The Promising Results of Accessory Dwelling Unit Reform

  • June 28, 2023
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Vanessa Brown Calder and Jordan Gygi

Housing prices remain high throughout the country, and policymakers in many places have acknowledged the need to expand housing supply to reduce prices and even combat homelessness. Accessory Dwelling Units (ADUs) provide one option for increasing housing supply without noticeably changing neighborhood aesthetics, since ADUs are typically secondary units that discreetly share a lot with a primary residence.

Fortunately, some states have relaxed regulation to make it easier for homeowners to construct ADUs. A few years have passed since California and Seattle, Washington have made reforms, so it possible to examine the impacts of reforms on units permitted and/​or constructed. Early results from Portland, Oregon’s ADU reform are also worth reviewing.

California

California’s history with ADU reform began decades ago. In 1982, the state banned localities from explicitly outlawing ADU development, with some exceptions. However, localities were able to circumvent the law’s intent by enacting tough approval procedures. Though this was addressed in a 2002 bill that required non‐​discretionary approval processes for ADUs, localities still managed to limit the number of ADUs permitted and built by implementing regulations that increased the cost of building an ADU. The result was an environment that technically allowed for ADU development but practically discouraged it.

The state addressed these issues in 2019 when the legislature passed a handful of bills meant to make it easier for people to build ADUs. For example, SB 9 authorized ADUs on land zoned for single or multi‐​family housing and mandated that ADU projects be approved ministerially (non‐​discretionarily) within 60 days. AB 671 required cities and counties to develop plans to increase the construction of ADUs as part of their overall housing plans. AB 68 barred localities from implementing minimum lot sizes, a common tool used to prevent the construction of ADUs. SB 13 eliminated impact fees for ADUs that are smaller than 750 square feet and barred localities from implementing owner‐​occupancy rules for 5 years after implementation. These constitute just a few examples of the sweeping ADU‐​related legislation passed by the state in 2019.

The number of ADU permits granted in California increased greatly following the 2019 reforms. After staying relatively stable between 2019 and 2020, permits increased 61% between 2020 and 2021 (Figure 2). Between 2019 and 2022 the number of ADUs permitted grew 88%. Constructed ADUs follow the same general trend, rising from 5,852 in 2019 to 17,460 by 2022 (an almost 200% increase).

Seattle

Housing affordability has been on the mind of Seattle officials for some time. In 2015, Mayor Ed Murray set a goal of creating 50,000 new homes in 10 years, 20,000 of which would be affordably priced. To aid in this effort, the Housing Affordability and Livability Agenda Advisory Committee was charged with studying the issue of housing and submitting policy recommendations that could help bolster supply. One of their recommendations was to “[b]oost production of accessory dwelling units and detached accessory dwelling units by removing specific code barriers that make it difficult to build ADUs and DADUs [detached accessory dwelling units].” It took several years, but the city eventually acted on this suggestion.

In 2019, the Seattle City Council approved CB 119544. Among other things, the bill authorized up to two ADUs per lot, eliminated the existing owner‐​occupancy rule, reduced minimum lot sizes, and eliminated ADU parking space requirements. These changes officially went into effect in August of 2019.

City data shows that the number of ADU permits requested boomed after 2019. While permits stayed relatively consistent between 2016 and 2019, permits increased 75% in 2020 (Figure 1). By 2022, numbers were up 253% from 2019. The rise in ADU construction rose so fast that, by 2022, ADU construction outpaced single‐​family home construction.

Portland

Like California, Portland, Oregon has a long history of pro‐​ADU reforms. Parking requirements for ADUs were eliminated, and in 1998, Portland eliminated requirements that owners must live on site or that primary residences be more than five years old prior to an ADU addition. In 2010, the city suspended system development fees, a one‐​time payment assessed to owners of new units for access to city services and infrastructure. The city continued to suspend these payments until they permanently eliminated them for ADUs in 2018.

Portland further implemented ADU‐​related reforms in 2020 as part of the Residential Infill Project, a comprehensive city project meant to create “more housing options in Portland’s neighborhoods.” Among other things, the city legalized up to two ADUs in many zones and eliminated off‐​street parking requirements for ADUs.

Based on data provided by the city, ADU permitting and construction shot up after the 2010 suspension of system development fees. Before the reform, homeowners were forced to pay up to $12,000 in fees when they built an ADU, a sum large enough to discourage ADU development. The number of ADU permits issued grew from just 1 in 2010 to 112 by 2014 and further to 334 by 2018. After 2018, permits and builds began to drop.

However, preliminary evidence suggests that the 2020 reform allowing two ADUs per lot—which went into effect in 2021—may be boosting ADU permitting once again. Permits increased 34% the year after implementation, the first increase since 2018. While it is too early to know for sure what the reform’s long‐​term impact will be, early results look promising.

Conclusion

Recent estimates suggest that there are 20 million plus “missing” housing units in the U.S. ADUs alone will be unable to make up the difference, and any massive increase in supply will require comprehensive reform, particularly comprehensive zoning reform. However, results in California, Seattle, and Portland indicate that when state and local governments remove barriers to ADU development, housing production increases. Notably, each of these successful locations took a multi‐​pronged approach to reform, rather than narrowly reforming ADU rules in a way that could be offset or circumvented by other regulations.

Other states like Connecticut have recently passed similar ADU reforms, and states including North Carolina and New York are considering reforms of their own. As further reforms are implemented, it is worth continuing to review housing outcomes to determine whether and which reforms are most effective.

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