Pursue revenue potential, while city eyeing new rules for ADUs
Photo by: 
Chris Rourke
Sovick stands in front of an ADU project.
Sovick stands in front of an ADU project.

Free-standing garages in backyards across the City of Gunnison may offer multiple benefits, including helping a homeowner make his mortgage payment while easing a tight rental housing market.

Planners are increasingly looking to accessory dwelling units (ADU) as a way to provide housing stock by increasing density and simultaneously preventing sprawl.

Yet, as these units address one sector of housing needs, another may be squeezed — namely, affordable starter homes.

Contractor Andy Sovick and one of his employees are working on two separate projects, both of which entail converting detached garages into ADUs.

“The cool thing about the projects is they’re just little places,” said Sovick. “We’re dealing with a 12-by-20-foot rectangle. It’s very digestible and all of a sudden it opens up our creative minds.”

While Sovick acknowledged the financial benefit of adding an ADU is speculative, the numbers add up. For example, he said, a garage remodel that costs about $60,000 amounts to about a $300 payment on a home equity loan. With rents for a studio or one bedroom apartment ranging from $500-$1,000, the project will not only cover the loan payment, but allow for a profit as well.

“The numbers work out immediately,” said Sovick. “You still need some cash and you need some equity and you need a garage to convert.”

The key to a financially reasonable project, Sovick said, is the square footage. Since he is converting existing buildings and using recycled materials, his renovation costs are much lower than building an ADU new. That makes the project much more feasible, and he said since starting the two garage conversions, he has had potential clients express interest in constructing ADUs of their own.

“I would love to see the city continue to help promote ADUs and be more lenient on parking regulations, on setbacks and tap fees … and completely encourage the process,” Sovick said. “We can use plenty more density and I think there’s plenty of parking in this town.”
 

Reducing regulation

In fact, Gunnison city leaders have embarked on a mission to identify barriers to affordable housing construction within the Land Development Code (LDC). City Council recently approved a proposal from Cascadia Partners to examine Gunnison’s LDC and suggest changes to regulations.

This week, City Manager Russ Forrest said the LDC review is broad — and not confined to finding one solution. Still, ADUs and regulations that pertain to them are within the scope of work. For instance, allowing ADUs in zones which do not currently permit them and possible tap fee reductions may be considered, he said.

Required setbacks also may be examined. It is yet to be determined whether off-street parking requirements — which have been a huge deterrent to adding an additional living space — will be adjusted.

But even with changes to regulations, Forrest acknowledged there may not be a huge increase in ADUs permitted.

“You can look at our higher density residential zone districts and you could get a pretty good density if you just read that number,” Forrest said of allowed units. “But then when you overlay landscaping, and … parking and snow storage requirements, the reality is you may get a fraction of that number depending on the lot.”

Yet, the cost of constructing a new ADU can be prohibitive for some homeowners. That’s why the West Denver Renaissance Collaborative has launched a new program that seeks to streamline the ADU permitting process by offering pre-designed and reviewed designs.

The program may also offer financial incentives and coordinate work with contractors. While a 600-square-foot ADU normally may cost $250,000 to build, the program aims to cut that cost in half.
 

Diversity in housing stock

Still, Gunnison Planning and Zoning Commission member and energy efficiency contractor Andy Tocke noted that ADUs are not a silver bullet in solving an affordable housing crisis. While they may supply one portion of the market, they have the potential of squeezing out another housing sector — firsttime buyers seeking a starter home.

That is, the addition of a structure to a property adds value. But for someone looking to purchase a starter home, the addition of an ADU may add enough value that the buyer is unable to qualify for financing.

“What you put on the land really does affect the property value,” said Tocke. “The ADUs address the issue of getting more beds for people to sleep in, but it does not address home ownership. Maintaining a diverse supply of housing — price-wise — is important to maintaining a vibrant community.”

(Chris Rourke can be contacted at 970.641.1414 or at chris.rourke@gunnisontimes.com )