The City of Durham is piloting a new loan program to support the development of accessory dwelling units as part of its efforts to expand and diversify the city’s housing stock.
Housing is a central issue throughout the Triangle. Just last week Durham mayor Leonardo Williams and Raleigh mayor Janet Cowell commiserated over the region’s housing challenges during a panel discussion with Atlantic journalist Derek Thompson, whose new book Abundance offers a sharp critique of U.S. housing policy. A flood of new housing units is in the pipeline, but Durham is still woefully behind on meeting its housing needs.
The number of residents who are “cost burdened” by housing is in the tens of thousands, says Reginald Johnson, the city’s director of community development. For the city to meet its goals, residents need a diversity of options when deciding where to live. Accessory dwelling units, also known as ADUs, are one such option.
“We need more different types of housing,” Johnson says, “and more availability of housing that’s smaller, in terms of their structure. [The ADU pilot] is just one tool in the toolbox that we’re exploring.”
The city has not set a benchmark for how many units it expects to get out of the pilot. The $1.75 million allocated to the program supports gap funding and administrative costs, so the amount of housing that gets built will depend largely on what other financing is pulled together for the initiative.
Interested homeowners have a few hurdles to clear should they choose to participate in the program. They must live in Durham, own the property where the ADU is built, and cap rents at 80 percent of the area median income (AMI). In exchange, homeowners get a 30-year loan with a low interest rate to build the additional unit.
Amendments to the city’s unified development ordinance over the past few years by the Planning Department have opened the door for more construction of ADUs in Durham in the form of so-called mother-in-law suites on the top of a family garage, or tiny homes tucked into backyards. Topher Thomas, founder of Coram Houses, a local development firm focused on building ADUs, has been an advocate for Durham’s adoption of new design ordinances. He says the city’s pilot program could help serve more than one population in need.
“I’m excited about the potential of this program to increase awareness of the power of ADUs—as a tool for creating accessible housing for the people who live in them, and also as a way for homeowners to generate sustainable income by sharing their land,” Thomas says. “My hope is that this low-interest capital becomes a real pathway to capital access for folks who’ve traditionally been excluded from it.”
Bringing ADUs to other parts of Durham has been well received by the community, Johnson says. One of the goals for the pilot, which is part of the city’s “Forever Home, Durham” housing initiative, is to create a proof of concept that can be replicated across the different neighborhoods in Durham.
“The concept is very popular, particularly [for] those that may have land in their backyard but don’t have the financial capacity to build an ADU,” Johnson says. “We don’t have enough housing, and that pushes up the cost. So to the extent that you can create more and diverse housing, you have more opportunities for people to rent.”
But it’s not time for interested homeowners to sign up just yet. First, city staff have released a request for proposals (RFP) to hire an administrator who would oversee the $1.75 million set aside for the program and coordinate with homeowners. Possible applicants include individuals or groups like community development financial institutions and architecture firms.
The deadline to submit proposals for the RFP is May 16. Afterward, the proposals will be reviewed by staff before getting final sign-off from the city council before the end of the summer.
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