Housing: Production
3 P's of Housing: Production
Production strategies focus on increasing affordable housing and reducing barriers to development.
Accessory Dwelling Units
Accessory dwelling units (ADUs) are secondary units or apartments typically added to low-density residential properties (e.g., single-family homes). Also known as granny flats, in-law units, or accessory apartments, these ADUs have the double benefit of acting as an additional source of income for homeowners as well as introducing more housing to less-dense neighborhoods where zoning can prohibit most development. ADUs come in several forms and are not limited to additional free-standing structures on a current residential lot but can also be made through conversions of existing spaces such as bedrooms, basements, or other living spaces.
Junior Accessory Dwelling Units (JADUs) can be created within the walls of a proposed or existing single-family residence and shall contain no more than 500 square feet. JADUs offer additional housing options. They may share central systems, contain a basic kitchen utilizing small plug-in appliances, may share a bathroom with the primary dwelling, all to reduce development costs. JADUs present no additional stress on utility services or infrastructure because they simply repurpose existing space within the residence and do not expand the dwellings planned occupancy (HCD).
One of the main benefits of ADUs is their ability to be counted towards housing production requirements in both low-income and market-rate categories. However, research has also shown that the construction of ADUs and JADUs alone will not prevent displacement alone.
With the new ADU law in effect HCD has included guidance for potential state grants and financial incentives for ADUs (HCD):
- CalHome
- Local Early Action Planning (LEAP)
- Local Housing Trust Fund (LHTF)
- Regional Early Action Planning (REAP)
- SB 2 Planning Grants
- Community Development Block Grant (CDBG)
View the Accessory Dwelling Units (ADUs) & Junior Accessory Dwelling Units (JADUs) guide [PDF]
Case Study, Los Angeles, CA
LA ADU is a joint initiative between the County of Los Angeles and the Office of Los Angeles Mayor Eric Garcetti, and provides the public with information on ADUs across LA.
Case Study: Aduo – East Palo Alto, Belle Haven, and North Fair Oaks, CA
Aduo is a nonprofit initiative to develop an open-source solution for building garage ADUs, focused on the neighborhoods of East Palo Alto, Belle Haven, and North Fair Oaks. This site plans to hold wiki-style content, including architectural drawings, instruction manuals, and educational videos, to guide homeowners in the Bay Area and beyond through the development of plug-in garage ADUs for under $100K. View the Case study.
Affordable Housing Overlay Zones
Affordable Housing Overlay Zones (AHO zones) work by placing an additional zoning layer over base zoning designations. They encourage the production of affordable housing by providing incentive packages to developers who include affordable housing in their projects, such as impact fee waivers, enhanced density bonuses, reduced parking ratios, changes to setback requirements, relaxed height standards, and by-right zoning. To qualify, developers must meet baseline affordability qualifications pursuant to local zoning code. Typically, an AHO will require that between 25 and 100 percent of units in a development be affordable for households earning 50 to 80 percent of Area Median Income (AMI).
In addition, AHOs can expedite the approval and permit processes for affordable housing projects that might otherwise require an amendment to a general plan. In places where land is not zoned for residential use but where a city would like to see affordable housing built, an AHO may eliminate lengthy entitlement processes.
View a pdf guide to Affordable Housing Overlay Zones HERE.
Case Study: Rancho Cucamonga, CA
In Rancho Cucamonga, the City has created a Senior Housing Overlay Zone which is intended to provide for residential uses that are appropriate for the development of seniors, recognizing their unique lifestyles and needs, by allowing higher densities, a mix of uses, and requiring in return, higher design, and construction standards, as well as the provision of specific site and building amenities. It is the intent of this zone to carry out the policies and objectives of all elements of the general plan and to meet the standards necessary to satisfy the requirements for public health, safety, and general welfare. Visit the Case study website HERE.
Case Study: San Mateo County, CA
The City of Menlo Park established an AHO to encourage the development of affordable housing for low, very low and extremely low-income households. The AHO serves to implement the housing element goal of providing new housing that addresses affordable housing needs in the city of Menlo Park by establishing development regulations for designated housing opportunity sites. The AHO is also intended to address those housing projects which provide a greater percentage of low and very low-income units than identified in Government Code Section 65915. (Ord. 993 § 2 (part), 2013). Visit the Case study website HERE.
Bonds for Housing Construction
A housing bond generates funds that cities or counties can loan to nonprofit and for-profit real estate developers, who in turn use the money to preserve or create affordable housing. Housing bonds are important because they provide needed additional resources for affordable housing developers and multi-family project owners, who can then serve residents on limited incomes who would otherwise be unable to afford other housing options. Housing bonds can be implemented at the city or county level, but because they affect governmental finances, they must be approved by voters as a ballot measure.
