Post by High Priestess on Nov 19, 2017 15:59:32 GMT
How Berkeley laws impact ADUs -- some extracts from a community discussion:
(1)It depends on whether attached or detached; if detached, it depends on whether the home (main home) was owner-occupied on (some date in the past, is it 1987?); detached and main building was owner-occupied, you have to "register" with the rent board, but they do not set the rent amount. You will, however, be under the eviction laws (not sure I'm using the right terminology); you won't be able to end your tenant's stay in the home for a reason such as the one-year lease is over. That's where it got a little complicated for me to completely understand. (I had assumed that when a lease was over, it's up to both tenant and landlord whether to continue; the landlord is not free to ask the tenant to leave at that point). The person I spoke to at the Rent Board was quite helpful; they'll start by looking up your property address, and it's possible that there is some other "rule" that determines things at that juncture, that I haven't spoken of here. (or she may have been determining whether our home was owner-occupied at that past date. The owner-occupancy thing doesn't have to be *you* owned it, it just had to be "an owner".)
(2) About golden duplexes (and of non-golden duplexes) as it relates to ADUs.
Certain properties are eligible to become golden duplexes once a permitted second unit, including an ADU, is established and provided that certain criteria are met. By my estimate, there are over 10,000 Berkeley properties eligible to develop an ADU and over 70% of these are eligible to become golden duplexes.
The golden duplex exemption exempts the homeowners from the entire rent board regulation:
www.cityofberkeley.info/Rent_Stabilization_Board/Home/Ordinance__Rent_Stabilization_and_Eviction_for_Good_Cause.aspx
The most important benefit of ADUs is that over a long period of time, ADUs have so many different potential uses, including rental income. It is this versatility of use and not income potential that makes ADUs so compelling. Newly applicable Rent Board regulations applicable to single family homeowners that develop ADUs harm the versatility of some ADUs. So, it makes sense for homeowners contemplating an ADU investment to spend a little time to learn about which ADUs trigger which Rent Board requirements at which properties.
At Councilmember Kate Harrison's ADU workshop on Nov 29, I will present the 5 steps most homeowners can follow to determine, for free, whether their property is likely to be eligible to become a golden duplex with the addition of a new ADU.
At properties that are ineligible to become golden duplexes (i.e., where the rent board rules would apply), it becomes much more complicated. Those requirements will also be addressed at a high level at the Nov 29 workshop.
Generally, though, my understanding is.... If the ADU is an attached addition ADU or conversion ADU, then annual rent price increases are controlled by the Rent Board (and average 1-2% per year) whereas if it is a detached ADU, then it is exempt from rent price controls (but there are some complicated exceptions that can apply that require careful review and good counsel). Eviction controls apply to all ADUs (detached, attached addition, and conversion ADUs) at properties that are ineligible to become golden duplexes. At such properties, the Rent Board's rules allow tenants to stay in place for as long as they want. The Rent Board rules also require homeowners at such properties to pay a tenant $15,000 to $20,000 for an "owner move-in" eviction. Homeowner's development choices can affect how the Rent Board regulations apply to their newly built and rented ADUs.
(3) The penalty for developing an informal second unit (without permits) are deceptively significant. The penalty appears to be that both units become fully regulated under Rent Board regulations. This is true even at properties that were eligible to become golden duplexes before the informal unit was established.
Once the informal second unit is established, then the homeowner is no longer eligible to create an ADU (ADUs can only be the second unit on any residential property). There are no clear provisions in the ADU ordinance, the Rent Board rules or elsewhere in the municipal code that explain how to re-establish eligibility to create a golden duplex. Informal second units can squander your opportunities.
So, to all homeowners who may be residing at properties eligible to become golden duplexes, I strongly advise you to develop all second units formally with permits. If you choose the informal approach, you could expose yourself to interminable regulation and a significant and avoidable lowering of your long term property values and cash flow. My strongest recommendation: Do it but do it with permits.
It seems unlikely that anyone (not your architect, not your builder) will warn you about these possible downsides of developing a second unit without permits.
Eliminate the golden duplex exemption and you eliminate the greatest deterrent that exists to creating even more unpermitted and potentially unsafe second units in every Berkeley neighborhood.
(4) A golden duplex does not expire with the 1979 owners. If it was owner occupied on Dec. 31, 1979 and is still owner occupied it is still a golden duplex, even if the owner has changed. The rules for establishing a golden ADU would require some discussion but I don't see any difference in the rationale for a golden duplex and an ADU exemption.
(5) Owner occupancy:
Q: What constitutes evidence of current homeowner occupancy?
A: Rent Board regulation and ordinance seem to be silent on what evidence is sufficient to support a golden duplex claim. If it was easy to find answers to questions like this, then the golden duplex exemption would not continue to be the most important exemption that nobody knows about.
There are two categories of evidence that should suffice. The first is the current property tax roll, as you mentioned. The 1979 tax roll is the primary evidence the Rent Board currently uses to determine owner occupancy in 1979. It stands up to reason, therefore, that the most current property tax roll (i.e., your property tax bill showing your homeowner's exemption) would be the best form of evidence to support a golden duplex exemption claim.
