Accessory Dwelling Units Coming to Multifamily Near You!

In recent years the state legislature has taken unprecedented steps to encourage the production of new ‘infill’ housing. Multifamily owners are favored with big incentives to redevelop their property to greater heights. Permitting is streamlined. Local zoning regulations and parking requirements are preempted. It seems like no opportunity was missed to shoehorn new dwellings wherever they may fit. Coming soon to your property: one or more accessory dwelling units carved out of common spaces like the garage, laundry, recreation room or management office. Low construction costs and high rents make it a no-brainer for the landlord. What does it mean for tenants?


Single-family ADU examples

What is an ‘Accessory Dwelling Unit’?

The law defines an accessory dwelling unit as an “attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons…and shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling is or will be situated.” It is called ‘accessory’ because it can’t be sold separately from the main dwelling.

The ‘in-law apartment’ or ‘granny flat’ (right) is a common example of an accessory dwelling unit converted from a garage or other structure behind a single-family home. It is perfect for a senior parent or perhaps  an income-producing second unit.

232 Spalding ADU on the alleyA multifamily example is the apartment situated above the detached garage (left). It was a common feature of apartment buildings constructed between 1925 and 1945 and it continues to lend character to our multifamily areas today.

However a new zoning code changed that model in the postwar decades. The minimum size for apartments was greatly increased which put new rental housing out of the reach of some households; and greater off-street parking requirements pushed the garage at ground level or below while the building filled the lot. There was not longer a place for a small apartment in Beverly Hills.

In recent decades the need for affordable housing encouraged localities to look again at the humble garage apartment. Beverly Hills amended the zoning code in 2002 to permit them again but also required off-street parking and that discouraged construction because many multifamily parcels couldn’t accommodate additional parking.

Also the Planning Commission’s review of those applications added another hurdle. Commissioners could block an application if  the proposed apartment was not “compatible” in architectural style with the primary building, in the eyes of commissioners, or if it didn’t comport with the “garden quality” of the city.

Those subjective standards were swept-away by Sacramento. On the advice of pro-growth housing advocates, academic planners and industry interests, all of which successfully pitched the ADU as a cost-efficient means to add rental housing, lawmakers changed the law.

ADU Policy Changes Open the Door

A series of housing reports swayed lawmakers. UC Berkeley’s Center for Community Innovation as early as 2011 said that local laws put “regulatory barriers” in the way of housing production and specifically the addition of ADUs. The center’s study recommended a raft of measures to “unblock” that market: relax the parking requirements, streamline the project approvals, and even bless the past illegal dwellings by permitting them for occupancy once they met the building code.

McKinsey consultancy in 2016 flagged multifamily properties from the 1930s for allocating too much space to parking (at the expense of housing). Beverly Hills has many such multifamily properties because the hurdles to redevelopment were relatively high here. Statewide, McKinsey said, these parcels can accommodate between a half-million and one million additional dwelling units like ADUs before the parcels even reached the residential density ceiling in place today.

“The challenge is to overcome current barriers—whether regulatory, political, economic, or cultural—to unlock supply and actually build these much-needed homes,” said the McKinsey in its policy toolkit.

The state’s Department of Housing and Community Development published a 200-page report that urged local cooperation with Sacramento to reach the state’s housing goals. Titled California’s Housing Future: Challenges and Opportunities, the report was aimed squarely at localities (like Beverly Hills) that have under-produced housing in recent decades. However the approach was less carrot and more stick: the report prescribed a menu of state policies to preempt local regulations and to take the public out of the process.

Many of the measures prescribed by California’s Housing Future were enacted in recent years by an activist legislature in Sacramento that is newly focused on the production of housing — and lots of it. The preamble to Government Code §65852.2 underscores the importance of the ADU in the larger picture.

California faces a severe housing crisis. The state is falling far short of meeting current and future housing demand with serious consequences for the state’s economy, our ability to build green infill consistent with state greenhouse gas reduction goals, and the well-being of our citizens, particularly lower and middle-income earners. Accessory dwelling units offer lower cost housing to meet the needs of existing and future residents within existing neighborhoods while respecting architectural character.

What follows in that statute are a raft of measures that do preempt local “regulatory barriers” as were called out in these reports. Gone are minimum unit size and parking requirements, for example; forget about Planning Commission review. The public no longer has a say because approvals are now ministerial rather than discretionary. Now the path to ADUs is unblocked and unlocked!

