Will backyard apartments help with housing affordability?
Accessory dwelling units were legalized everywhere in Chattanooga earlier this year. So far, about a dozen residents have applied for permits.
By William Newlin
Fast facts
Accessory dwelling units, or ADUs, are small apartments built on the lot of a single family home
Chattanooga has allowed ADUs in certain areas since 2016, and some properties have had them for decades
A new City ordinance passed in June allows anyone in Chattanooga to build an ADU
ADUs are seen as a way to increase housing availability and affordability
Asheville, North Carolina, passed a similar ADU ordinance in 2015 and has issued 267 permits since then
An apartment in the back
When Donna Williams built her home on M.L.K Boulevard two years ago, an accessory dwelling unit went up, too. ADUs — sometimes referred to as carriage houses or granny flats — are small apartments homeowners can add to their properties, whether to rent out or house a family member.
Currently, one of Williams’ younger relatives lives in the 440-square-foot ADU behind her house. They share a garage and a small patio. She didn't know whether she would like sharing the lot with someone, but the fire pit sitting between their homes has become a neighborhood meeting spot in miniature.
“So when the weather gets cold, whoever feels like it will just say, ‘I’m gonna make a fire, you want to come out to the courtyard?’” Williams said. “And we have a good little community.”
The City made it easier for people to build new ADUs in June. While allowed in certain areas, mostly downtown, since 2016, the new ordinance lets anyone in Chattanooga apply to build one. The mayor and City Council see it as a way to increase housing options.
Williams has a similar hope for the expanded ADU ordinance — that it will allow greater density and diversity in Chattanooga’s neighborhoods where high prices and low availability would otherwise keep people out.
A tool for affordable housing?
Asheville, North Carolina, streamlined its ADU policy in 2015. Although approximately 267 ADU permits have come through since then, a spokesperson for its planning division said the city hasn’t seen a noticeable impact on housing availability or affordability.
The response from Chattanoogans has been limited so far. Trevis Swilley from the City’s permitting division said about a dozen people had applied for an ADU permit as of late October. But he said there’s a lot of interest, and homeowners are likely still researching the option.
“I think we're still in that ramping up phase,” Swilley said. “I think when the springtime rolls around, we'll see a lot more permits come through.”
In Los Angeles — which was part of the Hamilton County Regional Planning Agency’s peer review for ADU policy — ADU restrictions were loosened in 2017, and an awareness campaign significantly increased its number of ADUs. Its goal is to keep older residents in more affordable housing.
About half of Chattanooga’s applicants plan to use their ADU as living space for a relative, Swilley said, but he’s also heard a lot of interest from people who want to use ADUs as rentals.
Legalizing ADUs everywhere in the city is just one of the ways Chattanooga policymakers are trying to impact the housing market. They’ve also focused on adding density, like townhomes, duplexes, and apartments, when making rezoning decisions.
“Some of that would be what we call missing middle housing,” said Emily Wood, the RPA’s principal planner. “So I hope (the new ADU ordinance) will be one tool, but we still have more work to do.”
ADU assembly line
Lance Truett and Christian Wilhelm formed Chattanooga ADU Co. about two months ago with their sights set on a budding market.
They envision an assembly-line-like process for building ADUs in their warehouse off East 23rd Street: Construct the walls and other components using in-house templates, and then put it all together on-site. By taking care of permits and connecting the ADUs to utilities themselves, Wilhelm said they hope to “alleviate that whole headache” of a long construction job.
“That’s a six-week, dirt-to-key process,” Wilhelm said. “Sometimes it could take a bit longer, but it’s really our goal — six weeks.”
Chattanooga ADU Co. has yet to break ground on an ADU. But Truett and Wilhelm said they’re fielding more and more phone calls, and several clients are in the financing process. Their semi-prefabricated ADUs range from $95,000 for the 480-square-foot models to $125,000 for 640 square feet.
Interest has come more from middle-aged Chattanoogans looking for additional income or to house an older relative, although the duo anticipated a younger audience looking to get into the rental game. They’re open to all audiences, though, and ADUs for rent might start popping up in the coming months.
“So on the commercial side of things, those people are gonna execute faster,” Truett said. “On the residential side of things, it’s more of an awareness campaign at this point.”
Can ADUs be used as short-term vacation rentals?
Both Swilley from the City permitting office and Truett and Wilhelm noted the commercial pull of ADUs could result in more short-term vacation rentals (STVRs). Currently, STVR permitting in Chattanooga is on hold as the City Council reworks the ordinance regulating them.
And all the parties involved with ADUs now agree it will be up to the City how ADUs will fit into short-term rental regulations. Donna Williams, for one, was never interested in turning hers into an Airbnb.
“People can make a lot of money doing that,” Williams said. “But I prefer to be part of the solution with regard to diversifying neighborhoods and preserving neighborhoods.”