The idea isn't without controversy, but the goal is to expand the diversity of housing stock in the city by building small, more affordable units. This would also densify the neighborhoods, meaning more people could live closer to work, grocery stores, etc.
A couple problems with the Canadian plan stuck out to me, including the ability for property owners to keep up to three parking spaces. That would allow the new residents to clog local streets with more cars, rather than increasing the walkability of the neighborhoods.
But the basic idea is good, and worth emulating in the almost-walkable, relatively high-density suburban areas of the Bay Area, including the City and County's own suburbs among the dunes on the West side of town.
A zoning change or a streamlined process for building and approving these in-law units would provide financial benefit for those homeowners on this robust segment of rail infrastructure who don't drive much, or might be willing to give up a parking space for some extra rental income.
Our city leaders tell us every chance they get that we need to find a way to fit more housing into SF. Their solution for the last three decades has been to put that in the "Eastern Neighborhoods." These neighborhoods - SoMa, the Mission, Potrero Hill and also Bayview - are being made to bear this load because there are pockets of industrial land that are going out of use for various reasons, but also because it's politically possible to do so; residents of those neighborhoods don't have ebough of voice in city government to stop it.
For reasons worth exploring (but not now) the homeowners West of Twin Peaks have made a political third rail out of any new, dense housing on their avenues. But that's not good for the city. It will cost a lot of money, out of public and private coffers, to put 10,000 units of housing on the East side of town.
Most of the new housing will be on the formerly industrial land, which often lacks sidewalks, adequate street lighting, traffic signals, sewers, even properly paved roads. And once those units are built the residents will have to squeeze onto those bus lines that survived the TEP axe.
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Outside of SF, East Bay and Peninsula counties could use rezoning strategies like this to densify corridors along new light rail or BRT lines. Using tax revenue capture programs, they might even choose to fund the capital costs of those lines by encouraging this "laneway housing."
Every city and region has their own needs, but a properly-tailored plan for this kind of infill housing can steer development away from the exurbs and into existing neighborhoods, without many of the external costs that come when big development corporations raze and rebuild sections of the neighborhood fabric.