Building an ADU – Part 1
Updated: Aug 2
By Lorianna Kastrop, VP/CFO, The Kastrop Group, Inc. Architects
Today I will blog about what I am learning as the client of my own architectural firm. (Just to be clear, I am not an architect. My husband Mike Kastrop is the Principal Architect at The Kastrop Group. I handle administrative and financial matters.) As residents of the San Francisco Bay Area, we are acutely aware of the housing shortage in our region, leading to skyrocketing housing costs and rents. In our firm we have promoted and participated in the design of Accessory Dwelling Units to help provide more local housing options.
Building an ADU/backyard cottage/granny unit, or whatever you like to call them, provides multiple benefits for homeowners. The rental income from the ADU can help to offset mortgage and property tax expenses. It improves security to have someone else on the property when the homeowner is away. It facilitates aging-in-place for elderly homeowners. It increases property value.
Renters of ADU’s gain important benefits as well. The rents are often more affordable than other options. You can live in a single-family neighborhood, rather than an apartment complex. You may be able to find an ADU that allows you to own a pet. You may find that the homeowner becomes a friend and helps you become familiar with the community. You may be able to trade your services caring for the property in exchange for rent reduction, such as gardening or small home improvements/repairs.
Mike and I started thinking about building an ADU a few years ago. We have a large backyard, so we knew that we have enough room for it. I was reluctant only because I really value privacy and I couldn’t picture having someone around all the time if I wanted to just relax in my backyard. Then Covid-19 hit, and I realized that I might like having someone around all the time, just to socialize with. I have a friend who rents out part of her home and she tells me that she has had good experiences with her renters. We also like the idea that we might be able to provide housing for family members or the adult children of our friends who cannot yet afford to buy a home in the Bay Area. Our ADU could be perfect for a young couple starting out, a recent college graduate, or someone who has a job in Redwood City and would rather bike to work.
Construction starts on our ADU. The form boards show the outline.
Interest rates dropped so low that we could refinance our mortgage and get enough money to build the ADU. I checked with our financial advisor and she was enthusiastic about it. She said that for most people their home is their biggest financial asset, but it doesn’t produce income. She showed me the projections for our financial status. Even if we used below-market rent to run the calculations, the savings really add up. It’s even more astonishing if we decide to move into the ADU and rent out our main residence. So, I was convinced. I told Mike, “Let’s do it! I’ll get the loan.”
As an architect, Mike worked with me to prioritize our goals. In every construction project you must decide what you need and what is less critical. With an ADU there will be space restrictions. If you will be renting it, you want it to be low-maintenance and cost-efficient. Our priorities were energy-efficiency, accessibility, and storage. Mike designed the ADU to be all-electric (powered by solar panels and a home battery) so that it would be safe during the increasingly frequent summer heat waves and power outages. It has double-width walls for tremendous insulation as well as sound-proofing. We designed it to be accessible so we could have the option of moving into it comfortably when we are elderly. (It will also make it available to differently-abled renters.) We want it to feel roomy, so that means high ceilings. Mike loves natural light, so he designed clerestory windows and specified Solatube skylights www.solatube.com . I wanted storage, as much closet space and cabinets as possible. I was willing to have a smaller living room in exchange for a walk-in closet in the bedroom. Think about your electrical and technology needs in the design process. We will have USB ports throughout the ADU, and we considered where computer monitors and the television would be located so that glare on the screens will be reduced.
Mike went to work on the design, and Marie, our Design Associate at The Kastrop Group, created the construction documents and did a lot of the research for materials. Brian, our Project Manager, gave input based on his long experience with residential projects. It was a team effort. Once we had a design, we started getting bids. Construction is always more expensive than you hope. I will share the cost information in a future blog article.
Foundation complete and wall framing begins.
I mistakenly believed that we didn’t have to pay school impact fees (taxes) on our ADU, but I checked the state ADU handbook (include the url here). It clearly explains that while local jurisdictions can’t impose other types of impact fees (such as for parks), school impact fees are allowed. We submitted our plans to the local high school district, and they called us to let us know the amount owed for the high school district and the elementary school district. These 2 checks must be paid before you can get your building permit. Because of the COVID-19 shut down I had to call and make an appointment to come to the High School District and drop off the checks. I recommend that you call every agency in advance to find out their procedures before going there in person. A lot of public agencies have new rules because of the pandemic.
