Eager to boost the supply of affordable housing, Long Beach city officials have devised a program that can help a limited number of homeowners build an additional unit on their land.
But before launching it they had to decide what to name it.
“We’ve been playing with the name for a while,” said Mayor Rex Richardson, who added that a news release promoting the event was delayed for several days for naming purposes. “We’re building the bike the way we ride it.”
Long Beach officials have issued a self-explanatory “Backyard Builders Program“, the hope is that a partial solution to the affordable housing shortage lies in the unused spaces of the city’s homeowners’ properties. It’s a concept that’s widely supported by low-income housing advocates, though some argue that the city’s version should have included more tenant protections.
Long Beach Pilot Program Uses one-time funding that would provide low-to-zero-interest loans of up to $250,000 to 10 homeowners to build accessory dwelling units, or ADUs, on their lots. Those units would have to be rented to low-income individuals or families for at least five years.
Interested applicants can apply here https://www.longbeach.gov/lbcd/hn/aduloan/.
“Long Beach has been a leader in ADU production,” Richardson said. “And we’ve done all the work we needed to do … to make it easier for people to develop an ADU in their backyard.”
Rose Institute of Claremont McKenna College This was confirmed in an April report Long Beach was one of the most ADU-friendly cities in the state, issuing 1,431 ADU permits between 2018 and 2022. While this total lags behind larger cities like San Diego (2,867), Long Beach issued 317 permits per 100,000 residents.
For this pilot program, ADUs, as defined by the city’s Community Development Department, must have independent facilities, including a living room, bedroom, kitchen and bathroom.
In addition to agreeing to temporary rent caps, property owners must live on-site and have fewer than four units already on their land.
These units can be rented to anyone earning 80% or less of the Los Angeles County median income, which equates to $77,700 for a single person, $88,800 for a two-person family, $99,900 for three people, and $110,950 for four people. Los Angeles County Regional Planning Department,
But the program gives landlords an additional financial incentive to rent out these ADUs to recipients of Long Beach’s Housing Choice Voucher program, which provides a portion of the rent for those who fall into the extremely low-income, very low-income or poor categories. low income group,
ADU construction has become more expensive in recent years, labor and material costs Increases will be 11% and 9% in 2021 and 2022, respectively, while construction labor costs will rise 34% between 2018 and 2023.
The loan provides up to $250,000 for planning, permitting and construction costs, though Backyard Builders community program specialist Kelly Pagele doesn’t anticipate the loan amount will be that high.
The interest on the loan will remain at 0% as long as the owner rents the ADU to a low-income recipient. A condition for loan eligibility is that the owner must rent the home to a voucher recipient for at least five years or to a non-voucher, low-income tenant for seven years.
If the ADU is rented to someone who does not meet the income limits after the five or seven-year period, the loan interest rate will increase to 3%. If the ADU is rented to an ineligible tenant prematurely, the owner will have to pay a $2,500 monthly penalty.
The prospect of low-income tenants being evicted worries Long Beach Residents Empowered (LiBRE), an advocacy group that strives to create and preserve affordable housing and tenant protections.
“We are glad that the city is investing in affordable housing and trying to reduce the housing shortage,” Andre Donado, Libre’s project director, said by phone. “However, every single tenant is at risk of being evicted after five years.”
Donado also expressed hope that the city would consider providing $4,500 in relocation assistance to low-income tenants displaced through no fault of their own in all cases.
The city is offering $4,500 or two months’ rent If the landlord demolishes or radically rebuilds a building, but in other cases only one month’s rent need be paid.
“I think there are a lot of positives to this program, and we would like to make it permanent with some adjustments,” Donado said.
The pilot project’s loans far outweigh the assistance of up to $40,000 provided by the California Housing Finance Agency’s ADU grant program, which awarded $125 million to help homeowners cover permitting and planning costs before funds ran out.
The city believes that home-rich, cash-strapped homeowners, especially seniors, can leverage the loans to build ADUs and create passive income. The program estimates that ADUs built with its loans will generate more than $1,000 in monthly income for owners who rent to voucher holders.
“You might be a grandma or somebody who has a lot of land, and you want to be part of the solution, but it might be hard for you to get funding or figure out a way to do that,” Richardson said.
To this end, the city is expected to appoint a project manager who will help loan recipients select the architect, builder, planner, contractor and others needed during the planning and construction process. That manager will serve as an intermediary between the property owner and the general contractor.
One caveat for interested property owners is that a qualified tenant cannot be a relative or family caregiver.
As for the loan, payments will be deferred for two years during the construction process.
Richardson said that since the program is based on loans that will be repaid over time, it will be self-sustaining. If it is deemed successful — meaning the ADUs are built and rented to low-income tenants — he said the city would consider looking for more revenue sources to expand the project.
The city is holding a series of Zoom webinars to gauge interest in the program and answer questions.
