A one-stop source about accessory dwelling units, multigenerational homes, laneway houses, ADUs, granny flats, in-law units…
Check out Hammer & Hand’s ADU Profiles to see examples of their ADUs! For a more in-depth look, read Regan Gray & George Okulitch’s ADU: A Super-Efficient ADU.
“ADUs are good for the city, good for the planet, and good for our clients. It’s the right thing to do in the right city at the right time. We can substantially increase urban density and stay current with the city’s plans – the walkable neighborhoods, that sort of thing – by building ADUs.” –Sam Hagerman
Sam Hagerman is one of the owners of Hammer & Hand, a construction and remodeling company with locations in Portland, OR and Seattle, WA. Sam has been involved with ADUs since the development of RICAP 5 in 2007, when he served on the steering committee as a representative for the green building industry. (In Portland a Regulatory Improvement Code Amendment Package (RICAP) is a periodic update to existing zoning code, which usually addresses timely issues. To learn more about possible impacts of RICAP 7 on Accessory Structures, check out Accessory Structures Zoning Code Amendments.)
“The regulatory improvement process is really important to the civic and political fabric of the city and I’m a big believer in that, so I’m willing to donate my time to it. It was a good process and time well spent. We talked about a number of things and, to their credit, the City Council adopted all our recommendations without any amendments. A lot of what we were talking about at the time was ADUs. Up to that point they had a punitive restriction on ADUs. There were only 8-10 permitted per year. “ –Sam Hagerman
The restrictions on ADUs – such as a maximum size no larger than 30% the size of the primary dwelling – were making it difficult to get ADUs permitted, so many people were creating practical ADUs illegally. Sam’s goal as a member of the committee was to point out the regulatory barriers to creating space-efficient housing options like ADUs and to put forward ideas to make ADUs more buildable. It seemed clear that there was a demand for more space-efficient, affordable housing options in the city of Portland. Allowing homeowners in Portland to build an ADU by right (instead of requiring them to go through a variance or conditional use permit) was an important step in getting ADUs built. (Check out How Portland Became ADU-Friendly (And How Your City Can, Too)). However, Sam is quick to point out that removing regulatory roadblocks wasn’t enough to make them ubiquitous.
“I’m one of the early promoters of the ADU concept in Portland and worked hard to bring it to fruition, but it’s only really become a reality because of economic change. At the time in 2007 I thought ADUs made so much sense financially that they’d explode right then. That’s why Hammer & Hand put so much energy into ADUs. I met with bankers, PDC [Portland Development Commission], and the Mayor’s office. Everyone agreed it was a great idea, but none of the banking industries got on board for five years.” –Sam Hagerman
Sam notes that although many homeowners in Portland recognized the value of creating an ADU on their property, the banking industry was not convinced. The economic recession made financers wary of loaning for ADUs.
“We were abandoned by financing. Banks are always fair-weather friends. When they know it will make sense they’ll pour money into it. I was specifically targeting equity help and community based banks. They’d sit there and say it was great, but they didn’t fund it until the market changed, like 18 months ago. Up until recently the biggest hurdle was financing for clients. That’s shifted, with a big influx of ‘qualified’ leads coming in for ADU projects. Real estate prices have gone way back up, as everyone knows. There’s the advent of Airbnb. The writing on the wall is finally definitely enough for the bankers to pay attention. If you build an ADU you can potentially raise the value by far more than the mortgage. So the banks have loosened up a bit. They’ve decided it’s okay to loan on these projects. It’s really only a function of land prices going back up.” –Sam Hagerman
(Check out The Triple Whammy of ADU Financials to learn about the other financial challenges ADU owners face.)
Sam also points out that the waiver of System Development Charges (SDCs) has played a big role in enabling homeowners to fund an ADU project.
“The RICAP process can’t be credited with the waiver of the SCDs [System Development Charges]. That came right out of Mayor Sam Adams’ office. My fond hope that the waiver will be done away with. Once the property is connected to the city and the tax system there shouldn’t be a way for the city to double-dip. And hopefully we’ll see fewer of the new-fangled houses built hither and yon [using new infrastructure rather than existing].” –Sam Hagerman
However, for Sam, building ADUs is not just a wise financial decision. It’s also a moral decision from a land use standpoint.
“You go to other successful cities… I lived in Berkeley for two years when my wife was in college. We lived in an ADU there and every house in Berkeley and North Oakland had an apartment added onto it in some way. It was primarily driven by a combination of lax regulations and high rental prices. This is just a function of development catching up with what is necessary and right. ADUs shouldn’t be controversial in the slightest.” –Sam Hagerman
In addition to these social benefits, sustainability is a key component of the build when Hammer and Hand takes on an ADU project.
“We focus on energy efficiency first, then a broad range of sustainability goals like upcycling, rapidly renewable materials, and water conservation. It’s mostly about performance, making sure people are comfortable without heroic measures to heat and cool the spaces.” –Sam Hagerman
Sam also shares that the connection between environmental sustainability and economic sustainability is being recognized by the finance industry.
“We built a couple certified passive houses for clients with bank loans. The underwriters are starting to understand this. If you would have spent $900 or $1200 per year on your utility bills and I can build you a house that would take 90% of the cost away, the underwriters are starting to hone in on that. If you build a certified passive house you automatically get a certification from the DOE [Department of Energy]. It’s a basically a societal shift. It’s like the movement of tectonic plates.” –Sam Hagerman
So what advice does Sam have for homeowners considering creating an ADU on their own property?
“Honestly, just do it. It’s so hard to lose. If you can develop an income-producing value add to your property, it’s difficult to go wrong. There are lots more financing options available now. There are also tons of resources out there. Hammer and Hand has information about what you can and can’t do, what’s realistic and unrealistic. The city has a tremendously valuable website to let you know what the parameters are. There are some things commonly misconstrued by normal folks who don’t know about this stuff. What are the setbacks, height limits, and square footage limits. Those things are not generally granted as adjustments at the city level, so you have to plan for the battle rather than battle the plans. There’s more legwork and research that needs to go into the process before you hire anyone to do an ADU project. But those resources are there.” –Sam Hagerman