Jump Starting the Benefits of ADUs in Minneapolis

Let’s talk about ADUs. First the definition from the City of Minneapolis:

An accessory dwelling unit (ADU) – also referred to as a granny flat, mother-in-law apartment, or carriage house – is a self-contained living unit that can be located within the walls of an existing or newly constructed home, or that can be an addition to an existing home. It can also be a freestanding structure on the same lot as the principal dwelling unit.

Currently, the Minneapolis ADU ordinance requires the property owner to live in the single-family home or duplex in order to add an ADU. The last published information showed that 104 ADU permits have been issued in the first three years they have been allowed. This is an extremely small number considering the potential. Minneapolis builds twice as many single-family homes in an average year than the total number of new ADUs built over the first three years of the ordinance. As of the last census, there are over 12,000 single-family homes that are used as rentals in Minneapolis and over 23,000 rental duplex and triplexes that could accommodate an ADU.

http://www.mncompass.org/profiles/neighborhoods/minneapolis/lowry-hill-east

The solution to substantially boost construction of ADUs is to allow landlord-owners in good standing to build an ADU on their 1-4 unit rental properties. Based on the success of other cities, we could increase our rate of new ADUs up to five times by expanding the pool of people allowed to build them. Portland has allowed both owner-occupant and landlord-owners to build ADUs to help add smart housing options to neighborhoods and add much needed rental housing.

As a landlord myself, and as someone concerned about our city’s current shortage of affordable homes, I would encourage the City of Minneapolis to expand its three-year-old ADU ordinance to include landlords who don’t occupy their 1-4 unit rental buildings. How do I know this would work? I own rental properties made up of duplexes and triplexes and I would start adding 2 and 3 bedroom ADU’s on my properties as soon as an ordinance eliminating the owner-occupant requirement was passed. Unlike your average homeowner, I’m already comfortable with the idea of being a landlord.

My neighbors often cite small-scale housing as their preferred method for adding new housing in their neighborhoods. Allowing experienced landlord owners, in good standing with the city, the ability to create new, stable and safe housing options for individuals and families makes sense. Not everyone wants to live in large apartment buildings and the key to solving our current rental housing shortage is adding a diversity of new living options and having these options available throughout the city.

Increasing the building of ADUs would also encourage the preservation of older housing stock. In many of our very established neighborhoods with unique single-family, duplex and triplex homes, an owner might consider a tear down to construct a new building with more units. Allowing that property owner to add an ADU might be more cost-effective and satisfy neighbors concerned about maintaining the visual character of the neighborhood. Any new detached ADU is required to match design elements of the existing house and has to be smaller than the current structure. Many ADU’s would fit inside the current building by legalizing another unit in the basement or attic. In these cases, no additional building would occur outside the current house.

By allowing smaller scale development of ADU’s instead of the proliferation of large apartment buildings by very large developers, the city can benefit from the fact that most owners of small-scale rental buildings live locally.

These are the 3 different examples of the types of ADU’s that could be built.

http://www.marcy-holmes.org/images/documents/Accessory_Dwelling_Unit_Powerpoint-082314.pdf

The big benefits to changing the ADU ordinance are:

● They can add 1, 2, or 3 bedroom apartments to desirable areas that can be much more affordable than other types of new construction.
● No houses need to be demolished. This acts to preserve naturally occurring affordable housing.
● Scarce additional land doesn’t need to be secured which makes building an ADU or adding an apartment inside an existing building more affordable.
● Maintains visual character of the neighborhood since they have to match some elements of the house currently on the property and they have to be smaller than the current house with strict limitations to their size.
● If the ADU is a detached additional structure, they have to be built in the back of the property so they often can’t be seen from the street.
● Creates more homes in the midst of serious housing shortage.
● When built inside an existing home, it allows existing homes to adapt to the changing needs of our city’s older population and smaller household sizes.
● Each ADU increases the value of the property, this increases Minneapolis’s tax base.

