City Council - Regular Meeting

Oh, that sounds beautiful. So can everybody hear me all right? If you can raise your hand in the back of the room, good. I don't actually need a mic, but some of these people are shyer. So welcome to our affordable ADU loan Forgivable Loan Program event. It's the last one we're doing in the valley. And so we're excited to bring it up here because so far, a lot of the development and people who've taken advantage of it have been farther to the base of the valley. And ADUs are a really cool way to get some affordable housing up here too. So we're excited to see more applicants in both jurisdictions, St. Helena, Calistoga, and the unincorporated county up here. Can I get a quick show of hands? If you are really developed, you kind of like understand what an ADU is, you kind of know exactly what you want to do already, can you raise your hand? Yeah, it's always about half the room. Okay, and if you're like, I'm not actually sure what ADU even stands for, I just kind of vaguely know. I'm curious about whether this forgivable loan is right for me, but I don't know any of the details. Can you raise your hand? Yeah, all right. So one brave soul admits. But it's often the case that it's a couple of people. So we're going to go at all levels today and kind of cover the bases. But my name is Ryan and I've got a panel of awesome speakers. We're going to talk to Scott Johnson from the ADU Center about some of the practicalities about ADUs in general, whether or not you use this forgivable loan. He's kind of the one who sets reality, tells you the sticker price, all the sad stuff. But also the happy stuff, because he's talked to literally hundreds of homeowners in Napa and helped them go from the very concept or imagination, all the way to completion. And so it's a lot of good experience. He's at the ADU Center, which is a nonprofit that exists just to help you with that exact kind of process. Then we're going to talk to Erica Ortado-Ponce, who's at the county's Department of Housing and Community Services. They run this program, and she's a programs manager. And so she'll be going through the details of the forgivable loan specifically and who it's right for and what exactly you'll be committing to if you go down that road. And then we've got Natalie from the city of St. Helena. Natalie is an assistant planner at the city of St. Helena. You probably met Lauren and some of the team that's assistant that Lauren's an assistant planner at the city of St. Helena. And and then we might be getting a Trevor. Yeah. So and then we might also have a Trevor Hawks who's PBS, which is the he's a senior planner at the county center. And so depending on which jurisdiction you fall in, it's probably one of those three teams that you're gonna end up interfacing with. Whether or not you use the forgivable loan, which is gonna be through Erica's team, then you've got the planning and the permitting and the entitlement, which will be through whichever jurisdictional team. So without further ado, I'll hand it off to Scott. We'll give the cameras a couple seconds to find you. And then I think Eric is, oh, you're slide free, right? I'm slide free. I love it. A brave soul. All right. Take it away, Scott.

Thank you. Well, it's great to be here in Calistoga. I'm the director of the Napa Sonoma ADU Center, also known as the ADU Center. We work in Napa and Marin. And when we started in 2020, we started in Napa and Sonoma and Calistoga, shout out to Calistoga, Calistoga was one of the first jurisdictions who helped support us fiscally. And we've been working in Napa County for the last six years. And we are the folks, if you're thinking about you wanna do an ADU and you've never done this kind of project before, come talk to us. We're not going to sell you anything. Because you're all residents of Napa County, all of our services are free for you. So if you're thinking, I think I want an ADU, or I know exactly what I want, but I've never done this, come talk to us. We have a website at napasonomaadu.org. And I've got business cards here. I can pass them out. that has a tremendous amount of information for people who are thinking about an ADU. We're really sort of early, what we call pre-project, right? You don't have an architect, you don't have plans, you don't have a permit. Come talk to us, because we can help steer you away from some of the potential pitfalls of building an ADU, or whether it's a good fit for you. As Ryan alluded to, we've talked to now over 1,000 homeowners across the two counties. who were thinking about an ADU, have built an ADU. We talked to contractors, we talked to plumbers, planners, finance folks, to really get a sense of what is actually happening when people try to build an ADU. And so I would say that, you know, at a start, you can go to our website. We have a workbook you can download. We have a tremendous amount of information on the website that you can read through at your leisure. If you want to go for the affordable ADU loan, which is really the most amazing ADU loan in the country, there's nothing else like it, you're going to be coming to us anyway because that's part of the process of applying for a loan. And what we will do is we will have a one-on-one virtual, one-on-one, one-hour consultation call with you. where we talk to you about what your hopes are, what your budget is. We look up information about your property so we know what your zoning is, we know if there's a creek. And we try and kind of get a sense of where you're at in the process, how much you need to know, what your next steps are going to be, what red or yellow flags you may need to be aware of. We really will try and set a baseline of, here are the basics that you need to understand about your project on your property. And then after that hour, we put together a written report that covers... everything we talked about and and some other stuff um so you've always got that because early on in our processes we learned very quickly that homeowners will talk to us in the six months down the line decide to do something and go oh god what did that guy from the adu center say i don't remember so we try and give you a pretty it's about 25 page report that covers a lot of things that we cover in our consultation any any of the details that we go over Because really, when we were founded, we came out of the fires, the Tubbs fires and the fires we had in Napa in 2017, 2018. The community foundations of Sonoma and Napa got together and said, what can we do to make housing better? And ADUs had just sort of become legal at that point, had become viable at that point. And every homeowner we talked to, whether they had built one or whether they were thinking about it, said, we don't know how to start. We don't know the rules. We don't know what we're doing. And so that's really kind of defined what we do, is we want to help you understand what you need to do, what the process looks like, what department you need to talk to. So... once you've got that you'll have kind of a baseline of okay this is the project that i think i want this is what it's probably going to cost in the ballpark these are the things i have to worry about with creek setbacks or you know fire regulations so then we say okay then you go talk to the county the city the planning department the fire department and we step you through what that process looks like so there hopefully will be a minimum number of surprises or no surprises as you work the process because really ultimately We want you to be able to build an ADU and use it for family or friends or renters and be really successful and not get halfway through and go, oh, God, this was a nightmare. I didn't know what to do and I was lost. We really want to try and not have you go through that. So that's what we do. We don't do project management. We don't sell you plans. We don't, you know, we have a list of vendors or contractors and engineers, but we don't endorse anybody. So it's all non-commercial. We just want to try and give you the best, most up-to-date information that we can about this process. And I think with that, I'll pass it to Erica. We'll tell you about the loan.

