HOUSING AND COMMUNITY DEVELOPMENT COMMITTEE
POST-MEETING AGENDA
REGULAR MEETING
August 7, 2025, 12:00 p.m.
City Hall North Conference Room A
1600 Truxtun Avenue
Committee Members:
Manpreet Kaur
Bob Smith
Larry Koman
1. ROLL CALL
2. PUBLIC STATEMENTS
a. Agenda Item Public Statements
b. Non-Agenda Item Public Statements
3. ADOPTION OF MINUTES
a. Adoption of June 12, 2025 Regular Meeting Minutes.
Staff Recommends adoption of minutes.
4. REPORTS
5. DEFERRED BUSINESS
6. NEW BUSINESS
a. Accessory Dwelling Unit (ADU) Forgivable Loan Program Staff recommends Committee receive, file, and approve draft guidelines. *1. Blue Memo
*2. PowerPoint presentation
7. COMMITTEE COMMENTS
8. ADJOURNMENT
1 HOUSING AND COMMUNITY DEVELOPMENT COMMITTEE
MINUTES
REGULAR MEETING
June 12, 2025, 12:00 p.m.
City Hall North Conference Room A
1600 Truxtun Avenue
Members Present: Bob Smith, Larry Koman
Members Absent: Manpreet Kaur
Staff Present: Gary Hallen, Assistant City Manager, Viridiana Gallardo-King, Deputy City Attorney, Phil Burns, Development Services
Director, Jenni Byers, Economic Development Director, Julie Drimakis, City Clerk
_____________________________________________________________________
1. ROLL CALL
Meeting called to order at 12:11 pm
2. PUBLIC STATEMENTS
a. Agenda Item Public Statements
None
b. Non-Agenda Item Public Statements
None
3. ADOPTION OF MINUTES
a. Adoption of February 19, 2025, Special Meeting Minutes Moved by: Larry Koman
Staff recommends adoption of minutes
Approved
4. REPORTS
a. Presentation by the Greater Bakersfield Legal Assistance on the Eviction Protection Program
2 Economic and Community Development Director Byers made staff comments and introduced Jeanette Irigaray-Welch, Sandra Mitchell, and Elena Almazan from Greater Bakersfield Legal Assistance (GBLA) who provided a PowerPoint presentation.
Moved by: Larry Koman
Staff recommends Committee receive and file the presentation Approved
1. PowerPoint Presentation
b. Administrative Citation Program Revision of Administrative Fines Development Services Director Burns made staff comments.
Code Enforcement Manager Jose Gonzales made additional staff comments and provided a PowerPoint presentation.
Moved by: Larry Koman
Staff recommends approval and authorization of the revised Administrative Citation Fee Schedule.
Approved
1. PowerPoint presentation
5. DEFERRED BUSINESS
6. NEW BUSINESS
7. COMMITTEE COMMENTS
8. ADJOURNMENT
Meeting was adjourned at 1:22 pm
_________________________
MANPREET KAUR, CHAIR
_________________________
JULIE DRIMAKIS, CITY CLERK
ADMINISTRATIVE REPORT
MEETING DATE: August 7, 2025 AGENDA CATEGORY: NEW BUSINESS TO: Housing and Community Development Committee
FROM: Juan M. Heredia, Assistant to the City Manager
DATE: August 1, 2025
SUBJECT: Accessory Dwelling Unit (ADU) Forgivable Loan Program Proposal
[Document Description]
RECOMMENDATION:
Staff recommends Committee receive, file, and approve draft guidelines.
BACKGROUND:
Accessory Dwelling Units (ADUs) are defined as secondary housing units on single-family residential lots.
ADUs provide an affordable and flexible option for homeowners to provide additional independent living spaces for one or more persons. City staff regularly work with property owners and developers to facilitate the development of ADUs in the City of Bakersfield.
Over the last few years, the City has applied to several rounds of the state’s Permanent Local Housing Allocation (PLHA). In total the City has received $638,960.02 for ADU-related projects. In the applications, the City committed to using 100 percent of the funds to serve renters between 60 percent and 120 percent of the Area Median Income. The City has until 2030 to expend these funds.
In 2024, the City entered into a $400,000 contract with Willdan Engineering. The purpose of the contract was to identify illegal ADU conversions and connect property owners with resources to bring identified structures into compliance. Since then, Willdan has identified over 30 properties in the City with at least eight property owners allowing the contractor to inspect and document violations. The most common violations include electrical code violations; inadequate heating; improper water installation; window and egress issues; and missing smoke and carbon monoxide detectors. This contract is funded by the American Rescue Plan Act and funds need to be expended by October 31, 2026.
After considerable research into comparable cities and programs, city staff propose a new ADU Forgivable Loan Program (Program) to provide forgivable loans to qualified homeowners, for the purpose of bringing unpermitted ADUs into compliance. Forgivable loans would be administered by a third-party contractor and require the signing of a five-year covenant to rent at an affordable rate to low and very low -income individuals or families. Loans offered by the contractor would cover building permit fees, design and construction costs, and administrative fees. This program wo uld connect property owners with a dedicated Case Manager who would serve as the subject matter expert and point of contact for the City.
City staff propose hiring a qualified, third-party contractor to carry out this program. The contractor would use the City’s full PLHA allocation of $638,960 to pay for any ADU related fees and repairs. The contractor’s administrative fees would be paid out a projected $80,000 in savings from the ARPA allocation to Willdan Engineeing. The City may pull additional funds from the Willdan contract if the bids submitted by qualified contractors exceed the $80,000 target.
FISCAL IMPACT:
There is no fiscal impact to the General Fund. The proposed program will use existing Permanent Local Housing Allocation funds for the ADU improvements and previously allocated American Rescue Plan Act funds for the administration of a future contract.
COUNCIL GOAL:
Economic Opportunity for All
ATTACHMENTS:
1. Bakersfield ADU Forgivable Loan Program Guidelines
2. Bakersfield ADU Forgivable Loan Program One-Pager
Accessory Dwelling Unit (ADU)
Forgivable Loan Program Guidelines
The City of Bakersfield’s Accessory Dwelling Unit Forgivable Loan Program is a locally initiated program that uses local, state, and federal funds to bring existing unpermitted ADUs into compliance.
Economic & Community Development Department
1600 Truxtun Ave, Bakersfield, CA 93301
Phone: (661) 326-3765 | www.bakersfieldcity.us
2 Table of Contents
Section 1: Program Summary ............................................................................................................... 3 Section 2: Why apply to the ADU Forgivable Loan Program? ..................................................... 3 Section 3: Eligibility .................................................................................................................................. 4
3.1 Eligible Properties & Property Owners ..................................................................................... 4
3.2 Eligible Projects .............................................................................................................................. 4
3.3 Eligible Tenants / Renters ............................................................................................................. 6
3.4 Eligible Costs ................................................................................................................................... 6 Section 4: How to Apply ......................................................................................................................... 7
4.1 Pre-Application Preparation (0-5 business days) ................................................................. 8
4.2 Application: Approval (0-30 business days) .......................................................................... 8
4.2 Follow-Up & Compliance (Minimum 5 Years) ....................................................................... 9 Section 5: Evaluation / Selection Criteria ........................................................................................ 10 Section 6: Frequently Asked Questions ........................................................................................... 11 Section 7: Appendix .............................................................................................................................. 12
7.1 Definitions ...................................................................................................................................... 12
7.2 Application ................................................................................................................................... 14
7.3 Sample Third-Party Contractor Forms .................................................................................... 14
7.4 Tenant Eligibility Form ................................................................................................................. 14
3 Program Guidelines
Section 1: Program Summary
Accessory Dwelling Units (ADUs) are defined as secondary housing units on single-family residential lots. ADUs provide an affordable and flexible option for homeowners to provide additional independent living spaces for one or more persons. The City of Bakersfield and its staff regularly work with property owners and developers to facilitate the development and conversion of ADUs.
