The ADU Hour

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The ADU Hour w/guest Ethan Stuckmayer Aug 25, 2021

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[00:02:18] Kol Peterson: Welcome, Ethan, good morning. [00:02:22] Ethan Stuckmayer: Thanks for having me.[00:02:23] Kol Peterson: Yeah. I'm excited for this, I was bantering with Ethan before this and I was kinda thinking what is exactly is the professional experience that you need to have to do this job that nobody else in the country has ever done before?What an interesting position you've been put in. For people's benefit, could you describe kind of your particular role within DLCD as far as your relationship to House Bill 2001, which we will describe in a minute?[00:02:47] Ethan Stuckmayer: Yeah. So I'm the Senior Housing Planner at the Department of Land Conservation and evelopment, which is really state of Oregon's land use department.We regulate what are called the Statewide [00:03:00] Planning Goals, and there's 19 of them, one of those is Goal 10. Goal 10: Housing, which is my domain, I guess, and this is the area which we implement the intent and the purpose of Goal 10. House Bill 2001 in 2003 are two pieces of legislation that advance DLCD's work in housing.And prior to House Bill 2001 and 2003, really, the 2019 session DLCD did not have a housing team, which we do have now, which is really exciting.[00:03:30] Kol Peterson: Do other states have a Goal 10 equivalent that is like a statewide housing goal mandate or is that unique to the state of Oregon?[00:03:39] Ethan Stuckmayer: I don't think it's unique to the state of Oregon. What is unique about the state of Oregon is just the context within which that sits. The state of Oregon is one of the few growth management states, Washington, there's others, that have high preference on preserving forest and farm lands and regulating the development [00:04:00] within a certain geographic boundary, urban growth boundary or, or similar.So I know that the state of California has things like The Housing Element that their Housing Community Services Division at the state level manages. But from my understanding, the state of Oregon is, is really quite unique in that. [00:04:17] Kol Peterson: All right. So let's describe House Bill 2001 in two minutes for a random Planner in N ew Hampshire, who's never heard of it. What is House Bill 2001? [00:04:26] Ethan Stuckmayer: Sure, so House Bill 2001, really pretty simply end s exclusive single family zoning in big and medium sized cities and the state of Oregon. So as a requirement to House Bill 2001, cities must basically update their development codes to allow certain middle housing types, which I'll define in just a bit, but those need to be allowed in every residential zone that also allows for the development of a single family detached home.So, converting those lower densities zones into a little bit higher density zones. Cities are still [00:05:00] allowed to regulate the citing and design and the look and the feel of middle housing, as long as those standards don't cause what's called unreasonable cost and delay. So basically those cities can apply only standards that they might only apply to single family detached homes, previously, things like building height, setbacks, lot coverage, all of those standards can't place an undue burden on the development of middle housing. That's pretty short version of House Bill 2001.[00:05:25] Kol Peterson: And describe for us this term, middle housing you're using that term that most people have been familiar with was coined by Daniel Parolek, "Missing Middle"housing. What is it? Are those the same thing? Why, why are we using the term "middle housing"? [00:05:38] Ethan Stuckmayer: Yeah. So middle housing, for the state of Oregon is a well-defined term. It's a collection of missing middle housing types that Perolek talks about. For the Oregon context, there is five: duplexes, triplexes, quadplexes, townhomes, and cottage clusters. And the reason why Oregon's not using "missing middle" housing is because it's [00:06:00] a long-term policy.We're hoping that in 20, 50 years, we're not missing those middle housing types anymore. It's just called middle housing. It's just part of our housing continuum.[00:06:10] Kol Peterson: Now House Bill 2001, unfortunately did not capture ADUs within this middle housing definition, which has some weird administrative history that we don't need to go into, but can you describe what House Bill 2001 did for ADUs, explicitly? [00:06:26] Ethan Stuckmayer: Yeah, I think the beauty of House Bill 2001 is that it's got so many different layers. For ADUs House Bill 2001 followed up the previous bill that you were just talking about, Senate Bill 1051, that required cities to allow ADUS in conjunction with a single family detached home. And city could only subject those ADUs to what are called reasonable standards. So basically House Bill 2001, with some years of experience of implementing Senate Bill 1051, the legislature identified a couple standards that cities were using that were maybe more unreasonable than reasonable.So [00:07:00] basically House Bill 2001 clarified that off-street parking requirements and owner occupancy of either the primary or accessory dwelling were quote unquote unreasonable for ADUs specifically. Yeah. [00:07:11] Kol Peterson: Right. For those who are on the call, it's the opinion of many people, including myself, that owner occupancy and off-street parking requirements are the two most common largest poison pills for ADUs that you will see prominently throughout regulations across most of the country. If you look at cities that actually do allow ADUs, they are oftentimes have those provisions in effect, so this is a really good example of a very simple one line legislative effort that effectively changes the course of the potential for ADUs to happen. Not that not to say that they will happen in great numbers, but that they can now potentially happen in Oregon cities. So how many cities does House Bill 2001 impact in the state of Oregon? And what does the total population that House Bill 2001 effects compared to the [00:08:00] overall state policy? [00:08:02] Ethan Stuckmayer: Yeah. So House Bill 2001, applies to cities and counties, but cities outside of the Portland Metro with a population of 10,000 or greater, and then cities within the Portland Metro of 1000 or greater. And there's different thresholds within those broad categories, but in total that's 56 cities across the state and three metropolitan counties. And then there's quite a few cities who are just under those thresholds. There's maybe about five or six cities that are definitely coming online in the next couple of years, but that's pretty close to two and a half million people in the state of Oregon. In the whole state, that's about 60% of the population. [00:08:43] Kol Peterson: Yeah. So 60% of the population is captured by hospital 2001. Okay. You know, and, and that's we have, I guess it's a fairly small population relative to a lot of us states. But th but the majority of the population is covered by this.[00:09:00] All right. So tell us about the history of house bill 2001 came into being.[00:09:03] Ethan Stuckmayer: Yeah, well that's tough, because there's a lot of history, there's kind of like two major history threads here. The first is the long-term history of race and income segregation in America. And then that plays into the short-term history of just rising home prices brought on by housing market that's really failed to keep up with the number and the capacity of the units that we've really needed over the past decade or so. Naturally that short term history is influenced by that long-term history and the conversation about middle housing is is important because it used to be part of our housing market, right? It used to be these row houses, multiplexes kind of all over our, our state and our country. And they're even referenced as kind of like traditional housing types because that's traditionally what we've seen built across the country. But I think in [00:10:00] the even shorter term, House Bill 2001 came into being as part of a follow-up to what the city of Minneapolis did in 2018, which was the first kind of city-wide elimination of exclusive single family zoning.And Oregon kind of took that a step further and did that on a statewide level, but really it learned from the success of Minneapolis, where they will able to create these coalitions of, of, of interest groups or advocates that don't usually play on the kind of same team and brought them together for this, this greater purpose of creating more housing, housing choice, housing options, and then leading to more affordable housing. And I think the lead up to House Bill 2001 saw a lot of housing advocates teaming up with the home builders association and Realtors teaming up with their housing advocates. Some of those things you just don't really see on a regular basis legislative session to session. So House Bill 2001 really I think, learned and was successful in [00:11:00] part because of City of Minneapolis. [00:11:02] Kol Peterson: Yeah. I think one of the themes this week has been the impact of this coalition building at a local, regional, and now a state level and the importance that that's had in terms of this general movement towards small infill housing or middle housing or whatever we're going to call it.So, what is your role and DLCD's role, more broadly, in developing regulations for House Bill 2001. For those who aren't familiar with the general rule making process, there's the law, the legislation, then there's the rulemaking process. So what is DLC D's role within the rulemaking or regulatory development process?[00:11:37] Ethan Stuckmayer: Yeah. So DLCD has got a very singular role in the state process. Like I mentioned, there's these 19 statewide planning goals and we're kind of like the protector of those statewide the Oregon statewide land use system. I say protector. I think some others would probably say more like passive observers or even some other people might say we're the [00:12:00] arbiters of the land use system. So DLCD's role is to be that face in front of the land system. Implementing it statewide and interpreting rules and, you know, playing referee at some points. And so basically when legislation comes through, right, the legislature sets the land use policy direction, that gets codified in statute, and then basically DLCD's role in that is to translate those statutes, which are broad policy directions, into actual rules and regulations to put forward an operationalize that that policy direction. So my role within all of that was to lead the rule-making effort for House Bill 2001, along with a huge group of advisory committee members to create the framework around how cities can and should and must implement House Bill 2001. [00:12:55] Kol Peterson: We'll talk more about the rulemaking process in a minute. Before we get there, let's talk [00:13:00] about the number of states staff DLCD department of land conservation and development staff that are 100% dedicated towards the implementation of these new standards across the state. [00:13:09] Ethan Stuckmayer: Right. So now, finally, DLCD has a housing team, which is an incredible asset, I think, for the state.So right now we've got four full-time staff members who are working on housing implementation across the state, focusing on Goal 10. And then we're supported by probably close to five others on a part-time basis. So we've got this big crew now to focus on monitoring, reporting, rule writing, enforcement, reviewing standards, providing technical assistance.And so it's really kind of incredible to see the amount of work that we've been able to do now that DLCD has a housing team, right. It's kind of new core work for DLCD.[00:13:50] Kol Peterson: And you referred to this as a big crew, and I just want to put a pin in that and be like, there's only four people for the whole state of Oregon that are executing this bill [00:14:00] that is going to have such significant impact across two thirds of the state as a reference point for other states that are considering this. The amount of bang for the buck there is really significant. Perhaps we'll see, we'll see how this all plays out. [00:14:12] Ethan Stuckmayer: Fingers crossed. Yes, that's correct. [00:14:14] Kol Peterson: So how is monitoring for compliance with the state standards going to be handled?[00:14:20] Ethan Stuckmayer: Right. So now that we've actually got some capacity to do that monitoring, reporting, and enforcement, it makes that job of fulfilling the intent of Goal 10 a lot easier. But historically DLCD has never really had much authority to play in an enforcement role. We manage the process that's known as the Post Acknowledgement Plan Amendment Process.For people outside of Oregon, that's basically the process by which cities and counties submit their new comprehensive plan and development code language, and the state kind of reviews it and says, yes, you meet all of the state's laws and requirements, that's kind [00:15:00] of DLCD is domain there. And thankfully we already have that infrastructure in place, so we can kind of utilize that. And there's some checks and balances there. House Bill 2001 is unique in that I think the legislature played a little bit of hardball to some extent with House Bill 2001. There's definitely more authority for DLCD to enforce the provisions in House Bill 2001. Specifically the state's model code for middle housing, which really has an enforcement mechanism. If cities fail to comply with House Bill 2001, by the specific deadlines and timelines. Then the state's model code removes or preempts the local control of how middle housing gets regulated in their city. So it's yet another tool in the toolbox for the department. [00:15:47] Kol Peterson: I had the perception going into the rulemaking process that model code meant we were talking about the best possible gold standard platinum level standard code. And that isn't [00:16:00] necessarily what the model code is, is that accurate? [00:16:03] Ethan Stuckmayer: Yeah, I think it's a blend of reasonable standards with best practice standards for regulating middle housing.It's definitely, I would say quote unquote goes above and beyond what most cities would consider reasonable regulations for middle housing, and that's really the intent of the model code is to be this shining star in some manner, but also be able to be implemented, right? It has to be drafted in a way that can be implemented without further amendment or adaptation. [00:16:35] Kol Peterson: And just to give some ground-truthing for those who are not intimately involved with this process. Let's give an example of model code for parking for say a quadplex what is the state's model code for parking for a quadplex going to be? How is that framed? And then what is the minimum compliance standards for a quadplex if a city doesn't want to use the statewide model codes? [00:16:56] Ethan Stuckmayer: Right. Yeah. For even more context there, we've got the [00:17:00] model code, which is very specific set of standards. And then what Kol mentioned was these minimum compliance standards, which are basically just setting the range of acceptable outcomes.And the model code is just one of those kind of cherry-picked acceptable outcomes. So the model code for parking might say for a duplex, you do not, or you can not require any off street parking spaces for that duplex. And then in the minimum compliance standards that says a ci…

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The ADU Hour w/guest Michael Andersen Aug 17, 2021

