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Could ADU condos start city trend?


TRIBUNE PHOTO: STEVE LAW  - Developer Eli Spevak will convert this new ADU south of Mount Tabor, and the house next door, into condos, enabling two separate owners. Want to buy a brand-new cottage in a desirable Portland neighborhood for $300,000?

Developer Eli Spevak is pioneering a new method to provide just that, and he hopes his idea will catch on.

Call it “condoizing.”

In the southern shadow of Mount Tabor, Spevak’s Orange Splot LLC is building a new accessory dwelling unit, or ADU, alongside a 1906 farmhouse where his girlfriend lived before they were married. Elsewhere in Portland, ADUs — also called granny flats or mother-in-law apartments — are held by the adjoining homeowners, and rented out to private parties or made available cheap to family members or friends. Some are being used for short-term rentals via Airbnb.

For this lot in the South Tabor neighborhood, Spevak converted the ADU and his wife’s old house into condos, to be offered to two different buyers. He’s putting a large garden near the street, and hopes the two owners will share that space, forming a mini-community on one city lot.

“The idea is to create an affordable homeownership option by selling the house separately from the ADU,” Spevak says. “That ADU is going to be sold at a price that’s lower than you could buy in that neighborhood.”

ADUs cost less to build than putting up a regular house on a single-family lot. They’re capped at 800 square feet in Portland or three-fourths the size of the main house. And the owner or homebuilder doesn’t have to buy any land, nor provide as many amenities such as sidewalks and underground utilities.

By “condoizing” the Southeast 71st Avenue and Woodward Street project, dubbed Applewood Corner, Spevak enables each buyer to qualify for a separate mortgage or home-equity loan.

Portland allows most homeowners to put up ADUs on their lots, but they’ve been an adjunct to the main house. Condoizing opens up new opportunities, converting a single-family lot to a duplex lot.

Third time’s the charm?

Kol Peterson, an ADU

consultant who runs an

authoritative blog called

accessorydwellings.org, says Spevak pioneered the idea of condoizing ADUs a decade ago, with his four-unit Sabin Green co-housing project in Northeast Portland. That mini-community consists of two houses and two ADUs.

Then Kristy Lakin condoized her Woodstock Gardens project in the Woodstock neighborhood in 2013, building three houses and three ADUs. According to a how-to guide in accessorydwellings.org, she built an ADU there for about $100,000.

But now Portland is suffering from a major housing shortage, especially in closer-in, walkable neighborhoods near parks and other amenities. Spevak expects to market his next ADU for around $300,000.

Condoizing ADUs could be an idea whose time has come.

“I know other builders are looking at it because they ask me how to do it,” says Spevak, who freely shares his experiences and advice. He recently joined the Portland Planning and Sustainability Commission, where he’s championing more creative ways to do infill housing in Portland.

ADUs seem to be catching on right now, for good reason, says Vic Remmers, owner of Everett Custom Homes, a major infill developer in the Portland area.

“There’s a huge lack of housing in the city right now,” he says, and many suburban residents want to move into closer-in Portland neighborhoods. “It provides more densities in these neighborhoods that really need it,” Remmers says.

In Portland last year, more than 300 new ADUs were permitted by the city. That number could easily grow as ADUs gain more acceptance. The city of Portland recently made it easier to site ADUs in homeowners’ yards.

Learning from Vancouver, B.C.

One idea being considered by planners working on the city’s new 20-year comprehensive land-use plan is to allow homeowners to put two ADUs on each lot. One would be inside the home, such as a converted attic or basement, and one would be detached, such as a converted garage or a freestanding cottage like Spevak is building.

The idea of allowing two ADUs in each single-family lot comes from Vancouver, British Columbia. A recent report in the Sightline Institute blog estimates that Vancouver has more than 26,000 ADUs. That’s an average of one for every three single-family lots in that city.

In Portland, appraisers observe that homes with ADUs don’t fetch the same sale prices as they would with two regular homes on a lot. Condoizing might change that, enabling homeowners to get a better price when they’re ready to sell.

Not simple

Turning a house and ADU into a condo is comparable to converting apartments into condos. It usually requires a lawyer to prepare and file documents with the state, which oversees the condo process, and a surveyor to work with the county. The city of Portland plays no role, Spevak says.

“It’s not something you’re going to see a lot of any time soon,” Peterson says. “It’s not for the faint of heart.”

Spevak agrees, though he says it’s not as complicated as some fear. He figures it can be done for $20,000 or less, perhaps as low as $15,000.

Condos also require cooperative arrangements between the owners who share common space, such as a driveway or a garden or yard.

Easier than subdividing?

Condoizing may offer advantages over another way that Portland homeowners and developers get more density on single-family lots: Subdividing into multiple lots.

Remmers figures subdividing costs at least $20,000, and likely requires more hassle, and gives less flexibility, than condoizing. To get an approved subdivision, you have to go through the city, Remmers says. “They make it extremely difficult to do a land division.”

It takes at least a year, he says, and to a builder time is money. People dividing a single-family lot into two lots also face more restrictions than those putting up ADUs, such as stricter setback rules, minimum-lot-size regulations, and the added cost of providing separate utilities for each unit, he says.

For an oblong lot, people turning one big lot into two may need to do a “flag lot,” providing a long driveway, akin to the flagpole, to reach the second lot in the rear. Many consider flag lots unattractive. Siting an ADU in a back yard is a lot simpler.

A homeowner who condoizes their ADU will usually “take a little bit of a haircut” on the value of their property, Spevak says. Presumably, they’ll more than make up for that, and for the $15,000 to $20,000 cost to condoize, by selling the ADU.

“The verdict is not quite in yet how the numbers work,” Spevak says. However, he adds, “It worked for me last time.”

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