Stakeholder Interviews

What are opportunities for partnership and coordination between existing programs, non-profits, homeowners, and property developers?

To identify potential participants for stakeholder interviews, I started by mapping out existing government bodies, non-profit organizations, advisory councils, advocacy groups and community associations with the city of Bellingham and surrounding community. Then I began by reaching out to potential stakeholders to schedule interviews. As I conducted interviews, participants often gave me recommendations and email introductions to additional relevant stakeholders. I approached many participants directly in the context of their professional and organization roles. To recruit homeowner participants, I reached out through professional and personal networks.

  • This section reports on interview findings and reporting from six major stakeholder categories:
    • Plannng Staff & Subject Matter Experts
    • Community Land Trust & Non-Profit Housing Developers
    • Advocacy Groups & Community Organizations
    • Real Estate & Finance Industries
    • Builders, Developers, Architects
    • Homeowners
    • Key Findings & Summary
Itentifying relevant stakeholds and lines of inquiry for interviews

Planning Staff and Subject Matter Experts

City of Bellingham Planning staff have been incredibly generous with their time and assistance throughout the process of conducting this research. Staff in the Planning Department’s GIS team contributed greatly to helping me access tax parcel and Zoning data through the city’s GIS Data Portal and provided ongoing guidance for my data analysis. Staff in the Community Development and Long-Range Planning Department gave significant input that guided the design of this research study, and the focus of the Literature Review. I also received informal input and consultation of subject matter experts from the Incremental Development Alliance, Neighborhood Workshop, Grounded Solutions Network, and New Energy Homes in South Bend, IN. No city staff agreed to participate in the formal stakeholder interviews described in this section, and most of the subject matter experts from case study regions participated through informal consultation, rather than as stakeholders. As such, their input is woven throughout this research, primarily guiding the Literature Review, Case Studies, and Data Analysis.

Community Land Trust & Non-Profit Housing Developers

What are opportunities for partnership and coordination between existing programs, non-profits, homeowners, and property developers?

What frameworks within existing municipal code and programs can be leveraged to increase affordable infill unit production?

The stakeholder interviews with affordable housing developers and community land trusts in Bellingham covered diverse topics critical to housing initiatives. Conversations focused on understanding policy structures, linking public funds to affordable housing infill, supporting small-scale development, fostering entry-level homeownership, conducting equity analyses, and exploring various strategies like ADU condoization, co-buying, and leveraging DIY labor. Key organizations like Kulshan Community Land Trust and Habitat for Humanity highlighted challenges posed by soaring real estate costs, leading to operational diversification and collaborations with local municipalities. Notably, innovative models like A Hand Up Homes’ approach for first-time buyers and ongoing discussions within the Senior Co-Living Discussion Group underscore the diverse efforts and collaborative strategies shaping affordable housing initiatives in Bellingham.

  • A Hand Up Homes – Susan Burke & Jodie Lit 10/27/22
  • Kulshan Community Land Trust – (sitting in on board meeting) 2/15/23
  • Department of Commerce – Taylor Webb
  • Community Frameworks, Senior Housing Developer – Max Benson 3/16/22
  • Habitat for Humanity – Senior Staff 3/27/22
  • Working Group to Expand Tactics for CLT Land Acquisition – Organized by Michael Chivario, multiple dates
  • Senior Co-Living Discussion Group – Ongoing monthly meeting run by Laura Welker Consulting

Kulshan Community Land Trust and Habitat for Humanity of Whatcom County are the primary organizations working to create affordable home ownership opportunities in Bellingham. While there are several more non-profit organizations working to provide low-income housing and housing support services, they are either rental assistance and/or subsidized rental units. Kulshan Community Land Trust and Habitat for Humanity executive staff have both expressed frustration with s the high cost of real estate in the city of Bellingham, and both organizations have had to diversity their operation. Kulshan has ceased scattered site home purchasing at this time, as prices in the current market are so high that the available subsidy programs for down payment assistance that their model is based on have been priced out of the market. Habitat for Humanity has been able to proceed with their standard business model, as it is based on the resource of volunteer labor to construct new homes on vacant lots, but this model has slowed considerably in the current market. Both organizations have pivoted towards development in collaboration with local cities to build new housing on publicly owned land that cities can transfer into land trust ownership at discounted rates. KCLT and Habitat Whatcom also working with nearby cities of Ferndale and Everson to pursue housing development opportunities in slightly cooler real estate markets. Habitat for Humanity has one active project in Ferndale, where an elder woman who wants to age in place is donating her large property for infill development. Habitat is planning to help preserve the existing home and construct four additional units on the property to help create new homes and allow the primary resident to age in place within her existing home. They are still in the planning and research phase to determine the ownership or property management structure for the resulting housing units. Habitat has another project in progress in Everson, Matteo Meadow, that will produce 30 homeownership units and 16 rental units. The Habitat board will approve income qualification for households earning 80% to 130% area median income ranges, which will support units for households earning 50% area median income.  Habitat is establishing a new Community Land Trust entity for Matteo Meadows, which will maintain the homes as permanent affordable non-market housing. These projects reflect similar tactics found in case studies of Durham and Charlotte, North Carolina.

