Will New York Copy California's Most Successful Housing Reform?

The Golden State's legalization of accessory dwelling units has produced a glut of new housing. New York area policymakers are trying to replicate the success.

In a truly rare turn of events, California's successful approach to legalizing more types of housing is serving as inspiration for reforms elsewhere in the country.

Over the past several years, lawmakers in the Golden State have passed a suite of bills that make it much easier for homeowners to build accessory dwelling units (ADUs), sometimes called granny flats or in-law suites, on their property, while also making it harder for local governments to stop such construction.

It's proven to be one of the few YIMBY (yes, in my backyard)-inspired zoning reforms that has actually led to more housing being built. Now other states and cities with their own affordability crunches are passing or considering their own ADU deregulations.

Last week, New York Gov. Kathy Hochul, a Democrat, released her 200-page State of the State legislative agenda. Among other things, it took a swipe at local rules that prevent homeowners from turning their garage or attic into a new housing unit.

ADUs "can provide an affordable multi-generational housing option that helps families live closer together," reads the State of the State book. "Current land use restrictions prevent homeowners in some communities from building ADUs."

The governor's agenda says she'll propose legislation that would require localities to allow at least one ADU on owner-occupied residential lots. This legislation, per the agenda, would also prevent localities from adopting rules that legalize ADUs on paper, but prevent their construction in practice.

That reflects a lesson learned from California's ADU experience, where state laws allowing homeowners to build a backyard apartment have technically been on the books since the 1980s.

For decades, however, cities were able to stop them from being built by imposing infeasible requirements that they come with off-street parking, be a minimum size, or receive special, discretionary permits in order to be built.

It took the passage of several additional bills between 2016 and 2019 limiting what localities could require of ADUs, and then several lawsuits to actually enforce those new rules, to really kick off new ADU construction.

The results have been pretty amazing so far.

The number of ADUs permitted statewide rose from just over 1,000 in 2016 to over 12,000 in 2019, according to state housing data culled by Bloomberg. Nearly a quarter of new homes permitted in Los Angeles in 2018 were ADUs.

New York City and its surrounding municipalities could see a similar building boom if ADU regulations were liberalized, says Nolan Gray, a former New York City planner and current researcher at the University of California, Los Angeles.

As a city planner working in Queens "we would get weekly calls from people who wanted to build accessory dwelling units," says Gray. "In many cases, they were calling because they wanted a young adult child to move in or an aging parent to be able to stay in place, or they were a senior homeowner who wanted an extra source of income."

Gray notes that boroughs like Queens and Staten Island, as well as some pockets of Brooklyn and the Bronx, have lots of neighborhoods that are zoned to allow only single-family residences. That flatly prohibits homeowners from adding a second unit on site.

Even when zoning rules technically allow for two units, Gray says, additional restrictions on building size and off-street parking requirements still served as de facto prohibitions on ADUs. Single-family-only residential zoning covers 9 percent of New York City. A maximum of two units are allowed in another 16 percent of the city.

Hochul's plan to introduce ADU legislation follows on the heels of the successful passage of reforms in neighboring Connecticut in June 2021.

Beginning this year, those reforms will allow Connecticut homeowners to build an ADU on any land that's already zoned for single-family-only homes. The Connecticut reforms will also generally prohibits localities from imposing regulations on these units that aren't also required of principal residences.

These units would also have to be allowed "as of right," meaning their approval wouldn't hinge on the discretion of local bureaucrats or the good grace of neighboring homeowners.

New York Sen. Pete Harckham (D, W.F.–South Salem) proposed similar reforms early last year. His bill, which is currently being considered by the New York Senate's Judiciary Committee, would likewise require localities in the state to allow ADUs on properties that are zoned residential.

Under Harckham's bill, cities and towns would be forbidden from requiring off-street parking for ADUs unless they're located far from transit and have no on-street parking option. Localities could still set regulations around the size, height, and design, but couldn't impose rules that "unnecessarily impair the creation" of ADUs.

Like Connecticut and California, Harckham's bill would stop local governments from forcing homeowners to go through rounds of public hearings or give bureaucrats discretion to deny permits for code-compliant ADUs.

All those details would ensure more units would actually get built, says Gray, should Harckham's bill actually pass.

On the flipside, Gray says that provisions in the bill prohibiting ADUs from being short-term rentals (i.e. AirBNBs) and mandating strict eviction protections for renters of ADUs would "on the margins make homeowners a little more reluctant to build ADUs."

"In many cases with an accessory dwelling unit, the homeowner lives in the main property, and they want to have a lot of say over the person who lives in maybe their basement or attic or their garage," Gray says of the eviction protections in particular. "You don't want to have rules that make [homeowners] indisposed to building an" ADU.

In New Jersey, state Sen. Trey Singleton (D–Burlington) introduced a bill at the tail end of last year's legislative session that would have, like Connecticut, allowed homeowners to build ADUs on their property, and put limits on how much parking and utility fees localities could impose on these new units. But neither Singleton's bill nor a companion bill introduced in the New Jersey Assembly made much legislative progress in 2021.

In New York, however, momentum is on the housing reformers' side in 2022.

In addition to legalizing ADUs, Hochul has proposed a number of other supply-expanding reforms in her State of the State agenda. That includes lifting state-imposed restrictions on high-density construction in New York City, allowing hotels and offices to be converted into housing units, and encouraging localities to allow denser construction near rail transit stops.

"New York recently has been behind the curve when compared to California" on housing reform, says Michael Hendrix, director of state and local policy at the Manhattan Institute. "Now, New York state and state senators are trying to catch up."

If California is any guide, ADU reform should be the easiest to pass politically. Repeated efforts by state legislators to allow denser housing near transit stops have failed in the face of determined opposition from NIMBY (not in my backyard) homeowners and left-wing housing activists who worry more intense development will result in gentrification and displacement of lower income renters.

ADU legalization often wins over those same homeowners, who see some benefit in creating a unit of rental housing on their property. Because these units make the most sense to build in wealthy, high-cost neighborhoods, they generally don't stoke activists' fears of overdevelopment.

To be sure, neither California's nor New York's high housing costs are going to be completely solved by more granny flats. But these reforms are an important piece of the puzzle.