Josh Kelety at the Capitol Hill Seattle Blog has a comprehensive post about the latest discussions about increasing the number of Detached Accessory Dwelling Units or DADUs also called backyard cottages. As we pointed out before, the main snag for most people interested in building a backyard cottage as housing, is financing.

[Valdez] argues that while the amendments are a good step, without identifying financing mechanisms for homeowners interested in building DADUs, as well as completely removing the owner requirement—to allow homeowners to sell constructed DADUs alongside their homes and developers to independently build DADUs on single family lots they’ve purchased (as well as the subdivision of single family lots , to allow for potential split ownership between a homeowner and a developer)—there isn’t going to be a major jump in construction.

Most financing for housing is based on the value of the product being created or the rental income that would be created. If a homeowner is just building a cottage, it ends up that the financing is based on the existing home and the income of the residents of that home. So instead of generating financing from value of new housing, financing requires the homeowner to essentially borrow on their home or their income. Most people don’t or can’t do that.

However, if the cottage could be on land that is divided from the main parcel and could be sold, the financing would be more like the financing for new construction. For financing purposes, this would mean the cottage would look a lot like a speculative (I hate that word, but it just means a home built for the housing market, not a custom built home) project, like that small-lot house in Wallingford or Laurelhurst that created so much controversy two years ago.

And that’s the problem. That is exactly what the neighbors DON’T want and it’s why Councilmember O’Brien isn’t heeding what the Mayor’s Housing Affordability and Livability Agenda (HALA) Committee and lots of other people locally and Oregon have recommended:

Remove the ownership requirement. Allow both the accessory and principal unit to be rented [independently]. Currently, the owner must live in one of the two. The ownership requirement is a barrier to securing financing to build an ADU/DADU. Explore the opportunities and implications of Unit Lot Subdivision which would allow separate ownership of the primary dwelling and the accessory dwelling.

It’s right there in the HALA recommendations. But what is O’Brien doing?

According to O’Brien, the one-year mandate is intended to find a compromise between neighborhood concerns about preventing outside investors and developers from creating DADUs (as well as some anti-renter sentiment) and the setbacks of the owner occupancy requirement identified by DPD.

“They are concerned about a private developer coming in and building a backyard cottage and flipping it. What we did is that we have an owner occupancy requirement essentially saying that the owner of the house has to build it but they can rent it out.”

So once again, O’Brien and his colleagues are more worried about someone possibly making money building housing than they are producing more housing. It’s why the city is being served poorly by this Council and Mayor. Instead of listening to the HALA Committee and lots of experts, O’Brien is doing what has consistently done: cave in to angry neighbors. The HALA recommendations have a lot of promise, but only if they get implemented not just paid lip service.