Monday, September 15, 2014

All About ADUs - A Primer Course for Brokers

Starting this fall, I'm going to be teaching a new 4 hour ADU course designed for real estate professionals through the Earth Advantage Institute. If you know of realtors who may be interested in this class, please let them know about it. More information about the ADU course is available here.



In case you missed the ADU tour announcement on AccessoryDwellings.org, my company Caravan-The Tiny House Hotel will be running another city wide tour of ADUs at the end of May. So, we’re starting to look for candidates for the tour and here’s what we’re looking for:
  • Recently permitted and completed ADUs in inner Portland.
  • Homeowners who are willing to open their ADU to hundreds and hundreds of visitors. The hosts from the last tour said that hosting was one of the best experiences of their life. Many hosts compared the experience to their wedding day—no joke.
  • The homeowner must be willing to have their ADU profiled on AccessoryDwellings.org. This profile involves sharing the design/build costs–so there’s a degree of transparency that is required by owners, in order to make the tour useful for attendees. 
Lastly, an article was published in Portland Business Journal that correctly differentiates ADUs from tiny houses on wheels. Oftentimes, media conflates these two building types when in fact, they are completely different from each other. Since I have my feet submerged in both ADUs and tiny houses on wheels, it was good to see an article that actually differentiated the two. 

Wednesday, May 7, 2014

Build Small, Live Large- Portland’s Accessory Dwelling Unit Tour- Sunday, June 1st, 2014

Update 5/28/14: There's been a huge amount of interest in attending this tour, which is fantastic. Over 800 people have registered to attend. 

To allow for ample access to the ADUs for attendees, we have decided to cap the ticket sales.  Tickets sales have now ended. We really wanted to sell more, but feel that this cap is in the best interest of the tour registrants and the ADU hosts. 

This blog focuses on the design/build process for my ADU. Occasionally, however, I make other ADU related announcements that will be of interest to readers. In this case, I'm very excited to announce Build Small, Live Large- Portland’s Accessory Dwelling Unit Tour. This will be the first tour of its kind, and promises to be a fantastic event.

This ADU, ten other finished ADUs, and one under construction, will be featured on the tour. Homeowner, architects, and builders for the ADUs will be available to answer questions. There will also be a series of expert presentations held throughout the day. Additionally, attendees will be able to see eight tiny houses on wheels.

The day will jam packed with small and tiny houses, networking opportunities, and access to ADU professionals and experts. If you're planning to build an ADU, this tour (and the ongoing ADU classes I offer) are the best ways to learn from others about the ADU designing, permitting, and building process.

Here's the press release from Caravan- The Tiny House Hotel, about the tour.



Caravan- The Tiny House Hotel, in partnership with the Oregon Department of Environmental Quality, the City of Portland, and Metro, is hosting Portland’s first citywide tour of Accessory Dwelling Units on Sunday, June 1st, 2014 from 10am-6pm. ADUs are secondary living units on single-family lots.  Modeled after the City of Portland’s Build It Green Tour, Build Small, Live Large: Portland’s Accessory Dwelling Unit Tour offers attendees the rare opportunity to see the interiors of eleven ADUs in a variety of locations across the eastside of Portland. The self-guided tour gives attendees access to the homeowners, builders and designers of the ADUs, and to comprehensive, educational case studies about the building process of each ADU. There will also be workshops throughout the day presented by local and national experts about a range of topics related to ADUs, from permitting and financing, to designing and building.

Portland has seen a six-fold rise in the number of ADUs built since 2010.  This dramatic increase is the result of a 2010 City of Portland waiver of System Development Charges, which reduced the cost of building permits for an ADU by up to $11,000.  Before the 2010 waiver, approximately 30 ADUs were built in Portland annually, but in 2013 alone, there were almost 200 ADU permits applications.  The waiver’s popularity caused the Portland City Council to extend the waiver until July, 2016, spurring local ADU leaders to develop Portland’s first ADU tour.

Throughout the day, attendees will also have the opportunity to tour four custom-built tiny houses on wheels at Caravan- The Tiny House Hotel. Caravan has received national media attention for being the first tiny house hotel in the United States. Caravan will host a late afternoon networking event from 4-6pm where attendees can meet local advocates, designers, builders and leaders of both the ADU and the tiny house movement. Real estate professionals can earn up to 6 CE credits. Attendees will have the opportunity to earn a special $25 discount to stay at Caravan, as well as enter a raffle for a free stay at Caravan.

