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Accessory dwelling units were supposed to help ease the Twin Cities’ housing crunch. How’s that working out?

Four years after allowing the structures, Minneapolis has permitted 137 ADUs.

In total, Minneapolis has permitted 137 ADUs, like this one on 37th Avenue South.
MinnPost photo by Jana Freiband

As homeowners in Minneapolis’ Longfellow neighborhood, Stephanie and Ross knew they needed to tear down their detached garage when they were expecting their first child about two years ago. The old structure was in bad shape and couldn’t meet their new needs for space with a child on the way.

But, in those early days of construction planning, the couple realized another issue with their property: Where could they comfortably host grandparents from out of town, now that their family is growing in size? That’s when they decided to build a new one-bedroom apartment on top of a future two-stall garage, making for a home-improvement project that felt like one for the benefits of two.

“For us to stay here (in Longfellow), we needed more room,” said Stephanie, standing in the apartment over the weekend. Crews on Friday had just finished the unit, which shares a lot with the family’s main residence and has a private entrance via an alley.

Dubbed an accessory dwelling unit (ADU), the new space is one of some 150 similar structures in Twin Cities’ neighborhoods that are mostly for single-family homes, according to the Family Housing Fund, a Twin Cities housing nonprofit. Since cities have passed ordinances permitting ADUs in recent years, property owners and city planners have touted the housing structures as a low-key solution to adding more housing without changing the look and feel of neighborhoods, or upsetting people who do not want taller or bigger houses near their own homes.

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Urban planners and elected officials across the metro — and state — say they are working with new urgency to try and fill a shortage of housing by building more. From new language in city codes that aims to protect renters to a first-of-its-kind zoning change in Minneapolis to increase residential density everywhere (via Minneapolis 2040), politicians in the Twin Cities have introduced a slew of new policies over the past year as possible solutions to the housing gap.

But less discussed has been if, or to what extent, ADU’s have made a dent in that problem. According to local architects and experts in housing trends, the structures’ high cost of construction — which can range between $140,000 and $320,000 in Minneapolis — and building requirements can deter people from adding the new type of development. Sarah Berke, a program officer at the Family Housing Fund, said accessory dwelling units aren’t as common in the Twin Cities as they are in other places.

“The potential for ADU development in the metro is still, I would say, largely untapped,” she said.

Adding housing very gradually

According to code, ADUs can be attached to homes as mother-in-law units, detached as cottage houses, in yards as garage apartments or inside the main residence (such as a basement or attic apartment), among other housing types. All must have plumbing, electricity and basic amenities for living, as well as their own entrances.

Homeowners typically build them for similar reasons: to host overflow guests, to gain extra rental income, as a smaller home to move into later in life or to provide a new house for adult children. In Minneapolis, ADUs must be at least 300-square feet and owners of the main residence must live on the property.

“In Minneapolis, it was about allowing more housing choice … but not really altering the character of the neighborhood,” said Shanna Sether, a principal city planner.

From the perspective of local architect Theo Grothe, who works for the firm that designed Stephanie and Ross’ new detached garage-apartment, more and more residents are interested in ADUs as time progresses.

Since 2015 — the first year in which Minneapolis residents could apply for permits following a new ordinance by the City Council — construction peaked in 2017 with 38 new ADUs. In total, the city has permitted 137 ADUs. They are on about 0.2 percent of single-family lots.

“It’s about what we expected,” said City Council President Lisa Bender, who authored the zoning-code change in 2014.

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Meanwhile, St. Paul has four permitted ADUs. The city adopted an ordinance that allows the housing type in certain parts of the city after Minneapolis, in 2016.

But it’s not just the urban core that’s home to accessory dwelling units. Many Twin Cities suburbs have passed ADU ordinances in recent years.

Roseville passed an ADU ordinance nearly a decade ago. Since then, a handful residents have gone through the permitting process to build an extra unit on their property, said senior city planner Bryan Lloyd.

When a resident applies for a permit, the city mails notices to neighbors. The most common feedback is calls asking “‘That’s a thing? How can I do that,’” Lloyd said, “As opposed to ‘We can’t have another house in my neighborhood.’”

That seems to be the case in Minneapolis, too. Bender said despite initial concerns when the council adopted the ordinance — most of which from a group of residents who argued ADUs would complicate parking and traffic — she too has not heard opposition to their construction in recent years.

“One of the concerns we heard was that suddenly neighborhoods would change very quickly,” she said. “(But instead) it has felt that this is a way to add housing very gradually in neighborhoods, in a way that neighbors probably don’t even notice.”

