Thursday, September 15, 2016

Upcoming Policy Changes to Backyard Cottages and Accessory Dwelling Units

We are very excited about the proposed policy changes currently under review by the City Council that would modify current development standards making it easier to construct Backyard Cottages and Accessory Dwelling Units here in Seattle.   Even with the recent appeal from the Queen Anne Community Council, this new legislation is expected to pass by the end of the year.

For those not familiar this housing typology, the following is a brief summary of most everything you need to know.


DEFINITIONS

An Accessory Dwelling Unit (ADU) is a self-contained living unit located within a single family house and is often referred to as mother-in-law suite or granny flat.  They are typically constructed within basements, attics and attached garages additions.  And along with DADUs, they have a separate entrance and their own living space, a small kitchen, a bed and bathroom.

ADU in attic or basement
ADU addition

A Detached Accessory Dwelling Unit (DADU) is a separate living unit located on the same lot as a single family home and is often referred to as backyard cottage or carriage house.  They are typically separate, free-standing structures or constructed within or on top of a detached garage.

DADU garage conversion and 2nd floor addition

FYI - in most cities throughout the country, other than Seattle, an ADU is defined as a 2nd separate living unit located within, attached to, or detached from a single family house. Seattle however, has decided to make the distinction between an attached (ADU) and a detached (DADU) accessory dwelling unit - so if you're doing research, keep this in mind.


HISTORY

Accessory dwelling units can be traced back to the early twentieth century in cities throughout the United States, prior to the implementation of zoning regulations.  In the 1940’s and 1950’s it was common for underutilized spaces within homes to be converted into private living spaces to satisfy changing family needs and provide rental income.  Shortly thereafter a boom in urban sprawl and an emphasis on the nuclear family sparked concerns about perceived risks and impacts of ADU’s within neighborhoods, ultimately leading many jurisdictions to prohibit their construction.

Today, in Seattle and many cities throughout the country, the lack of affordable housing has brought this typology back into the forefront.  In Seattle,  ADUs have been allowed in all single family zoned lots since 1994 and DADUs since 2010 but unfortunately, only about 2,500 units have been constructed.  Just 140 miles north in Vancouver, a city with less than half the number of single family homes, the total ADU + DADU count is more than tenfold.  How can this be, you ask?  Less restrictive regulations, city implemented incentives and a true desire to encourage growth.  It's a similar prescriptive path which Seattle will be enacting, pending approval in the upcoming months, which will hopefully lead to similar results.  


WHY ADUs and DADUs ARE A GOOD THING

For the City
They increase affordable rental housing, utilize existing house stock without compromising the scale and character of neighborhoods, encourage better housing maintenance and neighborhood stability, reduce sprawl and environmental footprint, and are viable alternative to larger scale housing projects

For the Homeowner
They provide rental income, offer a private living unit for family members or friends, create aging in place opportunities and increase property values

For the Renters
They offers affordable rent and access to amenities in single family neighborhoods such as privacy, quieter environment and less traffic congestion


PROPOSED POLICY CHANGES

The following is the list of proposed policy changes, when implemented, should encourage the construction of more ADUs and DADUs throughout the city.

1.  Allow an ADU and DADU on the same lot
Current policy stipulates that a single-family lot can have an ADU or a DADU, but not both.  New legislation would allow single-family lots to have an ADU and a DADU.

2.  Remove off-street parking requirements
Current regulations require one additional off-street parking space for either an ADU or DADU unless the lot is located in an urban village.  New legislation eliminates the off-street parking requirement.

3.  Modify the owner occupancy requirement
Current regulations require that the property owner occupy either the main house or the ADU/DADU.  New legislation would terminate the requirement 12 months after the final inspection for the building permit.  Unfortunately this is only a partial step in the right direction.  The owner occupancy requirement is a significant hurdle for construction financing, as the bank cannot rent out the ADU/DADU in the event of a default.  This modification may not have much of an impact on production.

4.  Reduce the minimum lot size for DADUs
Current regulations stipulate that only lots 4,000 square feet and larger can have DADU’s.  New
legislation would reduce the minimum lot size to 3,200 SF however, all other development standards that regulate the location and scale of DADU’s, such as minimum separation between structures and the maximum lot coverage limit, would remain in effect.