Far-Reaching Effects on Multifamily Tenants

The landlord has a number of pathways to realize additional net operating income by adding new accessory dwelling units. This is what state law allows in multifamily-zoned areas.

  • The landlord can add at least one ADU within an existing multifamily building. That includes any ‘non-livable’ space (per the language of the statute) and the law tees-up some examples: a storage room, boiler room, passageway, attic, or even a basement. But any common area can be converted even spaces in use such as a recreation room, laundry facility, or management office. The number of ADUs within the structure is limited to not more than 25% of the number of existing units.
  • Apart from the main structure the landlord can add up to two ADUs by converting existing off-street parking areas. That includes any garage, carport, or even an uncovered parking area if it can be converted to dwelling uses or a new ADU structure built. The new ADU(s) need only meet basic building codes and city setback regulations.
  • The landlord does not have to replace parking that was converted into an ADU. That is explicit in the law. Indeed the city can’t even require it. There is no provision in the law that will compensate tenants for parking, or any housing service, that is lost to an ADU conversion — even if the rental agreement includes parking, storage, or laundry or whatever. (We reached out to the Rent Stabilization Office with a question about any city requirement but we didn’t receive a response.)
  • ADUs can be shoehorned just about anywhere. The state has prohibited localities from imposing a minimum size requirement on ADUs which means many common areas can be converted into small efficiency units. The law also disallows any restriction on the upper size limit to permit ADUs of at least 850 square feet (studio) or 1,000 square feet (1-bedroom).
  • ADU projects are not subject to discretionary review. Don’t expect to be noticed about a planning commission hearing or indeed expect any heads-up at all before a permit is granted. By then it’s already gone through the permit process.

Read more about all of the new provisions in the state’s California Accessory Dwelling unit Handbook.

Say Goodbye to Housing Services

Garages and carports will be converted into ADUs as will recreation rooms and management offices. Permit applications are already in process. Illegal units like basement apartments can be lawfully converted and ‘grandfathered.’ Even a broom closet can be repurposed into a new apartment if it meets the building code.

We will see many such conversions because at today’s rents the cost of construction can be recaptured in only a couple of years. Of course a renting household won’t care about losing a broom closet. But it will experience inconvenience if the laundry room is converted into an ADU.  That battered laundry room and old coin-op machines never looked so good until they’re gone!

Indeed there are fewer coin-op laundries than in years past. That was such a concern to San Francisco lawmakers that they adopted an ordinance to put the break on the conversion of a laundry room into an ADU. (They also enacted barriers to taking a commercial laundry facility out of service.)

Apartment Association of Greater Los Angeles ADU webinar promoFrom the landlord’s perspective this is all good news. “State law allows you to increase the number of rental units you own with very few restrictions,” said the Apartment Association of Greater Los Angeles to member landlords in a promotion for an ADU webinar advertisement. “Learn about the NEW California laws that allow YOU to add more rental units at your property and boost your income.”

Say Goodbye to Parking?

Of most concern to certain renting households will be the inevitable loss of off-street parking to an ADU conversion. State law allows it; indeed the law won’t let a locality like Beverly Hills even impose a parking-replacement requirement.

When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit or converted to an accessory dwelling unit, the local agency shall not require that those offstreet [sic] parking spaces be replaced. — GOV §65852.2(a)(D)(xi)

The city’s Multi-Family Residential ADU Guidelines for landlords provides helpful advice. “If parking for the primary multi-family residential structure would be lost because an ADU is proposed in place of an existing garage or parking area, the city will not require you to replace the parking that would be lost.” (Where is the FAQ for tenants? You’re reading it!)

The landlord association found much to crow about here too. “YOU can eliminate parking at YOUR building with no additional parking requirements so long as your property is located within one-half mile of mass-transit,” said the webinar promo. “Learn how YOU can add even more Accessory Dwelling Units.”

405 Shirley garages
405 Shirley: Lots of opportunity to maximize those carports for rental income!

Parking Options

A landlord may temporarily remove off-street parking for construction purposes and some will permanently repossess resident parking for conversion into an ADU. If a tenant loses off-street parking temporarily due to construction, then the landlord should arrange a monthly permit for curbside parking (and pick up the cost).

