The Permit and the ADU Design Build, Time and Cost Breakdown

Six and a half weeks after submitting the permit application to the City of Portland, we have gotten the permit! Needless to say, I am thrilled to move forward with the construction phase. 

We're going to be moving really fast now, so I'll be posting frequent updates of the construction process. In the next two days, I'll post pictures and videos of the groundbreaking, excavation, and foundation wall forms.

This post however, is about the costs and time of this initial phase of the project, as well as the cost of the ADU project overall. I know that cost is the most major factor for everyone who is considering such a project. So, I'll be transparently reporting on the costs of this project so that others have a good sense of the costs involved.

To start, it is very noteworthy that Portland has temporarily waived all System Development Charges for ADUs. System Development Charges, which are the city's administrative fees for transportation, water, and waste management for all new construction projects, typically ran $10,000 for ADUs. This policy has obviously been a major recent incentive for many residents to consider building new ADUs (or legalize their existing ADUs).

Portland took this measure to actively promote ADUs to add density to the urban core. This is one the many laudable urban planning policies that consistently keeps Portland near the top of the list for being on the nation's most livable, walkable, and bike-able cities.

System Development Charges for ADUs through June, 2013.

ADU Costs

One of the goals for this project is to build high-quality custom construction at a relatively low cost; partially by making better design decisions, and partially by sourcing materials and labor astutely.

Here is a time and cost breakdown of the design phase that I just completed, which amounted to $8,196.

Design Phase Cost Time Breakdown

Generally speaking, custom high quality construction costs $150-200 sq. ft. My original goal was to get the whole project done for $100 sq ft, but it's looks like I won't be able to get the project costs that low.

Here are my current cost projections. If I am able to stick to this budget of $88,196, the project will cost ~$110 sq ft.

Of course, there's a well-known rule of thumb that says that you should always expect to pay 20% more than what you estimated, and that the project will take twice as long as you had hoped.

Building To Code

Many people are interested in building ADU's and the daunting capital expense is their only deterrent. I know that some have converted garages into livable spaces for as little as $20K without a permit, and that others spend up to $200K to build an ADU from scratch with a permit. Since this post comes in conjunction with the permit, I've attached the line item Portland BDS permit fees below for reference, which, for this project, amounted to $4,205.38.

Building legally requires more work that building illegally and it comes at a cost. However, it gives more peace of mind, legal assurance, and better financial payback to the homeowner for rental and resale. Building legally or not is a big decision that the homeowner must carefully consider.

If you're considering whether and how to build a new structure in accordance with the city's rules , I've found that the City of Portland BDS is great about answering questions about new construction by phone or in person. So, don't hesitate to sit down with them and talk frankly about your ideas--you don't even have to give them your address if you're still trying to decide how to proceed.

The City Of Portland permit costs amounted to $4,205.38 for this project.

I'm curious to understand how this permit fee compares other permit fees around the country, and whether the fees are structured on a per sq ft basis.

To me, this permit fee seems reasonable. If the $10K system development charges were in effect, I would have balked at funding this project. So, again, I applaud Portland's active promotion of ADUs.

Quality, Cost, and Time

There's a huge range of tactics that effect project cost. But, my Sustainable Home Professional instructor introduced me to a great rule of thumb, called the Project Management Triangle:

'There are three relational pillars in every design/build project: Quality, Cost, and Time- and it's hard to optimize all three pillars.'

In other words, you can build a high quality project at low cost, if you have lots of time. You can build a high quality project in little time if you have lots of money. And you can build quickly and cheaply if you don't care about quality.

Finding that sweet spot in the middle is really tough. But, that doesn't mean we can't try!

Only the Worst Need Apply

Last week, I had a home energy audit conducted as part of the Clean Energy Works Oregon program. Although this energy program is not directly pertinent to ADUs, I was so impressed by the audit and the program overall, that I feel compelled to write about it.

Several years ago, in Washington DC., I managed to get a free home energy audit through a local grant-based, energy efficiency program. The DC home energy audit was not helpful at all; their findings did not result in me making any changes to my home, due to the program's inability to intelligibly convey the home energy loss findings to me, or to offer me any compelling financial incentives to take action. In contrast, this Oregon-based program is run brilliantly and it truly deserves a national spotlight.

I'll caveat this post by saying that I have not yet gone through the whole program, but my first 'touch' with the program has been fabulous.  If nothing else comes from the program other than the free audit that they conducted (which they value at $500) and the ten free CFL's, it was still totally worthwhile.

