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ADUs: An incremental improvement for affordable housing, but not a silver bullet

A construction worker carries lumber while working on new homes in San Mateo, Calif., in March.
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A construction worker carries lumber while working on new homes in San Mateo, Calif., in March. Homebuilding is at its highest level in nearly four years.

Wilmington is in the process of creating new Land Use Development codes, which will decide how the city grows and changes for the next several decades. These codes sound dry, but they will determine the look and character of our neighborhoods ... and whether we can afford to live in them.

A key strategy in the proposed code is to bring more so-called “missing middle housing” to Wilmington — that's housing that fits in somewhere between a large, single-family home and a major apartment complex

But new construction on empty lots is just one way to fill that missing middle; there’s another, more subtle strategy for bringing more housing units into existing single-family neighborhoods.

They’re called ADUs, or “accessory dwelling units.” There are a ton of other names too — granny flat, garage apartment, carriage houses. The basic idea is that a homeowner can build a secondary dwelling on their own lot: usually something between a studio and a 2-bedroom apartment.

Wilmington Planning Directory Glenn Harbeck said ADUs have long been allowed in town, but under the current code, they’re hard to build.

"There was a provision in there that I call the poison pill, and that is you had to have a lot and a half,” he said.

They’ve gotten rid of that requirement in the proposed code, so now any residential lot in Wilmington is allowed to build an ADU. They'll still need to meet existing setback requirements, but that's a given for garage or shed conversions.

But at a recent public hearing on the proposed LDC, Mayor Pro-Tem Margaret Haynes was concerned about how adding a dwelling to an already-occupied lot could lead to parking problems.

"If it's that tight, then you can have two cars, we're thinking to put them on the street?" Haynes asked. "Because in a lot of those neighborhoods, on-street parking is limited.”

But Harbeck says an ADU is more like adding an extra bedroom than an extra house, and focusing on parking can be another so-called “poison pill” for ADUs. He attended a virtual housing forum put on by the North Carolina AARP, which focused on how to make ADUs more buildable, and it outlined numerous "poison pills" that can prevent ADU construction.

They can include requirements that the home is owner-occupied, or that the ADU is occupied by a relative of the homeowner. But when they are built, ADUs have the potential to help retirees stay in their own neighborhoods.

ADUs are often at the ground level, so they may be well-suited for accessible design. They can be built to accommodate a wheelchair-user, allowing an aging homeowner to move into the smaller ADU while renting out their larger home or allowing their children to move in.

ADUs can offer some privacy to a relatively independent family member who just needs a bit of help. But they can also be rented, either as AirBNBs or as longer-term housing, in order to provide a senior on social security with a bit of extra income.

But ADUs alone won't solve an affordable housing crisis, said Samuel Gunter, executive director of NC Housing Coalition. “It's very tempting to think that adding this density through accessory dwelling units is going to be a solution," he said. "And it is a solution, but it's a partial solution, right?"

It is a solution, but it's a partial solution, right?
Sam Gunter, Executive Director, NC Housing Coalition

Gunter said allowing other types of housing is key, because ADUs are relatively rare by comparison. In 2019, Durham made it easier to build ADUs, but only 20 have been built since then. It's not enough units to make much of a dent in the need for housing.

“I think it is necessary to also think about financing," Gunter added. “It's important to put that affordability question in conversation with this.”

Developer Dave Spetrino has built an ADU on the North Side of Wilmington, and said it’s not always cheap. The main cost savings is in the land -- since people build ADUs on property they own.

“The cost of your land is about 20 to 25% of your overall cost," Spetrino explained. "If your home is $400,000, the valuation of that land is somewhere between $80,000 and $100,000. So anytime you can get additional density on the same piece of land, that's one real quick way to get a 20% discount.”

For new construction, an ADU can run upward of $200,000. But converting a garage or other existing structure can cost as little at $80,000. Financing is the key problem: whether banks, or even the city, could help a lower-income owner make this kind of investment. And traditional loaning mechanisms don’t fit in easily with ADUs, so it’s an uphill battle for many homeowners to figure out how to get the money for construction.

While ADUs are not the be-all, end-all solution for infill development, the city of Wilmington is still betting on ADUs as an easy way to bring some change to the homogenous, suburban neighborhoods of mid-town... without getting the kind of pushback other cities have seen when they get rid of single-family zoning altogether.

ADUs are a way to bring extra housing units into a neighborhood that might otherwise strongly resist the integration of other missing middle housing types. Because ADU owners tend to exercise more care in who they rent to, it's likely they won't face the same resistance that duplexes and other investment properties do, Harbeck said.

“I took a picture of a street supposedly that had ADUs, prevalent on the street. And then I took a picture of the same street that did not have ADUs on it. And the pictures were exactly the same," he said. "That's the difference between duplexes and ADUs.”

So far, ADUs have received no objections from speakers at the LDC hearings. But other styles of missing middle housing are still forbidden in the spread-out suburbs. Perhaps in the next LDC, in 20 to 40 years, the city will go further in promoting infill in the entire city.