They can bring housing density to Denver neighborhoods without the need to scrape away existing homes or drastically change the way those neighborhoods look.
They can serve as a source of income for homeowners struggling to keep up with Denver’s rising cost of living and property taxes. Or they can house aging relatives, providing parents and grandparents with the opportunity to live just a few steps from loved ones but also maintain some privacy.
They have environmental benefits, providing options for the reuse of garages or underutilized space within a home. They create infill housing close to transportation corridors and employment centers instead of driving more sprawl on the periphery of town.
In a city where rent prices have climbed steadily over the last decade and housing supply is estimated to be tens of thousands of units short of demand, accessory dwelling units, sometimes called granny flats or ADUs for short, are broadly viewed as a tool in pushing back against the housing crisis.
The self-contained residential units — sometimes found in cordoned-off basements, sometimes in converted garages, sometimes built from the ground up, but always an accessory to the main home on a property — have existed in various forms for generations. But they are gaining popularity in markets from the Midwest to the Pacific coast as broad swaths of the country deal with a lack of available, attainable housing.
There’s one big problem with the tiny style of housing in Denver, advocates say: too few of them are being created.
Between Denver’s big zoning code overhaul in 2010 and the end of 2021, the city issued construction permits for 393 ADUs. That’s roughly 33 permits per year over that span. The high-water mark was 2019 when 71 permits were pulled. In 2021, the city issued 64.
Rezoning hearings for residents seeking to build ADUs on the Denver properties are common if not abundant. Monday night’s City Council agenda included three public hearings seeking approval for new ADUs.
“Everybody understands the potential and doesn’t understand why they’re not being built,” said Renee Martinez-Stone, a former Denver Planning Board member and Denver Housing Authority staffer who is leading a program focused on fostering more ADU development in west Denver neighborhoods.
“There’s a pretty complex regulator environment for ADUs,” said Martinez-Stone, who recently authored a report detailing the challenges homeowners in west Denver face. “That’s one of the biggest obstacles in Denver. Small development is disproportionately impacted by fees and requirements.”
Martinez-Stone is also a member of an advisory committee convened by the Denver Community Planning and Development department this year to provide input on the city’s ADUs in Denver project.
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The project’s purpose is to follow through on the city’s long-range planning goals to make it easier for people to build a secondary residence on their property if they want to.
It’s about “making sure that we have a streamlined process for accessory dwelling units that makes sense and doesn’t create unnecessary barriers and promoting designs that fit in with different kinds of neighborhoods,” said Abe Barge, the principal city planner leading the project.
So far, city planners and the advisory committee have focused on identifying barriers to development, Barge said. Those barriers include that some residential lots, those under 3,000 square feet, aren’t eligible for ADUs because they are deemed too small. The city’s zoning code also caps an ADU’s height at either 24 feet or 1.5 stories. The 1.5-story measure is a technical way of divvying up a two-story building that can drive up construction costs and prevent a homeowner from following through on building.
The advisory committee’s work is now pivoting to looking at possible solutions to those problems such as reducing or even eliminating minimum lot size rules. Efforts will also include setting guidelines that move the city away from the one-size-fits-all approach to ADUs in favor of specialized rules for different neighborhoods that would allow the units to better blend in with their surroundings, Barge said.
Ultimately, the project is expected to generate a list of zoning code changes that planning staff could bring to the City Council for consideration and possible approval next year. There is one major caveat to the project. “It is not intended to expand where you can build ADUs,” Barge said.
That work is largely by neighborhood residents themselves working with council members including City Council President Jamie Torres and District 1 Councilwoman Amanda Sandoval.
At the outset of 2020, about 13% of all single-family zoned lots in the city were zoned to allow for ADU construction, according to the city planning department. Since then, Sandoval has shepherded three neighborhood-wide rezonings through the council approval process in her far northwestern corner of the city. Those three neighborhoods, Chaffee Park, Sloan Lake and Regis, combined to make 3,825 more properties eligible for ADUs without going through a costly and time-consuming rezoning application process that requires City Council approval.
This fall, Sandoval plans to bring forward a blanket rezoning of the West Highland neighborhood. In the likely event that passes, 25% of all single-family zoned properties in the city would have ADU zoning. The Barnum, Barnum West, Villa Park and East Colfax neighborhoods have all been approved for blanket rezoning in the last eight months.
“The ability to age in place and have another source of income for people who have lived in their house for a long time and take the equity and use it and still be able to live in Denver is really important for me,” Sandoval said of her ADU work.
The councilwoman knows the neighborhood-by-neighborhood approach is the slow route. She has been approached about leading a citywide rezoning. But she feels she was elected to represent her district first and foremost. Once the planning department’s project is done and the city (potentially) has new rules around setbacks from property lines and other finer points around future ADUs, then the timing might be right for a bigger step.
“I think that’s an important discussion before we talk about citywide rezoning,” Sandoval said. “Let’s look at the rules we have on the books and modify those.”
