Urban Lawyer

Second Units in the Silicon Valley

by Jane Cho

Jane Cho is a third-year student at Stanford University School of Law ( J.D. expected 2017) with a passion for inclusive and sensible city planning. She would like to thank Professor Michelle Anderson for cultivating my scholarship in environmental justice, and clinical supervisor Jeanne Merino for helping her to brainstorm this idea with her wealth of knowledge regarding housing in East Palo Alto.

I.  Introduction

The woefully inadequate supply of housing compared to the number of jobs in the Silicon Valley is old news. For some real estate investment firms and property owners, the situation is an exciting opportunity to make a huge profit. For most others, however, the situation is not so positive. For those who can afford to stay, the lack of affordable housing poses daily inconveniences in the form of traffic and pollution. For those with fewer resources, the lack of affordable housing means becoming homeless,1 enduring squalid conditions in a poorly maintained apartment, or relocating as far east as Stockton, about ninety miles away. Far from a prime capitalist opportunity, for many people the lack of housing constitutes a serious social crisis.

In San Mateo County, California, this housing crisis is well-documented. In the next decade, the county will experience significant job growth; 40% of those jobs will pay lower-income wages.2 The Department of Housing projects that by 2025 the county’s housing supply will meet only one-third to one-half of the demand. At the same time, renters and homeowners have been overpaying for housing, meaning that they have been spending more than 30% of their gross income on housing-related costs. Similarly, in Santa Clara County, nearly half of all renters and homeowners were cost-burdened, meaning they spent more than 30% of their income on housing.3

Rent control is a highly contested measure that only two South Bay cities, East Palo Alto and San Jose, have enacted. East Palo Alto is the only city with a “just-cause” eviction ordinance. In all other cities, landlords can evict tenants for any reason and raise the rent by any amount they desire. Annual rent increases of $700 a month have become commonplace. Despite persistent advocacy for rent control by local nonprofit organizations such as Community Legal Services in East Palo Alto and Peninsula Interfaith Action, local governments in Silicon Valley have been reluctant to consider it as a remedy. Under the Costa-Hawkins Rental Housing Act, California cities can restrict rents only on apartment buildings occupied before 1995.4 Nonetheless, local homeowners associations and real estate associations have been strongly opposed to any form of rent control.5 As a consequence, local officials have been eager to promote other methods of providing affordable housing, such as increasing residential infill.

One promising type of residential infill is the construction of secondary-dwelling units. Urban planners have praised this method of residential infill because second units are discreet and yet can add a significant amount of affordable housing in a single-family residential zoning district.6 By nature, they are small, independent living facilities, so they are suitable for elderly family members, students, and low-income households. They are required to include “permanent pro- visions for living, sleeping, eating, cooking, and sanitation.”7 As the proportions of elderly residents begin to rise across America — over the next decade and a half, the number of seniors in San Mateo County will increase by 76%8 — second units are an increasingly suitable option for elderly residents who wish to age in place, and live near family.9 Additionally, in metropolitan areas, second units are sensible options for single professionals.10 Last but not least, second units are a smart way to provide housing for people with disabilities.

Recognizing the benefits of second units, California first passed legislation on second units in 1982.11 This state-wide law enabled local jurisdictions to allow second units in order to meet housing needs. However, the law left substantial room for cities to impose onerous requirements for second unit building permits. Unsurprisingly, many cities did just that. In response, in 2002, the California legislature passed AB 186612 to amend existing second unit law in two significant ways. First, this law required that, as of July 1, 2003, all local governments switch from a discretionary to a ministerial application process, meaning that as long as the second unit plan met a list of requirements, the application for a second unit permit would automatically be approved. Rather than being subjective, these requirements must be “predictable, objective, fixed, quantifiable and clear.”13 Not only did this change to a ministerial approval process exempt second units from the California Environmental Quality Act (CEQA),14 but second units in a residential zone are also categorically exempt under current CEQA Guidelines.15 Second, AB 1866 required that all local governments write their own second unit ordinances, adopt the state standards, or demonstrate why they could not conform.

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