Expanding the ADU ordinance by allowing landlord owners to build ADUs would also support the goals of the Minneapolis 2040 comprehensive plan by adding more housing options (up to fourplexes) throughout the city. Adding one additional housing unit to the thousands of existing 1-4 unit rental homes allows development throughout the city and opens opportunities for people to live in areas they didn’t have access to in the past. We can add smart, unobtrusive carriage houses to neighborhood interiors, in desirable areas with a shortage of available housing options. Neighborhoods could add dozens of ADU homes with little impact to the neighborhood. We can eliminate concerns about concentrating car traffic as with large-scale apartment buildings. And it’s an attractive option for owners because building an ADU doesn’t require the purchase of additional land and often, it can be added inside the current building.

There are other ways to make the process friendlier to landlords and homeowners alike when planning and building a detached ADU. Architect fees can add approximately $10,000 to the cost of an ADU project, and the planning process can be time-consuming. If the city created a half-dozen pre-approved ADU plans available to the public for free, those costs would be eliminated, and we could significantly reduce the time city planners spend on individual projects. Individual variations of these pre-approved plans could still offer the ability to create unique looking carriage houses at more affordable costs but still shorten the amount of time to approve the plans.

Portland had dramatic increases in the building of ADU’s through opening it to owner occupied and non occupied owners.  It also encourages the building of ADU’s by  waiving the fees for new construction to make this a more attractive option for property owners. In Portland, this can save $14-$19,000. (Minneapolis could waive these fees as well as a way to jump start adding housing now). Additionally, Portland has also subsidized some ADU’s to help them get built. One of the conditions in Portland is the new ADU can only be used for long-term tenants, and not for short-term Airbnb-type rentals.

City of Portland ADU Permit Trends

As in Portland, lawmakers in California are pursuing reforms to increase ADU development and mitigate their housing shortage. The state banned cities from enforcing occupancy limits that were used to prevent ADUs. San Diego and other cities have waived construction permit fees to spur growth. In Los Angeles, permits tripled in 2017 once reforms were enacted at the state level.

http://www.buildinganadu.com/adu-blog/building-an-adu-in-la

Minneapolis is changing and growing. But that change doesn’t have to be jarring and sudden. It can be incremental and done in a smart way. If Minneapolis is committed to expanding more housing options for all people, it can be a partner in the solution through a cooperative effort for pre-approved ADU designs along with the elimination of development fees like other cities have done, costs will come down quickly, and ADUs will proliferate.  Changing the ADU ordinance to include Landlord owner properties will create a jump start to adding new housing options right away.

 

 

 

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31 Responses to Jump Starting the Benefits of ADUs in Minneapolis

  1. Adam Miller
    Adam Miller May 29, 2018 at 12:08 pm #

    Allowing an additional unit to be added to existing small multifamily structures sounds like a no-brainer proposal to me.

  2. Matt Steele
    Matt Steele May 29, 2018 at 12:17 pm #

    This change would also encourage owner-occupants to build ADUs. I would consider building an ADU to replace my garage but for the owner occupancy requirement. I don’t want a deed restriction that limits the potential market for my property should I choose to sell, which by extension reduces the value of the investment I’d make in new housing.

    • Theo Kozel May 29, 2018 at 2:28 pm #

      This is a really great point, Matt.

      I’ve been investigating building an ADU behind my house and likely will not do so. My reasoning has everything to do with questions of return on investment. Due to a shortage of workers and an increase in the cost of construction materials, spending $200K to build an ADU would not be out of the question…and my house is worth roughly $220K (per the 100% reliable Zillow). So for me I’d be spending nearly as much as the value of my house to build an ADU, and at the same time that ADU would add restrictions to potential future buyers.

      I still have a need for more space (due to aging parents), but it seems like I need to go the old-fashioned route of trading up to a bigger house since it’s a much more financially secure route to go.

  3. Tom Quinn May 29, 2018 at 12:21 pm #

    Wouldn’t lots large enough in the city to add an ADU be exceptional? Most lots are 6,000 sq.ft. or less.

    • Andrew Owen May 29, 2018 at 1:36 pm #

      There’s no lot size requirement tied to ADUs; residential-zoned lots of any size are potentially eligible for an ADU. However setback regulations still have to be met, and there are additional space regulations, for example setting a minimum distance between a detached ADU and the primary dwelling. On lots with large primary dwellings it is possible that an ADU would not fit.