A Hand Up Homes is a small startup in Bellingham with an innovative model aimed at helping first-time home buyers. Their program targets households in the gap between existing programming for low-income households and what it takes to actually buy a home in the current market. A Hand Up Homes uses the legal mechanism of tenants-in-common to co-buy homes with participants, allowing participants to buy-out their share of the mortgage over time as they build equity. Their model also seeks to add an accessory dwelling unit to each home upfront, setting up the homeowner/client as the property manager for the rental unit. This is a new, emerging tactic for supporting entry level homeownership for middle-income households and reflects some of the tactics and approaches of incremental development.

The Senior Co-Living Discussion Group, convened and organized by Laura Welker Consulting, is an ongoing monthly meeting attended by a group of elder women extensively connected across affordable housing fields of Bellingham, and primarily seeking to design and develop co-living housing forms for themselves to live in. With membership overlapping with League of Women Voters and regular attendance from city planning department staff and Whatcom Housing Alliance staff, this group is actively exploring short-term opportunities for cooperative housing and co-living arrangements for seniors who desire a community living housing arrangement. One primary topic explored within the group has been discussions of missing architectural forms to serve this desired style of occupancy. A major consideration is better describing the architectural balance between a desire for private space, and the desire for shared community. This discussion is evolving into brainstorming around how to match housemates to empty bedrooms in large, under-occupied single-family homes to address the growing mismatch between household size and existing housing inventory (as described in the data analysis section above). The group is also brainstorming a description of the missing architectural forms needed to serve the group’s desired housing arrangements – describing something that is a middle-ground between a large single-family home and a small to medium multifamily structure. This housing form is being affectionately described as a “Co-Housing Manor” and would feature suites of private rooms with individual bathrooms and possibly wet-bars or kitchenettes, but ample shared communal spaces, living room, home office, and a communal kitchen. A further aspect of this conversation is the extensive overlap between the housing needs described by seniors seeking co-living and cooperative housing arrangements, and college students who often live in dormitory-style buildings with small, minimal private units clustered around a variety of well-used common spaces.

Advocacy Groups & Community Organizations

What are opportunities for partnership and coordination between existing programs, non-profits, homeowners, and property developers?

Stakeholder interviews with advocacy groups and community organizations shed light on critical issues in housing access and rental rights within Bellingham. The discussions navigated multiple crucial topics, including equity analysis, programming to support housing access, fostering entry-level homeownership, and the urgency to establish ethical and sustainable property management practices. One central concern raised by all participants was the dissatisfaction with prevalent housing forms developed in the city, focusing on an oversupply of large apartment buildings and high-value single-family homes. Concerns were also voiced regarding rental property management practices, with reported issues of rising rental costs, substandard living conditions, and discriminatory practices impacting various segments, particularly Western students facing challenges due to poor living conditions affecting academic pursuits. Advocacy groups highlighted the difficulties faced by renters in accessing accessory dwelling units (ADUs) due to discriminatory practices and the absence of regulatory oversight. Furthermore, stakeholders advocated for regulatory reforms to enable support for cooperative housing arrangements and adaptive re-use, emphasizing the need for a public utility housing developer and flexible financial investment products to support cooperative developments in Whatcom County. These discussions underscore the pressing need for comprehensive reforms addressing housing accessibility and renters’ rights in Bellingham.

  • Racial Equity Commission – 11/14/22
  • Bellingham Tenants Union – 3/28/22
  • Student Tenant’s Revolt – WWU registered student club, public event, 2/13/22  
  • WWU Office of Off Campus Living – Julia Burns, ongoing consultations
  • Generations Forward / Family Council – Keith Montoya, ongoing consultations

While this research is focused primarily on the design of affordable home ownership access, considerations of renter rights is a core issue in planning and policy for infill development and the construction of accessory dwelling units. Every potential first-time home buyer is currently a renter, and current renters are the target demographic for first-time homebuyer policy programs. All participants interviewed in this category reported frustration with the housing forms that existing property developers are producing – overproduction at both extreme ends of the housing type spectrum: large apartment buildings and large high-end single-family homes. Participants in this stakeholder category also reported vast dissatisfaction with current business practices for residential rental property management in Bellingham, across all forms of housing types and rental arrangements.

