States facilitate the establishment of ASUs. Now it remains for the municipalities to follow it.
A national housing shortage, the benefits of increased density, a shift in consumer tastes toward smaller homes closer to urban traffic, and other factors have prompted state lawmakers to build additional housing.
In 2024 alone, Colorado, Arizona, Massachusetts, and Hawaii passed major ASU legislation, and California added several laws to open the door wider for s. Finally, when it comes to ASU liberalization, local governments remain the main gatekeepers. Although state-level ASU policies target local regulations that hinder ASU development, there is still work to be done.
But first, the good news. Colorado and Arizona followed the same basic principles that have become a standard approach to ASU development. They rightfully legalized ADUs (ie local governments can't simply ban them), eliminated or minimized requirements for additional parking requirements, prohibited municipalities from imposing stricter ADU design requirements than primary residences, and facilitated or eliminated owner . residential requirements. Although Hawaii does not meet the parking requirements, it does.
Passed in August, Massachusetts allows ADUs of less than 900 square feet in single-family lots. State officials expect that 8-10 thousand ADUs will be built in the next five years thanks to the law. California, which passed its first ADU law in 1982, has passed five ADU laws:
- placed a permanent ban on the owner's residential requirements.
- Allows the sale of ADU separately from the main residence.
- requires all cities and municipalities to develop programs for pre-approval of ASU plans that are posted on the agency's website to streamline the review process.
- makes it easier to build ADUs on multi-family properties.
- requires utilities to publish estimated fees and completion times for typical service connections, including ADUs (to ensure that owners have an upfront idea of the cost and timing of utility connections).
As state legislatures continue to pressure municipalities to ease or eliminate ASU restrictions (13 and counting), utilities and other fees (collectively known as impact fees) are moving to the center of the pro-ASU policy debate. That's because impact fees can add up enough to stifle ASU development.
Take a few examples from Colorado, where the state and many municipalities are working hard to change the regulatory landscape that favors large single-family homes. The city of Lyons, near Boulder, is trying to increase density. But antiquated regulations favoring large single-family homes, coupled with impact fees slapped on every door in high-density single-family developments, make it financially unfeasible. So despite a dense ADU community that fits Lyon's community goals, the land will instead go to a developer of standard single-family homes.
In Nederland, another city near Boulder, impact fees to build an ADU or any other home run about $65,000. If you're building a $2 million mansion, that's probably a rounding error. But if you consider a $200,000 ADU, it's a big hit.
To Nederland's credit, they are working on a water study and intend to reduce those fees. The city is following a clear trend: hardly a week goes by where a municipality somewhere in the country doesn't liberalize its ordinances related to ADUs. Based on these and my own experience, there are several things municipalities can do to help develop ASUs beyond what is typically found in new state mandates:
- Proportion the impact fee based on the size of the building, whether residential or not. A 750-square-foot ADU is not the same utility-wise as a 5,000-square-foot home.
- If ASU is not intended as a short-term rental, consider a program like the one in Portland, Ore. These fees may include transportation (for possible road improvements), water, sewer and stormwater, parks and recreation.
- If it's historically home-dominated, evaluate how zoning and permitting works (or doesn't) for multi-unit or small-block developments.
- As California did with AB 1332, ADUs are allowed to be built based on pre-made plans previously submitted by ADU builders.
Finally, a broader consideration: Think about the long-term benefits of higher density, including higher sales tax revenues and revenues — and without the building headaches, for example, in terms of public safety.
States and municipalities have come a long way in smoothing the way forward for those hoping to add vital infill housing through ASUs. Ultimately, municipalities hold the keys to whether ASUs can open more doors in the U.S.'s ongoing housing shortage.
Mike Koenig is the president and founder of Studio Shed.
This column does not necessarily reflect the opinion of HousingWire's editorial department or its owners.
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