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U.S. Rep. Sam Liccardo, D-16th District, introduced a bill last week that would create a new federal financing pathway for accessory dwelling units, or ADUs. The bill is meant to address the nation’s housing shortage.
The bill, H.R. 4479, also known as the SUPPLY Act, has 16 co-sponsors and was introduced on the House floor on July 18.
ADUs — sometimes referred to as backyard homes — are smaller units located on the same lot as a primary residence. They can include converted garages, basement apartments with private entrances, or newly built detached structures.
According to the Bipartisan Policy Center, nearly one in five new homes built in California in 2022 was an ADU. That year, the state issued almost 84,000 ADU permits.
“This bill will help homeowners who are struggling to get financing to get units like those built,” Liccardo said during a press conference and ADU tour in Redwood City.
As it stands, according to the bill, most banks don’t offer loans for ADUs. However, if passed, federal housing agencies could back these loans under the National Housing Act, making them less risky.
U.S. Rep. Andrew Garbarino, R-New York, co-sponsor of the bill, emphasized the bipartisan appeal of the legislation.
“On Long Island, families work hard to create economic opportunities for themselves and their communities,” he said in a press release. “This bipartisan bill gives families the chance to invest, grow equity and strengthen our local economy.”
Liccardo, whose district includes Palo Alto, Menlo Park, Mountain View and a portion of Redwood City, said the bill is designed to help individual homeowners while addressing the broader issue of housing affordability.
“Millions of homeowners want to have backyard homes — maybe to rent out and provide a naturally affordable supply of housing,” he said. “The big obstacle they all face is financing.”
The Casita Coalition, a California-based nonprofit that advocates for ADUs, praised the
proposal.
“We’re thrilled that Representative Liccardo has introduced a bill that tackles one of the biggest remaining hurdles — access to practical, affordable ADU loans,” said CEO Noerena Limón. “This is a smart, targeted solution that brings ADUs within reach for the people who need them most.”
It really is a smart targeted solution. Good on Sam.
ADU’s are one of the few genuine success stories of pro-housing policy. This because vendors now offer pre-fabricated ADU’s and the permitting process has been stabilized enough so that vendors offer both the unit and the permitting. It’s a true commodity unlike other housing products.
The downside is that ADU saturation complicates development in R-1 spaces and competes with legislation like SB9 which has been vastly unsuccessful. Few are willing to scrape their own house to build a duplex or quadplex, but many will add ADU’s.
It’s also unclear how many truly “new” units are created by ADU’s. We have one, but don’t rent it. We use it, as many probably do. And those who do rent it, presumably do so to the highest bidder. So ADU’s probably don’t create many new or “affordable” units. So they increase the price of single-family lots making them more expensive.
As office development consumes sites that could otherwise be built for apartments, future housing potential will dwindle rapidly, despite RHNA, and R-1 spaces will be less available for increased production. This means household will continue to grow faster than housing units as they have for the last 30 years.
Things that can’t go on forever don’t. I have no idea where and how this trend crashes, but I know that it will.