Thank you. Okay. Thank you all for joining us for this presentation for the Affordable Accessory Dwelling Unit Loan Program with the county. My name is Erika Hurtado-Ponce. I am an affordable housing analyst with the county, and I just want to make a brief distinction that I'm with the Department of Housing and Community Services. If you have any questions related to the building of the unit, you're going to want to go to the jurisdiction that your property resides in. I strictly oversee the loan, so you don't want me to answer any questions as far as planning and building, because it's not going to be right. I'm going to just oversee the loan. OK, so let's get started with the basics. I fully recognize that you guys are all here for an ADU, but I wanted to go over, in essence, the definition, should you care to know what it is. So simply put, an ADU is a separate, fully independent living unit located on the same property as the primary single family home. It has its own entrance, kitchen, bathroom, and living space, all on the same property as the primary home. um okay but how does this become a reality to you uh and that's exactly what we're here to talk about today we know that building an adu is a great idea in theory but we also know that the cost and the process can feel overwhelming so that's what we're here to alleviate and what we'll be covering today is our loan program how it works who qualifies what the loan amounts look like We'll also walk through some important things to consider as you decide whether the program is the right fit for you and what to expect both before and after your loan is funded. If you'd like to follow along with the program guidelines, feel free to scan the QR code on the screen. And just a little background on the loan program. Our loan program was launched in March of 2023 as a unique effort to increase the amount of affordable housing here in Napa County. And I'll give you guys a couple seconds if you want to scan that code. OK. All right. OK. I think we're ready. Either way. Oh sorry. OK. Before we get into the loan itself I want to take a moment to go over what makes our program special. And really it's a support system. So I know that taking on an ADU project is a big undertaking. So beyond financing we've put together a set of resources to help guide you every step of the way. First, we offer a free of cost consultation with the ADU Center, as Scott has mentioned. And this is a really great starting point because you're in the early stages of exploring whether an ADU is right for your property. They can help you think through what is feasible both from what is physically feasible on your property and also get you a ballpark figure of what it might cost you. You also have dedicated staff, which is myself, meaning you'll not be navigating this process by yourself. I'm here to walk alongside with you from start to finish so that if you have any questions as this process moves along, you feel supported and that nothing slips through the cracks. We also have a learning management system, and you can think of this as your on-demand resource hub. So there are courses to help you navigate our neighborly portal, explore conventional financing options, prepare for project management, because once your loan is funded, you will be responsible for overseeing the project completion. And also, there's also landlord roles and responsibilities, because once your unit is up, you'll be stepping into a new role as a landlord, and we want to make sure that you feel prepared for that. Finally we have a notary on staff to assist you with loan documents at closing so you don't have to worry about coordinating that piece on your own. Altogether our look our program isn't just a loan it's a full support system designed to set you up to success from start to finish. Okay, so now that we have a sense of what our program offers, let's talk about whether or not you qualify. So there are a few key eligibility requirements that I'm going to walk you through. And the first requirement is that your property is within the Napa County boundary, meaning if you live within the city of Napa, American Canyon, St. Helena, Calistoga, Yountville, and of course, the unincorporated county, those are all qualified. The second requirement is that you live on the property where you intend to build full time. So this must be your primary residence. And the third main requirement is that you make a commitment to rent the unit out at an affordable rate to an income eligible tenant. So to sum it up, the right location, owner occupancy and a commitment to affordable housing. OK, now that we've covered who qualifies, we're going to go over what you can receive through the program. Our base loan is dependent on the unit size. So if you go with a one bedroom unit, it's $60,000. A two bedroom gets you $85,000. On top of our base loan, our program offers additional rebates. Our rebates are up to the dollar amount listed, but based on actual costs. So for example, if you live in the unincorporated county and you qualify for that rebate, the incentive is up to $10,000, but based on actual costs. So for example, if your permits are $8,000, that's what we would actually cover, but it's up to that $10,000 mark. And one more thing I wanted to touch on is that our loan program requires that a managed construction escrow account be established. And I'll go over that account in detail in a further slide. But I do want to mention that our loan program does cover the fees to start up that account as well. So I know we've covered quite a bit about our program, but I also want to mention that as we've learned lessons in the past three years that our loan program has been established, we've had a lot of lessons learned. And I want to make sure that I'm transparent because part of my goal today is that you have a full picture to see if this is the right program for you or not. The first consideration that I want to touch on is that. Pre development costs in order to reach loan funding we do require that plans and permits be submitted and those costs would have to be covered by the homeowner up front. Another consideration is gap financing. Although our loan is a great means to getting you closer to building the unit, we fully recognize that our loan will not cover the entire cost associated with building it. So in order to reach loan funding, we do require that the difference in financing be covered, whether through a conventional financing loan or through liquid assets. Another thing to consider is that if you do pursue conventional financing, both of those loans, meaning the conventional