5. Modify the maximum height limit for DADUs
Current regulations determine the maximum height of a DADU based on the width of the lot, with overall height limits set too low to allow conventional roof geometry.  New legislation would simplify this standard and slightly increases the maximum height limit up to 2 feet depending on the lot width.

6.  Modify the rear yard coverage limit for DADUs
Current regulations limit coverage of a required rear yard to no more than 40 percent. New legislation would allow an additional 20 percent coverage only for one-story DADUs to provide flexibility for property owners who may wish to design a DADU without stairs for mobility or universal design reasons.

7.  Modify maximum gross square footage limits
Currently, ADUs are limited to 1,000 square feet and DADUs to 800 square feet. New legislation would maintain a 1,000 square feet limit for ADUs and increase the DADU limit to the same 1,000 square feet.  This legislation also removes garage and storage space from counting towards the maximum gross square footage for ADUs and DADUs.

8.  Add flexibility for entry door locations to DADUs
Current regulations prohibit entrances to DADUs on the facades facing the nearest side or rear lot lines unless that lot line abuts a public right-of-way.  New legislation would allow an entrance on any facade provided that the entrance is no closer than 10 feet to side or rear lot line, unless that lot line abuts a public right-of-way.

9.  Allow certain roof features that add interior space
Current regulations allow these features for principal units in single-family zones but are not allowed for DADUs.  New legislation would allow certain roof features that accommodate windows and add interior space, such as dormers, clerestories, and skylights
     
THE DIFFERENCES BETWEEN ADUs AND DADUs

If you’re thinking about building an ADU or DADU, there are several factors to consider.  As noted above, both share many advantages, but the following are additional issues to consider:

Accessory Dwelling Unit
  • Can provide rental income
  • The space and building systems already exists - construction expense is greatly reduced
  • Does not impact scale or character of neighborhood and often goes unnoticed
  • Does not impact open space of property
  • Unit can often be directly connected to house if so desired (family members)
  • Can be a quick return investment
  • Since the unit is attached, sounds will likely be heard regardless of sound-proofing efforts
  • Privacy.  You’ll likely be sharing some exterior spaces and possibly even some interior
       Detached Accessory Dwelling Units      
  • Can provide rental income
  • Increased privacy and no shared walls and floors/ceiling
  • Clear boundaries can be delineated between units
  • Cost.  Building a DADU is significantly more costly per square foot than building a house
  • Takes away from yard and open space
  • Potential to impact neighbors open space and privacy

LESSONS LEARNED

Below are "before" and "after" floor plans of an ADU we recently completed.  As with most ADUs we’ve designed, the basement was finished space and only required minor interior renovations.  A small, compact kitchen was added along with a new closet for a stacked washer/dryer, and sound attenuation and fire separation was added to adjoining house walls and ceilings.  In addition, access to an electric sub-panel and thermostat was added for independent control of the building systems within the unit.  And the best part - no exterior work was required.  This ADU has 485 SF of rentable space, will be used as a long term rental, rents for $1,200 / month and cost $35,000 which included all project costs.


DADUs are wonderful - who doesn't love a tiny house (?!) but ADUs are typically a bigger bang for the buck.  Based on the ADU project we've designed, returns on investments have ranged from 2 to 4 years.


FINANCING

If you’re unable to finance your project with cash savings, the following conditional loan types are worth exploring and may be viable options depending on your current financial situation.  Some lenders are beginning to catch on but in general, the industry remains unfamiliar with the added value ADUs and DADUs can bring to your property, thus making financing more arduous than necessary.

Cash-out refinancing – Refinance your existing loan for more than you owe, taking out the difference in cash

 Home equity loan &  Home equity line of credit (HELOC) – Also referred to as a second mortgage, both types allow you to borrow money using your home’s equity as collateral

 Renovation financing / FHA 203(k) Combines a construction loan with your home mortgage


REFERENCES

If you’re interested in more information, check out the following:

Additional information on permitting, requirements, guides and reports for both ADUs and DADUs

A Portland based one stop internet source for all things ADU.  Some information may not be directly applicable to Seattle, but we’ve found them to be an invaluable reference nonetheless.