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Michael Andersen: Thanks for the invitation. Kol Peterson: I'm just gonna start by having you say a few more words about yourself that are not covered by your bio, that you would like for people to know about you. You've done a lot of things over the years that are relevant to the questions we'll be talking about today is so provide a little context for things about you that we should know.Michael Andersen: Sure. I, I became obsessed with housing policy and transportation sort of in tandem. When I was a reporter in suburban Portland covering Clark county, Washington I was covering county government and like two parts of county government are covering poor people who are interacting with the criminal justice system and covering rich people who are building new homes or even middle class people who are building new homes on the fringe of the urban landscape.And I was seeing all these poor people, but get being screwed by the fact that they were being forced to live in [00:03:00] places without that we're not designed for people without cars. And then they would own a car, but it'd be a crappy car. And then their car would fall apart. Then their life would fall apart.And I was like, there's got to be better. Our solution. Meanwhile, I was spending time with all my 20 something, friends in Portland who didn't have cars and they didn't care. Like, and so I was like, it's not as simple a story as that. Like there's a lot of privileges both ways, but that was sort of what got me thinking about transportation and housing.So since I've been working on public transportation, journalism and biking journalism, and since more recently housing advocacy, I've been sort of doing content in various ways. Kol Peterson: So tell us a little bit about your own family's experience, living in an ADU. Michael Andersen: Yeah. It started with just trying to continue to live with our housemates.So I was interested in living with housemates when I started a little business 10 years ago because I was new, I was going to be socially isolated otherwise, and I needed to save money it worked in both dimensions. And then my wife moved in and then our housemates had a kid and then we were going to have a kid.We [00:04:00] were like, this is too much for this 1942 building. And we're gonna have to figure out some way to do it. And we decided that best way was for us to keep them whole while they built an ADU. And so we lived as tenants for several years. And it was great. It was a perfect setup for both of our kids to grow up together as best friends and the they had to move for a job recently.So we've relocated since, but it was a really rewarding thing. Kol Peterson: All right, so you have some direct personal experience with ADUs in particular, and we're going to talk about ADUs for sure, but we're also going to focus on this broader conversation of middle housing today. So let's start off with talking about Sightline Institute first. Tell us a little bit about what Sightline Institute is and what's the mission of Sightline Institute? How would you describe it to other people for those who are not familiar with it? Michael Andersen: Sure. We're a sustainability think tank founded in 1993 based in Seattle, but covering the Pacific Northwest.So my, my boss's big idea is that you can't get people to care about their planet. The evidence seems to suggest, but maybe you can get people to care about their [00:05:00] ecosystem. And so we focus on the Pacific Northwest as an ecosystem across the border states and nations, and write about the ways that we can make it the best, most welcoming, most sustainable version of itself as a model to other ecosystems.Kol Peterson: Is there any other examples of similar Sightline Institute types of think tanks out there in other regions or comparable institutions that you can think of in the United States. Michael Andersen: We're definitely weird, but Rocky Mountain Institute is a little bit similar. There are a lot bigger now founded in Colorado, I think.And there's my my colleague Eric is trying to working on creating one for Appalachian actually. So there may be more.Kol Peterson: Cool. All right. So how tell us about the scope of the material that you cover for the Sightline Institute. Michael Andersen: I write mostly about housing, a little bit about transportation and that overlap, which is parking, which I love talking about parking, in the Portland and Oregon areas.So mostly focusing on the statewide level and regional level and what we can do there, but also a little bit of Portland stuff to the extent that it's [00:06:00] like a model for other cities. Kol Peterson: And how does the material that you cover for Sightline Institute fit into the institutes larger mission? Michael Andersen: I think one of our niches is that we are a sort of environmental organization that is really into economics and harnessing the power and insights of economics for our progressive sustainability sort of vision.And one of our insights, or one of our decisions, our perspective is that we desperately need to reduce the need for energy over the longterm without making it feel like we're giving anything up. And the way to do that is to allow urbanization, but we've banned urbanization because of zoning laws that have made it impossible for people to basically choose where they want to live, which is good for lots of reasons.So we try to work to undo that while also not being blind to the other complications that creates for disruption and so on. Kol Peterson: You previously wrote for a bike blog, local [00:07:00] bike blog. That's quite beloved, quite popular called Bike Portland. Can you talk about the material that you wrote for Bike Portland and how it relates to what you covered at the Sightline Institute?Michael Andersen: Yeah. So when I came to Bike Portland, it was just 2013. Portland was sort of swinging into a big boom in home building was coming out of a four year, like plateau, like almost no home building. So like there was, it was obvious that there was going to be some sort of a rent crisis. We already had a rent shortage and then the rents were starting to climb.And I was really interested in like, we should be solving this problem, but we should be solving it in a way that makes things more proximal. Like if you look at the greatest biking cities in Southeast Asia or Northern Europe, they're all full of these little close together homes. And that's the bedrock.People are not biking that many miles, they're just biking a lot because there are a lot of short trips. And the only way we create short trips is by building ADUs and attached homes and apartment buildings that are all close to jobs and everything [00:08:00] else. So that was the case I was making. And I had a weekly column about that and got more and more obsessed with sort of that side of how to improve biking and by living in the places where biking is already good.Instead of having to spend all our wheels, trying to make biking great in more and more places, which we should be doing both of.Kol Peterson: This is off topic, but in South Asia, Southeast Asia, and I would imagine Europe electric, motor scooters are becoming more common, right? That's not really taking off in the US.I mean, those little like ride on hop on scooters are really taking off, but not like the kind of ride on scooters that give you longer distances. And they're electric. What are your thoughts about electric scooters and their potential. Are those as good as bikes or what are the differences? What are the ways in which like electric scooters are?Provided serving the same role that bikes could play. And how does that deal? How do you think about that in terms of urban form? Yeah, that's a good question. I don't really have a strong perspective, I guess. But they're better than cars. They're worse [00:09:00] than bikes. Bikes are better than scooters and worse than skateboards.Michael Andersen: So yeah, I mean, I think it's like if a, if a tool is going to work, you should be able to use it. I'm pro transportation to the extent that it infringes on the other types of trends of more efficient transportation, that's a problem. So like when those, when like a motor vehicle is using a bike lane to the exclusion of it, being comfortable for people to bike or scoot in, then that's a problem.But I don't know exactly where you draw that line. Kol Peterson: Yeah. Okay. I've just been, I have an electric ride on scooter. I love it. And I'm just surprised that it's there's so few of them in the U S wherein, I would imagine they're that they're quite popular now. Michael Andersen: Yeah. I don't know why. I mean, it's taken over in Northern Europe too, I think.Yeah. Not taken over, but there's a lot of it Kol Peterson: Anyway, that was a side topic, but I figured you'd have some thoughts about that. All right. So what sources do you rely upon for staying abreast of the latest legislative policy discourse related to [00:10:00] housing nationally? Michael Andersen: My main filter is Twitter. So I use Tweet Deck as like a Twitter app that lets use like organize it all by, you know, most recent first.And so it takes away some of the poisonous dunking fixation that the Twitter algorithm pushes you towards. So I highly endorsed that. And then it lets you segregate by topic. So I can have a column for housing people and a column for transportation people. If anybody's interested, you can look at my housing list on Twitter, it's a public list.And I use that to constantly update that. Kol Peterson: I bet you people are interested in that. Cause the fire hose is a real deal. I guess if you're not a reporter, it's like, it's just overwhelming. So I guess my, I guess my question is like following up on that, is there a primary source of like information source that TweetDeck tends to push you towards, or is it individual DIY blogs out there across the, across the internet? Michael Andersen: Yeah, I used to, so I once heard, you know, [00:11:00] William Gibson, the William, but no, no, this was David Carr, the times, his old, New York times, his own media columnist. He said that like Twitter is like dipping a teacup into a glittering sea of information.And that's how he likes to enjoy it. And you don't worry about the sea as it flows by you just dip your tea cup and you enjoy that information. So I knew I liked that, metaphor.Kol Peterson: That it's apt. But does it do to my question, is it you're dodging the question young man. No , is there a primary news source that you tend to be directed towards?Michael Andersen: No. No, it's just, it's just a painstakingly building, figuring out who's smart on this stuff. Kol Peterson: All right. So you've recently written about a lot more recently about state level zoning standards. What do you believe are some appropriate frameworks for when states attempt to reform local zoning statewide?It's evident to me based on my observation of the ADU market, that the legislation that has occurred [00:12:00] in Oregon and California has been extremely effective. Tell us your thoughts about that. Yeah. Michael Andersen: So you're going to talk more about that this week, I know in Oregon. But the both in Oregon and California, and to some extent in a few other states, Washington, Connecticut, just recently Utah there've been laws that sort of set of basic standards for like you can, you have, you have control over a lot of your zoning, but you're not allowed to ban the following options.And you know, the following options is a different list based on which state you are. In Oregon, we've had an accelerating pace of state level actions to set certain pro-housing standards at the local level. First with ADUs a few years ago then followed up with middle housing, duplexes, triplexes, fourplexes, cottage clusters and then just in the last session just weeks ago when that allows lot division for middle housing, which is as you were talking about yesterday with Jake, hugely useful to get it actually built.So we've also passed some like statewide level affordable housing [00:13:00] mandates on a sweeping bipartisan basis that say that like, you're like you have to give extra space and unit count to projects that provide regulated affordability. So I think that essentially makes that possible, no matter the zone which is also great for building an integrated city.So Yeah, I think I'm really bullish about this trend of using the state to solve this problem that we created piecemeal city by city, by city, but we create everywhere. So like, I've got like, I can, I can kind of go into like, sort of the game theory of it. Kol Peterson: Yeah. Michael Andersen: So it seems to me that the, you know, like it's, it's a prisoner's dilemma, right? So if you're familiar, like two people constantly lose if they are purely self interested, but if they can act together in concert, then they can win mutually compared to the constant losing. And that's essentially, I think how the vision for state zoning action works. You've got, so if you think about the county.You've got. So if you look at all the cities around Puget sound, for [00:14:00] example. You've got a wide variety of different amounts of land zoned for attached housing and to the Seattle and Tukwila having about half of their land and a few cities like richer cities, almost none of that land. With various cities in the middle, if say, Tukwila decided we are going to try and relegalize cities, we're going to say, you can live wherever you want in our city.You can build a home here. And we are gonna also, that's going to create a tax windfall and we'll use that property tax windfall to spend, to make sure that poor people can live here as well. And we'll build this wonderful situation. It would not solve the problem because Tukwilla would also need every other city around Puget sound to be doing something similar or else it's a drop in the housing bucket.Like it could not solve the problem on its own. And so, as a result, if you're an elected official in Tukwilla, you're thinking, well, I could do this and I have an incentive to solve this regional housing shortage, but I don't have the means to do it. So why would I ever try? Like, why would I go through the political cost of doing so, and the state level, [00:15:00] the politicians have, not just the incentive, not just a motive, but they also have the opportunity, they have the means.So that's the puzzle that state level action solves. Yeah. Interesting way to frame it. Thank you for putting it in those like game theory terms. So in Connecticut they recently passed ADU legislation that allows cities to opt out. Maybe you can describe that a little bit for us before you answer the question I'm about to pose, but presumably this legislation was a form of political compromise in, in an idealistic, you know, ADU legislative bill.Kol Peterson: How do you feel about this particular legislative political tactic? Michael Andersen: Yeah. So I don't know a ton about Connecticut. My impression is, and I've seen some of the advocates work on this is one of the most zoning segregated states in the country. There's very few like either regulate affordable or market affordable homes in a lot of the state and especially where the jobs are rich and the fight -the bill that [00:16:00] was just passed a law legalizes ADUs up to, I think, a thousand square feet on almost any residential property.And, but it says, and also d…

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The ADU Hour w/guest Tracy Morgan Aug 10, 2021

