Accessory Dwelling Units in Portland Promise “Smart Growth”

New changes by the City of Portland just put an Accessory Dwelling Unit (ADU) within reach of most homeowners. On March 3, 2010, Portland City Council waived the System Development Charges for ADUs for 3 years, subtracting up to $15,000 from the cost of developing an ADU. Council also voted to increase the size limits to 800 SF or 75% of the primary structure. These policy changes have opened a key window of opportunity for the creation of ADUs in Portland that local home builders say brings the promise of a new spurt of “smart growth” just when the city’s economy needs it the most.

ADUs, also called “granny flats” or “backyard cottages”, are separate, compact spaces – complete with bed, bath, kitchen, and entry – that provide a second dwelling on residential property.

History of ADU Policy in Portland

Before World War II, Accessory Dwelling Units were a common fixture of American neighborhoods. They integrated easily into existing communities, provided affordable housing options for young and old, and facilitated intergenerational living for families.

But after WWII, national patterns of urban development shifted toward low-density sprawl and new zoning rules emerged that segregated land uses and housing types. During this period, ADUs fell out of favor and, in fact, were outlawed in most urban areas across the country.

After several decades of sprawl – accompanied by urban blight, car dependence, and loss of greenspace – communities across the country began advocating for smarter growth. The City of Portland became an early leader in this movement, and was among the first to reallow ADU development. But it was not until 1998 that the City began promoting ADUs by relaxing minimum area requirements; eliminating owner-occupancy requirements; and permitting ADUs in most residential zones.

Despite this progress, onerous maximum SF requirements and systems development charges (SDCs) of up to $15,000 remained. With an average ADU building cost of $75,000, these SDCs and square footage restrictions caused most consumers to either abandon ADU projects entirely or alter projects to avoid ADU designation and permitting.

So, the many “smart growth” benefits of ADU development – each firmly aligned with the City’s Portland Plan – have largely remained unrealized. These missed opportunities include:

1. Increasing the supply of affordable housing in a way that blends easily with existing neighborhoods;
2. Supporting the creation of a compact urban form that supports walking, transit, and vibrant neighborhoods;
3. Providing an independent living option for elderly/disabled that promotes intergenerational living;
4. Generating extra rental income for owners and tax base for the City;
5. Providing increased residential development without major new infrastructure.

Key Roadblocks Removed

In 2008 the City began a review of its zoning codes and regulations governing sustainable building technologies and forms. The effort, called RICAP5 (Regulatory Improvement Code Amendment Package 5), was guided by a Citizens Advisory Committee of key stakeholders that recommended removing the regulatory roadblocks to ADU development.

The committee’s work met considerable success. On March 3, 2010 Portland City Council removed all SDCs for ADUs. Council followed soon after by increasing maximum size restrictions to 800 SF or 75% of the primary structure, whichever is less. In Mayor Sam Adams’ words: “This couldn’t happen at a better time, given the significant hardships faced by builders and the construction industry, and in terms of our goals for sustainability in the community.”

The last boom in ADUs was during the Great Depression. Now, according to local builders and policymakers, ADU development might help homeowners and the local economy emerge from the Great Recession. But the window of opportunity is not open forever; the City’s easing of ADU development regulations ends on June 30, 2013.

Potential Benefits of ADU Projects to Homeowners and the Community

ADUs promise to benefit homeowners and the community as:

1. Local and sustainable drivers of neighborhood prosperity and vitality;
2. Dwellings that significantly improve value and marketability of properties;
3. Inexpensive projects with high built-value and return on investment (ROI);
4. “Plug-And-Play”, easy developments.

Many in the home building and real estate community see ADU development as a boon for Porltand’s future. “It’s the people that make Portland interesting – young entrepreneurs who bring business to the city and life to the sidewalks,” says local broker Kama Dersham. “ADUs are hip and affordable for these folks and will help keep Portland vibrant and viable.”