Whatever you call them — ADUs, in-law units, granny flats, what-have-you — they are a solution that appears tailormade for the Truckee/North Lake Tahoe region. These secondary units can fit in small spaces, don’t further suburban spread, and are specifically designed for single-family homes, which make up 80.1% of the regional housing stock as of 2014. Yet, it can be incredibly difficult to permit and build this small-scale housing for a seemingly endless list of reasons.
Over the last few years, the state of California has passed a number of bills to alleviate some of the barriers against ADUs in an effort to open up housing, and while the updated laws have correlated with an increase in housing units in other parts of the state, Truckee/Tahoe lags behind.
Placer County, for example, saw a change, though “not so much on the eastern side of the county,” said Placer County Principal Planner Shawna Purvines. She did, however, witness, “a substantial increase [in secondary units] in the western side of the county.”
Purvines said the countywide trend of about 15 to 16 units per year leapt to 40 to 50 units per year in 2017 and 2018, but the eastern half of the county only contributed an additional two units to this rise. What’s the sticking point?
Barriers in the Basin
Until a few short years ago, ADUs on properties less than 1 acre were actually not allowed anywhere in the Tahoe Basin. The Tahoe Basin Area Plan, adopted by Placer County and the TRPA in 2016 and 2017, respectively, made them possible anywhere a primary residence is permitted, but still this liberation has not exactly led to a building frenzy.
The two-unit increase in the Basin is a step up from one unit the year before, so you could say that the volume doubled, Purvines jokes. But, for a potential housing solution it’s a paltry contribution.
The first factor is one that affects all of California but is felt acutely here in the mountains: cost of construction. A 2018 Mountain Housing Council report investigating development fees found that costs of construction were actually “the greatest cost component to building housing in our Region.”
The fees investigated in the MHC report were also found to be an obstacle, especially for smaller unit sizes, but in Placer County some of the fees can be waived if the unit is built as inclusionary housing. According to the report, “[Placer] county offers deferral of traffic, parks and recreation, and capital facilities impact fees; exemption from impact fees and permit fees if secondary dwelling units are deed-restricted for affordability.” As shown in the graph included on the next page, this benefit can be substantial.
Due to the Tahoe Basin Area Plan, the county also restricts accessory units entirely on properties less than 1 acre if they are not deed-restricted affordable. For the county, this means any ADU on a property less than 1 acre must be deed restricted to be rented at or below 120% of area median income (AMI), or $86,000 a year for a family of three in Placer County. The Tahoe Regional Area Planning Agency (TRPA) recently amended its regulations to expand this requirement to fit the “achievable” housing definition of below 180% of AMI.
“TRPA is actually less restrictive than the county at this point and it’s not something the county intended, so that’s something we would like to get corrected,” Purvines said. ADUs within the Basin are also prohibited from being used as short-term rentals.
Emily Setzer, senior management analyst for Placer County, doesn’t believe the 120% affordability cap to be a significant barrier to building second units, stating in an email to Moonshine Ink that the cap is “pretty close to market rate given the small size of most ADUs anyways.” The county is considering adopting the achievable definition as well, “or just allowing second units without an income restriction.” This is a rule it already has in place in the rest of the county.
“We’ve been talking about how we can possibly align our codes a little bit more to meet at least the interest we’re hearing from people who want to build [ADUs], but again those people still have to be able to finance it, and that labor, and [cost of] materials is still pretty high,” Purvines said. “But it is our intent to try and streamline both the approval and reduce the constraints for the development of [ADUs] from a regulatory side, you know, that’s basically what we control.”
Trials in Town
On July 4, 2017, local real estate agent Amie Quirarte was working with clients to purchase a home in Tahoe Donner, listed for 2,540 square feet. The home was actually 4,348 square feet due to a remodel that had finished out a space in the bottom floor — a complete, livable unit with a kitchen, bedroom, and bathrooms. Near the beginning of the sale process, the seller had submitted a permit request with the Town of Truckee to have the additional square footage from the basement addition signed off on, Quirarte said. Their goal was simply to get the extra square footage legally on the books as a stipulation of the sale.
