Using Lot Splits to Provide More Opportunities for Homeownership

Logan Tokos

Project Background

Legislative response

2017 – California AB 2299 Accessory Dwelling Unit Law – Authorizes municipalities to create ordinances for the construction of second units in single and multifamily zones.

2019 – California Housing Crisis Act – Passed in response to the California's Housing Future Report, the Act prohibits municipalities from adding unnecessary delays or outright denying housing construction projects.

2021 – California State Bill 8 – Extends the provisions of the California Housing Crisis Act to 2030.

2021 - California State Bill 9 – Authorizes construction by right of additional units in single family residential zones. This gives property owners the ability to construct accessory dwelling units (ADUs) on their property by right, simplifying some local permitting process. The Bill also allows for lot splits to provide more housing in some cases.

One solution to the housing crisis identified in the 2018 California’s Housing Futures report is to facilitate the construction of more accessory dwelling units (ADUs). This solution is highly relevant to the Los Angeles context. Los Angeles is the quintessential car-centric city blanketed by single family residential neighborhoods. ADUs are commonly promoted in Planning literature as a measure to provide more affordable housing by augmenting the urban fabric of single family neighborhoods. The logic is that through ADU construction, a city can provide more housing by incrementally changing its urban fabric rather than bulldozing single family residential to build at higher densities. Indeed, many ADUs already exist in the city.

Interestingly, a recent analysis by the Center for Community Innovation at the University of California Berkeley found that recent homeowners who still have a mortgage are more likely to construct ADUs (2020). The same analysis also concluded that affluent homeowners are more likely than the average Californian to construct an ADU on their property. That being said, lower income communities, particularly in Los Angeles County, are constructing ADUs in significant numbers (The Center for Community Innovation, 2020).

Support for ADUs in Los Angeles

There is growing support for ADU construction in Los Angeles as a method of providing more affordable housing. UCLA's Citylab estimates that ADU construction has the potential to provide 462,644 new units in the City of Los Angeles and 1,473,973 units in Los Angeles County. The regulatory apparatus in California is acting to remove barriers to constructing ADUs and close the housing need gap. Non-profits and academic institutions are also working to address these challenges. Two notable examples are: LA Más, a community development organization designing and building initiatives to support and empower communities of color in Northeast Los Angeles, and UCLA's Citylab, a think tank within UCLA's Department of Architecture and Urban Design that explores design challenges related to building more sustainable, equitable and beautiful cities.

LA Más has partnered with the City of Los Angeles and Los Angeles County on several pilot initiatives to design and build ADUs as housing for low income people. The outcome of these pilots is the Backyard Homes Project, a consortium of public and private organization teaming up to help homeowners build ADUs. The Backyard Homes Project will provide homeowners with design and construction support (and optional support for financing as well) to build an ADU in their backyard. In exchange for these services, homeowners agree to rent their ADU to tenants with a Section 8 voucher for at least five years. Through this initiative, LA Más is helping to provide more housing supply for the Housing Choice Voucher Program which has been crippled by landlord's refusal to accept vouchers. A few examples of possible ADU designs from the Backyard Homes Project are shown above.

Inspiration - Westmont, Los Angeles

The inspiration for my project comes from my visits to Westmont, Los Angeles, where my in-laws live. Westmont is a lower income neighborhood in South Central Los Angeles, just east of Inglewood. The existing development pattern there is single family residential and depends heavily on cars for transportation. My brother-in-law and sister-in-law live in a two-bedroom ADU. When visiting, I was intrigued by the configuration of the houses on their street. Most of the homes on their street have multiple dwelling units on the property, an original house fronting the street and one or two accessory dwelling units in the rear. These ADUs are quietly changing the urban fabric of their neighborhood, providing more housing without additional roads, infrastructure. or land purchases.

Though this rental arrangement has worked well for them, my in-laws would plan to stay in Los Angeles long term and would love to own their own home. However, doing so in such an expensive housing market is difficult. They have attended multiple workshops on mortgage hacking, how to purchase a property with an ADU or JADU (junior ADU – an accessory dwelling unit interior to the original house) and rent it to friends to cover the cost of the mortgage. They have also considered pooling their money with a few other families to purchase a home for all of them to live in together. My in-laws are certainly not alone in making these calculations. The Wall Street Journal recently documented that this a growing trend among millennials (Janin, 2021). Desperate to be able to own an asset and to obtain secure housing, millennials are pooling their resources to purchase homes. The number of mortgages granted to co-buyers with different last names has exploded. Real estate analytics show that this has increased 771% since 2014 (Janin, 2021).

