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Help for California’s Housing Crisis Is in the Backyard: Editorial Board

The state has passed legislation to expedite approval for accessory dwelling units.

(Bloomberg Opinion)—California is in the midst of a housing crisis, and homeowners opposed to development in their neighborhoods are making it worse. The state is trying a new approach: Turn some of them into mini-developers. It’s a smart idea that deserves Governor Gavin Newsom’s support.

The state recently passed legislation to ease zoning restrictions and expedite approval for so-called accessory dwelling units, or ADUs. A trio of bills would make it easier for Californians to convert a garage into a “granny unit” or to build a modest “casita” of, say, 750 square feet in the backyard and rent it out. Owners would be prohibited from using the structures for short-term rentals, but would be exempt from some local ordinances, such as those requiring off-street parking, large lot sizes or owner occupancy. The permitting process would be cut in half, from 120 to 60 days, and local fees would be regulated.

California has the second-lowest homeownership rate (after New York) of the 50 states. A 2016 McKinsey report estimated that Californians pay $50 billion more for housing annually than they can afford and that the state suffers more than $140 billion in lost economic output each year due to lack of housing.

It’s a vicious circle. The shortage of housing drives up rents and prices, and higher prices encourage opposition to development from homeowners seeking to lock in their gains. More than half the state’s housing is single-family detached units. In metropolitan Los Angeles and San Francisco, where shortages are acute, single-family homes predominate. For too many homeowners, Nimby — not in my backyard — is a credo.

Enabling more homeowners to produce rental units is a good way to create more housing — in effect, by letting owners opposed to development capture some of the gains. Previous legislation to encourage the construction of ADUs, which went into effect in 2017, has had an effect. Since then, Los Angeles has received more than 9,000 applications for ADUs. That may seem like small potatoes in a city of 4 million, but it’s a roughly 30-fold increase compared with the era before looser regulations, and it shows there’s promise in transforming more homeowners into developers.

According to a 2019 Department of City Planning report, Los Angeles now leads the nation in ADU permitting; more than 5,000 applications are expected in 2019. The city produced more housing in 2018 — issuing permits for more than 21,000 units — than in any year in the past three decades. Yet the need remains great, and some California localities, hooked on Nimby, are still blocking new ADUs with, for instance, permitting fees that can cost tens of thousands of dollars.

So the new laws are needed. Newsom has set a goal of 3.5 million new housing units by 2025, and recognizes that the housing shortage is hurting the state. He should sign the legislation.

--Editorial: Francis Wilkinson, Clive Crook.

To contact the senior editor responsible for Bloomberg Opinion’s editorials: David Shipley at [email protected].

© 2019 Bloomberg L.P.

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