NEW LAW COULD PAVE PATH FOR MORE ADUS
Building extra dwelling units in Portlanders' attics, basements, garages and backyards is in vogue these days, with about 600 a year getting approved plus untold more flying under the radar without city permits.
Now the trend could expand into the suburbs and beyond.
By July 1, a 2017 state law requires most cities and counties to permit one accessory dwelling unit or ADU inside or alongside each single-family home, subject to "reasonable" design and siting regulations.
"It's not just Portland's thing anymore," said Eli Spevak, a developer who builds ADUs and other alternative housing, and serves on the Portland Planning and Sustainability Commission.
ADUs can fill a vital niche given the growing housing affordability crisis, changing nature of families, and regional planning that encourages more walkable neighborhoods. They are smaller and require less capital to build, so generally are more affordable. They provide infill housing that is close to services and jobs and is relatively popular with neighbors. They provide places for senior citizens or young adults to live independently but near family, and give homeowners potential rental income.
Those reasons are why House Speaker Tina Kotek, D-Portland, pushed the new ADU provisions in the 2017 housing bill she sponsored, which became Senate Bill 1051A.
In the wake of Portland's success spurring a new ADU industry in the past decade, communities like Bend, Ashland and Vancouver, Washington, have adopted more welcoming codes.
But new ADUs have been relatively rare in most Portland suburbs, even though Metro required cities within its jurisdiction to allow them back in 1996, in a little-noticed provision. The new state law expands the requirement to Clackamas and Washington counties, which include hundreds of thousands of residents in unincorporated but urbanized communities, such as Clackamas and Cedar Hills. And the law is pressuring cities and counties to shed some of their restrictions that have impeded construction of ADUs.
"The issue is whether you make it relatively easy to do or not," said Mary Kyle McCurdy, deputy director of 1000 Friends of Oregon, a land-use watchdog group that lobbied for the new law.
Change is coming
Tigard, for example, currently bars freestanding or detached ADUs, also known as backyard cottages. And it has other restrictions that planners dub "poison pills" because they thwart ADU construction.
Tigard planners field multiple calls a week from residents asking about ADUs, said Schuyler Warren, associate planner. Yet Tigard only issued six ADU permits last year and three the year before, despite a growing housing affordability problem.
Spevak lauded Tigard as one of the local suburbs that appears to be stepping up to comply with the new state law and encourage more ADUs.
Preliminary recommendations from Tigard's Housing Options Task Force suggest allowing two ADUs on each home site, one inside the home and one freestanding, and eliminating some restrictive provisions, Warren said. The city plans a June 13 open house to discuss proposed changes and get residents' views.
It's too soon to know if Senate Bill 1051A will spur many new ADUs, said Kol Peterson, a Portland ADU consultant and author of a new book called "Backdoor Revolution: The Definitive Guide to ADU Development."
We'll know more when communities finish updating their codes by July 1, he said.
The whole purpose of the law is to "lower barriers to development" and weed out poison pills, said Laura Buhl, a land-use and transportation planner with the state Department of Land Conservation and Development. Some communities may meet the letter of the law but not the spirit of the law, Buhl said.
To help prod them, the state land-use agency released model terms for new ADU codes in March. That proposes shedding the major impediments and suggests communities consider allowing two ADUs per site, as Portland is considering in its proposed Residential Infill Project.
A single restriction may not kill the market in one city by itself. But multiple restrictions have a chilling combined effect on new development, Buhl said.
"I'd say every city has a barrier or two they could work on reducing," said Elizabeth Decker, a Vancouver planner hired by Metro to survey existing ADU regulations among area cities and counties.
ADUs are the one type of new housing not orchestrated by developers. Usually, homeowners oversee construction, and they are not as adept at navigating cumbersome regulations.
So far, cities that have submitted their new ADU regulations to state land-use officials have retained many restrictions, Buhl said. "Most of them continued more barriers, more regulations than what our model code contains," she said. "Most jurisdictions are trying to meet the letter of the law, but are not completely gung ho."
