Accessory Dwelling Units, aka: ADUs, a building industry dream come true

“We’ll make you big money by renting your backyard, and it won’t cost you a dime!” So advertise backyard lease, development, and property management companies in the process of aggregating an ADU portfolio. Promoted as a solution to California’s affordable housing crisis, new ADU regulations are yet another sleazy housing industry scheme to make huge profits for themselves and wealthy Wall Street investors at the expense of the average homeowner.

Under new rules effective January 1, 2020 regulating the creation of ADUs, every California property owner has been set loose to conduct commercial activity by monetizing their backyards. Fast-moving companies with the scent of profit in their noses are already hawking their services, with promises of a steady income-stream for property owners. Facebook ads by such companies are already running across my newsfeed. A new gold rush has begun, but this time it’s the gold buried in California’s backyards. Wall Street is salivating; let me tell you why.

It costs between $50,000-150,000 to convert a garage to an ADU, and as much as $400,000 to build a 1,000 square-foot ADU from scratch. Aside from the occasional single property owner who might have the credit or cash to finance this amount, attention is going to corporations who can bundle this new type of real estate asset and monetize the business model by issuing stocks and bonds. This means banks, mortgage issuers, insurance companies, finance companies, tax accountants, and yes, most certainly Wall Street, are going to be involved.

What of pre-existing density and zoning rules? With the new statewide ADU regulations, every single-family-zoned property in California with a yard has suddenly been converted to multiple-family zoning. ADU homes of 800-1000 square feet are big enough for a couple, and even a couple with kids. This alone will cause a geometrical, unplanned density increase of cars and people in most neighborhoods; new neighbors on every side is a real possibility.

Roughly half of the residential real estate in America is investor-owned, not home-owner occupied, and California’s new ADU regulations eliminate owner-occupied requirements. Accordingly, it’s wealthy property-owner-investors and sophisticated housing development corporations and their allies who will harvest the money-tree now bearing fruit in California’s back yards; then again, it never hurts to appeal to good-old American greed. Every home-owning Californian is now being cultivated as a budding business-entrepreneur-landlord, with a valuable nest egg sitting in the backyard, legally entitled for rapid exploitation. California’s new ADU rules demand a streamlined application approval process, the swiftest in the real estate development industry, so the ready money is lining up. But there’s a host of other issues and questions.

Will an ADU be affordable to rent? Real estate development and property management companies are interested in maximizing profits, not affordability. Government regulations mandating the affordability of ADUs are not allowed, and they will rent at the highest price the market will allow. Property taxes associated with ADU construction will have to be folded into rental rates; a $400,000 ADU will add $4,000 a year in taxes, plus increased homeowner insurance. And who will rent these ADUs in Sonoma? Will wealthy, white homeowners seek low-paid Latino restaurant or hotel workers as tenants? Not likely, but well-paid high-tech workers in the Bay Area will be delighted to rent a small house in Sonoma to enjoy on the weekends.

Development impact fees are not collected on ADUs under 750 square feet. This means government will see little in the way of new revenues while at the same time must provide services to a larger population of residents. Does an ADU have its own address, for like mail delivery? What about utilities, like PG&E and garbage? It will get complicated.

Being a landlord can be a real pain, which is why the business world is salivating, knowing they will grab most of the profits through ADU property-management corporations that find tenants, and manage rent collection. And corporations seek to maximize profits, so rent will always be market-rate. A 1,000 square feet unit is large enough for two decent-sized bedrooms, a livingroom/kitchenette and bath, and will rent in Sonoma for at least $2,500/month; that’s more than a full month’s take-home pay for a worker with a minimum-wage job.

Sound travels and sometimes a noisy neighbor over the fence can be a challenge; having four new neighbors added to the ones you already have will certainly be interesting, particularly if it’s multiple families.

Setbacks and zoning requirements have traditionally been applied to the development of neighborhoods of single-family housing through the imposition of minimum lot sizes required for dwelling units, formulas about lot coverage, and floor/area ratios. Growth management ordinances have regulated the rate of development and population increase. Historically, the population in Sonoma has increased at a managed average rate of 1% per year. If only 20% of the 4,500 single family parcels in Sonoma build and rent an ADU in the next few years, the population will quickly increase by a whopping 20%. The same goes for the rest of Sonoma Valley; do the math.