The Accessory Dwelling Unit Forgivable Loan Program (Program) provides forgivable loans to qualified homeowners, for the purpose of bringing unpermitted ADUs into compliance. Forgivable loans are administered by a third-party contractor and require the signing of a five-year covenant to rent at an affordable rate to low and very low- income individuals or families. These loans can cover building permit fees, design and construction costs, and administrative fees. Acceptance into the ADU Forgivable Program will provide property owners with a dedicated Case Manager who will serve as the building code subject matter expert and point of contact for the City.
Applications for Program are available at the City’s website under Development Services. For any questions not covered by the guidelines below, please contact Christopher Hinds with the Economic & Community Development Department at 661- 852-7543 or [email protected].
Section 2: Why apply to the ADU Forgivable Loan Program?
The City of Bakersfield is committed the working with homeowners and developers to create more ADUs and increase the supply of affordable housing city-wide. Property owners across the City have found ADUs are a great option for homeowners to increase the value of their home and create an additional revenue stream. Unfortunately, many property owners are not aware of the violations on their properties, don’t know the system for getting into compliance, and lack the funds to make the necessary repairs.
The ADU Forgivable Loan Program presents an easy and accessible opportunity for eligible homeowners to bring their unpermitted ADUs into compliance with city codes.
Funds for these fees and improvements are provided by a third-party contractor and there are no income limitations for property owners, only future renters. The third-party contractor will assist homeowners with determining eligibility ADU-related costs, pulling permits on the property, identifying and addressing violations, finding qualified contractors to do the work, and securing funds for the project.
4 Section 3: Eligibility
This section outlines the eligibility requirements for the ADU Loan Forgiveness Program.
3.1 Eligible Properties & Property Owners
All the requirements below must be met for a property and/or property owner to be eligible for the ADU Forgivable Loan Program.
Property must be located in the City of Bakersfield
Property must be a Single-Family Home in a residential neighborhood Property must not have received a prior ADU Forgivable Loan on the parcel Applicant must be property owner
Property must be the primary residence of the property owner Property cannot be used for short- or long-term rentals for the length of the five- year covenant. Short-term rental includes any term less than 1 month and long- term rental includes any term less than 12 months.
Property must have a minimum rental lease term of 12 months.
3.2 Eligible Projects
All the requirements below must be met for a project to be eligible for the ADU Forgivable Loan Program.
Project must create a new ADU through the conversion of existing portions of non-residential structures on eligible properties
Project must have work completed by a licensed contractor from the California Contractors State License Board
Project scope must be limited to the ADU portion of the residence Project must receive a certificate of habitability by the City of Bakersfield The proposed ADU must also fall into one of the three ADU categories listed below:
Attached ADUs
5 Attached ADUs an independent living unit attached to the primary structure. Two sub- types of attached ADUs are:
Attached ADU Additions: additional square footage added to a primary structure, creating an independent living unit.
Attached ADU Conversion: space such as a garage or master bedroom that is converted into an independent living unit
Detached ADUs
Detached ADUs are independent living units separated from the primary structure. Two sub-types of detached ADUs are:
New Detached ADUs: construction of a new accessory structure, creating an independent living unit
Detached ADU Conversions: existing accessory structure that is converted into an independent living unit such as a detached garage.
Junior ADU
Junior ADUs are a type of existing space conversion that is contained entirely within an existing or proposed single-family residence and limited to 500 square feet in size.
6 3.3 Eligible Tenants / Renters
It is the sole responsibility of the property owner to find and rent to eligible tenants for the full duration of the 60 month covenant. Tenants may be related to the property owners; however, they will still need to verify their income as any other tenant. Months during which a unit is vacated due to tenant turnover will not count toward the 60-month affordability requirement.
Tenant-eligibility for the program will be determined by the 2024 Area Median Income levels provided by the California Department of Housing and Community Development.
Below is a table with the income limits based on households earning 60% of the Area Median Income and 120% of the Area Median Income. Area Median Income levels are updated on an annual basis by the California Department of Housing & Community Development. City staff will update the table above on an annual basis and send out to any existing program participants.
2025 Area Median Income
Persons 1 2 3 4 5 6 7 8
Median
Income $65,750 $75,100 $84,500 $93,900 $101,400 $108,900 $116,450 $123,950 60% AMI $39,450 $45,060 $50,700 $56,340 $60,840 $65,340 $69,870 $74,370 120% AMI $78,900 $90,120 $101,400 $112,680 $121,680 $130,680 $139,740 $148,740
Once a property owner receives their certificate of occupancy, it is the responsibility of the property owner to comply with the 5 year or 60-month affordability covenant.
Compliance with the five-year covenant will include, but is not limited to:
Determining tenant eligibility upon applying for the unit by submitting the Tenant Eligibility Form in Appendix 7.3 and any other applicable documents Recertification will not be required
Notification of vacancies or changes in tenants within 10 business days Filling any vacancies within 60 calendar days
The City reserves the right to request additional back-up material, as necessary, for compliance with state and federal law.
3.4 Eligible Costs
The ADU Forgivable Loan Program is funded by the City’s Permanent Local Housing Allocation from the State of California and the American Rescue Plan Act. The Program provides funding to assist with the development of affordable ADUs on homeowners’ properties. Homeowners participating in the program can use the loan to pay for the following eligible costs:
7 - Building fees
- Design, material, and construction costs
- Demolition as necessary for the construction of the ADU - Site work such as water, sewer, septic connections, utility improvements, or site leveling as necessary
- Contractor fees and overhead, not to exceed 10% of total project cost - Fees related to closing costs for conventional loan financing - Administrative costs of a managed construction escrow account - Existing fees from current code violations on the unpermitted structure. These fees will be reviewed and decided on a case-by-case basis.
Below is a non-exhaustive list of the fees that may be covered by the Program along with a rough calculation of what a typical 400-square-foot garage conversion ADU can expect:
Fee Range
1. CBSC-BSA Special Revenue $0 - $10
2. Permit Fee $100 - $300
3. Plan Check $100 - $300
4. SMI Fee – Residential $0 - $10
5. General Plan Maintenance $125 - $300
6. Fire Sprinkler Inspection $75 - $200
7. School Fee $2000 - $3000
Total $2410 - $4120
Any other applicable building, impact, or code violation fees will be determined by the dedicated Case Manager and City of Bakersfield at the time of assessment. In all cases, the City reserves the right, in its sole discretion, to deem costs as excessive, unreasonable, or ineligible due to costs associated with construction items, materials of a luxury nature, furnishings, or excessive labor costs.
Section 4: How to Apply
Property-owners and developers interested in the ADU Forgiveness Loan Program must follow the Pre-Application and Application steps below to be eligible or the program. The length of the application process will largely depend on the readiness of the property owner with the appropriate documents. It is the goal of the City to get applicants through the approval process in less than 60 calendar days.
Pre-Application Prep
Application: Approval
Follow-Up:Covenant
8 4.1 Pre-Application Preparation (0-5 business days)
The Pre-Application phase will help determine whether a property, homeowner, or project is eligible to participate in the program. Applicants referred to the program through Code Enforcement or applying out of their own accord are expected to follow the five steps below to determine ADU Forgivable Loan Program eligibility:
1. Documents. Gather relevant documents demonstrating ownership of the property (Property Deed, Title, Property Tax Records, etc.) and a California identification card.
