There are several approaches:
- A public mechanism could involve developing an affordable ADU fund. The fund could provide financial incentives for homeowners to build ADUs that would be rented at an affordable rate under a fixed term affordability covenant.
- An affordability covenant is a legal contract between the city and a homeowner to make a unit affordable for a specified period of time. This is an effective means of superseding state limitations on creating and maintaining affordable housing.
- Likewise, the private sector can play a role. For example, a homeowner could agree to rent out an ADU to a low-income person in exchange for ultra low interest loans. This would help banks meet their fair lending requirements while helping the community.
Funding homeowners to build and rent affordable ADUs is an elegant remedy to persistent shortcomings of the current housing affordability strategies.
In order to truly impact the housing affordability crisis, Berkeley will have to embrace its traditions of innovation and create new models of housing policy. Let’s develop a new form of affordable housing that can be modeled statewide!