    • Bruce Brunner
      Bruce Brunner May 29, 2018 at 2:44 pm #

      Hi Tom, The lots my duplexes are on average 5,200 sq ft and would fit an ADU just fine based on the requirements in the ADU ordinance. If anything, I would like to see the 20′ max height raised to 24′ so I don’t have to cheapen the construction. All of my duplex/triplexes are 2 1/2 stories and average about 32-35′ in height. Moving from the current 20′ to 24′ still allows the ADU to be much smaller.

  4. Andrew Owen May 29, 2018 at 12:53 pm #

    The relevant city code sections are in Title 20 (https://library.municode.com/mn/minneapolis/codes/code_of_ordinances?nodeId=MICOOR_TIT20ZOCO), chapters 520, 521, 525, 535, 537, 541 and 551.

    The city provides the text of the ADU-enabling ordinance, as well as a summary of the regulations, here: http://www.ci.minneapolis.mn.us/cped/projects/ADU

  5. Andrew Owen May 29, 2018 at 1:30 pm #

    I find it irrationally interesting to puzzle out the overlapping regulations related to ADUs and rental housing 🙂

    For example, consider an existing 2, 3, or 4-unit rental property in an R3, R4, R5, or R6 zone. 5+ units is allowed here as-of-right, so at first glance the ADU ordinance doesn’t change anything. The difference is in parking: adding an ADU does not require adding a parking space, which would be required for just adding a normal rental unit. So the net ADU change here is that you can add a small unit without adding parking, but the new unit can only be rented while the building is owner-occupied.

    (Of course, this difference is negated if you’re within 1/4 mile of a high-frequency bus route, which eliminates the requirement for an additional parking space.)

    • Andrew Owen May 29, 2018 at 1:44 pm #

      One thing I’d missed before is that if a property already has 3 or more units, you can’t add an ADU:

      §537.110:
      “(1) The principal residential structure shall be a permitted or conditional single-family or two-family dwelling…”

  6. Eric W May 29, 2018 at 1:33 pm #

    I wonder if it would be possible to build a new house in front of a smaller one and have the original be considered the ADU. In my neighborhood (Longfellow) there are a number of properties with a very small house built near the back of the lot. My understanding is that these were originally intended to be temporary houses that the owners would live in while saving up to build a bigger house toward the front of the lot, but for whatever reason (the Great Depression, perhaps?) the larger house was never built.

    • Andrew Owen May 29, 2018 at 1:43 pm #

      Two relevant parts of the ordinance:

      §537.110:
      “(1) The principal residential structure shall be a permitted or conditional single-family or two-family dwelling…

      (6) An owner of the property must occupy at least one dwelling unit on the zoning lot as their primary place of residence.”

      So it looks like the building that was there before the ADU will always be the “principal structure,” but you can satisfy the owner-occupancy requirement by living in either the principle structure or the ADU.

      • Eric W May 29, 2018 at 1:51 pm #

        But the requirement that the ADU be smaller than the principal structure seems a hindrance in this case.

        • Eric W May 29, 2018 at 1:54 pm #

          Also that it must be in back of the lot, according to the article.

      • Bruce Brunner
        Bruce Brunner May 29, 2018 at 2:57 pm #

        Andrew, You are pointing out restrictions in the current ordinance which is why the ordinance has had limited success so far in it’s ability to add more housing.

        That is why my article propose changes to the ADU ordinance so it can be rolled out so hundreds of ADU’s can be built each year. The current ADU ordinance was a great first step and I applaud the previous City Council for passing it but it still is very restrictive and why we only averaged 35 permits in the first 3 years. Since our comp plan MPLS 2040 is proposing up to 4plexes everywhere, the city council could incorporate this ordinance change and it would cause a dramatic jump in the number of ADU/housing units being built and be one of several avenues the city uses to more housing for everyone. As stated in the article, we have over 30,000 rental 1-3 unit buildings that are non owner occupied. Adding another unit still keeps it within the concept of 4 plex’s throughout the city.

