SJ Mayor Proposes ‘Granny Unit’ Program to Boost Housing Supply

San Jose Mayor Sam Liccardo pitched a creative idea to up the affordable housing stock, and some residents might already have the solution on their property: their garages.

Liccardo, in partnership with Housing Trust Silicon Valley, announced a program to waive city impact fees and offer loan incentives for San Jose homeowners who build an accessory dwelling unit (ADU), otherwise known as a “granny unit,” on their property.

A granny unit is an additional room built into an existing home. It can be a standalone unit or a garage, kitchen or similar space that has been converted into a housing unit.

The program, coined “Yes in My Backyard,” or YIMBY—the opposite of NIMBY, or Not in My Backyard—proposes an allocation of up to $5 million in housing funds for the loans, along with some matching grants from Housing Trust.

To participate, interested homeowners would agree to restrict their ADU for low- to mid-income households. In return, the city would issue a forgivable loan to cover construction and other related costs up to $20,000, so long as the homeowners keep their ADU affordable for at least five years and not put list their unit on Airbnb or any other similar short-term rent service during the duration of the loan.

“Our housing crisis requires we pursue creative and innovative approaches to spur more housing development at all income levels,” Liccardo said in a press release. “This unique opportunity to partner with the Housing Trust will help us leverage the city’s affordable housing dollars more efficiently, and increase the stock of affordable housing for families struggling to keep up with the high cost of living in our valley.”

Liccardo’s memo also suggested the YIMBY project could work with philanthropic and business organizations and construction firms to prefabricate all-inclusive ADU packages that would relieve sone of the cost burden on homeowners.

“Creating ADUs is a great way to add more housing opportunities in existing single-family neighborhoods,” Housing Trust CEO Kevin Zwick said in a press release. “We’re happy to see San Jose continue to use innovative tools to address housing in the region and invite everyone from philanthropic and corporate partners to homeowners to become part of the solution.”

The proposal garnered support from council members Magdalena Carrasco, Sylvia Arenas and Pam Foley. The entire council is set to discuss the YIMBY idea as part of its budget hearings this Tuesday.

13 Comments

  1. I have a better idea,
    Have the city give another $200K to home sale of anyone over the age of 60, selling a house and moving out of the state. The city can than pack ten illegal aliens into each bed room, get them drivers licenses, sign them up to vote as Democrats ensuring noting will ever change here.

  2. This is an interesting and innovative program. One thing I wonder is how the City or the Trust will enforce the ban on putting those ADUs on air bnb. Sure is enticing, so there’s gotta be a sharp penalty for those homeowners/landlords who let greed get the best of them.

  3. For years San Jose Officials did their very best to “outlaw” granny-units.

    Re-branded as “Accessory Dwelling Units” for strangers that cannot afford to live in the Bay Area ADU’s are now warmly embraced.

    The leftist Democrats are always searching for the “new low” and they will continue to hoist one plan after another to increase a population who can and will be bought to “vote” for them.

    ADU’s do have an unintentional advantage. Property owners are not going to rent ADU’s to the “Great Unwashed” and depending on the locale, ADU’s will be a lucrative investment in the putsch for “gentrification.”

    No income, very low income and low income “illegals” awaiting deportation will not appreciate the mean streets of San Jose. There will be “no” ADU’s for them.

    Nice try.

    David S. Wall

    • Good insight.

      It’s true. Residents of ADU’s get closer “vetting” from people who have substantial, REAL investment in the community.

      More ADU’s. Less subsidized, below-market rate, “affordable” public housing. San Jose will be a better place.

  4. I like the idea. I moved here from Memphis 9 years ago purely to be near enough to watch my granddaughter grow up.
    First I rented one room with my own bath & shared kitchen in Willow Glen with a person who became my friend. She ended up having to sell & moved to Portland after 3 years. I struggled for 2 years paying rent on a condo (a low kept studio behind a strip mall off Hamilton in Campbell). I was about to lose that uphill struggle, but while driving in circles searching for something/anything affordable, I received the call I’d been waiting on for 3 years & moved into these privately owned apartments which are run somewhat LIKE hud, but are NOT hud. Living here has been a prayer answered & a dream come true for me, I was on their waiting list for 3 years, waiting, but now I’m set or as set as I can be for now! And& grateful.
    So YES. Please. This dear, lovely, hardworking, intelligent grandmother (me 😊) would appreciate the “grandma homes” thing coming to life! It’s so needed.

  5. My neighbor constructed an extension to her garage. Now she has day laborers living there who start drinking beer after coming home and blast the neighborhood with their music. We can no longer sit in our backyard in peace.

    • > We can no longer sit in our backyard in peace.

      ADU’s are better than public housing, but there is a downside.

      It increases residential density, traffic, and number of vehicles parked on the street.

      I’m not a big fan of housing market regulation, but there is a certain amount of logic in saving ADU landlords from themselves.

      Short of regulation, the city should publicize “guidelines” for “best practices” for an ADU. Guideline number one: NO MORE than two residents per unit.

      I also think the city should discourage parents with children from occupying ADU’s.

  6. Plenty of owners will apply to legalize their non-conforming rentals if the city simply makes it easy.

    So, why does the city need to shovel another $5 MILLION of taxpayer loot into a program where there are already lots of homeowners ready, willing, and able to either legalize their non-conforming units or build new ADU’s?

    I’ve done plenty of these units over the years, beginning in the 1970’s. In every case — bar none — the rental income more than offset the borrowing costs, even if the entire amount necessary to build the ADU had to be borrowed.

    If a homeowner has room on their lot to build another unit, the rental income always covers the necessary borrowing, even if the property owner has to borrow 110% of the entire construction cost. The income from the ADU will provide enough free cash flow in addition to the mortgage payments to give the homeowner a nice income.

    That was the economics of the situation even when interest rates approached 20%. With interest rates now in the low to mid-single digits, it’s a no-brainer. The homeowner can make close to double the cost of the loan, with every dollar above the cost of loan repayment being net spendable income.

    All the city needs to do is say, “OK, do it. We won’t penalize you for renting that unit before, we’ll just help you get the necessary permits.” Or: “If you want to add an ADU, we’ll make the paperwork easy-peasy.”

    So, where is that “$5 million” going? It is certainly isn’t necessary to get this program up and running. NO public funds are needed at all. Property owners only need the process expedited, and the city’s red tape cut.

    Since no public money is needed to get this ADU scheme moving forward, I smell something fishy.

  7. I actually think Sam may be entering the onset of Alzheimer’s or dementia This thought process cannot be normal.

  8. Spend $200k+ to build an ADU, rent it out and then you are subject to 100+ pages of landlord regulations which gives your tenant more rights than you as the property owner. Yeah, right! Liccardo continues to show what an idiot he is.

  9. If you want your wages to go UP… get educated in a skill that’s in demand by local businesses.

    Wages don’t just go up by themselves… unless you live in Bernie Sanders’ make believe world.

Leave a Reply