Planning Commission recommends ADU ordinance updates; approves 90-day primary-residence short-term rental allowance

The Santa Cruz City Planning Commission voted unanimously on Jan. 15 to recommend that City Council adopt a package of amendments to the city’s accessory dwelling unit (ADU) ordinance to comply with recent state laws and to modify local rules on short-term rentals.

Clara Stanger, senior planner, told the commission that the updates respond to three state laws signed last year. "ADU and junior ADU size are now measured in terms of interior livable space rather than floor area," Stanger said, adding that junior ADUs would also be eligible for the same fire sprinkler and fee exceptions as ADUs. She also described a new requirement that the city provide a completeness determination for ADU and JADU permit applications and establish an appeal process.

Why it matters: The amendments align Santa Cruz’s ordinance with state law and change how ADU size limits are calculated, which can affect unit designs and, potentially, rent levels. The staff-recommended appeal path would funnel completeness and permit denials to the Planning Commission rather than City Council; the commission would be the final local appellate body for those determinations.

Key provisions approved or discussed:
- Measurement: ADU and JADU size will be measured by interior livable space, defined under state law as areas intended for human habitation (living, sleeping, eating, cooking or sanitation). Non-habitable spaces such as garages or storage do not count toward the livable-space cap, staff said.
- JADU rules: Junior ADUs (JADUs) will be eligible for the same fire sprinkler and fee exceptions as ADUs; owner-occupancy is no longer required for a site with a JADU if the JADU has its own bathroom; JADUs must be rented for more than 30 days.
- Appeals: The ordinance will add a process for applicants to appeal a completeness determination or permit denial; staff recommended appeals be heard by the Planning Commission, with disputes about building or fire-code application first appealed to the Board of Building and Fire Appeals.
- Coastal permits: Under AB 462, certain coastal permits for ADUs will not be appealable to the California Coastal Commission; staff said those reviews will be processed at the staff level and done concurrently with building permit review in some shoreline areas.
- Short-term rentals: Commissioners debated and then approved a friendly amendment to the staff recommendation to allow an associated primary dwelling (not the ADU or JADU) to be offered as a short-term rental for up to 90 days per year and not longer than seven consecutive days, while continuing to prohibit short-term rentals in ADUs and JADUs in accordance with state law. Commissioners cited examples from other cities and the transient occupancy tax revenue as part of their discussion.

Procedure and next steps: If City Council accepts the Planning Commission’s recommendation, the item was scheduled for first reading on Feb. 10 and a second reading on Feb. 24. Staff noted that portions of the ordinance that amend the local coastal program (LCP) were sent to the State Department of Housing and Community Development on Jan. 8 for a collaborative review with the Coastal Commission; staff expects that review to be completed by Feb. 7. LCP amendments will then go to the Coastal Commission for their approval.

What commissioners said: One commissioner said the move to interior "livable space" made sense for small units and clarified how non-habitable areas are treated. Another commissioner said he welcomed ending appeals to City Council for these technical disputes, stating the Planning Commission was better equipped to handle them.

The motion recommending the ordinance package to council as amended passed unanimously.

Next: The commission’s recommendation will go to City Council for readings on Feb. 10 and Feb. 24; LCP portions will proceed to the Coastal Commission after HCD review.