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Study Session Zoning Ordinance Text Amendment - Accessory Dwelling Unit and Condominium Conversion Updates - A study session to discuss proposed zoning code updates to sections relating to accessory dwelling units and condominium conversion in Alameda Municipal Code Section 30-5.18 - Accessory Dwelling Units, and Section 30-8 - Conversion to Multiple Houses. The amendment may allow conversion of accessory dwelling units to condominiums, modernize the procedures for condominium conversion more generally, and update provisions throughout to comply with State law. The study session is not considered a project under the California Environmental Quality Act because it does not constitute a discretionary approval and will not cause a direct or indirect physical change in the environment.
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To: Honorable President and Members of the Planning Board
From: Steven Buckley, Planning Services Manager and Secretary to the Board
SUMMARY
The Alameda Municipal Code (AMC) provides for accessory dwelling unit (ADU) development standards and processes for creation of accessory homes to provide housing that meets the City’s varied housing needs. The AMC also provides for regulations and procedures for conversion of residential units into condominiums to allow the property owners with multiple existing or proposed units to sell those units separately as condominiums. These sections do not currently interact, but with the passage of AB 1033, the City may choose to adopt amendments to facilitate ADU condominium conversion. While condominium conversions in general are not common in Alameda, allowing conversion of ADUs into condominiums may incentivize property owners to construct ADUs that wouldn’t otherwise. In addition, an ADU condominium may theoretically provide a more affordable pathway to detached single-family homeownership because they’re typically smaller and simpler in design than other single-family homes in the City, thus diversifying the stock of available housing types. Conversely, the rampant conversion of existing units into condominiums can threaten the relative stock of rental units, which can drive up costs for residents. In order to thread this needle, staff has prepared a range of policy options for the Planning Board to consider and provide feedback on, with the goal of producing a broader range of ownership housing types without allowing unchecked proliferation to the detriment of the rental housing stock.
There are fairly significant changes that need to be made to the ADU ordinance to comply with amendments to State law, as the City’s ADU ordinance hasn’t been updated since 2022, while other policy options warrant more careful deliberation. Specifically, the policy questions fall into 3 main categories, condominium conversion, changes to development standards, and changes to procedures.
BACKGROUND
General History. The City’s existing zoning code includes a section regarding accessory dwelling units that was originally adopted in July of 2017. This section has since been amended in 2020, 2021, and 2022, as the State legislature provided new statutory ADU law for a number of consecutive years. The ordinance has primarily been amended to comply with State law, although in addition Alameda’s ADU standards have historically been more lenient than the minimum requirements enforced under State law.
The City’s existing zoning code also includes a section regarding conversion of existing residential units into condominiums, referred to as “Conversion to Multiple Houses” in part because when it was originally adopted in its current form in March of 1975, the City’s Measure A prohibited new multifamily housing throughout the City, and so the concept of “multiple houses” was introduced into the code to distinguish condominium conversions from prohibited new multifamily residential. Measure A has since been determined unenforceable due to conflicts with state law, and yet the obsolete language remains.
Effective starting in January 2024, the State legislature’s AB 1033 authorizes local agencies to adopt a local ordinance to allow separate conveyance of the primary dwelling unit and ADU as condominiums. Previously, all ADUs were prohibited from being conveyed separately from the primary dwelling, which precluded condominium-ization. Local agencies are in no way compelled to adopt such a local ordinance, however without it, all ADUs will remain long-term rental units.
ADU Policy Questions. In addition to amendments designed to comply with changes to State law, there are a number of policy questions related to ADUs that warrant consideration as we update the ordinance. These policy questions center around three categories: condominium conversion, changes to development standards, and changes to procedures.
The first category, condominium conversion, has perhaps the greatest potential impact, and therefore also warrants the most in depth analysis. The overarching question, whether to allow condominium conversion of ADUs at all, includes as part of its considerations whether ADU conversions should be subject to a different process from other condominium conversions, and what such a process might look like. In addition, should the City determine that ADU conversions will have the same process as all other condominium conversions, additional amendments to modernize the existing conversion to multiple houses ordinance may also be warranted.
The second major category of policy questions are regarding changes to the development standards applied to ADUs. While some of the changes to development standards are a function of changes to State law, and are therefore not subject to the City’s discretion, there are several others that justify consideration. In addition, for certain types of ADUs and JADUs, formerly referred to as Statewide exemption ADUs or State mandated ADUs, now called 66323 Units (referring to Government Code 66323), many of the policy questions may not apply, as State law preempts local jurisdiction’s development standards for ADUs that meet certain minimum standards. These 66323 Units are also subject to ministerial review. To qualify as a 66323 Unit, the proposed ADU must either be a conversion of existing space within an existing structure (primary or accessory), or, if new construction, the proposed ADU must be detached and maintain 4’ setbacks from the side and rear yard property lines, not to exceed 800 square feet, and meet the height regulations specified in the Government Code. For multifamily buildings, up to eight (8) detached 66323 Units must be approved depending on the number of existing units on the lot. The policy questions that will be applied to all other ADU projects include topics regarding the overall number and type of ADUs permitted, the inclusion of a front yard setback, handling of legal nonconforming accessory structure conversions, and clarification of standards for off-street parking.
