Not your grandma’s granny flat: How San Diego hacked state housing law to build ADU ‘apartment buildings’

San Diego has leveraged a 2021 state housing law to dramatically expand accessory dwelling unit development through its innovative ADU Bonus Program, creating apartment-style complexes that bear little resemblance to traditional "granny flats." The city's unique ordinance offers property owners a one-for-one deal: for each affordable ADU they build for lower-income residents, they receive automatic permission to construct a second "bonus" unit that can be rented at market rates.

The program allows significantly higher density development than typical ADU regulations.

In areas away from public transit, property owners can build up to five total units on a single-family lot.

In transit priority areas covering much of San Diego's urban core, developers can alternate between affordable and bonus units with few practical limits beyond height restrictions and floor area ratios.

This has resulted in projects like a Golden Hill development featuring nine apartment units on a single-family lot, with four classified as ADUs and two designated as affordable housing.

The program represents a novel approach to addressing California's housing shortage while maintaining compliance with state ADU laws.

For property developers, it offers unprecedented density opportunities in urban areas, while homeowners in qualifying neighborhoods may see increased development activity as investors seek to capitalize on the bonus unit incentives.

The initiative could serve as a model for other California cities seeking to maximize housing production under existing regulatory frameworks.