financing loan and our loan need to be closed concurrently. So we will work with your financing institution to make sure that those loans go out together. We'll do the coordinating on that piece. One of the next things that I want to touch on is general contractors. In order for loan funding, you do have to have a contract with a licensed general contractor in the state of California, and that's a firm requirement for our loan program. And with that in mind, something that comes up a lot is owner builds. We completely understand that some homeowners have the skill or the license to build the unit themselves. In order to avoid any conflicts of interest, we would not be able to approve owner builds at this time. The next consideration is managed construction escrow accounts. I know I mentioned it before, but a little bit more detail on those accounts is the purpose of this account is to ensure that the funds that are drawn are in line with the actual pace of the project. So that means that, for example, if there was work done on the project, such as foundation, foundation was poured, the escrow entity would ensure that, yes, in fact, they would inspect that the foundation was poured and then they would issue out that draw. And this account is required prior to loan funding and all financing must be deposited into this account a week prior to loan funding and we would let you know what those dates are as we approach those milestones. And the last item I want to talk about is timelines. We're not a conventional financing institution. We and therefore our audit processes are stringent because we are stewards of public funds. Therefore I want to be transparent and let you all know that from the moment you have a complete file meaning that we have permits plans and a submission of a full financial picture it can take an average of two and a half months to reach loan funding. Just because of those processes that goes your file would go through many review queues and then obviously to county council for loan document retrieval and the auditors and treasurers for loan funding. So it just it's a little bit of a process. Okay, now that we've covered what to consider before you apply i'd like to cover what you can expect once your loan has been funded the first. period post loan funding you're going to is the construction period so from the moment your loan has been funded, you have two years to complete your build. And then once your build has been completed and you've received your certificate of occupancy or your final building permit, essentially it's signed off by the planning and building department in the jurisdiction where your property is located, you have six months to lease out your unit to an eligible tenant. And that lease should be for a 12 month period. and then the forgiveness period, which is initiated from the time of lease up. Every month that the unit is leased to an eligible tenant, you receive a credit towards forgiveness. And I know I talked a lot about what an eligible tenant is. I know this is a lot of information, but this is the two tables that you would be referencing as it relates to when you would be at the point of lease up. So an eligible household would be dependent on the size of the household. So if it's a single person leasing out the unit, The maximum that they could earn annually is the $98,700, and that goes up depending on the household size. So if it's a two-person household, it's that one 12-figure and then so forth. Also, the rental limits are based on the unit size, and that is the maximum rent that you could rent the unit out per HCD guidelines. Those guidelines are updated annually. We've seen as early as April and as late as June, we actually just got these limits updated a couple of days ago. So you guys are getting the first of what 2026 income limits and maximum rents are. And last thing to know as it relates to the rental limits, they must include utilities. So your rent and utilities together cannot exceed that maximum monthly rent. Okay, and I'm gonna talk about monitoring a little bit. So you've built your unit, you've leased out the unit. Every calendar year, at the beginning of the calendar year, both homeowners and tenants have a responsibility to respond to our monitoring requests. So we will send both homeowners and tenants a letter where essentially we're asking you to attest that you still live on the property as your primary residence. and that the tenant is still residing in that unit, that you're not renting the unit out more than the agreed-upon HCD amount. And then those two letters would be returned to the county, and that's essentially what we use to determine your forgiveness for the year. So every month or every day that the unit is rented, then we calculate the forgiveness based on the date that it was leased and then receiving those letters back. And as I mentioned, loan forgiveness is issued for each month the unit is leased. So essentially, once you've reached the 60 months of the unit being leased, then the loan is fully forgiven. If there are periods of vacancy, so for example, life happens, tenant one moves out, and then tenant two moves in three months later, that gap in tenancy, you could either do one of two things. You could add three additional months, so make it the... past the 60-month initial deadline to make yourself whole so that the loan is fully forgiven, or you could pay the difference back with the interest incurred for those three months. And then also one more thing to mention as it relates to that, we fully recognize that life happens. And if at any point in time you decide to opt out of the program, you could request a payoff letter and then we would let you know what the outstanding balance is with the interest incurred. And these are some success stories that I wanted to share for units that have been built within the county. The first one is a two-story detached unit built in the unincorporated county. The second one is a basement conversion within the city of Napa. And the third one is a detached single story unit within the city of American Canyon. So it's really nice to kind of see what the full picture is and what people have created. Some people have done some wonderful jobs. So it's neat to kind of see what the new affordable housing is within the county. And with that, I thank you. I know we're going to have some Q&A, but you can follow our QR codes to our websites. If you have any questions, feel free to reach out. This is my contact information. I'm the main point of contact for the county's affordable dwelling unit loan program. So with that, I will pass the mic on to Ryan.

