At Revival Homes, we’ve watched enthusiastically as new state laws have encouraged the production of ADUs, both at single-family homes and multifamily residences. While existing state laws have been effective at boosting ADU production across California, there’s always room for improvement. In particular, California law didn’t do enough to help owners of duplexes, triplexes, and other small apartment buildings add ADUs to their properties.
That’s why we’re excited that California Governor Gavin Newsom has signed Senate Bill 1211. This new law expanded the number of detached ADUs that can be built at multifamily properties from 2 units to 8 units, and disallowed local governments from requiring replacement parking. The law will take effect early next year.
What does this mean for multifamily property owners who want to maximize rental income and overall property value?
The Pre-SB 1211 ADU Framework
Under pre-existing state law, multifamily property owners were allowed to add two detached ADUs to their properties, plus interior ADUs up to 25% of existing units. Interior ADUs could not add new square footage and had to be built “within the portions of existing multifamily dwelling structures that are not used as livable space, including, but not limited to, storage rooms, boiler rooms, passageways, attics, basements, or garages.”
While this provided some opportunities for value-add investing, the requirement that most ADUs be built within unused interior space in existing dwelling structures limited both the range of properties that could add units and the number of units that could be added. For example, detached garages could not be converted to ADUs because the garage was not within the dwelling structure, and local governments could require the replacement of lost surface parking.
In short, multifamily properties without large unused interior spaces, like garages and storage spaces, did not qualify for state ADU streamlining beyond 2 detached ADUs. Additionally, property owners would have to replace surface parking removed for ADU construction, which made many potential ADU projects infeasible.
What Does SB 1211 Do?
SB 1211 creates more flexibility to add ADUs at multifamily properties by (a) raising the cap on detached ADUs from 2 to 8 units, so long as the ADUs do not outnumber the units in the main building, and (b) forbidding local governments from mandating the replacement of surface parking.
Simply put, this allows someone who owns an 8-unit building with a large surface parking lot to replace that parking lot with up to 8 ADUs, as long as the ADUs follow state rules for setbacks and height.
At larger properties with more than 32 units, the “25% of existing units” cap remains in effect; so a 100-unit building could add 8 detached ADUs and up to 17 ADUs within unused interior space.
Here’s a table to help you visualize the number of ADUs that can be built at multifamily properties of different sizes:
What Kinds Of Opportunities Does This Create?
We expect SB 1211 will create significant opportunities for value-add investing, particularly in suburban markets where multifamily housing has historically been subject to large setback requirements and high parking minimums. Smaller multifamily properties on large lots will be especially well-positioned to replace excess land with additional units.
If you’re a rental property owner, developer, or investor, and you’re considering building ADUs at a multifamily property you own, the Revival Homes team would be happy to assist you in navigating SB 1211 and developing a project plan. Book your free consultation with our ADU experts today!
