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This ain't granny's house anymore

DEQ survey says city's accessory units have found a home


by: COURTESY RAINBOW VALLEY DESIGN/FRED JOE PHOTOGRAPHY - This accessory dwelling unit is Southeast Portland by Rainbow Valley Design fits two bedrooms, a bathroom, a living room and a kitchen into 700 square feet.There aren’t a lot of grannies living in Portland granny flats.

And there aren’t a lot of mother-in-laws living in local mother-in-law suites, either.

But that’s just fine with the Oregon Department of Environmental Quality, which recently completed the first comprehensive survey of accessory dwelling units, as they are officially known.

ADUs, as they are commonly called, are essentially small second homes built on lots with existing homes under certain conditions. Construction is exploding in Portland since the City Council waived development fees for them in 2010.

Despite the conventional wisdom that ADUs are being built for relatives, including aging ones, the DEQ survey found that only 17 percent of the people living in them in Portland are related to the owners. The majority — 57 percent — were strangers when they moved in.

What’s more, most ADUs — 52 percent — were built primarily to generate extra income from rent.

And that’s all right, says Jordan Palmeri, a DEQ employee who works to reduce the environmentally harmful effects of homes by increasing their efficiency. According to Palmeri, research shows that the greatest benefits result from building small. The smaller the home, the fewer natural resources are consumed by its construction and the fewer greenhouse gases it emits.

“Smaller homes have significant environmental benefits compared to other green building strategies. Building small is a very green thing to do,” says Palmeri.

More than anything, Palmeri is impressed by the survey’s finding that 79 percent of ADUs in Portland are occupied year-round. According to Palmeri, when the City Council first considered encouraging the construction of ADUs, some people worried they would end up being used as garages, workshops or entertainment rooms.

“That hasn’t happened. The majority of ADUs are being used as homes,” says Palmeri, the sole employee of DEQ’s Green Building Program.

Shawn Wood with the city’s Bureau of Planning and Sustainability agrees.

“We weren’t sure ADUs wouldn’t be used for offices, shops and short-term rentals, so it was good to see that most are occupied as homes,” says Woods, who works in the bureau’s Green Building program.

To publicize the benefits of ADUs, DEQ and the city are supporting an upcoming self-guided public tour of 12 ADUs in Portland. It will be held on Sunday, June 1.

The tour is being organized by Caravan — The Tiny House Hotel in Portland, whose owners also advocate for smaller homes. A networking event will be held at 4 p.m. that same day at the hotel, 3009 N.E. 11th Ave.

For additional information on ADUs and the tour, visit www.accessorydwellings.org.

‘Greenest thing to do’

The City Council did not need additional research to jump on the ADU bandwagon early. Recognizing an opportunity to provide more affordable housing, it waived the system development charges for the construction of second homes on primary lots that meet certain conditions. Among other things, the ADUs could not be any larger than 800 square feet and had to include a full kitchen. They could be either a separate structure or a renovated part of an existing home, such as an attic or basement.

The 2010 waiver reduced the cost of construction by between $8,000 and $11,000. It inspired a surge in construction, with almost 200 ADUs permitted in 2013, six times the yearly average from 2000 to 2009. The waiver’s popularity promoted the council to extend it to 2016.

Some are being built by Rainbow Valley Design, a design and construction firm owned by Stephen Williams. One is a two-story, 700-foot ADU behind an older house in the 4100 block of Southeast 66th Avenue. He built it last year after buying the property and completely remodeling the primary house several years ago. Now both are rented out.

“I’ve been building homes for 40 years and I used to build a lot of large ones. But I’ve come around to thinking people should be living smaller because it’s the greenest thing you can do,” says Williams, whose Southeast Portland ADU will be featured on the upcoming tour.

According to Palmeri and Woods, the survey also highlighted challenges that must be overcome to encourage even more ADUs. It found the mean cost for an ADU is nearly $78,000, with about a quarter costing more than $120,000.

“That’s a lot of money for a lot of people,” says Palmeri.

Perhaps more significant, the survey found that most homeowners had to finance the construction themselves because most financial institutions will not make loans for ADUs. According to the survey, the most common sources of funding were cash savings at 60 percent, home equity lines of credit at 27 percent and refinancing or cashing out the main home’s value at 11 percent.

But as Palmeri sees it, ADUs can be good investments. The survey shows the mean rents are in the $880 a month range, meaning most can repay the initial investment in about seven years.

Woods says the survey also showed that many homeowners who want to build ADUs have trouble understanding all of the building regulations and obtaining all of the necessary permits. Few of them are as experienced as Williams.

“The permitting system is largely set up for seasoned builders and developers, not homeowners who have not built a house before. That’s definitely an opportunity for the city to do more,” explains Woods, who says his bureau will soon start work on a guide for those specifically interested in building ADUs at their homes.

Additional rent income

The survey by the Portland State University Survey Research Lab on behalf of DEQ’s Green Building Program, Metro and AccessoryDwellings.org. The goal was to learn how ADUs are being used by owners in Portland, Eugene and Ashland, where they are most popular. It also gathered information on how the ADUs are financed, and some of their energy usage and structural characteristics.

The survey was conducted by mail and online from June 5 to Aug. 11, 2013. The names and contact information of ADU owners were provided by each city from building permit and tax records. Just under 50 percent responded, resulting in a total of 369 completed surveys, 290 from Portland, 49 from Eugene and 30 from Ashland.

The combined results from all three cities did not differ significantly from those in Portland — 81 percent of ADUs in all three cities are used as primary residences, only 18 percent of occupants are family members and 53 percent of occupants were strangers when they moved in. And the majority of owners in all three cities — slightly more than 50 percent — built them for the additional rental income.