Accessory Dwelling Units: The Granny Flat Is Filling A Need Across The Country

When Paulette and Jeff Rees-Denis began thinking about downsizing a few years ago, they knew they didn’t want to leave the northeast Portland, Ore., neighborhood where they’d lived in a 1924 Craftsman bungalow since 1992.

“We love this area,” said Paulette, a life coach and dance instructor. “It’s quiet and close to restaurants, cafes and shopping. People stay here for a long time and we wanted to do the same.”

Thanks to a city ordinance that allowed them to build an 800-square-foot house — technically known as an “accessory dwelling unit” or ADU or granny flat — on their property, they didn’t have to move. ADUs can also be apartment additions to existing homes, house remodels or garage conversions.

The Portland couple is part of a growing trend around the country — Washington, D.C., eased regulations on ADUs in some neighborhoods last year — aimed in part at addressing the high cost of housing in many areas.

Though their original home wasn’t large by modern standards at 1,400 square feet, Paulette said she and her husband weren’t in need of that much space for the two of them.

“To be honest, we didn’t think about building our little house for that long,” she said of the ADU, which they located toward the back of their large lot. “And part of our reason for downsizing was financial because we wanted to build an investment for the future.”

The couple worked with Propel Studio, which focuses on ADUs, and Paulette said the entire process consumed about 18 months from start to finish. Part of the reason it took so long was because her husband did much of the carpentry himself, while working on other jobs. They now live in the new dwelling and rent out their old house.

“It was a relatively easy process, though it took awhile to get the permit to cut down some trees,” she said. “But I’m happy with the result, and we got what we wanted, a two-bedroom home that is both rustic and modern, with a great room and a south wall that is all glass with sliding doors that open onto a large garden. I’d say it’s minimalist in a beautiful way.”

Portland Promoting ADUs

Lucas Gray, a designer at Propel Studio who worked with the couple, said his company has done 30 to 40 ADUs since 2012. Most have been in Portland, but a few others were in surrounding communities.

“Portland has been promoting them for the past six to eight years, though they’ve been allowed in the zoning code for longer than that,” he said of the ADUs. “There has been a push recently because of the lack of affordable housing in rapidly growing cities on the West Coast like Portland, where the price for a typical three-bedroom, two-bath home can be between $500,000 and $800,000.”

He said the city council in Portland created a financial incentive to get more ADUs built by waiving system development charges — the fees for parks, streets, sidewalks and water infrastructure improvements — on ADUs. Permitting costs for an ADU now are roughly $5,000, which can be a savings of $10,000 or more, he noted.

Gray said his firm has converted basements and attics, carved out parts of existing houses, built additions and constructed new cottages to create ADUs, which can be no larger than 800 square feet in Portland. Many people want to convert garages into apartments, but often find it’s less expensive to demolish and start over.

“Many garages are old and not in good shape, and weren’t designed or built to residential standards, so we’d have to bring them up to today’s code regulations and make numerous changes. That can be more trouble than it is worth. Usually we recommend they build new.”

Gray said his company takes customers from A to Z on ADU projects, starting with examining a site, taking measurements and searching city records for what he called “weird easements” or restrictions to make sure a project is feasible.

“Next comes the schematic design, which I like to say is the fun part where we are developing the look and feel of the ADU, figuring out the floor plan, what materials will be used and how it will fit on the parcel in relation to the main house and other structures.”

He then presents clients with several different options, depending on their needs. Most have open floor plans because of their small size. The cost for Propel’s services are 10 percent of the cost.

He said he’s found that people are doing ADUs for a variety of reasons, including downsizing as they age or after children have moved out.

“They might want to stay in their neighborhoods, but live in the ADU and rent out the main house,” he said. “They could also want to create a space for an aging family member or want to create a short-term vacation rental like an Airbnb.”

Unlike in some cities, Portland owners are not required to live in one of the two units to build an ADU.

Though Gray praised the city for waiving system development charges and creating rules that are relatively easy to follow, he said a lack of planning department staff has slowed the process. He said it can run two to three months for the design work, another two months for permitting and then four to six months for construction. So a typical ADU project might easily take a year from start to finish.

Santa Cruz overhauling regulations

Seven hundred miles south in Santa Cruz County on the central California coast, planner Sarah Neuse said her department is working on an overhaul of regulations to encourage the production of ADUs.

“The state recently simplified the laws to open things up a bit, so you can build on parcels of any size,” she said. “Now, you pretty much only need a building permit, with not a lot of other approval that is needed in most circumstances. The primary regulations are that the property be owner-occupied and zoned residential to have an ADU. If the dwelling is a duplex, you can’t do an ADU. And investor owners can’t do them, either.”

She said the push to change ADU rules was a result of rising home prices, which has led to ADUs being built without permits.

“I’d say we have a large percent of those [un-permitted ADUs] in our county,” she mused, noting that one of the most common ways to add an ADU is by converting a garage. “Garages are relatively easy because you already have an existing structure. You might also have plumbing if you have a laundry out there. And with a 220-volt outlet it’s pretty easy to put in a kitchen.

“We’ve seen garage conversions to full cottages being built for grandma in the backyard,” she said. To be legal, an ADU must meet code rules for sleeping, cooking and sanitation and be a completely separate dwelling unit with its own entrance and exit, firewall separation, noise attenuation and heat source.

She estimated the county has around 700 legal ADUs, with another 1,500 without permits. “We’re trying to bring folks into the fold, so they will have safe and fully habitable housing units,” she said. “That is our overarching goal. To do that, we have a limited immunity program for people who have put in an ADU without a permit.

