Should the city lift a cap limiting the number of accessory dwelling units (ADUs) – or granny flats – that can be built each year in local neighborhoods?

The possibility is up for discussion when planning commissioners review the city’s ADU policy at their 7:30pm meeting tonight (Tuesday) at the Governmental Center. The review comes a year after city officials voted to allow homeowners to rent out secondary dwellings on their property – such as garage, basement or attic apartments – in an attempt to address the city’s housing crisis.

Commissioners put several stipulations on the ordinance in order to evaluate its efficacy and impact in the first year. Only 10 new ADU permits can be granted per year in single-family neighborhoods, and homeowners are required to live on-site. ADUs cannot exceed 800 square feet, are limited to one per parcel and require a minimum three-month rental commitment.

Officials had previously approved ADUs on a test pilot basis in Traverse Heights neighborhood in 2014, but failed to attract any applications. But after expanding the ordinance to other neighborhoods last year, the city experienced a significantly higher response rate, according to City Planning Director Russ Soyring.

In a memo to planning commissioners, Soyring noted that the 10-limit ADU maximum was hit in 2015, and has already been reached again in 2016. There are now “seven (homeowners) waiting” on a list to receive ADU permits in 2017, Soyring wrote. Of the 20 units approved to date, a majority – 17 – are apartments above either new or existing garages on residential properties, with most located in Central and Boardman neighborhoods. Units have also been added in Slabtown and near Northwestern Michigan College (NMC).

“I think from the report we see that (ADUs) have a place in Traverse City,” says City Commissioner Gary Howe, who also sits on the planning commission and supported the ordinance. “I don’t think having an arbitrary limit of permits per year is required anymore. I would say let the market of people willing to do ADUs be the determining factor.”

But City Commissioner Ross Richardson – who also sits on the planning commission, but opposed the ordinance – says he doesn’t “see any reason to expand the program.”

“This was sold as having a low impact on the neighborhoods,” Richardson says. “The more you expand it, the more you’ll exacerbate any problems you might have with parking or space or any other issues. It’s creating too much density.”

Richardson adds he’s concerned that a “large percentage” of ADUs are being used as weekly vacation rental properties instead of year-round residential housing. “That’s the way you’d best maximize your return,” he says. “I’m sure they’re not all being used that way…but there’s no way to enforce that. That’s what destroys the neighborhoods, or the sense of neighborhoods people have, and that’s why they’re so opposed to it.”

City Zoning Administrator Dave Weston says he’s “not aware of any (ADUs) being used” as vacation rentals. “There are a lot of people in the community who make us aware of (those types of properties), and our city assessor works hard on trying to figure out where the short-term rentals are and shares that information with me,” he says. “We’re being more proactive. I’m not aware of anyone using them that way.”

Weston also says his office has received “no complaints” from the public about ADUs since the ordinance began.

While planning commissioners are likely only to discuss the ordinance tonight, they could consider modifications going forward that would make it easier for more ADUs to be built, such as lifting the permit cap or changing the square footage requirements. Howe says that one key provision – requiring the homeowner to live on-site – could help safeguard the quality of neighborhoods while still expanding housing options in the city should commissioners decide to broaden the ordinance.

“A lot of the concerns about how (ADUs) fit into the neighborhood and community are going to be addressed by having the homeowner present,” Howe says. “If a homeowner is able to live with it (on their property), the neighborhood and city should be able to as well.”