That October, in the course of a long, convoluted process that lasted throughout the fall, Quirarte sent an email to the town to check up on the permit process. Originally the town building department told the sellers it would fast-track the permit and not go through the planning department, Quirarte said. As the process unfolded, the second kitchen that had been added became the home’s Achilles heel. It put the extra space in ADU territory, and the town took notice.
In October, the seller paid a roughly $10,000 fee to permit the new square footage, but the application was sent back to the planning department which required site visits by multiple building experts, and a deed restriction was invoked requiring the space would never be occupied as a second living unit and giving the town permission to inspect the property for compliance at any time. In the end, the 1,800 square foot addition fell above the town’s ADU size requirement that a second unit must be under 50% of the size of the primary residence. The seller was required to remove the entire kitchen space.
“This went on and on and on,” said Quirarte. The escrow eventually closed in December, but not before the seller had spent thousands of dollars complying with the town’s long list of requirements in order to permit the additional space, and removed one livable, albeit unpermitted, living space from the region’s inventory. Quirarte stresses she does not place blame on the town, but she does feel the entire process needs to be simplified for the many people who might be considering opening up living spaces in their homes through ADUs. As a realtor for Tahoe Luxury Properties who gets an insider look at the regional housing inventory every day, she says the nature of housing in Truckee/Tahoe makes it especially ripe for attached ADUs.
“When you think about how many properties in the Basin, or in Truckee, have that potential … it’s a high number,” she said. “The process is just so overwhelming and so daunting.”
Following her experience in 2017, Quirarte shared the story with the audience at the Mountain Housing Council’s second annual update in an effort to drum up support for a program to streamline the ADU process. Shortly after, the council decided to get behind Quirarte’s proposed ADU Pathways Program, directed at two main objectives. The first is gathering data and case studies from as far off as British Columbia to design a policy recommendation regarding ADUs for local jurisdictions to consider, and the second is outreach. The outreach aspect of the program hopes to provide a resource explaining and simplifying the ADU process to anyone, and Quirarte says it will begin after they finish the policy recommendation.
“It’s not to point blame at one person,” Quirarte said. “Instead, it brought awareness to the situation of there being units that exist that can currently house people but because of guidelines through different jurisdictions — whether it’s Placer County, Nevada County, Town of Truckee, TRPA — people are being forced to either illegally rent them out or convert them and remove the livable piece of it.”
Similar horror stories as that of Quirarte and her clients seem to stem from one integral issue: a lack of understanding on the part of the property owner, and a lack of education on the part of the building authority. The process can be rife with miscommunication about how exactly to build, permit, or legalize these units, but the town is aware the process can be daunting and has its eye toward solutions.
“There is no doubt that that whole process, and in particular the town process, can be onerous and/or scary, or simply not worth it. Yeah, we get that too,” said town planning manager Jenna Gatto. “I think in terms of making the whole process be more approachable … we’re looking right now at hiring [and] creating a position that would help facilitate housing projects.”
According to Gatto, if this position is budgeted by the town this spring, the person would essentially be a housing liaison available to “shepherd” anyone — from the experienced developer to your average homeowner — through the public process, start to finish.
Ironically, even if the town did allow the above-mentioned unit as an ADU, it still would have been out of compliance with the regulations of the Tahoe Donner Association, which bans secondary dwelling units for all of its 6,438 units, according to the association’s general manager Robb Etnyre.
Gatto says the town has been keeping pace to align its policies with all of the new, less-restrictive ADU ordinances coming down the pipe from recent state bills, but that homeowners associations (HOAs) are “where there are some pretty big departures from what the state is requiring.”
Currently, Truckee’s two biggest HOAs are Tahoe Donner and Glenshire Devonshire, which together make up 7,795 of Truckee’s 13,368 housing units. Secondary units are banned outright at Tahoe Donner and in Glenshire, are only allowed to be rented to family members. These restrictions supersede state, county, and town ordinances regarding ADUs, making it possible that you could get an ADU permitted by the town, but an HOA could put the kibosh on it. In the case of Glenshire, the HOA is looking at making modifications.
“In our current CC&R process, we’re going to allow the members to vote on opening up access to those ADUs, so they are able to be rented to anyone but on a long-term rental basis,” said Glenshire board member Peter Tucker. He says this likely would happen in the next nine months.
As for Tahoe Donner, Etnyre says they are considering bringing a vote before their members to allow for second kitchens within the HOA.