SUMMARY

Seattle's existing neighborhoods are one of the largest untapped resources available for increasing affordable housing stock.  By no means will this typology single handedly solve our housing shortage, but its an easy and beneficial step in the right direction that will have little or no impact on the scale and character of our neighborhoods.  You only need to look at the track records in Vancouver and Portland to see any concerns about changing the character of our neighborhoods have proven to be unfounded. In our pursuit of livability, affordability, community and access to housing for all, we look forward to welcoming more ADU and DADU projects into our community.


 The Cunningham's were cool with DADUs,
you should be too!



Thursday, August 18, 2016

Seattle Microhousing "Fix" Eliminates 830 Affordable Homes Per Year.

In my last post I illustrated how a succession of poor policy decisions over the last two years have suppressed the production of micro-housing, making it larger, more expensive and less plentiful. In this post I want to explore how many affordable housing units we are losing and how much more people are paying for their housing as a result.

Lets begin with my assumptions: 2013 was the last full year where congregate micro-housing was relatively unrestricted and no major event disrupted production.  Since mid 2014, every few months some new regulation has come along to shake up the playing field.  For lack of a better option, I'm using 2013 as a baseline year.

In 2013 we built out to roughly 576,000 sf of micro-housing. The chart below shows what this scale of development produces today compared to what it would produce if the city were to fix their recent policy mistakes. Built into these numbers is an assumption that a fixed policy scheme would produce about 50% SEDUs and 50% congregate housing. Since we have never enjoyed a year where our policies didn't tip the scales one way or the other, I'm making an educated guess.

Year
Congregate Units
SF per Congregate Unit
Congregate Total SF
SEDUs
SF per SEDU 
SEDU
Total SF
Total SF All Types
2013 Baseline
1804
300
541200
82
425
34850
576050
Today's Rules
183
315
57605
1,110
467
518445
576050
Fixed Policies
960
300
288025
678
425
288025
576050

Under today's rules, about 90% of production is in the form of SEDUs, The remaining 10% is congregate housing.  This skew towards SEDUs is because of a 2014 zoning change that limits congregate housing mostly to zones that are inappropriate for this type of housing.  SEDU projects rarely produce affordable housing because their market rents are too high and their MFTE rent levels are so low that SEDUs rarely participate. Current data suggests a 12% participation rate for SEDU projects, compared to a 50% participation rate for new development in general. Lastly, a new director's rule has made micro-housing units larger and more expensive than they would otherwise be. This in mind, a normal year of production under today's rules would look roughly like this:

Today's Rules
Congregate Units
SEDU Units

Cong
Market Rate
Units
Cong MFTE Units
SEDU
Market Rate
Units
SEDU MFTE Units
Total
Unit Count
160
23
1,077
33
1,293
Rent
$900
$633
$1,300
$850

Average
$866
$1,295
$1,235

For comparison, if we fixed the zoning criteria for congregate housing, we would expect a higher percentage of projects to swing back toward the smaller, more affordable congregate variety.  If we set the rent requirements for the MFTE program at a discount comparable to other housing types, we would expect SEDU participation to normalize at around 50%.  Congregate housing is already set at a reasonable rate for MFTE, so participation for this type would continue to be fairly robust as well. The net effect is a huge rise the number of affordable units created and sharp decrease in average rents.

Fixed Policies
Congregate Units
SEDU Units

Cong Market Rate Units
Cong MFTE Units
SEDU
Units
SEDU MFTE Units
Total
Unit Count
840
120
593
85
1,638
Rent
$875
$633
$1,200
$850

Average
$845
$1,156
$974

 Every year our current micro-housing policies remain in effect:
  • 1300 people pay an average of $253 more per month in rent.
  • 345 fewer units are built, pushing up prices by adding to the city's production shortfall and increasing economic displacement of low income renters within our existing housing stock.
  • 97 units of 40% AMI housing are not created (affordable to someone making $25k/yr).
  • 731 units of 55% AMI are not created (affordable to someone making $34k/yr).
Multiplied over ten years, this represents the loss of 8,300 units of affordable housing, a 25% rent hike for 13,000 people, and 3,450 units of housing production lost.  We could fix this with a couple of administrative actions and a minor change to the zoning code.