Yeah, yeah. So I'm going to steal the mic a little bit because not all of our planners want to do full presentations. which I kind of appreciate. Trevor's going to do it. He can't be stopped. But I think what's cool about tonight is that we're making a good pace, which means we'll have tons of time for questions and answers at the end. And that tends to be where we really get into the meat and people have a good time anyway. Really briefly, I want to introduce and thank all the planners for coming tonight because this is a really important thing that just a lot of people have to wrap their heads around. Forgivable loan, Erica. And then whether or not you want to use that forgivable loan at the end of the night, maybe you go, that's not for me. Maybe you go, yes, yes. Either way, you're going to have to work with the local jurisdiction to get your project permitted, right? And so it's a different process, and there's different humans. And we've got somebody from Calistoga.

Yay.

Somebody from St. Helena.

Yay.

And somebody from County PBS.

Yeah.

All right. So having made that introduction, Trevor does have some slides. You want to rattle through?

Sure.

Yeah, I can go through them.

You wouldn't have had to twist my arm too hard to get me to not do a presentation if you wanted, Ryan. I'm Trevor Hawks. I'm a supervising planner with the Unincorporated County. I'm just going to go through some quick slides to talk about applying for an ADU at the county. Before I get going, I just want to say real quick, I'm assuming most of the people here live in and around the cities of St. Helena and Calistoga. Man, you guys are so lucky. I don't get to go up valley that often anymore, and I really love St. Helena and Calistoga. I just got into town right now. I was like, I got to keep trying to convince my wife to move here. You guys are lucky. You get to live in up valley. It's really cool. okay so uh yeah this is this is napa county you know um it's we have the unincorporated county which is what uh i'm here to represent and talk about the adu permitting process but of course we also have our municipal uh our incorporated municipal districts of uh american canyon napa the town of yontville saint helena and calistoga And so if you live within the municipal cities of St. Helena, Calistoga, those are the permitting authorities for your ADUs if you go ahead and you try to build an ADU on your property. But if you're outside of those gray areas, which is actually, it's obviously a good deal of the county, and there's a good deal of people out there as well. it's young incorporated county in our offices in downtown napa that you need to come in or that you would be um that we're going to be the permit authority for you so 1195 third street we're in downtown right by the napa river and the and we represent the divisions of planning building environmental health engineering and cal fire cal fire is not in the building with us they're in a separate building but you can probably get all of your questions answered for fire in that building because engineering and fire work really close together. This is an idea of where we are. Maybe many of you already know where the county admin building is. And if you have questions, you come in, we're on the second floor. See if I can keep... Here's our lobby. Come meet Cynthia at the counter. And if you have questions, Yeah, you want to maybe Oh, there's our, our plans examination room where you know, if you want to come in, you have a specific question about a comment you got on your plans. Come in here, you can meet with planning, building environmental health, engineering, any of the you know, staff, we have staff ready between I think it's 8am and 4pm every hour to be able to answer your questions and respond to people who come in across the counter. Yeah, you wanna go forward again? So all applications, so that's where we're at. That's where you can come in and talk to people, but you don't need to come into downtown Napa to apply. All of our building permit applications, you can apply for online. You can pay for it online. So there's actually no need to come in. They all go through our county website, and there's documents and information available to walk you through the entire process. I am going to mention something as I go to the next slide. About five minutes before I came in here, I just remembered, oh, the county just did a massive retooling of our entire website, and I didn't update the slides. So it looks a little bit different like this if you log into NapaCounty.org at this point. It's kind of a different format, but it's kind of the same on the directions you need to go. So this is the main page. Next one. You would click on Permits and Certificates. And you come here to the main two links that you need to go to, which is the Online Permit Center. That's OPC. And that's where you can create an account. And you can apply for the application you want to apply for. And you submit the documents and upload them. And then there's Building Permits, where it has all the information regarding the building permit process and submittal. Let's go ahead and go to the next one. SO THIS IS THE BUILDING PERMIT PROCESS PAGE. IT'S GOING TO GO OVER THINGS LIKE LOCATION AND PROJECT TYPE, THE DOCUMENTS YOU HAVE TO GATHER, HOW YOU SUBMIT AN APPLICATION THROUGH OPC, INTAKE REVIEW PROCESS, WHAT THE PLAN REVIEW PROCESS AND TIMELINE IS GOING TO BE, AND THEN WHAT TO EXPECT WITH PERMIT ISSUANCE AND INSPECTIONS. And this is going to the other link here, our online permit center, where you can, if you scroll down, go ahead and go to the next one. All of these links, how-tos, explaining every step of the process so you can do this without having to come in. Although if you do come in, staff is here to help. Go ahead and go to the next one. This is OPC. Go ahead and go to the next slide. Oh, and then I just wanted to mention real quick, we have online plans, pre-approved plans that you can use for your ADUs as well. You don't have to necessarily have them designed from scratch from a designer or an architect. We are part of the... If you go back one, what's the website again? It's the ca.aduaccelerator.org. You do have to, I think, search for Napa County. But once you go there, there's a whole plan gallery where I think you pay a small amount of money and you own that plan set and so you still have to do things like give us a site plan because we're going to want to make sure okay you're not in stream setbacks you're meeting your yard setbacks you know where where is the house in relation to your septic system all those things still need to get looked at but the actual building plans are all ready to go um it's a significant savings if you're okay with that plan set and what that's going to look like because it's going to have to be what that pre-approved plan is go ahead and go to the next one And that's just what it's going to look like when you go on there. Go ahead and go to the next slide. And that's it. Real quick presentation. I'm Trevor. I'm with the planning division. And so I'm going to be good at answering planning questions. I was actually just in an hour and a half meeting with the State Department of Housing Community Development on Tuesday about interpretation of code. I might be the most up-to-date person in the state on ADU on HCD's ADU interpretations. But if you have questions about building environmental health, I'll try to answer them. If I can't, come up and get a card and email me the question. I'll make sure it gets the right staff and you get your questions answered. Thank you.

Yeah, round of applause for all the speakers.

Yay. Okay. For Q&A, we're going to run around with one of the mics so that the Zoomers can hear you too.

If you have a question, raise your hand.

Yeah.

I actually have two questions. First one, you don't mention Angwin at all. Is Angwin eligible for this? OK, because I have some friends up there that could make it. And secondly, say I've built my ADU. I live in my main house. Say my son lives in the ADU, and then he moves away. And then I want to rent out my house. Could I move into the ADU if I qualified financially?

You would have to have met the five-year covenant before you do that. So we, for the term of the five years that we're...

I can do whatever I want.

Yeah, so first you have to meet the five-year term, and then after that, then our, I guess, oversight is removed after that point. Okay, great.

Do you mind repeating the Angwin question? Like, whose jurisdiction is it under?

Yeah, so Angwin definitely qualifies for our loan program if you wanted to apply.

We started our ADU already. We're like halfway done. Can we still qualify for some of the money or not?

Unfortunately we just had an update to our guidelines as of March of this year and unfortunately any work that's been done prior to the issuance of a reservation of funds meaning that of the entire allocation that the county has set aside for the purposes of our loan. We we wouldn't be able to approve that project at this time.

Oh, what rights do you have as a landlord? Say you had a bad tenant that was in there and then what rights would you have to have them move out if they were not appropriate?

I'll take that one. That's a sticky question. I'll take it because I'm not actually qualified to answer it. And the reason I say that is because it's a sticky question and there are some great resources. We've talked to Fair Housing in Northern California. We did a webinar with them last October on our website. You can see a webinar where we talk about rights and responsibilities of a landlord. And that was a great schooling for me to be like, I'm not going to answer these questions anymore because what you really want to do is there's a couple of books from NOLO Press about being a single unit or a small-time landlord in California. And that's what you're going to want to look at because the laws do change and there's a lot there. But it's really good to think about that early in the process. Even if you're going to rent to family, do it. Even if you're going to rent to your son or your dad, get a rental agreement. Have everything done the right way because it's going to protect everybody.

