Increasing the Uptake of Accessory Dwelling Units: New Research, Design, and Outreach

In response to the need for more housing and the rising cost of construction in the Twin Cities region, Family Housing Fund is working to increase development of flexible housing forms like Accessory Dwelling Units (ADUs). ADUs are a type of small-scale housing development, typically built by homeowners in existing neighborhoods, that can play an important role in addressing our region’s need for more affordable housing options.

Since the release of our Home + home Twin Cities ADU Guidebook for Homeowners earlier in 2019, Family Housing Fund has engaged new partners and communities to increase ADU development in the Twin Cities. We have launched three main efforts to guide and encourage homeowners in constructing ADUs:

1. A demonstration project with Dayton’s Bluff Neighborhood Housing Services to develop design and cost models that support the development of ADUs throughout the Twin Cities.
2. A partnership with Twin Cities Habitat for Humanity to gauge homeowner and homebuyer interest in ADUs and analyze different approaches to ADU design and finance.
3. Community outreach to educate homeowners on the benefits of ADUs and connect them to resources that will help them get started.

Why are we focusing on ADUs?

An Accessory Dwelling Unit is a smaller, self-contained residential unit – with its own entrance, living room, kitchen, and bathroom – on the same lot as the primary house. It can be an apartment in the basement, above the garage, or in the backyard. ADUs provide flexible, life-cycle housing options for families, and they tend to be affordable rental options in the private market.

While ADUs are a historic housing form, our current housing affordability challenges have recently spurred a resurgence of interest in ADUs, both locally and nationally. Whether to house a relative, generate rental income, or downsize, more and more households are interested in building ADUs. And some state and local governments are responding to that demand. Just last month, California passed a legislative package removing certain regulatory barriers and expanding the ability of homeowners to build multiple ADUs on their property. In Minnesota, the City of Dayton is considering an ordinance that would allow ADUs to be built on lots zoned for single-family homes. And the Minneapolis City Council  is considering an amendment to its 2014 ADU ordinance that will remove owner-occupancy requirements, thereby making it easier to build and generate rental income from an ADU.

ADUs have the potential to help us meet a meaningful part of our region’s changing housing needs. If ADUs became as common as they are in Portland, OR (present on 1.5% of single-family lots), the Twin Cities region would create 11,000 new housing units. While no silver bullet, this would go a long way toward easing our supply problem.

New ADU research and design

One of the most significant barriers to building an ADU is financing the design and construction. This is why Family Housing Fund is partnering with Dayton’s Bluff Neighborhood Housing Services to design and implement an ADU demonstration project, which will result in six new ADUs developed on infill sites in Saint Paul. Through this project, we expect to determine the costs of building different types of ADUs and the degree to which costs can be supported by the resulting increase in property value. This demonstration project will also test the effectiveness of Saint Paul’s 2016 ADU ordinance and will help us identify and recommend changes to city building permitting, mortgage financing, or other systems that would encourage greater development of ADUs in Saint Paul and the region.

Additionally, we have partnered with Twin Cities Habitat for Humanity to conduct further market research, engaging with homeowners and buyers to gauge their interest and understand other barriers to building an ADU. Together, we will also explore additional design and finance models, gather information from other Habitat affiliates pursuing ADU development, and broadly share the lessons learned. This work will complement our demonstration project with Dayton’s Bluff, resulting in a comprehensive package of adaptable ADU designs and financing options that will help Twin Cities homeowners overcome the financial barriers to building an ADU.

Results from our homeowner outreach

For the last six months, Family Housing Fund has been engaging homeowners in communities around the metro to introduce local residents to our ADU guidebook and help them begin the process of building an ADU. We hosted three ADU workshops throughout the region in October, connecting 122 homeowners to in-person expert advice from local lenders, architects, and builders who have worked on ADU projects in the region. When surveyed, over 1/3 of workshop attendees said they definitely planned to build an ADU.

One suburban homeowner, Laura, built a detached ADU over ten years ago after deciding to repurpose an unused artist studio in her front yard. She says she mostly uses the ADU as a rental, which helps her afford maintenance for her main home. But she’s also used it to house her family and friends during hard times. When her adult son lost his business after a flood, he and his family stayed in the ADU until they were back on their feet. And when her daughter’s high-risk pregnancy forced her to move back to Minnesota unexpectedly, she and her husband moved into the ADU with their daughter. They stayed for a year after their baby was born, and Laura helped to care for her grandchildren.

“It’s a healing space,” Laura said. “I’m so grateful and glad I had this spot for them because they wouldn’t have been able to afford anywhere else.”

Laura’s ADU had such a positive impact on her family that her brother later decided to build his own ADU to house their mother, who wanted to be closer to her family rather than live in senior housing. And he’s far from alone; nearly 1/3 of homeowners who attended our workshops listed “housing a relative” as one of the main reasons they were interested in building an ADU.

An important piece of the affordability puzzle

While ADUs can help us meet a portion of our supply needs, we know that they are only one piece of the housing affordability puzzle. Our region needs a wide variety of housing options, from small-scale multihousing such as duplexes and triplexes, to manufactured homes, to high-rise developments. ADUs may be just one piece of the puzzle, but they provide necessary options for life-cycle housing, multigenerational living, and gently increasing density.

If you would like to host an ADU workshop – where architects, builders, and lenders offer ADU advice to your community – please contact Karyssa Scheck.