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Rental Property Portland

Oregon’s ADU rules allow for more income-producing rentals

From OregonLive.com 

Put a spare home or two in your backyard: Oregon’s ADU rules allow for more income-producing rentals

Oregon neighborhoods with rows of single-family houses may see the addition of smaller homes built to help ease the state’s longstanding housing shortage and high costs.

As of Aug. 1, Portland homeowners can legally have two small dwellings sharing a residential city lot with their existing house. Most likely, a self-contained unit will be created by carving out space from underused rooms inside the house and the other unit would be a standalone structure on a foundation in the backyard.

Since 1996, Portland’s zoning code permitted a small, secondary home to be added to a residential lot anywhere in the city. Since 2017′s Senate Bill 1051, these accessory dwelling units (ADUs) have been allowed in cities throughout the state.

An ADU, commonly called an in-law flat, can also be created by converting an unfinished basement or structurally sound garage into new living quarters. Or owners could erect a second story while building a new garage.

The allowance implements part of House Bill 2001 and Portland’s Residential Infill Project (RIP) to encourage a greater variety of home types, including duplexes, triplexes and quadplexes, on land previously reserved for single-family houses.

More code changes are on the horizon to comply with House Bill 2001. This sequel code project, called “RIP 2,” will add cottage clusters, a group of detached homes around a central common space, to options for land zoned R2.5, R5 and R7.

Other types of multifamily “middle housing,” designed to be in scale with single-family houses, will be approved in lower-density land zoned R10 and R20.

Find out if your lot can have more units with this map.

Another law that will be implemented is Senate Bill 458, which was developed in partnership with Oregon Habitat for Humanity affiliates and the Oregon Home Builders Association. This law requires cities to allow homes in middle housing projects to be divided into individual lots as a way to expand options for first-time homebuyers.

All of these changes will be adopted by July 2022.

Portland has also recently taken steps to legalize inexpensive options that can be critical for those with the fewest housing choices, said Eli Spevak, who chairs the Portland’s Planning and Sustainability Commission.

The Shelter to Housing Continuum Project zoning changes approved in April expand single-room occupancy housing and group living arrangements, and permit living longterm in RVs and tiny houses on wheels on residential property.

“This is another example of Portland leading in the land use arena, like ADUs, which have been allowed in Portland in various forms since 1981,” said Eden Dabbs, spokeswoman for the city’s Bureau of Planning and Sustainability.

House Bill 2001, a law passed by the 2019 Oregon Legislature, and the Residential Infill Project were prompted, in part, by a 2014 letter from Spevak, before he was on Portland’s Planning and Sustainability Commission.

Spevak, who owns Orange Splot, which designs and builds cohousing and other small communities, spoke of the mismatch between houses and resident needs.

“Demographic shifts have yielded smaller households, and an increasing number of Portland residents don’t need and can’t afford the typically sized home,” he wrote in the letter that was signed by about 40 building professionals and small-home advocates.

Six years ago, Joe Zehnder, Portland’s chief planner who retired in July after 20 years with the city, championed for smaller, attached homes in single-dwelling zones as a way to curtail larger houses, dubbed McMansions, from replacing older houses.

Need for small homes

More than half of all households in Oregon are occupied by one or two people, but the vast majority of land zoned for residential is occupied by single-family houses, said Rep. Julie Fahey of Eugene in a July 2020 webinar presented by the Home Builders Association of Metropolitan PortlandMetro and the Build Small Coalition.

Speakers explained the need to build small-scale homes that tap into utilities and services, like roads, sewers and schools, already existing in neighborhoods near employment, retail centers and transit corridors.

Since housing is the single largest monthly expense for most Americans, seniors nearing retirement see an accessible ADU as a way to downsize and cut costs while staying in their neighborhood.

Smaller dwellings also let owners receive rent to help offset mortgage payments. But additions to an existing property will result in a property tax increase.

The City of Portland has been waiving expensive system development fees to owners who agree to not use an ADU as a short-term rental for 10 years.

Although affordable one- or two-bedroom urban homes are in demand, critics don’t like ADUs’ added density and parking issues as well as the decrease in gardens, trees and creature habitats. Privacy can be intruded upon when windows look into a neighbor’s house or backyard.

Recognizing these concerns, Portland’s rules on setbacks, height and lot coverage that apply to single-family houses also apply to properties with ADUs.

Real estate experts like Kurt Misar, a broker with NW Property Advisors, say state and city governments’ push for greater residential infill entices developers to convert a house on a large, dividable lot into up to four limited-sized units.

Some new home builders already include an option for a home within a house to be used as an apartment with a separate entrance that grants privacy to a member of a multigenerational family or tenant.

Changing neighborhoods

Longtime small housing advocate Kol Peterson was introduced in the Home Builders Association’s webinar as the “godfather of ADUs.”

Over the years, he has offered courses on how to design and build a legal spare home through his Building an ADU consulting company. Thousands of people curious about or committed to adding a home attended his Build Small, Live Large: Portland’s Accessory Dwelling Unit Tours.

Peterson, the author of the 358-page book “Backdoor Revolution-The Definitive Guide to ADU Development,” has been promoting the benefits of second homes on a single-family residential lot to homeowners, environmentalists and government decision makers since 2011.

He said more people have found value in having expanded, flexible space during the coronavirus pandemic as they set up home offices and study areas, and as multiple generations of families decided to live together.

Peterson said House Bill 2001 will generate more residential housing over time, while maintaining the historic character of neighborhoods.

The city of Portland issued 600 ADU permits a year in 2017 and 2018 and about 300 permits a year in 2019 and 2020, he said.

Peterson predicts there could be a slight increase in applications to build two ADUs by homeowners and developers.

“It’s fair to say there won’t be dramatic changes to the architectural fabric [because of House Bill 2001], but over 100 years there will be more smaller, more affordable houses than if we continued” as before, said Peterson.

Small home design ideas

Little homes can range in style, from farmhouse to glass-box modern, and size, from about 260 square feet, equivalent to a single-car garage, to more than 800 square feet, the living space of the average U.S. home before 1950.

A detached shelter can cost more than $300,000, while garage and basement conversions are about $125,000, according to Peterson’s posting data on Accessorydwellings.org.

Lina Menard of Niche Consulting, a longtime tiny house advocate who earned a master’s degree in urban and regional planning at Portland State University, is offering interactive e-courses on ADUs with Missa Aloisi of Hinge Architecture, tiny houses with Ethan Waldman of The Tiny House, and co-housing with Brian Squillace of Yestermorrow design-build school as well as Menard’s Digital Downsizing E-Course.

— Janet Eastman | 503-294-4072

jeastman@oregonian.com @janeteastman