Illegal “in-law” housing units inched closer to legality after the San Francisco Planning Commission voted 6-1 Thursday to amend City codes and create a process for granting them legal status.

The ordinance would legalize dwelling units constructed without proper permits, suspend code enforcement for units in the process of receiving legal status, and prohibit units from being legalized if there has been a recent no-fault eviction.

Somewhere between 30,000 and 40,000 in-law units are estimated to have been built in San Francisco without proper permits.

In-law units — often constructed in garages or basements — earned their name by providing housing to extended family members. Many are now part of the ultra-competitive San Francisco rental market.

Proposed by SF Board of Supervisor President David Chiu, the ordinance would also prohibit landlords from passing along the costs of legalizing in-law to tenants.

Previous efforts to legitimize illegal housing units have failed amid concerns over parking, property values and neighborhood character. However, the current housing crunch and rising eviction rates have opened the door for this effort once again.

Chiu says his legislation will balance these concerns with reality, officially acknowledging that so many of these units already exist.

At the meeting, Commissioner Michael Antonini asked when the exclusion of in-law units with recent no-fault evictions would go into effect, and if it would be enforced retroactively.

Chiu said the exclusion would only be enforced if the eviction happens after the process to legalize them goes into effect:

“We don’t want to create any incentives for those type of evictions to happen but it does apply when the ordinance goes into effect.”

Kimia Haddadan, a planner with the SF Planning Department’s office of legislative affairs, told the Commission the ordinance will not exempt these units from complying with building, fire and housing codes. Units in buildings made before 1979 will also remain under rent control, Haddadan said:

“In the midst of this current housing crisis, the City should make every effort to preserve the current and existing stock of affordable rental housing. The (Planning) Department strongly supports the permission of this ordinance and proposes the Commission to approve this ordinance, with some modifications.”

These modifications include screening buildings to determine eligibility at the beginning of the process, so homeowners would know up front if their units were OK to legalize, Haddadan said:

“We don’t want the applicants to start an application and then later on find out that they are not eligible because of a (no-fault) eviction.”

Antonini asked if the legislation had any “proactive enforcement” to compel property owners to legalize their units.

A legislative aide for BOS President Chiu, Amy Chan, said the process would be voluntary, so no one would be compelled by this ordinance to comply:

“We considered voluntary versus not voluntary and our working-group members all felt that voluntary was the best route to go because we didn’t want to put tenants who are currently living in these units at immediate risk of displacement if owners were unable to comply immediately.”

Chan noted there will be some units that will require structural changes to meet building code standards and this is bound to create “cost challenges”:

“We’re working with the mayor’s Office of Housing to figure out whether or not their current loan funding for rehabilitation of units for code enforcement reasons can be applied to our legislation, specifically for in-law units. So that’s why we went the voluntary route.”

Single-family homes are generally exempt from rent control, except in the case when a tenant moved in before 1997. The SF Rent Board, however, considers tenants in illegal units attached to single-family homes as having the full rights of rent-controlled tenancy.

Commissioner Rich Hillis asked how this ordinance would affect single-family homeowners renting illegal in-law units who decided to make them legal. He said it did not appear to him that this would create two rent-controlled units instead of one.

Scott Sanchez, a zoning administrator for the SF Planning Department, says the illegal unit would still be treated as a rent-controlled unit if it were legalized.

Interviewed outside the meeting in the hallway, Tanya Solomon, a resident from the Sunset District, told SFBay she she supports the ordinance:

“If this legislation passes it’s a win-win for both myself and a potential tenant that I would rent to. The value of my house would be … more valuable. … And then I will be paying more property taxes on it but I can offset that by the rental income.”

Solomon added:

“Most importantly, and the reason why the unit is vacant right now, is because if I rent my unit illegally and somebody lives in there, they can come back after they’ve rented … and they can turn around and say ‘I know that you’ve been illegally taking this money from me as a tenant and so I want it back because you didn’t have the legal right to take it from me. … If you don’t pay me then I will sue you for it.’”

The proposed ordinance was passed with Antonini voting against it. It now heads to the Board of Supervisors.