2. ADU Calculator. Go to the City of Bakersfield’s ADU website (link) and use the ADU calculator tool (link) to estimate the cost of constructing a rental ADU based on current or future concept. Add this calculation to the documents for submission.
3. Consultation. Call or email the City of Bakersfield’s Economic & Community Development Department to schedule an on-site consultation with a third party contractor. Please bring your proof of ownership and IDs to the consultation.
4. Feasibility Report. After the consultation, property owner will receive an ADU Feasibility Report detailing necessary work and eligibility for Program. Feasibility report will be provided at no cost to homeowners. Property owner must email feasibility report to Economic & Community Development Department.
5. Referral. If property, project, and homeowner are eligible, City staff will refer property owner to contractor who will assist with the application process moving forward.
4.2 Application: Approval (0-30 business days)
Once the Pre-Application phase is complete, eligible property owners have the option to submit their application on their own or work third-party Case Manager to move the project along at no charge.
1. Submit. Upon completion of the Feasibility Consultation, the property owner/Case Manager must submit an application and relevant attachments via email to Christopher Hinds ([email protected]) with the Economic & Community Development Department. This request for funding will be based on ADU size and must include the pre-prepared items from the prior phase: proof of ownership, ID, cost-estimation/project budget, and feasibility report.
2. City Review. City staff will review submitted application for up to 30 business days.
At this time, staff may have follow-up questions to property-owner and/or third- party contractor.
9 3. Approval. Once approved, City will refer case to third-party contractor to confirm violations, prepare and execute the loan with a five-year affordability covenant, prepare formal cost estimates, seek qualified contractors, and perform work.
4.2 Follow-Up & Compliance (Minimum 5 Years)
Once a project is complete and a certificate of habitability has been issued, property- owners will be expected to fill the newly permitted ADU with individuals that meet the income requirements listed in the program guidelines. City staff will follow-up over the five-year period and confirm compliance with third-party contractor. Below are some of the steps and phases for consideration:
1. Determining Tenant Eligibility: Property owners are required to certify tenant eligibility before tenants are approved for housing. Certification will be satisfied by submitting Appendix item 7.3 and any required attachments in the form.
2. Begin Forgiveness Period: Once tenant eligibility is confirmed and they have moved in, staff will certify compliance and begin the tracking process. Property owner must inform city staff of any habitability changes to the primary residence or ADU. If property owner moves out of primary residence or tenant leaves ADU, property owner will be out of compliance and those months will not count towards the covenant. Changes to primary residence or ADU occupancy must be reported to the City within 10 business days and corrected within 60 calendar days. Exceptions may be granted on a case-by-case basis.
3. Complete Forgiveness Period: Once a property owner complies with the five-year covenant, City staff will work with third-party contractor, escrow, and any other relevant agencies to remove the five-year covenant from the deed.
10 Section 5: Evaluation / Selection Criteria
Complete applications for the ADU Forgivable Loan Program will be scored according to the following evaluation criteria. Applications must meet a minimum of 65% to be eligible for the program.
Evaluation Criteria Scoring
Financial Need of Property Owner: The intent of the program is to remove any financial hurdles for existing property owners with unpermitted structures to come into compliance. As such, the financial need of the property owner applying to the program will be weighed heavily with a higher score given to property owners that are low income as defined by the 2025 Area
Median Income limits.
40%
Project Location: The intent of the program is to use ADUs to increase the housing supply of affordable housing units. Projects located in one of the City’s Economic Opportunity Areas (EOA) will receive higher consideration than those outside of a city designated EOA.
30%
Severity of Violations: The intent of the program is to address violations that are the most likely to cause the most harm to the property owners and existing tenants. Properties with more severe violations will score higher than those with less violations. 15%
Project Readiness / Turnaround Time: The intent of the program is to create a more timeline and efficient process for converting existing unpermitted structures into ADUs. Projects that are ready to be assessed and scoped will receive higher consideration than those without any prior administrative work.
15%
Total 100%
11 Section 6: Frequently Asked Questions
If I am renting a house, can I apply to this program?
No. To be eligible for ADU Forgivable Loan Program, applicants must own the primary residence home. The current property owner you are renting the unpermitted structure from may apply to this program.
Will I be expected to spend any money upfront?
No, the City has partnered with a third party contractor to pay for all fees, fines, and the cost of doing the work. Property owner may be required to demonstrate creditworthiness, proof of ownership, and proof of residence in primary residence.
How long until I hear back on my application?
City staff plan to communicate regularly with applicants. The goal of this process is to provide a determination to applicants within a 35-business day window.
What happens to the deed restriction or covenant if we complete the work and I sell the primary residence, ADU, or both?
The property will continue to have the deed restriction. Any new property owner will have this information available to them during escrow and must comply by the covenant if they purchase the property. No exceptions.
Who can I contact if I have any more questions?
Please contact Christopher Hinds with the Economic & Community Development Department at [email protected].
12 Section 7: Appendix
7.1 Definitions
1. Accessory Dwelling Unit (ADU): City Municipal Code 17.04.170 refers to an accessory dwelling unit as “an attached or detached dwelling unit that provides complete independent living facilities on the same parcel as a legal single-unit or multi-unit dwelling, including permanent provisions for living, sleeping, eating, cooking and sanitation. Accessory dwelling unit types include:
a. “Attached” means an accessory dwelling unit that is created in whole or in part from newly constructed space that is attached to an existing or proposed primary dwelling, such as through a shared wall, floor, or roofline. b. “Detached” means an accessory dwelling unit that is created in whole or in part from newly constructed space that is detached or separated from the proposed or existing primary dwelling, including an existing stand-alone garage converted into an accessory dwelling unit. The detached accessory dwelling unit shall be located on the same parcel as the existing or proposed primary dwelling.
c. “Converted” means an accessory dwelling unit entirely located within the existing or proposed primary dwelling or accessory structure, including but not limited to attached garages, storage areas, or similar uses; or an accessory structure including but not limited to studio, pool house, or other similar structure. (Ord. 5151 § 7, 2024; prior code § 17.08.160)
2. Junior Accessory Dwelling Unit (ADU): City Municipal Code 17.04.170 refers to an accessory dwelling unit as an accessory dwelling unit that is located within the living space of an existing or proposed primary single-unit dwelling, as defined in Section 17958.1 of the California Health and Safety Code, and which meets the following requirements:
a. Shall only be allowed on parcels zoned for single-unit residences and that include an existing or proposed single-unit dwelling.
b. Is entirely located within an existing or proposed primary single-unit dwelling.
c. Has independent exterior access from the primary dwelling. d. Has sanitation facilities that are either shared with or separate from those of the primary dwelling.
e. Includes an efficiency kitchen, which includes a cooking facility with appliances, food preparation counter, and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit. (Ord. 5151 § 7, 2024; prior code § 17.08.190)
3. Program Supported Unit: Refers to any ADU supported by a City of Bakersfield Affordable ADU Forgivable Loan Program.
4. Affordability Covenant: An agreement between City of Bakersfield and a property owner to restrict the pricing of a housing unit, among other conditions, for a given
13 period. Once the covenant is satisfied, the property owner may choose to rent the unit at any price otherwise allocated by law.
5. Affordable Rent: Affordable rent is generally defined as rent for housing in which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities, and adjusted for household size.
6. Forgivable Loan: A loan provided to a homeowner that is forgiven over time in exchange for compliance with provisions described elsewhere in this document.