Sandoval has ideas about ways to bring down the costs for construction and hopefully spur more ADU development. For one, she wonders why standalone ADUs require their own water tap and utility hookup when, as the name suggests, they are accessories to the existing home.
Many other cities and, in the case of perpetually housing-strapped California, entire states have taken steps in recent years to ease burdens and encourage more ADU development in hopes of providing more housing options to their residents.
Through his Portland, Oregon-based company, Accessory Dwelling Strategies, Kol Peterson has emerged as a national expert on accessory dwelling units and consults with local governments on their regulations and codes. The Denver planning department has already worked with him as part of its project and Barge expects more conversations in the future.
A key thing to remember when designing ADU rules, Peterson said, is that by and large they are developed by average homeowners, not sophisticated housing developers or real estate companies. Simple, uniform rules, applied citywide is a minimum bar for encouraging their development, he said.
“Unfortunately, it’s really complicated to understand Denver’s code,” Peterson said.
In particular, there is one poison pill Peterson has identified in the code. The city has an occupancy requirement for properties with ADUs on them. That means the property owner must live on-site to have an ADU and couldn’t rent both the ADU and the main house out at the same time.
“What other form of housing does Denver require owner occupancy of?” Peterson said. “You’re giving up rights and freedoms to have an ADU.”
That regulation can make banks more hesitant to finance ADU construction. In the event of a foreclosure, the lender may end up possessing something it can’t legally own under the city code, Peterson pointed out.
Housing industry professionals in Denver are also critical of the city’s approach to ADUs thus far.
Jeff Handling is the president of Oread Capital & Development, the development firm that is planning to bring a mixed-use project with more than 2,300 homes to a 150-acre plot of former farmland in Westminster. He is also an adjunct professor at the University of Denver’s business school.
“I think anything Denver can do to expand housing choice is a step in the right direction,” Handling said. “Accessory dwelling units are a very, very limited tool that favors wealthy homeowners over everybody else. You have to be an owner of a home to put in an ADU and you have to have enough money, frankly, to finance or pay for a multi-hundred thousand-dollar unit on the land.”
One way Handling thinks Denver could make ADUs more impactful is to make them severable from the main property so they could be sold separately, creating more options and flexibility in the market.
Sandoval, whose district saw a wave of so-called slot home projects subdividing what were formerly single-family home lots before the city put new restrictions on that housing form in 2018, would not support making ADUs severable from the main property, she said.
The total number of permits issued may be modest so far, but there are ADU success stories dotting Denver’s neighborhood.
When Ryan Brisch and his wife Nicole moved to Denver from Chicago six years ago, they knew they wanted to buy a house on a corner lot and build an ADU to use as a short-term rental. The couple had been renting out the spare room in their condo and enjoying the company and the cash flow.
That’s exactly what they ended up doing on their lot on Irving Street in Denver’s Villa Park neighborhood. But first, they had to jump through all the hoops necessary to build their money-making granny flat.
The couple rezoned their property individually before the blanket rezoning of Villa Park took place earlier this year. The final City Council hearing took place on March 18, 2019, City Council records show. The rezoning passed unanimously but it came after more than nine months of back and forth with city departments, Brisch said.
“There was nothing that was necessarily difficult about it. It was just like most bureaucratic things; it was a lot of small, what I would consider worthless paperwork,” Brisch said.
Every department at city hall it seems had a task and bill for Brisch. He remembers paying $175 for a water shutoff so that he could tear down the dilapidated garage that he replaced with his ADU. The irony being the garage had no running water. Even posting signs on his property for the rezoning hearing was a hassle. They had to be printed at a specific custom size that cost him more than $100. He estimated it cost him $1,200 to get the zoning squared away and that was before he spent a dime on construction.
All told, the ADU (which runs entirely off solar power) cost the couple close to $250,000 to build, a figure that benefitted from some deals on materials and elbow grease. They had been squirreling away money for years in Chicago to be able to afford the project and even took out a line of credit against the equity in the condo they left behind.
The hassles didn’t stop after the construction was completed. After their ADU was done, the couple got the property appraised ahead of refinancing. They expected to be able to take money out of the property but found the appraisal was much lower than they expected. Brisch pins that on most banks not being familiar with ADUs and not accurately accounting for their value as an income generator, especially in his west Denver neighborhood.
“We were in a place with a lot of financial flexibility,” Brisch said. “But for some people that would be something that would keep them from wanting to do this.”
Even if Denver adjusts its zoning code to make it easier to build ADUs, experts and local officials still don’t expect to see the structures popping up in droves.
In Portland, where Peterson lives and runs his consultancy, the city already underwent an ADU boom over the last decade and even then he estimated that only between 1 and 2% of homes have added the structures.
“One out of 100 homes might have an ADU if you’re lucky,” Peterson said of creating a regulatory environment that encourages ADU development. “That’s not necessarily a great thing because it’s not going to solve the housing crisis but it will help one family solve their own crisis.”