By contrast, the Rent Board regs - Sec 524(B) - list 7 alternative forms of evidence that a tenant (but not necessarily a homeowner) can use as evidence of occupancy:
www.cityofberkeley.info/Rent_Stabilization_Board/Home/Regulation_Chapters_1-6.aspx#521
I did not attend the most recent Planning Commission Meeting but I tracked it and read several very good comment letters to the Commission, including yours.
www.cityofberkeley.info/uploadedFiles/Planning_and_Development/Level_3_-_Commissions/Commission_for_Planning/2017-11-15_AGENDA.pdf
I have a single family home at which I was planning to develop an ADU, and spent a little money on design. But when the Rent Board adopted new regs earlier this year to extend rent control to certain single family homeowners that develop ADUs, as well as retroactively to certain previously built ADUs and second units, I placed my ADU development plans on hold. It has taken quite a few months for me to figure out what the new rules actually mean (and I interpret regulations for a living!). So, I agree with you that cost and applicability of Rent Board regulations to ADUs clearly act as impediments to new housing development in Berkeley. The recent ADU workshop survey results provide strong evidence supporting your views:
www.cityofberkeley.info/uploadedFiles/Planning_and_Development/Level_3_-_Commissions/Commission_for_Planning/CM%20Bartlett%20Letter%20to%20Planning%20Commission%20regarding%20ADUs.pdf
All of the research from cities and universities suggests that the close relationship that forms between a single family homeowner and an ADU tenant is distinct from relationships that form between tenants and landlords in apartment buildings. It is this unique proximity-driven relationship that makes ADUs affordable by design, merely by existing.
ADUs also hold great potential to become more affordable in the future both for homeowners and for tenants. If and when I have an ADU to rent, I too will rent it permanently below market, but before proceeding to create a new rental housing unit, I'll need more confidence that I will not be unexpectedly penalized for building new housing.
Unlike large new apartment buildings, which tend to modestly reduce housing cost burdens for tenants but not homeowners, new ADUs are known to reduce the housing cost burdens of BOTH tenants AND homeowners. So, I strongly agree with your closing statements.
I will reiterate that good counsel is often needed to determine with certainty whether a golden duplex claim is valid. So, if you plan to develop an ADU, then you should insist on knowing with certainty BEFORE incurring significant development expenses what Rent Board rules will apply to rental of your new ADU. A good advisor can also advise you about clever ways to configure your ADU project to minimize the cost impacts of those rules.
(1)It depends on whether attached or detached; if detached, it depends on whether the home (main home) was owner-occupied on (some date in the past, is it 1987?); detached and main building was owner-occupied, you have to "register" with the rent board, but they do not set the rent amount. You will, however, be under the eviction laws (not sure I'm using the right terminology); you won't be able to end your tenant's stay in the home for a reason such as the one-year lease is over. That's where it got a little complicated for me to completely understand. (I had assumed that when a lease was over, it's up to both tenant and landlord whether to continue; the landlord is not free to ask the tenant to leave at that point). The person I spoke to at the Rent Board was quite helpful; they'll start by looking up your property address, and it's possible that there is some other "rule" that determines things at that juncture, that I haven't spoken of here. (or she may have been determining whether our home was owner-occupied at that past date. The owner-occupancy thing doesn't have to be *you* owned it, it just had to be "an owner".)
(2) About golden duplexes (and of non-golden duplexes) as it relates to ADUs.
Certain properties are eligible to become golden duplexes once a permitted second unit, including an ADU, is established and provided that certain criteria are met. By my estimate, there are over 10,000 Berkeley properties eligible to develop an ADU and over 70% of these are eligible to become golden duplexes.
The golden duplex exemption exempts the homeowners from the entire rent board regulation:
www.cityofberkeley.info/Rent_Stabilization_Board/Home/Ordinance__Rent_Stabilization_and_Eviction_for_Good_Cause.aspx
The most important benefit of ADUs is that over a long period of time, ADUs have so many different potential uses, including rental income. It is this versatility of use and not income potential that makes ADUs so compelling. Newly applicable Rent Board regulations applicable to single family homeowners that develop ADUs harm the versatility of some ADUs. So, it makes sense for homeowners contemplating an ADU investment to spend a little time to learn about which ADUs trigger which Rent Board requirements at which properties.
At Councilmember Kate Harrison's ADU workshop on Nov 29, I will present the 5 steps most homeowners can follow to determine, for free, whether their property is likely to be eligible to become a golden duplex with the addition of a new ADU.
At properties that are ineligible to become golden duplexes (i.e., where the rent board rules would apply), it becomes much more complicated. Those requirements will also be addressed at a high level at the Nov 29 workshop.
