Deed restriction on ADUs will hurt year-round rentals

It has come to my attention that there is a proposal that all future ADU permits will be required to be “perpetually affordable” with deed restrictions in accordance with SJCC 18.60.260.

If the goal is to encourage year-round rentals, this will do the opposite. This proposal will destroy the owner’s ability to get fair market rent and require the owner to get permission from the county each time they rent out their ADU. It is unclear how arduous this process would be, or how long this would take or what hurdles the owner would have to overcome. This deed restriction would make obtaining financing more difficult. This will forever burden the property thus decreasing property values.

This deed restriction on ADUs would greatly REDUCE future year-round rentals. This requirement would only be hurting those who depend on the income from renting out their ADUs.

Burdening the property with this requirement will discourage the private sector from building year-round rentals. Unlike OPAL which is funded by donations and public grants, private owners or developers must finance their rentals with cash or loans repayable with interest.

Building costs are now a minimum of $300 per sq. ft. A modest 1,000 sq ft ADU will cost $300,000 to build. No one will invest $300,000 to build an ADU and be restricted from renting it at fair market value. ADUs are smaller dwellings and thus more apt to be affordable increasing the probability of reasonable rents. There is also a dearth of year-round rentals for those who do not qualify for OPAL housing.

ADUs CANNOT BE VACATION RENTALS if detached, so they are more likely to be year-round rentals.

For example, I have built over a dozen ADUs in the last five years and all have become year-round housing. Not one of those would exist if I had been required to add this deed restriction.

Let your commissioners and the county know how you feel about this issue.

John Miller