Finally, the last main category of policy questions are regarding changes to the permitting procedures related to ADUs. Similar to the development standards, some changes to the process are a function of changes to state law but may still contain some policy question. For example, new State law limits the extent to which deed restrictions can be placed on JADUs, rendering most of the current section requiring deed restrictions moot, but there are some portions that remain untouched by the State law that may be worth preserving. Other process related policy questions include whether impact fees should be imposed, to the extent permissible, explicitly requiring Design Review for improvements that are related to ADUs but not inherent to their creation, as well as questions related to condominium conversion if ADUs are determined to require a separate permitting pathway.
ANALYSIS
Conversion of ADUs to Condominiums. The primary question here, whether to allow ADUs to be converted into condominiums, begs the question, why or why not? The argument in favor of allowing ADU condominium conversion is rooted in the belief that it will incentivize new ADU construction and will diversify the type of ownership units available on the market within the City. The argument against allowing ADU condominium conversion argues that those benefits are marginal and outweighed by the possibility of losing some amount of existing rental housing stock to ADU condominium conversion. While both sides have valid points, each assertion is worthy of additional scrutiny.
Regarding the argument in favor, the basic premise is that ADU construction helps to alleviate the housing crisis by creating new housing units that are inherently more affordable, and therefore policies that incentivize ADU construction are desirable. By allowing newly constructed ADUs to be sold separately from the primary dwelling, the City would be encouraging a given property owner to construct an ADU that they wouldn’t have a compelling reason to construct otherwise, because of the additional value captured by the sale of the new unit. However, this assumes that the difference in value to the property owner between a rental ADU and an ownership ADU must be substantial enough to cover the costs associated with completing the condominium conversion process.
The argument against is predicated on the notion that by allowing ADU conversion to condominiums, the City must accept the possible outcome where most or many eligible property owners pursue such conversions, to the extent that it depletes or diminishes the overall stock of rental housing in the City. This assertion assumes both a high level of eligibility as well as a high level of adoption by residents.
For context, the City of Alameda has been issuing permits for ADUs since the State law changed in 2016. While those first few years did not see today’s levels of ADU development, on average the City has approved approximately 50 ADUs each year between 2017 and 2025. Meaning that there are at least 450 existing ADUs in the City, projected to continue to increase at a steady rate for at least the next few years. That being said, the total number of rental units in the City is currently approximately 16,500, meaning that even if every existing ADU was converted to a condominium, it would still represent less than 3% of all rental housing stock in the City. While ADUs may increase their share of the rental stock over time, only a fraction of those ADUs would realistically convert to condominiums, supporting the argument that ADU condominium conversion will not have negative impacts on the availability of rental units to any meaningful degree.
Changes to Development Standards. The following specific changes to the development standards are not required by State law, but are allowed under State law if the City chooses to apply them:
Front yard setback - Currently, the ADU ordinance does not contain any front yard setback standards applied specifically to ADUs. The requirement of a front yard setback applied to non-66323 units would allow the City to discourage development patterns that create substantial impacts to the relationship between the front of a home and the street. While the City generally wants to facilitate ADU creation, it also does not want to support ADUs that come at the expense of the character of the neighborhood, or its architectural identity. Given that a typical residential lot in Alameda has ample rear yard area to accommodate ADUs, the requirement to maintain a front yard setback should not substantially reduce the number of ADUs constructed, as supported by the lack of front yard ADUs applied for since adoption of the ADU ordinance.
Number and type allowed - Currently, the City’s ordinance allows a greater number of ADUs allowed to be converted from within portions of the exiting building on a multifamily lot than what is strictly required under State law. Specifically, in addition to the two detached ADUs permitted on a multifamily lot, any number of ADUs are permitted within portions of an existing building, as compared to the State law, which permits only a number of converted ADUs equal to the number of existing units up to eight. The uncapped number of permitted ADUs has resulted in applications for projects that exceed eight units on a multifamily site. The City could continue to allow a greater number of converted ADUs on multifamily lots than is required under State law in an effort to promote densification through ADU conversion, or it could modify the number of permitted converted ADUs on multifamily lots to either establish a new cap on the number allowed, or to conform with State law.
