Liberalized ADU laws must be defended in court

By Brian T. Hodges and Oliver J. Dunford

Whether it’s adding space for a loved one or renting out a small home for extra money, building accessory dwelling units bring a multitude of advantages for both homeowners and communities starved for affordable housing. The growing movement to enact laws to allow ADUs is a good first step to address the shortage of affordable housing. But it is not enough. Recent legal developments show that we need to do more to ensure that permits are, in fact, being issued and new ADUs can be built.

What some prospective ADU builders don’t expect is that, even with strong laws supporting ADUs, the permitting process can lead to a thicket of outdated land-use regulations that might stall—or worse yet, kill—an owner’s plans. But the good news is that ADUs are widely recognized as being an important part of our response to the housing crisis.

As a result, public interest law firms like Pacific Legal Foundation are actively representing owners free of charge in cases that advance the ADU movement and promote the development of more housing. 

Yet local governments continue to resist ADUs. Their workarounds to permissive laws supporting ADU development can come in all shapes and sizes. 

Local Code Provisions

Despite permissive state laws, many cities and counties still have building codes on the books that impede ADUs. For example, in Eugene, Oregon, the local code prohibits ADUs on small urban residential lots and bars any new construction that will require alley access. Thus, when Nicholas Kamps-Hughes asked whether he could build an ADU behind his home, the city said no. Mr. Kamps-Hughes challenged the city’s decision and, thankfully, the Oregon Court of Appeals ruled the city’s decision was contrary to state law, which requires cities to allow at least one ADU on urban residential lots.  

A California court, however, reached a very different conclusion in the case, Donnelly v. City of San Marino. There, the city tightened its building code to the point that homeowner Cordelia Donnelly was not allowed to build a small ADU above her detached garage—even though the project met all the requirements set out by state law and would not expand the existing home’s footprint. Unfortunately, the California Court of Appeals upheld the city’s permit denial, unwilling to disturb the city’s authority to set its own rules for new construction. 

These very different results highlight the inherent tension between newly relaxed ADU laws and traditionally restrictive permitting policies. 

Unofficial Permitting Policies

A recent lawsuit filed against the City of Coronado, California highlights one of the most problematic aspects of permitting: unofficial policies. There, the city enacted an ADU ordinance that, on paper, allows simultaneous development of a primary house and ADU. But, in practice, the permit desk is refusing to accept the ADU permits until after the primary house is completed—a right expressly allowed by state law to further reduce the cost of ADU development. It is unfortunately not unusual for cities to refuse permit applications as a way to avoid pro-development laws, so it is critical to both ADU law and the rights of individual homeowners that such policies are challenged and brought to light.

Occupancy limits

A zoning rule that designates a neighborhood for “single family residential” may seem innocuous at first blush—particularly where most ADU laws specifically authorize their production in single family residential neighborhoods. But that designation often has serious consequences on the viability of ADUs as rental properties. This is because zoning laws typically include a definition of single-family use that limits the number of non-related individuals allowed to occupy the lot (often called “roommate caps”). For example, Bellingham, Washington—home to a major university and one of the youngest populations in the state—makes it unlawful for more than three unrelated persons to live on the same lot. 

Making matters worse, many cities with relaxed ADU rules have, motivated by a fear that renters may be harmful to the neighborhood, undermined their utility and attractiveness by enacting laws that require the owner to occupy the property—either in the primary home or the ADU. Worse still, these occupancy restrictions typically apply regardless of the size of the property or other circumstances making the property appropriate for multifamily use, resulting in untold thousands of rooms sitting vacant—and who knows how many more left unbuilt? —in the middle of a housing crisis. Meanwhile, there is no restriction on the number of related individuals who can occupy identically situated properties throughout the city.

As landowners stand up for their right to build ADUs, we are sure to see more challenges to occupancy restrictions. 