  7. Samantha S May 29, 2018 at 1:46 pm #

    Discussing with a client ADU options for his duplex in Seward. If we assume that Mpls will be generally upzoned, allowing up to 4-units in many parts of the city, would an ADU now be a short term solution?

    Also, if an ADU, it would be built under IRC, not IBC, which applies if over 2 units in Mpls. Of course, this is only for units within or attached to an existing structure.

    So what then is the overlap between an ADU and a legal 3rd unit? And what code should they be built to?

    I’m still seeing major issues with financing the over-garage ADUs. Any comps out there for that yet?

    I really want ADUs, or similar, to work for more people in Mpls/ St. Paul. Just seems the ones who really need it, can’t afford it.

  8. Mike May 29, 2018 at 2:18 pm #

    This is a tactical question – is there any way to get an ADU built into a garage where you did not build the garage with full frost footings. I have plenty of room on a 2nd floor of the garage but we did it 1 year before the ADU passed so not knowing that would be an option.

    Is there a way to “retro” footings for such a building, or can you somehow protect the plumbing in particular coming in from frost heaving etc…

    ?

    • Samantha S May 29, 2018 at 2:35 pm #

      Hey, Mike.
      It’s definitely not the ideal way to do it, but you could add strip frost footings for the garage.

      The bigger challenge is connecting to the house’s plumbing. Water and waste should be 48″+ underground. You’ll need that trenched from the house, and then come up in a protected/ conditioned space in the garage. So you’ll need a partial crawl space at least.
      This could get complicated and potentially damage the integrity of the existing slab. Be sure to bring in a professional mason to assess.

      But I’m sure it all can be done- just at what cost.

  9. SSP May 29, 2018 at 5:39 pm #

    Seems to me the lot location and height restrictions for detached ADUs are about right, your adding density in a SFH-duplex area, so a critical amenity for adjacent residents is the use of the yard and allowing ADUs that are much higher would eliminate any sun for the neighbors.

    Anyone done this? The utility issue seems a deal killer from a cost perspective. The electric feed comes from the alley so that should be cheap, but running water and sewer from the back of the lot into the existing structure or out to the street could be really expensive. Does anyone know if the City requires a new connection at the street or if you can run it in the existing connection inside the house?

    • Samantha S May 29, 2018 at 7:35 pm #

      No new connections. Consider it a baby “feeding” off the main house.
      The costs have run from the low to mid- $100K’s. It is truly a little house and needs everything a typical house does, just smaller.
      Which goes back to my point that those who really need this, for either extended families or affordability’s sake, find the cost an impossible hurdle.
      Would love to see the city develop a loan or subsidy program specifically for this type of housing. Owner-occupied jump to front of the line.

    • Adam Miller
      Adam Miller May 29, 2018 at 8:33 pm #

      Our neighborhood has trees that are much taller than any of the houses. We still get sun. Turns out it’s pretty far up there.

  10. Serafina Scheel
    Serafina Scheel May 30, 2018 at 6:54 am #

    We had difficulty finding financing for an over-garage ADU when the ordinance first passed. Finally settled on a HELOC, but then the bids came in too cost-prohibitive (almost $250K). There were some issues with the homeowner’s insurance also. We’ll eventually explore other options when the girls are done with college in a couple of years.

    • Samantha S May 30, 2018 at 1:19 pm #

      Hi, Serafina. Your experience is exactly what I’m talking about. The lending world hasn’t caught up to this movement. So only option is a HELOC, which you could literally buy anything with, and is really reserved for those with a huge amount of equity.

  11. Cut Red Tape May 30, 2018 at 4:38 pm #

    great points made by Bruce that really seem to be potential to help address the lack of low income housing that Mpls has currently… I have thought about building ADU’s and based on the ADU restrictions and limitations as to what can be built, and considering new construction codes it is tough to make it work financially for the vast majority of owners as it currently is written. Time to ease and update the ADU restrictions and provide incentive to responsible owners to build and increase density (in appropriate areas). RE Tax incentives/discounts for owners could be a possibility. I also agree with prior poster about parking congestion issues that can become concerning in certain areas (not sure if ADU code requires extra parking pads on the property which I would recommend in certain areas).

