11) A Pathway for Planners and Advocates Toward More Permitted Development

Transcription

1 11) A Pathway for Planners and Advocates Toward More Permitted Development

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3 Image of Caravan- The Tiny House Hotel: tinyhousehotel.com

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6 Household sizes Home sizes

7 Household sizes Home sizes

8 11) A Pathway for Planners and Advocates Toward More Permitted Development

9 11) A Pathway for Planners and Advocates Toward More Permitted Development

10 11) A Pathway for Planners and Advocates Toward More Permitted Development

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15 11) A Pathway for Planners and Advocates Toward More Permitted Development

16 Cons of permitting Use restrictions Additional parking requirements Must go through lengthy, bureaucratic and expensive process More expensive to comply with code than not to Tax increases

17 Pros of permitting Appraisal value ( and loans) Legally rent it--less stress Insurance Quality assurance

18 Good news ADU neighborhood impacts already exist Permitted ADUs would provide safer ADUs

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22 Breakeven for ADU Development How long will it take to pay for the cost of the ADU construction via the property s rental income? Example A: For an 800 sq ft ADU, Joe spends $160K. Joes lives in the house and rents out the ADU for $1,500/month for $18K/year $18K/year x 8.9 years = $160K Example B: For an 800 sq ft ADU, Joe spends $160K. Joe lives in the ADU and rents out the house for $2,500/month for $30K/year. $30K/year x 5.3 years = $160K Example C: For an 800 sq ft ADU, Joe spends $160K. Joe rents out the ADU and the house for $4,000/month for $48K/year. $48K/year x 3.3 years = $160K Ex. A) Lives in the house and rents out the ADU Ex. B) Lives in the ADU and rents out the house ADU construction cost $160K $160K $160K Ex. C) Rents out the ADU and the house Rental income $1,500/month $2,500/month $4,000/month Breakeven period 8.9 years 5.3 years 3.3 years Breakeven w/adu value 2.2 years 1.3 years 10 months

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26 Jumping the Capital Hurdle: ADU Financing Options Most common ways to fund ADU development: Home Equity Line of Credit Loans- refinancing existing house if there s significant equity in the main house. With a HELOC you wouldn t need to refinance the existing property but need enough equity. Cash Out Refinance: refinancing existing house and taking out cash at a new, fixed, amortized rate. Liquid assets (savings, stocks, 401K loans) Sweat Equity- rule of thumb: half for material, half for labor. Family Loans and other non-secured lines of credit

27 Non-secured lines of Credit

28 Conventional Renovation Financing Options Homestyle loan Conventional loan for updating homes upon purchase or refinance. 203K loan- FHA backed loan for updating homes upon purchase or refinance. Construction loan- For tearing down and starting from scratch. Requires getting a bank to appraise value of property with future ADU at a rate high enough to allow them give you a loan.

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30 Owner Occupancy Requirements Appraisers may undervalue properties as the deed restriction limits attractiveness of the property Owners may not be able to refinance the property in order to pay off bridge loan debts Lenders can t owner occupy, so may be unwilling to carry a mortgage in case of a default Affordable housing NGOs also can t create more affordable housing on their residential properties Significant restriction on what owners can do property. ie. Can t rent it out if they need to move. Must sell. Why wouldn t they just build an addition with an unpermitted kitchen to avoid the deed restriction? What other property types owner occupancy requirements? No cities that have owner occupancy requirements have seen large #s of ADUs Short Term Rentals Complicated. No clear data patterns. No best practices established yet. Decouple STR Regs from ADU Regs. They re not the same thing.

31 ADUs in Austin, TX

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33 ADUs in Los Angeles

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35 Portland s ADU History ADUs permitted per year & Applicable Regulations 700" 600" 500" 400" 300" 200" 100" 0" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017" 2018" Pre Permitted ADUs from 1981 to 1996 ALLOWED BY RIGHT NO OFF STREET PARKING A OVERLAY ZONE ONLY OWNER OCCUPANCY IMPACT FEES??? NO MINIMUM LOT SIZE SIZE CAP: PRIMARY HOUSE INTERNAL CONVERSION ONLY DESIGN COMPATIBILITY

36 Portland s ADU History ADUs permitted per year & Applicable Regulations 700" 600" 500" 400" 300" 200" 100" 0" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017" 2018" ADU Blast Off?? ALLOWED BY RIGHT NO OFF STREET PARKING A OVERLAY ZONE ONLY ALLOWED CITY-WIDE CAN OWNER RENT OCCUPANCY BOTH UNITS IMPACT IMPACT FEES FEES??? 50% NO MINIMUM LOT SIZE SIZE CAP: PRIMARY 33% / 800SF HOUSE TYPES: INTERNAL INTERNAL CONVERSION ADDITIONS ONLY DETACHED DESIGN COMPATIBILITY

37 Portland s ADU History ADUs permitted per year & Applicable Regulations 700" 600" 500" 400" 300" 200" 100" 0" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017" 2018" ADU Blast Off?? ALLOWED BY RIGHT NO OFF STREET PARKING A OVERLAY ZONE ONLY ALLOWED CITY-WIDE CAN OWNER RENT OCCUPANCY BOTH UNITS IMPACT FEES 50% NO MINIMUM LOT SIZE SIZE CAP: PRIMARY 33% / 800SF HOUSE TYPES: INTERNAL INTERNAL CONVERSION ADDITIONS ONLY DETACHED DESIGN COMPATIBILITY

38 Portland s ADU History ADUs permitted per year & Applicable Regulations 700" 600" 500" 400" 300" 200" 100" 0" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017" 2018" ALLOWED BY RIGHT NO OFF STREET PARKING ALLOWED CITY-WIDE CAN RENT BOTH UNITS IMPACT IMPACT FEES FEES 50% WAIVED NO MINIMUM LOT SIZE SIZE CAP 33% / 800SF TYPES: INTERNAL ADDITIONS DETACHED DESIGN COMPATIBILITY

39 Portland s ADU History ADUs permitted per year & Applicable Regulations 700" 600" 500" 400" 300" 200" 100" 0" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017" 2018" ALLOWED BY RIGHT NO OFF STREET PARKING ALLOWED CITY-WIDE CAN RENT BOTH UNITS IMPACT IMPACT FEES FEES 50% WAIVED NO MINIMUM LOT SIZE SIZE CAP 75% / 800SF TYPES: INTERNAL ADDITIONS DETACHED DESIGN COMPATIBILITY

40 Portland s ADU History ADUs permitted per year & Applicable Regulations 700" 600" 500" 400" 300" 200" 100" 0" 1991" 1992" 1993" 1994" 1995" 1996" 1997" 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017" 2018" ALLOWED BY RIGHT NO OFF STREET PARKING ALLOWED CITY-WIDE CAN RENT BOTH UNITS IMPACT IMPACT FEES FEES 50% WAIVED NO MINIMUM LOT SIZE SIZE CAP 75% / 800SF TYPES: INTERNAL ADDITIONS DETACHED DESIGN COMPATIBILITY

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43 11) A Pathway for Planners and Advocates Toward More Permitted Development

44 Preconditions of an ADU Movement Affordable Rental Housing Crisis & High Land Values Predominance of Single Family Residential Zoning Political Leadership Reasonable Zoning and Flexible Development Regulations No poison pill regulations, reasonable design standards Faith in Government/Permitting Office Transparency Access to Capital (from Increased Equity due to Land Value Inflation)

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