Guide to the Affordability Bonus ADU Program in San DiegoJuly 23rd, 2022
California law states that every single family-zoned property is allowed one accessory dwelling unit (ADU) and one junior accessory dwelling unit (JADU) converted from existing space in the home. For multi-family properties, the law allows up to two detached accessory dwelling units as well as conversion of existing space into ADUs.
In the City of San Diego, it is also possible to build additional ADUs under the “Affordable ADU Bonus” program, created in response to a California mandate for jurisdictions to incentivize construction of affordable ADUs. Read on for the requirements of the ADU bonus program.
How many ADUs can you build under the ADU bonus program in San Diego?
The Affordable ADU Bonus program allows the construction of one additional unrestricted ADU (meaning the unit may be rented out at market rates) for every ADU deed restricted to the level of moderate income households for a period of 15 years, or restricted to the level of low income households for 10 years.
If you are within a Transit Priority Area (TPA), there is no specific limit to the number of bonus ADUs you can build. Outside the TPA, you may build one affordable ADU and one unrestricted ADU. On a single-family property, this means you could have a total of three ADUs (plus a JADU, but we don’t recommend those to investors, as they come with an owner occupancy requirement). On a multifamily property, this means you could have a total of four detached ADUs (or even more inside the TPA).
However, in all cases, the number of bonus ADUs allowed will also be limited by the floor area ratio (FAR, how many square feet of living space can be developed on the property in relation to the lot size), lot coverage, setbacks and height requirements of the underlying zone in which the property is located.
In other words, the total living space and building mass allowed would be the same as the original zoning. This is of course so that properties are not developed beyond the character of the neighborhood… but will also allow for increasing density on properties that were perhaps under developed given their lot size.
What is the deed restriction requirement under the affordable ADU program?
Deed restricted ADUs will have moderate income affordability limits in place for 15 years, or just 10 years if restricted to low income. After that period, you can rent out the ADU at market rates. For a single-family zoned property, the affordability restriction will be on title in second lien position. For a multifamily zoned property, the affordability restriction will be on title in first lien position.
What is the low- and moderate-income limit for ADU tenants under the program?
The San Diego Housing Commission publishes annual income and rent calculations for each income level. Below is the chart showing the rates at which the ADU could be rented. For example, a 3BR unit could be rented at up to $3,208 to a family of four with income up to $128,300, or up to $3,721 to a family of six with income up to $148,850, subject to a 15 year deed restriction for moderate income.
2022 Income and Rent Limits for San Diego County
Source: SDHC and Snap ADU (updated July 2022)
What are the verification requirements on income?
Property owners shall submit income verification to the San Diego Housing Commission (SDHC) before tenants move in so that the SDHC can determine eligibility of the tenants. Income information must be submitted annually to confirm continued eligibility under the program. If incomes increase beyond the limits, tenants will be asked to vacate within six months when their income reaches certain levels (typically about a 25% increase… but keep in mind the income limits area also increased each year).
How can I find out if my property is in a Transit Priority Area (TPA)?
You can use this interactive Transit Priority Area map to see if you are located in the TPA. Be sure to click the box on the right under Content -> Transit Priority Areas to turn on the map layer. Remember that even if you are not within a TPA, you may still be able to build one affordable ADU and a market rate ADU, so long as you conform to the FAR and lot coverage requirements.
What is the application process for the San Diego ADU Bonus Program?
The ADU project plans will need to be submitted to the City of San Diego Development Services Department (DSD), which will confer with the SDHC on eligibility. If the project meets the guidelines, the SDHC will draft the affordable housing agreement and deed of trust for recording the restriction on the property. SDHC will also sign off on the building permit for the units so that the construction may commence. The application is $600 and there is a $150 annual fee to verify income of the tenants.
What are the design requirements for ADUs under the affordable program?
The deed restricted affordable ADUs must be of comparable size, mix of bedrooms and amenities to the market rate ADUs. This is interpreted to mean that the affordable units must be within 15% of the square footage of the market rate unit size. Many investors would simply build the same unit for all of the ADUs to simplify their rental portfolio. Read more about renting out ADUs.
How can I best fit multiple units on my property?
The number one tip to fitting multiple units on a property is to stack units. The City of San Diego ADU regulations allow for stacking ADUs, so long as height and fire rating requirements are met. For instance, you must keep an external staircase at least 5’ away from structures and property lines (though you could choose to enclose the staircase and enjoy smaller setbacks).
How much will it cost to build multiple units?
There are some economies of scale when building multiple units, since we will be building more square footage yet mobilizing the same number of subcontractors required to construct a single unit. However, you will be constructing multiple expensive rooms, for instance kitchens and baths that have costly plumbing & finishes. This means the overall cost per square foot may still be moderate, especially if the units are small 1BR or 2BRs. Also, you will require fire rating between units, more robust foundation and framing, as well as stair access to upper units.
We would be happy to provide a detailed proposal for your project factoring in all of these considerations. The first step is to fill out a Project Assessment so we can give you ballpark pricing. If that looks roughly on target to you, we will dig into more details of your lot to refine the highly variable sitework costs so we can produce a full Proposal. From there, we would kick off the ADU Feasibility Study to verify all of the project costs and produce a final Price Guarantee for the design, permit and build of your ADU project.