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This week's guest is Morgan Tracy. Morgan Tracy, a member of the American Institute of Certified Planners has been actively involved in the Oregon land use planning in both long range planning, projects and development review for the last 25 years. He has worked for the cities of [00:01:00] West Linn, Lake Oswego, Tigard and has been with the City of Portland for the past 15 years in both the Bureau of Development Services and the Bureau of Planning and Sustainability. Currently, he is a staff project manager for Portland's Residential Infill Project, which seeks to increase the range of permitted housing types while lowering housing costs in single dwelling neighborhoods.Kol, what are your thoughts on our interview with Morgan? Morgan has been very deep in the weeds and details of overhauling, a complex residential zoning ordinance for the City of Portland for the last five years. This task was daunting and a journey, not just for him, but for all of the engaged citizens who saw this overhaul as a great opportunity to make a difference in the future of the city that likes to chart new territory nationally in matters, related to urban planning and infill. Capturing his perspective on how this process could be translated to other jurisdictions is hopefully going to be valuable for future research and application of middle housing, zoning, rewrites. Kelcy, what were some of your takeaways?[00:02:00] Morgan gives great examples of how one can participate in city council meetings in an effort to make change in one's local jury state. And why it's crucial that citizens get involved with the process of rulemaking as a planner, as a planner, deeply involved in quite possibly the most progressive zonings shift in the country.Morgan shares his experience as someone on the front lines, as the liaison to the community and rule makers. Let's get to our interview with Morgan. Kol Peterson: [00:02:25] Good morning, Morgan Tracy: [00:02:26] Morning, morning, Kol and Kelcy, it's great to be here, thanks for having me. Kol Peterson: [00:02:30] Thanks for being here. Morgan, the Residential Infill Project is familiar to those of us who are in Portland, obviously, let's assume that people are not familiar with it, but they're fairly sophisticated in this general urban infill topic, very familiar with ADUs. Can you describe for us what RIP is for somebody who might be unfamiliar with it from outside of the city of Portland?Morgan Tracy: [00:02:52] Yeah. It's a bit, it's a bit challenging to do this in a condensed form cause it took five years of work. So boiling that down, I can [00:03:00] concise.As a big challenge, but here, here we go. I would say that the Residential Infill Project was the city's first major overhaul of the single dwelling zoning since corner lot duplexes were allowed in 1991. So it had been about 25 years when we got started. Now, these changes expand the types of housing allowed on most lots to include duplexes, triplexes, fourplexes, and options to create additional ADUs in nearly 90% of the single dwellings zone neighborhoods, simultaneously new tools to limit building sizes will ensure that this development maintains the look and feel of those neighborhoods.And together, these changes allow a broader range of compatible housing types that are comparatively less expensive than new single family homes, making neighborhoods more accessible, more inclusive, and more sustainable over time. Kol Peterson: [00:03:45] All right. I should have asked you this , but I'm gonna ask you, now, what is a good title for you to give some framework for what your role was within the residential input project? Morgan Tracy: [00:03:56] So my, my official title with the city is a City Planner II, which [00:04:00] doesn't mean much to many people. So, but extensively, the work that I'm doing is, is managing the project.I coordinate our team, our staff, our consultant work, work on the project timelines and make sure that we deliver a project on schedule when we can. Generally, I go by the title of project manager. Kol Peterson: [00:04:18] So this project running five years, how did the history of Residential Infill Project come to be and why in the world did it take so long to get there? Morgan Tracy: [00:04:29] Well, as you can imagine, it's a bit of a complicated project, a little bit of, a little bit of controversy involved. But let's, let's start with the history.So the project began in 2015 and in 2015, we are hearing a lot of calls about concerns resulting from outcomes from infill development. So we were seeing lots of small homes being demolished and replaced by big, expensive new homes. We, we're seeing about more than a house per day being demolished on average.And we're also seeing the housing prices in 2015 were beginning to price out families earning a hundred percent of the Median [00:05:00] Family Income. So that essentially translates to about half of the families in Portland would be unable to afford to purchase a house in the city. So recognizing the city could not prohibit tear downs and simply applying stricter limits to new development would tighten the supply of new housing, which exacerbates housing costs.We brought together two objectives, which was addressing the scale of new development and increasing housing options in neighborhoods. And part of the, I think the real challenge in this project were these are two almost at-odd objectives that we had to balance and bet with the public in multiple scenarios, multiple occasions So you know, you, you asked why it took so long.There were several steps along the way, either fortunate or unfortunate. But first off we started under a different administration under Charlie Hale as mayor, and he had decided towards the end of his term that he wasn't gonna run again, but he wanted to see some product.And we weren't at a point where we can deliver a new code and new maps and all that stuff. So, [00:06:00] we 'd agreed to bring forward a concept plan, which essentially lays out the basic trajectory that the project is going to follow. And the positive side of that is it's good to take the temperature of your decision makers to see if you're going in the right direction before you really invest a lot of time and effort.The downside of that is the project took so long that by the time we got back to city council, four years later, it was an almost entirely new council. We just had one city council left. So that was a bit of a fruitless exercise. We also spent 14 interesting, exhilarating months with the planning and sustainability commission.We went through almost every single detail of that project, point by point by point by point in a series of monthly meetings. And about two thirds through that process, the planning and sustainability commission, after hearing public testimony and considering the objectives, and then the proposals, gave us some rather very different direction, which caused us to go back to the drawing board and start over on our code.[00:07:00] Not entirely, but it really changed the fundamental building blocks that we come to them with. So we had to redo our analysis, redo the code, and that took some more time. Unfortunate outcome of that was we were also about to lose two of our planning commissioners, they were terming out.And so by the time we got back to them, we were really in a rush to get a decision from them. And so we came back to them with this revised proposal and said, here it is, here are the stats, the data, and the analysis, what do you think? And we'd unveiled a displacement risk report and didn't really spend a lot of time going through that report. Understanding the implications, what the data was really telling us.And so they felt rushed to a decision and they had a rather split decision. It was a five to four decision. And so that created a little uncertainty at city council. We had to take time to work with the council offices, go through these reports, help people understand what they were telling us. We started the city council process and right before we were about to finish, COVID struck and that's through another five months [00:08:00] on the end.So now a little bit of that's me, but a lot of that's just the circumstances of the project. Kol Peterson: [00:08:05] Just as an observer slash public participant, I could tell this was an extreme, highly engaged public process and there was so much commentary from the public on this.And I, I couldn't imagine having to balance all of those different inputs that you guys had to manage. So we're going to talk a little bit more about that, but just to give people some context for that, how many public comments would you say the City of Portland received on the residential infill project?Morgan Tracy: [00:08:33] Close to 15,000. We also were, at one point we sent out 123,000 notices to property owners. Kol Peterson: [00:08:41] Yeah. So this would be on the scale of a very highly, both engaging and engaged topic in terms of the impact that it was going to have on people and the level of input that they wanted to provide, relative to most public processes. Would you say that? Morgan Tracy: [00:08:58] Yeah, it was [00:09:00] both super engaging, everybody had an opinion, no matter where you were what, what sort of venue you were at. Just about everybody you talk to either lives in, or has lived in a single family home or single family neighborhood and has opinions about that.So there's that, and then the geography was city-wide. So that's you know, that's a lot of area, a lot of peoples that are involved. Kol Peterson: [00:09:19] Can you talk about Bureau of Planning and Sustainability's role in developing policies and regulations for RIP, and maybe talk about, just as a general 101 for those of us who aren't familiar with the process, the Planning and Sustainability Commission's role relative to the Bureau of Planning and Sustainability its role, and then the City Council's role. How does a policy become law at a local level? Morgan Tracy: [00:09:44] You're asking for the version of, "I'm Just a Bill." Kol Peterson: [00:09:46] Yep, "I'm Just the RIP". Yeah. Morgan Tracy: [00:09:49] So BPS, the Bureau of Planning and Sustainability is in charge of legislative projects to change the city's zoning and development regulations. So we have the Bureau of Development Services which [00:10:00] does the implementation. They do the over-the-counter permit review and development review. Our role is really to go through the legislative process to make those changes happen. We make those decisions based on statewide planning goals. So the state has a statewide planning framework, and they might hear a little bit more about that in tomorrow's session. But we also have our own comprehensive plan and our comprehensive plan identifies 700 plus policies that relate to housing, economic development, environment. And really it lays out the city's trajectory for its growth and development over the 20 year period. The Planning and Sustainability Commission is our advisory body. So we would, as staff, we develop these projects based on public concerns, public calls for change, and we'll bring projects to the Planning and Sustainability Commission and others that they are the recommending body to the City Council on these projects.The city council is the formal decision making body. Kol Peterson: [00:10:54] Got it. So as a staff project [00:11:00] manager working on this project with so much public input and the interests of not only the city council members, but also the Sustainability Commission. What are some general guidelines that you had in mind for incorporating all these different inputs of public ideas and suggestions? Morgan Tracy: [00:11:19] It's tough. Right? So like I mentioned how these are sort of two competing objectives that we're trying to balance and not surprisingly, we heard testimony on both of those ends of the fulcrum.But I think just sort of taking a step back, planning is really a reflection of the community's values carried into the future. So we take the input of a lot of public when we developed a comprehensive plan, those translate into policy objectives for what we want our future to look like.But when we're translating those values, one thing that can be a little bit dangerous is people are resistant to change, right? So if a community is resistant to change, understanding that change is inevitable and understanding of the thriving city is one that adapts and embraces and is prepared for that change.You kind of [00:12:00] need to look beyond some of the immediacy of the concerns that are being expressed and think about the bigger picture and who's benefiting and who's burdened by these decisions.We heard a lot of arguments that the solution to our housing affordability problem was just making sure that those small, less expensive homes weren't being demolished.As long as no one's having children and people aren't moving here, that solution might work, but that's also not realistic. Just ask the real old timers in Carmel, California. Very precious little homes that are $2 million and up. And land use matters. We also carry this history of not hearing from, or actually some might suggest listening to the underserved and underrepresented communities like communities of color, renters, and the youth.So we really had to apply an equity lens to our wayfinding on this project to carry forward proposals that were honoring the best parts of our community values, while also keeping an eye on a more prosperous future for all Portlanders. So in this topic about single family zoning, we heard from a lot of single family homeowners that already had houses. That really [00:13:00] wasn't the crux of the problem we were trying to solve. Compatibility of neighborhoods, the longevity and the livability of neighborhoods certainly was a concern, but to address the housing crisis, it was really about the people that weren't in those homes. Fortunately, we also completed this eight year planning process to complete the comprehensive plan, so we had a lot of policy guidance that we could rely on it to give us direction on that. Kol Peterson: [00:13:22] That's really interesting point that I hadn't thought about that from a planning perspective, given these like policy overlays, that the fundamental audience that you were trying to draw inputs from wasn't necessarily those who are currently living in single family homes, but those who might be able to in the future, which exists right now, it's just that that's not the audience that you would necessarily directly go to, generally speaking, for that kind of information. You're rather you're looking for everybody else who isn't in those single-family homes almost. Morgan Tracy: [00:13:53] Yeah. Yeah. Even more confounding as the generations that aren't born yet. Right. So we're looking at population trends and what [00:14:00] household composition trends are looking like to project what that future need might be. One of the stats that we repeated and in our outreach was about the dwindling size of households. Fewer people per house, but the buildings themselves were getting larger and larger. So there was this disconnect between the demographic need and, and the development trend.Kol Peterson: [00:14:20] Portland has somehow managed to put into place this Residential Infill Project Plan that enables for middle housing and two ADUs in a manner that hasn't been done elsewhere yet in the United States. And I'm curious if you have observation as to why it is that Portland was someh…

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The ADU Hour w/guest Alexis Stephens Aug 03, 2021

