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Napa County launches program to spur ADU construction

Forgivable loans require affordable rents for five years

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Napa County will make forgivable loans available to help people build accessory dwelling units — commonly called “granny flats" — with rents meeting affordability standards.

The county Board of Supervisors on Tuesday adopted the guidelines. Forgivable loans to cover a portion of construction costs will be available to residents in both cities and unincorporated areas.

County officials hope the result will be 65 to 75 accessory dwelling units built to house 145 to 160 people. Fifty homeowners have already expressed interest in the loans.

Board of Supervisors Chairperson Ryan Gregory called this “a really interesting and innovative program.”

“I think this is absolutely needed,” Supervisor Alfredo Pedroza said.

Supervisor Belia Ramos said such units can be “a real steppingstone into what is a really tight housing market.”

Accessory dwelling units are living quarters detached from the main house. They are typically 400 to 1,000 square feet and have their own kitchen and bathroom.

Napa County will offer maximum forgivable loans of up to $45,000 for a studio, $80,000 for a one-bedroom unit and $105,000 for a two-bedroom unit. In addition, the county encourages homeowners to seek $40,000 California Housing Finance Agency grants.

County officials gave some examples of how the program can work for a homeowner who wants to build an accessory dwelling unit:

  • A two-bedroom, 800-square-foot unit might cost $340,000 to build. A base forgivable loan, other county incentives and a state grant could total $145,000, leaving $195,000 for the homeowner to cover.
  • A 400-square-foot studio might cost $180,000 to build. A base forgivable loan and other county incentives and a state grant could total $85,000, leaving $95,000 for the homeowner to cover.

The homeowner would agree to rent to someone earning at or below 80% of the area median income. That's $70,550 for a household of one, $80,600 for a household of two, $90,700 for a household of three and $100,750 for a household of four.

Illegal short-term rentals have, in quantity, long outpaced their legal counterparts in Napa County. That's still true, but officials say the number of illegal units is now well below 2019 levels. 

Also, the homeowner would agree to rent affordability standards. For example, a medium-sized unit that could fetch a market-rate rent of $2,624 would rent for $2,026 under the affordability standards, a county report said.

The affordability requirement would last five years. Twenty percent of the county loan would be forgiven for each year of compliance, until the total loan is forgiven after five years.

The state considers accessory dwelling units to be “naturally occurring affordable housing.” The new loan program will make them “even more deeply affordable,” county Director of Housing and Homeless Services Jennifer Palmer said.

Supervisor Brad Wagenknecht said one thing that scares neighbors about more neighborhood rentals is the prospect of more cars being parked on their streets.

“We have not seen those problems actually erupt in the neighborhoods where ADUs are,” Palmer said. “Yes, I think that is a challenge, though the neighbors have fewer-to-no opportunities to object to an ADU at this point either.”

Napa County is spending $5 million on the affordable rent accessory dwelling unit program.

The county is spending another $1 million on a related program to incentivize the building of market-rate units. It will offer participating homeowners such assistance as a landlord matching program, permit streamlining, feasibility studies, grants for loan fees and help from the Napa Sonoma ADU Center.

Though money from the federal American Rescue Plan Act isn’t directly funding the program, it freed up other county funds to do so, county officials said.

In total, Napa County received $27 million in this COVID-19 relief money. County officials have said the goal is to use it for “transformational” change, with money going to such services as child care.

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You can reach Barry Eberling at 707-256-2253 or

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Napa County Reporter

Barry Eberling covers Napa County government, transportation, the environment and general assignments. He has worked for the Napa Valley Register since fall 2014 and previously worked 27 years for the Daily Republic of Fairfield.

Related to this story

Three Accessory Dwelling Units were recently available for people to tour in Napa, at the CrossWalk Community Church. About 500 people showed up to see them through four November events. 

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