Accessory dwelling units create lucrative, affordable housing. Why hasn't Ann Arbor built any?

When Richard Norton decided to replace his old garage in 2016, he added space on the new garage's second floor for an accessory dwelling unit (ADU) to house his aging parents or in-laws in the future. However, Norton, a professor with the University of Michigan Taubman College of Architecture and Urban Planning who lives on Ann Arbor's Old West Side, hasn't yet built that apartment due to concerns about cost and red tape.


That seems to be the general trend in Ann Arbor, which in 2016 adopted a revised ADU ordinance in response to a 2015 Washtenaw County Housing Affordability and Economic Equity report. The report advised five high-impact and six low-to-moderate-impact strategies to make housing more affordable in the county, with ADUs falling into the second category as a way to increase the county's housing stock.


Teresa Gillotti, interim director of the Washtenaw County Office of Community and Economic Development, says no ADUs have been built in the two years since the ordinance was adopted. Only one ADU permit has been pulled.


Local affordable housing advocates say more work needs to be done to influence public opinion, get local contractors on board, and tweak the ordinance before ADUs will catch on in Ann Arbor.


Why ADUs?


ADUs come in two main types: either attached, as in a basement converted to an apartment with a separate entrance; or detached, such as an apartment over a garage. They're sometimes colloquially known as "mother-in-law" apartments or "granny flats" because they are often used to house extended family.


Gillotti says ADUs could be built before the 2016 ordinance revision, but under limited circumstances.


"You could have one if you were related to the person or they were some kind of caretaker for you, but you could not collect rent," she says. Additionally, the homeowner had to provide at least three parking spots.


These limitations created a heavy cost associated with ADUs and limited their applications, so few people bothered to build them.


Though several high-impact strategies were suggested by the 2015 report, they typically require a lot of funds, a lot of time, or both. Ann Arbor resident and community architecture educator Jessica A.S. Letaw says changing the ADU ordinance was easier and quicker to implement than other recommended strategies.


"It's a lower-impact solution, but still one of the top 10," Letaw says. "It's (also) one of the few market-based solutions for adding housing that doesn't require one to be a professional homebuilder" and doesn't require local or federal subsidies to accomplish, she says.


Before adopting the revised ADU ordinance, many public input sessions were held around Ann Arbor. Letaw says sentiment was split, with about half of each audience saying they would like to have the option of building an ADU to house a family member, and the other half expressing concern about parking, increased traffic, and short-term rental use, including Airbnb use, that could change the character of residential neighborhoods.


Public officials tweaked the ordinance in response to those concerns, adding square footage restrictions, lot size and setback requirements, and a requirement that only structures existing on a homeowner's property before Dec. 31, 2016 could be converted into a detached ADU.


Letaw says those restrictions are only part of the reason ADUs aren't catching on in Ann Arbor. Utility fees, difficulties securing a loan to build an ADU, and a learning curve for local architects and builders add to the problem.


Making ADUs more attractive


Originally, it appeared the revised ADU ordinance would require a separate sewer line and tap fee, but Gillotti says the city recently clarified that while a separate sewer line will be required, the tap fee won't, lowering one barrier for homeowners interested in the ADU option. However, other hurdles remain.


Gillotti says she'd like to see the ordinance changed to remove the requirement that detached ADUs can only be built from structures already in place by the end of 2016. Then homeowners would find it easier to roll the cost of building an ADU into a loan they're already taking out for a new garage, for instance.


She also thinks the ordinance could be expanded into other zoning districts beyond the handful of districts where ADUs are now allowed, and she'd like to see ADUs allowed for any single-family house in any district.


Fees are also much steeper in Ann Arbor than in other communities that have embraced ADUs.


Holly Huntley is the owner of a Portland, Ore. design/build firm called environs, which specializes in ADUs. She says running a separate sewer line, plus tap fees and other permitting fees, can add up to $20,000 or more in additional costs beyond the cost of constructing the ADU. The city's removal of the sewer line requirement removes one potential hurdle for those considering building an ADU; Norton notes the expense of running a separate sewer line as one of the factors that prevented him from completing his plans to create an ADU on his property.


Portland restructured system development charges for ADUs to make them more attractive to homeowners, so that the typical ADU builder pays around $4,000-5,000 in fees as opposed to $15,000-20,000 before the price restructuring, Huntley says.


Norton says he'd like to see the city revisit the square footage requirement, as the space he built over his garage turned out to be just a bit over the maximum square footage the city's ADU requirement allows. He also believes that the city hasn't fully thought through the implications for property taxes on a lot with an ADU.


Letaw says that even if all those issues can be worked out, architects and builders may need convincing that building ADUs is worth their time.


"The smaller the project is, the less enticing it is to established companies," Letaw says. "Certainly there are handyman and smaller remodeling firms hungry for (that kind of business), and ADUs could be a good fit for them."


Additionally, she'd like to see more established firms begin thinking of ADUs as a service they can offer that gives them an edge over other providers, perhaps by offering to add an ADU into a client's larger remodeling project.


To educate Ann Arbor homeowners, builders, and architects about ADUs, Letaw is bringing Huntley to Ann Arbor to co-host a series of events on ADUs Aug. 14 and 15. In addition to Huntley and Letaw, local lenders and city staff will be on hand to answer detailed financing, zoning, and permitting questions.


During the event, Letaw also intends to get feedback on the current ADU ordinance and bring a list of suggested changes that will encourage the use of ADUs to the city's building department.


Letaw says she hopes these events will encourage people thinking about an ADU to move forward with the project. She says if five to 10 can be quickly built, those successful models can then be posted to the city's website so prospective ADU owners and builders can see what their options are.


"It feels like a lot of energy and attention for something that will have an incremental, at best, effect on the housing inventory bottom line. But I keep going back to the idea that it's the only thing private citizens have a direct impact on," Letaw says. "We know it's painfully expensive to live in our community, so I want to do anything we can to add to our housing stock."


Sarah Rigg is a freelance writer and editor in Ypsilanti Township. You may reach her at

Portland ADU photos courtesy of Environs. All other photos by Doug Coombe.
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