So one of the great things about this program in particular is that part of it, you have to watch three videos of me now. Part of it is educational resources to get you up to speed on all that stuff. So one of the three things you have to do is learn about your potential landlord responsibilities. And I very similarly punt it because everything changes every year. An amazing amount of legislation comes through. An amazing amount of litigation happens. And so those NOLO books, N-O-L-O, are a great resource. They're also a good resource for like standardized leases and things like that because you shouldn't just like chat GPT that. You got to use real resources, either get lawyer or get published things from lawyers kind of thing. Yeah. Good question. And there aren't that many nightmare stories so far in the program, right? It is a backyard unit. It's like you live with this person, right? So respect for your housing laws, which you'll learn all about, but also take time choosing a tenant and being really detailed in your lease agreement. so that you already know where the trash is going to be on trash day, where it's going to be between trash day and the next week. All those little things, it's really important to iron them out because you live there.

I'm going to tag team this back. We're ping-ponging this question. So because it was a landlord question, I want to add on one thing that people often don't think about very deeply at this stage is if you build an ADU, that's going to change the insurance in your house. That's going to change, you know, there may be issues with your lender. You know, you want to have that conversation early on as well, particularly fire insurance because it's now also a rental property. And we get calls every April saying, Your rent is income. You have to pay taxes on it. So just some of those basic things is we tend to focus on the build because there's a lot of moving pieces to get that build done. But you're going to be a landlord for many, many, many years afterwards. And there are effects that are going to happen to your property and to your income and all those kinds of things that you're going to want to be thinking about early on to say, yeah, this works for me or this doesn't work for me. I can you tell me how much money the county allocates to this program annually and then how competitive it is for folks.

So the initial allocation that the county set aside for the purposes of this loan program was five million of that initial allocation we've spent down just shy of three million. So we still have funds from that initial allocation and the board has agreed to continue to replenish it annually through the transient occupancy tax. So this will be a reoccurring fund. We just haven't fully spent down the initial allocation. So there is a lot of interest. There's a lot of people that want to subscribe to the program. The thing about it is it's kind of along the lines of the lessons learned. That pre-development cost, so the permits and the plans and all of those items, a lot of times if people don't have the resources to go ahead and front that cost, it often kind of forces them out of the program. Although there is a high interest just kind of meeting those initial requirements, we recognize that not everybody can meet those right away. So it's created a little bit of an easier process to get through, so to speak, and so that it's not over-prescribed. Oh I couldn't tell you that exact number but in the total lifeline of the loan program so we've only been around for three years where I think around five hundred five hundred and fifty around. Yeah. Over three.

Oh no she applicants she said.

Do you know if the. Yeah.

So now I'm thinking about manufacturing If they gave me the loan from the manufacturing home and I'm going to be paying, do I get the money or do you guys pay that loan to the manufacturing home? Because I already spending all that much money already on the development and I'm going to spend the money with the electricity and all the hookup. How did that work?

So I think, just to be clear, you're not seeking an additional loan outside of this loan? When you reference loan, you're talking about our loan program?

Yes. And I'm going to, if I get the house, the manufacturing home, they're going to give me the house. And I have to pay them, of course. It's a loan also.

Oh, I see. OK. So I guess to answer the question, I guess one of the things that we want to make sure that we're very clear on is we want to make sure you're not moving forward too quickly. So as soon as you have plans and permits, that's when we would ask you to submit that full financial picture so that we can get you to loan funding before you move forward with the delivery or any of that thing, because we don't want you to be in a situation where you're financially strained. So then once you submit that full financial picture, we'll know what the outstanding balance is. So if you've kind of done a lot of prepayments towards the entirety of the project, that would give us an indication if any funds are outstanding in addition to our loan, and that would all be deposited into the escrow account at the time of loan funding. And then at that point, you could submit for that draw request.

Yes, but it's going to be for my decision, for example, do I go to the manufacturer home or do I continue with the contractor that I had, you know, with the other?

That would be your call to make.

No, because it would be depends on the loan.

Yeah, let me check in with you after the fact, yeah.

Do you know if the forgivable loan is generally considered taxable income.

No because the although the loan is given up front where it's it's still a loan that is forgiven on an annual basis and depending on when that unit was leased that's the amount that's forgivable. I think it's under the amount that it's taxable based on some conversations we've had in house but no.

So unlike the state grant that came out a couple years ago, which was taxable income completely, this is a loan which you will tell your CPA you actually might pay interest on, right, if you didn't do the full term of forgiveness. And then that interest is not only untaxed, it's tax deductible, right, in a lot of circumstances. So you'll tell your CPA this is a loan that is being forgiven at this scale, and that's how they'll handle it. Does that make sense? Okay. Not tax advice.

What's the policy on second question?

Just a little bit gruesome, but if you died before the loan was paid off, does it go into your estate or what happens to that? As far as is the person that inherits your property then responsible to pay it back?

Just to be clear, we've only been around for three years. We thankfully haven't had to run into that situation and we're still developing the loan program further as we kind of approach these situations. So I can't give you a clear answer yet because county council hasn't vetted it yet.

I think one thing, not tax advice, a very easy scenario in most cases would be to pay off the remainder, right? Because it's 3% simple interest. So just make it easier. And the answer to a lot of these questions about details is, hey, remember, this is 3% simple interest. So like, what's the big deal kind of thing? The thing that might come up that's rosier than the scenario is people just have to move unexpectedly, right? Or they get deployed or whatever happens and 3% simple interest.

I have another question.

