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There are significant ADU legislative initiatives underway in California, Portland, and Oregon at large. Each of these legislative efforts have national signficance.
ADU advocates in other parts of the court and should consider which of these types of legislative approaches to pursue in their own jurisdiction to help foster more tolerable zoning standards and development regulations for ADUs.
Let’s dive right in.
SDC Waiver Update
Today (5/2/2018), the Portland City Council voted 4-1 to permanenty extend the waiver on system development charges for ADUs!
The SDC waiver was going to sunset on July 31st, 2018, but the popularity and the success of the waiver prompted the City Council to permanently waive the fees.
One significant concession that was made is that the ADU can not be used for short term rental for 10 years. The City Council did not want to subsidize the development of short term rentals. If people want to use their ADU for short term rental, they may do so, but must pay the SDC fee, which will be $14-19K for ADUs starting August 1st, 2018.
Time will tell what impact this new policy has on the development rate of ADUs at large, but this seemed to be a reasonable concession for proponents of ADUs to make in order to get a permanent SDC waiver for ADUs, given that the City’s interests in waiving the fees were to foster the creation of more long term housing units.
There will also be some reporting requirements for those who take advangtage of the waiver. These specifics have not been spelled out yet. The full hearing will be eventually available for viewing here.
As an ADU advocate, what excites me about the permanent waiver is the stabilization of the ADU marketplace in Portland. There will no longer be unpredictability around the administrative costs of development, which means that the market can mature.
By the market maturing, I mean that design and construction companies that focus on ADUs can safely hire staff to help their business meet the consumer demand. Previously, companies may have been reluctant to invest in employees or initiatives that were largely contingent upon the ADU production resulting from the ephemeral SDC waiver. It also means that innovative ADU development models can be tested with more long-term confidence in the ADU market in Portland.
Similarly, local banks and credit unions may finally be willing to invest the requisite effort and capital to create better ADU financing options. While ADUs could have been interpreted as a fad, local banks and credit unions are finally waking up to this robust market now, and will see that there is a huge and untapped loan market that they can help foster.
The gold standard would be a standalone ADU loan product that is based on the projected future income of the ADU. This would bring down the barrier of entry for homeowners who wish to develop an ADU.
Portland Residential Infill Project
Portland has been creating new zoning regulations that would allow for two ADUs. The draft standards were released, and next, the Portland Sustainability Commission will hear public testimony about the draft. City staff will then incorporate their input before submitting the final proposal to the City Council.
Although the residential infill concept is good for ADUs, the devil is in the details, and this draft is full of details. In this regard, some ADU practicioners have put together a list of regulatory ammendment and improvements that we would like to see in the next round of code writing.
Oregon Senate Bill 1051
Statewide, senate bill 1051 is requiring all cities to “allow ADUs”. While the legislation itself is fairly vague, the Oregon Department of Land Conversation and Development guidance on implementing the legislation is not.
Among other things, the guidance they are providing is to drop owner occupancy requirements, drop off street parking requirements, allow detached ADUs up to 800 sq ft by right, and even to allow two ADUs.
As a result of SB 1051, many towns and cities across Oregon are updating and improving their ADU codes to comply with the state legislation and DLCD guidance.
California State ADU Legislation
In California, two or three significant pieces of ADU legislation are making their way through senate committees currently. Depending on how these bills shake out, they could also have signifcant impact nationally.
SB 831, my personal favorite of the proposed bills, requires jurisdictions to drop owner occupancy requirements statewide. This would the first time that state legislation has directly exacted this poison pill ordinance that is commonly found in local ADU regulations. It is about time for a government to address this arbitrary penalization of ADUs.
Competing legistlative agendas designed to help foster ADUs, including SB 1469 also are making their way through legistlative committees with broad support.
California has been moving forward boldly with ADU legistlation in the last two years, and these efforts have proven fruitful. The logic being deployed is that while ADUs have been theoretically endeared by decades, CA cities have been slow to adopt decent ADU regulations.
With a chronic and acute housing crisis unfolding statewide, the state is finally paternally stepping in to establish a baseline standard of acceptable ADU regulations. Cities don’t like having their zoning controls usurped by state legislation, but at this point, the housing crisis carries more than sufficient political weight to supercede the particular controveries surrounding the mandatory relaxation of local ADU regluations.