San Jose eases laws to allow construction of more 'in-law' units

San Jose city officials say the number of applications to build so-called in-law units has increased nearly five-fold. This, after the city tweaked existing laws to ease construction.

Now Mayor Sam Liccardo (D) San Jose, is proposing more changes, that would wipe a homeowner’s in-law construction loan off the ledger. 

Accessory Dwelling Units (ADUs) have caught the eye of San Jose homeowners for decades. Monica Nanez says she’s considered adding an ADU to her backyard, but has been scared off by the exorbitant cost.

“You have to pay permitting fees of up to $20,000 before you even get started,” she said.

Wednesday, with overcast skies above, Liccardo, offered a ray of sunshine amid the crisis that is the lack of affordable housing. He proposes making it easier and cheaper for homeowners to build and then rent an ADU in their backyard.

“We need to be able to bend the cost curve. We need to disrupt the market to find a more innovative way of getting housing built,” said Liccardo.

City officials say current construction costs for a traditional home exceed $600,000. An ADU, or in-law unit, can cost from $100,000-to-$200,000. The mayor proposes waiving city impact fees to help green-light in-law applications, which have jumped from seven to 350 over two years.

“This program will significantly cut costs for homeowners interested in building an ADU and provide affordable housing for San Jose families,” said Todd Su, president and CEO of Advantage Homes.

Additionally, the mayor wants to forgive the total project loan after five years if the owner rents to a low or middle-income person or family.

“It’s gonna help people like teachers have more access to affordable housing,” said Nanez.

The city council rules committee will write up the mayor’s idea next week, and submit a proposal to city council in June. Backers say the goal is to call for a vote on this idea before the end of the fiscal year at the end of June.

“We have to find a solution. And so we’re looking at every using every tool that we have in our toolbox,” said Magdolina Carrasco, the city council representative for Dist. 5.

One developer who already has a program to help house teachers says the city’s further cost-cutting measures would make a significant impact.

“If it becomes law, then we should see a reduction, quite a huge per square foot in cost that the homeowners are not having to front,” said Greg Popovich, president of Goldbar Builders.

Experts say significantly lower costs could have homeowners such as Monica Nanez placing a build order for an ADU, instead of just looking at what is fast becoming the future of home building.