Aaron Fernando | Sept. 30, 2019 --As housing crises heat up across American cities, the San Francisco Bay Area is experiencing an extreme disparity: in 2017, it added three times as many jobs as it did new housing units for those workers.
To address this challenge, the region and others will need to embrace a number of different complementary solutions. One creative solution, available for decades but growing in popularity, is bottom-up in its nature: the granny flat. Technically known as Accessory Development Units (ADUs), these residencies are small housing units built on existing single-family lots — usually a small free-standing building in a backyard or a unit above a garage in which more people may live.
Because they have frequently been used to house relatives, ADUs are often referred to as “in-law units” or “granny flats” and in many residential areas, are legally only permitted to house family members. Yet in recent years, these legal and zoning restrictions have been relaxed with the intention of incentivizing homeowners to create more ADUs, a comparatively non-controversial housing solution that could ease the housing crunch.
California has been passing laws which make it less difficult to add an ADU to your property, and applications are keeping pace. Across the state, the number of ADU construction applications rapidly increased after laws relaxing regulations were passed in 2016 and 2017.
Though many legal restrictions have been eased, ADU development is still hindered by a couple of factors. One is the high cost of building a new structure, which can require $100-200K in financing or more and is not always affordable for homeowners. Another significant barrier is the time and energy required to navigate the complex government approval process.
ADU development can be seen as a decentralized housing solution and one that does not alter the skyline dramatically. Compared to many other projects like high-rise apartments, these units have shown to be far less controversial than many other housing solutions.
A Bay Area co-op may have a housing crisis solution that incentivizes the creation of more ADUs while advancing the cooperative business model. The Arizmendi Association of Cooperatives, which has existed for over two decades, has created the Roots and Returns co-op to facilitate ADU construction. The Arizmendi Association itself is a meta-co-op, made up of six cooperative bakeries, a landscape design cooperative, a construction cooperative, a development and support collective, plus its newest addition, the Roots and Returns Cooperative.
By using the construction skills of its worker-owners and its administrative support around financing and accounting, co-op leaders believe it is in an optimal position for creating affordable housing ADUs in the Bay Area.
The name Arizmendi is a shortening of Jose Maria Arizmendiarrieta, a young priest who in the 1940s inspired and helped found the Mondragon Cooperatives in the Basque Country of Spain. Today, the Mondragon Corporation is the largest worker-owned co-operative in the world, consisting of 260 separate co-operatives which in total employ 75,000 people in 35 countries and like Arizmendi, is a co-op of co-ops.
According to a CBS SF Bay Area news report from May, the Roots and Returns co-op draws up a contract with property owners, then finances and constructs each ADU. Interestingly, the co-op retains ownership of the structure itself and pays rent to the landowner. In practice, this is similar to how an affordable housing community land trust operates.
By providing affordable housing to service workers though cooperative construction, the co-op’s solution could simultaneously address multiple problems. The co-op members’ knowledge and expertise around construction and legal requirements makes it less difficult for homeowners to choose to create an ADU in their backyard. Importantly, since the co-op finances and owns each ADU as an asset, homeowners do not have to front that cost, incentivizing the decentralized growth of ADUs. By creating affordable housing specifically for service industry workers in the Bay Area, and by doing it through a worker co-op, this project could be at the vanguard of how affordable, non-extractive housing construction can occur in a truly regenerative economy.
Beyond the Bay Area, this type of business might be about to take off in other parts of the US. The Evanston Development Cooperative in Evanston, Illinois has been taking steps to try a similar approach with a hybrid co-op model of its own. With ongoing affordability crises, the relaxation of legal barriers around ADUs, a dire need for worker empowerment and fair wages in an economy of increasing inequality, this model, if it proves successful, is likely to be replicated around the country.