Portland’s backyard ADU program quietly launches

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PORTLAND, Ore. (KOIN) — It started out as a bold idea to give Portland homeowners a free tiny home in their backyard – in exchange for housing a homeless family in the unit for five years. 

The idea has since changed dramatically. The initial timeline has, too. But in late August – more than a year after the project was initially intended to launch – the final families moved in to the small accessory dwelling units, or ADUs, constructed for Multnomah County’s A Place for You pilot program.  

Sherry, whose last name we are withholding due to privacy concerns, moved into one of the units in North Portland in July, along with her 12-year-old niece. The two had been living in homeless shelters for months.  

“There’s nothing like feeling like being home,” Sherry said. She said she had escaped an abusive relationship; her niece’s parents had recently passed away. “I don’t think I’ll ever get over feeling like I’ve won a million dollars.” 

Sherry stands in the kitchen of the ADU she now lives in built in the backyard of Martha Chambers' property in North Portland, September 7, 2018 (KOIN)

Multnomah Idea Lab director Mary Li, whose department developed the pilot, called the program a success. 

“I believe in the work government can and should do, and this is some of the best work I’ve ever had the privilege to do,” Li said. The Idea Lab, part of the Multnomah County Department of Human Services, is tasked with testing new policies and innovative concepts to help the community.  

Still, the process of developing and implementing a first-of-its-kind program meant learning lessons the hard way, through trial and error. The pilot proved costlier and more time-consuming than initially expected. 

“My job is to run the test as best we can and be rigorous and honest about where we fell down and where we succeeded,” Li said. The goal, she said, is to give elected officials and decision-makers the information necessary to make educated decisions about the viability of expanding this type of program. 

A $350,000 budget announced in March 2017 grew to $500,000 by April 2018. The latest figure is $550,000. Funding has come from several sources: Multnomah County, the Joint Office of Homeless Services, and Meyer Memorial Trust. 

“We didn’t know how much things were going to cost,” Li said. 

The initial goal was to build each of the four test units for $75,000 — a goal Li said was intentionally ambitious. Two of the units, which are modular units fully constructed off-site by Wolf Industries and then transported to homeowners’ properties in Portland, cost just under $80,000 to build.  

Derek Huegel's group built  the ADU in the backyard of Martha Chambers' property in North Portland, September 7, 2018 (KOIN)

The other two units, built by SQFT Studios, cost $133,391 — 78% over the initial target. These ADUs used more innovative technologies; they were constructed on site using structural insulated panels (SIPs). 

KOIN 6 News questioned SQFT Studios co-founder Eli Green about the final costs for the units his company delivered. He explained that the lion’s share of the increase came from a county decision – fairly late in the process – to pay all subcontractors the prevailing wage. 

Oregon’s Bureau of Labor and Industries determines the prevailing wage rate, which is the rate of pay for workers on public works projects. The prevailing wage, in this case, was roughly 30% higher than the wages Green said he would have otherwise paid subcontractors.  

Multnomah Idea Lab spokesperson Ryan Yambra said the county had asked the Bureau of Labor and Industries whether the project was required to pay workers the prevailing wage. While the project was ultimately deemed to be exempt, Yambra said county leadership decided to pay the higher prevailing wage regardless.   

“The prevailing wage is one decision out of a series that influenced the final cost of the project. Other contributing factors included material costs, the permitting process, construction timelines, and some units being built from scratch on site rather than being manufactured and delivered,” Yambra wrote to KOIN 6 News in an email. 

Tim Miller, CEO of Enhabit, the non-profit organization contracted by the county to oversee the building and permitting process, said Wolf Industries and SQFT Studios were specifically chosen to test different technologies.  

The idea, he explained, was to understand whether different types of construction methods could be scaled easily if the program were expanded. Miller said he believed that SQFT Studios’ unit could be built cheaper if there were a large order. 

Miller said that Wolf Industries’ units were better suited for properties off of alleys, or corner units, given that the ADU is fully constructed off-site and transported in one piece to Portland. SQFT Studios’ model, meanwhile, is better for properties for which there is no alley access, since the unit is built on-site.  

“I’d say we learned enough to say this is a huge opportunity for us to address our housing [needs],” Miller said by phone Friday. 

Miller and Li agreed that the permitting challenges experienced would be lessened over time, as the city’s Bureau of Development Services learns more about the different types of technologies used to construct ADUs. Permitting, Li said, was the major reason the project’s launch was delayed by 14 months. 

“It’s one of the most stringent and bureaucratic” permitting processes, Wolf Industries co-founder Derek Huegel told KOIN 6 News. 

Permitting, however, was not the only cause for delay. The initial idea also had to be significantly reworked, adding to the timeline. 

Li’s team learned that giving homeowners the ADUs for free after the five-year period would leave them with a tax penalty. 

Martha Chambers built an ADU in her backyard property in North Portland, September 7, 2018 (KOIN)

After much research, the Multnomah Idea Lab decided it would give homeowners the opportunity to purchase the ADUs from the county after 5 years. The ADUs will be assessed at that time to determine the fair market value and purchase price. 

“There’s a lot of factors that will make it reasonable,” participating homeowner Martha Chambers said. “And if it isn’t, they’ll take it away and I’ll have done something good for someone for 5 years.” 

Li said the county will now be evaluating the pilot program, looking at the development timeline and budget, as well as the success of the tiny home residents. It is unclear at this point whether Multnomah County will seek to expand A Place for You. 

Regardless of the county’s decision, however, Enhabit will be looking to build more ADUs to address the need for affordable housing in Portland. Miller said the non-profit is in the process of changing its business to concentrate fully on affordable backyard ADUs.  

“It’s not the [only] solution – we need a whole array of solutions,” Miller said. “But we think ADUs could be an important piece of it.” He said Enhabit will be looking to partner with public agencies and innovative lenders to provide loans to homeowners interested in building backyard ADUs for lower-income renters. 

And while many may balk at the idea of having a stranger living in the backyard, Chambers said it’s been a painless process. 

“It’s a way for me to help that’s really easy for me,” she said.  

Sherry, meanwhile, said she and her niece have gained even more from the setup than they could have imagined. 

“It’s like a family, except she’s living there and we’re living here,” she said. “It’s like we all belong together.” 

Sherry sits outside the ADU she now lives in built in the backyard of Martha Chambers' property in North Portland, September 7, 2018 (KOIN)

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