LOOKING AT THIS BROCHURE FROM ADU SOLUTIONS BY THE CALIFORNIA AFFORDABLE HOUSING AND THEY LIST A SIMPLE SIX-STEP PATH AND NUMBER FIVE IS BUILD WITH CAH OVERSIGHT. IT SERVES AS PROJECT COORDINATOR AND IMPLEMENTS, REPRESENTS HOMEOWNER WITH ALL CITY COUNTY FACTORY SUBCONTRACTOR AND FINANCIAL ITEMS.

remains as decision maker does that interface with what you guys do is that separate yeah so that that's what that's a homeowner's rep right that's someone who knows the industry who's basically working on your behalf to answer the questions keep people moving that kind of thing that's not part of anything that we're doing up here they would interface with us okay um we've done consultations with homeowners reps in the you know sitting next to the homeowner and during construction all that the homeowner rep does that kind of work but that's not part of the program or you know they'd be working for for the homeowner in that case and they would the homeowner would pay them to do that so so would you recommend this step or does it complicate it i i won't give a recommendation but that's also not not a recommendation i'm gonna say i'm gonna say yeah

Simple 3%. A standard interest rate for the loan program is 3% simple interest. 3% simple interest on the loan program.

I have a tiny question. It's a city question, actually. When you employ an ADU on your property, how does that affect? How has your water bill changed? Is there a secondary household?

Can we clarify what city you're in? Calistoga. Calistoga. Okay, great. So if it's a new construction ADU, would that be the case in your situation? So a new construction ADU would require new connections, so water and sewer connections to the street. So those connection fees are roughly a little under $30,000. Okay.

Actually, mine is connected already.

Yeah, so that's the connection fee. And then the additional monthly fee would be to your tenant, which you'd also have to include in your rent. So, yeah.

Just to clarify, when you say new construction, you're talking about building a new home with an ADU? Or are you talking about an existing home, and now you're going to build an ADU?

An existing home, new ADU. The only time that those fees are waived if you're converting an existing structure to an ADU or if you're converting an existing space in your home to a junior ADU and only increasing by 150 square feet for excess. Yeah, go ahead.

Okay, and good question. I'm not going to put anybody on the spot, but for example, the other city that's present tonight, which had a similar policy and still has that policy on the books, is currently looking at changing it, and that's going to the Planning Commission for review, and then it'll go to the City Council. One can imagine local advocates saying, hey, it would make a big difference in the affordability of the future unit if we didn't have to spend $30,000 on the water connection. Because in a lot of parts of the state, we connect to the T at the front and kind of piggyback off the existing connection. And it's always worth talking about logistics and what works for each jurisdiction. Does that make sense?

And Calistoga is in the process of coming up with incentives for ADUs currently. It's in the works. They're working through a housing advisory committee first, going to planning commission in July, August, and possibly in city council in August around that time. So they're considering more incentives, but kind of similar to an affordable component. And I don't know if, I don't know the details enough yet to whether or not that those could work together, but that would be great if they could.

That was a good question, Jamie. So I'm just outside Calistoga city limits. I have solar. I have Tesla batteries. I have a well. So what I have to pay, and septic system, what I have to pay connection fees to use those. So I can just tap into what I have. you might need to expand right i understand that but basically no i don't have any utility bills you don't have any utility bills well i have eight dollars a month from pg e but that doesn't count your your wastewater has no utility bill to it no okay thank you yeah yeah i'll pass it back to you so

If you're in Calistoga, so Calistoga, you have to have a separate connection fee if you're building a new ADU. That's not the way everywhere. So if you're not in the city of Calistoga, inside city limits, you may have a different situation and talk to us or talk to your city about that. So you're outside city limits. So if you're on Well and Septic, totally different ballgame, still potentially very expensive, however. because primarily with septic. So Napa, great for growing wine, not great for septic systems in terms of the soil and the rocks. And so we've heard a lot from, we've talked to environmental services at the county and homeowners that if you have a septic system, For most folks, that's actually going to be your first stop is talk to environmental services, figure out if you can, because some places you can't, your property is too small, you don't have the right soils, you can't expand. So septic, we've seen in unincorporated parts of the county, septic is the biggest blocker to building the ADU. But well is close second because there are many areas of the county that don't have good groundwater availability. And so you can't add more stuff there. And this actually applies to everybody, whether you're in the county or in a city. Utilities at this stage, when you're thinking about the project, utilities deserve a lot of thought and investigation because they can dramatically change the price or the viability of your project. So if you're on septic, talk to Environmental Health. If you have a well and you get your water from a well, talk to Environmental Health. Figure out where you're at and what may be needed for your project before you go forward into paying thousands of dollars for plans or anything else. Do we switch? We can talk offline. We can talk about your septic system after. Sure, sure. Yeah, okay. Yeah. Did you have a question?

If you have a garage you want to convert, is there a difference? Like you have to, since it already has its own electricity and its own panel, do you have to, just to hook up to your own septic system, would that be extra? And is it considered unincorporated if I'm within city limits?

So, great. You actually, you fed me the perfect lines twice tonight, so thank you for that. Garage conversions. So there are, I'm going to be very fast here, but I can go into depth about any of these things. There are lots of different kinds of ADUs. Typically, we kind of see it as five-ish different types of ADUs. The one that most people think about is the new detached ADU, the cottage in the backyard or the side yard. Separate from the house, doesn't share any walls, its own building, right? Then there's attached. So it's an addition onto the house. that has a shared wall but doesn't change any of the footprint of the house. Then there's conversion, which is some basement, attic, some part of your house, you wall it off and turn it into an ADU. And that may have an addition as well. So you're converting part of the existing house. And then there's the junior ADU, which is under 500 square feet. I'm going through these fast because there are two things I want to talk about. One is garage conversions are very common. You have a garage that's already got a roof and walls, concrete pad, turn that into a living space. Very common, particularly on smaller lots. If you're in city limits, you've got city water and sewer. You don't need to worry about septic or well. But you will need to make sure that it meets current state habitable standards, which are pretty high. So insulation, sealing the floor. You may need, depending on where you live, you may need to add water service, its own water service to that structure. And it may not have a big enough sewer pipe for the washer dryer because you're going to add a bathroom there. So when we see garage conversions, they're a great, relatively low-cost way to build an ADU, but there are some garage conversion specifics that you may want to talk to us about or think about. There's some great information online available that we can point you towards about, you know, I'm a homeowner thinking of a garage conversion. What do I need to know? So the reason I love that you asked me about the garage conversions is I'm actually going to put you on the spot, is that not all ADUs qualify for the loan.

