San Mateo’s wealthy cities using ADUs to avoid building affordable housing, says report

Affluent cities in San Mateo County are using accessory dwelling units (ADUs) to meet affordable housing targets set by the state, according to a new report by the county’s civil grand jury. Effectively, this allows these cities to avoid constructing multifamily low-income affordable housing units, the report says.

An ADU — sometimes called a granny flat — is a small secondary housing unit that shares the single-family lot of a larger primary residence. A recent change to California’s 1969 Housing Element Law allows communities to count ADUs as affordable housing in their state-mandated plans.

The requirements for the 2023-2031 period call for approximately three times more affordable housing units compared to the 2015-2023 cycle, the report says. Cities like Atherton, Hillsborough, Portola Valley and Woodside plan to meet as much as 80 percent of these targets through ADUs, according to the report.

This is a problem, the report says, because property owners often rent their ADUs out to family and friends and the state has not proposed any form of regulation to ensure they serve low-income tenants. The state has demanded that cities monitor ADU affordability every two years but has not specified how to prove the dwellings are being rented to low-income people. ADUs are also usually occupied by only one or two people and not large families.

“The big issue here is that every ADU that is permitted for low-income housing but is not used for low-income housing is an actual low-income deed-restricted affordable housing unit that is not built,” said civil grand jury foreperson Steven Drace.

“It’s not unfair to suggest that there are some cities like Redwood City for whom it would be much easier to build multi-unit low-income housing than for others like Hillsborough or Portola Valley,” he added. “So I recognize the conundrum these cities are facing. And yet, we believe that everybody has to chip in and do their part to satisfy state requirements.”

California YIMBY Director of Communications Matthew Lewis said it was disappointing but not unusual to see cities “trying to substitute ADUs for their obligations for low-income housing.”

“I think it’s hopeful that the grand jury is recognizing this issue,” he added. “I hope the state will take action…to make sure these communities that have a history of not providing enough housing for their residents and for low-income workers get the message that the old days are over. It’s time to build the housing that they need. I want to be clear — we love ADUs, it’s fantastic that we’re seeing a lot of them. But they’re not a substitute for deed-restricted subsidized housing.”

In its report, the civil grand jury recommended that city councils stop using ADUs to meet state-mandated affordable housing targets in their plans until they have effective monitoring systems. The jury’s recommendations are not mandates, but elected officials must respond to the report within 60 days and governing bodies within 90 days.

In response to the report, Hillsborough Mayor Christine Krolik said it was not long ago that ADUs were hailed as the best way to solve the housing crisis in communities with high land values. She said the city is encouraging people who build ADUs to rent them out and will track that data.

“I think almost every community here on the Peninsula has its heart in the right place,” Krolik said. “We’re doing what we can to provide the needed housing. The conversation here is not by and large geared towards pushing back against these mandates. It’s about how to creatively fulfill them.”