Show notes

Alexis Stevens is the co-founder of tiny house expedition, the DIY tiny house, dweller and advocate. Along with our partner Christian Parsons, they inspire others to rethink housing through thought, provoking storytelling, educational events, and resource sharing.Their work includes the acclaimed educational documentary [00:01:00] series. Living tiny legally. Living, tiny legally. It was featured on Washington post NPR business, insider parade magazine, curved entry, hugger. Cool. What were some of your takeaways from listening to this episode? Well, I'm in a real kick right now with mobile dwellings.So it's really fun to banter with Alexis who is equally wonky about tiny house on wheels regulations. The tiniest moment is very fractured and stealthy by nature. So it's fun to try to anticipate how the stealthy movement will actually play out. In the future technology has enabled mobile dwellings, like RVs vans, tiny homes, and park model RVs to be far more convenient and practical than they would have been for living 20 years ago.And I expect that we will look back almost consoling only to the days when tiny houses on wheels weren't even legal to live in, in residential zones. And think how weird it was that we didn't allow people to live in mobile dwellings. Kelsey, what were some of your takeaways? Alexis is incredibly personable and we had a great time chatting with her.She has traveled the country in search of knowledge [00:02:00] and experience of how tiny house communities are collecting and advocating to improve local regulations, to make this lifestyle more accessible.Let's get to our interview with Alexis.Kol Peterson: As, as Kelcy was introducing you, my Alexa device was responding and I was like,oh shoot, ,that's going to happen this whole episode -got unplug that. That that must be so annoying. It is so annoying. Alexis Stephens: We recently filmed in like three tiny houses with Alexas and they had to turn them off and yeah, it gets old and Alexa got creepy. I don't know if it was because I was there and she felt competition, Kol Peterson: What a bummer, huh? [00:03:00] I mean, you can change for your own self. You can change the name of Alexa to somebody else, but like everybody else is still going to have the default Alexa. So it's going to pester you for the rest of your life. Your bio was just read, but let's just hear a little bit about your personal endeavors with living in tiny homes. Some people have a little bit of context for your history, with the you know, living in one. Alexis Stephens: Sure. Back in 2014 Christian and I ordered our, our trailer and built our tiny house over the next nine months.And he was the main builder, but I helped, I learned a lot of new skills and we had a lot of great help for friends and family. And like so many people in tiny houses, we fell pretty hard down the rabbit hole. Before we decided to build and research like crazy for, you know, for personal choice to simplify.It was a time in my life that where that just felt so right, [00:04:00] but I'm just an all or nothing person. And as I was researching, you know, I really fell in love with the movement and how creatively tiny homes are being used to address personal and community needs. And so I got the idea to travel around with our tiny house and document the movement.And so I pitched Christian on both at the same time, I was like, let's build a house. Like I want to build a house and I have this documentary idea. Do you want to do it with me? Because we'd only been dating for a year at that time when I pitched it. Fortunately he was a really good sport and really loved the idea of it.The rest is history. And after we finished our house at 2015, we ended up traveling for about four and a half years zigzagging across the United States, peaking into Canada. And it had just the most wonderful adventure. And most of that was around documenting as much as we could of the tiny house movement, the people, communities legal action that was happening.And then of course we threw in some, some fun stuff [00:05:00] and some family visits, but I'm really happy to say that now we just traveled three months out of the year and have a home base in central Oregon. Kol Peterson: Awesome. So this is not going to be so much focused on your personal experiences but rather the tiny house movement at large and specifically the regulatory things that are occurring in the U S so, and, you know, tying that into ADUs to some extent, but just more generally legalization of tiny homes on wheels.We're going to talk about your specific documentary series on that later, but let's talk more about the nuts and bolts of it. So can you attempt to define tiny homes on wheels? Alexis Stephens: Yeah, absolutely. You know, the term tiny house is a slippery one. That's for sure, especially in the media, but a tiny house on wheels, also known as a movable tiny house is built on a trailer using traditional housing materials and techniques for the most part, but at its core, it's a hybrid [00:06:00] structure that has a lot in common with like a travel trailer, as far as mobility, but with more durable materials construction, more kin to a traditional house than at RV, which makes it more suitable for a year round living, you know, think insulation, you know, is a big one.The difference between an RV and a tiny house is night and day it's, it's a residential house versus a camper. It's, that's what we're talking about. Kol Peterson: Would you say that there's a universally agreed upon definition of a tiny house on wheels in terms of size? Obviously it's on wheels. Aside from that, is there any other like core definitions that we should bear in mind or is it kind of all over the map? Alexis Stephens: The term is, is still squishy, so to speak. And, but I will say that in tiny house, on wheels or movable tiny house zoning ordinances it is starting to get a little bit more formalized.And in most of most of those you know, what I, a version of what I said and more formalized language [00:07:00] is, is becoming more widely accepted. Typically they'll say a chassis instead of a trailer. And, and in some areas, particularly California, they do like to distinguish a tiny house from an, a traditional RV, because, well, I'm sure we'll get into this word later.They are trying to discourage, you know, RVs in backyards and, and want something that looks like a cottage that resembles an ADU. Kol Peterson: So what roles do you see tiny homes on wheels playing in housing, a formal legal housing on residential properties?Alexis Stephens: You know, I love a tiny house on a residential property because it's so, so flexible is great as a caretaker unit and not necessarily, you know, it could go either way. It could be like your mom, your mom, you know, comes to live in your backyard. Cause you've had a baby and she just can't stand to be away, but you maybe can't send, have her in the house.You know, or vice versa where you, you or a [00:08:00] nurse comes and lives in a backyard in a temporary fashion to take care of someone. We just visited someone in Eldorado Hills, California doing just that. Her parents health is starting to wane and she lives on their property, but doesn't plan to be there forever.So very, very flexible. Yeah. Besides this, the caretaking idea is just another housing option. A long-term more affordable housing option. That's very mutually beneficial for the homeowner and the tiny dweller. You know, I think sometimes people look down on tiny houses on wheels in this like temporary mobile fashion that they are as, you know, taking advantage not paying their fair share.When in reality, the majority, I mean the majority of tiny houses in my personal experience on residential property are helping pay the mortgage, the property taxes. We just visited a great situation where a woman was divorced, a single income. [00:09:00] What is she going to do? Her whole life is there.And so she welcomed a couple of tiny houses onto her property to pay her bills. Kol Peterson: So sounds pretty similar to ADUs in that way. How would you differentiate the roles that tiny houses on wheels and ADUs can play in housing on residential properties?Alexis Stephens: You know, it's, there's a lot of similarities, like you said. I think the main difference is the flexibility, you know, it's flexible infill housing that can be removed as needed, which is kind of, kind of great because you know, dedicating to an ADU is a very long-term permanent situation where, you know, this, the cost of it alone, you know, I mean, you're not going to want to take it down once it's up where a tiny house like it, you know, if you need it to back could be gone for when you need to sell the house or if your situation changes.Kol Peterson: And I'll chime in with a couple of responses after my questions, because I have a lot of thoughts about this [00:10:00] too. So forgive me. So I would also say that tiny homes on wheels are vastly less expensive than ADUs in general. And B to your flexibility point. There, this opens up this whole other marketplace of potential things that don't yet exist, but marketplace actors such as third parties that could own the tiny houses and lease it to either the dweller or to the owner of the property could exist.Whereas with with ADUs, you could theoretically come up with some way to do that, but it would be really challenging. Tiny homes on wheels definitely afford some really innovative new business models. Alexis Stephens: Yeah, excellent points. You know, the cost is a big one. You know, it's, it's incredible how much money you can save when you, when you skip the foundation.And the price range of tiny houses. This is so great. I know people complain about that, but you really can get something that's suitable to you. And the loans are just becoming more available all the time. Kol Peterson: This wasn't one of my questions, but like how much does a tiny house costs, what is the range that you offer? And then can you briefly [00:11:00] speak to this financing option? Alexis Stephens: Sure the range is tricky because it varies greatly on size customization. The materials used. Also, we got the pandemic factor, you know, with prices going up. So I'll try to be a little bit more generous you know, on the low end from a builder $50,000 and that, and that might be pre pandemic times, but we'll say low ends, $50,000 high-end it's $115,000.The majority I would say would be probably between 65 and 90 from a builder. Now, if you have the time ability, ability to learn a place to build, you can build for much less by being resourceful. We certainly did. Of course I was many years ago, but we use a lot of salvage and reclaim materials that we got for free or low cost. Oftentimes the cost was our sweat equity into like tearing down the walls off an old farmhouse. [00:12:00] Those opportunities still exist, but it's just not accessible or realistic for everyone Kol Peterson: And financing? Alexis Stephens: So financing. So there are a number of credit unions who will lend for a tiny house. They're the biggest player.And then a number of personal loan. Oh, what's the word I'm looking for? That you can get personal loans from a lot of like online sources now. I would say the most, well-known right now is Liberty Bank of Utah. Even though the Utah bit, they service the nation and they work with a number of builders, they require certification.There's still feasibility, I think, for a DIYer, but they have very reasonable, reasonable terms. They do 15 to 20 year loans. So something that could be paid off much quicker maybe than a 30 year loan and I'm blanking on the, on the exact rates or whatnot, but they're lending all the time, which is fantastic.Now I'm like, oh, yay. [00:13:00] There's like a couple of handfuls, you know, I know this is a, a big country, but that's a big difference from a few years ago. Kol Peterson: Yeah. And I mean, there's both financing opportunities emerging as well as like insurance opportunities emerging. And we don't go into too many details on that, but one point I'll just make for people on the call and maybe you can respond to this.It's like ADU construction, loan financing is based on like GSE sponsored you know Fannie Mae, Freddie Mac sponsored Types of loans, whereas this type of loan is not secured against a property, is that correct? Alexis Stephens: Exactly. Yep. These are unsecured loans you know, personal loan. So, you know, there's ups and downsides with that.Oh, I also have to give a shout out to one of my favorite nonprofits is Operation Tiny Home. They have a fantastic grant program as a down payment assistance grant program. And what, you know, you think, well, what's the down payment on a tiny house, you know, for some people it's a drop in the hat, but for a lot of people who really do need to get into affordable housing and can't [00:14:00] afford a monthly, tiny house payment. And you know, probably a lot lease too, they, they struggle with the upfront money and that's where operation tiny home comes in. They're also launching a secondary grant program. If you haven't heard of them, I highly recommend you check it out.Kol Peterson: People sometimes ask me like how many people would actually want to really want to live in an ADU. And I'm like pretty much any one and two person household could definitely live in ADU. It's not, it's not that big of a deal to downsize to 800 square feet or 1000 square feet or whatever.And, you know, that might seem like a weird concept to downsize to an ADU, but once you've been in an ADU, you see that they're actually just like, you know, decent, a good size, comfortable, luxurious. Tiny homes on wheels are a little bit different. They're significantly smaller, oftentimes 200 square feet.So with that factor in mind, but other factors as well, what percentage of the US population would realistically consider living in a tiny house on wheels if they were just as [00:15:00] legitimate as a single family house in terms of the legal structure for doing so? Alexis Stephens: Yeah, those are really good question. You know, for, I like to preface by saying, I often find that tiny houses on wheels work really well for a number of people for a season of their life: starter home, retirement home, transition out of divorce. Raise my hand here. There's a lot of ways that tiny house would fit, but not forever. For most people. Fortunately, there was a study done at the end of 2020 by a Fidelity National Financial affiliate and it's not a huge sampling, I think only 3000, but nonetheless 56% said that they would consider living in a tiny home.That's huge. I think. And I mean, and more than that 86% said they were considering it as a first time home or as a retirement option. And I do feel like that reflects where we are awareness wise of tiny houses, [00:16:00] say from 2014 to 2021, you know, the shows helped make it cool, you know, with a lot of unrealistic expectations, but now people, you know, it's, it's rough out there.And I think, you know, a lot of people living in a room for most of their adult life, you know, in a shared housing situation, you know, if you think about it in that context, all the single people out there, there's more single people than ever people without children. And if you're used to having your roommate.What's that difference between a room in a tiny house, really at the end of the day, except that you get a kitchen and a bathroom?Can you review some of the commo…

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The ADU Hour w/guest Kol Peterson Jul 27, 2021

