April 27, 2022
San Diego Housing Commission Launches Pilot Program to Help Homeowners with Low Income Build Accessory Dwelling Units
Low-interest loans and no-cost technical assistance available for eligible homeowners
SAN DIEGO, CA — Homeowners with low income in the City of San Diego who want to build accessory dwelling units (ADU) on their property can now apply for a new San Diego Housing Commission (SDHC) program that provides low-interest loans and no-cost technical assistance to help them with the process.
“The ADU Finance Pilot Program will provide low-income homeowners with the resources and opportunity to not only generate additional income, but also play a role in addressing the housing crisis. This pilot program is a win-win as it will help close the wealth gap and incentivize more housing production,” San Diego Mayor Todd Gloria said.
The application for SDHC’s Accessory Dwelling Unit (ADU) Finance Pilot Program is available now through SDHC’s website at www.sdhc.org/adu.
“We must build more homes to address our city’s housing crisis,” San Diego City Council President Sean Elo-Rivera said. “This pilot program has the potential to provide the dual benefit of creating more homes for San Diegans and provide an opportunity for low-income homeowners to earn money and build wealth.”
The SDHC ADU Finance Program provides eligible homeowners with loans of up to $200,000 per household. In addition, SDHC will provide technical assistance through a consultant, at no cost to the homeowner, to help with predesign, permits and construction.
“Increasing housing opportunities throughout the City has been one of my priorities since I took office. I am pleased that the San Diego Housing Commission’s Accessory Dwelling Unit (ADU) Pilot Program will help encourage the construction of more ADUs, which is critical to help build our stock of affordable housing. These dwelling units create many more housing opportunities for individuals and families,” said San Diego City Councilmember Vivian Moreno, Chair of the City Council’s Land Use and Housing Committee.
Property owners participating in SDHC’s ADU Finance Pilot Program may generate wealth for themselves through the increase in their property’s value and the rental income from their ADU.
In addition, the ADUs financed through this program will create additional affordable rental housing in the City of San Diego because rents are required to remain affordable for seven years for households with income up to 80 percent of San Diego’s Area Median Income (AMI). “Affordable” means that the rents must be 30 percent or less of the renter’s monthly household income.
“This program is an innovative solution that will help homeowners understand the process for building an ADU and provide them the resources to do it,” SDHC Interim President & CEO Jeff Davis said. “These new units will create additional affordable housing opportunities, while also benefitting homeowners with low income.”
To be eligible for the program, the homeowner’s annual income must be no more than 80 percent of AMI, or $97,000 per year for a family of four. The homeowner is required to reside in the main home at a residential property (detached single-family home) in the City of San Diego, where the ADU will be built. The program also requires a minimum credit score of 680 and an owner contribution of 1 percent of the construction loan amount.
The SDHC loan funds the ADU construction. The SDHC construction loan is then refinanced into a permanent first mortgage. SDHC is collaborating with a partner lender bank for this program to fund the permanent first mortgage loans; however, homeowners may refinance with a lender they choose.
ADUs are one of the five main sources of potential additional housing units in the City of San Diego through 2028, according to SDHC’s report “Addressing the Housing Affordability Crisis: San Diego Housing Production Objectives 2018 – 2028,” published in September 2017. The report identified that approximately “2,700 to 5,500 ADUs could be built across the city of San Diego,” based on a geospatial analysis of single-family homeowners with enough space.
Last year, SDHC also completed the ADU Development Pilot Program. SDHC constructed five ADUs—one each in the available yard space of five single-family homes SDHC owns and rents as affordable housing in the City of San Diego. Through this program, SDHC published a report with lessons learned and key takeaways for San Diego property owners, “Accessory Dwelling Unit Pilot Program: Lessons Learned for San Diego Homeowners.”
In October 2020, the City of San Diego revised the Municipal Code regarding ADUs to implement the State’s mandate to promote the construction of ADUs. The revisions to facilitate ADU construction included reduced parking requirements, zoning setbacks and fire sprinklers, and waived Development Impact Fees, Facility Benefit Assessment Fees and General Plan Maintenance Fees.
The number of ADUs permitted for construction in the City of San Diego rose from 32 in 2017 to 266 in 2018 to 627 in 2019. In 2020, 493 ADUs were permitted for construction, according to the City of San Diego’s Annual Housing Inventory Report.
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Media Contact:
Scott Marshall
Vice President of Communications
San Diego Housing Commission
619-578-7138