Do you want to talk about which ones do?

So for Napa County's ADU loan program, it's specific to detached units or garage or basement conversions. Essentially, if you're adding additional livable square footage to the property that wasn't designated as such previously, those would qualify. But we don't, unfortunately, do JADUs. If you're looking for that, I would recommend you, well, they're in Calistoga, no. The city of Napa does but I don't I don't necessarily think that you guys have something similar not not yet But yeah, so specifically detached garage or basement conversions Before and you're turning into space entirely that could be that could qualify for the lot Yep doesn't count

Yeah, so that's just for the loan. So we start to splice between what qualifies for the loan, what can you build from a regulatory standpoint, and there are kind of different buckets there.

Do you happen to know if there's still any grants in California for...

No? There was some, right? There was money, but it got spent in about six months. Yeah.

Okay. Talking about mine, the rent, does that apply for us once we finish our ADU? I'm so sorry.

It doesn't?

Okay. The max of how much can we charge?

You said you're already building your unit. Yeah. Yeah. No, unfortunately. Yeah, no, no, no. Otherwise, I don't think there's a limit.

But if I gave that $10,000, I'm just kidding.

So the one limit that's real is 30-day minimum lease on ADs in the state. So no short-term rental. I'm watching you with that 10,000 number.

So I have a detached garage, and it's actually pretty far from the single family home. It has a septic in it already, because we do the washing and drying there. And it also has its own septic. Would that qualify? Is that a question I need to?

It could become an ADU.

So it could become an ADU. And talk to your environmental health about the size of the current septic. You may need to enlarge it for the garage. But that you've already got one just for the garage, you're way ahead of 95% of the people who live in unincorporated county. Make sure it's the right size. And then as far as the loan goes, since it's currently a garage, it's what they call unconditioned space. So if you converted it to an ADU, it would qualify for the loan. And you could build an ADU legally in that place. Rarely, rarely. We've answered all the questions about ADUs.

Is there such thing as partial loan forgiveness if you're unable to rent it out for 60 months because your circumstances change?

Yeah, you can definitely opt out. Our loan program does permit you to opt out, so we would essentially look at what the outstanding balance is with the interest incurred and then provide you a payoff letter, and you can pay us back for whatever the outstanding amount is due.

Thank you.

Obviously, with some of the new fire regulations, it's hard to get road permits. Our house has been rebuilt since the fires. We used to have an ADU. We don't anymore. Will we need to do an additional pullout for access, or is the pullout that we've provided already taken care of?

Grab a card from me before you go. I can make sure that Jason Downs at Cal Fire gets that question. I can't answer that question. yeah yeah did it burn down from one of the um the glass fire unfortunately the uh emergency ordinance for reeb for like um streamlining rebuilds path i think it was october yeah so we were passing that i think it's still there you maybe so it's probably just not streamlined but i think you can Get a card. I don't want to answer something I probably shouldn't answer. It needs to be engineering for that.

Oh, great.

At that time, would you then address those issues about well, septic, all of that? Yeah. That's what would be covered in that feasibility?

Yeah, and I'll give you a spoiler alert. Most of it's going to be talk to environmental health. Pardon? Most of it's going to be talk to environmental services because they're the ones who are going to be able to look at what your system that you have and what you're hoping to build and be able to guide you on that. Okay. But be aware that, yeah, talking to us. And then talk to them. And talk to them. Because that's really going to be your, we call it step zero. If you've got well and septic, that's the first thing you want to be paying attention to.

And the same for the electric, since we're all on solar.

Electric is less of an issue, typically and typically less expensive. That would be a talk to whoever provided you solar already. Make sure your system is big enough. Right size your battery. That's more of a construction question. PG&E is likely to be involved, which can take forever. But well and septic really are the main ones, particularly from a regulatory perspective.

Okay.

Great. Thank you.

Just I I don't see are there income qualifications for the loans either limits or qualifications for the homeowner No, we don't income qualify really what we're looking at is that the property is within the Napa County boundary that you live on the property full-time and that you're willing to rent out the unit for an affordable rate to an income eligible tenant them and That in addition to the items we've already talked about that you do have to get The permits plans and make sure that you have the assets to cover the remaining cost, but we don't income qualify homeowners Yeah, so we will income qualify tenants at lease up. We expect them to hopefully have, you know, higher wages as they've rented out the unit. And so we will not be looking at their income after that initial lease up. However, if they vacate the unit after a year, we would have to re-income qualify the next tenant.

In the county, it seems like the biggest hindrance to building an ADU is the additional septic. If you have a huge tank, why can't you just add an ADU? And yeah, and then I'll get to the second one.

Yeah, so particularly those of you who talk to me or my colleague at the ADU Center, you're going to hear a lot of, well, it depends. If you have a huge tank and you've got extra capacity, yeah, not a problem. You can build an ADU. Not a problem. It won't be limited by well or septic. If you've got good water capacity, you've got good septic capacity, you've got five bedrooms certified on your tank and you've only got a three-bedroom house, not a problem. Most people don't have that. And you want to double-check that it is current, that that is what you have. So that's why we say it's step zero, because it's very hard or expensive to get past that or can be if you don't have enough water. If you don't have enough septic capacity, it can dramatically change the math of your project. So it is the biggest limiter, but it's certainly not. It won't stop people if you do your research. We just want people to do their research first before they pay lots of money for a design they can't build.

