SAN JOSE (CBS SF) – San Jose Mayor Sam Liccardo is proposing $5 million in subsidies and waived fees for homeowners who want to construct accessory dwelling units in an effort to curb the housing crisis in the South Bay.

Liccardo and councilwomen Sylvia Arenas and Magdalena Carrasco announced their support for the proposal Wednesday morning at Advantage Homes in South San Jose. Advantage Homes specializes in relatively inexpensive factory-built “pre-fabricated” and modular homes.

The “Yes in my Backyard” program could offer up to $20,000 in forgivable loans for residents who build ADUs and agree to rent control for low-to-moderate income tenants for at least five years. The units cannot be listed on Airbnb or short-term rental sites during this time.

The loans will go toward construction and permit costs, some of which could be waived.

“This has great potential to scale if we can get it right,” Liccardo said, addressing an ongoing housing crisis. “We look forward to having a region that says ‘Yes in My Backyard.'”

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The city would source the money for the “naturally occurring affordable housing” from its Multi-Source Housing Fund and a partnership with the Housing Trust Silicon Valley.

San Jose most recently revised its ADU policy last year, increasing the amount of eligible homes in the city from 100,000 to 120,000.  After the change, Housing Trust Silicon Valley CEO Kevin Zwick said the amount of ADU applications jumped from 70 to 350.

Homeowner and San Jose resident Monica Nanez also advocated for the program, saying it would help families make extra income while supporting workers who are being priced out of the city.

“This program, I think is going to be a huge help to overcome the initial cost barrier that homeowners face, but perhaps more importantly, it’s going to help people like teachers have more access to affordable housing,” she said.

Advantage Homes led Liccardo, Arenas and Carrasco on tours of its ADUs, showing off neat, inexpensive homes that were decorated with trendy fixtures and appliances for a fraction of the cost of a regular home. One two-room, one-bathroom unit is going for $48,386 without the trimmings, and $85,671 with. A three-bedroom, two-bathroom house is roughly $140,000.

The company’s president, Todd Su, said the pre-fabricated homes have a stigma of being unstylish and flimsy, but can last 30 to 50 years with weatherproof building processes. They only take about three weeks to build, compared to about a year for a traditional home, and can be set up in a matter of weeks as an ADU.

The proposal will go before the City Council in June, and has received public support from Liccardo, Arenas and Carrasco, as well as being co-signed by Councilwoman Pam Foley.

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