The Student Tenants Revolt reports that both rental costs and building quality have been having ongoing impacts on Western students’ ability to pursue their studies (Why Is Rent Going Up When My House Is on Fire?, 2023). The reported impacts – including respiratory ailments from poor indoor air quality and mold, flooded units, and fires caused by unsafe electrical wiring – all contribute to an escalated rate of students and other low-income populations being shuffled through a roulette of expensive and unsafe rental units. The time and energy associated with frequent moves and medical emergencies has direct impact on students’ ability to engage with their academic studies. This impact is especially magnified for students from low-income families, students who are parents, and older students. These student demographics are more likely to be working to support themselves while in school and less likely to have a support network to fall back on to help with navigating frequent housing emergencies. The Bellingham Tenants Union and Tenants Revolt report similar issues for renters across Bellingham.

The Bellingham Tenants Union reports that homeowners operating Accessory Dwelling Units are also the most likely to discriminate in favor of renters who are “easy to rent to”. While not overtly intending to discriminate, a landlord seeking this an “easy to rent to” tenant is generally seeking to find tenants who are culturally similar to them, speak English as their first language, and/or whose income is more than three times rent by default. In this way, “easy to rent to” becomes a proxy for discriminatory property management business practices. Beyond this, available ADU rentals are often quietly traded amongst friends and family before they are ever listed as an available unit. BTU reports that the primary benefit of renting through property management agencies is that these larger companies are regulated as a commercial enterprise, and therefore governed by a regulatory framework that explicitly prohibits discriminatory practices in selecting renters. In the current absence of regulatory oversight, ADU units area rarely accessible to renters who are members of racial minorities, renters whose first language is anything other than English, or middle-or lower income renters whose income is less than 3x the rent (current median rent in Bellingham is $1,925/mo, and unavailable to anyone who relies on any kind of rental assistance. Despite the cultural popularity around the idea of accessory dwelling units, lack of regulatory oversight on small-operation landlords limits these structures from providing a meaningful source of stable housing to the overall housing market. Renter populations are interested in increased opportunities for co-living, co-ownership, cluster housing, cooperative housing, and other alternative forms of cooperative ownership than homeowners.

The primary sentiment expressed by all stakeholders in this category is the need for a public utility housing developer serving Whatcom County. Participants in this category expressed frustration with restrictive zoning that makes adaptive re-use and cooperative housing arrangements difficult to produce or outright illegal. They also expressed the need for more flexible financial investment products to fund privately formed limited equity cooperative and cohousing developments.

Real Estate & Finance Industries

What are opportunities for partnership and coordination between existing programs, non-profits, homeowners, and property developers?

Conversations with stakeholders in the real estate and finance sectors centered on transformative strategies like ADU Condoization, co-buying as tenants-in-common, and small lot subdivisions. Discussions highlighted a general lack of familiarity with converting single-family properties into multiple units within Bellingham. However, insights underscored the prevalent practice of ADU Condoization in Seattle, primarily contributing market-rate units rather than affordable housing for lower-income segments. Discussions emphasized the potential for these strategies to enable adaptive re-use of existing housing stock to meet the needs of changing household dynamics, reflecting a growing trend of resource pooling among adult friends or households. Additionally, the emergence of entities facilitating co-buying solutions in Bellingham accentuates the increasing relevance of structured approaches to accommodate evolving housing needs. While these strategies may not inherently produce affordable housing, they present opportunities to expand homeownership and informal transactions, calling for further exploration to develop scalable and inclusive housing models.

  • Banker, Savi Bank, Vice President & Branch Manager – Christian Christianson 8/9/22
    • Mortgage Broker Caliber Home Loans – Anonymous, Winter 2023
    • John L Scott Real Estate Agent, Rental Property Owner – Hannah Cranny 3/7
    • Land Use lawyer, practicing ADU Condoization in Seattle – Terrance Wilson 3/16
    • Real Estate Agent Specializing in Co-Buying, KCLT Board Member – Kelcy King 3/27

Topics that I discussed with this group included the creation of opportunities for entry level homeownership using the mechanisms of ADU Condoization, co-buying as tenants-in-common, and small lot subdivisions. This is the stakeholder group that I was able to talk to the fewest number of individuals from. I talked to Hannah Cranny, a real estate agent working within the John L Scott network, as well as Kelcy King, a real estate agent who specializes in facilitating co-buying transactions for groups purchasing homes as tenants-in-common and who has served as a KCLT board member. I was able to talk to the Branch Manager and Vice President of Savi Bank, a small regional bank that offers HELOC and small business loans. I was also able to talk to a local Mortgage Broker with Caliber Home Loans. Beyond the local area of Bellingham, I was able to interview Terrance Wilson, principal operator of Wilson Law Group, a land use law office doing a booming business establishing little three-to-four-unit ADU condo associations in Seattle, WA.