And it has to meet current requirements. And those have changed at the state. So once again, I'm not with EH. I can't speak about this. But there's also reserve area that I don't think used to be part of septic approvals. But I can't tell you when that happened. But I've seen people be like, oh, I didn't know that. I needed that. And if you're going to do a new project, a new permit, you have to come up to current wastewater standards.

The other online question was about, what if your tenant starts making more money? And as Erica said, the income qualify once at the front, at the lease up, and this program does not punish you for making more money in future years, which is very unique. Any other questions? Yeah. Olga's coming around with the mic. Any St. Alenans here? I feel like Natalie's just being...

I came in late, but I'm from St. Helena. And Natalie, I was hoping you could share what the current incentives are, if there are any in St. Helena. I do live, you know, on Stockton Street, so kind of a normal situation.

Incentives? Do you mean like money incentives?

Are there incentives regarding the hookups for water and sewer or what are the current costs?

So current costs really just depend. The process we have right now, and like Ryan mentioned earlier, we are bringing on July 7th our planning commission and draft ordinance to recommend to city council for the ADU. ordinance and in that in this process we're looking at our current situation which is you can do separate hookups for an ADU just straight away you can put that in your application I don't know what those costs are off the top of my head unfortunately Or you can do a study that goes to Public Works, and it's up to the discretion of the director, but they can allow you to branch off your existing connection from your main line. But it just depends on your circumstance, how many bedrooms, if it's adequate enough for the main line system, if it'll hold the right capacities, things like that. So it really just depends on what your exact situation is.

So maybe the first step would be to have someone come out and assess that situation, whether we could branch off.

Yeah, that would probably be the best start. I would also maybe wait until the July 7th meeting, because we're going to get direction from Planning Commission on if we want to keep this option, or if we just allow a branch off the main connection, or if they're going to require separate utilities altogether. So it is a good place to start, but I would maybe wait till that meeting, and I would recommend coming.

Yeah, I would recommend coming. Thank you, Natalie.

This is not just for you, but for anyone who's got city water and sewer, since I've banged on about septic. If you're on city water and sewer, at this stage, you can find out from the city what size your water valve is. And I also recommend, there are three things I recommend for people who are thinking about an ADU to do sort of a site assessment of their own on utilities. Figure out, talk to the city, find out what size water valve you have feeding your property. Have a plumber rotor router service whomever come out and run a scope down your sewer line Because many people have like me seven-year-old sewer lines that have to be replaced and that's gonna cost 15 grand whether you do an ad or not and or and then also if you know an electrician or you can find electrician have them come take a look at your box your main electrical box is it 50 years old does it still have old fuses in it um that can be kind of sort of these slots of okay i'm going to have to upgrade the electrical to my house so i'm going to be working with pg e my sewer lines in great shape so i won't have to touch that that's good or i've got great water service i've got a three quarter inch or inch and a quarter water service to my property. So that's going to be probably good. Those kinds of things cost very little in the grand scheme of things, but they can give you kind of a baseline of, in my case, I live in a house from 1947. I have a tiny water service. I have a broken sewer line and I have a 75 amp box. All of that has to be upgraded if I want to do an ADU. So that just goes in the back of my head of that's going to be part of the cost. So these are the kinds of things that we'll talk through with you if you come talk to us. So I'm giving you some of this stuff early. Sneak peek, thank you, Ryan, because that can help you start to do your math now and start to get records, put a binder together, start making notes about this stuff. because that's going to help you through the rest of your build. Because most people take a couple of years to build their ADU. From thinking about it to unlocking the door, it's typically 18 months to two years, sometimes three years. So the more notes you take to yourself now, the easier of a time you're going to have.

Could that be used for that alone?

So if, and meaning to, not to the main property, to just the general, to get to hook up to the ADU, the septic or the sewer, if those needed to be replaced. If it's a necessary for the build, I think we would consider that as an eligible cost.

So in the same vein, if you're in the country and you have a well or a septic,

You would want to test your well for your gallons per minute before you come in and you want to have somebody come out and inspect your sewer.

Talk to your environmental health. Because there are, depending on where you are and what water availability you have, this is where it starts to get complicated. They can pull your septic permit to see how current your system is, what size it is. I'm from Sonoma County. Like 80% of the ones we have are redwood boxes built 70 years ago. So they can be able to kind of give you that information if you give them time to look it up. And then they also will have the requirements for well testing. For some folks, they have to do it during the dry season. Or they have to have a certain number of gallons per hour, depending on what zone they're in. So that's why knowing that you have to go do that, you can start to get that information now. You can do those tests. And that will have you in good stead for when you're ready to design your ADU. Thank you. Talk to the agency. Talk to the planners. That's going to get you the best information. Yeah, so it's just if it's not if there's the county do those inspections and For me, so I live in Sonoma. We hired a well-serviced tech come out and he did a flow test for us and tested the water and then signed off the county requirement for that. So it was a private party that came out and did it and charged us a couple hundred bucks to do it. But we were required by the county to do that. I assume it's probably something very similar in Napa. But again, I would talk to environmental health. They'll tell you exactly what you need.

All right, I'm going to wrap it up a little bit early. But this is a really best-in-class program. We do not see this anywhere else in California. Nothing deploys capital like this. Nothing builds affordable units, deed-restricted affordable units faster than this program does. And we're really lucky to have it here. There's up to 105 grand, and there's a lot of strings attached that you've heard all about, but that can make a big dent in a project that's otherwise going to cost you like $300,000, $400,000, right? So hope you learned everything you need to learn tonight. There's a bunch of material over there. We'll send a survey out by email. We'll send a recording out by email. If you have questions, we're lingering a tiny bit. If you're shy about the mic, just don't want to ask incriminating questions in public, you just say it's for a friend. I got this bad boy in Calistoga. So ask us anything you want. And thank you so much for coming out. And please, yeah, please, round of applause for them. Round of applause for the county program. Round of applause for your planners. Thank you all very much for coming.

Thank you, everybody who came online.

I'm going to close out the room.