Additional Dwelling Units (ADUs), or “granny flats”, could be part of the solution for Bend, Oregon’s housing affordability. They’ve become a popular investment for many homeowners in the area, but the City Council may be taking steps to make them even more so.

The current ADU rules allow you to build an additional residence on your property up to 600 sf (some restrictions apply). You’ll need to provide an additional parking space for your new dwelling, and if your lot was created prior to 1998, you’ll need to go through a public conditional-use permitting process. This costs homeowners a minimum of $2,600, plus the time and effort of the application and required public meeting.

What the City of Bend is considering is removing many of these requirements. Specifically:
– No conditional use permit required in most residential areas.
– Increasing the maximum size of an ADU to 800 sf.
– Removing the requirement for additional parking.

Prior to the City of Bend imposing restrictions on vacation rentals, ADUs were a popular option for homeowners looking to earn some additional income by taking in travelers. The new ordinances severely limit most homeowners ability to enjoy the revenue they once could from the tourist market, which was, in most cases, many times what they could earn renting property out on long-term leases.

However, with the ever-increasing trends of aging in place and multi-generational households, the ADU continues to be a popular addition.

From the City’s standpoint, Additional Dwelling Units provide much needed rental inventories, increased density, and utilizes already existing infrastructure while making room for new growth. ADUs also bring affordable housing into neighborhoods which may no longer be affordable to most homebuyers. This is in contrast to the affordable-housing solutions from most developers that cluster entry-level housing on the periphery of the City where land is cheapest.

Bend isn’t the only city in Bend that thinks ADUs might offer many solutions. The City of Portland was an early adopter of new relaxed standards on ADUs when it came to their land-use process. Like Bend, Portland was suffering from the same dramatic increases in home prices that Oregon’s land-use laws can create in a rapidly growing city. Empowering homeowners to easily add new residences into their own neighborhoods was seen as a smart move.

Adding a rental property to your current residence can come with some tax advantages (please consult your tax professional), but many people forget that it will also likely increase their property taxes. Because Oregon has limited property tax increases under normal circumstances (Measure 50), adding an additional residence to your property can have somewhat surprising tax results. In the Bend area, we recommend talking to the folks at Deschutes County Tax Assessors Office prior to finalizing any plans for an ADU. The staff there is helpful in explaining most property tax concerns, and their advice may direct the type of ADU you ultimately decide on.