Progress Toward Affordable Coach Houses & ADUs?

Coach houses and ADUs (accessory dwelling units) are a hot topic in Evanston, since many backyards have room for them and they may have the potential to  be a new source of affordable housing. However, turning this cool idea into reality is going to take some work. Here's what's going on.

Seeking to Do a Pilot
The Evanston Development Cooperative (EDC) is leading the charge on creating new coach houses. They have several homeowners interested. However, they are still looking for the right financing models to allow the new coach houses to be affordable to whomever is living in them. They pitched an idea for a pilot to the City of Evanston last week that included the following:
  • The City would loan up to $220,000 to a homeowner, selected because they offered to do a pilot project, at 1% interest and a term of 20 years.
  • In return, the homeowner would rent the coach house to someone at 80% AMI for 20 years.
  • The homeowner would be able to get out of the deal by repaying the City.
You can read about the details in the packet for the September 16 City Council meeting (starting on page 4).

Rejection of the Proposal 
The City Council voted the proposal for the pilot down. It appeared to us that they did not all seem to realize that this was a proposal to have the City fund one pilot coach house--not to pilot a loan program for coach houses. With an apparent assumption that this would be the first of multiple such loans, they raised several good concerns that included:
  • If the City is giving loans, shouldn't they go to people who are struggling (apparently the homeowner in this case is doing OK but just doesn't have the extra income to finance the project out of their own money)?
  • How did the City pick this homeowner for the pilot? Was the selection process fair?
  • Why would the City put its money on the line for this? Shouldn't a bank be doing this?
  • Is it enough for the rent to be appropriate for someone at 80% AMI? Can we go lower?
  • Etc.
Some of these concerns we agree with (like, can we try for a lower AMI for tenants), and we are glad that the aldermen are looking at proposals critically. 

However, some of the concerns seem to come from an overly cautious, austerity-based mindset. Such a mindset is understandable right now, given the current budget situation and the fierce criticism the community is directing towards City Council's every move. 

We believe that EDC's proposal was a low-risk opportunity to get a coach house built that could serve as a financial model for banks and other potential sources of funding and for homeowners to see how an ADU could be feasible for them. We believe that such a model could help to accelerate the propagation of affordable coach houses throughout the community.  
While the pilot proposal was not perfect, it would have showed everyone that the City is serious about taking action to get affordable housing built. If there had been better understanding that this was NOT a proposal for a loan program but a proposal to accelerate development of a pilot ADU, perhaps the aldermen would have been willing to take a leap of faith and try this out.

Next Steps
EDC responded to the rejection with grace and showed willingness to take the feedback they received and work with it. The best case scenario will be if they can find a solution that will quickly result in a pilot that has even stronger characteristics than what they originally proposed. Some things we are hoping for are:
  • Involvement of a lender other than the City (not necessarily ruling out City involvement, however)
  • Engagement of a low-income primary homeowner or a lower AMI requirement for the ADU tenant
Meanwhile, EDC and Joining Forces are both looking at ordinances that are currently prohibiting the propagation of ADUs, as well as incentives to homeowners to consider placing ADUs in their back yards! Stay tuned.