Homeowners associations are not the only entities that supersede the town when it comes to allowing secondary units. The Lahontan Regional Water Quality Control Board also plays this gatekeeper role.
“[The board] put in place a rule … that if a property is on septic and it’s 3 acres or less they cannot put a second unit on the property,” said Kristi Thompson, principal architect at MWA Architecture and Engineering and local expert on the subject of ADUs. “So, the town’s hands are tied on all those neighborhoods.”
For the Town of Truckee, these neighborhoods represent a surprisingly large part of the housing stock including a sizeable area of Sierra Meadows, as well as Olympic Heights, Alder Hill, Prosser Lakeview Estates, Pannonia Ranchos, The Meadows, and Juniper Hills.
“The role the town could play would be to initiate discussions with Lahontan about some modification to that rule or talk to Truckee Sanitary District about bringing sewer to some of those neighborhoods,” said Pat Davison, governmental affairs manager for the Contractors Association of Truckee Tahoe, adding that neither solution is easy or quick. One way to circumvent the septic issue is through a Junior ADU, which is a smaller unit under 500-square-feet — typically an already existing room in a house — with a separate entrance and cooking facilities that is not required to have a private bathroom. A crucial component of a JADU is that they do not need to require additional parking or a sewer connection fee. Policies for these units are still in their infancy, and Truckee recently processed its first JADU permit last year, see Trouble in ADU Territory, online.
But the barriers to ADUs in Truckee seem daunting. “Tahoe Donner and Glenshire, when you look at them, that’s a lot of property right there that second units may not be possible, plus the ones on septic,” Davison said. “It kind of shows you that this is going to be a difficult issue.”
The Caveat of Cost
Differing regulations, HOAs, and properties on septic drastically reduce the amount of lots that ADUs are even legally feasible on in both Truckee and Placer County, at least with the current status quo, but they are not the primary barrier.
“If policies [encouraging ADUs] already exist, why are not more people coming in to the town and Placer County to do them?” said Seana Doherty, project director for the Mountain Housing Council. She says what the council found when they investigated this question is that the primary barrier to ADUs making headway is simply the cost. “We are focused on trying to find a product that gets the cost down to a level that makes it appealing for a homeowner to take it on and keeps the rent in a zone that is affordable for our local community.”
Doherty says she will be sitting down with representatives from Truckee and Placer County this month to discuss a potential innovative pilot program to cut costs for ADUs on the lots where they are permitted. The program in a nutshell: preapproved modular units. This would involve town and county planners working with Colorado-based modular developer Studio Shed to design two styles of modular unit built entirely to regional codes — including mountain-style facades and snow-load requirements.
Not only does the preapproved nature of the two units streamline the public process — they would already have the green light — but the production of multiple units for this area would allow Studio Shed to cut costs that are normally hyper-inflated by the economies of scale associated with building small units. Doherty says that currently, bids for traditionally built units in the 400- to 800-square-foot range are north of $250,000, but Studio Shed estimates the cost of its units — not including foundation and building fees — would come out to around $80,000 to $120,000.
This might still look like a heavy price tag, but Doherty says she is also working with Plumas Bank to consider a financing package designed specifically for these units. She adds that town and county governments also could potentially provide financial incentives, especially if they are attached to locally oriented deed restrictions.
If the goal of local jurisdictions is to open up locals’ housing, Doherty says the return on investment of incentivizing ADUs is huge compared to building them outright. Doherty believes a $5,000 to $10,000 incentive could get the ball rolling for many would-be builders. By comparison, the town spent roughly $14,700 per unit with its $2 million contribution to Coburn Crossing, also intended to get locals’ housing on the ground.
“I’m not interested in doing all this work and creating a product so people can do more short-term rentals,” Doherty said. “Figuring out how to use some of our public dollars to incentivize ADUs is a really good use of public dollars if it’s deed restricted.”
But what exactly is an ADU?
Accessory dwelling units, or ADUs, are a “secondary dwelling unit with complete independent living facilities for one or more persons,” and they come in a variety of forms — attached, detached, repurposed, or a junior accessory dwelling unit. These small-scale units can work to increase housing density on developed single-family properties. ~ California Department of Housing and Development