Show notes

Kelcy King: Kol Peterson is an ADU expert based in Portland, Oregon. He has helped catalyze the exponential growth of ADUs in Portland over the last decade through ADU advocacy, education, consulting, policy work and entrepreneurship. He is the author Backdoor Revolution, The Definitive Guide to ADU Development, and also happens to be the host of this podcast. For this episode of the ADU [00:02:00] Hour, we decided to shake it up a little bit, and I take on the role of the interviewer. So Kol, what were some of your takeaways from listening to this episode? Kol Peterson: In this episode, we talked about building coalitions. Now that ADUs being folded into broader policy conversations about middle housing, more generally. A conversation that has really taken off in a big way in the last year.I think that this idea of coalition building and meeting regularly with that coalition has even more salience. The power of a disparate group with diverse expertise, but with a common mission of getting more ADUs built cannot be overstated. Groups like this can definitely, help change regulations, change laws, impact financing opportunities, raise awareness about ADUs and much more.Kelcy, what were some of your takeaways?Kelcy King: Well, I will second that your interview offers some great nuggets in regard to forming coalitions in an effort to advocate for ADUs as a piece of the puzzle for building greener, resilient cities, and as affordable housing, you've also built quite a few ADUs on your properties and you offer a few [00:03:00] design tricks that you've used offer highly enjoyable living spaces in a small structure.Let's get to our interview with you. A quick heads up to our listeners. My audio in this episode is subpar. So sorry about that. We also had some technical issues during the original recording and lost the introduction. So we'll start here with the second question I asked Kol. For those looking to advocate at their local municipal level. Where would one start to address ordinances that only allow ADUs in certain zones within a city? For example, some residential zones, but not other residential zones. Kelcy, just to be clear here. So the question is if you're aware of the best practices, as far as what regulation should be, how should you go about making those changes? Correct, yes. Kol Peterson: So, this ties into a later point that we'll get into, but I think there's so many different things that need to be changed in local regulations to make the regulations for ADUs good. It's not as though, if you are able to [00:04:00] address, say off street parking requirements that you will have a good ADU code.Rather, there's like 20 or 30 different little things that will all significantly impact whether or not a code is good. So let me just pick on one example, California has an incredibly good state code. However, they have one element of their state code that says by right you can build a 16 foot ADU. Well, that is a big poison pill, in my opinion, that isn't a good policy. They have this incredibly good ADU regulations statewide, except they have this one thing that makes a whole lot of ADUs is not possible, which is you can only build a one story ADU. Which is a killer, that doesn't work. ADUs will not pencil if you have that in place.And that's a minor thing, but that's very major in a lot of ways, like sure. A lot of people will still want to build ADUs in California and some jurisdictions will have liberalized height standards, but statewide, most jurisdictions will not. And therefore they're killing [00:05:00] 20% of their market without one bad regulation. Having visited several hundred ADUs in Portland, where that isn't in place, most of the ADUs that are built, the majority of them are two story detached ADUs. Why, because they're being built on small lots because they want more square footage in those ADUs.And so if you're requiring people to build an 800 square foot, one story ADU, they're not, they're going to lose their backyard and that isn't going to work for a lot of people. That one little example, it doesn't doesn't really matter that much, but I guess the point is there's so many different things that need to be worked on that.I think there's a need for a group of people to be working collectively. Slowly improve their regulations over time. Kelcy King: Is there a certain place where you would start? Like, would you start with zoning? Would you start with owner occupancy or is it just chisel away as you can?Kol Peterson: Yeah. So I think that depends on what level you're working on. Right? If you're working at the state level, really, if you're working at any level, I think the [00:06:00] way to go about this is understanding from an advocacy point of view. This is a hard one for people to swallow, but your code needs to be A-plus bomber for people to actually want to build an ADU. So if you have the 16 foot poison pill in your regs, it's not good enough. It needs to be much better. And that, and like that doesn't, that means that everywhere in the country has bad codes except for Portland, Seattle, and a few jurisdictions in California.So there's a lot of room for improvement. And then you can get to these kinds of like next level ADU codes that are like two ADUs and allowing two detached ADUs. My vantage on this is you have to aim really high, and hopefully they'll get most of that because if you incrementally chip away at these regulations over time, it's going to take a long time. For example, the entire east coast of the United States doesn't have a single city with what I would classify as a halfway decent set of ADU regulations. I would not build an ADU in any city on the entire east coast. So, a city [00:07:00] could work on chipping away at those regulations over time, but it's really challenging. It takes decades to pass good code. Rip off the band-aid and pass a really good code once. That's the approach that I'm in favor of.And as a result of kind of working on this for the last decade is advocacy changing regulations, because I've now come around to thinking, you know what? This is too painful at the jurisdictional level there's too much nimbyism too many, too much local politics to deal with. We have to do this at the state level because it's taking too long and we don't have the time to wait, this is not a tenable approach to improving your ADU regulations, bit by bit at the local level, across 128,000 jurisdictions and not at the pace at which we really need this form of housing to actually take hold. Kelcy King: So this is a great segue because I'm moving into the state regulations here.So in order to advocate at the state level and have that be the most effective, first, who are the target legislators and representatives you would target? Kol Peterson: I don't know the political scene [00:08:00] necessarily at any state let alone every state, but I would say what I've seen, what did a little bit knowledge I have about this as what I've seen as lobbyists, so to speak whether that's the Home Builders Association or AARP or an affordable housing group working with an elected state legislator, House or Senate, putting forward a proposal and then working that through the sausage making process. There's been a couple examples of statewide legislation now in Oregon, in California, in New Hampshire in I'm sure a few other places. A lot of these have not been particularly effective in the sense that they are not getting rid of any of the poison pills, they're simply enabling ADUs to be built. That's what happened in California prior to the latest two years of legislation. That's what had happened in Oregon. That's what had happened elsewhere. you might as well not allow you to use if you're not going to have really good ADU regulations, it's the same thing.So just saying we allow ADUs, that's pointless. Don't even bother. Go do something else. [00:09:00] If you're going to get serious about enabling ADUs, you have to have excellent ADU regulations. So. Getting back to this idea of work with the state legislator, who's going to be open to pushing the envelope really far, making people uncomfortable.And hopefully you'll be able to build a coalition of stakeholders that really support that policy measure. And that's what it's going to take to actually set environment where hopefully at that point, maybe we'll start to see some ADUs built, don't count on that. Even if you have the best ADU regulations, it doesn't make it easy to build an ADU at scale. They're not going to just take off overnight. You will get a pathetic, pitiful number, ADUs being built, even in the best conditions. Like what we'll see in California, we'll see many more times ADUs being built, but it's still a very small number of ADUs overall.So I think that's kind of the good and the bad side of this stuff is it's going to take a long time for ADUs to make a substantive dent and the kind of housing crisis that we have. But we can only start to get there if we have really good ADU regulations. I would say working [00:10:00] on approaching it really aggressive ask using a lot of data that I point out in the book and that's available elsewhere. As far as going for the gold standard kind of default model zoning code for your whole state is the way to go. And if you can't get that, work on it on the, at the local level. The most controversial things to work on are owner-occupancy and off-street parking. I'd say those are the ones that, if anything, I would work on those at the state level, because locally it's really politically challenging to get rid of those two poison pills. Kelcy King: How do you show up as an advocate? You personally, are you showing up in person? Who are you showing up to see? And are you, are you like writing letters, gathering signatures on petition? How do you show up? Kol Peterson: Yeah, I do all the above. I write letters when there's draft proposed regulations at local jurisdictions.I write letters to state level policymaking efforts. And it's surprising, these letters are actually meaningful. I think, you know, [00:11:00] little, one sentence letters that say I support this bill are fine, but I, at least as, as a subject matter expert, I weigh in with specific critiques and criticisms and suggestions of how to improve policies.And that is actually surprisingly meaningful. I think those things do get adopted. So that's, that's really helpful. I guess the other thing to note, is at least in my experience, With trying to inform policy using data is far more powerful than just using your opinion. A lot of people will use their opinion in rule making and it doesn't, at least in my experience in the different advocacy work I've done, that hasn't held as much sway as providing evidence.Kelcy King: How do you find out this has just been a challenge, but I've found and have read all over, but how do you find out the information who is meeting when and how to meet them? So as far as policy makers, [00:12:00] like when policy makers are meeting and how to show up for that? Kol Peterson: That's a great question. I wish I had a better answer for you. It's a little bit opaque, isn't it? I think if this is again where having a coalition is helpful. Kelcy King: You are a part of a number of advocacy groups and teams. So could you explain what those different teams are, how they got formed and advice for attendees who are interested in forming their own?Kol Peterson: Yeah. There is several coalitions now that I'm aware of happening in different jurisdictions and at the state level in California, there's coalitions. And having been a part of these different coalitions at the local level now for a decade, I'm convinced that they are critical and a best practice for improving ADU regulations.So if we go back to this question you had posed about how do you find out about an upcoming meeting that pertains to ADUs you don't because websites for government stink and I used to be a government web manager and it's terrible. So, sure. You find out about one thing, [00:13:00] but you don't find out about another meeting and you don't find out about the state level meaning. So the state level website is even worse than the local level website. So That's a problem, but the way that you address that is to get a coalition of people who have their boots on the ground and are working in these different organizations or associations or entities that have some knowledge about what's going on with regulations, et cetera. So in terms of that best practice concept, I say that people, the entities that are important to include in a coalition and ADU coalition, so to speak would be, these are just some examples, AARP, a local university that has say an architecture department. The municipality itself I'd say is maybe the most key stakeholder, because that's where you'd start to get tips about what things are coming up in from a regulatory point of view. State level environmental or land planning agencies. Utility providers, affordable housing [00:14:00] advocates, green builders, architects, urban planners, tiny house advocates, realtors, all those different stakeholder could be part of a coalition and should be part of a coalition, ideally that meets on a regular basis, maybe once a month for an hour or two forever, basically.And that's I think what needs to happen to actually enable the type of change that is meaningful from getting to this gold standard model policy level, but also doing the non-regulatory things that I've been heavily involved with. And I tapped into that coalition to help do so for example, classes, or ADU tours all those kinds of events that involve getting the word out.So this huge group of homeowners. It's hard to reach homeowners when you're doing marketing. And that's your market audiences like homeowners, you might want to build an ADU. How do you find them? It's not easy. So I think having a coalition that can reach out to their own constituencies using their own email list is a good good technique.Anyway, [00:15:00] I think there's a lot of different ways that an ongoing coalition can support. Improving the environment for ADUs, if they meet on a regular basis and work on these issues together. It doesn't have to be a super formal structure, but just checking in regularly to hear what's going on.And and then strategically working on things on a case-by-case basis as needed.Kelcy King: So I'm gonna move into a couple of questions that were from previous interviews. So this one was from Karen bank. When we were talking to Robert Liberty, What are the best ways to educate elected decision makers on ADU policies that are working in other places? They're busy. They often don't watch webinars like this. What did you do that was successful? Kol Peterson: Yeah. I think that the policy makers, elected officials , I think they're going to be open to hearing ideas from people who are on this webinar. Like I think people who are aware of what's going on and clued in and understand what the best practices are and are strategic about getting those changes [00:16:00] made can make a difference. Every single person on this webinar can make a difference in their local jurisdiction by being smart and strategic.Your influence in your capacity to write a good email to the right people. So that's what I would say. They don't have to watch these webinars,…

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The ADU Hour w/guest Tim Cocaro Jul 20, 2021

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Timothy is CEO of RESCON Builders the largest dedicated Granny Flat building company in Australia, and founder of Canibuild, a sales app changing how the world’s builders sell construction.

The ADU Hour w/guest Willie Dean Jul 13, 2021

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Kol Peterson: All right. So this is Willie Dean and Willie Dean is a residential designer working primarily doing ADU design and has worked [00:02:00] quite a bit in both Oregon and now in California. I thought he would be an appropriate guest to have because yeah his experience in both those states. On top of that, Willie is also an excellent ADU designer. We're going to be talking about ADU design as a general matter. And hopefully everybody can get something out of our conversation. So, Willie why don't I give you a second to introduce yourself in a little bit more detail?Willie Dean: Sure. My name is Willie Dean. I am an architectural designer in Portland, Oregon. My company is called Ground Up Design Works and I specialize in residential design of all types. But I'd say specifically, probably 80% of my work is accessory dwelling units here in the Portland area. And over the last few years I had a opportunity to work with a company in South bay, San Jose area and with them, we, we executed probably twelve ADUs in the South Bay, Silicon Valley area. It's a good amount of [00:03:00] work within a short period of time. But I definitely have some observations about differences, good and bad and in general. I got my master's degree in architecture from the University of Oregon and that's what got me out to Oregon. I'm originally from Wisconsin. I got my undergrad from University of Wisconsin, Milwaukee. Kol Peterson: So for those who don't know, I actually went to a design school myself and everybody wore black rim glasses.So is it a requirement that you wear a black rim glasses if you're an architect? Willie Dean: You know, some people with other colored glasses but it's a standard. These are actually technically navy blue. Kol Peterson: Navy blue. Okay. I'm color blind. All right. So we're going to dive right into your work in Oregon, California.So which markets specifically have you worked in ? Well, I should say in Oregon you probably just worked in Portland, correct? Willie Dean: For ADUs. Yes. I've only done ADUs in Portland. I've done a couple of remodels in Vancouver, I've done a single family house [00:04:00] out in rural Wasco county. But as far as ADUs are concerned, actually only the east side.Kol Peterson: I just point that out to say that I know a lot of people who work in the ADU space in Oregon and when I say Oregon, it's really just Portland because there's not a lot of activity, even five miles away from where we are in Portland, because the regulations haven't been the same. In any event. So California, which jurisdictions have you worked in? Willie Dean: So San Jose, Campbell, Mountain View, Los Gatos. The interesting thing about that environment is that every few miles you're in a new town, right. And that's pretty different than Portland where we at and sort of the urban growth boundary and the rules are pretty similar for miles in any direction. Whereas down there, I mean, it's a way bigger space. There's way, way more people. And there's all of these little enclaves that all have their own specific zoning rules. So, that's one of the huge differences working down there. You have every town you go to, [00:05:00] you have to learn a whole new set of rules.And some of them base their rules on the same stuff. And some of them are just different. And then the way that the permitting offices work is always different, too. Kol Peterson: So tell us about some of the substantial differences between the ADU design work that you've done in these two markets, Portland and the San Jose zone in terms of a number of different things. So process wise, things like Title 24, net zero solar requirements, designing for dry versus wet conditions, culture wise in terms of players, actors and costs. Willie Dean: Yeah. I know that there's a new set of rules in California in 2020, and I haven't done anything this year within the context of the new rules. So everything that I'm saying is, is a tiny bit dated in that respect. But my experiences was that the rules in that part of California, where I was working were a little bit more restrictive. In Portland, you're [00:06:00] allowed to do 800 square feet or 75% of the existing house, whichever is smaller.And that's just across the board. Down there the lots are a lot bigger and it's based on a FAR, but a normal lot down there is 7,500 square feet and you can only do a 600 square foot ADU. So, for my experience, we could only do single story one floor, one bedroom, one bath, which if that's the context or the constraints of the project that you're working in and it simplifies things drastically. So it was, I suppose, easier because you didn't have as many tricks that you could pull out of your hat. But also limiting in that, I felt like it's the most expensive housing market in the country and we're limiting it to these one bedroom apartments that we're building where there really is huge, huge, huge opportunities for infill, and we could be doing bigger projects. From a zoning perspective, it seemed it was smaller and therefore simpler [00:07:00] projects then into like Title 24, that's just an interesting different way of doing things. In Oregon, we have the energy code and it's just a part of the design review and there is no third party verification, which I mean on some level is maybe a better thing, that there is third party verification and it makes it, it maybe adds a little bit more rigor to the process, but it also makes it more expensive.You usually have to work with a specific Title 24 consultants and then you become sort of a middleman. You're asking somebody else to verify your designs. So it's a little different. And then it's also interesting because while we just have the code here, our code is actually stricter in a lot of ways as well.So because it doesn't get cold down there, you can still just do a two by four wall with R- 21 insulation. You do slab on grade construction, you don't have to insulate under the slab. So these are things that outward just like standard [00:08:00] designs in my kit when I went and we ended up changing a lot of those things, 'cause when I started two by six walls and under slab insulation and all these things that even with the, the added rigor of T 24, weren't necessary because of the climate. Kol Peterson: What about drive versus wet, that change anything? Willie Dean: I still designed it as if it was going to get rained on because it does still rain and when it happens, it's the same . I guess one big difference is up here, we have to mitigate for storm water. And down there you don't, for the most part. If you're in a low land area where you're not going to have good drainage, then they might specifically single you out to do something about it, but we weren't putting in dry wells and every single project. It rains everywhere, but here because it rains so much, we have these onsite water mitigation systems that you don't have to do that down there.Kol Peterson: Right. Just, as a side note, Portland's always been a little bit on the bleeding edge of stormwater management and we have a really good [00:09:00] climate for that. This really light rain that falls a lot of the year, so it can absorb storm water on site. And I've always liked that, but it can't, you can't do that there as much because of the rainfall patterns. So costs talk about cost-wise some of the differences between the Portland market and the San Jose area. Willie Dean: Yeah. It's a lot more expensive, it's most expensive housing market in the country and so that just makes everything more expensive. Because the cost for the people that work down there. It's one of the reasons that I was hired. I know what I'm doing with ADUs and so the people that I was working with met me, and thought that I was a good fit, but also I didn't live there. It was it was hard because people that are living there are already busy working in the housing market and they were having a hard time finding people because of how busy it is. And then in terms of cost for building, it's just a lot more expensive. And you know, being a designer, I wasn't bidding and building all of the projects, so I don't have the exact number of where and why, but just if a climate's more expensive than it's going to be more expensive to build [00:10:00] down there. Kol Peterson: Just to dive into that, cause I had to figure this theory out for myself, and I'm sure other like economists have written about this, but if you were to go to a Home Depot, a stick, a lumber down, there would be roughly the same cost as a stick of lumber in Oregon as an Alaska as in Florida.But it's that I'm guessing it's private, primarily the labor costs that escalate significantly. I would imagine a direct correlation between land values and labor costs and therefore construction costs. How does that mesh with what you had hypothesized about that?Willie Dean: That's right. I think that it's in the building, not in the material. It's possible that there's a slight increase in material and there's a lot of people from California on the chat here, maybe somebody else that has bought material in both places regularly could answer these questions better than me because I'm primarily drawing the designs.But I think that that idea that the labor is for sure the most expensive part, because those people need to be able [00:11:00] to afford to live at least somewhere near there. And even if you're not living in San Jose, but you're living a half hour away, it's still expensive. I would assume that it's just a more expensive climate to operate in. Yeah. Kol Peterson: Let's get into a more nuanced element of that question I posed. You were one part of an ADU development process, so you might not be able to speak to all of this, but can you talk about some of the cultural differences and I'll give some context for this, my experience in the Portland market, your experience in the Portland market is we've had the benefit of having this kind of tight knit community of people who kind of all know each other and to some extent, or a lot of people do.And we've kind of been working in this small cottage industry sector. Cause it's kind of been a slow growing, well, not slow growing, but it's been a fairly modest number of ADUs being developed in a concentrated geography, but California: different situation, rapid fire, huge explosion of ADU development, so I'm just curious if you could speak to any [00:12:00] observations you have about the cultural differences of ADU development, professionally speaking in Portland versus the Bay Area. Willie Dean: Yeah. It's just coming on very fast and very strong in California. I mean, Portland has been a sort of slow burn process where it's been growing, but not exponentially, or maybe not as exponentially and therefore a lot of us know each other, other, we visit each other's projects when there's tours, but yet it's still a pretty niche industry.You're not producing huge numbers of projects every year. Where down there, there's the possibility of like really exponential growth as these huge swaths of land with ranch houses on 7,500 square foot lots that have flat backyards. You'd have to do a GIS sort of query to figure it out, but it's a huge percentage of the way that the land is developed down there is, is it's all primed for it. And then when you take, that would be the most high cost housing market. Like the [00:13:00] market forces are strong. I mean, Portland's a popular place to live, but the market forces are way stronger down there.And therefore that does change people's motivations for, for doing it. That said when I was down there, it was still a lot of people that were looking to downsize and stay in their house. The same flexible space ideas. It's the most expensive housing market and so if you want your kids to be able to stay there, you might have to build them a house because they can't rent anything, they can't buy anything. So you're going to pool your money and build an ADU, or it's so expensive for your parents to have an apartment that they're going to move into the ADU in the backyard, and you're going to keep things closer.So a lot of the forces were very similar. I'm sure there's people building them as rentals, but we still experienced a huge amount of the people were building them for ways to be flexible and accommodate family members or friends. The other part of it is there's not huge incentives the way there have been in Portland.So I think that who sees [00:14:00] it as an opportunity as a little bit of a different group of people, because in Portland, the way that it's been incentivized for a long time and continues to be, helps open the door to a wider range of people. It's so expensive to own a house down there and then because there aren't incentives to get you to build an ADU, you're trending to a little bit more affluent group of people that would be building them in that area versus how they can get done here.Kol Peterson: Another difference that I've touched on last week with other guests, and I want to talk about with you for a minute here is prefab, modular aid use and also, you know, standardized designs. It's an interesting topic and I've historically been kind of skeptical of standardized designs and prefab development in general because these companies have not generally gotten a lot of market adoption here in Portland, but I think that is ephemeral in the sense that things are changing with ADUs, they're becoming much more popular now and a lot more jurisdictions. And so [00:15:00] prefab does potentially play a different role or a significant role. Standardized designs might play a different role. And I was hoping you could talk to me about your thoughts about standardized designs in the Portland market versus the California market and prefab modular to some extent. Willie Dean: Sure. So the short answer is I think I alluded to this earlier, we're a niche market still with ADUs, in particular in Portland, I think it's going to pick up quicker. And then also Portland, especially inner Portland, the lot sizes and typography and layout is very diverse and so it makes it hard to do anything besides a very small standardized design, which most of my experience is a lot of people want to do the biggest thing they can do. And so here, if you're trying to fit the biggest thing you can do into any weird space backyard that you find yourself in, a standard solution is not going to work very well. Where if you had a 300 square foot design, you probably [00:16:00] could still get away with that, but that's not what everybody wants.In other places my experience down in the south Bay Area, the houses just naturally bigger yards because of the way that they were laid out years ago when they did that. And there is more flat space. There's definitely Hills. When you get to the perimeters of towns, but down in the basin where San Jose is built, there's not a lot of Hills. And so I think that just from a construction standpoint, places with more homogeneous typography and site layout would lend themselves better to that. And also down there the market, especially prefab and modular, you need a big market to make factory building houses to make sense.In that respect, you need a big market share before that can really get traction. Whereas I th…

