To ADU or Not ADU | Part 1 of 4
I have recently survived a very Portland, very complicated, very expensive process called “ADU Permitting”. It started out lovely. I had been looking for a home for my parents to call their own. They had been temporarily living with my family while they decided whether or not to relocate from Chicago. After 9 months of having them in our guest room, the definition of “temporarily” was getting a bit strained, and we all finally made the decision that they would stay in Portland, but move into a home of their own.
It started out great. After a couple months of looking and onefailed offer, we found a wonderful mid-century home in the burgeoning Woodstock neighborhood. It was perfectly situated about 20 blocks from our home, and walkable to everything they would ever need. Great for relocating retirees. The home had a great layout for an Airbnb. The upstairs had 2 beds and 1 bath, kitchen, living room, and dining room all on one level. Downstairs already had an entrance that led outside, a full bath, a fireplace, and a 1950’s rec room. The rec room was in poor condition, but it was the perfect size to remodel into a bedroom, living room, and mini-kitchen. Our offer was accepted over several other higher offers because I waived all inspections (kids don’t do this at home!).
We got the upstairs into move-in ready shape quickly with some minor repairs and a coat of paint, then I set about finding a contractor to remodel the basement into a nice livable space. The main decision was whether to make it an “ADU” (Accessory Dwelling Unit) or just a “remodeled basement with bar”. If we wanted to have a cooking source (a range/oven), it would have to be an ADU. Having heard some horror stories about ADU construction requirements, the complications of permits, and the possible raise in taxes, I decided that we didn’t need a full kitchen in the basement for an Airbnb. We would just have a bar area. Several successful Airbnbs in town don’t offer full kitchens, and I wanted to be able to get the remodel done as quickly and cheaply as possible.
All along I had planned on getting my own drawings and permits to save money. Having flipped a home last year, I was in contact with a good designer who could draw up the plans for me and I got that done quickly and easily. Then, with plans in hand I interviewed about 8 contractors, and 6 sub-contractors. The bids I had from contractors ranged from $22,000 to $49,000 for the same loose scope of work. I signed up with a contractor near the bottom of the price ranges that had been highly recommend. I liked that he had a large crew and was in the process of remodeling several other basements at the same time. He had good ideas on design and knew things about construction that I didn’t know. That convinced me he was right for the job. Once I had a contractor ready, I set about getting permits, and this is where things got complicated.
I went down town to Bureau of Development Services on Friday before a three-day weekend. This was my first mistake. Everyone there agreed that they had never seen the place so busy. But I waited my turn, about an hour, and eventually sat down with the first screener who reviewed my plans to make sure that they were legible, in the proper form & size, had the right markings, etc. She deemed my plans worthy to move them forward. She also confirmed that I owned the house and that generally what I wanted to do was legal. I felt great about the first step and though it would be smooth sailing from there.The way it works at BDS is that you get a slip of paper that moves from “box” to “box” on the waiting wall. Each box represents a different department from whom you need approval of your plans. After waiting for hours I finally got through to the next box, a plans reviewer. This is where things got interesting. The plans reviewer let me know that I would have to get a special permit before I could move forward with my plan. Since I wasn’t trying to get an ADU, but I was adding something that could resemble a kitchen, I needed to record a statement with the county that I didn’t intend to rent out the space I was remodeling. This is what they call a “second sink covenant” and it’s required when you install a sink in an area that’s not a utility area, bathroom, or main kitchen. Unfortunately, this meant that I needed to go get a statement notarized by both me and my husband, then take it to get recorded at Multnomah County before I could proceed. While I knew that we would be renting space for an Airbnb, I didn’t think that this fell into the category of their concern which was a full time rental space.
So, I did it. The next free morning I had, I got my husband, got notarized, and got recorded. Then it was back to BDS where I had to restart back in Box A. I once again got moved through to the next stage and after lots more waiting, met with another plans reviewer. This one, though, had a different idea of what I should do. “Why did you get a second sink permit? You should just do an ADU.” I explained to her my reasons for not doing an ADU – I thought I would have to do some major modifications to the space, I was worried the permit would be much more complicated and expensive, I was worried that the property taxes on the house would go way up. She said that I should really consider my options, and go to the “Questions” box to ask more about what I would need to do to turn it into an ADU plan. So, my slip went back to the waiting wall and I waited until a “Questions” person was available.
