What is the California AB 976?

The Genesis of AB 976

The impetus behind Assembly Bill 976 stems from California's persistent housing crisis, characterized by soaring rents and limited housing supply. ADUs have emerged as a viable solution to increase density in residential areas. However, owner-occupancy requirements imposed by many local governments acted as a major deterrent.

AB 976 represents a significant measure toward addressing California's housing crisis by unlocking the full rental potential of ADUs. This legislation aims to stimulate ADU construction, expand the rental housing market, and create more affordable housing opportunities by removing owner-occupancy requirements.

AB 881's Temporary Relief

Assembly Bill 881 (AB 881), passed in 2020, temporarily prohibited local governments from imposing owner-occupancy requirements on ADUs until 2025. While this legislation helped create a surge in ADU construction, it also recognized that these requirements created a "poison pill," hindering ADU development and limiting rental opportunities.

AB 976's Permanent Solution

AB 976 builds upon AB 881 by permanently removing owner-occupancy requirements. This removes the uncertainty created by the 2025 sunset provision in AB 881 and gives ADU owners and potential owners long-term security. This permanent change is meant to encourage greater ADU construction and increase rental housing availability.

Key Provisions and Implications of AB 976

Elimination of Owner-Occupancy Requirements

AB 976's core provision permanently removes owner-occupation requirements for ADUs. This empowers homeowners to rent out their ADUs regardless of their residency status.

Expansion of Rental Housing Market

AB 976 is expected to significantly expand the rental housing market in California by removing owner-occupancy restrictions. This will create more housing opportunities, particularly in areas with high housing costs.

Simplified Financing

Removing owner-occupancy requirements simplifies the process of obtaining financing for ADU construction. Lenders are more likely to approve loans for ADUs that can generate rental income, regardless of the owner's residency.

Long-Term Rental Focus

AB 976 authorizes local agencies to require that ADUs be used for rentals of terms 30 days or longer. This provision aims to prioritize long-term rental housing, which is more stable and beneficial for communities.

Addressing Financial Barriers

According to the Terner Center for Housing Innovation, rental income is a primary motivation for homeowners building ADUs. AB 976 removes a significant financial barrier, encouraging more homeowners to develop ADUs.

Impact and Considerations

• Increased ADU Development: AB 976 is expected to stimulate ADU construction, increasing the housing supply.
• Affordable Housing Opportunities: ADUs can provide more affordable housing options, particularly for low- and moderate-income individuals and families.
• Neighborhood Impacts: Local jurisdictions may need to address potential neighborhood impacts, such as increased traffic and parking demands. Careful planning and design can mitigate these impacts.
• Local Agency Autonomy: While AB 976 removes owner-occupancy requirements, local agencies still retain some autonomy in regulating ADUs. It is crucial for homeowners to consult with local authorities to understand specific requirements.

References

• California Legislative Information - Assembly Bill 976 Text
• California Legislative Information - Assembly Bill 881 Text
• Office of Assembly Member Philip Y. Ting - AB 976 Fact Sheet (PDF)
• Terner Center for Housing Innovation - Breaking Down Barriers to Racial and Economic Equity in Accessory Dwelling Unit Construction (PDF)