In its continued effort to address the state’s housing shortage, the California Apartment Association has sponsored legislation to help streamline the conversion of mixed-use commercial space into accessory dwelling units.

SB 778 by Sen. Josh Becker, D-San Mateo, clarifies that owners of mixed-use or multifamily buildings may turn commercial spaces into these extra units, also known as in-law units or granny flats, a valuable form of housing at below-market prices within existing  neighborhoods.

The clarification centers on AB 68, a 2019 law that requires local governments to ministerially approve the conversion of non-living spaces in mixed-use and multifamily buildings into ADUs. The law gives examples of non-living spaces that would qualify, such as garages and boiler rooms, but does not expressly use the words “commercial or retail space.” Despite the fact that retail space was always intended for the conversion under the law, some jurisdictions have misinterpreted the law and failed to provide the streamlined approval as intended under AB 68.

SB 778 closes that loophole by mandating the issuance of permits to create ADUs out of commercial  space, industrial space, retail space, or any other vacant space if each unit complies with state building standards for dwellings, according to the SB 778  fact sheet.

“Clear guidance on the right of an owner in these buildings to create additional residential living spaces is vital to fulfill California’s stated goal to increase housing supply. One of the quickest ways to ease California’s housing burden is to increase the number of ADUs,” the fact sheet concludes.