7. Maximum Renter Household Income: The maximum household income of a household living in an ADU, determined based on reported income by the household upon applying to rent the unit. The Maximum Renter Household Income is 80%-120% of the Area Median Income (AMI) for the City of Bakersfield, as defined by the California Department of Housing and Community Development (HCD).
8. Minimum Rental Period of Affordability: A homeowner must agree, by signing an Affordability Covenant, to rent an ADU at an affordable rent for at least 60 months, meaning the unit is occupied by a resident paying an affordable rent for at least 60 months.
9. Minimum Lease Term: The minimum commitment a homeowner may make with a tenant in a Program-supported ADU is 12 months; this Minimum Lease Term is notwithstanding the Minimum Rental Period of Affordability, which requires the unit to be rented for 60 months at an affordable rent.
10. Projected Total Development Cost: The estimated cost of all aspects of building an ADU, including design, engineering, local fees, construction materials, and construction labor.
11. Managed Construction Escrow Account
a. A third-party holding account for funds for a construction project. This account holds funds for the project until specific terms are met, then releases those funds to the contractor. Having funds in escrow helps guarantee that funds will be available for the project and restricted funds are properly used. The financing company, the title company, project owner, and even the contractor may request an escrow account. This account is funded before the work begins based on the projected budget for the project. Managed Construction Escrow Accounts are also often used in new construction. For example, when building a new home, the lending institution will use a construction escrow account. When the project is completed and passes inspection, the funds are released to the contractor.
b. When the contractor is ready to receive funds for completed work, they submit a pay application or request a “draw” from the escrow company.
Upon the managed construction escrow provider’s approval of each building phase, the contractor can request a draw of funds to pay off building costs such as contractor bids, excavation costs, and permit fees.
This request is reviewed by the escrow company for the bank. Then, an onsite inspection may happen to ensure the amount requested matches the work completed.
14 c. A Managed Construction Escrow Account benefits the homeowner, lender(s) and the contractor. For the homeowner, the account provides certainty the contractor(s) will be paid without having to do a lot of leg work. For the lender(s), the account ensures checks-and-balances on funding being applied to specific approved funding uses. Finally, when working on a project with an escrow account, the contractor has certainty that the full project is funded.
7.2 Application
Coming Soon
7.3 Sample Third-Party Contractor Forms
Coming Soon
7.4 Tenant Eligibility Form
Coming Soon.
Accessory Dwelling Unit (ADU) Forgivable Loan Program
Economic & Community Development Department | bakersfieldcity.us | (661) 326-3000 Common Illegal ADU Violations
1. Electrical Code Violations
2. Inadequate Heating
3. Improper Water Installation
4. Window and Egress Issues
5. Missing Smoke/Carbon Monoxide Detectors
Permanent Local Housing Allocation (PLHA) Fund
Forgivable Loans May Cover:
Building Fees
Design, Material, & Construction
Demolition as Necessary
Site Work: Water, Sewer, Septic, etc.
Contractor Fees and Overhead (Max 10%)
Costs for Conventional Loan Financing
Managed Construction Escrow Account
August 7
Committee
Presentation &
Approval August - September
Bidding Process &
Council Approval
October - November
Hire Contractor &
Begin Work October 2026
End of Pilot Program
The City of Bakersfield has identified 30 illegal Accessory Dwelling Unit (ADU) conversions since March of 2025. Eight of these units have been inspected and pose concerning safety risks to renters and homeowners. City staff propose using Permanent Local Housing Allocation dollars and American Rescue Plan Act funds to create a new ADU Forgivable Loan Program. This program will help eligible property owners bring unpermitted ADUs into compliance by guiding them through the permit process and providing funds for fees and repairs. Property owners would be required to sign a five-year covenant to rent to low and very low-income individuals and families. City staff propose this program be carried out by a third-party contractor that specializes in ADU-related improvements with Economic & Community Development staff overseeing the contract and project outcomes.
PLHA provides funding to local governments for housing- related projects and programs that assist in addressing the unmet housing needs of their local communities. The City committed to using $638,960.02 of PLHA funds for
ADUs. 80% of PLHA funds will target the rehabilitation
and permitting of illegal converted ADUs; the other 20% is assist in the development of new ADUs.
Who Qualifies for a Forgivable Loan?
Single-Family Homeowners living on their
property within the City of Bakersfield
Homeowners willing to commit to a 5-year
affordability covenant to rent to households
earning 60% - 120% AMI.
1. Pre-Application Prep
a.Gather Documents
b.Calculate Cost
c.Consult with ECD
d.Feasibility Report
2. Application
a.Submit Application
b.City Review
c.Referral to contractor
3. Follow-Up & Compliance
a.Tenant Eligibility
b.Loan Forgiveness
c.Covenant Removal
How to Apply
CITY MANAGER’S OFFICE
MEMORANDUM
August 7, 2025
TO: Housing & Community Development Committee
FROM: Juan M. Heredia, Assistant to the City Manager
SUBJECT: August, 7, 2025 12:00 PM
New Business 6.a.
_____________________________________________________________________________________
The purpose of this memorandum is to provide the Housing & Community Development Committee with updated ADU Loan Forgiveness Program Guidelines, an updated One-Pager, and edit the Administrative Report to reflect the changes made to the proposed program.
Attached is the updated Administrative Report and meeting attachments.
ADMINISTRATIVE REPORT
MEETING DATE: August 7, 2025 AGENDA CATEGORY: NEW BUSINESS TO: Housing and Community Development Committee
FROM: Juan M. Heredia, Assistant to the City Manager
DATE: August 4, 2025
SUBJECT: Accessory Dwelling Unit (ADU) Forgivable Loan Program Proposal
[Document Description]
RECOMMENDATION:
Staff recommends Committee receive and file.
BACKGROUND:
Accessory Dwelling Units (ADUs) are defined as secondary housing units on single-family residential lots.
ADUs provide an affordable and flexible option for homeowners to provide additional independent living spaces for one or more persons. City staff regularly work with property owners and developers to facilitate the development of ADUs in the City of Bakersfield.
Over the last few years, the City has applied for and received $638,960.02 from the state’s Permanent Local Housing Allocation (PLHA) for ADU-related projects. The City has committed to using 100 percent of these ADU funds to serve renters who make up to 60 percent the Area Median Income. The City has until 2030 to expend these funds.
In 2024, the City entered into a contract with Willdan Engineering (Willdan) to identify illegal ADU conversions and connect property owners with resources to bring identified structures into compliance.
Since then, the City has identified over 30 properties in the City with at least eight property owners allowing the contra ctor to enter their residence, inspect, and document violations. The most common violations they have found include electrical code violations ; inadequate heating ; improper water installation; window and egress issues; and missing smoke and carbon monoxide detectors. This contract is funded by the American Rescue Plan Act and funds need to be expended by October 31, 2026.
After a review of comparable cities and their ADU programs, city staff propose a new ADU Forgivable Loan Program (Program) to provide forgivable loans to qualified homeowners . The purpose of these loans would be to construct a new ADU or bring unpermitted structures into compliance. The Program and forgivable loans would be administered by a third-party contractor and require the signing of a five-year covenant to rent at an affordable rate to low-income tenants. Loans offered by the contractor would pay for building permit fees, design and construction costs, and administrative fees. This program would also provide property owners with a dedicated Case Manager who would serve as the subject matter expert and point of contact for the City.
Due to the subject matter expertise and time commitment required to run this Program, City staff propose hiring a qualified, third-party contractor to carry out the Program and issue the forgivable loans . The contractor would use the City’s full PLHA allocation of $638,960 to pay for any ADU related fees, repairs, or administrative costs. Comparable cities who have entered into sub-recipient agreements for this type of ADU work have been charged between $3000 to $4000 in processing fees per ADU.