The two participants from Bellingham banking and finance industries reported little-to-no knowledge of established practices for converting single family properties into multiple independently owned household units. Based on this limited sampling, it could be implied that this practice is not occurring at any significant rate in Bellingham at this time. Hannah Cranny, the real estate agent with John L Scott gave me the tip to look at 1010 High Street as one example of an ADU condo produced in Bellingham, shown in Figure 39 below. Upon closer investigation, the duplex B101/B201 appears to have been built as an accessory building on the existing multifamily condominium building at 1000 High Street. Checking the Zillow listing against the Whatcom County Assessor record reveals that unit B101 sold for $475,000 on March 17, 2023, and unit B201 sold for $435,000 on July 29, 2022. At 875 square feet per unit, these sale prices translate to a cost $543 per square foot for unit B101 and $497 per square foot for B201.

Figure 39 – Example of a duplex ADU constructed on a multifamily property in the Sehome neighborhood of Bellingham, WA.
Screenshot from real estate property listing on Zillow.com.
Zillow’s Affordability Calculator, showing that a houshold would have to be earning 200% of the area median income in order to purchase one of the units in the duplex condo at 1010 High Street.

In order to further investigate and learn about practices of ADU condoization, I contacted land use lawyer Terrance Wilson of the Wilson Law Group of Washington. Within the past two years, Wilson Law Group’s practice has become dominated by the creation of small two-to-four-unit condo associations for single family properties redeveloped into something approximating zero lot line short plat subdivisions using Seattle’s land use zoning that allows two Accessory Dwelling Units on a single-family lot. Wilson reported that condominiums are governed by Washington State law and that the internal structure for how individual condo units are allocated is largely unregulated under this governance, allowing each new condo association to set up their HOA according to their own preference. In the context of this unregulated environment, Terrance reported that the vast majority of these new HOAs were choosing to delineate ownership by reflecting a zero-lot line model similar to townhomes or cohousing communities, so that each unit also owns the section of property that their unit sits on, with underground utilities being managed communally under the HOA agreements. Practiced in this way, ADU Condoization effectively becomes a work around to accomplish small-lot subdivisions without going through the long and expensive process of subdividing single-family lots.

As described by Wilson Law Group, the practice of ADU Condoization in Seattle is an opportunity for developers to purchase existing single-family properties and convert them into clusters of smaller single-family homes. While this definitively adds more market-rate units to the Seattle housing market, nothing about the practice of ADU Condoization produces housing units that are affordable to households earning less than area median income. Seattle’s current AMI is $105,391 – using Zillow’s affordability calculator shown in Figure 40, even when assuming a 20% down payment. The lowest price that most of the houses produced under ADU Condoization practices in Seattle is $600,000 and well out of reach of workers earning Seattle’s area median income. Again, the primary benefit of this practice is increasing overall residential unit density in existing neighborhoods and increasing the production of owner occupied housing units over rental units.

Partial Release/Reconveyance

When I inquired specifically about the above observation with Wilson, he confirmed the assessment that, while the practice of ADU Condoization performs the important function of adding additional market-rate homeownership opportunities to the housing market, it does not inherently produce units that are affordable to populations earning below area median income. In discussing how this practice could be applied as a tool in the context of affordable housing production, we identified two primary strategies. First, ADU Condoization can be a mechanism for existing single-family homeowners to reduce their overall housing costs and consolidate their property equity, by selling an ADU (or the development rights for an ADU-eligible lot). As reported by Wilson, this can be accomplished through the legal mechanism of a partial release, also referred to as a partial reconveyance. As described by Wildson, in the practice of establishing a new condo HOA, the partial release/reconveyance legal transaction can allow an existing homeowner who has built an Accessory Dwelling Unit to sell the small plot of land that the ADU sits on without having to refinance their mortgage and without having to subdivide the property. Again, this wouldn’t necessarily create a housing product affordable to households earning below area median income, but it can help to add more home ownership opportunities to the market rather than rental units, and it increases opportunity for informal transactions in the context of existing personal relationships. Most importantly, the possibility of existing single-family homes being able to sell ADU development rights, could create an opportunity for community land trusts to purchase the development rights with funding from affordable housing subsidy programs, use public funding to bring in utility services to the plot, and then partner directly with a future occupant/land trust homeowner to finance construction of the resulting unit. Further research is needed to explore these legal mechanisms and design a repeatable and scalable financial product.

