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Little Backyard Houses Face Surprise Costs

The rarely spotted relative of a granny-flat or in-law apartment that's built inside a house is getting more and more popular.

Tue January 05, 2016 - West Edition
BOB YOUNG - The Seattle Times

The Seattle City Council is trying to figure out how to permit more backyard cottages because they can offer a moderately priced option to the growing demand for rentals.
The Seattle City Council is trying to figure out how to permit more backyard cottages because they can offer a moderately priced option to the growing demand for rentals.

SEATTLE (AP) - Matt Stevenson has a little treasure behind his house that's envied by his Fremont neighbors and coveted by city officials.

Stevenson and his wife just built a backyard cottage, known in city-speak as a 'detached accessory dwelling unit,' or DADU. It's the rarely spotted relative of a granny-flat or in-law apartment that's built inside a house.

The Seattle City Council is trying to figure out how to permit more backyard cottages because they can offer a moderately priced option to the growing demand for rentals. If just 5 percent of the eligible single-family homes added cottages, that would add almost 4,000 dwellings to the city.

But it turns out these little houses face big challenges. Just 159 of them have been built in Seattle since they were legalized in 2010.

Portland had a similar problem. It tried removing two rules now front and center in Seattle's consideration. Portland scrapped its requirement that each cottage must have a dedicated off-street parking spot, and a mandate that owners must live on the property, in either the main house or cottage.

“Those had minimal effect,” said Phil Nameny, a city planner in Portland.

What made Portland's cottages an industry - with the city now permitting roughly one accessory unit per day - was when the city waived development charges for accessory units in 2010, saving builders about $11,000 on average, Nameny said.

There's been no similar proposal in Seattle as the City Council moves toward drafting legislation this year to encourage more cottages and granny flats. If anything, the opposite appears to be happening: Some cottage-builders are getting billed for King County sewer connections they weren't expecting.

If the city can't waive such charges, dropping the owner-occupancy requirement is the next best option, some say. “Without adding a new class of investors you will not see a big bump in production because they are expensive,' said Matt Hutchins, an architect who specializes in backyard cottages.

But that's likely to stir controversy.

“Owner-occupancy is going to be a tough one,' Fremont neighborhood activist Toby Thaler told City Council members at a packed meeting in mid-December. “Good luck with that. We'll be happy to engage with you next year.'

More privacy, quiet

Backyard cottages have some obvious advantages over granny flats, called ADUs by the city, 937 of which existed in Seattle last year.

With no shared walls, DADUs offer a sense of privacy and quiet that makes them similar to a small house.

“As a homeowner I'd love someone living in my backyard,' said Mike O'Brien, the council member leading the push for more accessory units. “But do I want someone in my basement? That's about 20 feet too close.'

Late last month, Stevenson completed construction of a two-story, 482-square-foot cottage behind the 1944 Fremont house he's owned for 11 years. He and his wife see it as an investment they might move into when their children are grown.

It wasn't cheap, though. The cottage cost them $160,000.

Under city rules, they had to create two parking spots they didn't have - one for the cottage and one for their house. That added more than $5,000 to the project, Stevenson said.

And smaller appliances, such as stacked washer-dryer combos, are more expensive than conventional ones, Stevenson said.

City fees and permits, which he estimated at a few thousand dollars, were not much of an impediment, Stevenson said. Construction and materials were by far his biggest expenses.

He and his wife plan to charge $150 a night for the cottage as a short-term rental, or $1,800 a month for a longer-term tenant.

In a city survey, cottage owners said regulations and construction costs were the two chief obstacles they faced.

The average cost of building a detached unit is $55,000, according to a city report. But that's recession-era pricing, said Bruce Parker, founder of Microhouse, a company that specializes in designing small dwellings.

Parker said he tells homeowners they should expect to spend about $200,000.

At those costs, rents are not always affordable to tenants with modest incomes. “When I started,' Parker said, “clients mostly were building for family members. There was a certain economy if you're looking at costs of assisted care.'

Now, the majority of his clients build cottages for rental income, he said.

Many rents run between $1,200 and $1,800 for a one-bedroom cottage, according to a city report, and DADUs are often on larger-than-average parcels in neighborhoods “often affordable only to high-income households.'

$10,000 sewer fee

A new cost for cottages has popped up.

Until homeowner Benj Wadsworth brought it up at a December council meeting, architect Hutchins said he had not heard of accessory units getting hit with King County's sewer-connection charge.

“I imagine that would have quite a chilling effect,' he said of the $10,000 charge Wadsworth told council members he incurred.

In the past, city officials had let cottages connect to the plumbing in the main house, which avoided a county sewer-connection charge. But a few years ago, the city revised its interpretation, according to a spokesman for Seattle's planning department, triggering the charges.

Wadsworth said he tried to argue he was just adding an apartment, not a new house. But county officials told him the fee was based on the impact of new residential construction, he said, not the size of the unit or number of people in it.

Pam Elardo, head of the King County Wastewater Division, agreed.

In the county's growth-pays-for-growth logic, Elardo said, new connections create new demands on the countywide system. Those costs need to be spread to new users, she said.

There's also a fairness issue, she said. To exempt cottages from sewer-connection fees would amount to other properties subsidizing them.

If local leaders want such a subsidy, it's a decision above her pay grade, Elardo said.

And, if they were to subsidize detached units, it would make sense for policymakers to seek a public benefit in return, such as affordable rents, O'Brien said.

Affordability issue

Mayor Ed Murray is not thrilled about O'Brien's effort, saying it may interfere with key planks of his affordable-housing plan.

When it released recommendations last summer, Murray's housing task force sparked opposition with its call for allowing duplexes, triplexes, rooming houses and more accessory units in single-family zones.

“Amid the uproar,' Murray said, O'Brien encouraged him to dump the proposed changes to single-family neighborhoods, including those for accessory units.

Murray said he is focused on implementing two policies aimed at producing 6,000 new affordable units: inclusionary zoning that requires new developments to restrict rents in a certain percentage of units; and fees developers would pay to build bigger than what zoning allows.

“I'm happy to work with any ideas as long as they don't distract from where the most affordable units are coming from,' Murray said.

O'Brien disagrees with Murray's characterization.

He said he never asked Murray to pull back on accessory units, and a blog post he wrote in July supported an increase in backyard cottages, while retreating from other task-force recommendations. “I was disappointed when the mayor walked back all of it,' he said.

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