We’ve seen this game before; the market will quickly be oversaturated with ADUs sitting empty, and unwitting homeowners unable to keep up with payments associated with ADU costs will lose their homes. It’s just another version of the type of housing bubble that collapsed in 2008.

Past regulations created single-family neighborhoods as we’ve known them, forming the basic fabric of the community; the new ADU regulations will change all that. Under the guise of a housing crisis, Sonoma and the rest of California has been snookered by an avaricious building industry into the uncharted territory of yet another real estate boom and bust.

How to create affordable housing

I’m referring to government-regulated affordable housing — deed restricted to keep it affordable for 55 years, rent controlled and appreciation-limited, subject to income verification. Large projects of regulated Affordable Housing are rarely built in Sonoma, and the reasons are all about money.

When the State of California eliminated funding for Redevelopment Agencies in 2012, the 20% set-aside in that funding for the creation of Affordable Housing disappeared. When it was available, the 20% set-aside was used to issue bonds for housing development; the stability of the property tax revenues from which funding was taken made bond issuance a viable option. Bonds of 20-30 years, paid-off using ongoing tax revenues, provided millions of dollars to subsidize non-profit homebuilder projects or the purchase of land that was donated to facilitate a project.

Unfortunately, the City of Sonoma did nothing to replace the lost Redevelopment Agency revenues until recently. Had the TOT tax been raised, housing impact fees levied, and other revenue-raising avenues been implemented in 2013, today the City of Sonoma would have millions to use for low-income Affordable Housing. This is important because without government subsidy, significant numbers of Affordable Housing does not and will not get built. A higher TOT and impact fees are now being imposed, but it will take many years to accumulate significant funding.

Some argue that the problem is one of land cost; the high cost of land in the city and valley does pose a hurdle to the creation of low-income housing. Similarly, the high cost of construction, now pegged at well over $500/square foot, has raised the bar. This is why government subsidy is necessary, and always has been. All real estate projects need to pencil-out for investors over a 10-year period; lower-priced housing produces a lower return on investment, and real estate investors, non-profits and otherwise, will not wait 20 or 30 years to get a sufficient return. It’s the reality of housing economics in a capitalist system, unfortunately.

Others aver that neighbors and NIMBYS object to higher-density housing; higher-density is one way of lowering development costs. But the evidence is that approval of such project applications overcomes such objections. The City of Sonoma, the Planning Commission and the City Council have all supported higher-density projects, and if proposed and funded, the city will continue to do so. This sustains a commitment to the creation of Affordable Housing that has been city policy for the past 30 years, at least. What’s changed is the availability of money.

The Urban Growth Boundary (UGB) limits the expansion of the city limits, but makes an exception for adding land for low and very-low income housing. In fact, its the only type of housing an expansion of the UGB will allow. Without government funding however, even this exception will not be utilized; again, whether it’s a non-profit or profit-based home builder, a project must pencil-out or it won’t happen.

Arguments that Affordable Housing creation in Sonoma is governed by issues of class, segregation, bigotry and greed are wrong; history shows that when government funding is available applications are approved. The problem is a lack of applications, and that’s due to a shortage of government money. When it comes to the lack of Affordable Housing, it’s not NIMBYS or class-warfare at work, it’s good old-fashioned capitalist economics.

Deconstructing Sonoma

Witnessing the construction of Sonoma is easy, just take a stroll down West Spain Street and the homes rising on previously vacant parcels give ample testimony to the process of ongoing development, a process that’s been taking place more or less continuously since the building of the Mission. By and large, the blueprint for Sonoma’s development was laid down on paper by General Mariano Vallejo in the 1850s, when its borders and parcel map were drawn. The subdivision maps of 1853 remain valid today.

Though the city limits have grown somewhat, in comparison to towns like Petaluma or Santa Rosa, Sonoma’s growth has been quite modest. This finds its precedent in both devotion to city history and Sonoma’s somewhat isolated location away from the Highway 101 corridor, but the present-day instrumentality of such preservation is found in words, the language of law: policies and regulations governing land use. And it is through an attack on words, the laws of land use, that the deconstructing of Sonoma is now proceeding.

Our reliance on words and laws constructed of them characterizes modern western society. The Bible says, “In the beginning was the word,” what the Greeks called “logos,” and upon that monumental dictate western society has been built. Our “logocentric” culture has invested words with the capacity of expressing truth, this despite the frequent ambiguity of language and its ready corruption into a tool of manipulation and commercial vulgarity. Unlike the scientific language of mathematics, which can be empirically tested and proven true or false, the truth of words cannot be proven except through the grammars of logic, themselves built of words.

