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City of Missoula looks to relax parking, owner-occupancy rules guiding ADUs

In an effort to boost Missoula’s stock of affordable housing, the city may relax regulations covering accessory dwelling units, including rules on owner occupancy, parking requirements and increasing height allowances.

It may also use the housing trust fund to cover permitting fees to incentivize the construction of ADUs, or so-called tourist homes, so long as they agree to rent the units to a Section 8 voucher holder.

The changes are part of the city’s annual review of Title 20 and on Wednesday, they received mixed support from members of the City Council. Some believe more ADUs will do little to boost the city’s housing stock but rather, would grow the more lucrative business of vacation rentals.

“I have no desire to create more accessory dwelling units in Ward 3 that are basically targeted to be tourist homes,” said council member Gwen Jones. “We want housing stock. We’re in a dramatically shifting economy in terms of our housing inventory and housing costs.”

The units, sometimes referred to as mother-in-law apartments or backyard cottages, have always been controversial and the City Council opposed them less than a decade ago. At the time, opponents said they’d bring unwelcome changes to traditional neighborhoods, increased density and create parking congestion.

But the city has warmed up to ADUs and has cleared the way for their construction, though few have been built. Of the 30 ADUs permitted in Missoula, only six have been built after 2018, according to Montana James with the Office of Housing and Community Development.

“ADUs combine an ecological and financial benefit when compared to the more costly expansion on the urban fringe,” said James. “The wider adoption of ADU development represents a housing approach strongly aligned with the city’s focus inward growth policy.”

In an effort to get more ADUs in the mix, the city is proposing a number of regulation changes. Some were universally accepted on Wednesday, such as increasing the height allowance from 22 feet to 25 feet.

But other amendments remain controversial, including the elimination of parking requirements. Under current regulations, at least one paved parking space is required for the ADU while the primary household must have two spaces.

“The repercussions of the current parking requirements are pretty significant for folks looking to build an ADU,” said James. “It makes many potential lots unfeasible for construction of an ADU, or it will make the rent needed to cover the debt service for the ADU much less affordable.”

Currently regulations also require the owner of the property to reside on site in either the ADU or the main structure. That regulation is tied to the property and is assumed by future owners in perpetuity.

“This presents significant barriers to the construction of ADUs,” said James. “The deed restriction has the tendency to complicate the process of obtaining financing or limit the types of mortgage financing available for the home when it’s resold to a new buyer.”

While relaxing restrictions on owner-occupancy has its benefits, it also has its share of opponents. Not requiring some form of owner occupancy, they believe, increases the likelihood that more ADUs will convert to short-term rentals or tourist homes. It could result in neglect of the property.

But the Office of Housing and Community Development believes requirements on owner-occupancy should go.

“It will continue to limit Missoulians’ ability to construct ADUs and keep us in a position where we have limited options to provide the diversity of homes Missoulians want and need,” James said.

The regulation changes could also remove current requirements that an applicant looking to build an ADA or tourist home provide notice to surrounding property owners. But the proposal wasn’t accepted by most council members who said notice is required for nearly all other projects.

Making an exception for an ADU was bad policy, they agreed.

“This is basically a commercial entity going into a residential neighborhood, which is already pushing the envelope,” said Jones. “As a courtesy to people, they should be given a heads up. It’s easier to swallow than just getting notice after the fact.”

In an effort to increase the development of ADUs, the city may also provide incentives from the newly created Housing Trust Fund, which was recently established as part of the housing policy to boost the development of affordable housing.

“Through the trust fund, we could support permitting fees or any component of the construction,” said James. “In return, through a contract, the owner would use that unit and rent it long-term to a voucher holder.”