Early bird registration is only $25. Learn more and register at http://accessorydwellings.org/adu_tour/

...or Eventbrite - Build Small, Live Large: Portland’s Accessory Dwelling Unit Tour

Thursday, February 27, 2014

Refinishing the Concrete Floors

Finishing up the ADU construction in the summer of 2011, my partner and I were attempting to make tens of good, long-term design decisions about the final look and feel of the ADU. From the placement of outlets, to the colors and style of granite countertops in the kitchen, to how to build attractive built-in cabinetry in the bedroom cheaply, there was so much to figure out quickly.

Having never worked with concrete, I was at a loss about how to correctly finish the concrete. I went to Home Depot and found a concrete stain and was able to easily apply a beautiful, rich red stain to the floor with a roller brush. Then, I applied a sealant, and voila, within a matter of hours, the drab grey concrete was a glossy red. It looked awesome.


Fast forward 2 years, 6 months, and I was no longer so psyched about the wonderful looking concrete floor. Over time, the stain gradually wore off to the point where it diminished the aesthetic of the ADU. It was a cool process to observe where it wore off . Any guesses where the it came off quickest? Answer: The kitchen- where we apparently spend the most the time walking around.




At first, there were just little white nicks, but eventually, the concrete looked ragged. I was frustrated because I'd stained and sealed the floor, but I came to learn that the product that I'd used wasn't really an absorbent stain; it acted more like a paint. And, like paint, it eventually peeled off. 

In January, I decided to bite the bullet and re-do the floor altogether. I researched options on how to refinish concrete floors, and eventually learned that the only viable approach to getting a good finish on the concrete floors would be grind down the existing surface. Then, we would have to re-stain the concrete with an acetone mixture that would actually penetrate the surface and stain the top 1/8" of concrete. 

The process included grinding down the existing concrete with a 4 grit, 8 grit, 16 grit, 32 grit, 64 grit, all the way to an 800 grit, to give it a polished finish. The stain/acetone mixture was sprayed onto the floor into the final passes. This concrete staining process is referred to as acid-etching. Lastly, a very thin protective was layer was applied. 

To prep for this job, we had to move everything off the ground floor of the ADU. Then, we took off on a road trip for the long weekend, and let professional concrete contractors work their magic. A big part of their job was taping off the entire first floor so that the concrete dust wouldn't cover everything. They were extremely thorough, nonetheless, concrete dust still managed to seep through and coat some of the walls. 


Here are pictures of the process. They spent two long days re-doing the 500 sq ft concrete floor. When they were finished, the floors looked awesome, as shown below. Unlike the paint-like stain process I did initially 2.5 years ago, this new stain should remain looking glossy and rich for years and years to come. 




This job cost $2,500. It wasn't cheap. I asked the contractor how much this job would have cost if I had hired him outright at the beginning. He said it would have cost the same amount, which surprised me. So, in the end, my initial stain job wasn't a mistake that ended up costing me more money. Rather, it simply required some additional work to move everything out of the house for the weekend. 

In hindsight, I would have sought and asked for a concrete foundation company that would have been willing and able to do all of the concrete work, down to the polished finish, and sought input on how best to get to the final glossy look that I was seeking initially. This would have allowed me to avoid the annoyance of refinishing the concrete floors. Like many building trades, concrete work has a lot of specialized processes, and I have found that having specialists scope out, advise, and in this case, execute the project, was critical to getting a final product that met my expectations. 

Thursday, March 21, 2013

Energy Use Over the Last Year In the ADU

In earlier posts, I shared how living in smaller spaces reduces per capita energy consumption, which was part of my motivation for living more compactly. Furthermore, after constructing an energy efficient ADU, Energy Trust of Oregon even gave me a $1,750 rebate for meeting Northwest ENERGY STAR standards and achieving a modeled Energy Performance Score of 35. 

Now that I've lived in the ADU for over a year, I wanted to share the actual energy bills, and compare them to the energy bills of the main house. Comparing the utility bills of the two dwellings will allow me to draw a few conclusions regarding the nuanced personal energy consumption virtues of living more compactly.

Both homes are heated by natural gas. The ADU is heated via a tankless water heater and in floor radiant hydronic heat. The main house, built in 1906 and recently weatherized, is heated through a conventional forced air heating system.

Below are the natural gas bills for the ADU and the main house, respectively. The ADU consumed 277.5 therms, and the main house consumed 930.4 therms. A "therm" is a unit of heat equal to 100,000 British thermal units.
The total therms used in the last year in the ADU
The total therms used in the last year in the main house
At only 277 therms, the ADU used only 29% as much energy as was used by the main house for heating!

That's very cool, but that's not the real story. 