The Life Cycle of Clean Energy Works program funding 

You should visit their site for an authoritative overview of their brilliant program. But, here's my layman take on how it works:

The major power/gas providers tack on 3% to their customers' home energy bills; that 3% levy is pooled together and administered by the Energy Trust of Oregon, whose mission is to reduce the region's energy demand. This demand-side reduction ultimately saves the major energy providers (NW Natural, Pacific Power etc) from the costs of having to build another expensive power plant to meet the region's ever growing energy demands.

The Energy Trust doles out this money via incentives and programs to homeowners whose homes need energy improvements. In the case of the Clean Energy Works Oregon program (CEWO), one of Energy Trust's partners; you have to apply to get into the program, and only the big, old, clunky, under-performing homes are admitted into their program (thus, the title of this blog post).

Energy Trust sets the homeowner up with a local, small-business, weatherization contractor, who audits and assesses the home, and provides a bid to do the work to improve the energy performance of the home. The contractor gives a scope of work and a bid to the homeowner. The homeowner reviews the scope of work that they wish to complete with an "energy advocate" from CEWO. Then, they select a scope of work, presumably based on the bid and the likely payback period (let's say this scope amounts to $10K)

The contractor initially fronts the capital to do this work, and when CEWO says that the home improvements are complete, the contractors are paid ($10K) by a partner bank for the work. The bank then turns this capitol expense ($10K) into a 5.9% interest, 20-year loan, that the homeowner then pays back through a extra add-on expense in their monthly energy bill (~$50/month). The monthly loan payments are incorporated into the homeowner's energy bill, which makes the the loan repayment administratively simple for the homeowner (since I pay through autopay, for example, I'll never have to lift a finger to pay off the CEWO loan).

The weatherization work that has been performed on the home by the contractor will result in a lower montly energy bill. Ideally, if the contractor performs inexpensive weatherization improvements, such as air sealing and insulation, the monthly energy bill will be reduced by a dollar amount similar to the loan repayment amount. Ideally, this would mean that the homeowner would pay no more on a monthly basis than they would have paid on their monthly energy bills in the first place.

So, instead of paying $50 extra in my gas bills each month because home is poorly insulated, I'll instead pay $50 a month towards the cost of those weatherization improvements over the next twenty years through a monthly loan. (Presumably, as energy costs increase, this 20-year $50 loan repayment rate will be proportionally less expensive than the cost of inflating gas and/or electrical prices. In ten years, my wasted energy may have gone from $50/month to $100/month, for example) 

Furthermore, if a homeowner achieves 15% energy gains after going their program, CEWO gives the homeowner a $1,500 cash incentive. If you achieve a 20% reduction, you get $2,200. And if you achieve 30% in reduced energy consumption, you get $3,200K. Note that these incentives are not based on how much the homeowner spends on weatherization, but rather on how effective the improvements are at reducing home energy use--a crafty performance-based criteria.

The Audit

The audit that was done on my home lasted four hours; the inspections were extremely thorough. The weatherization contractor spent an hour on each floor, including in the basement and the attic. He conducted a blower door test, which in itself, is a service that would normally cost over $100 to administer. He found that the building envelope was 21 ACH @50 Pascals (they could only pressure it to 35 pascals before the blower maxed out). They estimated that the home gets one air change per hour under normal pressurization. For you non-energy geeks, that means that my house leaks like a sieve.

My leaky-sieve-of-a-house is THE target house for the Clean Energy Works program. For a house as leaky as mine on a gas combustion furnace, there's lots of low cost fixes that could reduce my energy load and monthly bill considerably. Their audit, model, and my gas bills, indicate to them that I have the potential to reduce my home's energy use by 33% by going through their program.

My Review of the Program

In my mind, from a policy perspective, the best benefit of this program is job growth opportunities for small businesses who do weatherization/energy conservation. The contractor who did my home audit owns his business with his wife and they employ one or two others for some jobs. Many of the contractors in the program are small businesses like his.

The Clean Energy Works of Oregon program is exactly what the doctor ordered. The US desperately needs job growth, it needs to stop wasting 30% of its buildings' energy use through careless building design, and it needs to find more creative ways to fund distributed micro energy-conservation projects like this. Citizens are eager to have an opportunity to be part of a solution to address a problem that is bigger than any one of us alone.

I have heard two valid criticisms of the the Clean Energy Works program, and there may be others:

• This 3% energy levy is a regressive tax that impacts poor homeowners/renter more than wealthy homeowners/renters. In other words, just like other citizens in the region, the region's poorest residents are subsidizing Clean Energy Works program participants. However, unlike the median and upper income residents, they are likely not the beneficiaries of this levy.
• Weatherization contractors may or may not have the capital to front the cost of expensive repairs for a homeowner in the program. This capital expense (up to $30K sometimes) is too large for some small businesses to afford, pricing them out of the program.

