Open Source Think Tank
Offering solutions to critical housing issues in legislation and policy by combining the best business and governmental thinking.
The McCulloch Foundation Think Tank focuses on critical issues such as the homeless emergency, the affordability crisis, and the loss of our important historical places and environmental degradation through thoughtless demolition. The Foundation conducts its own research, serves as a hub for the collection and sharing of ideas, and offers original solutions.
Legislative and policy suggestions
I. Oregon House Bill for Internal Conversion: Initial conceptual draft
A. Definition and purpose of Internal Conversion: An Internal Conversion is one that converts an existing house into multiple housing units. The most affordable house is the one that already exists. Simply dividing existing housing stock increases density economically. By spending less, the cost of housing stays lower. The internal conversion also means that neighborhoods retain their authentic architectural feel while minimizing demolitions with their pollution and waste of resources. When existing resources are eliminated and replaced with new housing stock, the cost of housing goes up. By turning existing old homes into duplexes or triplexes, housing prices go down rather than up.
B. Description of legislation for internal conversion: Ensure that municipalities do not discourage internal conversions, (IC’s), through zoning, fees, or restrictions. The following steps are designed to facilitate and encourage an increase in IC’s.
1. Reduce permit fees. Permit fees for Internal Conversions will cost 20 percent less than they would be assessed at for other types of permitting.
2. Reduce permit approval turnaround times. The initial permit for converting an existing structure to a multifamily streamlined to be a maximum one month process. The 30 days would allow time for neighborhood comment period. In the event of controversy, a thirty day review period could be added.
3. Approve multifamily zoning for internal conversions. The zoning overlay to multi-family would apply ONLY to internal conversions. This competitive advantage will trigger investment in internal conversions rather than in more expensive demolitions and new housing.
4. Tax incentives for multifamily internal conversions in the form of a temporary tax deferral. Municipalities would still collect the same taxes, but by giving owners who could elect to live in their part of the house that they are converting for at least two years, they could get a two year tax deferral so that they could stop spending money on the renovation and start collecting rent or sell the other half or third of their house before their taxes come due again. This would allow an avenue for young families to gain sweat equity while lowering the price of housing rather than the usual remodeler’s gain from home improvement inflating the cost of housing.
5. Make it easier to convert commercial properties into homes / multifamily developments. The zoning overlay exception for multi-family conversions would extend into commercial areas, only for internal conversions. Thus office spaces over commercial property, for example, could be converted to living space. By making these commercial properties into residential infill projects, banking interest rates will be lower, and the zoning can essentially be separated by part of a building. This also means, less money down and lower appraisal fees (like Wapato). Typically, if a property is zoned commercial, you have to get a commercial loan.
6. Financing options – Municipalities can stretch their investment in affordable housing by not spending tax dollars, but by loaning tax dollars at interest to home owners willing to turn their houses into duplexes. The municipality can offer low interest rates for multifamily at 1 per cent below what typical rates would be for a home improvement loan.
7. Lowering utility connection fees (water, sewer, electrical, gas, etc. can be expensive). Municipalities gather a large part of their taxes from developers building luxury new houses through connection fees. When a new connection is needed for an internal conversion, these fees could be reduced to cover actual municipal overhead costs and no more.
8. Financing or tax benefits to improve energy efficiency in conversions.
9. Grants to States and localities that communities use-often in partnership with local nonprofit groups-to fund a wide range of activities that build, buy, and/or rehabilitate affordable housing for rent or homeownership or provide direct rental assistance to low-income people.
10. Make it easier for consumers to obtain affordable home improvement loans for multifamily conversions by insuring loans made by private lenders to improve properties that meet certain requirements. Lending institutions make loans from their own funds to eligible borrowers to finance these improvements.
11. Reduce minimum gross floor area requirements.
12. Multifamily conversions should be considered on a case by case basis.
13. Reduce requirements for homeowners go through a lengthy review process that includes public hearings.
14. De-incentivizing (or perhaps penalizing even) people who want to turn multi-unit homes into single family homes.
15. Reduce or restrict Air BnB / Short-term rentals in ADUs or multifamily conversions. Air B n B are essentially zombie housing for those with the resources to devote to travel and vacation. These should not be at the expense of affordable housing.
16. Incentivize conversions for first-time homebuyers.
ADUs in LA
On January 1st, 2017, ADU legislation was passed at the state level in California, forcing cities to amend their ADU code to comply with state law. The stated intent was as follows, “The Bill makes modifications to remove the most significant local barriers to ADUs to carry out the stated intent of existing law (AB 1866) which already states second units are to be encouraged with ministerial approvals by making the following changes.”
These laws, AB-2299 and SB-1069, compel Californians cities to relax off-street parking requirements for ADUs and to eliminate utility connection fees.
Barriers to small-scale infill development
In a book by Dr. Arthur C. Nelson titled Reshaping Metropolitan America, Nelson sees a dramatic increase in households with no children (over 80% by 2030) and in households with only one person in them (over 50% by 2030). Think about that while you consider how many 3 and 4 bedroom homes have been built in your town over the last 20 years. Do we need to make multifamily conversions easier? We are headed into a significant mismatch between the way the supply of housing is configured and located and the demand for housing.
5 immutable laws of affordable housing
If your zoning and building code mandates expensive housing, housing will be expensive. Most zoning codes place minimums on the size of dwelling units, the size of lots, and countless other factors that affect the cost of building housing. Unfortunately, these minimums don’t generally envision affordable construction types, even in the most progressive and challenged of housing markets. Duplexes, three-flats, and even small four-unit buildings can easily be designed to fit in with nearby single-family homes. These kinds of buildings should be allowed by right in low-density residential zones – no strings attached. Unlocking such large areas of land for modest increases in immediately opens up huge development potential without threatening the existing character of neighborhoods.
1. Tax deductions / tax credits for investors or first-time home buyers creating affordable housing internal conversions
2. Encourage more multifamily developments with shared spaces – very small apartments with larger, shared kitchen, living room, outdoor areas, etc.
(Irish Government plans high-rise apartments with communal facilities at affordable rent)
3. Provide a free “manual” or advice on a conversion process or ADU so every citizen doesn’t need to do their own lengthy research about the process.
4. Have city employees who do lower-cost plumbing, HVAC, utilities, advising, etc. for multifamily conversions