ANN ARBOR, MI — When Megan and Brian Fenech decided to build a new garage behind their Ann Arbor home a few years ago, they committed to adding an apartment above it.
A door on the side of their new garage now leads to a staircase for an accessory dwelling unit, also known as an ADU, complete with a living room, kitchen, bedroom and bathroom.
It took about a year and a half to go from applying for permits to getting it approved, built and certified for occupancy, Brian Fenech said, noting he did a lot of the work himself.
As of about a year ago, it’s officially recognized by the city as a living space that can be rented out, as long as the Fenechs also live on the property, a city requirement.
The apartment above their garage is now one of 23 ADUs submitted for review and approval since 2016, said City Planner Chris Cheng, who showcased it as an example at a recent city planning meeting.
“That does not mean all of them have been built and received a certificate of occupancy,” he said. “Some are still under review and additional information is required.”
Ann Arbor officials are now exploring ways to remove barriers to creating ADUs to allow more of them in neighborhoods throughout the city, as one small way of chipping away at increasing the city’s housing supply.
Amid the COVID-19 pandemic, Brian Fenech said the ADU above his garage has served as an attractive option for University of Michigan students who did not want to do full-year leases. The last three tenants have been graduate students or recent grads who needed a place to live for a couple months.
The Fenechs haven’t heard any complaints from neighbors about the ADU, they said. Rather, neighbors have said the new garage looks nice and some have asked how they could do something similar on their own property.
“I feel like we’ve been fortunate in that we’ve already had three long-term rentals or renters,” Megan Fenech said in a recorded interview with Cheng shared at a recent city meeting.
“But there were people we had to turn away that wanted a shorter-term stay, so I feel like the 30-day minimum is a bit of a hurdle for renting it out,” she said, referring to city rules prohibiting short-term rentals of ADUs.
“I can think of a family who I think one of their children was having surgery at the university hospital and they wanted a place to stay, but it was only for 10 days,” she said of some of the people they’ve had to turn away.
ADUs are not super affordable to build, so not having the option of short-term rental income can be a deterrent to building one, Brian Fenech said, noting other Ann Arbor homeowners are allowed to do short-term rentals of their houses.
“The disparate treatment between owner-occupied short-term rentals and ADUs — not only in the way that they’re allowed to operate, but also the way that they’re taxed — I think is a deterrent for many as well,” he said.
“Because as it stands right now, if you have an ADU, the portion of your property that’s an ADU, you lose your homestead exemption for that. They say it’s not your principle primary residence ... and then obviously your taxes go up from being assessed as well, or reassessed on the entire property.”
He declined to say how much it cost to build the ADU or how much it rents for, but he said it’s rented at a reasonable rate.
Ann Arbor officials are now taking a closer look at ADU and short-term rental regulations.
The Planning Commission is considering proposed changes Tuesday night, March 2. That includes allowing continuation of short-term rental properties such as dedicated Airbnb houses that are not owner-occupied in residential zones, as long as they were established prior to March 1, 2021.
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As for ADUs, officials are considering tweaks to rules put in place several years ago. City Council adopted an ordinance in 2016 that allowed homeowners to create ADUs — separate apartments on their properties — and rent them to non-family members, but they can only be part of a primary house or in a detached structure built by Dec. 31, 2016.
Existing accessory buildings, like an old garage, also can be replaced or modified and used as an ADU, which is how the Fenechs were able to do theirs.
The changes now proposed would allow ADUs in all residential zones except mobile home parks, rather than just single-family zones, and remove a 5,000-square-foot minimum lot size requirement, and allow homeowners to build new detached ADUs on their properties without the requirement of structures existing prior to Dec. 31, 2016.
Officials also are considering eliminating parking requirements and the rule that an owner must reside on the property.
Officials also are proposing eliminating requirements that ADUs must be designed to maintain the appearance of single-family residences with entrances on the side or rear of a building.
Under what’s proposed, for residential properties up to 7,200 square feet in size, an ADU of up to 600 square feet could be built. And for properties bigger than that, the maximum size of an ADU would be 800 square feet.
Before the Planning Commission votes on recommending ordinance changes to City Council, it will hold a public hearing when it meets at 7 p.m. Tuesday.
To participate, call toll free at 877-853-5247 or 888-788-0099 and enter meeting ID 929-1620-2435.
Input also can be submitted in advance by emailing planning@a2gov.org.
Brian Fenech said he’s glad officials are exploring the issue and he hopes it results in equitable treatment of ADUs and short-term rentals.
“I’m for them taking a deep dive into this and really looking at it from all angles and creating policy that makes sense from a few different standpoints,” he said.
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