After Dmitriy Manzhura spent about a decade building houses and accessory dwelling units in Seattle, his cousin Ed Gavrish told him Vancouver needed more rentals. So, Manzhura bought a lot on Washington Street in the Carter Park neighborhood that used to be part of the parking lot at First Baptist Church.
He built a 2,900-square-foot house, where he lives, and a 655-square-foot ADU stacked on top of a garage that he will rent for $1,250 per month.
“It’s really cute and different. People want different,” Manzhura said. “People hate neighbors upstairs, neighbors to the side, all the noise.”
Manzhura, through his company Vast Homes, recently applied to build a three-story house at H and 22nd streets that will have a groundfloor space that could be converted into an ADU. He’s also building three single-family homes on Lincoln Avenue between 19th and 20th streets, and wants to purchase property across the street from his house. He’d like to build more houses with ADUs to turn into rentals, but he said some of the current restrictions get in the way.
Those restrictions might soon be eased. The Vancouver City Council is mulling changes to the standards for ADUs to encourage their development. Also known as in-law suites, granny flats or backyard cottages, these homes are seen as a way to add housing in a tight rental market without drastically changing neighborhoods.
Other West Coast cities such as Seattle, Portland and San Francisco are grappling with rising rents, a lack of available housing and buildable land. While accessory dwellings are not guaranteed to be affordable in the private rental market and rely on homeowner investment to get built, they add to the overall housing stock. So, these cities are trying to encourage them.
It’s an option that’s been rarely used here. About 65 ADUs have been built in Vancouver since 2000. The Northwest-based think tank Sightline Institute gave Vancouver a 38 out of 100 rating for its overall friendliness to constructing them, after considering what restrictions and barriers are in place. Portland has a score of 72 and Vancouver, B.C., rates 96.
Bryan Snodgrass attributes the local lack of construction to market conditions, including the cost and requirements, as well as their overall newness. Snodgrass, the city’s community and economic development planner, is heading the effort to update ADU regulations.
The public can testify at a hearing about the proposed changes on July 10 at Vancouver City Hall.
Setting the rules
Chris Dickinsen, who lives across the street from Manzhura, has mixed feelings about ADU development.
“The average person can’t afford to live in Carter Park anymore,” she said.
While the arrival of ADUs helps with housing availability, she said it doesn’t do much to help the neighborhood’s affordability. The addition of ADUs increases home values and property taxes.
“Dmitriy has built a beautiful home and he’s a great guy, so we got lucky,” Dickinsen said.
Still, she’s worried about other, outside developers swooping in to profit without considering the character of the neighborhood. She’s not against density and once imagined that First Baptist Church could be turned into apartments if the opportunity arose, but she’s concerned about Vancouver’s future.
Although Snodgrass doesn’t expect ADUs to be rented often by low-income tenants, he said “they increase the range of housing price options.”
A trend toward ADUs
Cities like Bend, Ore., have shown that if requirements are eased, ADUs will be built. Applications to build accessory dwelling units reached an all-time high last summer after Bend officials reduced fees and changed rules making it easier for homeowners to build ADUs, The Bulletin newspaper reported.
In Vancouver, much of the interest in ADUs is on the city’s west side. Properties in some older neighborhoods sit on oversized lots that could easily fit an ADU. Ten projects were approved last year, and another eight so far this year are somewhere in the development process.
While ADU construction activity is growing, it’s trivial compared to the hundreds built across the river.
“There’s been an overall increase in development in Portland since the recession,” said Ross Caron, spokesman for Portland’s Bureau of Development Services.
In 2009, the Portland City Council waived system development charges that Caron said saves builders between $8,000 and $13,000 per unit. The temporary waiver has been extended twice and will last until at least July 2018. Caron sees the healthy housing market and the fee waiver as the main drivers of ADU development.
Portland is among the few West Coast cities that allows both the main house and ADU to be rentals. This is one of the more contentious options the Vancouver City Council is considering. Vancouver homeowners currently have to live in either the main house or ADU at least six months out of the year.
Manzhura wants the city to ax this rule, which he said prevents him from building more rental properties that have a house and ADU.
Vancouver City Councilor Jack Burkman advised his fellow councilors that they should move in small steps and keep the owner-occupied requirement.
