El Cajon has approved a new loan program to help homeowners build accessory dwelling units as long as they lease them at affordable prices to those with a moderate income.
The $632,109 loan program — unanimously approved last month by the City Council — will help El Cajon homeowners build accessory dwelling units — or ADUs, for short — which are smaller, secondary homes that are either attached or detached from an existing home.
Funding for the program comes from a Planning Grants Program passed by the California Legislature in 2017 to establish a permanent source of funding dedicated to addressing homelessness and increasing affordable housing stock throughout the state. Through a $75 fee applied to certain real estate transactions, the state expected to generate between $250 million and $300 million each year.
From that program, El Cajon received $2.7 million this year, about $2 million of which will be used to support programs for unhoused El Cajon residents.
The loans will be available on terms between five and 30 years, and recipients will be required to lease them at affordable rates to renters whose household income is at or below 150 percent of the area median income, which the U.S. Census Bureau reports is just over $87,000 as of 2021. Homeowners renting to residents with an even lower household income will have more time to pay back the loans — between 20 to 30 years.
The loan program is expected to serve six households by giving each applicant a loan of up to $100,000. If the city does not receive enough eligible applications, the council can later decide to reallocate the funding to another affordable housing program.
The California Department of Housing and Community Development reports that ADUs are an affordable option for increasing the number of housing units throughout the state because a property owner who is building one doesn’t need to pay for land, major new infrastructure, structured parking or elevators. They also benefit homeowners by providing a source of income when they rent them out.