Do you agree that we should fix this?  If so, please send a note to the city council, let them know.




*Prior to 2014, SEDUs had a design review threshold of 4 to 8 units depending on the zone, whereas congregate housing was not subject to design review.  This is the primary reason for the strong skew in the 2013 data towards congregate housing development.

Saturday, August 6, 2016

Microhousing news goes from bad to worse



In my last post I delivered the bad news that Seattle just functionally eliminated micro-housing by issuing Directors Rule 7-2016, making Small Efficiency Dwelling Units (SEDU's) almost as large as a conventional studio apartment. This week the other shoe dropped.  I got official word that the new rule doesn't just apply to SEDU's.  It applies to all housing, so it will make conventional studios larger as well.

To understand just how far we have wandered off the path, let's compress the last two years into the narrative of a single development project:

You buy a plot of land in a dense Urban Village to develop microhousing.  Your goal is to provide housing at affordable rents in a desirable neighborhood for the most people that you can.  You'd also like to participate in the Multi-Family Tax Exemption (MFTE) program so that your rents can be as affordable as possible. You draw up plans to build (40) 175sf units and rent them each for $900/mo. 

Not so fast. Some of the folks who live nearby are upset about what you have planned, so the city council passes new rules to help you compromise with your neighbors.  First, they propose to bump up your units to an average of 220 square feet, then in committee, they add some more rules that bump your average unit size even further.  You re-design your project according to the new rules. You are now down to (27) 260sf units that rent for about $1200/mo. Your projected rents just went up 33%, but at least you are in the MFTE program so 20% of your units will offer a discounted rent of $1020/mo in exchange for a property tax reduction, which is a nice break for some of your renters and actually works out to your benefit as well.

Hold on just a second. The Office of Housing figures out that the MFTE deal is too good for you. They reset the program requirements, dropping SEDU rents down to $628/mo. Some quick math tells you this is a drastic over-compensation that will cost you way more in rent abatement than you would ever get back in property tax relief.  Then the Mayor's office jumps in and decides to promote family-sized housing by bumping your participation rate up from 20% to 25%.  You're not exactly sure how driving you out the MFTE program is helping to build family-sized housing, but you've got bigger fish to fry, so you give up on the MFTE program.  There will be no discounted units, but at least you'll be adding some much needed inventory to the housing supply.

Nice try.  The building department in concerned that your units are so small that they pose a threat to life, health and safety.  They publish a new code interpretation that requires your SEDU's to have larger living rooms. You re-design your project again. You are now down to (24) 290sf units that rent for about $1300/mo. At this point, you realize you're better off converting the units into to small conventional studios.  Your unit size bumps up again, to a little over 300sf, but at least conventional studios can rationally participate in the MFTE program, so 25% of your tenants will get an affordable rent.

Not quite. The building department has a follow-up memo.  It turns out that the living room size problem doesn't just concern SEDUs; conventional studios are also in danger of sliding below the minimum threshold for human habitation.  The new interpretation applies to all housing, so your studios have to get larger again. Your units jump up to an average of 330sf.  Your unit count drops to 21.  Your rents are now at $1400/mo.

This is how Seattle micro-housing has evolved in less than two years. Spread over the dozens of small-unit development projects this represents the loss of significant amounts of affordable housing and a huge increase in average rents.  How much? I'll explore the numbers in a follow-up post.










Monday, July 11, 2016

The War Against Micro-housing is Over. Micro-housing Lost.


Our practice is deeply involved in micro-housing – as architects, as developers, and as proponents in the public policy sphere. Getting these projects done has become an ever-increasing uphill battle.  Taking stock and looking back over that last couple years, I think I’m ready to call it:  The war against micro-housing is over…and micro-housing has lost.

The straw that broke the camel’s back is a recent SDCI director’s rule that places new restrictions on Small Efficiency Dwelling Units (SEDU’s) to the extent that that they will no longer be meaningfully smaller than a typical studio apartment. It is a significant setback for micro-housing and the ability of private market development to help with housing affordability.  But it is only the latest in a series of unforced errors that has taken Seattle from being a national leader on this issue to leaving the stage altogether.

