City Committee To Consider More Money for ADU Program

The Economic Development and Technology Committee will consider $200,000 in additional program funding for the city’s accessory dwelling unit loan pilot program.

The item would also include an increase in loan caps for the program.

In 2020, the housing department started the Second Unit ADU Loan Pilot Program as part of the city’s ongoing effort to create more housing in a city with a growing dearth of available and affordable housing.

The program started with a budget totaling $674,500 ($600,000 for loans, and $74,500 for third-party project management).

“Through this program affordable housing initiative homeowners are incentivized to create an accessory dwelling unit (ADU) to be operated as an affordable rental unit on their property,” according to a city staff report.

Five ADU have been selected so far, including three new ADU projects, two existing unpermitted ADU projects.

The projects are in the design phase with $150,000 loans for the new ADUs and $75,000 for the unpermitted ADUs.

The program offers financial assistance to build an ADU through new construction or a garage conversion, or assistance to rehabilitate and bring up to code an already existing ADU.

Design With Skill will also assist homeowners from pre-design to permitting to bid preparation, as well as project oversight. The company will also provide advice to homeowners in choosing designers, builders, planners and contractors needed to build an ADU.

Senate Bill 9, which takes effect Jan. 1, allows residents to split their lots into two parcels and build more ADUs.

In the first option, new ADU Construction Loans up to $150,000 would be three-year loan terms with 1% simple interest. No payments would require for the term of the loan. The loan must then be paid in full through refinance prior to the end of the term, and the homeowner would agree to rent the ADU exclusively to Pasadena housing voucher tenants for seven years.

In the second option, which would apply to Existing Unpermitted ADUs, loans up to $75.000 would have 20-year loan terms with 1% simple interest, and deferred payments for the first five years

In addition, the Loan must be paid in full prior to the end of the term, and homeowner’s household income cannot exceed 80% area median income.

The meeting begins at 4 p.m. on Dec. 8 and can be viewed at: https://us02web.zoom.us/j/161482446