Published on May. 20, 2020 by Jay Koziarz
A zoning ordinance to bring back accessory dwelling units — or ADUs — was introduced Wednesday and poised to go before the Chicago City Council for a final vote in June or July in order to become effective on August 1. But what exactly will a post-ADU ordinance landscape look like? Where will these units be built, and who will be able to afford them?
Accessory dwelling units are essentially smaller secondary units added to residential lots; new coach houses were made illegal in Chicago in 1957. In its most recent five-year housing plan, the city identified the re-legalization of ADUs as an opportunity to provide “relatively affordable housing” and a way to bring extra income and stability to Chicago’s moderate-income families.
“The [ADU] ordinance is an almost invisible way to increase moderate-cost rental opportunities across the city that fit-in with the way a neighborhood already looks,” said Marisa Novara, commissioner of the Chicago Department of Housing on Wednesday. “Legalizing these units is also part of our affordability strategy. They can have a real and positive impact on homeowners that need extra income as they may be experiencing rising property taxes and may need to age in place.”
Accessory units can take a variety of forms, such as over-garage coach houses or stand-alone backyard cottages (see examples from around the country).
In Chicago, the most straightforward, affordable, and abundant option could be basement conversions in existing structures. A recent report drafted by the Urban Land Institute (ULI) that called on Chicago to model its legislation on what’s worked best in other metropolitan areas identified nearly 77,000 two- to four-flat buildings with potentially habitable basements.
Basement ADUs cost less to build and therefore can be rented at a lower rate, advocates say. Based on estimates in the ULI report, a lower-level space needing structural changes and other improvements will cost roughly $150,000 to be converted into an ADU. If such a space complies with code requirements and does not require significant structural work, the price tag could fall to $75,000 — well below the cost of a typical housing unit.
Though ADUs are cheaper to build, there are no guarantees that newly created units have to be rented below market rate. The city’s proposed ordinance only requires property owners who add multiple interior ADUs to offer 50 percent of the units (rounded down to the nearest whole number) at an affordable rate.
An even more urgent consideration is the legislation’s impact on any existing ADUs that don’t fully comply with the rules. If property owners have to invest in substantial repairs and upgrades, what happens to renters in the meantime? How can owners hope to recoup costs without passing higher rents onto lower-income tenants?
These are the concerns of Diane Limas, president of the Communities United board, a grassroots organization advocating for the preservation of affordable housing in the gentrifying Albany Park neighborhood.
“We saw developers deconverting multi-unit buildings and the families living in not-so-safe basement units facing displacement,” Limas said. “These residents were grateful to be there because it’s the only housing they could afford and they would be homeless otherwise. Our discussions around ADUs started with the goal to put a dent in the affordable housing crisis and prevent the displacement of low-income and middle-class families. But what landlord wouldn’t raise rents after having to make such a large investment?”
The authors of the ULI report say the city needs to be “mindful” of displacing residents in any existing ADUs that don’t comply, but it’s unclear how officials would enforce safety standards without issuing fines or threatening tenants with eviction.
Yet, despite lingering concerns, there is evidence that ADUs tend to be relatively affordable within their respective communities. Another ULI-assisted report (PDF) examined ADU legislation in the West Coast cities of Portland, Seattle, and Vancouver, B.C., found the “majority of accessory unit rent below market-rate” and therefore could be considered a form of affordable housing. It also showed that close friends or family members of the owners occupied nearly a third of accessory units, and more than half of those units were offered rent-free.
It remains to be seen where and to what extent ADUs will take off in Chicago once they become legal again. But until the city or other organizations come up with solutions to address the financial hurdles facing our underserved communities, it’s safe to assume that the first wave of new ADUs will show up in areas where property owners have access to capital.
Limas says the city should instead prioritize the creation and preservation of affordable ADUs before opening the door to a flood of new market-rate units. “Why don’t we start by helping the people who need it first?” she added. “For owners of two- to four-flats, where do they even get $75,000?”
Chicago’s ADU ordinance will need support to maximize its effectiveness across all 50 wards, but a robust ADU financing program isn’t expected until after the zoning ordinance goes into effect this summer.
“Chicago needs more affordable housing, and we know that a big piece of that is due to restrictive zoning,” said Molly Ekerdt, co-chair of ULI Chicago’s public policy committee and a vice president of Preservation of Affordable Housing (POAH). “But amending the code won’t solve all of the problems. In the case of ADUs, it’s also building out the programs and tools to educate homeowners and provide the necessary incentives. There’s more work to be done.”
Simply put, the movement to bring back ADUs won’t solve Chicago’s affordability crisis on its own. Nor will it present ideal solutions for every property owner or low-income renter. The legislation does, however, show a willingness to try something different to increase the overall housing supply and bring affordable, lot-by-lot density to Chicago’s neighborhoods — even if the definition of “affordable” isn’t universally agreed upon.
Coach houses & basement units will add more housing options, but will they be affordable? was originally published in Chicago Cityscape on Medium, where people are continuing the conversation by highlighting and responding to this story.
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