Case Study: Alameda County, CA
In 2016, Measure A1 was approved by Alameda County Voters. The goal of this bond is to create and protect affordable housing options for people who need it most in Alameda County. The bond raised $580 million dollars for affordable housing across the county and required that all funds stay local to the county. The following programs were created through the fund:
- Homeowner Programs
- Down Payment Assistance Loan Program ($50M)
- Homeowner Housing Development Program ($25M)
- Housing Preservation Loan ($45M)
- Rental Housing Programs
- Rental Housing Development Fund ($425M)
- Innovation and Opportunity Fund ($35M)
View the case study website HERE.
Case Study: Portland Metro
In 2018, voters approved a $652.8 million affordable housing bond measure to create permanently affordable homes across Washington, Clackamas, and Multnomah counties. Metro is working with local partners and communities to bring affordable homes to 12,000 people: seniors, families, and veterans.
Fee Deferral
According to the Municipal Research and Services Center (MRSC), a fee deferral allows builders to delay paying impact fees upfront which can save them money by reducing financing costs. Impact fees are typically collected once a building permit is issued however, implementing a fee deferral program would potentially allow for more permits to be pulled while also reducing cost and increasing construction. Local governments could potentially implement guidelines for fee deferrals that would allow specific developments to be eligible for deferment (such as affordable housing).
Case Study: San Diego
The San Diego Municipal Code Section 142.0640 allows for the deferral of Development Impact Fees (DIF) for a maximum period of two years or until the request for Final Inspection, whichever is shorter. The City of San Diego also allows Affordable Housing Projects to be part of the Developer Impact Fee deferral program (as long as it serves extremely low, very-low, low, or moderate-income households).
Housing Elements
Policies that address anti-displacement in a city’s Housing Element can indicate its commitment to addressing existing and/or growing displacement risks. Addressing displacement risks through the Housing Element can also ensure that a city is actively addressing housing challenges but also working to meet its housing goals within a specific timeline (5-8 years). Additionally, because the Housing Element requires community engagement, residents would be able to provide insight on the housing challenges they are facing and have them addressed through city goals and policies.
Case Study: Sacramento, CA
The City of Sacramento has listed “equity, inclusion and anti-displacement” as themes their current housing element reflects. Specifically, the City calls out the need to protect residents from displacement to remain keep people in their homes and communities and has listed the following additional anti-displacement policies to implement through their housing element.
- Minimize Displacement of Vulnerable Residents
- Strengthen Tenant Protections
- Develop Neighborhood-Specific Anti-Displacement Strategies
- Fair Housing Services and Education
- Supportive Collective Ownership Models
- Target Homeownership Programs to Underrepresented Residents
- Prioritize Affordable Housing Financing in Areas at Risk of Gentrification
- Homeowner Protection Services
- Condominium Conversions
Housing Trust Fund
Housing trust funds are distinct funds established by city, county or state governments that receive ongoing dedicated sources of public funding to support the preservation and production of affordable housing and increase opportunities for families and individuals to access decent affordable homes. Housing trust funds systemically shift affordable housing funding from annual budget allocations to the commitment of dedicated public revenue. While housing trust funds can also be a repository for private donations, they are not public/private partnerships, nor are they endowed funds operating from interest and other earnings.
Case Study: Ventura County, CA
Housing Trust Fund Ventura County (formerly Ventura County Housing Trust Fund) was created in response to the needs of affordable housing developments which often experience funding gaps during the planning and/or construction phases. The fund has provided over $10 million in loans and raised over $1M in Permanent Local Housing Allocation. The fund focuses on workforce housing for low to moderate-income families and individuals with a priority to serve veterans, youth adults (transitioning out of foster care), homeless individuals and families, farm workers, and very low-income. Since its inception, the fund has been able to produce 598 affordable homes.
Inclusionary Zoning & Developer Fees
Inclusionary has been implemented in jurisdictions across the U.S. for many years as is defined by the Urban Institute as an ordinance that encourages or requires developers who are creating market-rate housing to set aside a percentage of the housing to be sold or rented at below-market rates. In return, developers may receive incentives such as density bonuses, expedited permits, and approvals, relaxed design standards (including parking and height allowances), fee waivers, additional subsidies for affordable units, or fee restrictions (CARB). Another aspect of inclusionary zoning is referred to as “in-lieu fees” which allow developers to pay a fee to or “opt-out” of the affordability requirement. Jurisdictions with a strong real estate market could likely benefit the most from adopting an inclusionary zoning or in-lieu-fees. View more information at the City of San Jose's website HERE.