We had more trouble getting a building permit than expected because our street has less water pressure than the City Fire Department recommends. We didn’t want the extra expense of fire sprinklers (cost of about $20,000). We know that CA state building code doesn’t require sprinklers for the ADU if the main house is not sprinklered. Another ADU had been permitted on our street without sprinklers. But the inadequate water pressure was a concern. We checked with the head of the Public Works Department and he said that our street is scheduled to have the water main replaced within the next 2 years. So, we feel confident that the problem will eventually be solved. Since many towns have aging infrastructure, it is important to anticipate issues like this. Check with your City early, possibly before your architect starts designing your ADU, to see what requirements might affect your plans.
An issue that affects many homeowners are existing trees on the property. You cannot just cut down trees to build. You may be required to get a tree permit or an arborist report. We have a row of very tall Italian Cypress trees along the fence in our backyard. They created too much shade for the solar panels. We talked to the City Arborist and he was kind enough to come to our house and give his advice. Since our trees have narrow trunks (less than 12 inches) and were not trees that need to be protected, he suggested cutting down three of them and replacing them with a nice shade-producing silk tree in another part of the yard. That is our plan.
Framing almost complete. Trees removed.
The next issue is that the electrical panel needs an upgrade. We are going from 100-amp to 200-amp service. We contacted Pacific Gas & Electric to get going on that right away. They have a long lead time, so you need to schedule months in advance. We also decided to add a separate electrical meter so that the renters could have their own utility bill, which should be quite low due to the solar panel output.
Keep in mind that an Accessory Dwelling Unit is an “accessory building” by definition. It is not supposed to be considered an additional residential unit. Other examples of an accessory building include a storage shed, a detached garage, or a pool cabana. These are an accessory to the main residence, as is an Accessory Dwelling Unit. But PG&E treats it as a separate residence, so you may be required to do a separate meter even if you don’t think you will need one. Check this out in advance because it adds to your costs. By the way, it is not easy to find the PG&E request form. Log into your residential account at pge.com and click on “Start or Stop Service” on the left-hand side menu. Then click on “New Construction” to get to the application form. I highly recommend that you opt in for “Notifications” of project status updates as you will be waiting a while to hear back from them, and you don’t want to keep checking on your application.
Like many cities and towns, Redwood City requires you to get a separate address for the ADU, for public safety reasons. They want police and fire to know that other people are living on the property. You need to apply for that. Go to your city’s website and type “ADU address application” in the search bar. In Redwood City it is a one-page form that you send in and pay a fee of $144. It will be assigned as Suite A at our address.
We got two bids from General Contractors. Good contractors are very busy in the Bay Area and you might need to wait to get on their schedule. Give yourself plenty of time to find the right contractor for your project. Cost is an important consideration, but you also want someone who communicates well, and keeps you informed as questions come up.
Framing complete. Continuous rigid insulation installed around the double thick walls.
There will be many questions. Today we picked out a front door for our cottage. We also decided on brushed nickel (satin finish rather than shiny) for the finishes on the bathroom fixtures. You may have specific requests for the appliances, cabinets, finishes, etc., to fit your needs and tastes. Be sure to keep your GC informed as you move through the project. By the way, as Architects we could have specified these details up front, but we find that the GC can be savvy about what is available and where to get it at a good price. Working collaboratively with your GC and your architect can save you time and money. By making these decisions with your General Contractor you avoid having to change out specified items that are unavailable or too expensive.
General Contractors may make suggestions for cost savings, recommended suppliers, or possibly things you can do to keep your costs down. For example, we had our contractor bid the project with painting as an optional line item, because we may do some of that ourselves. We are also going to buy the appliances ourselves. Accessible appliances can be a little tricky to order.
Lumber prices are very high right now and some construction supplies (such as doors and windows) have long lead times. Luckily, we have worked with our General Contractor on many other projects and he is making sure that our orders are submitted so that construction will proceed in a timely manner.
An up to date photo of our ADU, with exterior finishes to be applied soon!
I hope you have enjoyed reading about our ADU project. I plan to blog more information soon. If you have questions or comments you can reach me at email@example.com. As always, we are “Designing for Your Reality”. Stay healthy and best wishes for the new year.