Herein lies the present route of attack — the weapon for the deconstruction of Sonoma — an assault on words themselves and their conventional meaning in written law. Questioning the meaning of words of law is not new; to the contrary, the history of the U.S. Supreme Court includes exactly that activity. The roots of our logocentric culture underlie our forms of discourse. Thus words like “freedom” or “equality” have been used, evaluated and reevaluated over time and their meaning and application under law have shifted. Setting partisanship aside, such evaluations display the murky depths wherein we inhabit our nominal, word-based reality, a reality at once both mundane and metaphysical, practical and philosophical.

When it comes to land use law, however, erosion of meaning equates to washing away of layers of Sonoma history and culture, and like pristine hillsides, once lost, they are impossible to recover. The best recent example is the proposal to build mansions on Shocken Hill, where a developer’s focus on the letter “s” in the words “building pads” in Sonoma’s development code led to a bizarre shift of meaning from the particular to the general, from reference to a single pad on a single parcel to multiple pads on a single parcel. The city was suddenly confronted by an interpretation of meaning, not unlike Bill Clinton’s recursive statement that “it depends on what the meaning of ‘is’ is. Going forward we will see further linguistic assaults. The terms “urban” and “rural”, “middle income”, and “affordable housing” are all being used as cudgels to pound conventional meaning into submission by subverting textual intent.

As cultures change, the conventional use of language is always vulnerable in this way, and therefore so are land use laws, particularly in our deconstructionist, post-truth era.

(Note: Artist M.C. Escher explored the nature of transformation — construction and deconstruction — in many of his graphic works, as in the transformation of Fish to Goose).

No land left for affordable housing? Hogwash!

There seems to be a persistent impression that the City of Sonoma has run out of land for new housing. If we’re talking about tens of acres of undeveloped land for tract housing, that’s correct, but Sonoma decades-ago rejected construction of large-scale tract-housing development on adjacent vacant land in favor of in-fill. It was this decision that fueled passage of the Urban Growth Boundary (UGB). That was eighteen years ago, and since then the city has built an average of 65 new housing units each year, precisely the number specified in its Growth Management Ordinance regulations (a one percent/year population increase) and in line with Association of Bay Area Government (ABAG) regional housing allocations.

When redevelopment agencies were eliminated after 2011, the State of California threw out the affordable housing baby with the Redevelopment Agency bath-water. What was a reliable source of millions (making city issuance of housing bonds possible) was never replaced, a terrible policy mistake. Sonoma’s inclusionary requirement (regulated affordable units must equal 20% of the units built when market-rate development over five units is approved) is now almost the only source of regulated affordable housing (regulated means by law the units must remain affordable to lower-income residents for 55 years).

Unless Sonoma wishes to abandon its identity as a small-scale rural town and adopt a profile more like that of Petaluma (now swollen to a population of over 60,000), the land we have inside the UGB for future housing is what we have to work with. The UGB has functioned exactly as was intended; open agricultural space is protected and denser, in-fill development within Sonoma is being built. Casual observers, however, think no housing opportunity sites remain.

I went to Westamerica Bank on a recent Friday; it’s the first time I’ve been inside for a while, and it was an eye-opener–virtually empty of both customers and employees. Only three employees were seated amid ten desks on the open floor, two teller windows in operation, and only three other employees visible behind the tellers. As for customers, I was alone. What I describe is true for banks in town overall: mostly empty buildings, vacant parking lots, abandoned desks, and a diminished number of customers walking into bank locations. Online technology has replaced most routine banking activities, and valuable real estate is underutilized.

A growing number of commercial properties (what we now call “brick and mortar” locations) within city limits are widely underutilized, creating a huge opportunity for them to be redeveloped with housing. In many cases, existing structures themselves provide spaces for conversion; in other cases, second story housing additions are viable. In yet other situations, underutilized commercial parcels (largely parking lots with crappy old structures) can be scraped clean and entirely new buildings built. Seven percent of the real estate in Sonoma is zoned “commercial” and much of it is, or will be, available for modification that includes new housing.

Continuing to consider only undeveloped parcels as housing sites is deeply mistaken. The UGB’s in-fill requirement forces developers to be increasingly creative in the use of under-utilized parcels, and the result is greater housing diversity, innovative designs, better planning–and all this without sprawl.