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The ADU Hour w/guest Ashley Salvador Jul 06, 2021

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Ashley is the founder and president of YEGarden Suites and Calgary Backyard Suites - Alberta’s only education and advocacy-based non-profits dedicated to informing citizens on the benefits, challenges, and regulations surrounding backyard housing. She is also the CEO of Municipaction Inc., a consulting firm that supports Edmontonians in their city-building endeavours. She has experience working across sectors on projects related to affordable housing, climate change, social isolation and inclusion, infill policy, seniors housing, and demographic change. Born and raised in Edmonton, Ashley holds a BA Honours in Sustainability and Sociology from Dalhousie University, and an MA Planning degree from the University of Waterloo.[00:00:00] Kol Peterson: Good morning. Ashley Salvador: Morning, Kol.. Kol Peterson: Thanks so much for coming on today. Ashley Salvador: Thanks for having me. Kol Peterson: And I'm super excited to talk with you about the work that you've done. I've been a fan of your research for a number of years and never had a chance to really talk with you directly. I've read your work because you put some of that content on AccessoryDwellings.Org initially, and that's kind of how I first learned about it. So let's dive right in. So tell us about yourself and where Edmonton is for those who aren't familiar with Edmonton.Ashley Salvador: Sure. So first of all, I've been tended in Alberta. Some of you may notice the Texas of the north. It's not necessarily that I would say, Hmm. Conservative. We, we actually have a lot of progressive policies here, a lot of really young folks who are looking to push the policies in a really good direction.On the, on the ADU front, things have moved quite quickly over the last couple of years to allow for, the diversity of sizes, sizes of ADUs basically across the entire [00:01:00] city at this point as a permitted use. Yeah. And. Just for a bit of context, we're looking at getting rid of our parking minimums entirely.So if that gives you a sense of kind of where we sit as a city and where our city councilors are at that's that's Edmonton. Kol Peterson: Yeah. Cool. So how did you get involved in doing ADU research and work?Ashley Salvador: Yeah. So it actually started in my undergrad. I have a degree in sustainability and sociology from Dalhousie University.And I started to get really interested in basically cities as human habitats and the ways that our cities are helping us thrive, but also the ways that they're kind of detrimental to So from a sustainability lens, I was always interested in the ways that we can help our cities grow, grow inward as opposed to outwards forever endlessly.And at some point along the way, I came across ADUs as a way for everyday homeowners to participate [00:02:00] in kind of the remaking and rebuilding of their cities. So that's, that's where it started. Kol Peterson: And can you tell us about some of the key findings of your undergrad and master's degree research in of garden suites and secondary suites, and actually, maybe take a second to define garden suites for people since that's a different term. Ashley Salvador: Absolutely. So garden suites would be a detached accessory dwelling unit. Most folks will know them as that. Also known as laneway homes, granny flats. The list goes on in Edmonton attached, ADUs. So ones that are typically located in a basement, those are considered secondary suites.So most of my research focuses on detached accessory dwelling units, so independent from the main house. And I've done two studies at this point. One was in 2016 to 2017 and one I'm currently doing right now. So I, in terms of key findings just reflecting back on the study done in 2016, one of the big findings coming out of [00:03:00] that and Kol, you know all about this is voluntary, affordable.There was a really good study actually out in Portland that did a full sample or a full survey of owners at that time. And similar findings were, were discovered there around the affordability benefits.Kol Peterson: Let's just dive into voluntary affordability and then we'll go back to other findings.Ashley Salvador: Yeah. So basically what I wanted to look at from my research was whether or not it user functioning as a form of affordable housing and what the relationship between the owner and attending.Has to do with that affordability conversation. So in Edmonton, it was found that close to half of the people who are building these gardens suites are doing so for family or friends to live in. The other half are doing it for a traditional rental income. And when you bring affordability into that conversation it was found that the folks who are renting to family and friends are charging ultra low, sometimes zero rent. [00:04:00] And I mean, it, it seems pretty intuitive. You're not going to charge grandma a bunch of money, the same way you would just a, an unknown tenant. But being able to put that, that finding on paper and actually have similar findings popping up in other cities like Portland, it shows that there is a trend and it shows that ADUs in some capacity are functioning differently in a traditional rental property.And part of that has to do with the fact that these are homeowner developers, right? They're not, these big wig professional developers who are just trying to do it for a money-making opportunity. There's social reasons in there as well.Kol Peterson: Let's go back to the original research. Aside from the, just generally speaking that voluntary affordability is one of the things that happens with ADUs, what are some other key findings from your original research?Ashley Salvador: Yeah. So from the original study I also looked at barriers to development. And one of the biggest [00:05:00] barriers at that time was cost and financing. So it turns out that around 70% of the folks who were building ADUs had a household income of over a hundred thousand dollars annually. So that also brings into question who is able to even benefit from ADUs.. And it was looking like at that time it was really reserved for folks who are in that higher income bracket..So that was, that was a big finding. One that I like is folks who are building and living in ADUs don't own as many cars. So it is just that they are trying to. Either by choice or just by the location they live in, in the city live a more sustainable, less auto dependence lifestyle. Kol Peterson: So regarding voluntary affordability, I think you've found some interesting things. Can you go into a little bit more depth about some of the data that you were able to derive from your research?Ashley Salvador: Yeah, absolutely. And I'll, I'll bring in the current research as well. Cause there was also some findings around [00:06:00] voluntary affordability there. And so if we break down the numbers if you're looking at kind of a typical rent or comparable unit in Edmonton, you'd be looking at around, $1,100, maybe $1,200.Whereas an ADU who is rented to not a family member---the owner does not know the tenants. It would be comparable, sometimes slightly higher. Whereas if you renting to a family member you're looking between that $500, maybe $700 range. So there's a pretty significant gap between those two and that's not accounting for the people who are discharging zero rent at all.And I think one of the interesting things is on top of that affordability benefit, there's also some, some sharing of services. So in exchange for, living rent-free in an ADU, maybe your friends or your grandma is helping with childcare, maybe really helping with yard maintenance, things like that.So there's some kind of informal economies [00:07:00] that are happening around ADUs as well. Kol Peterson: Can you tell us briefly about the objectives and the model of the Cornerstone Grant Program and what your findings were about that incentive program to induce more deliberately affordable ADUs?Ashley Salvador: Sure. So. First of all the two, the two main objectives of the study were to look at affordability from both the renter's perspective and the owners and the city of Edmonton has a program that is meant to incentivize the development of ADUs. It's called Cornerstones and the Cornerstones Grant basically we'll give up to $20,000 towards the development of an ADU in exchange for renting that ADU for five years, to someone who is within a defined lower income bracket and the city sets that. When Cornerstones first came out, everyone was really excited because they're like, oh my gosh, $20,000. That's awesome. Like, that's a big chunk of change towards a project.And throughout my study, I actually found [00:08:00] that not a lot of people are using Cornerstones. They had the opportunity to apply and 75% of people chose not to. And, reflecting on that. And crunching the numbers, I think is what makes it seem like a pretty logical choice to step away from Cornerstones.So ADUs in Edmonton due to function as a bit of a luxury rental, so you can pull in a pretty penny on a monthly basis. So if you are locked into a Cornerstones Program for five years, where you are forced to rent for a lower rate, It doesn't actually equal out. So you're actually, you could potentially be losing money in exchange for that about opportunity costs to not rent at typical rates for the five-year period.So we were seeing the cost benefit analysis that people were doing in their heads play out in that research. So Cornerstones isn't that attractive for detached accessory dwelling units. For secondary [00:09:00] suites however, it does make a lot of sense so that it also comes into play the cost of being at your building.So in Edmonton, a detached accessory dwelling unit averages around $180,000 to $200,000. Whereas the secondary suite, typically $60,000 to $80,000 to have a functional secondary suite. So as you can see, even from the sheer cost perspective, $20,000 towards a secondary suite can make a lot of sense. And they don't function as that luxury rent as well.Kol Peterson: Another fascinating tidbit that you uncovered are that costs and financing are a perceived barrier, but not, maybe not an actual barrier. So what led you to that conclusion? Tell us some, some of the data behind that. Ashley Salvador: Sure. So one of the big questions I wanted to go into my current research with was really attacking the question around, for homeowners is, is cost and financing a barrier.And one of the things coming out of this was, it might just be a perceived [00:10:00] barrier. The people who are reporting the cost and financing is a barrier, have, the same household incomes sometimes higher assessed property values than people who have already built. So that was a little confounding. Digging a little bit deeper into that, the lack of mADUre financing product from banks seems to be a barrier. So people are kind of getting sticker shock. They hear the price of a typical detached ADU. And they're just like, "Okay, that's clear. I clearly can't afford that." They just assume that they can't afford it. And the people who are saying that ADUs are too expensive, I can't afford it.Only 10% of them actually spoke with a financial institution. So getting people in the door of a financial institution. That's a bit of a gap right now because people are getting scared upfront and not actually making it in the door. And once, once you get in the door, there are a number of options.I mean, in [00:11:00] Canada, in Alberta, in particular, the most common way of financing an ADU is you can get up to 80% of the equity of your home. And then up to 80% of the pre appraised value of your ADU. And in most cases, you can piece together a project using that mechanism. But again, when people don't have a financial product that they see as built for ADUs it scares them.And there's really only one financial institution in Canada and that's Van City that offers that type of product. Kol Peterson: Let's dive right into that set of questions right now. Cause I think that's worth investigating more. So I've seen that. So the CMHC, which stands for--- Ashley help me out. .Ashley Salvador: Canadian Mortgage and Housing Association Kol Peterson: Corporation, maybe? Ashley Salvador: Corporation yeah. Kol Peterson: It seems on paper that the CMHC so this is the equivalent to the [00:12:00] GSEs, which are Fannie Mae and Freddie Mac and FHA in the U S so it seems as though the underwriting standards for CMHC for ADU construction loan financing are very good.For example, at least. On the document that I've seen, they allow for up to a hundred percent of rental earnings to be added to income, and they explicitly endorse secondary suites. And they, so they allow for, if I understand correctly, future rental income to be class, not for detached ADUs. For internal ADUs, you can classify a future rental income potential towards your debt to income?So secondary suites have been around for a lot longer than detached ADUs. So the regulations are a lot more mature. There's still a ton of confusion around how to handle detached ADUs. And I mean, even, even things in our tax code, like there's still uncertainty around how to deal with them.Ashley Salvador: So at this point All the [00:13:00] suites that we've seen built, there is no consideration of the future rental potential of that detached unitKol Peterson: For secondary suites also? Ashley Salvador: For secondary suites, I believe. So we've seen up to 50% of the rental income counted towards it, but not, I, I haven't yet to see a hundred percent.Kol Peterson: So if these underwriting standards are fairly good why is it that there's only one bank, Van City Credit Union, that's doing this type of loan product?Ashley Salvador: Yeah. So I'm sure as everyone knows, Vancouver is a leader in the ADU space. And I think, honestly, it's just a matter of recognizing that there's a market there.Obviously it's happened in Vancouver. Van City was pretty quick to jump on it. I mean, we're trying to push institutions here. Local credit unions, ATB is a big one that we're trying to work with to, to get a product together that is specifically for ADUs. And even if it's a branding exercise that would go [00:14:00] a long ways in helping people see that there, there is a specific product, there's a niche for them and this bank can help fill that..Kol Peterson: Okay. So shifting back to your organization helped me pronounce it, but Y E Garden Suites, is that correct? Ashley Salvador: Yeah. So YEG is the flight code for Edmonton. So it's YEG gardens suites, or YEGgarden suites, whatever you like. Kol Peterson: Okay. So tell us about YEG garden suites mission and work?Sure. So, YEG Gardens Suites was founded about three and a half years ago now. Actually just at the tail end of my first study. So it was funny. I did that study and I spoke with around 150 suite owners at that time. And then, AccessoryDwellings.org published a little article with the media, picked up on my, my research and then people started coming to us. Because building an ADU is confusing and they're, they're looking for anyone who can help them through that process. And they're like, you [00:15:00] seem to know, can you help us? And at that time we're like, okay, we'll hold a little workshop or something. Didn't think that it would go really anywhere beyond that.So yeah, we, we founded this little organization started pulling small workshops. I started collaborating with the City of Edmonton, local builders, designers, financial institutions, other industry members, and sta…