Generally, though, my understanding is.... If the ADU is an attached addition ADU or conversion ADU, then annual rent price increases are controlled by the Rent Board (and average 1-2% per year) whereas if it is a detached ADU, then it is exempt from rent price controls (but there are some complicated exceptions that can apply that require careful review and good counsel). Eviction controls apply to all ADUs (detached, attached addition, and conversion ADUs) at properties that are ineligible to become golden duplexes. At such properties, the Rent Board's rules allow tenants to stay in place for as long as they want. The Rent Board rules also require homeowners at such properties to pay a tenant $15,000 to $20,000 for an "owner move-in" eviction. Homeowner's development choices can affect how the Rent Board regulations apply to their newly built and rented ADUs.
(3) The penalty for developing an informal second unit (without permits) are deceptively significant. The penalty appears to be that both units become fully regulated under Rent Board regulations. This is true even at properties that were eligible to become golden duplexes before the informal unit was established.
Once the informal second unit is established, then the homeowner is no longer eligible to create an ADU (ADUs can only be the second unit on any residential property). There are no clear provisions in the ADU ordinance, the Rent Board rules or elsewhere in the municipal code that explain how to re-establish eligibility to create a golden duplex. Informal second units can squander your opportunities.
So, to all homeowners who may be residing at properties eligible to become golden duplexes, I strongly advise you to develop all second units formally with permits. If you choose the informal approach, you could expose yourself to interminable regulation and a significant and avoidable lowering of your long term property values and cash flow. My strongest recommendation: Do it but do it with permits.
It seems unlikely that anyone (not your architect, not your builder) will warn you about these possible downsides of developing a second unit without permits.
Eliminate the golden duplex exemption and you eliminate the greatest deterrent that exists to creating even more unpermitted and potentially unsafe second units in every Berkeley neighborhood.
(4) A golden duplex does not expire with the 1979 owners. If it was owner occupied on Dec. 31, 1979 and is still owner occupied it is still a golden duplex, even if the owner has changed. The rules for establishing a golden ADU would require some discussion but I don't see any difference in the rationale for a golden duplex and an ADU exemption.
(5) Owner occupancy:
Q: What constitutes evidence of current homeowner occupancy?
A: Rent Board regulation and ordinance seem to be silent on what evidence is sufficient to support a golden duplex claim. If it was easy to find answers to questions like this, then the golden duplex exemption would not continue to be the most important exemption that nobody knows about.
There are two categories of evidence that should suffice. The first is the current property tax roll, as you mentioned. The 1979 tax roll is the primary evidence the Rent Board currently uses to determine owner occupancy in 1979. It stands up to reason, therefore, that the most current property tax roll (i.e., your property tax bill showing your homeowner's exemption) would be the best form of evidence to support a golden duplex exemption claim.
By contrast, the Rent Board regs - Sec 524(B) - list 7 alternative forms of evidence that a tenant (but not necessarily a homeowner) can use as evidence of occupancy:
www.cityofberkeley.info/Rent_Stabilization_Board/Home/Regulation_Chapters_1-6.aspx#521
I did not attend the most recent Planning Commission Meeting but I tracked it and read several very good comment letters to the Commission, including yours.
www.cityofberkeley.info/uploadedFiles/Planning_and_Development/Level_3_-_Commissions/Commission_for_Planning/2017-11-15_AGENDA.pdf
I have a single family home at which I was planning to develop an ADU, and spent a little money on design. But when the Rent Board adopted new regs earlier this year to extend rent control to certain single family homeowners that develop ADUs, as well as retroactively to certain previously built ADUs and second units, I placed my ADU development plans on hold. It has taken quite a few months for me to figure out what the new rules actually mean (and I interpret regulations for a living!). So, I agree with you that cost and applicability of Rent Board regulations to ADUs clearly act as impediments to new housing development in Berkeley. The recent ADU workshop survey results provide strong evidence supporting your views:
www.cityofberkeley.info/uploadedFiles/Planning_and_Development/Level_3_-_Commissions/Commission_for_Planning/CM%20Bartlett%20Letter%20to%20Planning%20Commission%20regarding%20ADUs.pdf
All of the research from cities and universities suggests that the close relationship that forms between a single family homeowner and an ADU tenant is distinct from relationships that form between tenants and landlords in apartment buildings. It is this unique proximity-driven relationship that makes ADUs affordable by design, merely by existing.
ADUs also hold great potential to become more affordable in the future both for homeowners and for tenants. If and when I have an ADU to rent, I too will rent it permanently below market, but before proceeding to create a new rental housing unit, I'll need more confidence that I will not be unexpectedly penalized for building new housing.
Unlike large new apartment buildings, which tend to modestly reduce housing cost burdens for tenants but not homeowners, new ADUs are known to reduce the housing cost burdens of BOTH tenants AND homeowners. So, I strongly agree with your closing statements.
I will reiterate that good counsel is often needed to determine with certainty whether a golden duplex claim is valid. So, if you plan to develop an ADU, then you should insist on knowing with certainty BEFORE incurring significant development expenses what Rent Board rules will apply to rental of your new ADU. A good advisor can also advise you about clever ways to configure your ADU project to minimize the cost impacts of those rules.