Innovation and incentives encouraging construction of small affordable homes

Napa County program encouraging ADUs is getting results, and recognition.

photo credit: Courtesy Napa Sonoma ADU Center
One of many pre-approved ADU plans, that can help control costs.

There's a creative but limited program encouraging construction of affordable housing in Napa County.

It's popularity is exceeding all expectations and being recognized nationally.

Hoping to spur construction of small, affordable homes, Napa County early last year began offering not subsidized or low interest, but entirely forgivable loans for building an accessory dwelling unit.

Called ADUs, they are typically a small, second home on a residential property.

"We were blown away by how many homeowners were interested in engaging with this, said Jennifer Palmer, Napa County's director of housing and homeless services.

The loans range from $60,000 to $105,000.

The catch, if it's considered one---once built, the ADU must be rented for five years to a person or household earning a certain amount.

"The size of our loan is actually scaled to the difference between market rent and rent that is affordable to a tenant earning 80 percent Area Median Income, or below for a period of five years," Palmer added.

photo credit: Courtesy Napa Sonoma ADU Center
One of the larger ADU plans, this one has a second floor.

In Napa County, that works out to roughly $103,000 for a family of four or $83,000 for a couple.

And a little more than $72,000 for a single person.

Palmer said that unlike the timeline for affordable housing developers, who usually must assemble financing, tax credits, and face an often lengthy permitting process and environmental review, financing and building an ADU is fairly straightforward.

You can even choose among multiple pre-approved blueprints. Some impact fees are discounted or waived, depending on the unit's size.

And, there's also some hand-holding available...Guidance on contracts, construction management, budgeting and being a landlord.

"Its a unique bargain that we're offering and most homeowners are not affordable housing developers so, we want them to understand what they are doing," Palmer observed.

She said the program is getting notice.

The National Association of Counties is bestowing it's Best-In-Category of “Community and Economic Development" upon Napa County this year for the loan program, besting more than 100 other applicants.

Local have too.

photo credit: Courtesy Napa Sonoma ADU Center
Another pre-approved ADU design, this one---the 'Net Zero Cottage.'

Palmer said officials predicted the program would deliver 80 to 90 ADUs over three years.

"We did a couple of community events, and then held this webinar in the evening on January 2023. By the time the webinar ended we had 60 people and in the first three months I think we had topped over 200," Palmer said.

Since the launch, the county has extended a dozen loans, with as many as 200 more likely by the end of next year.

There are no income requirements for the borrower.

"If you can develop it for really low cost and it turns out our loan covers 80 percent of the development cost, that's fantastic. If you're wanting to build a much higher-end, fancier ADU, that's up to you and we don't mind that either."

The program has been enough of a success that the county turned it from pilot to permanent--dedicating a portion of county hotel taxes to help fund the loan program into the future.