“They can have a building inspector do a basic check for exposed wiring, toxic mold and things like that without exposing them to any legal liability. We’d also make sure the unit isn’t slipping down a hillside because we have a lot of steep slopes here.

“At the least, we want to make sure these dwellings are safe, especially if the owners are thinking about moving grandma in. Some of these ADUs may have been built 15 years ago and the property has changed ownership three times since then, so the current owner might not know.”

She said there has been little pushback from neighbors about ADUs, in large part because of the housing crunch in the area.

“People are aware of how tough things are and want to find ways to solve that while fitting in with our existing land-use patterns,” she said. “I think ADUs are a good solution for that.”

Neuse said ADUs in Santa Cruz County can be as large as 1,200 square feet if built in a rural area on a one-acre parcel. That could be a three-bedroom house.

For the past few years, the county has issued between 10 and 15 ADU permits annually, a figure that Neuse would like to see rise to 40.

“Our ADU program isn’t a success yet, but it has potential,” she said. “We still have some work to do to bring down costs and increase predictability for all our building permit processes.

“But construction is just expensive here. We are working on making some changes to our fee structure and the way we review ADU plans. We’ll see in another year or two if that has changed the level of production.”

Some firms are now starting to focus on ADUs as their specialty, helping clients prequalify and figure out where an ADU could go, how large it would be and what it might cost.

“I’m optimistic that as those businesses get more experience and word-of-mouth exposure, ADU production levels will increase to levels we’d like to see,” she added.

Tim Gordin, co-founder of Workbench, a concept-tocompletion construction company in Santa Cruz, said his firm has begun working on ADUs because it promotes infill and “is an area where if people try to do it on their own, they can have a lot of frustrations.

“Some folks may have started down the road and given up,” he said. “We can help them because we know the rules. One woman had spent thousands of dollars to have an architect draw up plans before she came to us. But we found out later she’d have to replace her septic system at great cost, so she ended up abandoning her plans and selling her property.”

He said Workbench strives to help people understand ADU regulations so they can get started. His company is also working with planning departments to make the permitting process easier for consumers, he added.

“But it’s all worth the effort because our area needs affordable housing and we strongly believe ADUs can help with the shortage,” he said. “They are a good way to get small units built in an area where the average home costs $850,000.”

An East Coast town offering granny flat loans

On the other side of the country on Cape Cod, 70 miles south of Boston, the Town of Barnstable is promoting ADUs for many of the same reasons as Portland and Santa Cruz County — the high cost of owning a home.

Arden Cadrin, housing coordinator of the town’s planning and development department, said Barnstable has two separate programs for second units. One is a traditional granny flat for a family member and has less restrictive rules, while the second is for a non-relative and has been dubbed the “accessible affordable apartment” program, under which owners are required to meet fair housing requirements.

She said the town’s regulations were changed in 2001 as part of an amnesty program for existing unpermitted units that officials knew were prolific in the community. (The Town of Barnstable is made up of seven villages, including the better-known Hyannis.)

“A few years later, the ordinance that launched the program was amended to allow new units to be created, so if you had a walkout basement that was unfinished, for example, you could complete that and create a new accessory apartment, as long as it met all the requirements, she said.

To help homeowners pay for the conversions or additions, the town began offering deferred payment, zero-interest loans of up to $20,000 three years ago to create ADUs. The loans must be repaid if the property is sold, the unit is removed or the homeowner stops renting the ADU.

“Initially, they were trying to find a way for those property owners to come forward and make their ADUs safe, so they were offered this amnesty,” she said. “We said we’ll give you a permit, but the building commissioner will need to review the site and you’ll need to make some health and safety upgrades. The ADUs must also be affordable to qualify for the program.”

Cadrin said the town has a cap on earnings of the tenants and the rents that can be charged, which is 80 percent of the median income for the area. Other requirements are that the homeowner must live on the property and that ADUs be rented on a year-round basis.

“The program is designed for low- and moderate-income households, typically the people who work in restaurants, hospitality or in the service industry,” she said. “We have a disconnect between incomes and housing costs here in Barnstable, mainly because of the seasonal and tourist nature of the community.”

In addition, many wealthy people have bought second homes on Cape Cod, which further limits the housing stock and drives up home prices. The town now has 160 permitted ADUs, a population of about 45,000 and 20,000 year-round housing units.

Cadrin said participants in the program have changed free-standing garages into apartments or simply added an apartment on top of a garage, converted walk-out basements or added separate units onto homes.

In the beginning, some neighbors objected because they were worried that multi-family housing was being added to a single-family zone. “So yes, sometimes there is pushback and nimbyism,” she said. “But in order to get approval, you have to go through a public permitting process with the zoning board of appeals, which means that abutters — anyone who lives within 300 feet of an affected parcel — are notified that you are going to be asking to create this apartment. So they get to say their piece.”

Though limited, the program is a success. “I think it helps create affordable rental housing that we desperately need on Cape Cod,” she said. “And in some cases, it helps the homeowner to be able to afford to stay in their homes.

“I sometimes see people getting close to retirement or people in retirement who are looking for another income source. We don’t have much remaining developable land here on Cape Cod and we’re not going to solve the housing problem by building large developments. I think we need to avail ourselves of many tools: Using existing homes for infill is a really good means to do that.”

Cadrin said she thinks more communities in her area will permit ADUs. In recent months, a local group called “Smarter Cape,” which is made of nonprofits, chambers of commerce and the homebuilders association, asked other towns on Cape Cod to adopt ordinances allowing ADUs.

“It’s a trend that I think will pick up steam,” she said. ADUs are just one way to create options for additional housing, and I’d highly encourage communities to look at them.”