Of course, the affordable housing shortage isn’t just a big city problem, and big cities aren’t the only ones trying to tweak policies to kick start ADU development. Faced with its own need for middle-income or “workforce” housing, the Renton City Council voted in October 2017 to cut ADU permit fees in half. Based on the modest success of the program so far — over the past year there were five applications for new ADU permits versus five total between 2010 and 2017 — the city council voted in mid-November to extend the fee cuts until the end of 2020.
“I’m encouraged but not ecstatic about the progress,” said Renton Planning Director Chip Vincent. “I want to shoot for double-digit [ADU construction]. … I think once ADUs get a ground hold here, they’re going to take off.”
The council resolution cuts construction permit and impact fees in half for all new ADUs. Doing so brings the permitting costs from about $22,000 per backyard cottage to $11,000. To encourage subdivision developers to include ADUs in their projects, the resolution waives all permit and impact fees for every third ADU built in a subdivision with 10 or more houses.
If they do take off, Vincent said, ADUs will help address a few needs. First, they can provide a slightly bigger range of housing options to a city that predominantly has single-family homes with some multifamily, some condos and a handful of townhomes mixed in. Second, ADUs allow the 101,000-resident city to maximize existing infrastructure investments since they add density without a need to build new sidewalks, sewer lines and the like. And, finally, the cottages will become a form of privately developed housing that is affordable to middle-income renters, as well as potential rental income for existing homeowners looking to offset rising property taxes.
“Renton, similar to all of our cities in King County, is seeing the housing affordability crisis and trying to create more missing middle housing options for our workforce,” said Jennifer Anderson, King County manager with the Master Builders Association of King and Snohomish counties, which supported Renton’s ADU legislation.
“We feel like we’re ground zero for dealing with rising cost of living as a suburb of Seattle,” said Vincent, the planning director.
According to Zillow, the median monthly rent for a two-bedroom apartment in Renton grew from about $1,200 at the start of 2012 to $1,800 now. In that same period, the median home price grew from $243,000 to $466,000. A 2016 report on affordable housing needs and policies in King County found that 40 percent of Renton households are cost-burdened, meaning they pay more than a third of their income goes toward rent or a mortgage.
Renton started allowing ADUs in 2010. To assuage the “built-in biases in single-family neighborhoods against ADUs,” said Vincent, the city created stringent regulations. Whereas Seattle and other cities allow for both attached and detached units, Renton allows only detached backyard cottages. They can be a maximum of 800 square feet, must have an off-street parking space, must match the main house’s architectural style, and the homeowner must either live in the main house or in the cottage.
Yet Renton developers didn’t start knocking down Vincent’s door for ADU permits when they were first made legal. Between 2010 and 2017, just five ADUs were permitted in the city, Vincent said, “I was blown away that we’re not seeing more permits for these," he said. "We were talking to developers and they said they can’t afford to do it. The margins are so small with an 800-square-foot ADU that, by the time they pay all the fees, it doesn’t make it feasible.”
The cut in fees appears to have gotten the ball rolling with the five ADUs permitted in the past year. It is an admittedly small sample size, but Vincent believes more may be on the way. “We’re just trying to figure out what to do to economically incentivize,” he said. “I’m looking forward to the point when we’re getting run over with too many ADUs. Until that conversation happens, we’re going to keep whittling away at the problem.”
In Seattle, attached ADUs have been legal since 1994 and detached units since 2009. Construction has remained slow, with a total of 682 attached units built between 1995 and 2016 and 292 detached units built since 2009. Seattle has focused on looser regulations to allow larger ADUs, allowing two instead of one per lot, permitting them in more places in the city, removing off-street parking-space requirements and instituting other measures, all in the hope that it will increase the number of units.
The focus on adjusting regulations rather than permit fees comes in part because permit fees are relatively small in Seattle. Matt Hutchins, principal at CAST architecture, said two recent backyard cottage projects he led paid about $3,000 each in permit fees. The biggest costs for Seattle ADU construction are materials and labor. Eliminating the parking-space requirement can save about $10,000 per cottage, said Hutchins.
But Seattle’s incentives remain theoretical for the time being. The city has been tied up for over two years in a legal fight with the Queen Anne Community Council, which is trying to prevent the Seattle City Council from enacting the new regulations, an issue that still appears far from settled.