Trends Toward Smaller Homes

Tiny homes are rising in popularity across America and with good reason. Since they are smaller than typical single family homes, tiny homes are more affordable than traditional homes while still retaining all the benefits of owning private property. They are also more stable than renting. California's Housing Future Report includes tiny homes in its list of affordable options to ameliorate the housing crisis alongside ADUs. Some developers, like Newtown CDC are experimenting with smaller, affordable home offerings. Newtown's Tempe Microestates, single story 600 square feet homes sold out before they began construction.

Tiny homes and ADUs are "middle housing". It is well documented that most housing markets, like Los Angeles', are missing middle housing. Middle housing includes smaller starter homes like townhomes, duplexes, and work-live housing that that middle and working class people can afford to own (Parolek, 2020). In his research, Daniel Parolek asserts that dwelling unit size is not nearly as important to first time homebuyers as walkable, accessible amenities, transportation options, affordability, and a sense of community (2020). Architect Alain Bertaud also argues for smaller housing footprints (2018). Bertaud says that cities should remove minimum floor area requirements for dwelling units because they artificially raise the price of housing (2018). People will have more housing choice if they can choose how much house they want to purchase in a given location (Bertaud, 2018). The market is trending toward smaller dwelling units in amenity rich areas, but the housing supply is still catching up. ADUs are one solution to provide more housing in the middle housing category, but they do not address the desire to own property in expensive markets. Under current regulations, ADUs are only available as rentals options. How then can Los Angeles provide more homeownership opportunities for low income and first time homebuyers?

Extending the Logic of ADUs

If the logic of ADUs is to make incremental changes to the single family residential urban fabric to provide more housing, then its extension is to break these single family lots containing multiple dwelling units into smaller separate lots. This second piece, the creation of smaller separate lots with their own title, moves ADUs from solely existing in the rental market into the homeownership market. As argued above, Angelinos want to own homes, but rising prices makes it increasingly inaccessible to many.

Moving from home renter to homeowner offers many benefits but primary among them is security of tenure through fixed payments. Rents change from year to year, but mortgage payments do not. In the United States, homeownership is the primary mechanism through which families build generational wealth. The US tax code favors homeowners over renters. Homeowners effectively receive subsidies through the mortgage interest deduction and regulation that waives capital gains tax on land sales if the gains are less than $500,000. Converting ADUs into separate properties allows lower income and first time homebuyers to capitalize on these benefits of homeownership.

The Mechanism: Lot Splits

How can we split a single lot into multiple parts to separate original houses from ADUs? This tool already exists. It is called a lot split map. A lot split is a survey of a property that defines the boundaries of the original property and depicts new property divisions internal to the original lot. In my career as a land survey technician, I have worked on a number of these maps. They are used to circumvent the subdivision process, a long ordeal involving multiple levels of local government approval. Municipalities generally allow lot splits when the original property is split into four or fewer pieces. Avoiding the subdivision process benefits homeowners seeking to split their lots because it keeps costs down for them and for future ADU purchasers. For its property surveys, Los Angeles County uses the name parcel tract maps, so I will employ this terminology from here onward.

Los Angeles has a history of dividing large lots into smaller ones to incorporate more homes into existing neighborhoods. I discovered this digging through the survey records for Westmont. The subdivision my in-laws live in, Sunnyside Heights, contained on average 38,100 square foot lots at its inception in 1905. However, a later record of survey recorded in 1939 further divided the lots into six pieces, producing 6,000 square foot lots. Portions of the two surveys are shown below.

My new Parcel Tract maps would further split the lots into smaller pieces that coincide with the locations of each existing building. Access to properties setback from the right of way would be guaranteed by the provision of access easements benefitting the rear property owners. Examples of a two building lot split and a three building lot split are shown below. The new lots are 2,000-3,500 square feet in the two lot scenario. Lots contain roughly 1,300-2,600 square feet in the three lot division.