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The ADU Hour w/guest Susan Brown Jun 29, 2021

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[00:02:33] Kol Peterson: [00:02:33] Susan, come on out. Good morning. [00:02:37] Susan Brown: [00:02:37] Good morning. Good morning, Kelsey. Thank you. [00:02:40]Kol Peterson: [00:02:40] Thanks so much for joining us today. Susan, I'm really excited for this conversation. There's so much good stuff to talk about and I know that there's going to be a lot of good questions from attendees. [00:02:51]I've known Susan for a few years and have collaborated she's also attended the ADU academy. She's very knowledgeable about a lot of things in the [00:03:00] financing world, but, especially knowledgeable about ADU financing. She and I are both in this coalition called the Build Small Coalition here in the Portland Metro area.[00:03:09]I'm just going to ask you to introduce yourself a little bit more. [00:03:13] Susan Brown: [00:03:13] Sure. Thanks, Kol. Appreciate it, and welcome everybody, this has been a great resource for the last couple of weeks. Good way to spend some time and learn as much as we can from our colleagues and peers in this space.[00:03:24]I'm Susan Brown, Senior Vice President for Umpqua Bank. I run our construction and renovation loan production for residential lending. I've been in the banking space for quite some time. I don't even want to admit how long, but a long time and got an interest in the ADU space before it was a thing.[00:03:47] I was just talking with Kol a little earlier about this little home where my husband and I live is the garage space of what was going to be a 5,000 square foot chalet. And we ended up just building the [00:04:00] garage and that's where we live. That was kind of my introduction to simplified life, less expensive living, and it's manifested now into bringing financing to Umpqua Bank and a little bit bigger way. So I kind of walk the talk, I guess you'd say, and have a deep passion for this kind of building. [00:04:23] Great. [00:04:24] Kol Peterson: [00:04:24] Thanks, Susan. And I keep on forgetting to mention this just program note. There's roughly 150 people on right now, just so people know, because I think only we can see that I just wanted to let you guys know how many people were on the webinar.[00:04:35] Okay. So Susan, let's start by talking about the common ways that ADUs are financed to get that topic out of the way, because that's not the focus of today's conversation. So can you tell us a little bit about that ? [00:04:46]Susan Brown: [00:04:46] Sure. I think it kind of starts with cash. A lot of people just dip into their own bank account and pay for the project as they go. Absent them, having [00:05:00] cash, a lot of people dip into the bank of mom and dad or other relatives who may be able to pitch into the project. Parent is going to be living in the ADU or another part of the house. It's not uncommon for that parent to contribute to the project as well. Some customers use a home equity line of credit where they can tap into the existing equity in their home and hopefully that provides enough cash to get to the finish line on building the new addition to their property. Moving into a brand new loan if it's a purchase transaction or a refinance loan, if they're trying to re-engineer their financing to use that project for financing.[00:05:45]And we'll talk a little bit more about that in the construction space and how that all works, but there's a broad range of options available depending on the customer circumstances. [00:05:56] Kol Peterson: [00:05:56] So let's talk in broad strokes about construction and [00:06:00] renovation loans. Most homeowners haven't used them before, so what are they and how do they work? [00:06:07]Susan Brown: [00:06:07] A construction loan is a very different kind of an animal and what a lot of people don't recognize. It's a, there are specialty products available for doing renovations in particular, those renovations potentially including adding an ADU to the property.[00:06:25] So the loan part of it, a lot of people are already really familiar with. You apply for a loan, the lender looks at your credit, your income, the collateral that you're offering for the project, and they get approved and get their loan. What's added in a construction element is that we also look at the project and the builder to make sure a couple of things are happening. We want to make sure we've got a builder who is familiar with and has great experience doing the [00:07:00] kind of project where we're being asked to finance. And we also want to make sure that there's somebody who has managed their credit responsibly, paid their trades, their suppliers so that there doesn't end up being any liens against that property.[00:07:16] And then we also take a look at the full project and I'll add this is where there's the impression that it's difficult to work with a bank because we do look at a lot of those details up front and get the project very solidified before we ever start. And, and so that can be a little bit of a frustration where we're collecting plans and specifications and description of materials.[00:07:41] But all of that documentation is used for a couple of reasons. One, we want to make sure that we have a fully funded project when we get the loan in place. Is there enough money to build what you're trying to build? We also want to make sure that we have all of the materials accounted for. If you leave off [00:08:00] the cost of a foundation that can leave you a little frustrated without enough money.[00:08:04]And then we use those documents when we order the appraisal, because that appraisal is going to be based on an as complete value of the project. That's where, if there's not quite enough equity before the project, we're going to take into account the value that's added. And Abdur talked about some of those issues a couple of days ago.[00:08:26]But we do get to add whatever value that ADU brings, which allows us in some cases, to loan more money to get the project done. So all of those things we assume are going to be in place. Who've got credit, we've got a project, we've got a builder, an appraisal that comes in, we fund the loan and then the construction begins.[00:08:46] Over time we're going to do inspections and draws to pay the builder and trades for the work that they've done. That'll go through until the project is complete. And for our particular products that loan rolls [00:09:00] over to permanent financing without a new loan and the customer enjoys their home and lives happily ever after.[00:09:07]Kol Peterson: [00:09:07] The thing that I want to focus on today are the as completed value types of construction loans, as opposed to just being able to tap into what you currently have. I might have a disproportionate interest in that particular topic relative to the number of loans that are actually done that way. Is that nomenclature for as completed value loans that rely upon the competed value of the ADU, is that called something different than using current value than relying upon what your current market value of the real of the house is?[00:09:40]Susan Brown: [00:09:40] So I think what you're asking is what's that called in our world. We call it "As Complete Value". Some people would say finished value. The point for folks to take away. Is that we're going to ask an appraiser to look at that project as if it was already [00:10:00] complete. So when they're looking at the plans that may include that new ADU, we're asking them to compare that to other properties that also have an ADU. Hopefully we're going to get those comparables included in that report. So whatever contributory value from a market perspective is added to the property, we're going to be able to add that to the value to loan against. As Abdur talked about a couple of days ago, We coined it as cost does not always equal value.[00:10:33] So if an ADU costs $200,000, it may only contribute let's just say a $100,000 to the as complete value. But we would be able to then use that additional hundred thousand as we're calculating the maximum amount of loan that's available to the customer. [00:10:54] Kol Peterson: [00:10:54] So the next question was going to be how many ADU construction loans has Umpqua done, [00:11:00] but I want to be clear if you could at least try your best to tease apart what percentage of loans or how many loans have been resting upon that as complete value, if it's possible to do that, versus just, you know, HELOCS or other kind of conventional financing options that Umpqua might do for ADU construction.[00:11:17] Susan Brown: [00:11:17] Got it in my world. I only deal with the as complete product. Our division doesn't work with the HELOCs, so I don't have any data on that. [00:11:29] Kol Peterson: [00:11:29] That's great. [00:11:29]Susan Brown: [00:11:29] I wish that I did, because I think I know that there's a lot of customers who really do go out and get from a HELOC, but that's not, that's not my space.[00:11:38]My best estimate Kol is that we've done somewhere around a hundred, 125 of these loans in the last couple of years. And they're done as an as complete appraisal, always. We've done them from brand new projects where there are subdivisions being built, where those [00:12:00] subdivisions include an ADU with the property. [00:12:03] We do renovation loans where customers are adding either an internal, an attached, or a detached ADU we've financed all of those. Additionally we've done some projects where the ADU is a modular ADU, not just site-built. Those are a little trickier because they have to be craned into the property as opposed to going through the setbacks or whatever access there might be. But all of those projects that we've done, all of them are on an as complete basis.[00:12:37] Kol Peterson: [00:12:37] I should get this one out of the way too, though, it was in my list of questions, which is what jurisdictions does Umpqua serve? [00:12:44] Great [00:12:44] Susan Brown: [00:12:44] question. We're very fortunate. We are in the market all the way from Bellingham, Washington, to San Diego, California, and all of Idaho and Nevada.[00:12:54] So we've got the five states that we lend in. We particularly see the ADU [00:13:00] construction in the more populated areas, but not always, there are some more suburban kind of areas and a little bit more outlying too, but we've had an opportunity to finance ADUs in all of those places. [00:13:15]Kol Peterson: [00:13:15] For Umpqua, ADUs fall squarely within the realm of viable construction loan, financing options.[00:13:22] Is that true for all banks and all credit unions? If not, why not? [00:13:28]Susan Brown: [00:13:28] Yes. ADUs fall squarely in our wheelhouse. We have a high comfort level. We work with whatever is defined as [00:13:38] an DU in a jurisdiction. That's our definition of an ADU there long ago, we got out of trying to dictate what an ADU was, you know, a number of years ago when it was in commonplace, we had these artificial definitions, but now we've got jurisdictions that permit specifically for an ADU.[00:13:58] So if it's an ADU by their [00:14:00] definition, it is by ours in almost every case. I think when you talk about construction financing for ADUs, it gets to be a little bit of a broader issue where lenders have to decide if they want to be involved in construction first, and then if they want to be involved in something that is not as widespread yet as ADU financing. [00:14:25] Construction is challenging and I think we're going to talk about that a little bit more in a bit. So not every bank or credit union will be able to offer construction financing and more specifically ADU financing. The things that tend to keep them away from that, probably the biggest thing, is access to capital. During this COVID time, there's been a suspension of availability of credit to some types of lenders.[00:14:55] If you're a broker who sends your loan to [00:15:00] another lender, they underwrite it and close it for you. Many of those brokers have lost access to construction lending. And also if you're what's called an independent mortgage banker, they operate off of a warehouse lines of credit. They're giant credit lines that fund their loan production until those loans are purchased by the investor.[00:15:24] A lot of the lines of credit, the companies that offer those lines of credit have suspended the use of their lines of credit for construction lending. So it comes down to financial institutions of whatever type that have access either to their own portfolio or are direct sellers to Fannie Mae, Freddie Mac, Ginnie Mae, et cetera.[00:15:47]So it it's kind of shrunk the world of possibilities for who's offering construction loans more broadly. [00:15:56]Kol Peterson: [00:15:56] Thanks. That's really helpful. I've noticed that a lot of the banks that are willing to do construction [00:16:00] loan financing for ADUs, tend to be local banks and credit unions, not as many national banks.[00:16:04] For example, Bank of America would not be a bank I'd recommend for somebody to even pursue asking about whether doing an ADU construction. Can you talk about that a little bit? [00:16:14] Susan Brown: [00:16:14] Yes. I think I, I see it the same way that you do the big national lenders tend to be a little less agile.[00:16:23] They're trying to do things that are probably a little more mainstream because they need consistent processes from location to location, for lots of reasons, policy reasons, process reasons, fair lending reasons. There's all kinds of reasons that larger companies might have flexibility to offer kind of niche.[00:16:46] I'll call it niche. I don't really like to consider it that way, but based on the fact that it's a smaller percent, we'll call it niche. So when you get down to more regional or local lenders, they have a familiarity [00:17:00] with those marketplaces and they feel very comfortable and confident about how trends are developing, what market acceptance is of new types of products.[00:17:11] And so I think those types of lending institutions lend themselves to a little bit more agility, flexibility, and. Not really more risk-taking because we certainly need to make sure that it's very sound, you know, we're in the loan making business, but we're also in the getting paid back business.[00:17:29] Both of those things are equally important. So a more local lender would be a more probable place to find financing for an ADU.[00:17:38] Kol Peterson: [00:17:38] Does Umpqua do portfolio lending for ADU construction loans or only loans that are securitized by government sponsored entities? And that's kind of an advanced question. I'll just let you clarify what does portfolio lending and what are government sponsored entities.[00:17:56] Susan Brown: [00:17:56] Very good. So first some definitions. [00:18:00] Portfolio is when a bank is using it own deposits to lend. So if you have it checking account or a savings account, an IRA, any deposit that are at a bank, those deposits are then used to loan to people in the community, kind of getting back to the basics of how banks work.[00:18:22] And so not all banks use their portfolio to lend, some invest in securities with those deposits. There might be a variety of ways that those deposits are deployed or assets are deployed, but Umpqua does have a robust portfolio. And I'm very happy to say that we have access to that for our ADU lending.[00:18:43] And we'll talk a little…

