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San Luis Obispo staff propose tolling waiver, faster reviews to avoid automatic ADU approvals
Summary
City staff presented an ADU permitting waiver to toll the state'mandated 60-day deemed approval clock, outlined performance targets for faster plan review, and highlighted a separate construction electrification incentive for new ADUs.
San Luis Obispo City director-level staff told a developer roundtable that the city is preparing a waiver to toll the state'mandated 60-day review clock for accessory dwelling unit (ADU) permits and is setting internal targets to shorten review times.
The proposal would allow the city and applicants to extend the 60-day period spelled out in state law so the city can continue working with applicants rather than issuing premature denials or allowing applications to be "automatically deemed approved," a staff member said.
City staff said the change responds to a state provision requiring jurisdictions to either approve or deny a completed ADU application within 60 days of receiving it; if the city does not act, the application can be treated as approved. "The state law does allow for the waiver, the tolling of this time period," the director said, adding that tolling would prevent incomplete projects from being deemed approved.
Why it matters: ADUs are a near-term housing tool the city and developers use to add units and meet regional housing needs. City staff said they want to avoid cases where unfinished applications could become approved by default and instead preserve the opportunity to resolve outstanding issues with applicants prior to final approval.
City staff gave performance data from the previous two years to explain the need for procedural change. On average for new ADU projects, the city'initiated first-round review took 34 days; customers then averaged 84 days to respond. Second-round reviews averaged 20 days for the city and 42 days for applicants; staff said they frequently see a third round. "I don't know if we can say we've ever approved an ADU just within one round of review. Never," the director said.
As a target, staff said they will strive to return the first round of city review within two weeks, while acknowledging that the goal may not be met immediately as new processes are implemented.
Separately, staff noted a related sustainability incentive: the city's construction electrification program includes an incentive for new ADUs built all-electric. The program has been extended through September 2026 and staff referred developers to the sustainability division and a city contact, Chris Reed, for more information.
Public comment at the meeting flagged detail issues in related housing guidance. One participant, identified as Donna, said mortgage insurance is generally not required for many below-market-rate units and that applying a mortgage insurance assumption in sample pricing spreadsheets could raise an allowable sales price inaccurately.
Staff response: City housing staff encouraged developers to contact the housing team early in project planning to work through unit-specific pricing assumptions and avoid later surprises in sales-price calculations.
Looking ahead: Staff said they will pursue the tolling waiver option with the goal of retaining the ability to continue working with applicants through the review process, and will implement internal timeline targets to reduce review cycles.