Proposed Regulatory Changes

Planning for Parking

The primary critique I have received for this proposal is, what about the parking? More people per lot means more cars, especially in a car-centric environment like Los Angeles. Where are those cars going to go? To answer this question, I performed a parking analysis on this case study block of 107^th Street. The zoning for this neighborhood is R-2 which requires at least two parking spaces per lot prior to ADU construction. To fulfill this parking requirement, the City does allow tandem parking, parking two cars one behind the other in a driveway where one cannot get out. For each ADU constructed on a property, the City of Los Angeles requires one additional parking space. However, the City waives this requirement for ADUs located within one half mile of a bus stop or light rail station or one block of a designated car-share pick up area. The units shown in this analysis are within one half mile of the bus stop at 108^th Street and Denker Avenue, shown below. Though relatively near a light rail station, the distance is too far for daily walks. There are no car-share pick up areas nearby. However, since many opt to drive over taking transit in Los Angeles, I counted one parking space per ADU in my analysis, even though this is not required per the current zoning code.

The parking analysis is shown below. Red circles with x’s indicate an original house. Red circles with crosses indicate an ADU. Green rectangles indicate one vehicle parking space. On this street, there are 45 original houses and 46 ADUs. This sums to a total of 136 parking spaces required per the zoning ordinance. Summing the available street parking and driveway parking, totals to 177 spaces. Of these available spaces, 90 are tandem driveway spaces. The other 87 are street parking. The parking available on this block is amply provides for residents’ needs, which makes sense given that this is not a theoretical situation. It already exists and residents have found a way to manage parking without City intervention.

It is also worth considering if this level of parking provision is necessary. As discussed above, technically ADUs on this street do not need to provide the extra parking space because these units sit within a half mile of a bus stop. In its Mobility Plan 2035, the City of Los Angeles expresses its intention to build complete streets which decenter the car to facilitate alternative modes of transportation. Los Angeles already incentivizes city employees to embrace ridesharing, biking, walking, and taking public transportation. The City also has extensive plans to expand its light rail network and provide real time updates for trains and buses to make transit more predictable and reliable. Ride share is on the rise with the proliferation of app services like Lyft and Uber. All these changes should decrease automobile use and thereby the need for parking spaces.

Opportunity Zones for ADUs

In their study of informal housing in Los Angeles Mukhija & Loukaitou-Sideris show that ADUs are widely disaggregated across the city (2014). Residents build ADUs in wealthy and low income neighborhoods. There is some evidence that more ADUs are built in wealthy neighborhoods, but no one neighborhood has cornered the market on their construction. ADUs can help increase density in single family neighborhoods across Los Angeles, which is good news because single family neighborhoods blanket many parts of the city. One possibility for targeted ADU construction might be to designate opportunity zones in neighborhoods experiencing rapid gentrification to ensure stability of tenure for long time residents. Another approach might be to draw upon existing research and initiatives to identify high impact zones. In their analysis for ADU pilot projects, LA Más identified Northeast Los Angeles, Southwest Los Angeles, and the San Fernando Valley as areas that could benefit from ADU construction. These areas might be worthy of further consideration for opportunity zone status as well.

Potential Project Extensions

Though parking is not an issue in this case study, further analysis of other sites could add weight to this argument and provide a more comprehensive approach to incrementally changing the urban fabric through ADU construction. The site analysis performed as part of my thesis raises legitimate questions for further research. A few are listed here:

• Is this solution scalable? Could we implement it in other neighborhoods?

• What programs exist to support the production of ADUs? What are the notable barriers that prevent this construction?

• What is the price difference between lots with ADUs and lots without? How much value does an ADU add to a property? How is this cost divided after splitting the lots into smaller properties?

• How small is too small? Should there be a lower limit to ADU sizes or lot splits?

• Are there "opportunity zones" where coupling lot splits with ADUs could make the most impact?

I would argue that from the position of this project, the scalability of this research appears defendable. ADUs are prevalent in Los Angeles, but further analytics could strengthen this thesis. Examining mechanisms to support ADU production and pricing falls beyond the scope of this project but deserves careful consideration. I have argued against the last question in this report, but minimum floor areas came into existence for a reason. Building shoebox sized dwelling units can promote slum-like conditions if poorly done. Further research on how to incentivize development of quality small units would benefit this thesis.

Conclusion

Disclaimer: Much of the information on this webpage comes from my Final Report written for the Common Grounds Studio class. I have directly quoted sections from it here.