We encourage tenants to look closely at the means and method plan that is provided prior to the start of construction. Does it suggest that construction workers need to park on the property? Can alternate arrangements be made? The landlord should make every accommodation to tenants during construction and especially if a disabled tenant will temporarily lose off-street parking. (Read more about means and method plans in our explainer, Means and Method Plan: What You Need to Know.)

When off-street parking is permanently repossessed for an ADU conversion there are a few options:

  1. Park at the curb using daytime and overnight preferential parking permits. These permits cost $37 and $122 annually, respectively. Again it is not clear whether the landlord can be required to pick up that cost. The practical problem for tenants is that it is difficult to find available curb space in a multifamily area. On many blocks occupancy runs close to 100% later in the evening. ADU conversion of off-street parking will add to the problem.
  2. Park in a city garage. The city allows overnight parking in several garages by monthly agreement at prices ranging from $85 at the La Cienega Tennis Center to $155 at the 9510 Brighton garage. The North Crescent garage is a relative bargain at $95. These garages also provide overflow capacity on a nightly basis; the flat rate of $3 to $5 applies after 6pm. However the practical problem here is that city garages can close as early as 8pm on weekends (Crescent) or midnight on weekdays (Reeves and Beverly-Canon). The Third Street garage runs 24 hours (automated) but it is not convenient to most multifamily areas.
  3. Contract for private off-street parking. A few posts on Craigslist and Nextdoor have offered off-street parking for about $150 monthly but availability seems limited. The practical problem with this option is that residential leases often preclude non-resident parking and the unwitting parking lessor may be towed by management. If you contract for parking it might be a good idea to limit the search to condominium buildings: owners may have more flexibility to lease parking and it is less likely that condominium parking will be replaced by an ADU!

Compensation for Lost Parking?

The law is silent about compensating tenants who lose parking when it is contractually obligated by the rental agreement. We reached out to the Rent Stabilization Office to ask whether the city is making any arrangements to require such compensation for RSO households but we received no reply.

It is worth distinguishing between contractually-obligated off-street parking and parking that is provided at the discretion of the landlord. There is a difference and it depends on the rental agreement. If parking is contractually provided it will state that clearly. However we are seeing agreements that relieve the landlord of the obligation. For example:

Lessor does not provide parking or any storage space, regardless of whether there is a garage or other designated area for tenants to park and store items. In Lessor’s sole discretion however, Lessor may provide a parking space for Lessee for parking of an operable, California registered vehicle only, though Lessor may withhold or withdraw the right to use such a space on seven (7) days notice for any reason or no reason.

Another agreement we reviewed gets right to the point: “Upon seven (7) days written notice to Renter, Owner may terminate Renter’s parking privilege…..”

These are examples of off-street parking that comes with an asterisk because the landlord is not actually obligated to provide the parking no matter what the tenant believe. If it is repossessed there is no obligation to compensate the tenant.

Other schemes may abound.

One new landlord demanded that current tenants sign a new lease. The rent didn’t change but the parking section did: the right to off-street parking was quietly deleted. A tenant who signs that agreement would forfeit off-street parking and of course would relinquish any claim to future compensation. As it happened, that landlord soon applied to convert four parking spaces into two ADUs. We will cover that case and others in an upcoming post about ADU conversion case studies.

(Pro-tip: If your property changes hands do NOT sign a new lease. The landlord can’t require it as a condition of extending a month-to-month tenancy.)

Whom Do I Call With a Question?

The new ADU standards are complicated and the city provides no information to tenants. So we suggest that you contact planner Reina Kapadia at rkapadia@beverlyhills.org or 310–285–1141 with any question that you have.

For questions specific to tenant rights, such as lost parking or concerns about the means and method plan, contact the Rent Stabilization Office at bhrent@beverlyhills.org or 310–285–1031. We always welcome your questions. Please get in touch with Renters Alliance.

Whom Do I Call With a Complaint?

City Council bears some responsibility here. City hall saw these changes coming through the legislative process years ago and the city did oppose them. But as far as city policies that might cushion the impact, city hall has focused exclusively on single-family residents. For example the Planning Commission has held two study sessions about single-family ADUs and the Community Development Department has held a community meeting. All focused only on single-family ADUs.

Of course the promised future study session and community outreach meeting for multifamily households did never materialize.

You could ask your City Council why the city has focused exclusively on single-family ADUs but has paid no attention to the renting households that may lose parking and other amenities. You can reach City Council by phone at 310–285–1013 or individual councilmembers by email:

Find them ready to answer your questions and address your concerns!

Additional Resources