For Lorena Gonzalez, renting out her Fresno backyard cottage isn’t just a way of alleviating the state’s housing crisis — it’s an essential source of income. She and her husband are undocumented and have relied on farm work, packhouses and construction to provide for their three children.

These jobs are seasonal and come with fluctuating income, making the extra $360 monthly income from her backyard rental significant.

Her renters — a single-mother and her teenage daughter, survivors of domestic abuse — are fortunate to have found a home below the average costs for a typical Fresno apartment. But the unit is unlicensed. When Gonzalez bought her home in 2003, the backyard cottage was already there. She can’t afford to bring the unit up to modern building codes.

Many housing advocates have championed the statewide legalization of backyard cottages as a potential solution to high housing costs. But for many Fresno homeowners, financing the construction of these units is still far out of reach.

A solution to the housing crisis?

Housing prices in California continue to rise in part due to the shortage of homes, according to experts. Fresno County currently faces a shortage of over 35,000 affordable housing units, according to the California Housing Partnership.

For local renters, the crisis is acute: over 60% of Fresno County renters pay more than 30% of their income on rent. Currently, the average rent in Fresno is $1,131 monthly, according to data on rent trends from RENTCafé, a national apartment listing service. To afford the average rent, a person or household would need to make over $19 per hour.

Backyard cottages, also known as accessory dwelling units (ADUs), often have lower rents due to their smaller size. Fresno could be an ideal location for ADU expansion, as many older homes have detached garages that could be converted to an apartment.

As the city looks for ways to build more housing in neighborhoods that are closer to transit and already have water and sewer infrastructure, ADUs are one way to achieve that goal, especially as market-rate developers continue to be reluctant to build in older neighborhoods.

Housing advocates celebrated in January of 2020 when California passed a set of bills that would support ADUs as a way to reverse the shelter crisis throughout the state. The new laws “require local agencies to designate these areas based on the adequacy of water and sewer services and the impact of accessory dwelling units on traffic flow and public safety.” Assembly Bill 68 reduced the time a city can take to respond to a permit application from 120 to 60 days, cutting the wait time from four months down to two.

In Fresno, there are few zoning hurdles to overcome. According to Daniel Zack, assistant director of planning for the City of Fresno, there have been seven ADUs constructed between 2018 to the present. Additionally, the city has granted 22 zone clearances and 14 building permits, the two licenses an owner needs before starting construction. The city’s average turnaround time for applications is about 30 days, Zack said.

Permit challenges

For homeowners, ADUs can mean an extra source of income to help with their mortgage costs or space for older children or parents.

For Rosio Mejia, a 42-year-old Fresno resident, converting her garage into an ADU was a way to help her elderly parents, 75 and 78, who are on a fixed income and lived in a small one-bedroom apartment near the fairgrounds.

“They kept raising their rent and their social security income was not enough,” Mejia said. “The best thing I could do for them was build a backhouse, but I did not have money to get it properly built with permits.”

Mejia’s ADU is considered an illegal structure. With no permit, she turned to family and friends who work in construction to install the plumbing, drywall, tile and appliances. Her garage is now a small one-bedroom home with a kitchen, living room and bathroom with a shower. Her total expense was $8,000 and the work lasted four months. Mejia said she never applied for a permit because she was under the impression that the city would require her to use their contractors which would have raised the cost beyond her budget.

Zack, however, stated that the city’s only concern is ensuring that the property meets the zoning and safety guidelines. Once the city approves the layout and grants the permits, the owner is free to use their contractor of choice.

Getting zone clearance costs $648, but a building permit fee varies, depending on the size of the unit. A typical 700 square foot one-bedroom ADU, with a small patio, would run about $2,000. When the city becomes aware of an illegal ADU, a code enforcement officer will visit the property. The first citation is $800, the second is $1,200, and the third is $1,600.

“Our goal is to fix before we fine,” said Mark Standriff, director of communications and public affairs for the City of Fresno.

Standriff said the city will not automatically issue a citation but would instead allow the owner 18 days to apply for a permit and 30 days to comply. He also said the city is flexible and willing to work with the owners to avoid a citation as much as possible.

Scott Handley, owner of the real estate agency Western Pioneer Financial, is a supporter of these housing options.

“They add value to the property and have multiple benefits,” Handley said. “Someone can use it to generate income and offset their rent, convert it into a home office, or give it to a child or elderly.”

Financing remains a challenge

In some parts of California, converting a backyard garage to an ADU can easily cost upwards of $100,000. Homeowners are generally left to tap existing equity in their home or take out a second mortgage in order to finance the project — options not easily accessible to lower or moderate-income owners.

The City of Fresno does not currently have a program that assists owners with ADU financing, but Zack says the city has reduced the zone clearance application fee from $2,140 to $648.

Across the state, local governments, banks, and community organizations are finding ways to help homeowners finance these projects. In Los Angeles, the Self-Help Federal Credit Union has partnered with community organizations to help homeowners with financing in exchange for committing to rent their ADU to a Section 8 tenant for a minimum of five years.

The Silicon Valley Housing Trust ADU Program in San Jose offers loans with a grant that covers the initial site assessment. Another option is refinancing through loans using government agencies such as Fannie Mae, Freddie Mac as well as the Federal Housing Administration — which allows the borrower to refinance as much as 80 percent of the home’s value.

Building from the ground up

In Clovis, the city has developed a program for homeowners looking to build a new backyard cottage from the ground up, rather than convert an existing structure. The Cottage Home program offers free pre-designed plans to approved property owners looking to build a tiny home.

Nick Mosley, founder of California Tiny House, Inc., said construction for a tiny home can vary from $30,000 to $100,000, depending on the size and blueprint of the home. Clovis currently has 11 completed tiny homes and five in process.

The city of Fresno added tiny homes into the zoning code in 2016 but has not received an application to build one. Zack said there is talk within the city to offer Fresno residents free tiny home blueprints as well.

Meanwhile, Mejia says she worries that the city will find out about her illegal ADU because it is missing some safety requirements. Her biggest concern is that it has no windows and can be dangerous for her parents in case of a fire. Now that she knows the city will not automatically cite her or force her to demolish it, she might apply for a permit in the future, but it is not a priority at the moment.

“I didn’t know it was that affordable to get permitted,” Mejia said. “It’s a rumor that the city is hard to work with. I took the risk and made what I could out of my own resources.”

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