Newsom signs major streamlining for 'junior' ADUs

(The Center Square) - California Gov. Gavin Newsom signed a new law requiring streamlined approvals of “junior” accessory dwelling units — new homes carved out within a larger single family home that are less than 500 square feet.

With a 4.5 million unit housing shortage, California has some of the highest costs of housing in the country. To rectify this, California has been making limited advances towards streamlining housing permitting and construction, delays that can cause developers’ interest costs on borrowed money to doom many potential projects.

California accessory dwelling units as a whole have been largely exempted from the California Environmental Quality Act, though JADUs did not receive an explicit exemption until now. CEQA allows anyone to challenge a project essentially indefinitely in courts on environmental grounds — this exemption means eliminating a major potential risk to JADU projects.

In 2021, AB 2221 was passed, requiring local agencies to permit ADUs and JADUs within 60 days. In 2019, AB 68 was passed, requiring local agencies to allow for one ADU and one JADU to be built on most single family residential lots. ADUs and JADUs have increased from 0.9% of homes permitted in 2013 to 19% of new housing today, meaning these smaller homes — mostly built on single-family lots — are driving California’s housing growth as multifamily and single family home construction starts have remained stagnant or in decline since even before the pandemic.

“With these new laws, local governments have even more tools to provide housing,” said Newsom in a statement. “I urge them to fully utilize the state’s unprecedented resources to address homelessness.”

While it’s not clear how these programs will reduce homelessness, evidence suggests only 8% these new smaller homes are rarely used for short-term rentals, and 66% are priced as “affordable” to earners of an area’s median income.

“ADU legalization triggered a boom in affordable housing at no cost to the taxpayer,” noted California YIMBY, a pro-housing lobbying organization that sponsored the new CEQA JADU exemption, in its ADU status report stating 84,000 ADUs were permitted between 2016 and 2022.

With housing permitting in California collapsing 45% between 2022 and 2023, and interest rates remaining at historical levels, but elevated compared to recent years of extended low-cost credit, homeowner-financed ADUs may continue to rise as a percent of new homes.