Palo Alto mulls new rules for building and selling ADUs

In June, an accessory dwelling unit in San Jose became the first in the state to be sold separately from the main house. It closed for $530,000, taking advantage of a new state law that allows cities to treat granny flats, in-law apartments and other ADUs as condominiums for sale.

Now, Palo Alto is considering a policy that would enable the same process, but concerns about potential inequities, low demand and unforeseen circumstances are plaguing the city’s efforts.

The debate over whether the backyard homes should be treated like condominiums comes at a time when Palo Alto leaders are increasingly leaning on ADUs to meet the city’s housing goals. The city has seen a huge growth in ADUs in recent years thanks to revisions to state laws and local policies. Palo Alto councilmembers and candidates characterize them as a gentle and relatively unobtrusive way to increase housing in single-family residential neighborhoods where larger housing projects would seem out of scale.

Not everyone, however, is sold on the need to create a condo policy. When the issue came before the city’s Planning and Transportation Commission on Sept. 9, its members expressed some hesitancy about the idea of separately selling ADUs. Senate Bill 9 already allows for single-family properties to be split into two lots and allows homeowners to build duplexes or ADUs on the same property as their single-family home.

Commissioner Allen Akin said SB 9 already provides a streamlined method to build and sell ADUs, making the separate-sale provision less necessary. SB 9 also contains a number of constraints, such as requirements governing parking and owner-occupancy, that would be absent in the ADU condo policy.