The city must fully commit to generating revenues to support regulated affordable housing; available land is the least of our problems.

Sonoma’s Urban Growth Boundary in Maturity

Sonoma’s Urban Growth Boundary (UGB) is performing exactly the way it was intended. Agricultural land and open space beyond the city’s borders have been preserved, but preventing sprawl was always the simplest and most obvious intent. The less obvious intent now manifesting is creatively-designed, higher-density infill housing projects.

It has taken eighteen years for the UGB to generate this latter effect; the community is now taking notice but it’s also created misperceptions. The pace of infill has been slow for large, vacant parcels zoned for housing to be developed, such as those on West Spain Street. This slow pace attests to the realities of land-use patterns in Sonoma: the ups-and-downs of the housing market, and the availability of plenty of parcels for development. Given Sonoma’s Growth Management Ordinance limiting development to an average of 65 units per year and the availability of parcels, the pressure to develop has been modest.

The UGB was designed to create a condition of parcel “scarcity” that prompts infill development at higher density to satisfy housing demand. “Scarcity” means that remaining undeveloped parcels are therefore more carefully and creatively designed. The older, 20th century development pattern of detached, single family homes with large, park-like yards on 6,000 sq. ft. lots based upon abundant land is yielding to smart, 21st century needs for diverse housing stock–multi-family, apartments, and government-regulated affordable housing–based on limited land availability. After 18 years, it’s finally happening.

Parcels with older, often run-down single family homes are being re-developed with multi-family units; the completed Ledson project on West Spain is an example. Seven or eight older structures were removed and eighteen new housing units, all rentals, were created. The same is contemplated for a parcel behind the El Pueblo Motel. Going forward, infill will proceed in this manner, combined with the re-development of commercially-zoned parcels large enough to include required housing. Protecting agricultural land and open space always required the trade-off of higher-density infill development within the urban boundary.

One element in the land-use formula that needs immediate attention is generating revenues for government regulated affordable housing. It was not anticipated that Redevelopment Agency funding would disappear after 2011, and the City of Sonoma has been too slow to respond with new revenue sources to fund its affordable housing program. In fact, it has no funding and no program, even after seven years, and substantial revenue opportunities have been lost. If the city now gets serious and adopts new fees, taxes and financial instruments to raise substantial funding, some of that lost ground can be recovered.

Some complain the UGB has raised land prices; as regional population grows, land prices throughout the Bay Area have increased, even in unincorporated areas without any UGB. In popular and attractive towns like Sonoma, this is particularly true. That’s the nature of capitalism.

Renewal of the UGB in its existing form will insure that it can continue to function as intended in its maturity. Between the remaining undeveloped parcels (which are substantial if not immediately obvious), already developed parcels which are good candidates for reuse and re-development, and commercial parcels large enough to add substantial housing, the protection of Sonoma’s greenbelt can continue. An expansion of the UGB will subvert its intention by relieving pressure on land-use and returning Sonoma to inefficient and wasteful housing development.

Sonoma, Super-Sized

The Cheese Factory proposal by the Oxbow developer

Since its beginnings, Sonoma has been a small town. It once was the county seat, long ago, but that role fell to Santa Rosa and, well, thank goodness for that. From then on Sonoma’s destiny seemed to be an indelible Bear Flag moment of history combined with an urban trajectory of modest, small-town scale and character.

That small-town character is under assault in 2017, and highly vulnerable. America’s penchant for big, bigger and biggest has finally reached our shores, particularly the scenic and ever more popular Historic Plaza. The latest example of the super-sizing of Sonoma is a proposal to rebuild and expand the Sonoma Cheese Factory building on Spain Street (shown above), right across from the Plaza park’s newly installed sculpture of General Vallejo.

In 2015, the owners of the Cheese Factory received approval from the Planning Commission for the reuse and renovation of the existing building, roughly 11,000-plus square feet in size, into a multi-vendor public market, sort of like a mini-Ox-Bow market in Napa. Apparently, this caught the attention of the owners of the Ox-Bow market itself, and they formed a new company with the developer who received approval in 2015. The result of that union is now an updated proposal to replace the building entirely, except for the historic 1945 facade, and by adding a basement level, enlarge it to 25,000 square feet. In their project narrative, they call this revision “modest.” It includes no housing component, of course.