The second strategy for using ADU Condoization to produce affordable (and/or non-market) housing discussed with this category of stakeholders, would be as a tool for groups to co-buy an existing single-family property as tenants-in-common, as a limited equity cooperative, or as a pre-emptively formed CoHousing Condo Association. As imagined, the co-owners can then redevelop the property into a cluster of attached or detached independent housing units for themselves, according to individual preference. All of the stakeholder participants that I interviewed from real estate industries reported that, as overall property values rise, it is becoming increasingly common practice for adult friends or groups of small households to pool resources and buy residential property together. This pooling increases the group’s upfront purchasing capital, as well as collaborative labor capacity for DIY repair, maintenance, and improvement of the property over time. While shared housing and co-living has been an informal tactic for adult households to create informal affordable housing for decades, this practice has been largely ignored and marginalized by mainstream real estate and financial institutions, as well as municipal zoning and land use policies. In current practice though, co-buying and co-living are being re-examined under the category of adaptive re-use, as planners and real estate industries observe the mismatch between household size and an existing building stock dominated by single family homes, (shown above, in Figures 24 and 25 of the Data Analysis).

Pairadime, or “PAIRADIME,” is a company in Bellingham that I did not conduct a stakeholder interview with due to limitations of time and logistics, but whose business model is highly relevant to this research. Located in Bellingham, Washinton but serving both the United States and Canada, Pairadime facilitates all forms of residential property co-buying including parents co-buying with their adult children, friends co-buying together, and unmarried partners. Services they provide include co-buyer matching, client education, matching with mortgage brokers and real estate agents, and contract agreements household co-ownership. 

In summary, my discussions with various real estate and finance stakeholders revealed that ADU condoization, co-buying as tenants-in-common, and small lot subdivisions are the most actionable strategies for producing more middle housing home ownership opportunities with infill, within shorter timelines. These strategies themselves do not inherently produce affordable housing for those below area median income. Nevertheless, they serve as valuable tools for expanding home ownership opportunities, promoting informal transactions, and accommodating changing household dynamics. Additionally, the emergence of companies like Pairadime in Bellingham underscores the growing relevance of co-buying practices in the evolving landscape of housing solutions. Further research and exploration are essential to refine these strategies and create scalable models that can contribute to more inclusive and equitable housing options.

Builders, Developers, Architects

What are the primary barriers to producing affordable housing units in the context of urban infill development?
What frameworks within existing municipal code and programs can be leveraged to increase affordable infill unit production?
What are opportunities for partnership and coordination between existing programs, non-profits, homeowners, and property developers?

In this section, insights from interviews with builders, developers, and architects underscore key challenges and strategies shaping Bellingham’s housing landscape. Topics explored range from ADU condoization, co-buying models, and the impact of building codes on construction costs. Builders highlighted hurdles in converting properties, citing permitting fees, design reviews, and site work expenses as significant barriers. Contrasting perspectives emerged on relaxing energy codes for smaller units, while exploring the potential of mobile tiny homes and co-housing models as viable alternatives. Participants also had extensive input on the small footprint/high efficiency building design, and architectural forms for the co-living manor that promise cost-effective and community-oriented housing options. Conversations with stakeholders in this category highlight critical barriers and innovative solutions essential to advancing affordable housing initiatives in Bellingham.

  • Faber Construction/West Coast Homes – Raymond Faber & Mat Metcalf 2/13/23
  • TC Legends Home Builders – Ted Clifton 2/16
  • Bundle Design Studio, architect – Dan Welch 3/8
  • Tiny House Nation – host/tiny house expert – Zack Giffin 3/9
  • CAZ Construction, Business Advisory Council, Member BIAW – Dan Dunne 2/16/
  • Jones Engineering – Brian & Darcy Jones 3/13
  • Instinct Builders – Jason Wheeler 3/24
  • A1 Design Build – Patrick Martin & Maggie Bates 3/23/23

Interviews with stakeholders in this category tended to be the most technical, with participants engaging directly with the draft of proposed code revisions. This was unsurprising, since several members of the Business Advisory Council are also residential builders and housing developers – including Dan Dunn who spearheaded the Building Advisory Council working group that produce the policy recommendations. Contractors and builders generally supported the draft code revisions written by Kulshan CLT and the Business Advisory council without critique.

Primary Permitting, Zoning & Land Use Policies that Increase Infill Development Costs:
  • Design Review adds the most cost by increasing overall project time. Architect/Drafting time required to revise plans is expensive upfront and time delays increase overall project management costs.
  • Site work associated with adding parking spaces and/or laneway access can easily cost up to $30,000 – $40,000 per parking space. Excessive parking requirements for infill development also limits what can be built under overall FAR requirements.
  • $7,000 fee for increasing water meter size, triggered by count of individual plumbing fixtures.
  • Subdividing lots is overall cost prohibitive – one developer reported an experience that I took 2 years + $50,000 to subdivide an existing double lot.

