A bumper crop of ADU permits is boosting Pacific Grove’s housing numbers.

When Jerry and Helen Beach, both 81, decided it was time to downsize, they didn’t look far to find their new home. The Pacific Grove couple applied for a permit and purchased water credits to build an 800-square-foot accessory dwelling unit in the backyard of their 2,167-square-foot house. As soon as their ADU is complete, they’ll move in and their son and daughter-in-law will take over the main house. “We’re getting excited,” says Jerry, standing in what is now a drywalled shell.

The two don’t look 81 and they’re still active, walking every day in their neighborhood near Asilomar State Beach and keeping up the big house themselves. Looking to the future, they realized it would be good to have family nearby to help them as they get older. The ADU includes two bedrooms: the master and “Helen’s Hobby Room,” where she’ll continue painting and crafting. The initial construction estimate was $250,000, but the pandemic-fueled rise in building material prices means the final cost will likely be closer to $350,000. Purchasing water credits from the city cost approximately $9,000.

That ability to purchase credits – thanks to the city’s water recycling plant on Point Pinos, which translates into a higher allotment of credits from the Monterey Peninsula Water Management District – combined with changes in 2019 to state law designed to streamline ADU approvals and low loan interest rates has led to a boom in permit applications in Pacific Grove. There have been 104 permits pulled in the past two years, says P.G’s building inspector, John Kuehl. Of those, 29 have already had their final inspection, and 21 are in the process of getting building plans reviewed. The remaining 54 are somewhere in between.

Not all who pulled permits will complete their projects, but even a fraction of additional units will go a long way to P.G. meeting its state-mandated Regional Housing Needs Allocation, the number of new housing units municipalities are expected to add to their stock, which for P.G. is 115 units for the 2015-2023 period. While some have suggested “you can’t ADU your way out of” meeting RHNA requirements, in P.G., where there’s little land to build, encouraging more ADUs “is actually a pretty creative way to get our RHNA numbers,” says Housing Manager Anastacia Wyatt.

Not everyone who is pulling permits is building a new structure like the Beaches. Some are adding junior ADUs, a renovated portion of an existing house that becomes its own self-contained unit, up to 500 square feet, with a bathroom and kitchenette. (A potential benefit of a junior ADU is that purchasing water credits isn’t always necessary.)

Others who have pulled permits are homeowners with an existing unpermitted unit they now want officially recognized as an ADU. “What’s been nice is that we can recognize them and do inspections so they meet minimum fire, life and safety standards,” Kuehl says. Also nice is that those units count toward the city’s RHNA numbers.