A Carrot—Not a Stick—Toward the Development of Greater Housing Options

This Tuesday, June 6th, at 7 pm at the Grand Traverse County Governmental Center, the Traverse City Planning Commission will be hosting a Public Hearing, with possible recommendations to the Traverse City Commission, on zoning amendments that would allow for additional housing options to be built in Traverse City. This could be a big step forward for increasing housing availability in Traverse City and our region! The Traverse City Planning Commission has considered housing-related reforms dating back to June 2020 and most recently held a public open house on May 16th, 2023 at the Park Place Hotel with over 100 people in attendance. Just over half of the public open house attendees filled out forms to provide written feedback on the proposed zoning ordinance amendments. This input is summarized in a Memorandum (pages 2 to 3) written for the Traverse City Planning Commission Tuesday, June 6th Meeting. Concerns for Traverse City zoning ordinance amendments expressed at the May 16th public open house centered around one main theme: a desire to maintain owner occupancy of residential properties to combat concerns about institutional investors and short-term rentals. Well lucky for us, California may have already proven there is no need for concern.

Passed in September 2016, and enacted on January 1st, 2017, California passed three ADU-related bills (Senate Bill 1069, Assembly Bill 2299, and Assembly Bill 2406) in an effort to address California’s housing crisis. These laws kicked off a movement of ADU regulations, allowing California residents the opportunity to use their properties to provide multi-family housing that allows seniors to age in place (according to AARP over 75% of adults 50 and older have consistently stated they want to remain in their homes for the long term), provide housing for family members in need, or provide a place for community workers to live near job centers. However, this movement took time to get jumpstarted. The limitation? Owner occupancy requirements.

In 2019, as a result of slow adoption California passed a handful of new laws to accelerate ADU development throughout the State including Senate Bill 13, exempting all ADUs permitted from January 1st, 2020 until January 1st, 2025 from owner-occupancy requirements. This jumpstarted ADU construction permits increasing them by more than 1,400% from 2016 to 2021. Similarly, Seattle overhauled their ADU-related rules, including owner-occupancy requirements, in 2019 and the city issued 80% more ADU permits in 2020 than it did in 2019. Subsequently, communities like San Diego have added greater incentives for the development of ADUs. Most notably, an ADU Bonus Program where one additional unrestricted ADU is allowed on a property after they have maximized the number of ADUs allowed by right for every deed-restricted ADU. These deed-restricted ADUs have a choice of Area Median Income (AMI) levels of very low (50% of AMI), low (60% of AMI), or moderate (110% of AMI), and the restrictions stay in place for 15 years. Since the ADU bonus program started in 2021 San Diego has seen a meaningful increase in deed-restricted ADUs with 295 of them permitted from January 2021 to November 2022 compared to 7 deed-restricted ADUs permitted from 2018 to 2021.

It’s not just about ADUs, California passed in 2021 Senate Bill (SB) 9, which became law on January 1st, 2022. SB 9 effectively ended single-unit zoning, aiming to legalize duplexes and fourplexes in residential districts across California, similar to what the Traverse City Planning Commission is considering, but after a year had very limited adoption. The owner-occupancy requirement in SB 9 is noted as one of the reasons for this limited utilization that analysis estimated would make over 700,000 new homes feasible.

More broadly, studies have found that owner-occupancy requirements have had the effect of blocking/excluding renters and recommend alternatives to an owner-occupancy requirement like allowing homeowners to hire a professional property manager, to serve the purposes that an owner-occupancy rule may look to solve. It appears from other community examples that although uncapping ADUs and the allowance of duplexes, triplexes, and fourplexes, while requiring owner-occupancy would be a step forward in allowing more attainable housing options; it would still be a significant limitation to housing development. Let’s learn from other communities and skip the owner occupancy requirement so we can get housing development moving forward for our Traverse City community.

Connor Miller photo
Connor Miller
Government Affairs Director

As the Government Affairs Director, I work to advocate for the real estate industry through programming that promotes the election of pro-REALTOR® candidates; engage, inform, and activate membership and local government officials on key local and state real estate policies; provide staff support to the REALTOR® Political Action Committee that invests members' voluntary contributions to protect and promote the real estate industry; and support the Aspire North memberships’ involvement in community projects to further grow and strengthen our region.