Overall, builders reported that they are doing a booming business of home remodel projects to expand the living area of homes in Bellingham, and that remodel projects far outpace the rate of detached Accessory Dwelling Units. All contractors reported that they don’t think the overall costs of permitting fees for building accessory dwelling units are particularly onerous, although large-scale multifamily developers did not share this sentiment. Smaller residential builders and contractors did report a very consistent set of complaints: the overall time that that ADU design review processes adds to projects, the cost of any site work associated with adding parking spaces or laneway access to satisfy parking requirements, and the $7,000 fee associated with increasing the water meter size triggered by overall fixture count. Costs associate with sitework requirements to add parking or expand alley access for ADUs was cited by contractors as by far the most expensive hard cost associate with ADU construction, with casual estimates of impacts to previous projects ranging from $30,000 to $60,00. The fee for increasing the water meter size based on fixture count was reported at $7,000 by several participants and cited as the most onerous and inescapable cost associated with otherwise economical ADU projects, especially for attached ADUs. These specific issues were the primary aspects of the ADU process that residential contractors and builders identified as adding overwhelming project costs to ADU projects. These costs prevent all but the most well-resourced homeowners from attempting these types of builds and incentivize less resourced homeowners to subvert permitting processes for smaller building projects.

Considering a Small-Footprint / Mobile Tiny Home Code Variance

There was a wide variety of reactions and input on the code variance that I wrote for small footprint residential buildings (see copy in Appendix ##). The proposed small footprint code variance would reduce certain requirements from the energy code in the context of small footprint structures, developed primarily from a tour that occurred September of 2022, of the company 360 Modular’s Ferndale factory. The tour was hosted by owner/operator of 360 Modular Rob Dale, and attended by Port of Bellingham Community Development Director Don Goldberg, Senator Sharon Shewmake, and myself. 360 Modular was a business working to build prefabricated modular housing units specifically to serve the bottom end of the housing market. In this tour, Rob Dale, the 360 Modular owner/operator, reported the company’s struggle to establish a working business model. Dale’s specific frustration was that existing building codes that optimize for energy efficiency are scaled to a typical building size that is considerably larger than 360 Modular’s products and the size of units that are affordable to low- and middle-income populations (target customer base). 360 Modular simply was not able to produce a housing unit that was both affordable to low-income markets that also meets current energy codes, and in fall 2022 the operation closed shop. The code variance was also informed by my literature reviews looking specifically at innovative new designs for modular housing units that are economical to produce, and architectural designs that plan for later development/expansion of the home by the end user, as well as my own background in building performance analysis.

To investigate this proposed code variance in further depth, I interviewed Zack Giffin host of the Tiny House Nation TV show, as well as the executive team at Faber Construction a local contracting company that builds tiny homes rated for seasonal vacation use. Faber Construction would like to expand their tiny house product offerings to structures rated for full-time occupation but expressed the same difficulty as 360 Modular in producing a small-footprint housing unit that is both affordable for low-income buyers and that meets energy code requirements for residential structures. Architects and builders working in more traditional site-built home construction expressed enthusiastic opposition to the proposal to waive energy code requirements for the sake of creating small footprint housing units for low-income home buyers. This opposition was expressed around two primary sentiments. The first is that to do this would be to construct ghettos of poor-quality buildings that would further exacerbate cycles of poverty. The second is that in fact, small footprint structures would benefit from even more stringent energy requirements because of their increased ratio of exterior surface area to internal volume. While both sentiments are well-founded in rational building science, there are several mitigating factors that should be considered in this equation.

The international building code for residential structures is written to a design standard for a 2,000 square foot building. It is true that smaller units have a considerably higher surface area to volume ratio and it is through surface area, as well as window and door openings, that heat is lost. Under this design standard, multifamily structures vastly outperform single family homes in overall energy efficiency – and yet, we continue to build detached single-family homes out of an overriding cultural preference for the detached single family structure type. There is also a strong building science argument made by Tiny Home proponents, that building performance models based on structures that are +2,000 square feet, are not equivalent to building performance of small footprint units between 400 sq ft and 600 sq ft. This is because of two primary factors. First, is that even though the surface area to internal volume ratio is considerably higher, the amount of time it takes to heat this small volume of air can be almost immediate, meaning that occupants have far less need to run heating appliances to maintain a minimum temperature while the building is left unoccupied. This is because the small volume drastically reduces the amount of time required to bring the unit up to a comfortable internal temperature, fundamentally altering the occupant’s behavior and use of the building. Second is the consideration that insulation and energy performance codes for recreational vehicles are far lower than residential buildings codes. While it may not be cost effective for tiny homes to meet current residential building codes for a 2,000 sq ft site-built house, it is cost effective for them to be constructed with much higher insulation and energy performance than a comparable-size mobile home.

