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Chicago’s future ADU ordinance should learn from other cities’ mistakes

Published on May. 7, 2020 by Jay Koziarz

There’s a new sense of urgency to approve the city’s plan to bring Accessory Dwelling Units (ADUs) back to Chicago as the COVID-19 health crisis amplifies systemic economic inequality and the need for safe, affordable housing. While the ordinance to legalize ADUs isn’t expected to go before the City Council until later this summer, a new report from the Urban Land Institute (ULI) hints at what the upcoming legislation could look like. The report also highlights specific barriers that will need to be overcome for Chicago to implement a successful and equitable policy.

Editor’s note: Steven Vance, CEO of Chicago Cityscape, was a member of the ULI task force that created the recommendations in the report.

A coach house in Pilsen. Photo by Gabriel X. Michael

Accessory Dwelling Units — which are smaller, independent residences added to a single-family or multi-flat house — come in many forms including over-garage coach houses, attached rear additions, standalone backyard cottages, and basement or attic build-outs within existing buildings. Illegal in Chicago since the 1950s, this type of housing has the potential to boost income for homeowners, allow seniors to age in place, and replace the much-needed affordable housing and density being lost to demolitions and deconversion of existing two- to four-flat buildings.

The city will need to get the ordinance right to fully unlock all of the benefits ADUs have to offer and to encourage their construction, especially in Chicago’s underserved neighborhoods where real estate markets are softer and property owners have less capital to invest.

The ULI report incorporated the feedback from dozens of urban planners, real estate experts, architects, city officials, community groups, lenders, and other stakeholders to form a series of recommendations for Chicago’s future ADU legislation. The report also examined what it took for the ADU policies in other cities like Seattle, Portland, Minneapolis, and Los Angeles to take hold and flourish. The hope is that Chicago can avoid some of the same barriers and early mistakes.

Models drawn by Mark Pomarico and James Young, architects who work at Booth Hansen, were helpful in understanding how regulations affect design and development feasibility.

“The findings will help create an ordinance that we hope to get passed by August,” said Harry Osterman, alderman of the 48th Ward and chairman of the Committee on Housing, at a ULI-hosted webinar on Thursday. “We’re in very challenging times right now, and housing is going to play a critical part in where we go as a city. This ordinance is a tool to create additional units that are affordable and available for seniors.”

The report recommends a “less is more” approach to ADU regulation by allowing new units to be built as-of-right in all residential zoning districts. It also suggests targeting “chronically vacant” ground-floor commercial space for conversion into accessible residential units that can take advantage of at-grade entrances.

Other zoning recommendations include relaxing off-street parking minimums, minimum lot area per dwelling unit rules, and open space requirements. The cumulative effect will result in much greater flexibility in where an ADU can be placed on a standard Chicago lot. In the name of increased flexibility, the report advocates lifting requirements for property owners to reside at the address and to allow short-term rentals like Airbnb.

Chicago’s new building code, which is set to go into effect this summer, is already ADU-friendly and allows greater flexibility when it comes to less expensive wood-frame construction.

“We were preparing for an ordinance like this to come along and, building code-wise, we’re ready,” said Chicago Building Commissioner Judy Frydland at Thursday’s meeting. “We are streamlining our permit process and will work with people to keep down the cost. Our priority is to ensure the safety of residents.”

According to the report, a “solutions-focused” approach to building inspections should provide an easy way for homeowners to legalize existing non-compliant units and not discourage property owners from exploring ADUs due to the threat of possible fines or repair costs. The city also needs to be mindful of displacing residents living in existing ADUs with code infractions, the report says.

The ADU regulations are also looking at reducing minimum ceiling heights for basement units, which can eliminate the need for costly excavations, and flexibility when it comes to utility hook-ups. Another cost-saving measure could be pre-approved architectural designs for ADUs and the use of modular construction.

Though less expensive than a typical housing unit, the cost of building an ADU is still a significant investment that many Chicago property owners may not be able to shoulder.

Financing still remains one of the biggest hurdles in the path of creating the maximum number of new units.

The report identified the need for ADU-friendly financing mechanisms like short-term bridge loans supported by the city or the ability to borrow money against the future value of the ADU (lenders usually don’t consider the future value of a unit when lending). A possible solution could be homeowners partnering with developers and entering into a land-lease agreement in which the developer finances, builds, and owns the ADU but rents the land from the property owner (there’s at least one company doing this on the West Coast).

New homeowner-friendly programs and resources are needed to help homeowners understand what is required to build an ADU. This could include checklists, pre-approved designs, cost estimates, an online dashboard, and collaboration with community intermediaries and non-profit groups.

In a city were aldermanic privilege has historically resulted in a piece-meal approach to zoning and land-use policy, the upcoming ADU ordinance aims to cover all 50 wards, according to Osterman. The 48th Ward official says he and aldermen Tom Tunney (44th) and Matt Martin (47th) will speak to other members of the City Council in the coming weeks to gauge support.

“It’s important that we implement the ADU ordinance across the board, given the magnitude of it,” explained Osterman. “Part of our conversations with aldermen is to have them understand it on a citywide level but then also what the actual effect will be in their communities.”

“When we convened in-person in December last year to develop recommendations, we certainly didn’t expect to come face to face with a pandemic,” added Cindy McSherry, executive director at ULI Chicago. “But the last two months really underscored the importance of access to safe and stable housing for everyone. We look forward to exploring how ADUs can play a piece in addressing the need for increased housing and the housing challenges we have in the city.”

Chicago’s future ADU ordinance should learn from other cities’ mistakes was originally published in Chicago Cityscape on Medium, where people are continuing the conversation by highlighting and responding to this story.

Other posts by Jay Koziarz

Coach houses & basement units will add more housing options, but will they be affordable?

Chicago’s future ADU ordinance should learn from other cities’ mistakes [you're reading this one]