As a firm we have worked to create plentiful, high quality, small-unit housing, designed to support livability and promote community among residents.  We have worked to get the Multi-Family Tax Exemption (MFTE) program aligned with micro-housing development to increase the supply of affordable rent-stabilized units.  We have worked with policymakers and legislators to avoid unintended consequences when crafting policy language and code interpretations.  We worked with the HALA committee to get micro-housing promotion into the HALA agenda. Along the way we have won some kudos for our design work and for our advocacy efforts, but frankly little else.  We have had some success getting policy makers to agree with us in principle, but where the rubber meets the road we are not seeing any actual progress on the ground.  To the contrary, the policy direction is still moving backward.

How did we kill Microhousing?
There’s no one single moment where we drove the bus off the cliff.  Rather, it’s been a process of accumulated bad decisions. To help illustrate, I went back in my files and pulled together the following timeline summary of the past few years:

2007-2009:  Microhousing first appears in the Seattle Market. In 2007 Calhoun Properties remodels an existing duplex to create small units with private bathrooms paired with shared kitchens and open space. In 2009, they apply this idea to two new townhouse developments in the UW and Central District. Average unit size is about 140sf.

July 2009: Seattle Times publishes an article about Videre Apartments (23rd & John).  Public awareness and outrage grows.

2010-2013:  Microhousing proliferates and evolves.  Average unit size increases to about 175sf. Production ramps up to over 1000 units per year.

2013:  New Microhousing legislation is proposed, requiring all projects to undergo design review and to include more amenities such as common areas and bike parking.

2014: Revised Microhousing legislation proposes more expansive changes, prohibits congregate housing development in low-rise and most neighborhood commercial zones, replaces congregate housing with SEDU’s having a minimum average size of 220sf.

August 2014:  King County Superior Court rules that all current pod-style microhousing projects must go through the design review process.  Most existing projects switch over from pod-style to SEDU’s.

October 2014:  Microhousing legislation passes with some additional (hostile) amendments. Congregate housing is virtually banned, and subsequently disappears from the development pipeline. SEDU’s are encouraged as replacement for congregate housing.  A minimum unit size of 220 sf is required, but the minimum size is hard to achieve due to other restrictions. A 250-270 sf average unit size becomes a more typical outcome once all regulations are met.

December 2014:  A hearing examiner appeal invalidates the working definition of frequent transit, because SDCI determines frequent transit based on “average” time between transit stops, but the land use code definition does not contain the word “average”. Small unit development is no longer possible in portions of several Urban Villages.  Despite the fact that the issue was flagged by the HALA committee, and that the issue could be resolved by a one word addition to the land use code, no legislative fix has been brought forward to date.

February 2015:  The city council passes new rules that exclude congregate housing from participation in the MFTE program and sets a price for SEDU units that makes SEDU participation improbable. Since this time, only one SEDU project has applied for MFTE.

July 2015:  The HALA report is published.  HALA acknowledges the de-facto ban on congregate micro-housing, recommends relaxing recently created restrictions to increase the supply. This recommendation is not included in the city council HALA work plan.

August 2015:  SDCI enacts a new internal interpretation for the minimum clear floor space in a dwelling unit (the 70-7 rule).  The smallest (least expensive) unit sizes in all of our congregate housing projects are no longer legal. To date the 70-7 rule remains unpublished in any public document.  Applicants can only discover the issue only through a correction notice during permit review.

February 2016: Neiman Taber submits a CCAB appeal of the 70-7 rule for congregate residences, arguing it is inconsistent with the published code interpretation manual, past practices, historical models of small unit housing, and counterproductive to the very habitability and livability concerns that it aims to support.  The CCAB ruling upholds the 70-7 rule but acknowledges that we have a point.  The CCAB asks SDCI to develop a code change to accommodate the design of small congregate units.  SDCI has taken no action to date.

June 2016:  New SEDU rules are enacted apply the 70-7 rule to the entire living area of the unit. Many unit designs in the 250-280sf range will no longer meet SEDU requirements.  Note: 300sf is the bottom end of the range for a small regular studio apartment.

What now?