Additions to legal nonconforming accessory structures - Currently, additions to a legal nonconforming accessory structure are allowed up to 150 square feet, however these additions must comply with the setback and height standards applicable to the rest of the ADU. By allowing an addition along such a nonconformity if the “k & l” findings from AMC Sec. 30-5.7 can be made, the difficulty of creating or expanding an ADU where existing legal nonconformities exist would be reduced. However, this would also functionally increase the extent to which such nonconformities exist, which may create additional tension between property owners regarding ADUs built up to or close to shared property lines. It’s worth noting that because the setback standards for ADUs and accessory structures are different, in some cases the conversion to an ADU creates a new legal non-conformity, because the accessory structure may not have had any applicable setbacks. Additionally, requiring findings like the existing “k & l” may introduce discretion, and therefore may not be enforceable for ADUs.
Off-street parking standards - Currently, for projects that do not include an ADU, if the abandonment or demolition of existing parking space(s) is proposed, and if the remaining driveway will be less than 18’ in length behind the front yard property line, then the curb cut and driveway must be removed as part of the project. This situation is typical of ADU projects, as they are often created by conversion of existing garage spaces. However, because State Law prevents jurisdictions from applying off-street parking requirements for ADUs, there has been some confusion around the applicability of this standard. By more clearly rephrasing this standard within the ADU section, any challenge to its applicability can be preempted. Alternatively, a provision explicitly exempting ADUs from this standard could be considered, although the logical result of such a policy would be substandard parking stalls, which can lead to impediments in the sidewalk among other impacts.
Changes to Process. The following specific changes to the conversion process are not required by State law, but are allowed under State law if the City chooses to apply them:
Deck/Raise Design Review Requirement - Currently, projects for ADUs that also include a scope of work that triggers additional entitlements are required to complete those entitlements prior to issuance of a building permit. This has been interpreted in practice to include aspects of projects that are not integral to the ADU but are attached to it. For example, second story decks or roof decks generally are subject to Design Review, so an ADU with a proposed roof deck would be required to complete the Design Review for the roof deck prior to issuance of an ADU building permit, even though the ADU itself is not subject to Design Review. Changes to this section would more clearly call out examples of applicable improvements, to diminish any ambiguity regarding what types of projects will trigger this requirement in response to concerns from the community about whether this provision would apply to certain projects.
Impact Fees - Currently, the City does not charge any impact fees on ADUs besides those which it does not have the authority to waive (e.g. school impact fees), in order to incentivize the creation of new ADUs by removing hurdles to their construction. Under State law, impact fees cannot be charged on JADUs under 500 square feet, or on ADUs of less than 750 square feet, and for larger ADUs must be proportional to the impact fees applied to the primary dwelling unit. The City could amend its policy to allow levying of impact fees on ADUs that exceed 750 square feet, proportionally, at either a reduced rate or the current rate applied to single family dwellings, in order to better provide services needed for the residents who will occupy the ADUs. However, the current adopted Housing Element includes Program 5, which states the City’s intent to continue to waive development impact fees for accessory dwelling units.
Deed restrictions - Currently, JADUs are required to record a deed restriction as part of the permitting process. The ordinance requires three operative aspects to the deed restriction: (1) no separate sale, (2) owner occupancy requirements, and (3) restriction of size and attributes to conform with the development standards for JADUs. The first is already restricted by State law, the second has been rendered unenforceable under State law for all JADUs except those which maintain internal connectivity to the primary unit, and the third is redundant because it restates compliance with development standards. Due to the hollowing out of these regulations, the City may consider removing the deed restriction requirements entirely, or otherwise will need to amend this section minimally to comply with State law.
Other Edits. Finally, a few additional edits are proposed throughout the ordinance amendment to:
Remove portions of the existing ordinance that are not enforceable under State law - These are obsolete portions of the code that are generally not applied in practice due to their conflicts with State law, for example, the design requirements to match the external features of the primary unit.
66323 units in their own subsection - Revising the current format where each standard notes the exception for 66323 units, and instead creating a unified subsection describing 66323 units and exempting them from the other standards if that definition is met.
Update references to gov. codes - Revising references to specific Government Code sections which have been modified under State law.
New A/B sections for the ordinance to live in - Revising the structure of the Municipal Code sections to remove the ADU ordinance from the “General Provisions” section (30-5) and creating a new section or sections for it.
CEQA Analysis. The proposed amendments are exempt from CEQA pursuant to section 15061(b)(3), the common sense exemption where it can be seen with certainty that the proposed zoning text amendments have no possibility of having a significant effect on the environment because they relate to accessory dwelling unit standards, and a permit would be required for a project to apply these standards at which time project specific impacts would be considered. It would otherwise be too speculative to consider citywide impacts of the types of effects of these text amendments.
RECOMMENDATION
Conduct a study session to discuss the recommended amendments to the Alameda Municipal Code related to accessory dwelling units and give direction to staff for edits to bring back to the Planning Board for a public hearing and recommendation to City Council at a later date.
Respectfully Submitted,
Steven Buckley, Planning Services Manager