Accessory Dwelling Units as an Affordable Housing Program?

Yesterday I participated in the Deepening Roots & Creating Space forum organized by Chhaya CDC in New York City. Chhaya CDC serves the asian immagrant community in Queens. I was asked to be part of a panel on Accessory Dwelling Units and present the perspective of an architect who has attempted to work with home owners in the Chhaya community to create or legalize basement living space. As I was preparing my presentation for the panel, it occurred to me that we were tending to think of these units as a problem that codes, government regulations and government policies were creating. That being the case, we were assuming that doing something to alter the policies, codes and regulations would clear the way to create legal and safe accessory dwelling units. But the truth of the matter is that legal and safe accessory dwelling units do exist all over the city in row house neighborhoods. Basement rental apartments are a time honored first apartment option for singles and couples and a real estate strategy that allows families and individuals to purchase town homes and finance their mortgages.

The more that I thought about this, the more I realized that the real issue is not codes and regulations, though some adjustments need to be made there. The real issue is that communities with limited financial resources cannot afford to develop these units to meet the code and city regulations. And yet, they need the additional income and the community needs the additional housing, so the units are developed clandestinely.

A 2008 study prepared by Pratt Center and Chhaya estimated that there are more than 100,000 un-official housing units in basements and cellars across the city and that some 35% are configured in ways that would make it possible to legalize them, albeit with some minor loosening of code and regulations. What we are encountering, however, is that the large expense of bringing these units up to code ensures that they will remain underground in neighborhoods where financial resources are marginal. Between professional services, building department fees and construction costs it requires 10’s of thousands of dollars to legalize one of these units of housing. Few of Chhaya’s clients have the financial resources to accomplish this, even if city government were to make it easier by loosening codes and regulations and creating a straightforward process for converting them.

The principal challenge then, is whether or not a viable real estate strategy where there are many resources, can be made viable where there are few resources. My feeling is that without some kind of government program to assist homeowners in low and moderate income neighborhoods, it won’t be possible. I also think that the answer may be to construct an affordable housing program that renovates and legalizes these units, in some cases creates new ones, and gets them onto the market as subsidized or rent stabilized units.

It costs the city between $100,000 and $125,000 dollars to build a new affordable housing unit according to an article in Crain’s published March 22, 2011. The article is about the conversion of a stalled condo unit building into affordable housing. The cost per unit of moderate and middle income housing in this repurposing scenario is approximately $75,000. My thinking is that $50,000 to $75,000 might well be enough to gut renovate an underground basement apartment and turn it into a safe, energy efficient and affordable housing unit.

Making this more compelling are the related issues that could be dealt with at the same time:

  • There are high foreclosure rates in the communities where these underground units are common. Stress is deepened when a home owner looses the income from such a unit because the city discovers it and clears it out. Developing or legalizing a basement apartment could help many home owners generate enough income to stay in their homes.
  • Underground basement housing units are often not code compliant and every few years there is a tragic fire in one of them. A conversion/legalization program would bring units up to code and bring them out into the open. It would also give the city more of the moral high ground in addressing units that are unsafe and which can never be made safe.
  • Because these renovations would be gut or near gut renovations, the opportunity can be seized to make them energy efficient, something the city has committed major resources to with modest success.

There are some difficult issues to be resolved. The task of brokering a program relationship between multiple home owners and the city is a daunting one that will require the commitment of solid community development organizations and the city. A legal framework would have to be worked out that formalizes the obligations of the homeowner and the city. Homeowners would have to be willing to exchange some portion of control of their property through covenant or other similar legal arrangement in exchange for the funds to renovate. CDC’s will have to develop housing management procedures that support homeowners and the newly created affordable housing.

My opinion, though, is that if there is hope in being able to address the issue of underground basement housing units in a broad way, the development of an affordable housing program tailored to it is one of the better places to look.

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One thought on “Accessory Dwelling Units as an Affordable Housing Program?

  1. a very helpful analysis of the problem. As new residents struggle to find affordable housing, legal basement units are definitely a very good option

    Sujatha

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