With the advent of the new SEDU rules, all of our projects with SEDU units will be going back to the drawing board for a re-design to enlarge the units.  An example of this change is shown below, where a project loses two units per floor under the new SEDU rules. In a nutshell, the unit count drops by about 10%, and the average unit size goes up about 10%, with rents rising accordingly.
BEFORE - Floorplan Layout Using Old SEDU Rules

AFTER - Floorplan Layout Using New SEDU Rules


Congregate housing production, which peaked at over 1000 units per year, has been reduced to a trickle.  Going forward, the SEDU development that largely took its place will be virtually indistinguishable in density and unit size from conventional studio apartments.  Barring any future changes, microhousing in Seattle is essentially done. There will be a few projects around the margins (mostly ours) that will continue to keep the format alive in the technical sense.  But in terms of providing an affordable alternative to conventional development at a production scale where it can make a meaningful difference?  Nope.  Game over.

How can we fix the situation?

Policymakers need to hear from citizens that care about these issues.  Here’s what you can do:

·         Ask the city council to fix the frequent transit definition in this year’s omnibus code cleanup. This is the lowest of the low-hanging fruit of the HALA agenda.  This problem has inhibited small unit development in a number of neighborhoods for almost two years, with no end in sight. Contact CM Rob Johnson.

·         Ask SDCI to revoke the new director’s rule for SEDU’s.  Size requirements beyond the building code minimums should not be superimposed on a housing type that exists for the sole purpose of being a smaller and more affordable option. Contact SDCI Director Nathan Torgelson.

·         The Office of Housing needs to revise the rules for SEDU participation in MFTE.   The rates for SEDUs should be evaluated using the same criteria as all other types - that participation is about 50%.  It is currently at about 4% (one participant for 25 active projects). Contact CM Tim Burgess and OH Director Steve Walker.

·         Ask SDCI to follow through on the CCAB request to develop building code language that will support small affordable congregate microhousing. Contact SDCI Director Nathan Torgelson.

·         Put re-legalizing congregate microhousing on the council agenda. In the meantime, request that the city sell their listed surplus properties in NC3 zoning to be developed as microhousing to make up for the suppression of market production. Contact CM Rob Johnson and CM Tim Burgess.

·         Ask the city to create an executive branch staff position for a HALA cop – someone whose portfolio is dedicated to challenging city staff and agencies when their actions are inconsistent with the intent of HALA. Contact Mayor Ed Murray.


Thursday, March 24, 2016

New Project - Lake Washington Waterfront Homes

View of new homes from dock

After 3 years of review cycles and project setbacks, work has finally begun at 10202 Rainier Avenue South. Four dilapidated cottages have recently been removed and excavation for the new homes is currently underway.

Expansive views across Lake Washington inspired the orientation, site layout and window placement for all three new homes which gently march up the steep sloping property.  Each home includes a 2 car garage, large recreation room with an outdoor shower and additional space to for water gear and boat storage.  The Kitchen/Living/Dining levels feature an open floor plan, wet bar and fireplace, and a home-office niche off the kitchen.  Large sliding doors open onto decks with deep overhangs, strategically positioned to allow for year-round enjoyment of the stunning natural setting.  

Original 1930's cabin and dock


Original upland cottages 1930's - 1960's

Landscaped  entryway between houses


House 1, waterside, is 3,255 SF with a 500 SF garage.  The upper level contains the master suite with a wrap-around, covered balcony, 3 additional bedrooms with 2 bathrooms and a laundry room.  House 2 and 3 are identical in size and layout and are 2,385 SF with a 550 SF garage.  The bedrooms, located at the mid level to allow the kitchen/living/dining to take advantage of the expansive water views above, contains the master suite with a wrap-around, covered balcony, two additional bedrooms with a shared bathroom and a laundry room.       


Access along east side-yards to shared waterfront and dock
An easement has been created along the eastern side-yards for direct access to the shared waterfront and dock.  A portion of the original dock will be removed along the waters edge to reclaim the natural shoreline for native habitats and a new natural beach will be created for recreation and boat storage.  A bio-retention planter for storm-water mitigation will provide separation between the private rear yard of the waterside home. and shared beach

View of proposed waterfront house from beach

View from dock after cottage demolition

View towards Mercer Island , Seward Park and beyond 


Projected completion slated for spring 2017.  Stay tuned for construction progress postings!