FISCAL IMPACT:
There is no fiscal impact to the General Fund. Program fees and the cost of repairs will be paid for by the City’s $638,960 Permanent Local Housing Allocation for ADUs.
COUNCIL GOAL:
Economic Opportunity for All
ATTACHMENTS:
1. Bakersfield ADU Forgivable Loan Program Guidelines
2. Bakersfield ADU Forgivable Loan Program One-Pager
Accessory Dwelling Unit (ADU)
Forgivable Loan Program Guidelines
The City of Bakersfield’s Accessory Dwelling Unit Forgivable Loan Program is a locally initiated program that uses local and state funds to provide an opportunity to permit and legalize unpermitted ADUs into compliance.
A Joint Program between
Development Services Department
1715 Chester Avenue, Bakersfield, CA 93301
and
Economic & Community Development Department
1600 Truxtun Ave, Bakersfield, CA 93301
www.bakersfieldcity.us
2 Table of Contents
Section 1: Program Summary ............................................................................................................... 3 Section 2: Why apply to the ADU Forgivable Loan Program? ..................................................... 3 Section 3: Eligibility .................................................................................................................................. 4
3.1 Eligible Properties & Property Owners ..................................................................................... 4
3.2 Eligible Projects .............................................................................................................................. 4
3.3 Eligible Tenants / Renters ............................................................................................................. 6
3.4 Eligible Costs ................................................................................................................................... 6 Section 4: How to Apply ......................................................................................................................... 7
4.1 New Construction ADU Process ................................................................................................ 8
4.2 Unpermitted Structures Process ................................................................................................ 9 Section 5: Evaluation / Selection Criteria ........................................................................................ 11 Section 6: Frequently Asked Questions ........................................................................................... 12 Section 7: Appendix .............................................................................................................................. 13
7.1 Definitions ...................................................................................................................................... 13
7.2 Application ................................................................................................................................... 15
7.3 Sample Third-Party Contractor Forms .................................................................................... 15
7.4 Tenant Eligibility Form ................................................................................................................. 15
3 Program Guidelines
Section 1: Program Summary
Accessory Dwelling Units (ADUs) are defined as secondary housing units on single-family residential lots. ADUs provide an affordable and flexible option for homeowners to provide additional independent living spaces for one or more persons. Unpermitted ADUs can pose significant health and safety risks. These units, often built without the required permits and inspections, may lack proper safety features, potentially leading to hazards like fire, electrical issues, and structural problems. They may not have proper ventilation systems or adequate emergency exits, putting occupants at risk in case of fire or other emergencies.
The Accessory Dwelling Unit Forgivable Loan Program (Program) provides forgivable loans to qualified homeowners, for the purpose of bringing unpermitted structures into compliance and/or constructing new ADUs. The program and forgivable loans are administered by a third-party contractor and require the signing of a five-year covenant to rent at an affordable rate to low and very low-income individuals or families. These loans can cover building permit fees, design and construction costs, and administrative fees. In addition to the forgivable loan, this program will provide property owners with a dedicated Case Manager who will serve as the point of contact for the City.
Applications for the Program are available at the City’s website under Development Services. For any program-related questions, please contact Christopher Hinds with the Economic & Community Development Department at [email protected] or 661- 852-7543.
Section 2: Why apply to the ADU Forgivable Loan Program?
The City of Bakersfield is committed to working with property owners to create more ADUs and increase affordable housing city-wide.
ADUs are a great option for property owners to increase the value of their home and create an additional revenue stream. Unfortunately, ADUs can be expensive to design, plan, and construct with many single-family home property owners unfamiliar with the process, permits, or fees required. This program aims to bridge this knowledge and funding gap.
The ADU Forgivable Loan Program presents an easy and accessible opportunity for eligible homeowners to construct a new ADU or bring unpermitted structures into compliance. Funds for these fees and improvements are provided upfront by a third- party contractor with no income requirements for property owners. The third-party contractor will assist homeowners with determining eligible ADU-related costs, pulling permits on the property, identifying and addressing violations, finding qualified contractors to do the work, and securing funds for the project.
4 The ADU Forgivable Loan Program invites interested property owners to reach out to the City of Bakersfield to discuss their proposed project and improvements.
Section 3: Eligibility
This section outlines the eligibility requirements for the ADU Loan Forgiveness Program.
3.1 Eligible Properties & Property Owners
All the requirements below must be met for a property and/or property owner to be eligible for the ADU Forgivable Loan Program.
Property must be located in the City of Bakersfield
Property must be a Single-Family Home in a residential neighborhood Property must not have received a prior ADU Forgivable Loan on the parcel Applicant must be property owner
Property must be the primary residence of the property owner ADU shall be available for occupancy for a term of no less than 30 days
3.2 Eligible Projects
All the requirements below must be met for a project to be eligible for the ADU Forgivable Loan Program.
Project must create a new ADU through the conversion of existing portions of non-residential structures on eligible properties
Project must have work completed by a licensed contractor from the California Contractors State License Board
Project scope must be limited to the ADU portion of the residence Project must receive a certificate of occupancy by the City of Bakersfield Building Division.
The proposed ADU must also fall into one of the three ADU categories listed below:
Attached ADUs
5 Attached ADUs an independent living unit attached to the primary structure. Two sub- types of attached ADUs are:
Attached ADU Additions: additional square footage added to a primary structure, creating an independent living unit.
Attached ADU Conversion: space such as a garage or master bedroom that is converted into an independent living unit
Detached ADUs
Detached ADUs are independent living units separated from the primary structure. Two sub-types of detached ADUs are:
New Detached ADUs: construction of a new accessory structure, creating an independent living unit
Detached ADU Conversions: existing accessory structure that is converted into an independent living unit such as a detached garage.
Junior ADU
Junior ADUs are a type of existing space conversion that is contained entirely within an existing or proposed single-family residence and limited to 500 square feet in size.
6 3.3 Eligible Tenants / Renters
It is the sole responsibility of the property owner to find and rent to eligible tenants for the full duration of the 60 month covenant. Tenants may be related to the property owners; however, tenants will still need income verification. Months during which a unit is vacated due to tenant turnover will not count toward the 60-month affordability requirement.
Tenant-eligibility for the program will be determined by the Area Median Income levels for Kern County based on the year of application provided by the California Department of Housing and Community Development. Below is a table with the income limits based on households earning 60% of the Area Median Income. Area Median Income levels are updated on an annual basis by the California Department of Housing & Community Development. City staff will update the table below on an annual basis and send out to any existing program participants.
2025 Area Median Income
Persons 1 2 3 4 5 6 7 8
Median
Income $65,750 $75,100 $84,500 $93,900 $101,400 $108,900 $116,450 $123,950 60% AMI $39,450 $45,060 $50,700 $56,340 $60,840 $65,340 $69,870 $74,370
Once a property owner receives a certificate of occupancy, it is the responsibility of the property owner to comply with the five (5) year or 60-month affordability covenant.
Compliance with the five-year covenant will include, but is not limited to:
Determining tenant eligibility upon applying for the unit by submitting the Tenant Eligibility Form in Appendix 7.3 and any other applicable documents Annual compliance with a certificate of occupancy of primary residence and ADU
Recertification of household income will not be required unless individuals move in or out of the ADU
Notification of vacancies or changes in tenants within 10 business days Filling any vacancies within 60 calendar days
The City and third-party contractor reserve the right to request additional back-up material, as necessary, for compliance with state and federal laws.
