San Jose may offer amnesty for illegal dwelling units

With the desperate need for affordable housing in the region growing more dire, San Jose leaders are considering allowing some owners of illegal granny units to come forward without fear of facing penalties or fines.

The San Jose City Council is set to vote Tuesday on whether to launch an amnesty program for owners of illegally converted garages, sheds or other types of inlaw units to encourage residents to take the mandatory steps to turn them into safe, legal dwellings.

The two-year pilot program would mark the city’s latest effort to promote accessory dwelling units as a promising avenue to provide much-needed housing amid the region’s worsening crisis. As a result, the number of building permits the city issued for in-law units has grown tenfold in the past four years. If passed, the city will join San Francisco, San Mateo County and Santa Cruz County, which have similar programs in place.

“Our number one goal is to create a safe environment for our residents,” said Rosalynn

Hughey, director of the city’s planning, building and code enforcement department. “But as everybody knows, we’re in a statewide crisis, and we see the productions of ADUs — as well as the legalization of ADUs — really does help provide more affordable housing for our residents.”

Under the program, the city plans to hire third-party inspectors who would determine whether a unit has any zoning, safety or health violations based on the regulations in place when the unit was constructed. Residents would then be informed about how to make the necessary repairs. City staff are finalizing a checklist that will be available for homeowners and investigators to use when assessing a unit’s condition.

If a granny unit poses primarily aesthetic issues that cannot reasonably be amended, such as being built too close to the edge of the property, the homeowner likely would be able to acquire a permit without making any changes or paying any fees.

But the city will not overlook just any code violations.

In the case of serious health and safety hazards, such as dangerous wiring, inadequate fire protection and lack of sanitation, the inspector would be required to report those issues to the city, and the homeowner would have to pay for repairs before acquiring a permit.

City officials say homeowners who take part in the program will benefit from increased property values, better insurance coverage and added legitimacy when it comes to finding tenants for their units.

“The idea is to focus on safety and not sweat the small stuff,” Mayor Sam Liccardo said in an interview. “We think that this can be a great win-win for renters, as well as homeowners — many of whom are struggling to pay their mortgage.”

Under current city regulations, any owner of an illegal granny unit who seeks to bring it up to code is required to pay for building permits and outstanding taxes and fees. But the city’s proposed amnesty program would waive those fees for qualifying property owners.

Although its projections are anecdotal, the city estimates that at least 150 property owners will take advantage of the program within the next year and a half — each saving an estimated $5,862 in costs for plan reviews and permit fees, according to a city report.

Launching the program and waiving permit fees for the first year and a half would cost the city approximately $1.1 million, which is currently unaccounted for, the report states. If passed by the council Tuesday, staff members plan to request the needed funds during the 2020-2021 budget process in the spring.

While inspectors will focus the scope of their work on the granny units, they will be required to report any life-threatening safety issues they may come across on the property, according to the report.

Over the past year, the City Council has made a push to promote granny units, taking significant steps to simplify the permitting and building process for residents.

And it paid off. The city provided permits for the construction of 416 units in 2019 — up from about 40 in 2016.

Over the past year, the city has created a master ADU program where residents can quickly obtain permits by choosing a preapproved design, hired a full-time “ADU ally” to help homeowners navigate the process, launched an online portal where residents can find out whether they’re eligible to build a granny unit on their property, and started “ADU Tuesdays,” where homeowners and developers can theoretically obtain a building permit within 90 minutes through an express lane at the city’s permit center.

In December, the City Council also adopted zoning ordinance amendments to match state ADU laws that include allowing accessory dwelling units up to 500 square feet that are attached to a house and eliminating minimum lot size requirements.

Despite the big strides already made, Liccardo said there’s still more that he wants to tackle when it comes to granny units.

As a next step, Liccardo and his team are working with private partners and nonprofit organizations to devise new ways to help homeowners acquire loans to build additional units on their properties.

“Financing the construction of backyard homes will be a critical priority of mine in the years ahead,” Liccardo said. “… It’s not going to suddenly solve our housing crisis, but backyard homes — if we’re able to construct thousands rather than a few hundred — seem very promising.”