Five takeaways from the PSU Institute for Sustainable Solutions event on ADUs

LaRobert Liberty, PSU Institute for Sustainable Solutionsst month, the PSU Institute for Sustainable Solutions (ISS) teamed up with the PSU Alumni Association for an evening spent discussing accessory dwellings, specifically striving to answer the question of whether accessory dwelling units—or ADUs—can effectively address Portland’s needs for affordable, equitable, and sustainable housing.
 

The sold-out event spoke to the high level of interest in ADUs among Portlanders. Since the late ‘90s, ADUs have been promoted by local government officials as a sustainable form of infill development and a way to address housing scarcity. In recent years, incentives offered by the city of Portland have given rise to a flurry of ADU development—along with an increase in questions about how these new dwellings are being used.

In 2016, ISS launched its Small Backyard Homes initiative to examine issues including cost and financing and ways to increase the development of ADUs for affordable housing. ISS Director Robert Liberty moderated the panel and shared some of the information that ISS has gathered on the topic working with students and faculty members from across Portland State.

1. ADUs are hot in Portland—but not always for rent

There’s been a mini-boom in ADU construction in Portland since development fee waivers were introduced in 2010. A recent PSU survey found ADU construction numbers on a steady climb with numbers of new units doubling from 2014 to 2016. The survey also found that less than half of the ADU owners (44 percent) were actually offering them as long-term lease rental units. A quarter of those surveyed (26 percent) said they were offering their units as short-term rentals via platforms like Airbnb. Another 14 percent were just keeping the unit as extra space. The remaining owners were living in their ADUs.

2. Policy intervention is needed to make ADUs a viable affordable housing solution

Cully resident Michelle Labra, who was unable to attend the event, was able to find an affordable ADU in her neighborhood when her family was facing eviction from their apartment. It was a happy ending, but Cameron Herrington, anti-displacement coordinator for the nonprofit Living Cully, said the story is the exception that proves the rule: the ADUs owner had the capital to finance its construction and were willing to rent it at a sub-market rate.

“We need public policy intervention to make this story replicable,” Cameron said.

He suggested reserving ADU development incentives for owners willing to offer affordable housing—not those looking for easy money on Airbnb. City officials heeded that advice last week when they made permanent a fee waiver for ADU development—available for those who are not planning to use their new ADU as a short-term rental.

3. Designs are flexible

Sample ADU designs Margarette Leite, Associate Professor of Architecture with PSU’s Center for Public Interest Design (CPD), has been working with colleagues and students to address the design and cost components of ADU development. The result: Five prototype designs that are easily replicable and suit a range of ADU purposes. From a “hipster” version that uses shipping containers as the core of its design to a pre-manufactured ADU that comes in two pieces and is quickly assembled on site, the prototypes show the range of what’s possible in cost containment. The CPID is also working with Portland ReBuilding Center to put together kits of reused materials that can be easily assembled for ADU construction. Working with ISS, Leite and the faculty and students working with the CPID is in the proof-of-concept stage now, talking with homeowners interested in using the prototype designs for their own ADU construction.
 

4. Financing is a challenge

Adam Zimmerman, CEO of Craft3, a financial institution based in Portland, is in pursuit of the quintessential ADU loan. Something that would be within reach of the average homeowner and would make ADU development even more prevalent around the Portland metro area. Craft3, which is active in Oregon and Washington, has a stated mission to strengthen the resilience of businesses, families and nonprofits, including those without access to traditional financing. While high-income homeowners have an easier time financing ADU project, lower income homeowners don’t. Craft3 is working on developing a loan that would be based on the future rental income that the ADU will generate. Adam says right now the market is in the proof-of-concept phase: “We need to prove that we can build the homes, prove that we can finance them, and prove that we can create capital.”  

Panel on accessory dwelling units. 5. But ADUs hold real promise as an achievable housing solution

Marshall Runkel, chief of staff for City Commissioner Chloe Eudaly, closed the panel on a hopeful note. Thinking that ADUs can provide a solution to Portland’s housing problem? “This is not science fiction,” he said. “Our housing problem is not monolithic.”

Runkel envisions a future where permitting, financing, and construction of ADUs is a breeze and a thriving market has emerged to meet the housing needs of the city. The first step? That extension of the ADU Systems Development Charge fee waiver that was passed by the Portland City Council last week.