All in all, this is one of the most brilliant and holistic energy programs in the country and it is a pleasure to be a participant in it. My leaky sieve wants to express its gratitude as well.

Pre-Issuance!

This is the final step before the permit. Yes!

Fly Through Animations of ADU

When hiring an architect, I insisted that they must render the architectural design in SketchUp, a 3D modeling software that is now owned by Google. SketchUp is the best way to visualize spatial designs; it's relatively simple to create models, and even simpler to navigate through them once they are built. Did I mention that it's also free? Fortunately for me, my architect was quite skilled at designing in SketchUp.

While plan and section, 2D CAD drawings may suffice as a visual aid for some architects and builders, it's quite clear to me as a customer that 3D modeling is a far superior way for the average mortal to understand a complex design. A 3D model is essential to understanding a building's site and landscape design elements such as fences and trees, proximate relationships between standard home features like windows, doors, and cabinets, and it can even be astutely used to get a better grasp on the implications of aesthetic choices like furniture, textures, and finishes.

Every architect should provide customizable SketchUp models to their clients, and every client should be able to navigate their way through a SketchUp model. In an earlier post, I included some screen shots of various views in the model. What follows are two fly-through animations of the ADU design, in which I attempt to convey the physical spaces in the building.

A Passively Virtuous Choice

It is a government's grander policy challenge to steer individuals towards the personal choices that result in the best societal outcome; to purposely induce the virtuous choice by making it a passive choice.

I'll define a 'passive choice' as the expected behavioral choice that a self-interested or apathetic person would reasonably make.

Optimally, individuals' passive choices will collectively result in the best societal outcome. It is in our best interest to design systems where individuals' passive choices are the most regenerative for society. Collectively, we should design for the adoption of individual behaviors that benefit everyone, whether or not the individual is actively choosing to be virtuous.

For example, if driving to work is cheaper and quicker than taking the bus or biking, then more people will surely choose to drive. 

Conversely, if driving to work takes more time and costs more money than taking the bus or biking, then more people will choose these alternatives. 

Generally speaking, marketing the adoption of energy efficiency choices is easier than marketing behavioral change. For example, most environmentalists understand that driving alone has a bigger environmental footprint than taking the bus. But, if you’re accustomed to the ease and costs of driving alone to work, it is difficult to force yourself to change your behavior to take a bus every day. Therefore, a policy that asks citizens to drive alone less, is not as pragmatic as a policy that encourages us to purchase a more efficient vehicle.

If we want people to get out of the habit of driving their car alone for their daily commute, then driving alone cannot be the passive choice. Biking or taking transit must actually become the best way for people to get to work in terms of cost and time savings. If we are to bike or bus to work, society must strive to make it the more compelling option, the passive choice. 

Many environmentalists advocate for behavior change and there is a place for that. But, out of pessimism, mixed with a cup of pragmatism, I prefer to advocate for design change. 

ADU’s have the potential to help us passively make virtuous societal choices in the face of many looming environmental threats, not the least of which is climate change. The building and transportation sectors are the two most energy intensive sectors in the US.

 from Architecture2030.org
The charts above show the energy and carbon dioxide emissions 
associated with various sectors of the US economy. 

Smaller, urban infill housing represents an energy cure in the building and transportation sector. Compact, infill housing is akin to surgery intended to fix the clogged arteries of the building and transportation sector.

Urban density is a prerequisite for a robust and healthy transit system. ADU’s have potential to organically add density to the urban core in a meaningful, personalized, creative way.

From 'Research on Factors Relating to Density and Climate Change'.

The chart above shows the minimum number of 

residential dwelling units per acre needed 
to economically justify the associated transit service.

ADU’s are, by definition, smaller than the average residential dwelling; and building smaller is arguably the single most significant factor in building greener. 

ADU’s have the potential for a rapid payback period. In my case, I am striving for a five year payback period, a period which qualifies as a good business investment.

Economically, ADU’s are a shot in the arm for a homeowner's personal financial portfolio, the city's tax base and the state's unemployment rate. They also could help satiate the nation's thirst for creating US-based "green" jobs in a down economy.

Whether or not I cared about the green house gas reduction benefits or the benefits to the local economy, my self-interested choice to build an ADU is a societally virtuous one.