3.4 Eligible Costs
The ADU Forgivable Loan Program is funded by the City’s Permanent Local Housing Allocation from the State of California and local funds. Property owners participating in the Program may use the loan to pay for the following eligible costs:
- Building fees
- Design, material, and construction costs
- Demolition as necessary for the construction of the ADU
7 - Site work such as water, sewer, septic connections, utility improvements, or site leveling as necessary
- Contractor fees and overhead, not to exceed 10% of total project cost - Fees related to closing costs for conventional loan financing - Administrative costs of a managed construction escrow account - Existing fees from current code violations on the unpermitted structure. These fees will be reviewed and decided on a case-by-case basis.
Below is a non-exhaustive list of the fees that may be covered by the Program along with a rough calculation of what a typical 400-square-foot garage conversion ADU can expect:
Fee Range
1. CBSC-BSA Special Revenue $0 - $10
2. Permit Fee $100 - $300
3. Plan Check $100 - $300
4. SMI Fee – Residential $0 - $10
5. General Plan Maintenance $125 - $300
6. Fire Sprinkler Inspection $75 - $200
7. School Fee $2000 - $3000
Total $2410 - $4120
Any other applicable building, impact, or code violation fees will be determined by the dedicated Case Manager and City of Bakersfield at the time of assessment. In all cases, the City reserves the right, in its sole discretion, to deem costs as excessive, unreasonable, or ineligible due to costs associated with construction items, materials of a luxury nature, furnishings, or excessive labor costs.
Section 4: How to Apply
The application process for the ADU Forgiveness Loan Program will be administered by a third-party contractor. Property owners interested in the ADU Forgiveness Loan Program must reach out to the third-party contractor to determine eligibility and apply. City staff will also refer property owners to contractor. These referrals must follow the same application process.
The length of the application process will largely depend on the readiness of the property, complexity of existing violations, and willingness of the property owner to work with the third-party contractor. It is the City’s goal to get applicants through the approval process and begin construction in less than 60 calendar days.
The Contractor will generally follow the three-step process below for both unpermitted structures and new units.
8 4.1 New Construction ADU Process
1. Pre-Application Prep: The contractor’s Pre-Application phase will determine whether a property, homeowner, or project is eligible to participate in the program. At this stage, property owners will be expected to gather required documents, calculate the cost of their ADU, and review the contractor’s application.
a. Documents. Gather documents demonstrating proof of property ownership (Property Deed, Title, Property Tax Records, etc.), proof of identity (California ID), proof of residence, and any design plans completed prior to application submittal.
b. ADU Calculator. Go to the City of Bakersfield’s ADU website (link) and use the ADU calculator tool (link) to estimate the cost of constructing a rental ADU based on current or future concept. Add this calculation to the documents for submission.
c. Application. Review contractor’s program application.
2. Application: The contractor’s Application phase will determine whether a property, homeowner, and project are selected to participate in the program.
Homeowners are expected to fill out the application and submit pre-application documents to the contractor.
a. Submit. Property owner must fill out the contractor’s application and provide any required documents such as proof of ownership, proof of identity, ADU Calculator estimate, and design plans if available. b. Review & Decision. Property owner will determine whether eligible property is selected for the program based on a set of criteria defined in Section 5 of Program Guidelines.
3. Follow-Up & Compliance. Once a project is complete and a certificate of occupancy is issued, property-owners will be expected to fill the newly permitted ADU with individuals that meet the income requirements listed in the program guidelines. Contractor will follow up over the five-year period and confirm compliance. Below is a list of the compliance protocols required by the City and enforced by the contractor:
Pre-Application Prep
Application: Approval
Follow-Up & Compliance
9 a. Determining Tenant Eligibility: Property owners are required to certify tenant eligibility before tenants are approved for housing. Certification will be satisfied by submitting Appendix item 7.3 and any required attachments in the form.
b. Begin Forgiveness Period: Once tenant eligibility is confirmed and they have moved in, the contractor will certify compliance and begin the tracking process. Property owner must inform city staff of any habitability changes to the primary residence or ADU. If property owner moves out of primary residence or tenant leaves ADU, property owner will be out of compliance and those months will not count towards the covenant.
Changes to primary residence or ADU occupancy must be reported to the City within 10 business days and corrected within 60 calendar days.
Exceptions may be granted on a case-by-case basis.
c. Complete Forgiveness Period: Once a property owner complies with the five-year covenant, City staff will work with third-party contractor, escrow, and any other relevant agencies to remove the five-year covenant from the deed.
4.2 Unpermitted Structures Process
1. Pre-Application Prep: The contractor’s Pre-Application phase will determine whether a property, homeowner, or project is eligible to participate in the program. At this stage, property owners will be expected to gather required documents, receive a Special Inspection Report from contractor, and review the contractor’s application.
a. Documents. Gather documents demonstrating proof of property ownership (Property Deed, Title, Property Tax Records, etc.), proof of identity (California ID), proof of residence, and any design plans completed prior to application submittal.
b. Special Inspection Report. Property owners will need to schedule a Special Inspection Report with the contractor. This report will provide a cost estimate and scope of work required to bring the property into compliance.
c. Application. Review the contractor’s program application.
2. Application: The contractor’s Application phase will determine whether a property, homeowner, and project are selected to participate in the program.
Homeowners are expected to fill out the application and submit pre-application documents to the contractor.
a. Submit. Property owner must fill out the contractor’s application and provide any required documents such as proof of ownership, proof of identity, Special Inspection Report, and design plans if available.
10 b. Review & Decision. Property owner will determine whether eligible property is selected for the program based on a set of criteria defined in Section 5 of Program Guidelines.
3. Follow-Up & Compliance: Once a project is complete and a certificate of occupancy is issued, property-owners will be expected to fill the newly permitted ADU with individuals that meet the income requirements listed in the program guidelines. Contractor will follow-up over the five-year period and confirm compliance. Below is a list of the compliance protocols required by the City and enforced by the contractor:
a. Determining Tenant Eligibility: Property owners are required to certify tenant eligibility before tenants are approved for housing. Certification will be satisfied by submitting Appendix item 7.3 and any required attachments in the form.
b. Begin Forgiveness Period: Once tenant eligibility is confirmed and they have moved in, contractor will certify compliance and begin the tracking process. Property owner must inform city staff of any habitability changes to the primary residence or ADU. If property owner moves out of primary residence or tenant leaves ADU, property owner will be out of compliance and those months will not count towards the covenant. Changes to primary residence or ADU occupancy must be reported to the City within 10 business days and corrected within 60 calendar days. Exceptions may be granted on a case-by-case basis.
c. Complete Forgiveness Period: Once a property owner complies with the five-year covenant, City staff will work with third-party contractor, escrow, and any other relevant agencies to remove the five-year covenant from the deed.
11 Section 5: Evaluation / Selection Criteria
The third-party contractor will score applications for the ADU Forgivable Loan Program according to the following evaluation criteria. Applications must meet a minimum of 65% to be eligible for the program.
Evaluation Criteria Scoring
Financial Need of Property Owner: The intent of the program is to remove any financial hurdles for existing property owners with unpermitted structures to come into compliance. As such, the financial need of the property owner applying to the program will be weighed heavily with a higher score given to property owners that are low income as defined by the Area Median Income limits of that year.
40%
Project Location: The intent of the program is to use ADUs to increase the housing supply of affordable housing units within the City of Bakersfield.