Expensive dwelling units

For Joe Slavec, owner of a Minneapolis construction company, the topic of ADUs is exhausting. He said he and other local construction businesses spend a lot of time talking about them with potential clients — and even sometimes do bids on projects — yet some 90 percent of plans don’t materialize because of the structure’s price.

“We’ve done the math, and we’ve built a few. They take a lot of extra work,” said Slavec, of Minneapolis Garage Builders, LLC.

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Across the country, the price of new construction is at its highest it’s been in 70 years, a BuildZoom analysis of R.S. Means’ construction price index found.

Another challenge for interested homeowners: Borrowing the money to build an ADU isn’t necessarily the same process as  borrowing to build a house. Financing can be an impediment, since there’s still a lot of gray area in terms of assessing a property with an ADU on it, and there can be hurdles to getting a loan to build an ADU intended as a rental unit, said Berke, of the Family Housing Fund.

“If we want to see more accessory dwelling units, the big barrier is cost,” Bender said.

Beyond price, Slavec said clients’ expectations on timing for construction can also be a challenge — homeowners often want ADUs built fast. But the accessory units require special inspections and building requirements compared to other residential properties that can slow the process.

Bender said the inspections — which should include all rental spaces inside existing homes, under the ADU ordinance — aim to ensure that people are living in spaces that are safe and legal.

“We make sure that the existing structure is allowed in that zoning district. We make sure the principal use is already allowed. We verify owner occupancy because that’s one of the requirements today in the books,” said Sether, the principal city planner in Minneapolis. “We’re also checking for height, setbacks — things like that.”

Easing regulations

In other cities, the number of ADUs increased after city planners relaxed regulations, and in some cases offered incentives or outreach campaigns, according to a report by housing researchers at the Terner Center for Housing Innovation at the University of California-Berkeley and other housing research organizations.

In Portland there are ADUs on about 1.5 percent of single family home lots, Berke said. In order to hit that benchmark Minneapolis would need about 1,200 ADUs, St. Paul would need 888, and the Twin Cities region would need about 11,000, according to a MinnPost analysis of MetCouncil data.

Portland’s modest ADU boom is relatively new. The number of accessory units increased as housing costs have risen and as the city took steps to make it easier, and less expensive, to build them, waiving some fees associated with new construction on ADUs; allowing short-term rentals in ADUs and loosening design and setback rules. (Sether, a principal city planner in Minneapolis, said they studied ADUs in Portland and other cities as the city wrote its local ordinance years ago.)

Other cities have seen the number of ADUs increase after removing barriers to building them, too, the report found.

A different conversation

The Family Housing Fund suggests practices to help boost ADU construction and relieve housing pressures in Minnesota cities. Among them are allowing all different kinds of ADUs — attached, detached, and interior units — and reducing or removing rules like parking minimums, design and occupancy standards, height limits and size limits.

“Cities can really pass ordinances that make ADU development easier and more likely to happen,” Berke said.

St. Paul loosened restrictions on ADUs recently. Initially, in 2016, the city adopted an ordinance that allowed ADUs within a certain area: a half-mile north and south of University Avenue, from Lexington Parkway to Emerald Street. In 2018, it revised its ordinance to allow them throughout the city.

St. Paul has permitted four ADUs, but expects to see more now that they’re allowed citywide, based on inquiries from residents, said Suzanne Donovan, a spokesperson for the city’s Department of Safety and Inspections — especially as construction season starts.

Across the river, Bender described the 2014 ADU ordinance as a “baby step” to diversifying housing options. The city’s long-term plan for development, Minneapolis 2040, which the City Council finalized in December, eliminates all single-family zoning to allow multi-family housing of up to three units on every lot. She said that call for more residential density essentially loosens ADU rules since owners of single-family lots who don’t live onsite would be able to rent out units, as well.

“Five, six years ago that conversation was different. Now, there’s more support and awareness around the need for rental housing in our city, which is a majority renter city,” said Bender, who represents Ward 10 neighborhoods that include Lowry Hill East, Whittier, South Uptown and East Harriet. “Places like Ward 10, which are 80 percent renter units, there wasn’t an opportunity to do an ADU, and in other parts of the city that have high demand for rental housing.”

After that change, the council president wants the city to take note of other metro areas’ use of accessory dwelling units to ease a shortage of affordable housing, specifically.

“I do expect that, over time, we will slowly start to see more of these depending on how, you know, the housing market is going, what construction costs look like — all of those factors,” she said. “Over time as we learn more about ADU’s, and now that we’ve made them possible to have in renter-occupied housing, you know, I think we can expand the opportunity to use it as an affordable housing strategy.”