Zack Giffin and the Tiny Home Industry Association (THIA) propose a middle-ground code designation for mobile tiny homes that maxes out cost effective insulation values based on standard wood framing dimensions of 2×4 inch lumber and 2×6 inch lumber, where insulation fills the space inside the wall. THIA’s proposed insulation requirements mirror current tiny home building practices of local construction contractor Faber Construction, which max-out total insulation value against overall construction costs with standard 2×4 and 2×6 wall framing, where insulation fills the space inside the wall. Additional R-value for wall, floor, or ceilings is typically accomplished by adding a layer of rigid foam insulation to the exterior shell of the building, at considerable additional cost. Table 10 below shows a comparison of insulation requirements for different building types, including recreational vehicles, park models approved for longer-term occupation, Faber Construction’s tiny home products, and the Washington State energy code for permanent residential structures.

More research is needed to understand and effectively implement code regulations specific to small footprint and mobile structures, and making specific code recommendations to allow the placement of mobile tiny homes in existing residential lots in Bellingham is ultimately found to be beyond the scope of this research. However, it should be given serious attention, considering the potential benefits and advantages that small footprint mobile structures can offer.

Comparison of Building Code Insulation Requirements. Compiled from stakeholder interviews, American National Standards Institute (ANSI) for recreational vehicles, and Washington State Energy Code.

Recreational Vehicle Cert
(as described by stakeholder interviews)		ANSI A119.5 Park Model RV Standard (2020 Edition)Faber’s Custom Park Model
(maximizes energy efficiency at cost affordable to most potential buyers)		WA State Energy Code Residential Chapter 51-11C WAC TABLE R402.11
wallsNo insulation requiredR-19R-15 (2×4 framing with fiberglass)R-21
FloorsNo insulation requiredR-11 or R-13R-20
Fill 2×6 ceiling joist cavity with fiberglass		R-30
ceilingNo insulation required R-22R-25
Fill 2×6 ceiling joist cavity with fiberglass, plus layer of rigid foam		R-49
(but this will go up to R60 with recent legislation)

Because mobile tiny homes do not require a permanent foundation, they can be gentler to the environment, and make them more appropriate on lots and areas with high water tables, irregular terrain, or sensitive ecosystem conditions. Because small footprint mobile homes can be moved periodically, they offer a greater level of flexibility over time, not just to the residents but to the property hosts. This can allow housing units to be placed in ecologically dynamic locations, and moved and relocated as landscape conditions change over time. One household located on Bennet Street, in the Alderwood Growth Area, started with a small house on a double lot, and is working to develop their own co-housing cluster community over time. Their first project was the build a second single family house with Net Zero green building design, and to then to host a tiny house, allowing them to rapidly expand the number of housing units in their small community, beyond the capacity of their own building projects. A small handful of mobile tiny homes, and an available space for hosing them, are an excellent accessory to a cohousing development.              

The placement of mobile tiny homes on residential lots can also facilitate more aggressive owner-occupied property development. One of the primary limiting factors for owner-occupied developers in being able to max-out their allowed zoning density or to fully redevelop an existing house, is the question “where will we live while the house is under construction,” and the financial consideration of paying rent for an alternate living space.  While paying rent for another place to live over the duration of construction may make the remodel project not financially viable, being able to place a mobile structure onsite can be more economical. Many may consider the possibility of renting or buying an RV, but Tiny Homes are often superior to RVs in energy performance, aesthetic appearance, indoor air quality, livability, and durability over time.

Describing Bellingham’s “Efficiency Special”:
A dignified, healthy & livable housing unit that maximizes building cost per square foot and energy efficiency.

TC Legends offers a 900 square foot footprint, two-story home as a cost-effective option for maximizing building cost and energy efficiency. Part of what makes the home both energy efficient and economical to build is the use of the SIPS product – “structurally insulated panels” made up of rigid foam insulation sandwiched between sheets of plywood – that makes up the wall assembly, usually paired with timber frame style construction. Not only do SIPs panels offer high thermal performance and insulation value, but they also enable considerable cost savings in labor on the time required to construct standard 2×4 framing with insulation and sheathing onsite. TC Legends’ basic design features a steep roof peak with vaulted ceilings, spacious interiors, high-quality finishes, high-efficiency appliances, and net-zero building performance. This basic architectural shape can be seen popping up in neighborhoods all over Bellingham. Most frequently seen as a detached single-family home with a wrap-around porch, there are also occurrences that could be presumed to be a stacked duplex or an apartment over a garage or workshop. This form also shows up in older homes, often with a kitchen/laundry addition or an attached garage.