30%
Severity of Violations: The intent of the program is to address violations that are the most likely to cause the most harm to the property owners and existing tenants. Properties with more severe violations will score higher than those with less violations. 15%
Project Readiness / Turnaround Time: The intent of the program is to create a more timeline and efficient process for converting unpermitted structures into ADUs. Projects that are ready to be assessed and scoped will receive higher consideration than those without any prior administrative work.
15%
Total 100%
12 Section 6: Frequently Asked Questions
If I am renting a house, can I apply to this program?
No. To be eligible for ADU Forgivable Loan Program, applicants must own the primary residence home. The current property owner you are renting the unpermitted structure from may apply to this program.
Will I be expected to spend any money upfront?
No, the City has partnered with a third party contractor to pay for all fees, fines, and the cost of doing the work. Property owner may be required to demonstrate creditworthiness, proof of ownership, and proof of residence in primary residence.
How long until I hear back on my application?
City staff plan to communicate regularly with applicants. The goal of this process is to provide a determination to applicants within a 35-business day window.
What happens to the deed restriction or covenant if we complete the work and I sell the primary residence, ADU, or both?
The property will continue to have the deed restriction. Any new property owner will have this information available to them during escrow and must comply by the covenant if they purchase the property. No exceptions.
Who can I contact if I have any more questions?
Please contact Christopher Hinds with the Economic & Community Development Department at [email protected].
13 Section 7: Appendix
7.1 Definitions
1. Accessory Dwelling Unit (ADU): City Municipal Code 17.04.170 refers to an accessory dwelling unit as “an attached or detached dwelling unit that provides complete independent living facilities on the same parcel as a legal single-unit or multi-unit dwelling, including permanent provisions for living, sleeping, eating, cooking and sanitation. Accessory dwelling unit types include:
a. “Attached” means an accessory dwelling unit that is created in whole or in part from newly constructed space that is attached to an existing or proposed primary dwelling, such as through a shared wall, floor, or roofline. b. “Detached” means an accessory dwelling unit that is created in whole or in part from newly constructed space that is detached or separated from the proposed or existing primary dwelling, including an existing stand-alone garage converted into an accessory dwelling unit. The detached accessory dwelling unit shall be located on the same parcel as the existing or proposed primary dwelling.
c. “Converted” means an accessory dwelling unit entirely located within the existing or proposed primary dwelling or accessory structure, including but not limited to attached garages, storage areas, or similar uses; or an accessory structure including but not limited to studio, pool house, or other similar structure. (Ord. 5151 § 7, 2024; prior code § 17.08.160)
2. Junior Accessory Dwelling Unit (ADU): City Municipal Code 17.04.170 refers to an accessory dwelling unit as an accessory dwelling unit that is located within the living space of an existing or proposed primary single-unit dwelling, as defined in Section 17958.1 of the California Health and Safety Code, and which meets the following requirements:
a. Shall only be allowed on parcels zoned for single-unit residences and that include an existing or proposed single-unit dwelling.
b. Is entirely located within an existing or proposed primary single-unit dwelling.
c. Has independent exterior access from the primary dwelling. d. Has sanitation facilities that are either shared with or separate from those of the primary dwelling.
e. Includes an efficiency kitchen, which includes a cooking facility with appliances, food preparation counter, and storage cabinets that are of
14 reasonable size in relation to the size of the junior accessory dwelling unit. (Ord. 5151 § 7, 2024; prior code § 17.08.190)
3. Program Supported Unit: Refers to any ADU supported by a City of Bakersfield Affordable ADU Forgivable Loan Program.
4. Affordability Covenant: An agreement between City of Bakersfield and a property owner to restrict the pricing of a housing unit, among other conditions, for a given period. Once the covenant is satisfied, the property owner may choose to rent the unit at any price otherwise allocated by law.
5. Affordable Rent: Affordable rent is generally defined as rent for housing in which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities, and adjusted for household size.
6. Forgivable Loan: A loan provided to a homeowner that is forgiven over time in exchange for compliance with provisions described elsewhere in this document.
7. Maximum Renter Household Income: The maximum household income of a household living in an ADU, determined based on reported income by the household upon applying to rent the unit. The Maximum Renter Household Income is 60% of the Area Median Income (AMI) for the City of Bakersfield, as defined by the California Department of Housing and Community Development (HCD).
8. Minimum Rental Period of Affordability: A homeowner must agree, by signing an Affordability Covenant, to rent an ADU at an affordable rent for at least 60 months, meaning the unit is occupied by a resident paying an affordable rent for at least 60 months.
9. Minimum Lease Term: The minimum commitment a homeowner may make with a tenant in a Program-supported ADU is 12 months; this Minimum Lease Term is notwithstanding the Minimum Rental Period of Affordability, which requires the unit to be rented for 60 months at an affordable rent.
10. Projected Total Development Cost: The estimated cost of all aspects of building an ADU, including design, engineering, local fees, construction materials, and construction labor.
11. Managed Construction Escrow Account
a. A third-party holding account for funds for a construction project. This account holds funds for the project until specific terms are met, then releases those funds to the contractor. Having funds in escrow helps guarantee that funds will be available for the project and restricted funds are properly used. The financing company, the title company, project owner, and even the contractor may request an escrow account. This account is funded before the work begins based on the projected budget for the project. Managed Construction Escrow Accounts are also often used in new construction. For example, when building a new home, the
15 lending institution will use a construction escrow account. When the project is completed and passes inspection, the funds are released to the contractor.
b. When the contractor is ready to receive funds for completed work, they submit a pay application or request a “draw” from the escrow company.
Upon the managed construction escrow provider’s approval of each building phase, the contractor can request a draw of funds to pay off building costs such as contractor bids, excavation costs, and permit fees.
This request is reviewed by the escrow company for the bank. Then, an onsite inspection may happen to ensure the amount requested matches the work completed.
c. A Managed Construction Escrow Account benefits the homeowner, lender(s) and the contractor. For the homeowner, the account provides certainty the contractor(s) will be paid without having to do a lot of leg work. For the lender(s), the account ensures checks-and-balances on funding being applied to specific approved funding uses. Finally, when working on a project with an escrow account, the contractor has certainty that the full project is funded.
7.2 Application
Coming Soon
7.3 Sample Third-Party Contractor Forms
Coming Soon
7.4 Tenant Eligibility Form
Coming Soon.
Accessory Dwelling Unit (ADU) Forgivable Loan Program
Economic & Community Development Department | bakersfieldcity.us | (661) 326-3765 Common Illegal ADU Violations
1. Electrical Code Violations
2. Inadequate Heating
3. Improper Water Installation
4. Window and Egress Issues
5. Missing Smoke/Carbon Monoxide Detectors
Permanent Local Housing Allocation (PLHA) Fund
Forgivable Loans May Cover:
Building Fees
Design, Material, & Construction
Demolition as Necessary
Site Work: Water, Sewer, Septic, etc.
Contractor Fees and Overhead (Max 10%)
Costs for Conventional Loan Financing
Managed Construction Escrow Account
August 7
Committee
Presentation &
Approval August - September
Bidding Process &
Council Approval
October - November
Hire Contractor &
Begin Work December 2028
End of Pilot Program
The City of Bakersfield has identified 30 unpermitted structures since March of 2025. Eight of these units have been inspected and pose concerning safety risks to renters and homeowners. City staff propose using Permanent Local Housing Allocation dollars to create a new ADU Forgivable Loan Program. This program will help eligible property owners bring unpermitted ADUs into compliance by guiding them through the permit process and providing funds for fees and repairs. Property owners would be required to sign a five-year covenant to rent to low and very low-income individuals and families. City staff propose this program be carried out by a third-party contractor that specializes in ADU-related improvements with Economic & Community Development staff overseeing the contract and project outcomes.
