ADU- Accessory Dwelling Unit, aka “mother-in-law apartment,” “granny flat,” studio apartment, ohana (in HI).
An ADU is a second dwelling unit created on a lot with a house, attached house, or manufactured home. An ADU is smaller than the main dwelling. It can be a conversion of an existing portion of the home, an addition to the existing house, conversion of an existing garage, or the construction of an entirely new building.
ADUs are allowed in Portland on all Residential zones, all Commercial zones, and the Central Employment zone (EX). An ADU is required to have its own address, kitchen, bathroom, entrance and walk way. A building permit is required to construct an ADU- for both a new build and/or the conversion of an exiting structure. Plumbing, electrical and mechanical permits may also be needed. When applying for a permit, a complete application with plans must be submitted. For more details on the permit process, check out the City’s website here.
The development of an ADU requires permit fees and System Development Charges (SDCs)- Portland Parks, Environmental Services, Transportation, and Water Bureaus. Depending of the size of your ADU, these charges can be hefty. However, since 1998, the the city has waived all SDCs and will continue to do so until July 31st, 2018 (Note: It’s expected the city will extend this offer but we don’t know for sure).
ADUs must meet certain requirements in order to be permitted by the City. Detached ADUs can be 800 square feet or 75% of the square footage of the existing home- which ever is smaller. Basements or attics with ceilings 6 feet 8 inches or higher count towards the square footage of the main home. For example, if an existing house has 1,000 square feet of living area, the ADU size is limited to 750 square feet. For a house that has 2,500 square feet of living area, 75% of the floor area would be 1,875 square feet. In this case, the ADU size would be limited to 800 square feet. In addition to size constraints, detached ADUs cannot exceed 20 feet high, must be set back 40 feet from a front lot line or behind the rear wall of the house, and match the exterior finishes of the main home- trim, roof, pitch, eaves and windows. On-site parking is not required for an ADU. However, if an existing parking space is forfeited to build the ADU, the parking space must be replaced somewhere on site.
All ADUs, whether conversions of an existing space or a new construction, must have ready access to the electrical panel and water shut off valve. For detached ADUs, the Water Bureau requires the structure to have a separate water service. Other construction requirements may be specific to your ADU and will take into account: separation between units, ceiling height, doors, emergency escapes, stairways, energy, and livability .
You are allowed to rent out your ADU as a long term rental assuming it passes inspection and the total number of residents is within the bounds of the Zoning Code. ADUs are also allowed to be short term rentals, such as an airbnb, as long as a Type A or B permit is obtained from the City.
Financing an ADU can difficult. Banks can often find it hard to put a value on an ADU and won’t give a loan. However, with the increase in popularity of ADUs, more options for financing are starting to appear. Advantis Credit Union and Umpqua Bank are two institutions here in Portland with ADU programs. Talk with your loan consultant about the possibilities- they are out there. Here is a quick guide to help you get started. When it comes to property taxes, Multnomah county assesses and taxes ADUs the same as any other new improvement to a property. An appraiser will visit your property and appraise the entire property including the ADU. The added value associated with the construction of the ADU will be assessed and taxed. The ADU will not trigger a reset of the Maximum Assessed Value (MAV).
ADUs can be a great way to offset your mortgage, have space for family and friends, or offer affordable housing to a growing Portland population. Let us know if you have any questions. We are always here to help!