It certainly does not strike me as “modest.” To the contrary, this proposal expands the capacity of the parcel nearly to its maximum potential. 132 indoor restaurant seats plus outdoor seating and the lure of “artisan” (meaning pricey) food and produce vendors is surely going to maximize the tourist-dollar potential of the property and further exacerbate the traffic and pedestrian challenges of the entire Plaza.

This trend towards super-sizing is also visible in the hotel proposal on West Napa Street. In order to accomplish that particular feat of magic, seven individual lots are being combined and aggregated into one “super-lot” which can accommodate the proposed 62-room hotel and 80-seat restaurant. “Super-sized” lots allow a scale of development far larger than any of the smaller, individual parcels could accommodate, and represents a disturbing and destabilizing trend that runs counter to Sonoma’s small-town scale. The historic development patterns in Sonoma are largely the result of the existing lot sizes, and when those lots are allowed to be combined without limit, well, so much for small-scale.

Super-sizing Sonoma does nothing to address the existing infrastructure of streets, sidewalks and parking. The Plaza, a magnet for tourists and tourist-oriented businesses, is already traffic-snarled by cars and pedestrians; downtown is an open-air parking lot disguised as city streets. Super-sizing will simply lure more people, autos and tour busses into the limited confines of our National Historic Landmark.

What’s allowing this to happen is the absence of updated planning. Rules allowing multiple parcels to be combined for development need to be changed, and the effects of cumulative impacts given far greater consideration. What is the carrying capacity of The Plaza? The answer requires evaluation of the historic district as a whole and if we don’t provide that answer we won’t know when Sonoma’s soul is in danger of being super-sized into oblivion.

Sonoma’s examples of real, true and beautiful


Retailing has never been an easy business. Changing tastes, new technologies, capricious landlords and finding loyal employees alone are enough to create conditions of failure. Add in the Internet, and today’s retailer faces incredible odds.

Here in Sonoma, those of us who’ve been here for some decades have watched the Plaza morph and change from a resident-serving hub to one oriented to tourists. Behind these changes are all the forces I’ve mentioned, yet among the nearly thirty wine-bars, numerous restaurants and shops selling over-priced kitsch there remains a few reminders of what downtown used to be. Is it a miracle of nature, or is something else at play?

Two of the best examples are the kitchenware shop Sign of the Bear and Eraldi’s, the mostly men’s clothing store. How is it that these two Sonoma Plaza icons have not been displaced by yet another tasting room?

One part of the answer lies in the fact that the local owners of both stores are in the shops nearly every day. Like conductors overseeing their orchestra, leadership brings a sense of authenticity and connection to employees and customers alike. In our age of anonymity, the presence of identity is itself a powerful force.

Another inescapable fact is that in both cases, the owners also own the real estate. This removes the “greed” factor associated with landlords seeking the highest possible return on their real estate investment. The “churning” of retailers on the Plaza is largely due to rising rents, rents rising not due to increased costs but due to profit opportunities created by “market conditions.” Resisting the lure of more income because it can be had tests the will to remain loyal to tenants, and sadly, many landlords fail that test.

The product offering also comes into play, and the relative lack of competition. Both stores have some competition, but none on the Plaza and not much nearby. When it comes to well-stocked men’s clothing stores, Eraldi’s is it. As for kitchen-ware, Sign of the Bear is a crazy-quilted, crowded, over-stocked experience of exuberant sensory overload. In today’s slick and trendy retail environment, both stores are now firmly established in the category of genuinely quaint.

It’s an accomplishment to survive in retail long enough to be declared quaint. Both stores are more than quaint, of course; you can find what you need for your kitchen or your closet, and in this way both shops fill real needs in real lives. But quaintness, like patina on an antique, is something acquired only over time. It can be imitated, of course, but that’s not genuine. Originality confers a unique quality all its own.

I suspect that as Internet shopping continues to expand, “brick and mortar” retailing will increasingly be more difficult to sustain. Each new technology forces earlier technologies into obsolescence. When mail-order technology arrived, the mighty Sears catalog hit the sales of the local general store. Ironically, Amazon and Internet technology have sealed the demise of once mighty Sears.

We can only hope for and appreciate shops owned by locals who stay true to their mission and vision. Sign of the Bear has survived long enough for cooking to have waxed, waned, and waxed again, and Eraldi’s solidly remains a bastion of fair-priced, common sense clothing. Yes, they are are quaint by today’s standards, but they are also, real, true and beautiful.