Policy Documents: Comments on the ADU Situation after the Whittier Discussion

Here are a few observations about what was discussed Tuesday night at the Whittier ADU meeting that you all attended.

First, I would like to acknowledge Sam for putting in the time and energy to actually try to think through some of the issues and to put together an approach that would accomplish some of the goals without being a wholesale rezoning.

But there is a lot more work to be done, as I have tried to lay out below. My concern is that trying to address all this in a council meeting, when the groundwork has not been done properly, and where citizen input is necessarily going to be one step behind, is not going to produce anywhere near the optimal result.

The staff work is just not adequate: They failed to identify all the issues, and their arguments are pretty much a replay. And there is no real goals analysis, options development, or critical evaluation.

Here are some examples of where significant issues still exist. At the end I lay out an outline as to how you might proceed forward. I’m happy to discuss further.

IMO the key thing to remember, if you want to do it right, is that there is no hurry. Even the currently illegal ADUs have been around for years. It’s not an emergency that has to be deal with “right now!”

Steve Pomerance

A relatively few Boulder residents are being asked to accept the impacts of increasing the supply of affordable housing.

All of this ADU work is really targeted at the single-family homeowners in the RE, RL-1&2, and RR-1&2 zones. (In the RMX, they already have plenty of opportunity for ADUs and OAUs.) And of the “eligible” parcels in the staff’s chart on page 13 in the targeted zoning categories, there are some thousands of parcels that are not subject to the City’s proposed increased level of ADUs, simply because they are in HOAs, have covenants, or are in PUDs, PDs, etc. where what can be built is strictly limited. I’m still waiting for City staff to provide me with the numbers, but a guestimate on the remaining number of parcels is probably down around 9,000 or less where ADUs are possible, probably around 20+% of the total housing units in Boulder.

So the impact is being put on this relatively small subset of residents (those who live near a new ADU), when nothing equivalent is being asked of the rest of Boulder residents. I just don’t think this is at all fair.

Asking people to accept local impacts in the name of some community benefit might be acceptable if all residents faced the same impacts and they had some say in the decision. But in this case, it’s a relative few, and they have no real say at all.

The approach of constraining rents without income qualifications won’t work.

Tuesday night I heard for the first time that what is being proposed is to restrict rents but not require people who rent those ADUs to be income qualified. So here’s a scenario:

I live in and own a house with an ADU that I want to rent out. I have 2 potential renters whose applications I’m reviewing – one is obviously well off and the other is clearly not. Assuming I don’t want a hassle every month collecting the rent, I will pick the better credit risk every time. That means that I will have picked the one who doesn’t really need affordable housing, because he/she/they is/are more likely to pay the rent on time.

So not including income qualifications will likely do nothing toward the real goal, which I presume is maintaining an economically diverse population. But it will is transfer the value from the homeowner (who might need the money to stay in his/her home) to the renter (who clearly doesn’t need the money).

Using saturation rates without mandatory separation doesn’t work.

A quick look at my neighborhood, which is somewhat typical RL-1, shows me that with 20% saturation determined by the number of units within 300 feet, a homeowner could have one ADU on each side and one across the street. That makes parking a real issue. And with the larger ADU units, it’s entirely possible to have 2 adult residents and therefore 2 cars per ADU. This is not Portland or some other dense city – cars are what people use to get around, go skiing or hiking, etc. So putting in some separation requirement is important, but is not on the list.

The affordability trigger should start at zero, and not allow new ADU units to be built that are not affordable.

Assuming that you fix the affordability idea by requiring income qualification, there’s no good reason not to require all new ADUS to have affordable rents, rather than just those above 450 ft2 or whatever. You can grandfather in the existing units, but require them to conform to the rent affordability requirement upon sale or transfer of ownership. That meets the same legal tests as Sam’s proposal, since no one has to build an ADU; it’s totally voluntary. And no one has to buy a house with an ADU, again that’s voluntary.

The proposed saturation percentage of 20% is WAY too big.

A quick look at the table on page 13 shows that in the relevant zoning categories, OAUs/ADUs exist on less than 2% of the “eligible” parcels. So why is a saturation rate of 20% being considered? That’s way too high. If you really want more ADUs, once you’ve put in place the income qualification and rent control, it would make a lot more sense to fine tune the rules first, rather than opening the door up fully to far too many, and then being unable to fix any problems that arise because you can’t really go backwards.

The argument that because current occupancy limits already allow 2 boarders means that there won’t be parking impacts from ADUs is totally specious.

Someone at the meeting (Mary?) pointed out this current occupancy limit as an argument for not requiring off street parking parking. But this staff argument is bogus. The reality is that almost no homeowners have any boarders. But when they get to build big ADUs, they will have the maximum number of “boarders”, actually renters.

BTW, I pointed this out to the staff when they made the same specious argument in one of their biased surveys. But of course it keeps showing back up.