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The ADU Hour w/guest Joe Robertson Jun 22, 2021

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Kol: Joe Robertson and I have known each other for about a decade or so. And I learned about Joe because he was, you know, pretty involved with some ADU related conversations with the SDC waiver, which we'll talk about in a little bit more detail later. But he's also just notably the, one of the more prolific builders in the U.S. and definitely the most, or the most prolific builder in Portland. So, and the most experienced builder in Portland in terms of ADU development he corrected my marketing literature, which said he'd been building an ADU for a decade he's been building an ADU for two decades, which is very impressive given that it is, we're not really a phenomena two decades ago, at least in, in Portland. So so thank you for that correction. And it just goes to show how much Joe brings to the table. So we'll be fielding a number of questions from you guys that are just kind of all over the map in terms of design and build questions at the end today. So, and [00:03:00] Joe can answer any of these things jointly. All right. So Joe, please introduce yourself a little bit for the audience. Joe Robertson: Hi everybody. I'm Joe Robertson, owner of shelter solutions been a builder residential construction for about 42 years and Portland for 29 years and building ADUs for about 22 years.So I'm experienced in all different types of residential construction from custom homes to production, and then of course, ADUs and other accessory structures for other reasons. So now the ADUs are pretty much all we do. Kol: How many ADUs have you built roughly in how many jurisdictions? Joe Robertson: We have someone ask us this question about well a month or two ago.And so we went back and counted. So we're finishing one next week and it'll be number one sixty nine, a hundred sixty nine ADUs . And primarily building the City of Portland but built some in [00:04:00] Clackamas county, Washington County, Tigard, and Tualitin, but 98% in City of Portland.Kol: Yeah. Yeah. And and there's some, you know, I've mentioned that there's some really specific reasons why that's been the case that most people who are building ADUs are primarily building in Portland, but we're going to see that change probably with House Bill 2001, we'll see more market adoption in neighboring jurisdictions.But it's hard to find builders who have built in other jurisdictions around Portland at this point. Joe Robertson: Yeah. We're open to it, but we, we also need to gauge it by travel time and we don't want to get further than about 30 minutes away in between projects and have to spend too much time on the road with the traffic situation here in Portland.Kol: I know when I think of the work that I've seen, that you do, I've seen detached new construction and I've seen bump out addition ADUs. Do you also do internal ADUs [00:05:00] or other, you know, other forms of ADUs? Joe Robertson: Yeah. Yeah, we have we've completed a few basement conversions to ADUs and several attached ADUs, like you mentioned. The, you don't see the basement conversion so much, cause they're kind of harder to take pictures of.So I haven't posted any of those. Well, I think I do have one on my website, but we prefer to build detached standalone new construction but also garage conversions. We do quite a bit of those and we like, we like garage conversions, but we're not opposed to basement conversions, but there's there's just a select few that are set up to where it can be done properly. So it's kind of limited. Kol: So prior to your decades of ADU construction experience, you did production home building. Can you talk about some of the lessons that you have brought to bear in the ADU development, ADU building space that came from your previous [00:06:00] experiences? Joe Robertson: Yeah, so years ago I was a, for many years in a custom home construction and in Ashland, North Carolina, and I noticed the other day you had somebody on your your listeners from Asheville, North Carolina.And I built primarily a timber frame homes, exposed, exposed, being construction and mortise and tenon, and post and beam construction but all types of residential custom home construction, each one designed individually. And then when I moved to Portland 29 years ago, I started working for a small builder developer that developed his own subdivisions.And we grew quite substantially over the 10 or 12 years that I worked for him. And Joel, you're one of the major builders in the area that wasn't a national builder and production. Hall's mostly mid price production homes. And that's where I kind of honed organizational techniques and scheduling and estimating and so forth.And so I've [00:07:00] applied both aspects to, to building ADUs. I, I, I like to say, ADUs are like building a little custom home in somebody's backyard which it is to me, but we also use a lot of the principles that I use in production housing for organization estimating, scheduling, and so forth.Kol: Yeah. And I'll be prodding you about that process. Actually, let's just go into that. Can you tell us a little bit about the design build process that you use? And tips you'd have for other builders who are trying to adjust into this space. Joe Robertson: Yeah. So we, I started this system quite a few years ago.Well, actually when I started building ADUs, so we'll go out and do a site analysis with the customer and just look it over, have kind of an informal meeting with the customer and give them our opinion, answer their questions. Then the next step after that with us is we do what we call a feasibility study.And in that we start with the [00:08:00] designs, whereas the design build part, and we, we also welcome projects from architects or customers that already had an architect and we've done numerous ones of those, but for the design build aspect we do a feasibility study and we start with the site draw site plan, determine the footprint and then work the floor plan off of that, and then develop it into exterior elevations.And there's a lot of back and forth with the customer during that stage, obviously, till we get to a point to where I say, are we close enough to where I can bid this out to all my subcontractors and suppliers, you can still move a window or change your cabinet plan and I do that a bit. I have a system where I can send a bid package out plans and specs and do a real detailed cost estimate.And also during that time, we meet with the city over the counter in an informal review mostly with planning sometimes with structural and let them see what we're proposing to do and see if there's any issues so that we had them off before we actually apply for a building permit. [00:09:00] And we present that to the customer in a booklet form and also electronically.We charge a fee for that and when they sign up. So we try to answer all the major questions in that. And we also in designing try to design to meet their budget. And then the next step is up to them when they sign a building contract, we credit that fee against the price that we'd given them for the for the feasibility study.Kol: I think your, your feasibility study process is a good hook for getting new leads. For getting clients in your funnel, so to speak. Can you talk a little bit more about that? You know, roughly how much we're talking. How in depth are these feasibility studies? As a point of reference, I do consultations for homeowners who are at the very beginning of the process before they've talked to a builder designer, I charge $200. No, you know, I don't do referrals. I just kind of give my own opinion of what their situation calls [00:10:00] for, what kind of builder they should look for, what should, and it's not really a feasibility study, but it's more or less my, my professional opinion of what they should anticipate the process looking like, but you're doing a much more in depth feasibility study.So let's, can you. Pull that out for us a little bit. Joe Robertson: So my first site, I call it analysis. First consultation is very much like your. It's an informational thing, where you are answering questions basically, and sharing what's required by the code and so forth. And then the step further into the feasibility study, it gets pretty detailed and we spend a lot of time with the customer.And I don't mind saying it's on it's on my website. We charge $1,950 to do a feasibility study, which if a customer doesn't go through the building contract we've if I counted everything out, we've lost money, but. It's to cover us, hopefully part of the time, if it doesn't go through, but it's also, you know, to get a little commitment out of [00:11:00] the customer that we're going to do all this work for you.And, and if you decide you want us to build your ADU we'll, we'll give you that money back. It's built into the cost of, of the project. So it's worked out really well. And the conversion rate to that is, is pretty high. It varies a lot, but I'd say in the 70, 75% range converts to an actual build, Kol: The remaining 25%, you suspect they're going to other builders or they just not going forward with their ADU.Joe Robertson: I don't think I try to check up and I don't think I've lost too many to other builders. Like over the years, maybe. Two or three or four. Sometimes financing is the big holdup. Or they just changed their mind or it's, it's a little too overwhelming, it's a big deal. So, and it's a long process. So some people just aren't totally cut out for it once they find out everything about it.But that's one of the beauties of the feasibility study. They definitely get their [00:12:00] money's worth out of it.Kol: We should clarify that when I've seen your feasibility studies they actually include preliminary drawings of the ADU that you're talking about building. Joe Robertson: Correct. So we do floor plans. They're they're detail. I mean, everything's on the floor plans, except for all of the notes and stuff that you need to put on for permits and exterior elevations. And we'll usually do we do it in Revvit. So we usually do a couple of 3d renderings either outside or inside or both. So when we go to final plans, we're just adding engineering and all the, the details that the city is going to want to see on the application plans and any changes the customer makes along the way.Kelcy: You're saying the word rendering reminded me that can you tell us where you're sitting right now? Where we, where we think you're sitting? Joe Robertson: Oh, well this is one of my ADUs I'm sitting on the floor. No, I'm, I'm actually in my office with a backdrop of a picture of one that we built.Kol: We're going to go into [00:13:00] costs here. Joe, talk about cost and I can put myself on mute. Joe Robertson: I hope my my dog doesn't hear. Cause it'll start to o. As far as costs, I noticed, I heard you say that we're one of the least costly ADU builders and I, I don't, I can't say that for sure.And we don't want to be the cheapest, but we want to be as competitive as possible. And I think we were told that we are .I don't think I can say I've lost a whole lot because of costs I've lost. Maybe some that was more than the budget that the customer could stand, but not because I was competing against somebody else.But we'd like to compete against other builders on a cost standpoint, because I think. We're not the cheapest, but I think we come out good. And I think we give the customer good value for the dollars they spend. But we are competitive for maybe three, three different things. One is, is volume because of the systems that we we have in place and our organizational systems [00:14:00] and skills we can build more ADUs.We, we one year we built 20. I can't say that was comfortable, but it turned out well, all of the customers were happy with their product and we built them on time and budget. But 15 to 17 in that range, depending on size and complexity, is a more comfortable volume for us. But when you build in that volume, you can keep your cost, I think, a little bit more competitive and then 2, Our subcontractors and suppliers have been with me. Lots of them have been with me 20 years or more. Many of them 10 years or more. I think the newest one we have is three years . And so it, it develops a loyalty and it helps to control costs when you're not jumping around from subcontractor to subcontractor, especially in the market that we had before this little, a big crisis hit us.And then, like I mentioned before in the feasibility study we designed, we were very upfront with the customer to get a budget up front. And then we [00:15:00] design to that budget when we're doing a design build. And we were pretty successful with that. Kol: So let's talk a little bit about your business. How many, like how many full-time staff are there and what portions of the construction do you sub out and what portions do you do in house? Joe Robertson: We're a small company and happy to be that way, especially when things turn down. It's myself, my wife does the bookkeeping here in the office. I have a project manager I believe you've met.And then he has an assistant that he's basically training to to do more and more of his job. And I'm training my project manager to do more and more of my jobs. So we're, we're kind of building within at this point. And I mentioned near future. I don't want to grow any more than we are. I'm very happy with the size that we are and I don't really want to do anymore volume that I just explained -that works quite well for us. And we keep [00:16:00] it all the customers happy that way. So we're a pretty tight knit company. Our designer works for us on a contract basis, so per job basis, but he like all my other subcontractors. That's done all my work for many, many years. So it's more than just a, "Hey, go to this guy and get a plan drawn."We've got a real good relationship. And then I also have a designer, like a selections coordinator, who is an independent contractor. She's also a designer for Nike who works with our customers. When they go in for permits, she starts working with them and helps them kind of hold their hand and help assist them all the way through making all their finished selections.So that's the size of our business. Kol: So what are some elements of ADU construction that make it more challenging than conventional single family home building? Joe Robertson: So I've said this a lot -that building an ADU, like I said earlier, it's like building a custom home in [00:17:00] somebody's backyard- is more difficult to me - and I've got experience in building hundreds and hundreds of houses.And building an ADU is more difficult than going out and building a 2,500 square foot house on a vacant lot, by far. As far as challenges, the access is the obvious one. And we built some that I look back and I can't, I can't even see how we did it, but where there's five feet between the house and the property line.And we got everything through there, the concrete and the lumber and all the equipment and so forth, the grading. So access is always a consideration. We love, love, corner, lots, or alley, lots too love those. And then utilities, that's one of the first things when I go out on one of those site analysis to meet a customer, it's not fun or sexy to them, bu…

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