PLHA provides funding to local governments for housing- related projects and programs that assist in addressing the unmet housing needs of their local communities. The City committed to using $638,960.02 of PLHA funds for ADUs. 80% of PLHA funds will target the rehabilitation and permitting of illegal converted ADUs; the other 20% is assist in the
development of new ADUs.
Who Qualifies for a Forgivable Loan?
Single-Family Homeowners living on their
property within the City of Bakersfield
Homeowners willing to commit to a 5-year
affordability covenant to rent to households
earning up to 60% Area Median Income (AMI)
1. Pre-Application Prep
a.Gather Documents
b.Calculate Cost
2. Application
a.Submit Application
b.Contractor Review
c.City Approval
3. Follow-Up & Compliance
a.Tenant Eligibility
b.Loan Forgiveness
c.Covenant Removal
How to Apply
ADU Loan Forgiveness Program
Prepared for the Housing & Community Development Committee
Agenda
I. Context
II. Best Practices
III. Current Process & Case Study
IV. ADU Loan Forgiveness Program
V. Program Guidelines
I. Context
Accessory Dwelling Units: secondary housing units on
single-family residential lots that can be attached,
detached, junior, or multifamily.
Unpermitted Structures/Illegal ADU Conversions
• 38 unpermitted ADU structures with 24
inspected and confirmed
• Dozens of violations
• Varying degrees of severity
• 296 – 1216 SQ FT
I. Context
Common Violations
• General lack of permits or
inspections
• Electrical Code Violations
• Inadequate Heating
• Improper Water Heater Installations
• Window and Egress Issues
• Missing smoke and carbon monoxide
detectors
II. Best Practices
• Reviewed 19+ cities, counties, or commissions in California • Issues
• Unaware ADU was out of compliance or how to get ADU into compliance • Fear of additional fines, violations, or retaliation if they worked with code/LE • Miscommunication on the violations and work required
• High fees when pulling permits to get the process started • Lack of qualified contractors to carry out the work
• Lack of funds to cover the construction expenses
• Multiple reinspection due to miscommunication
• Lack of “Case Management” from property owners so any progress made was often lost if the process was lengthy or there were multiple hurdles to overcome.
II. Best Practices
Proposed Solutions
• Ordinances
• Guidebooks on ADU Programs
• Direct Forgivable Loan Program to Property Owners
• Fee Waiver Programs
• Educational Workshops
• One-Stop-Shops
• Case Management with Contractors
III. Current Process:
High Level
1 •Identification. City identifies an unpermitted structure, or a property owner reaches out about an illegal conversion 2 •Notice & Application. Property Owner receives a notice of violation for unpermitted structure to bring it up to code.
3 •Work. Once approved, property owner hires a contractor to pull permits and perform the scope of work.
4 •Inspections. City conducts multiple inspections as work gets completed, from the ground up
5 •Certificate. City issues a certificate of occupancy.
III. Current Process: Expected Fees for ADU
Fee Range
CBSC-BSA Special Revenue $0 - $10
Permit Fee $100 - $300
Plan Check $100 - $300
SMI Fee – Residential $0 - $10
General Plan Maintenance $125 - $300
Fire Sprinkler Inspection $75 - $200
School Fee $2000 - $3000
Total Fees $2410 - $4120
III. Case Study of New ADU Construction
365.6 SQ FT Garage Conversion
III. Case Study: 365.5 SQ FT Garage Conversion
Fee Range
CBSC-BSA Special Revenue $3
Permit Fee $167.13
Plan Check $142.37
SMI Fee – Residential $6.72
General Plan Maintenance $171
Fire Sprinkler Inspection $113
School Fee $1,842.62
Total Fees $2,445.84
Cost to Do Work $21,900
Total Cost $24,345.84
IV. ADU Loan Forgiveness Program
City staff propose a new Accessory Dwelling Unit Forgivable Loan Program • Forgivable loans/grants to qualified homeowners to construct new ADUs and bringing unpermitted ADUs into compliance
• Third-party contractor to provide technical assistance and Case Management
• Pay for building permit fees, design and construction costs, and other administrative fees.
• Five-year affordability covenant/deed restriction
• Maximum funding equal to ½ the cost of standard new construction ADU:
~$100-150k per project
IV. ADU LFP: Funding Sources
• Fees & Construction & Admin & Case Management: $638,960 from Permanent Local Housing Allocation for ADU-related work. $511,168
$127,792
Unpermitted Structures
New Construction
IV. ADU-LFP: Timeline
Aug. – Sept.
• Secure Contractor
& Admin Funding
• Finalize Program
Oct. / Nov. 2025
• Program
Launch
March 2026
• Pilot
Program
Assessment
December 2028
• Pilot
Program
End
V. Program Guidelines
• Eligible Properties & Property Owners
• Property must be in the City of Bakersfield, SFH, and in a residential neighborhood • Property must not have received a prior ADU Forgivable Loan on the parcel • Applicant must be property owner and property must be primary residence of the property owner
• Property cannot be used for short-term rentals. Property must have a minimum rental lease term of 30 days
• Eligible Projects
• Project must create a new ADU
• Project must have work completed by a licensed contractor from the California Contractors State License Board
• Project scope must be limited to the ADU portion of the residence • Project must receive a certificate of occupancy by the City’s Building Division
V. Program Guidelines
• Compliance
• Tenant eligibility confirmed at the time of application • Recertification not required on the same tenant
• Notification of vacancies or changes in tenants within 10 business days • Fill ADU vacancies within a reasonable time frame: < 60 calendar days. • Unfilled vacancies do not count towards 60-month covenant. • Eligible Costs
• Building fees and design, material, demolition, and construction costs • Site work such as water, sewer, septic connections, utility improvements, or site leveling as necessary
• Contractor fees and overhead, not to exceed 10% of total project cost • Fees related to closing costs for conventional loan financing • Administrative costs of a managed construction escrow account • Existing fees from current code violations on the unpermitted structure. These fees will be reviewed and decided on a case-by-case basis.
2025 Area Median Income
Persons 1 2 3 4 5 6 7 8
Median
Income $65,750 $75,100 $84,500 $93,900 $101,400 $108,900 $116,450 $123,950 60% AMI $39,450 $45,060 $50,700 $56,340 $60,840 $65,340 $69,870 $74,370
IV. Program Guidelines
Attached Detached
Junior
IV. Program Guidelines: Process
Property Owner
wants to construct
new Unit
Unpermitted
structure identified
by Staff
Contact Third-Party
Contractor or referral
from City staff for ADU
Loan Forgiveness
Program
Contractor’s
Application
Process
Begin Work and
Complete
Inspections
Close Out
Process and
Deed Restriction
IV. Program Guidelines: Application Process
Pre-Application Preparation
• Documents: proof of ownership, identity, residence, creditworthiness, etc. • Cost Estimate/Work Required:
• ADU Calculator (New Construction)
• Special Inspection Report (Unpermitted Structure)
• Application Preparation
Application
• Application Submission
• Review & Decision by Third-Party Contractor
Follow-Up & Compliance
• Tenant Eligibility
• Forgiveness: Period Start and Annual Compliance Report
IV. Program Guidelines: Selection
Selection Criteria
Evaluated by contractor with final approval by city staff.
Criteria
• Property Owner’s Financial Need
• Project Location
• Severity of Violations
• Project Readiness / Turnaround Time
Next Steps
Approval of general
direction by
Committee
RFP / Competitive
Bidding for Sub-
Recipient / Contractor
Sub-recipient
Agreement to Council
Program Launch