She informed me that the plans I had in hand would take very little modification to qualify for an ADU permit. She also told me that the fees would probably only go up by a couple hundred dollars. Finally, she said that they would be ending the ADU Fee Waiver program in July and that it would be much more expensive to install an ADU after that. She pressed upon me that I should take advantage of the waiver while I could. I asked about the potential property tax issue and she said that she couldn’t advise me on that, but that I should call the Multnomah County tax assessor and talk to them about it. In the meantime, I needed to talk to the Water Bureau to see if I would have to pay much in extra fees for their approval.
The Water Bureau box was not one that I would have had to do for my basement remodel, but if I was doing an ADU, I had to go to several additional bureaus for approval. (Planning and Zoning, Life Safety Review, Structural Review, Site Development Review, Residential Subsurface Site Evaluation - Site Development, Bureau of Environmental Services Review, Portland Department of Transportation Review, Bureau of Water Works Review, Urban Forestry Review). For the most part, under the fee waiver program, most of these fees were waived, but you still had to go through the motions and visit each box. She said that Water was the one where I might encounter some large additional fees depending on the current size of my piping, so I should go there first before deciding to go for the ADU.
So, back to the waiting room and my slip went into the Water Bureau box. After more waiting, I had a pleasant conversation and did some math with the Water Bureau guy. He looked up the current sizing of my meter, and while it would have to be upgraded, in the end, it would cost me an extra couple hundred dollars to get approval from the Water Bureau for my ADU. Not so bad, now just a couple more boxes and Bureaus to get through. But guess what, it’s noon on Tuesday, and BDS closes at noon on Tuesday. So, I was not going to get my permit today.
The next day I woke up with buyer’s regret on my decision to move towards an ADU permit. There was still the outstanding issue of taxation. I had heard horror stories about property taxes doubling or tripling once an ADU was added to the property. After all, on the front page of BDS’s info page about ADU’s it says “. “Construction of an ADU could result in a significant increase in property taxes under Oregon tax law.” So, I put a call into the tax assessor’s office to try to get some clarity on the issue. The tax assessor that I spoke to was remarkably helpful and really boiled down the policy for me. Basically the current policy is that if you build a DETACHED ADU on your property, then the entire property will get assessed as if it were new. This is also the case if you build onto your existing home. However, the best news for me was that if you are creating an ADU within the existing space of your home (basement or upstairs usually), then you do not get reassessed as new. Instead, they use a complicated formula to figure out the amount of the improvement and then add that to the rate that you were already paying. So, while my taxes were definitely going to go up, they were not going to double or triple.
Confident again in my decision to go ADU, I went back to BDS determined to get my permit issued. I started back in Box A again, this time asking to be permitted as an ADU. They hemmed and hawed over whether I could keep the permit number that had been issued to me, but decided in the end that I could. Then I went back to waiting wall to wait again for a plans examiner. The plans examiner was the last big hurdle I had. Turns out that, in fact, there had to be several modifications to my plans in order to meet ADU guidelines. Different ceilings, different walls, more walls between common spaces and those of the ADU. At one point there were 3 different plans examiners arguing over how thick the fire wall material between the upstairs and downstairs would be. That very issue had been a recent topic at the staff meeting, and apparently was settled without consensus and with many disgruntled engineers. But, they decided that I wouldn’t have to put carpet on my hardwoods upstairs (phew!) and that an application could be found to protect the two living areas from fires in one or the other.
The examiner marked up my plans with lots and lots of red pen, then left me to copy that onto the other copies of my plans before seeing the rest of the bureaus. After I had red-marked all the copies, the rest of the boxes were easy. I had to jump through hoops, go back to the Water Bureau, and spend lots more time on the waiting wall, but no major objections were voiced to my plans, so I got all the checkmarks. Finally, it was time to pay and get my permit. The sense of accomplishment was huge. It felt like a privilege to hand over $1300 for my permit. After 3 days, 11 hours, 9 examiners, and 12 plan revisions, I was handed my bright orange permit. Success!! Now all I had to do was the remodel. ☺
Stay tuned for what happens next!