Tension Builds Over Granny Units

The Mercury News  - November 4, 2003

By Tracey Kaplan

NEW STATE LAW AIMS TO BOOST INTEREST IN CONSTRUCTING SMALL, AFFORDABLE HOMES

Santa Cruz doctor Ken Koenig woke up recently to find a neighbor building a studio apartment overlooking his backyard hot tub. It's the kind of discovery more Bay Area residents may wind up making thanks to a new state law meant to increase the availability of affordable housing.

The law no longer gives neighbors the right to object to the construction of small apartments known as granny units, although cities can still impose other restrictions. From San Jose to Livermore, communities are responding by revisiting their policies, in some instances making it easier to legally build a cottage in the back yard or convert a garage into a small rental.

Whether the statewide push will spur the creation of more affordable housing remains unclear, because there is no guarantee new granny units would offer low rents or be leased at all. But one thing is certain: The shift can polarize residents, who argue about whether it will destroy the character of their single-family neighborhoods.

``Nothing was there, and all of a sudden, there was this granny unit,'' said Koenig, who complained to the city. ``There isn't really anything we can do about it.''

Aware of neighbors' concerns, San Jose planners cautiously recommended last week that the city lift its 19-year-old ban on granny units but consider imposing parking requirements and other conditions that would limit how many were built. The current ban applies to all neighborhoods except parts of Evergreen and was set largely out of concerns about overcrowding.

San Jose Councilman Chuck Reed says lifting the ban could save the city money.

``Right now, it costs the city about $100,000 to produce one unit of affordable housing,'' Reed said. ``So even if lifting the ban only produces 1,000 housing units, that's $100 million in savings for the city.''

State housing officials believe more granny units also would help reduce the state's housing shortage without increasing sprawl, as well as provide homeowners who are having trouble paying the mortgage with enough money to stay in their neighborhoods.

The new state law, AB 866, was sponsored by former Los Angeles Assemblyman Rod Wright at the urging of housing advocates, who said it was necessary because many cities were blocking construction of granny units by charging high permit fees, requiring excessive parking or holding long public reviews. The law requires cities to review permit requests without notifying neighbors or holding public hearings.

``This will create affordable housing in single-family neighborhoods where it might not otherwise occur,'' said Cathy Creswell, a deputy director of the state Housing and Community Development Department.

That's true in Koenig's Santa Cruz neighborhood, which is just blocks from some of the city's best surfing spots. Renter Rich Dickerson pays $800 a month for a tiny granny unit for himself, his girlfriend and two children across from Koenig on National Street.

``It lets us pay our cars off and save for a home,'' said Dickerson, a surfer who said he also enjoys living near the coast.

His neighbor Mark Agnello, a registered nurse who lives half a block away, just finished building a flat atop his garage that could someday bring in extra income. Agnello first applied for a building permit eight years ago, but Santa Cruz officials turned him down because of neighborhood opposition.

Today, the city not only offers no-interest loans and waives permit fees for homeowners who keep rents affordable but also offers seven architectural designs for granny units to interested homeowners.

The change has made an impact: From 1991 to 2002, 89 legal granny units were built in Santa Cruz, or about nine a year. Since the city updated its policy in late June, it has issued more than 20 granny-unit permits. Santa Cruz also survived a legal challenge by local attorney Barney Elders, who sued the city unsuccessfully to block the new policy, saying the apartments bring more traffic, noise and overcrowding.

Granny units ``violate the legitimate expectations of people who have invested in single-family properties,'' Elders wrote in an e-mail. ``There are other ways of providing affordable housing than to convert single-family neighborhoods into multiple-dwelling neighborhoods.''

Fearing that cities would respond to homeowners' concerns by finding ways around the new law, housing advocates are pushing another bill, AB 1160, which would bar cities from imposing ``unreasonable'' standards on granny units. Cities blocked the bill last spring, but it will be considered again next year.

In pricey Palo Alto, city officials are trying to balance neighborhood concerns with the need for more affordable housing. The city's relatively tough rules now require that each granny unit be detached from the main house and have two of its own parking spaces.

``The whole idea is to encourage second units without hurting existing neighborhoods,'' Palo Alto planner Christopher Riordan said.

However, if current practice is any indication, many granny units are likely to be used as exercise rooms or offices, or by nannies, guests or ``boomerang'' kids.

``In a lot of cases, the cities are fooling themselves,'' said Roger Menard, president and CEO of SummerHill Homes, which has built granny units atop the garages of eight of its $1 million-plus University Park luxury homes in Palo Alto. ``People who buy these houses generally don't need the income.''

Palo Alto interior designer Christina Pahl is one of the few people who bought a SummerHill home with the intention of renting the granny unit, for $1,000 a month. But the notion alarms her next-door neighbor, Margo Wright.

``Did you ever see the movie `Pacific Heights'?'' she said, referring to the film starring Michael Keaton as a sadistic tenant who nearly ruins a couple's house. ``I can't even imagine renting.''

Some cities are offering incentives to homeowners who agree to rent their granny units at lower-than-market rates. The amount is tied to the county median income and comes to about $1,000 a month for a single occupant in the Bay Area.

In Saratoga, for example, homeowners can build slightly larger apartments if they sign an agreement to offer lower rents. The city also gets credit from the state for providing affordable housing. So far, two homeowners have pulled permits to build granny units and both have agreed to the rent restriction.

However, one of those homeowners, developer John Michael Sobrato, has no plans to rent his 1,200-square-foot unit. Instead, he wants to use it as a guesthouse, presumably when his 10,000-square-foot house becomes too cramped to hold all his visitors.

Date published: November 4, 2003

http://www.bayarea.com/mld/mercurynews/news/7177502.htm

Reprinted with permission by Tracey Kaplan from The Mercury News.