The notion that by allowing currently illegal ADUs to become legal will solve the health/safety issue is questionable.

We already know (as Crystal pointed out at the meeting) that some currently illegal ADUs exist because of accidents of history, etc. You could create a variance process for people who are in that situation, and that would solve the health/safety issue, to the extent that these ADUs can be modified to fit the rules or the rules can be reasonably bent.

But if there are people, and I would bet dollars to donuts that there are plenty, who did or would do an illegal ADU because they think that they could get away with it, then they will create new illegal ones whether you have had an amnesty or not.

Then you will have new illegal ADUs, and the same real problem will just reoccur. Clearly what is required is a level of enforcement that would prevent illegal units in the first place.

The implications of the fact that mortgage lenders do not take into account income from ADUs in figuring out how much they’re willing to lend has not been sufficiently considered. 

It seems to me that the only people that will be able to take advantage of a loosened ADU ordinance are those whose incomes are high enough, or have the cash on hand, so that they can either easily borrow or cash fund, say, $130,000 (to use the example of 650 ft2 x $200/ft2), to build or pay for the ADU. (Costs of course may vary, but you get the idea – almost always, it takes some real money.)

The point is that allowing more ADUs, under this scenario, does not necessarily help the homeowners who actually need the extra money from the rental income to stay in their homes, since those potential homeowners can’t afford to construct one. But homeowners with plenty of cash can build ADUs.

Allowing property owners that have ADUs to sell their building and transfer the permit to the next property owner has negative implications whether allowed or not.

This relates to whether you maintain or delete the current law (9-6-3(a)(1)(F), B.R.C. 1981) that states that an ADU permit may not be renewed upon change of ownership if there is someone else on the waiting list for that area. 

This ability to sell the ADU permit along with the building obviously affects the current owner’s willingness to fund or finance an ADU: If they lose the permit when they sell, then their investment is down the toilet and they’ve lost the value. So they will have considerably less enthusiasm to get into this in the first place. 

But, on the other hand, if they get to keep the ADU just because they got in first, that exacerbates the inequities and conflicts — it ensures that first come/first served irrespective of any other arguments or priorities, and it means that existing illegals (that would fit under the new rules) get priority over new potential legal ones. 

But irrespective of the above issues, adding in an ADU makes the price upon sale even less affordable, since people with sufficient enough money can pay for the extra financial value of the ADU. But those on the edge that could otherwise afford the house without an ADU would be shut out financially from buying it with the ADU, because the rental income won’t count toward their mortgage qualification. This makes the neighborhood even more exclusive and exacerbates the spit between the have’s and the have not's.

Conclusion:

My point with all this is that there are real, significant issues that haven’t been fully thought through. And attempts to solve these will certainly bring up new/other issues that also haven’t been thought about. So trying to do this in a series of ordinance readings, without real-time input from people who are willing to look critically (clearly not City staff) is essential.

Here’s how I suggest proceeding forward:

Again, I would strongly suggest not trying to do this in a series of ordinance readings. The proper analysis has not been done, so it’s virtually certain that you will make sub-optimal decisions. And you do not need to do this now. Really, the only thing that you need to do now (and this is debatable as to its urgency) is to try to bring the historical illegal units (that I discussed above) into the regulatory process for health/safety reasons.

Then I would start afresh, and really spend some time clarifying the goals. What I heard last night was to use ADUs to create more affordable housing, presumably to support economic diversity, and to deal with the health/safety issues around the illegal units. But if there are other goals (like, for example, treating all residents equitably, allowing people on the edge financially to build ADUs, etc.) that have majority support, then they need to be clearly articulated.

Hand-pick a group of citizens to help you with all this. What you need is help with the analysis. That’s what the HAB and Planning Board should have done, but didn’t. Pick some of them, and some others, and have someone chair it who will hold the focus on being objective and analytical, not on pushing some agenda.

Do a real “options” analysis. I’ve laid out above some of the pros and cons of some of the approaches. But this needs to be done completely, identifying all reasonable actions, and then objectively and fully evaluating them. This will require some real data work that so far has not been done (or at least is not visible), so that the current reality is known.

Look at the details of each neighborhood. I know it’s tempting to just say that X or Y will work and leave it at that. But what you should support doing is evaluating how X or Y will work in Neighborhood Z, or in each part of it, because the conditions are not equal.

Then, once you have a list of action items that have a reasonable chance of achieving the goals, at least in the abstract, run them by the neighbors and let them hash it out as to how they might apply or function (or not) in their particular locations. Then take whatever comes back out of that and consider it.

As to the staff’s sub-community planning process, this ADU process does not have to run concurrently with that. It can be done separately, at least the way I see it. Whether or not ADUs are allowed or under what circumstances is not critical to big picture planning about shopping, office buildings, etc. But it can direct how people want their residential areas to be. And the people who live there should really have a significant say.