The Builder’s Contract

After much back and forth about how to best build this structure, I decided that it would be in my best interest to hire a builder to construct the waterproof shell. The construction process will be done in two phases. Phase I will be bulk of the structural work, and Phase II will consist of the finishing touches. 

The Phase I builder will be responsible for the foundation, framing, siding, roof, windows, insulation, and drywall. He is also going to provide construction oversight for the electrical, plumbing, and other subcontractors that will be working on this project. I haven’t yet determined how I’ll do phase II—I hope to do much of that work myself, if I capable of it. 

In signing the contract with the Phase I builder, we used a Cost + Fixed Fee with Guaranteed Maximum Price ($50,000) and Bonus Contract. This is a very loaded term that means there is a $50,000 cap for the cost of this project; I will not have to pay more than that for the project even if the builder’s costs are greater than this amount. However, leading up to the final stage of the project, we’re going to operate the contract as a time plus materials contract. He’s going to track the material expenses and the hours for himself and his subcontractors. 

For any amount that he completes the project in under his bid price, he’ll get to keep 60% of that amount and I’ll keep 40% of that amount. For example, if he completes the project for $40,000 ($10,000 less than his original bid), he’ll get a $6,000 bonus. If he completes it for $46,000, he gets a $2,400 bonus. There’s a few nuances to this financial structure that I won’t bother to mention here. 

But, needless to say, we both share the goal of completing this project on a low budget, and this payment structure gives the builder a financial incentive to complete the project under budget. In tandem with quality standards, this payment structure makes sense to me. The other key aspect of our contract worth mentioning is the 3^rd party certifications. 

His work must not only pass building code inspection, he will also be held to meeting the standards of the Northwest Energy Star program. 3^rd party inspectors will checking in on the project during construction using the Thermal Bypass Inspection Checklist as the standard against which to measure the quality of the work. All the Energy Star details for which he is responsible are described on their website, which use clear illustrations and even have Spanish versions. This checklist holds him accountable to a relatively strict benchmark for his construction quality. 

I have to pay $700 for the third party certifications necessary to complete this Energy Star program, but I will receive cash incentives from the Energy Trust of Oregon for successfully building to these standards once the building is complete. These cash incentives will in turn, totally offset the cost of the 3^rd party verifications, so it is a no-brainer to participate in this program, as it will inevitably result in a better process and product for both of us.  

Because we’ll be building a certifiably green building, the builder will be able to use this as an additional marketing piece. This project is not going to make the builder rich, but it is a desirable project for his portfolio, and he hopes that this project will lead to more projects like it down the road. I hope it does too.

My ADU’s sexy wall assembly

Heating and cooling is the most energy intensive function of homes in the US. Accordingly, reducing heating and cooling energy demand is critical to reducing a home’s energy footprint. If roofs, walls, and floor insulation were as sexy as solar panels, the market's attention would rightly be focused more toward insulation and air sealing than on purchasing solar panels or building windmills on roofs. 

In the green building marketplace, there is a disproportionate level of interest and a disproportionate level of federal, state, and local funding focused on subsidizing distributed, alternative energy production, when that effort would be better spent on subsidizing insulation and air sealing. In the building sector, 30% of the energy we consume is wasted through leaks and breaks and poor building design.

By putting a little more thought and money into a building's wall assembly, the energy reduction gains will surpass whatever amount of energy one could generate by putting that same amount of money into purchasing solar panels. Eventually, when the cost of producing alternative, distributed energy will make financial sense for homeowners, but for now, the best gains will be made through weatherization. In this project, I am focusing my efforts on energy conservation and efficiency as a pragmatic design goal.

Therefore, this post will deal with my ADU’s sexy wall assembly. For the ADU, my goals are to achieve a high performance building shell at a low cost and adhere to the city’s regulation. 

Standard wall assembly detail

ADU Wall Assembly, explained step by step, from exterior to interior

According to Porltand’s ADU regulations, the ADU “Exterior finish materials, roof pitch, trim, eaves, window orientation and dimension must be the same or visually match the house.”  My existing house has asbestos siding however, which is no longer legal to install, so the city asked us to use a comparable siding such as cedar shingles, instead. 

Incidentally, the original siding under the asbestos is ship lapped siding, and I would love to be able to match that siding style instead of my asbestos siding. Without going through a $1,500, 10 week variance, I am required to match the existing, ugly siding. Ugh. I wish there were an easier or cheaper process to make a simple change like this that would be aesthetically appealing to everyone. Under the siding, there will be furring strips will be fasted to the plywood sheathing to produce a 3/8” air gap between the siding and the that will serve as a rain screen to drain water. 

