You've probably heard of ADU's (Accessory Dwelling Units) - also known as "Granny Flats," "Mother-In-law Cottages," "Backyard Cottages," or any number of other similar monikers--but have you heard of ACU's? Like ADU's, ACU's are a secondary use on a property that is used primarily for something else (like a single-family home). In most zoning codes, this means that the ADU/ACU is smaller than the primary building on the lot--usually quite a bit so. The ADU guidelines in Portland, OR, for example, state that “The maximum size of an ADU may be no more than 75% of the living area of the house or 800 square feet, whichever is less.” (BDS Program Guide, March 2019). What that works out to is that unless your house is less than 1067 SF, your ADU will be capped at 800 SF. If your house is smaller than that, the ADU will be smaller. In LA, where lot sizes are larger than in Portland, a detached ADU is limited to 1200 SF.
In addition to the prospect of rental income for homeowners, ADUs have a couple of other obvious benefits that make them attractive:
They can provide relatively affordable housing in desirable neighborhoods. As we discussed in this post, one way to provide affordable housing is to simply build smaller homes. As far as infill density goes, a well-designed ADU is quite charming. They are arguably much less scary to neighborhoods than new apartment buildings (though we still need apartments, too).
Intergenerational living. A major attraction of ADU’s is that they can house aging parents or young families starting out. In the suburban neighborhood I grew up in (a subdivision with neighborhood covenants and everything), 5 of 14 homes on the street have built internal (illegal) ADU’s, and at least three of them to house aging parents. One family even gave the main house over to their son and his family, and moved into the ADU themselves.
Schematic design showing both street- and alley-facing ACUs on a Northside Richmond lot with an existing historic home
ACUs provide similar benefits to neighborhoods, but with commercial spaces:
The smaller (and therefore more affordable) commercial space of an ACU provides good entry-level places for new business owners, such as someone moving up from operating a food truck or as an exclusively online retailer into their first “brick and mortar” space. This is particularly important for businesses that are owned and led by women and people of color, who statistically have much less access to capital, whether it is venture capital, bank loans, or family wealth.
Women entrepreneurs receive only 4 percent of commercial loan dollars.
Black entrepreneurs are about three times as likely as white-owned businesses to have growth and profitability hindered by a lack of financial capital.
Improving walkability & livability: ACU’s increase the amount of neighborhood-serving businesses in a given area, making the neighborhood more walkable and more self-sufficient. Because these spaces tend to be built close to the street, they enhance the pedestrian experience, and have the added benefit of leaving the surrounding (often historic) homes intact.
Imagining ACUs in Richmond's historic Northside
A further benefit of ACU’s is that they can help to stabilize land values in rapidly changing (gentrifying) neighborhoods. In order to understand this economic benefit, it's helpful to understand the concept of "rent gap." Rent gap theory is an economic explanation for gentrification (rapid growth of property values and investment in a neighborhood), developed by Neil Smith. It describes the disparity between the current rental income and the potential rental income of a property. This disparity is what leads to investment in a market - when people look at a neighborhood and say "it has potential," they're describing the rent gap.
We know that gentrification is a driver of displacement; because of the rapidity of change it becomes hard for existing owners to keep up with rising property taxes or to justify keeping rents low. The addition of an ACU allows a property owner to increase the actual rent, thus closing that gap and staving off redevelopment. This means it is possible to add neighborhood-serving commercial uses as infill, while keeping existing homes rather than having to tear down and start over with a brand new mixed-use building or a much larger, more expensive home.
With these benefits in mind, I would go so far as to contend that ACUs are a useful tool for building economic justice. The Center for Economic and Social Justice describes Economic Justice as a subset of Social Justice. Economic justice touches both the individual and the community, as it guides the structuring of our economic systems. In a just economy, every individual has their basic needs met, freeing them to reach their potential productively and creatively. Whether we're working within the existing structural framework or working to redesign it, the end goal should be an economy that serves human lives and community, not the other way around.
"The human dignity of all is realized when people gain the power to work together to improve their lives, strengthen their families, and contribute to society. Basic justice calls for more than providing help to the poor and other vulnerable members of society. It recognizes the priority of policies and programs that support family life and enhance economic participation through employment and widespread ownership of property. It challenges privileged economic power in favor of the well-being of all. It points to the need to improve the present situation of those unjustly discriminated against in the past. And it has very important implications for both the domestic and the international distribution of power."
Economic justice for all: pastoral letter on Catholic social teaching and the U.S. economy, 1986
By providing affordable commercial spaces and stabilizing land values, ACUs fill a critical gap in the economy for small business owners, and for landowners who are committed to their communities. Additionally, the resultant scale and density of buildings contribute to an increased quality of life for neighborhood residents by reducing time commuting for basic needs, supporting additional demand for quality transportation, and increasing their ability to support their neighbors and keep dollars local by shopping close to home.
Sources & More Reading:
As Post-COVID Small Businesses Struggle, ACUs Offer a Viable Solution, Neil Heller, Neighborhood Workshop
The State of Inclusive Entrepreneurship: By the Numbers, Case Foundation
The State of Black Entrepreneurship in America, Congressional Black Caucus Foundation
Gentrification and the Rent Gap, Neil Smith
Defining Economic Justice and Social Justice, The Center for Economic and Social Justice