The real story must include the total energy use divided by the number of occupants. The designed occupancy level is calculated by taking the number of bedrooms in the house, and adding one additional occupant. This designed occupancy level assumes that two adults are living in a 'master bedroom' together.

The ADU is a one bedroom dwelling designed for two people. And, in fact, that is exactly what happened in the ADU;  two people lived in the ADU for the full year. 

The main house is a four bedroom house, with a designed occupancy level of five people. However, in reality, the actual occupancy rates of the main house were lower than the designed occupancy level; the main house maintained an average of three occupants throughout the year. 

Interestingly, census data shows that the average national occupancy rate for homes larger than mine at 1,700 sq ft, is surprisingly low. The average occupancy rate for homes of 2,500 sq ft is actually only 2.59 occupants.

So, let's look at the therms used per capita for both the designed occupancy and the actual occupancy.



If the main house were occupied at the design occupancy rate, each ADU occupant would have used 75% as much energy as the average resident in the main house. Living in the Northwest ENERGY STAR certified ADU would have been 25% more energy efficient than living in the main house.

But, in reality, with only three occupants in the main house, the actual therms used per capita for heating and cooling in the ADU was still 138.75, but the actual therms used in the main house was 310.13. This means that by residing in the ADU, I used only 44% the amount of energy that the average occupant used in the main house. Living in the ADU has been, in reality, 56% more energy efficient than living in the main house.

These are significant data points. Here are the stories that these data points tell us:

#1) Building the new structure to Northwest ENERGY STAR standards resulted in building a very efficient building envelope and in choosing to use efficient heating systems.

#2) By living at the designed occupancy in the ADU, my partner and I each lived more energy efficiently. Building a smallish dwelling alone did not make the dwelling energy efficient. It was dwelling in a smaller footprint per capita that had the most substantial energy efficiency impact.

Said another way, if I lived alone in the ADU, and the main house was fully occupied at the design occupancy of five people, I would have actually used 50% more energy than the average resident in the main house.

#3) In smaller dwelling spaces like my 800 sq ft ADU, I was prone to live at the designed occupancy level of two. Conversely and representatively, the main house was prone not to be fully occupied (according to US Census data).

These last two points are a thinking person's fodder for a housing revolution.

-----------------------------------------------------------------------------------------------------------------

I'm also including my electrical bills from the last year for reference. Since neither the ADU nor the main house used electricity as the primary heat source (where the bulk of a home's energy is used), these data points are less relevant.

That said, indeed, the ADU was more efficient than the main house in terms of electric power consumption due to the types of appliances and light fixtures that were installed. But, one will still draw a similar conclusions that I have drawn above regarding designed and actual occupancy

Under actual occupancy rates, living in the ADU used 30% less electricity per capita than living in the main house.        Under designed occupancy rates, living in the ADU would've used 18% more electricity per capita than in the main house.
In terms of electricity, the ADU was more efficient under actual occupancy rates. But, if the main house was occupied by five people, the electricity use per capita in the main house would have actually been lower than in the ADU.

Electricity used in the last year in the ADU


Electricity used in the last year in the main house


Note the July spike in electricity use in the main house and the lack of a spike in July for the ADU.

The main house is set in direct sun, has R12 wall insulation, and has an AC unit.

The ADU is kept cool through deciduous tree shading, R33 wall insulation, and a ceiling fan. :)

Thursday, February 21, 2013

One Data Point for the Property Tax Impact of an ADU

My property tax appeal was successful. My property taxes were officially lowered from $4,021.75 to $3,154.21 for 2013.

Adjusted tax statement from Multnomah County

This is still a big increase from my 2012 tax burden of $1,599.43, but it's a fair increase based on Multnomah's tax code. 



Property taxes before and after the ADU was added to the lot

For others who are considering the fiscal impacts of an ADU to their current property tax, the important numbers to note in terms of possible tax increases are that my ADU cost  ~$100K to build, it was valued at ~$90K by the county, and that this additional 'real market value improvement' increased my taxes by ~$1,500.

A property tax increase post-ADU, should be proportional to the contributory value of the improvements. Using my increased tax figures as a baseline, and assuming that I understand Multnomah tax code correctly, if an ADU adds between $50K-$150K of contributory 'real market value' to a property, the property taxes would go up proportionally from ~$850-$2,550/year.
To figure out how an ADU may impact your property tax if you're in Multnomah County, simply multiply the assumed increase in assessed property value by 0.017. That will tell you approximately how much your taxes will increase after you've added an ADU to the property. 

And take my formula with a grain a salt be cause I am just a guy with extra time on his hands and MS Excel.