“If we’re not careful we’ll take our single-family neighborhoods and set them up to have a lot of rental duplexes,” Burkman said.
Burkman pointed to other cities where investors scoop up properties, add an ADU, and become absentee landlords. In some places in Vancouver, he said, the investors’ mortgages are cheaper than the rents they charge. And although there’s nothing wrong with investing in Vancouver, he said, too many rental properties can change the character of the neighborhood, a process that should be done by changing zoning laws.
If the city’s primary goal is to create more affordable housing, which all the councilors appear to agree is the reason behind changing the ordinances, Burkman said it’s important to consider the possible unintended consequences.
Councilor Alishia Topper said she sees the owner-occupancy requirement as one of the biggest barriers preventing homeowners from building ADUs.
It’s an issue she’s spent the past 18 months studying, she said, and she’s confident updating the city’s ordinance would create more affordable housing within city limits. However, she doesn’t foresee a tsunami of building in the city.
“I don’t want citizens of Vancouver to be fearful there will be one in every yard … There are likely a lot of people not building ADUs,” she said.
She’s not worried about the extra units appealing to investors. She thinks Vancouver’s market is already too expensive to make rentals pencil out.
Short-term rentals
Homeowners with ADUs might get more income by listing on short-term rental websites like Airbnb and VRBO than by renting their flats by the month. It’s one of the potential unintended consequences of encouraging ADU development.
Portland was the first city in the country to legalize short-term rentals, and there’s been questions about whether those short-term rentals could have otherwise provided long-term housing. Airbnb makes much of its money through renting entire homes or apartments for as little as one night.
In Portland, the main house and ADU cannot both be short-term rentals unless the owner lives in one of the units for at least 270 days out of the year. However, last summer, Willamette Week reported on the lax enforcement of these rules where even an Airbnb manager was listing a property illegally. At the end of March, the Bureau of Development Services started fining short-term rental hosts who violated city rules.
Vancouver doesn’t have a short-term rental policy. If the city creates a policy to prevent the additional units from becoming costly one- or two-night rentals, it would ensure the ADUs aren’t all turned into Airbnbs, Topper said.
“I’m less concerned about the Airbnb effect,” Councilor Ty Stober said. “We’re not a primary tourist market. People using Airbnb in Vancouver have more specific motivations. I believe we don’t have some of the pressures that major cities have.”
ADUs cannot become short-term rentals in San Francisco, where Airbnb is headquartered. Santa Monica, Calif., another tourist destination, is also considering rules that would prevent homeowners from listing ADUs on home-sharing sites.
Seattle is also talking about how it should regulate short-term rentals.
“ADUs are part of that conversation in the sense that we know some are used for short-term rental purposes,” Senior Planner Nick Welch said. “All of this is sort of in the context of a much broader effort to increase housing affordability.”
Still, there aren’t many ADUs compared to other types of housing, so they represent a fraction of the short-term rental stock, he said.
Seattle’s strategy
Seattle has seen its population grow and housing prices skyrocket, making it one of the hottest housing markets in the country. The city has roughly 125,000 single-family lots and the vast majority do not have any kind of accessory dwelling unit. As of December 2015, 221 backyard cottages had been constructed or permitted in Seattle. Only once were more than 40 permitted in a single year. The city distinguishes between attached and detached accessory dwelling units, or DADUs, which are often called backyard cottages.
“It’s just one of many different tools the city thinks could create more housing overall,” Welch said.
While the city is revamping its requirements to make them easier to build and operate — grappling with many of the same issues as Vancouver — it’s a long process. The city council directed the Department of Planning and Development in September 2014 to explore policy changes, and it’s still being evaluated today, nearly three years later. Welch said his department is determining the environmental impact of potential changes, which will take about a year.
Like Vancouver, Seattle’s proposals came from a stakeholder group that met to talk about housing affordability and the lack of housing. (Making ADUs easier to build was a recommendation of Vancouver’s Affordable Housing Task Force that met between May and December 2015.)
For Manzhura, who built the house with an ADU off Washington Street in Vancouver, regulations are a barrier. He’d like the see zoning laws changed to make it easier to build different types of housing.
In Seattle, a lot like the one he purchased would likely be used to build four or five tall, boxlike houses, he said.
“Maybe that’s something people would hate here,” Manzhura said.
Reporter Lauren Dake contributed to this report.