  12. Walker Angell
    Walker Angell May 31, 2018 at 10:12 am #

    I’m a fan of ADU’s and would like to see them increase. OTOH, I understand the concerns of residents.

    Seemingly, an increasing number of people in Portland, including former supporters, don’t want any more non owner occupied ADU’s in many parts of the city. This due to problems of noise, trash, parking and other issues. While many landlords do a good job of taking care of their properties and problems, some do not. Policing this can be tough with a lot of regulations that make it difficult and time consuming to deal with problems.

    In one case a new tenant played quite loud and offensive music during much of the night and had frequent loud parties. IIRC, it took neighbors nearly 2 years to resolve the problem. In this case the police were somewhat limited in what they could do and the landlord was unhelpful. This could have been problematic with an owner occupant as well but, in theory anyway, much less likely.

    So, how do you assure residents that such situations will not become problems?

    • Bruce Brunner
      Bruce Brunner June 1, 2018 at 4:40 pm #

      Hi Walker,

      Your point is well taken but any property whether it’s an owner or a renter can cause these identical issues. I’ve been at some comp plan meetings where for some, they think any renter is a potential issue to them but I point out 52% of the residents in Minneapolis are renters. Any renter in any building in the city could do this. In Minneapolis, there is a 10:00 “curfew” on noise which is well defined. I’ve use it to remind some of my tenants and they get it right away, if not, the police get called and actions can be taken.

      Samantha, I’ve already started working with lenders and a HELOC isn’t the only avenue and as this continues to grow so will lenders adapting to service this segment. Rome wasn’t built in a day and there will be innovation that comes with this.

  13. Eric W. May 31, 2018 at 10:33 am #

    There is an ADU at 33rd Ave S and 35th St in Longfellow/Howe, which you may have seen if you went on this year’s home tour. It’s a well built, attractive building, but I don’t see what qualifies it as sharing design elements with the main building. It is a very modern-looking structure behind a larger 1920s house (duplex, I think?), so what it shares must be subtle.

    Not a complaint; just an observation. But others might not like it.

    • Ben O May 31, 2018 at 5:37 pm #

      Eric, the siding has to be the same material as the original structure. I think that is the only requirement with regards to keeping the unit similar to the existing unit.

      I think this requirement is too restrictive because a lot of older homes are constructed with costly materials that most housing is no longer made of unless they are really high end homes: stucco, brick.

      And other homes are made with materials that are just too high maintenance that people aren’t interested in adding to new construction: painted wood.

      • Eric W. June 1, 2018 at 10:28 am #

        Interesting. Does “original structure” here refer only to the house or could it be the structure that the ADU is replacing or being attached to? This is an over-the-garage apartment with flat siding of some kind (maybe Hardie panel?) behind a stucco house.

        • Ben O June 4, 2018 at 7:58 pm #

          Most current garages are slab on grade without frost footings. So you couldn’t rework a garage to turn it into an ADU. You would have to tear it down and start from scratch.

          You would have to match the current stucco house.

          Or you could do it in phases:

          Reside house first

          Build ADU

          • Eric W. June 4, 2018 at 8:06 pm #

            Hi Ben. You might have read my comment out of context. I was describing an existing ADU (at 35th St. and 33rd Ave in Howe) that is behind a stucco house, but is not itself sided with stucco. So if this is a rule there must be ways around it. Good news for people not wanting to pay for stucco; bad news for people wanting consistency in design.

  14. Gene Tierney
    Gene Tierney May 31, 2018 at 4:47 pm #

    I agree with Bruce, if we want ADU’s to be part of the solution to how we increase density without removing blocks of houses and building large apartment buildings in their place, we have to have an ordinance that is not so restrictive that it doesn’t work. We should at least allow non-owner occupied ADU’s within transit corridors. I also think a hold on property tax increases resulting from new ADU construction should be delayed for a period of time in order to provide an incentive.

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