Wednesday, January 9, 2013

Successful Appeal of the County's Initial Assessment of the Contributory Value of the ADU

In my last post, I described how the county attributed approximately $142K of contributory value from the new ADU. This translated to a HUGE annual property tax hike; from $1,599 to $4,021.


What I didn't describe in that post was that upon receiving the County letter in the mail, I immediately gathered together evidence that my ADU was actually worth far less (it is worth ~$100K) and wrote an appeal to the County Board of Property Tax Appeals. I submitted the appeal package in full the following day at the County tax office.

When I spoke with the kind lady behind the County desk, she informed me that the assessor, who I'd allowed into the property, had noted in his records that I had added a 1,350 sq ft ADU. Given that the City of Portland's regulations only allow ADUs of up to 800 sq ft, I had evidence to prove that his spatial calculations were necessarily off target by ~68%. I also learned that the County assessor likely applied a simple numeric formula to this miscalculated sq footage to come up with the obscenely high contributory value for the ADU of $142K (eg. 1,350 sq ft x $105 sq ft= $142K).

A couple months after submitting my appeal paperwork, a 2nd assessor contacted me and visited the property. When he arrived, he explained that he had read through my appeal documentation, which had included a full copy of a 3rd party appraisal. Upon visiting and measuring the property, he concurred that the initial assessment of the size of the ADU seemed incorrect and he shared that he'd never seen an ADU add more than $100K to the value of a property.

It's worth noting that the initial County assessment apparently included the ADU attic space in his sq footage calculations, whereas the City did not count the attic as living space. The 2nd assessor agreed that the attic should not be counted in the sq footage calculations.

It's also worth noting that the County assessment includes the total building footprint (i.e. the exterior walls) in the sq footage calculation, whereas the City only counts interior space (i.e. drywall to drywall). The County includes exterior dimensions because assessors must be able to assess the building from the outside since homeowners aren't required to allow assessors entry into the home and many homeowners deny entry. These two variables help explain why the first sq ft assessment was so off target. However, I never would have known about this sq footage miscalculation had the kind lady behind the desk not mentioned it; this 1,350 sq ft figure wasn't in the initial letter they sent.

Today, I received an updated property tax assessment in the mail, which I am happy to report, accurately attributes ~$90K of contributory value from the ADU to the property, $53K less than their initial assessment!


The "From" column relates the 2013 figures from the "This Year" column in the first image at the top of this post.

The "To" column shows the new figures according the 2nd assessment, which will override the initial assessment.

Whereas the initial assessment indicates the market values of the structures (main home and ADU) at $320,600, the new assessment has the market values of the structures at $267,600. The new assessment values the ADU at ~$90K, which tracks perfectly with my cost of construction and my private appraisal.

I don't yet have a newly updated tax bill, so I don't know what my actual annual taxes will be. But, I estimate that the updated tax on the property will probably come be about $3,100/year. Once I receive the final property tax bill, I'll post it for all to see.

If my estimate is correct, this will be $1K less per year than the initial County tax assessment. It is still a $1,500/year increase to the property tax, a two-fold increase from what my taxes had been before I built the ADU. But, based on the County tax regulations, this new property tax burden seems fair and reasonable.

Wednesday, October 24, 2012

Property Taxes for the ADU

Many people have inquired about how the ADU effected my county property tax. Up till now, I had no idea how the addition would impact it. Even the county's appraiser who inspected the ADU last spring couldn't give me any sense about the impacts of the ADU on my overall taxes.

I finally have an answer: It is raising my taxes a lot! In my case, it's raising my property taxes by $2,422.32. Said another way, it's more than doubling my property taxes (a 2.5X increase to be exact).



Whereas before, the total value of my property's structures (just the main house) previously were $177K; now, with the ADU added to the property, the county is assessing my property's two structures (the main house and the ADU) at $320K. I assume of course that the vast majority of that $142K increase in the county's structural valuation is attributable to the addition of the new ADU.

This doesn't reconcile with what a private appraiser found as the worth of the property with the ADU addition. In fact, this county valuation is over 50% higher than what the appraisal said.

This property tax anecdote should be considered with a grain of salt, as each property has unique attributes and history that would effect how an addition would increase the tax burden. With ADUs being relatively rare, this story can serve as one reliable data point. However, there are many factors than play into property taxes, so I won't speculate as to how this data point compares with other properties that have ADUs.

And, it's important to note that this relatively huge new property tax burden does not hold a candle to the very tangible financial benefits provided monthly or annually by having the ADU.

If ADU Financing is of interest to you, I encourage you to attend the Build Small, Live Large Summit this Friday, October, 26th. I'll be speaking on a panel entitled Financing the Accessory Dwelling Unit.
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