As Denver looks to make it easier to build accessory dwelling units, the baseline is relatively low.
Between 2016 and mid-November of last year, there were 227 ADUs that were completed in the city, according to data provided by the city.
The number completed each year varied, and lacked a clear trend:
2021: 8 (through Nov. 18)
Laura Swartz, a spokeswoman for Denver’s Community Planning and Development Department, said data from before 2016 was not available with as much detail.
Still, the data provides context that can eventually be used to assess the impact of the recent push by Denver City Council members to rezone certain neighborhoods to allow for ADUs.
Rezoning entire neighborhoods
Since late 2020, Denver has rezoned three neighborhoods — Sloan’s Lake, Chaffee Park and East Colfax — and efforts are underway to add five more neighborhoods to that list: Regis, West Highland, Barnum, Barnum West and Villa Park.
Prior to this push, property owners in those neighborhoods have had to ask the city to rezone their individual property in order to build an ADU.
It’s likely too early to tell whether the zoning changes have already had an impact. Since Sloan’s Lake was rezoned for ADUs in August, four permits have been issued. Chaffee Park, which was rezoned for ADUs in November 2020, has had no permits approved and no units completed.
Swartz said the city does not have a target number of ADUs it would like to see built.
“Because of the benefits ADUs offer, there are a number of recommendations from adopted city plans to reduce barriers to creating ADUs for people who want or need them, but not a specific goal of how many there should be,” she said.
ADUs cannot be sold separately from the main home, according to Denver city code. To rent out an ADU on a short- or long-term basis, the owner of the property must live onsite, Swartz said, and there are other short-term rental rules.
Denver has also started the process of regulating how ADUs are designed, how they fit into certain neighborhoods and whether changing city code will help people build more of them. Those plans are not expected to be finalized until spring 2023.
ADU industry getting more calls
Clayton McCabe, project manager for Denver-based L&D Construction, said the company has “definitely had more (ADU) inquiries over the past 18 months than we did.”
L&D was doing about eight to 10 ADUs a year, but is slated to do as many as 15 this year.
“Our yearly lineup has been pretty solid,” McCabe said of the ADU work orders. “After the initial COVID hit, we were a little slow, but now we have a full year.”
McCabe said because of Denver’s design standards, L&D doesn’t do much ADU reconstruction, such as sticking a unit on top of an existing garage. He said it can take three to six months just to get permitting and another six months to a year to get the project completed and approved.
ADUs that are built from scratch can cost between $250,000 to $425,000, he said.
“If someone comes to us with plans and is ready to go, it’s going to be 90-120 days (for permitting),” McCabe said. “Some homeowners have to go through (city appeals processes) and request new meetings and stuff like that. We have some people who we’re doing projects with, and we’ve been talking to them for years.”
Mike McCarty, the design manager and co-founder of Denver-based Sustainable Design Build, said his company has been getting a lot more calls about ADUs in recent months, but many of those calls don’t materialize into projects once property owners realize the costs involved.
“When we recontextualize about what we’re building, they think it’s inexpensive and can convert, and it’s pretty much the opposite,” McCarty said. “I think there’s a real lack of correct information out there on the web as it relates to ADUs. I think it’s a variety of factors.”
One of the problems people run into when thinking of adding an ADU to their property is that the structure must be on a foundation, McCarty said. For example, he said almost all garages, which are the first place people tend to look to build the addition, sit on a slab of concrete and not a foundation.
McCarty said most of his company’s clients finance their ADUs with home equity loans or cash-out refinances on the main dwelling. This gives them more flexibility by using their own money, he said.
What it’s like for a property owner to build an ADU
Outside Denver city limits, Damian Alcazar completed the first accessory dwelling unit to be built in Aurora on his property at 12th Avenue and Ironton Street last year.
“We saw the opportunity of building affordable housing for a fraction of what it would cost us to build it or buy it in another area,” Alcazar said.
It took 19 months for him to complete the project, but Alcazar said he finished the 650-square-foot unit for less than $100,000. A woodworker, he said he was able to shave off much of the costs by building the woodwork himself for the kitchen, and getting help from industry friends. He also bought construction materials before the COVID-19 pandemic and the resulting supply chain backup.
“I saw the numbers and thought, wow. It sounded outrageous to us,” Alcazar said about when he first explored the costs of ADUs.
Alcazar said he rents the unit to a family of Afghan refugees.
He said people should take their time and do their research before embarking on an ADU, as frustrating obstacles are unavoidable. He said he hired a general contractor who he had to let go in the middle of the project.
“Select the people you’re going to work with very carefully, and give yourself some leeway money-wise and time-wise — especially if you don’t have any knowledge or experience with construction,” he said.