Acceleration of ADU development has come to the forefront of possible solutions to help cities meet their Regional Housing Needs Allocation (RHNA) requirements to further the state’s economic, fair housing and environmental objectives. However, a new South Bay Cities Council of Governments (SBCCOG) study indicates that in the South Bay, less than half of accessory dwelling units (ADUs)—known as “granny flats”—are being rented out, with the rest being occupied for personal use or to house friends and family.

The survey was mailed to 404 unique residents of primary residences (ADU applicants) and 413 unique tenants (ADU occupants) in August 2023. In total 93 surveys were completed—71 by residents of the primary residences and 22 by tenants. It aimed to learn what went well for homeowners and what hurdles they faced in obtaining permits to build their ADU. It also sought to learn whether the ADU was being offered as free housing or to bring in rent.

Key findings:

  • 45% of owners are renting out their ADU
  • 20% are allowing a relative or friend to stay in the unit for free
  • 14% are using it for something else not specified
  • 26% were seeking tenants, had an ADU that was not livable or had other unspecified reasons for not renting out the unit

Who is renting ADUs?

  • 50% of units being rented out were occupied by a stranger
  • 51% were occupied by a relative, friend or someone else unspecified

The study reported rents range from $600 to $4,500, with an average rent of $1,834, not qualifying as “affordable.” The California Department of Housing and Community Development indicates that “very low-income” occupants of a studio unit must pay no more than $809 monthly and “low-income” tenants must be charged no more than $1,388 for a three-bedroom unit. Average rent in Los Angeles for a 790-square-foot apartment is $2,795 according to Zillow.

Removing ADU Barriers
The study suggests that reduced permit fees and speedier approval process could facilitate ADU construction and identifies “best practices” for cities. Most would require state funding support. It also identifies barriers such as high construction costs and rising interest rates. It concludes that state incentives might boost the percentage of ADUs built and rented at below-market rates.

The study examined whether ADUs advance the state’s environmental goals by reducing auto travel. It found no evidence that ADUs prompt shorter vehicle trips, which would lower emissions.

Transportation consultant Black & Veatch assisted with the study. It was funded by by the Southern California Association of Governments’ Regional Early Action Program (REAP), through the California Department of Housing and Community Development, to spur affordable housing production.

A second REAP-funded SBCCOG study finds that conversion of underutilized commercial strips and parking lots show potential to support housing construction to help meet regional housing and environmental goals.

The study also reveals that the cost of such conversions could constrain development and high-density housing projects alone may not provide the sought-after panacea for spurring housing production. The study sought to leverage underperforming parcels for potential redevelopment among the South Bay’s urban development profile. Targeted areas included strip arterials and parking lots.

It also earmarked areas that would place development in destination- and amenity-rich areas that facilitate zero-emission travel, such as walking, biking and short-range electric microdevices. It examined whether existing infrastructure, such as water and sewer capacity, was sufficient.

Key Findings: 

  • Conversion of underutilized commercial building sites to housing could physically accommodate many housing units in the South Bay to meet RHNA requirements.
  • Conversion of surface parking lots to housing presents an economically workable way of adding housing without changing a neighborhood’s character and keeping community businesses and destinations in place.
  • Economic considerations, such as high land and construction costs, are significant factors in limiting affordable housing development; offering density bonuses that create higher-density projects will not lead to the affordable housing needed to meet RHNA targets.
  • The private market supported by inclusionary zoning will not be able to reach RHNA’s affordable housing targets of 21,000 affordable units in South Bay cities. Government subsidies in the range of up to $3 billion will be needed.
  • Existing city infrastructure, such as water and sewer capacity, is not a barrier to new development, but would depend on the upgrade’s size and scale.

The SBCCOG worked in partnership with consultants Studio One Eleven, Dudek and Kosmont Companies on the study. •

To read the entire findings of both studies, visit