Andrew Cutting and his wife built an accessory dwelling unit six years ago, above the garage behind their downtown Anchorage house.
With the state’s economy heading into recession at the time, the one-bedroom apartment helped them “double down” and stay in Alaska. It has provided steady income from their long-term renters, and a possible nest of their own when they get older and want to downsize.
“It’s not a money-making scheme,” he said. “But it gives us options.”
The Anchorage Assembly last month approved a measure — initiated by the planning department under former Acting Mayor Austin Quinn-Davidson and carried forward under Mayor Dave Bronson — that will provide more options for residents looking to build accessory dwelling units. The units are often called in-law apartments, granny flats or backyard cottages. Some are built inside houses, and others are detached on the property.
In a near-unanimous vote, the Assembly expanded where the units can be built in Anchorage, loosened the maximum size allowance, and removed a requirement that the homeowner lives on the parcel, such as in the primary house, among other changes.
Accessory dwellings are increasingly common in Anchorage, though records indicate there are not more than 1,000 of them. They’re seen as part of the solution to the housing shortage in Anchorage and nationwide that has contributed to soaring home prices and rents.
Not enough of them are being built to meet city plans that call for 1,000 new ones by 2040, city officials say.
The new rules will help change that, said Meg Zaletel, an Assembly member for Midtown.
[Anchorage’s average home price rose to a record $456K, but higher interest rates are starting to cool the market]
“This will reduce barriers to making them happen and it opens up opportunities to a lot more property owners in the municipality,” she said.
But a few community councils have expressed deep displeasure with the changes.
Members of those councils say they support accessory dwellings in general. But they say the new rules could lead to an overabundance of rental units in neighborhoods, including short-term rentals that tighten housing markets. They fear potentially larger dwellings could intrude on neighbors’ sunlight and privacy.
“This was a huge loss for our neighborhood and others,” said Pete Mjos, president of the Rogers Park council, referring to the new regulations. “We are very disappointed to say the least.”
Not just for single-family properties anymore
The rules take effect Feb. 7. In addition to removing the owner-occupancy requirement, other stipulations include:
• Allowing a single ADU to be built on any parcel with a dwelling unit, including near duplexes, triplexes or even apartment complexes. They were previously limited to lots with a single-family dwellings.
• Changing the maximum size cap to 1,200 square feet, although zoning limits retained by the Assembly will help ensure that many ADUs will still be capped at the old limit of 900 feet, city officials say.
• Keeping the maximum height at 25 feet for units in the Anchorage Bowl, except those above garages, which can now reach 30 feet.
However, there are no restrictions on whether the units can become short-term rentals. The Assembly plans to soon tackle short-term rentals as a separate issue, which could include the first limits on their numbers or other new requirements.
Supporters of the changes include the American Association of Retired Persons Alaska. More accessory dwellings will provide more housing and income options for families, with Alaska’s population aging, said Katie Severin, with AARP Alaska. Future retirees might build one that provides affordable rent for a relative who’s a caregiver, or a grandkid attending college, she said.
“It has the impact of keeping seniors here, along with all the contributions they make to our economy,” such as volunteering and spending disposable income, Severin said.
[New report spells out factors driving Alaska’s tight housing rental market]
Mark Aafedt, a semi-retired mason, said he built a two-bedroom accessory dwelling on his large property in South Anchorage in 2020. He’s renting it out to a couple.
“I’m not the spring chicken I used to be,” he said. “So I built it for family purposes. I didn’t know if in the future my kids or in-laws might be in there. But right now, it makes good sense to rent it out and make a few dollars on it.”
Assembly wants to take up short-term rentals separately
The Rogers Park council wanted the Assembly to approve shorter height limits, in line with Lower 48 cities, and new limits on where the accessory dwellings can be built on lots, Mjos said. The council is especially concerned that larger dwellings could block sunlight of neighbors to the north.
“It’s about solar access, and privacy and respect for the neighbors,” he said.
Kris Stoehner, Midtown council president, said parking is one of her concerns. The Assembly in November removed off-street parking requirements for new developments, to spur more housing, leaving it up to the developer to determine how many parking spaces to build.
“If you go from a single-family dwelling to a multi-family dwelling in one lot and you don’t have room for parking for this second group of people, where do they park?” she said. “They park on the street, and that’s not a positive step for Anchorage.”
The previous owner-occupancy rule supported a balance of homeowners and renters, a pattern that helps diversify and strengthen neighborhoods, said Nancy Pease, a Rabbit Creek council board member. But without owner-occupancy requirements, there will be a higher proportion of rentals in neighborhoods, and a higher turnover rate of residents, she said.
Pease said accessory dwellings are a powerful tool that can help lower- and middle-income individuals buy and keep a home, since they’ll have a steady income stream on their property. But under the new rule, they might “have to compete with larger investors who can buy out struggling homeowners and create two rentals on a property,” she said.
Evidence from studies shows that short-term rentals can tighten housing markets by reducing the availability of long-term rentals, said Mark Foster, a Rogers Park resident and consultant who studied short-term rental and accessory-dwelling markets for the Rogers Park council.
A tighter market leads to higher rents and home sale prices, he said. That’s contrary to the Assembly’s goal, he said.
“You’d expect one more unit of supply would decrease prices in a housing market,” he said. But platforms such as Airbnb encouraging homeowners to chase high potential profits from short-term rentals have helped shift that dynamic, he said.
Zaletel and other Assembly members said they plan to soon address short-term rentals, which could lead to potential regulation such as limiting their numbers, or other requirements, she said. The rentals, often used for tourists, have been proliferating in Alaska and their numbers are highest in Anchorage, state economists reported last year.
Zaletel said the Assembly listened to the councils’ concerns, and tried to address them, including by not changing their setback requirements from property lines.
‘They do make a difference’
Jeannette Lee, Alaska research director for nonpartisan think tank Sightline Institute, was part of a working group that reviewed accessory dwelling proposals from the planning department.
“These won’t radically revolutionize the housing stock in terms of supply, but they do make a difference in terms of giving people more options, and it will add to the housing stock,” Lee said.
Assembly member Daniel Volland, representing North Anchorage, said he supported the changes because it can provide more affordable housing that prevents Alaskans from leaving for the Lower 48.
“I’m really concerned about outmigration and how expensive it is for young working professionals and families to find housing in Anchorage that’s close to professional opportunities,” Volland said.
He’ll have a chance to address the concerns about short-term rentals when that issue comes before the Assembly, he said.
“This will allow a lot of creative situations for those who are retired and want to age in place,” he said.
Kameron Perez-Verdia, representing West Anchorage, was the lone Assembly member to vote against the changes. He said they were passed near midnight in a “rushed” process, and the Assembly didn’t have a chance to fully address community concerns.
But he said he generally agrees with the changes.
“It increases opportunities for lower-cost housing, which we’re in desperate need of,” he said.