Neighbor Vetoes

An idea ingrained in the “planning” community is the supposed benefits from maintaining the “character” of a particular neighborhood or city—i.e., preventing new growth and other changes. As a result, courts routinely approve zoning regulations based on nothing more than a proposal’s “aesthetics.” Aesthetics are, of course, in the eye of the beholder and, often, a neighborhood’s “aesthetics” or “character” is used as pretext to keep out those individuals or groups who are deemed undesirable.

Proponents of these restrictions intend this result and use price and other barriers to prevent change. There is a long, sordid history of “exclusionary” zoning that was adopted with the intent to create segregated neighborhoods. And while zoning proponents today lack an invidious racist intent, they clearly intend to prevent “undesirable” (as they see it) changes to their neighborhoods. Indeed, it’s not hard to find examples of people who support “affordable housing” in the abstract while opposing affordable housing in their own neighborhoods. 

The phenomenon is so well known that it’s got an acronym—NIMBY—Not In My Back Yard. NIMBYs insist that they are merely acting as good stewards and working the through the political process to protect the integrity of their neighborhoods or cities or counties. But the nature of the political process often means that 50% + 1 of the people get to decide how everyone (else) may use his or her own private property—even when the property causes no harm. Harm is, of course, a legitimate reason to limit one’s use of private property. And the law has long recognized a cause of action for nuisance—e.g., foul odor, vibration, noise—against property owners. But a new house that some may see as unsightly or as allowing too much density does not amount to a harm. 

But whatever the intentions, NIMBY policies restrict new housing and, as a result, keep housing prices artificially high. And, therefore, NIMBYs impose costs on others, usually those who are less well-off and who would benefit from increased housing construction. 

Agency Vetoes

For many homeowners, state and local ADU laws are not enough. Agencies like California’s Coastal Commission or the interstate Tahoe Regional Planning Council have final say on any new development, regardless of state and local laws. This agency veto power has already had a dramatic impact on ADU development. Take La Jolla, California, for example. As a whole, the San Diego area has seen steadily increasing numbers of ADU permits being issued. But in neighboring La Jolla, the requirement that certain owners secure permission form the Coastal Commission—a process that can add months and thousands of dollars to a simple permit—has stopped most owners from applying for a permit. Because of the stunning disparity in numbers, the agency is considering revising its ADU permit procedures, but until then the agency will stand as a barrier to state housing policy.

Impact Fees

Localities further increase the cost of housing construction through “impact fees,” a form of taxes imposed on would-be homeowners and builders. In theory, these fees are meant to ameliorate negative impacts of construction, such as increased burdens on roads, parks, and schools. But, despite the Supreme Court’s strong admonitions that residential impact fees be limited to the actual identified impacts caused by a new home, many local governments use impact fees to raise revenue or fund unpopular projects—driving up the cost of new housing.

One particularly egregious example is Oakland’s “Affordable Housing Impact Fee,” which ironically drives up the cost of all housing—including small affordable units. The law works by withholding permits for new housing until the owner either pays the fee or, at their own cost, builds other “affordable housing” units, which must be rented out at below-market prices. These fees often increase costs by tens of thousands of dollars for just one single-family home. 

Ultimately, the best way to make housing more affordable is to eliminate prohibitive and expensive regulations and reduce the number of veto points in the process. If the cost of building ADUs is kept low, the supply of affordable housing opportunities will increase. The movement toward relaxing ADU laws is a strong step in this direction.

However, there’s a saying among lawyers that “a law is only as good as its enforcement.” That means that legislation, alone, cannot solve the problems resulting from nearly a century of restrictive zoning. Public interest litigation is necessary to enforce liberalized development laws and to overturn our long history of exclusive land-use policies. 

Brian Hodges and Oliver Dunford are attorneys at Pacific Legal Foundation, which litigates nationwide to achieve court victories enforcing the Constitution’s guarantee of individual liberty. As part of this effort, PLF is litigates to expand the supply of housing by liberating property owners to build ADUs. 

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