If anyone legally challenges such city codes on the grounds they go beyond "reasonable" design and siting regulations, the matter gets reviewed by the Oregon Land Use Board of Appeals. Groups like 1000 Friends of Oregon, or perhaps various Home Builders Associations, could challenge the rules in order to get more ADUs built.
There's little in the law to spell out what "reasonable" means, Buhl said. "I think there probably are going to be a lot of things decided in the courts."
Here are some of the main restrictions against building accessory dwelling units in city codes throughout the metro area and the state:
• Building size limits
Gladstone has a 400-square-foot cap on ADUs, which isn't enough to provide a bedroom, said ADU consultant Kol Peterson. Forest Grove caps detached ADUs at 30 percent of the size of the main house, which would be 450 square feet for a 1,500-square-foot main house.
"Anything less than 600 square feet becomes a problem," Peterson said. That allows for one separate bedroom, a bathroom, kitchen and living room. For two residents, you need more space, he said.
Model state rules issued by the Department of Land Conservation and Development suggest ADUs should be allowed up to 800 to 900 square feet, close to Portland's limit of 800 square feet (or 75 percent of the main house.)
• Owner occupancy
Most jurisdictions in Oregon require the owner to remain living in either the main house or the ADU. "That kills ADUs right there," Peterson said.
While seemingly reasonable, such rules can reduce the actual property value because of lost flexibility, he said, and make lenders less willing to provide a construction loan to build an ADU.
• Off-street parking
All jurisdictions in the Portland area aside from Portland, Durham and King City require off-street parking to be built with new ADUs, Peterson said. That adds $10,000 to $15,000 in costs to pave a driveway, he said, and many lots can't accommodate new parking spaces.
• Onerous fees
Many jurisdictions levy thousands of dollars in systems development charges on each new ADU — the same as they charge for regular houses — to cover the cost of providing parks, sewers, water, streets and other services. Portland, where such development fees typically top $16,000, found that waiving those fees for new ADUs led to the current ADU construction boom.
The state's model guidance urges cities to consider scaling back those fees, with the recognition that ADUs usually house fewer residents than a regular house.
The Department of Land Conservation and Development also suggests cities shed requirements that the ADU must resemble the main house architecturally. That adds to the cost.
EUDALY PUSHES FOR
ADU LOAN PROGRAM
Portlanders are now adding about 600 accessory dwelling units a year, but city Commissioner Chloe Eudaly wants to get that up to 1,500.
The city can't close the housing affordability gap just by building more housing, Eudaly said. But it can "make a real dent," she said, by enlisting the help of thousands of "tiny developers" in Portland — homeowners empowered to build ADUs inside or alongside their homes.
Eudaly wants the city to help create a new pilot loan program, so folks don't have to come up with $100,000 or more of their own cash to add a secondary unit in their basement, attic, garage or out in the backyard. The problem, she said, is that banks won't loan money based on homeowners' ability to make payments by renting out the ADUs. That cuts modest- and low-income homeowners out of the market.
Eudaly and her staff are exploring city aid for a pilot project with Craft 3, a Seattle-based nonprofit community development lender that wants to offer ADU construction loans for homeowners of modest income.
Eudaly was unable to get her proposed $2.1 million spending package in the 2018-19 city budget, which would have helped Craft 3 create a pilot project and subsidize 50 to 100 loans. Some of that money also would help streamline city building inspections for ADUs.
Eudaly hopes the City Council will approve the initiative this fall when it reviews unspent funds in the budget and approves replacement projects. Prosper Portland, the city urban renewal agency, may chip in $250,000 for the request, she said.
Adding ADUs could help a large number of Portland homeowners who are financially stressed pay their mortgages, she said. "Its potential for additional income for retirees who are living on a modest fixed income."
The regulatory and permitting costs for building an ADU typically run more than $10,000, and sometimes more than $20,000, said Marshall Runkel, Eudaly's chief of staff. Streamlining the permit process could cut those "soft costs" by 20 percent, he said.
Eudaly also is promoting a future property tax reduction if homeowners agree to rent out their ADUs to tenants earning 60 to 80 percent of the median income. She's been in talks with County Chair Deborah Kafoury, who reportedly is interested in the idea.
But first the city would need authorizing legislation approved by the Oregon Legislature in 2019.