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At first glance, the navy blue cottage near Liberty Park in Salt Lake City might fool you as a single-family home.
“We wanted to have it fit into the character of the neighborhood,” homeowner Jeff Perkins said, pointing to the three windows in his mother-in-law apartment that mimic the attic windows of a house across the street.
Mother-in-law apartments, also known as accessory dwelling units (ADUs), have become a hot topic in Utah’s housing crunch discussion as the state wrestles with an ongoing population boom.
In Salt Lake City alone, there’s roughly an 11,000 affordable unit shortage, according to Salt Lake City Planning Director Nick Norris. To help expand housing options, lawmakers on Utah’s Capitol Hill successfully passed a law in March of 2020 making it easier for housing developers and current homeowners to build an ADU.
Salt Lake County municipalities adopted ordinances that align with HB82, which went into effect on October 1. And while “lots of people are asking” about ADUs, it’s too early to tell if homeowners will actually follow through with the tedious task, said Travis Hair, a planner for the Greater Salt Lake Municipal Services District.
“I get probably 10 or 15 calls a week for new leads on ADU projects and micro-housing projects,” said Jason Coulam, the General Contractor and Chief Operating Officer of Built by Design, a Utah company that offers custom ADU construction.
Even with eased restrictions, ADU developments have to overcome a series of obstacles, including zoning laws, assorted fees, and, in some cases, neighbors.
“The initial excitement is always extremely high,” said Coulam about potential clients inquiring about ADU construction. “What tends to tamp down the excitement is fairly early on in the process.”
A versatile vision
With an average rent of roughly $1,200 for a one-bedroom apartment in Salt Lake City, a spotlight is on ADUs as a possible solution to housing affordability. Overall, the extra cash ADUs could bring in, and the multipurpose nature seem to be the main motivator for building them.
“Some folks are looking to create better housing for their families. Some people genuinely seem to be interested in helping the city solve its housing problem alongside benefiting themselves,” Coulam said. “Above all, I would say that most of the people that are approaching us are looking for an investment opportunity.”
Jeff and Stacy Perkins envisioned turning their large street-facing garden into something livable since they bought their home in 2012.
“Both of our families live out of state currently and we have aging parents,” explained Jeff. “We can use it for family and friends to come stay, and potentially long term.”
In the short term, the Perkins have turned the ADU into a community commodity.
“We’ve opened it up to some of our neighbors and some of their families,” said Jeff.
ADUs for rent are welcomed in Salt Lake City. The city put together a 2020 ADU report outlining the number of ADU applications, where the apartments are being built, addressing obstacles in construction and improvements that could be made to the process.
“What we can do is be a leader in the region to show that if we make these changes [to ADU construction] we can demonstrate they’re providing housing and not creating real negative impacts,” said Nick Norris, the planning director for Salt Lake City. “We need that variety of housing.”
The growing to-do list
Pen went to paper when Salt Lake City signed a 2018 ordinance, actually making it feasible for homeowners to build an ADU on their property. Soon afterward, Jeff and Stacy Perkins teamed up with Built by Design to break ground on their ADU project. It took the Perkins about 18 months and $150,000 to finish the project, and it didn’t come without surprises.
ADU construction costs and regulations differ depending on location. Unexpected costs arise which can set back the completion, like sewage standards and impact fees for supplementing extra use of resources, such as water.
When moving through the permit process, the Perkins were hit with Park Impact fees, which builders pay to help fund more parks in the interest of SLC’s spiking population.
“They [Salt Lake City] charged almost five or six thousand dollars for a Park Impact fee,” said Jeff Perkins. “We didn’t have that budgeted, and it caught us off guard for sure.”
The city has since lowered some impact fee rates for ADUs, including the Park fees, but it didn’t eliminate them completely. Prior to the change, new ADU stand-alone builds were considered new single-family homes which have higher impact fees than an individual unit in an apartment complex.
“We reevaluated how we were interpreting that [impact fees] to ADUs and decided it actually should be applied at the multifamily rate,” said Norris. That move alone, Norris says, reduced ADU impact fees by $2,200.
Those looking to build a stand-alone apartment, like the Perkins, have to be granted a conditional use permit. A public hearing was set up by the city to examine if the Perkins’ property checked all the required boxes. The public hearing also gives surrounding neighbors the opportunity to speak out against the ADU.
“We had a neighbor worried the structure was going to be too tall,” said Jeff. “Another was concerned about parking.”
At the end of the day, the ADU was in compliance with the SLC ordinance, so it was given the stamp of approval. Others aren’t so fortunate. If neighbor complaints about an ADU are excessive, they have the power to forfeit the project, or at least knock it off track.
“The conditional use permit is a large obstacle to overcome,” said Coulam, the general contractor for Built By Design.
Ironing out the wrinkles
The passage of HB82 did away with the conditional use permit for internal ADUs connected to the blueprint of the primary residence, such as a basement or over-the-garage apartment.
“Turning an internal ADU to be a nonconditional use permit … is a huge step in the right direction,” said Coulam, “and immediately opens up probably between 50-70% more projects to be completed under a normal review process, instead of a conditional use process.”
That’s at least the hope. According to the 2020 ADU report, Salt Lake City anticipated the completion of 40 ADUs by the end of 2021. But the pandemic put a damper on the city’s expectations.
“Materials went so high this year that we know some people backed out and their permits went stagnant,” Norris explained.
Now the city expects a significantly lower number of ADUs to be completed. But Norris is hopeful that when the supply chain levels out homeowners will open back up to the idea.
“We’ve seen a continued interest every year,” Norris said. “I think the changes the Legislature adopted earlier this year will start having more of an impact, particularly as the cost of construction starts coming down.”
As of the end of September, 23 ADU applications have been filed with the city, says Norris.
Salt Lake City’s 2021 ADU report will be available in early 2022.
Breaking future ground
Salt Lake City has yet to establish a goal for how much of the city’s rental market should be made up of mother-in-law apartments, according to Norris. A tangible goal, he says, would help the city progress to meet the housing demand.
“We’re going to have a bigger need. We’re going to have more people who can’t afford to live here,” Norris emphasized. “And those are our kids, our grandparents, our parents, you know, that are going to be the ones who suffer the most.”
Salt Lake City is working on an affordable housing incentive to encourage property owners that have the land to build and rent the space at an accessible rate through a density bonus. Currently, the city is short about 7,000 units for residents who fall 30% below the poverty line, according to Norris.
The bonus “is intended to increase the supply of affordable housing,” said Norris.
The program will hopefully be available to the public at the beginning of December.
“I don’t think that they’re going to be the only answer to our housing problem,” said Jason Coulam, a general contractor that builds custom ADUs. “But I do think they have a larger role to play in it.”