Beneath the furring strips will be a weather protective wrap called Siga Majvest, which will be stapled to the plywood sheathing.  Like Gortex, the Siga wrap and sheathing tape are vapor permeable to allow the building to expire vapor outwards, but that will blocking driving rain from penetrating inwards. 

The plywood will be fastened to a staggered stud frame. Early in the process, I chose to use staggered studs as a relatively low cost framing method that would give me the flexibility to use a lower cost insulation and still achieve relatively a good R-value wall assembly since staggered studs provides two extra inches for insulation, and every inch helps. 

Staggered studs are basically two sets of 2x4 walls, placed parallel to one another. In this case, the exterior 2x4 will be the load bearing wall. Using two separate walls reduces 'thermal bridging', or heat loss, through the wall assembly. Several experienced builders and framers have discouraged me from using staggered studs, but their criticisms have were not persuasive enough for me to amend the wall assembly design. 

For insulation, I’m leaning heavily towards blown in cellulose.  There are many factors in this decision, but for me, cost and performance are the biggest factors, and blown in cellulose seems to be the best option here. In the end, the walls will be R30 or greater. The roof assembly will be R39 or greater (depending on the insulation we select), the slab on grade floor will be R-15 (3” XPS foam, then a concrete slab). 

Lastly, we’ll hang drywall on the interior 2x4 stud wall. I'm choosing drywall because it is the cheapest and simplest material to use right now for interior residential walls. 

SketchUp shot of the south-facing wall of the ADU- the majority of the window glazing faces south.

While the south facing wall has lot of glazed surfaces to maximize solar gain and natural lighting potential, the north facing wall will not have much glazing.

I felt encouraged about this wall assembly design after reading a Journal of Light Construction article about superinsulating new construction homes on a tight budget in Massachusetts. They have been using a similar wall assembly in their production, and apparently, it’s worked well enough that it’s JLC feature article for January.

Common Forms of Living Smaller

Much residential "green building" attention has been placed on material selection, alternative power sources, and mechanical efficiencies. These choices all play a role in building "green", but arguably, none of these charismatic green features are as important as the energy efficiency gains achieved through building and living in smaller spaces. 

Smaller houses can take many forms, and the three common forms that I'll mention in this post, all achieve notable reductions in terms of their environmental lifecycle impact reductions: Multi-family, ADU, and "Tiny Houses" 

Let's begin with the recent EPA-sponsored report about the energy impacts of residential housing choices. As stated on the introductory page, 

"Buildings and transportation together account for about 70 percent of energy use in the United States and are responsible for about 62 percent of U.S. greenhouse gas emissions"

The findings in this report illustrate that certifiably green buildings are not as significant in reducing that energy as where you build (Conventional Suburban Development or Transit Oriented Development) and the housing type (Single Family Detached, Single Family Attached, and Multi-Family). The report findings are summarized well in this rich graphic.

For me, I’m beholden to my innate desire to design and build something on my own terms. There are strong correlations between the size of average Single Family Detached, Single Family Attached, and Multi-Family homes. However, the impact of housing size perhaps has a more direct correlation to energy use than those building type descriptions.


From 1950, to 2008, the average sq ft per person has increased from 259 ft to 961 ft, a 372% increase. 

ADU’s are an accessible way for urban homeowners to make a big stand on issues that span community building, environmentalism, urbanism, and climate change. Done well, ADU’s present a compelling personal financial opportunity for individuals to create a regenerative, personal financial portfolio. I plan to discuss the economics of my ADU and ADUs at large in future posts. 



I have extracted some graphics from a presentation about the findings from the Oregon DEQ report, "Life Cycle Approach to Prioritizing Methods of Preventing Waste from the Residential Construction Sector in the State of Oregon". I anticipate this this groundbreaking report will prove to be pivotal in the green building movement and will help to instigate a shift toward an emphasis on living smaller. 

I believe ADU’s will naturally become more and more popular where there is sufficient housing demand and where they are allowed by zoning laws. With a few exceptions in the US, ADU’s are not legal.

The first ten minutes of this video is of Jay Shafer of Tumbleweed Tiny Houses addressing code barriers to small housing. Jay Shafer is the person who has popularized the notion of building tiny houses on wheels- which, as he explains, is simply a tactical exploitation of a common municipal zoning loophole to legitimize what would otherwise be illegally constructed tiny houses.

Views of the ADU

My architect has put together a great SketchUp model. I've put the model into the site baseline conditions model. Here are some view of the models.