Long Beach city officials, eager to increase the supply of affordable housing, have created a program that could help a limited number of homeowners build an additional unit on their land.
But before they could launch it, they had to decide what to call it.
“We’ve been toying with the name for a while,” Mayor Rex Richardson said, noting that a press release introducing the program was delayed a few days because of the christening. “We build the bike as we ride it.”
Long Beach officials have decided to isolate themselves.”Backyard Builders Program,” hopes to be a partial solution to the city’s shortage of affordable housing on unused landlord-owned properties. It’s a concept widely supported by low-income housing advocates, though some argue the city’s version should include more protections for tenants.
Long Beach test program It uses a unique financing that provides 10 property owners with up to $250,000 in interest-free loans to build accessory dwelling units, or ADUs, on their lots. These units must be rented to low-income individuals or families for at least five years.
Interested parties can submit their application at this address. https://www.longbeach.gov/lbcd/hn/aduloan/.
“Long Beach has been a leader in ADU manufacturing,” Richardson said. “And we’ve done everything we need to do … to make it easy for people to build ADUs in their own backyard.”
Rose Claremont Institute McKenna College confirmed in the April report Long Beach was among the most ADU-friendly cities in the state, issuing 1,431 ADU permits between 2018 and 2022. While this is surpassed by larger cities like San Diego (2,867), Long Beach produced 317 permits per 100,000 residents.
An ADU identified by the City’s Community Development Department for this pilot program must have a self-contained unit that includes a living room, sleeping area, kitchen and bathroom.
In addition to agreeing to temporary rental restrictions, landlords must live on-site and have fewer than four units on their lot.
According to Unites, anyone earning 80% or less of the Los Angeles median income can rent, which equates to $77,700 for an individual, $88,800 for a family of two, $99,900 for a family of three and $110,950 for four people. Los Angeles Department of Regional Planning.
But the program offers landlords an additional financial incentive to sell these ADUs to recipients of the Long Beach Housing Choice Voucher Program, which subsidizes a portion of the rent for those with extremely low income, very low income, or low-income categories.
ADU construction has become more expensive in recent years, with consumption of labor and materials Between 2021 and 2022, it increased by 11% and 9%, respectively, while construction labor costs increased by 34% between 2018 and 2023.
The loan covers up to $250,000 in planning, permitting and construction costs, although Kelly Pezzell, community programs specialist for Backyard Builders, doesn’t expect the loans to be that high.
The loan interest remains at 0% until the owner rents the ADU to a low-income recipient. To qualify for the loan, the owner must rent to a voucher recipient for at least five years or to a low-income tenant who does not receive the voucher for seven years.
The loan interest rate is as high as 3% if the ADU is rented to someone who does not meet the income limits after five or seven years. If the ADU is rented early to a tenant, the owner will have to pay a $2,500 penalty.
The potential eviction of low-income tenants is a concern for Long Beach Residents Empowered, or LiBRE, an advocacy group that works to create and maintain affordable housing and protect tenants.
“We are excited that the city is investing in affordable housing and trying to reduce the housing shortage,” LiBRE project director Andre Donado said in a phone call. “However, all tenants are at risk of eviction after five years.”
Donado also hoped the city would consider offering $4,500 in relocation assistance in all cases to low-income tenants displaced through no fault of their own.
The city is offering $4,500 or two months’ rent. if the landlord demolishes or substantially rebuilds the building, but in other cases only one month’s rent.
“I think the program has several positive aspects and we would like to see it continue with some adjustments,” Donado said.
The pilot loans are significantly larger than the up to $40,000 in assistance offered by the California Housing Finance Agency’s ADU Grant Program, which is reserved to help homeowners cover permitting and planning costs before the $125 million is exhausted.
The city believes that wealthy and cash-strapped homeowners, especially seniors, can use the loan to build an ADU and generate passive income. The program estimates that ADUs built with its own loans will generate more than $1,000 per month for homeowners who rent to voucher holders.
“You’re a grandmother or someone who has an extra yard and you want to be part of the solution, but you’re having a hard time navigating or figuring out how to fund it,” Richardson said.
To that end, the city is expected to appoint a project manager to assist borrowers in selecting architects, builders, planners, contractors and others needed during the planning and construction process. That manager will act as an intermediary between the property owner and the general contractor.
One caveat for landlords is that a qualified tenant cannot be a relative or dependent of their household.
As for the loan, payments are deferred for up to two years during construction.
Because the program relies on loans that are repaid over time, it will be self-sustaining, Richardson said. If it is deemed successful — meaning the ADUs will be built and rented to low-income tenants — he said the city will consider looking for more revenue sources to expand the project.
The City will host a series of Zoom webinars to gauge interest in the program and answer questions.
