County Adopts Fee Reduction Pilot Plan for ADUs

Today the Santa Cruz County Board of Supervisors, led by Chair Zach Friend, adopted in principle a pilot program to reduce the fees levied on new ADU owners as a means of encouraging more ADU development. ADUs (Accessory Dwelling Units), also known as “Granny Units”, have long been sought after in both the unincorporated area of the County and within the Cities to help ease the shortage of available housing units. Local jurisdictions tend to favor ADUs over other larger housing developments because their impact on neighborhoods (and thus the public perception of new housing) is minimal, and requires very little support from the government. These units also usually serve as “affordable” rental housing by design from the consumer perspective, because they cannot be purchased independently of the property and tend to have a smaller square footage than other housing products.

The City of Santa Cruz has long been touted as having the model ADU ordinance, which is supposed to make it easier for people to build ADUs on their property. The County also recently took steps to emulate this style of ordinance, though it took a little pushing from the State of California to get something going. These new, state sanctioned, ADU ordinance changes were again designed to further encourage the development of ADUs–reducing setbacks, getting rid of overhead sprinklers requirements where possible, and allowing for ministerial approval if built over a pre-existing garage–but still weren’t garnering the results the County was looking for.

Given the still pervasive housing crisis in Santa Cruz, one that regularly has us ranked as one of the least affordable communities in the world from a wages to cost of living comparison, the County decided to conduct a survey of potential ADU owners. The key question: “why despite our changes are you still not building, and what would get you to build?” The answer was unsurprising if you had been talking to housing providers and developers, but was still good to capture analytically: the cost of building an ADU was (and still is) too high to make it a worthy investment.

That is why the proposal from Board Chair Zach friend is so needed, and commendable. The second highest cost of building an ADU after construction are the fees associated with approval. From water hook up fees, to permit fees, to even septic requirements, the cost before even breaking ground on an ADU is most certainly tens of thousands of dollars. That means the timeline for a return on investment is substantial, and that doesn’t include any incentive to make the unit any more affordable either. By taking the bold step to reduce even a couple of these fees for a a few years, the Board is setting up a grand experiment of sorts. If the hypothesis is reducing fees will get us more housing then perhaps we might finally get some evidence to roll back even more fees!

Either way, it’s telling that we (as in they) were even able to ask this sort of question in the first place, let alone pull together a pilot program to test it out. Progress is slow, but hey, it’s actually happening.