Case Study: East Palo Alto, CA
The city of East Palo Alto adopted the Inclusionary Housing Ordinance with the purpose of enhancing the public welfare by establishing policies which require the development of housing affordable to households of 35% AMI, very low, low, median, and moderate incomes, which will result in the creation of affordable housing opportunities in the community and further the goals and objectives of the City’s General Plan and Housing Element
Land Value Recapture
Land Value Recapture is a tax that jurisdictions may impose on landowners who witness an increase in their land values thanks to public sector action (such as rezoning or infrastructure investments). The LVR fee can help jurisdictions collect revenue that can be then earmarked for affordable housing; it can also help counteract the displacement impacts of public investment. While this approach does address displacement, local jurisdictions should keep in mind that there is not significant academic literature that examines the impact of LVR and its relationship with housing production.
Case Study: San Francisco, CA
The Eastern Neighborhoods Plans included impact fees on new development to help pay for a portion of needed infrastructure to help serve all the new residents and employees that come with new development. The City supplements these fees with other funding sources such as bonds, transportation sales taxes, and grants to fully fund infrastructure projects.
In some cases, known as in-kind agreements, private developments build public improvements directly instead of paying some or all their required fees.
Permit Streamlining
Permit streamlining is not a new topic; however, it is one that cities are constantly trying to improve. The 1977 Permit Streamlining Act was enacted to expedite the processing of permits for development projects. Nowadays, many jurisdictions have added online permit submission portals help create a streamlined process.
Case Study: Sacramento, CA
The City of Sacramento implemented “Sacramento Streamline” which is an initiative to expedite service. Under this initiative the following tools and/or changes were implemented:
- Development Tracker Tool
- Over the Counter Review Program
- Appointment Scheduling Program
- Electronic Plan Check Program
- Online Production Permit Applications
- Online Minor Permit Program
- SMUD and PG&E Safety Inspection Requests
- Express Lane at the Public Counter
- Planning and Development Code Update
- Permit Simplicity
- Prequalified Architecture Submittal System
- Revised Zoning Code for Parking
- Solar Energy System & Electrical Vehicle Permits
Public Land Disposition
In accordance with AB 1255 Surplus public land: inventory, local governments are required to provide an inventory of surplus land to the state. Considering the existing housing crisis, local governments could allocate viable surplus land to affordable housing developments. With land secured, developers could possibly lower development costs without the need to purchase land (typically the highest cost in development). Another avenue for local governments to explore is the disposition of surplus land to the community via a Community Land Trust.
Case Study: Seattle, WA
In 2018, Senate House Bill 2382 (WA) was passed and granted authority to cities to sell surplus land for below fair-market value so long as they would be used for permanently affordable housing. Land is typically one of the highest costs in developing permanently affordable housing. By allowing land to be sold below fair market value, cities in Washington can help spur development. Additionally, in Seattle, the city has focused on this opportunity to be community driven.
Reduced Parking Requirements
To reduce development costs, local governments could limit or reduce the number of parking spaces required for each unit being produced. Local Housing Solutions estimates that a structure or underground parking garage can range from $25,000 to $65,000 per space in urban areas. Additionally, by assessing the needs of occupants and access to public transportation, agencies could reduce parking based on affordability, building type, or location. Furthermore, a reduction in parking could also promote the usage of alternative modes of transportation in areas where transit is available.
Case Study: San Francisco, CA
The Off-Street Parking Requirement Ordinance removed parking requirements where they were previously required (in municipal code). A few of the benefits anticipated by the City after removing minimums are the reduction of cost for housing construction, increased housing production, reduced reliance on cars, increased safety for pedestrians and bicyclists, and more.
Visit the case study pdf HERE.
Case Study: Sacramento, CA
In 2021, the City of Sacramento removed minimum parking requirements in the Central Business District/Arts & Entertainment District. Additionally, across the city, minimum parking requirements are no longer required for: Nonresidential projects on lots 6,400 square feet or less, nonresidential component of vertical mixed-use projects that have more than 50% of the building’s square footage devoted to residential uses, or historic resources that are converted to residential uses.
Station Area Plans
Station Area Plans are typically created through collaborative efforts between multiple agencies ranging from local governments to transportation agencies. Plans consist of proposed usage for areas surrounding existing stations and/or future stations and usually include elements such as land use, housing, connectivity, and economic development.
Case Study: San Jose, CA
The Diridon Station Area Plan integrates land uses, urban design, open spaces, and mobility to enhance Downtown San José, while respecting existing surroundings. This plan weaves new ideas and new development possibilities within existing city fabric and strong neighborhoods and proposes ideas for twenty years or more into the future. The goal is to develop a sustainable and equitable plan around Diridon Station that capitalizes on an anticipated possible build-out of new transit-oriented development to allow for more urban vitality and economic activity, to act as a catalyst for similar development in surrounding neighborhoods, and to obtain environmental clearance under the California Environmental Quality Act (CEQA).