1,000 Square Feet, Two-Story, Simple Gable

Across all detached housing types, the overall building cost per square foot increases under 1,000 square feet for detached residential structures. This is due in part to increased ratios of surface area to interior space, but it is primarily due to the hard costs of: earth moving and foundation work, lateral sewer hookups and electrical service, and interior plumbing fixtures and heating appliances. These hard costs are a high value opportunity for public funding and energy efficiency subsidies.

Describing the “Co-Housing Manor” as a cost savings tactic over comparable multifamily structures  

Builders did identify several opportunities for potential cost savings from particularly high costs imposed under international building codes. These cost savings are achieved through an architectural vocabulary of shared spaces and shared utilities. Consider a typical four-plex apartment building, compared to a large single-family home of the same footprint and size. The four-plex multifamily structure will be required to have firewalls between each unit, separate utility meters, and additional code requirements associated with health and safety for independent and unassociated households to occupy each unit. But a comparable single-family home built to accommodate a similar number of people is only required to have one utility meter, and only enough sound insulation between interior sections as to provide privacy to the occupants. Similarly, a single-family home being creatively converted into a duplex or multiple attached units may face fewer upfront code requirements and/or lower overall project costs compared to the construction of new multifamily structures. Establishing a clearly defined architectural form and building code for a co-living house, as a cluster of semi-private suites arranged around generous shared communal spaces, may offer opportunities for building cost savings that would otherwise be unacceptable compromises to health and safety requirements for multifamily buildings.

Jason Wheeler with Instinct Builders proposed creating a design standard for a “co-housing manor” that is an equivalent building size and occupancy to a fourplex apartment building, with shared communal spaced and co-housing ownership structures. This is one place where the rigor of health and safety requirements in the international building code might be piling on unnecessary cost requirements. On the one hand, a fourplex apartment building that is going to be rented by independent, unrelated households should absolutely follow energy code in installing firewalls, separate energy meters, and other health and safety measures as required by building code. On the other hand, an existing single-family home being converted into separate units or installing an attached accessory unit may not be required to implement these measures. Among the residential contractors interviewed, all reported booming business of remodels to increase living space or add extra bathrooms to existing homes, but a relatively slow update of homeowners building permitted accessory dwelling units.

Beyond cost savings in building and structural codes, co-living offers cost savings in shared appliances, such as laundry machines, and it allows pooled investment in higher-quality commercial appliances. One current co-living rental household reports that 2 and ½ bathrooms serves six single working adults very satisfactorily without overcrowding. And, while a co-living ‘manor’ house that is a collection of individual suites might have a kitchenette or wet-bar in each unit, they can also afford to install a central household kitchen with commercial quality appliances and set-up for shared meals and collaborative food preparation. When operated as a self-owned co-op, this type of household can also have greater DIY labor resources for landscape and building maintenance.

Homeowners

What are the primary barriers to producing affordable housing units in the context of urban infill development?
What are opportunities for partnership and coordination between existing programs, non-profits, homeowners, and property developers?

In my conversations with homeowners, various essential topics emerged, underscoring the challenges and innovative adaptations within Bellingham’s housing landscape. Participants discussed the need for programming supporting affordable infill, the impact of permitting and code regulations, and the value of do-it-yourself (DIY) labor in small-scale property development. Additionally, themes around creating entry-level homeownership opportunities, the cost per square foot in building, and the utilization and occupancy of accessory units were prevalent. Notably, a pervasive culture of fear around informal structures and unpermitted housing arrangements impacted the dialogue, revealing underlying complexities in housing arrangements and code enforcement. These insights emphasize the multifaceted nature of housing dynamics and the pressing need for balanced regulations that cater to diverse homeowner needs while ensuring safety, equity, and meaningful housing security for renters.

  • Unpermitted dADU Rental – single family home, dADU new build. 50% DIY Labor, DIY Project management.
  • Unpermitted Duplex Rental – single-family home converted to duplex with major remodel/update of existing. Originally owner-occupied in one duplex unit, with 2nd unit rented. Owners later purchased a second property and moved there, both units in duplex now operated as market rentals.
  • Unpermitted dADU Garage Conversion – single family home with unpermitted conversion of existing detached garage into ADU, visions for further infill development pending multifamily re-zone.
  • Alderwood Infill Co-Housing/Incremental Development in Progress– single family home with double lot, completed infill to build new 2,000 sf home on vacant lot (TC Legends Builder). New home is currently rented, homeowners occupy original house and hosting a tiny house. Homeowners have plans to further develop property into urban farm and clustered housing community.
  • Birchwood Infill Visions – single family home, no current adu or rental space, but very large lot and a family/friend who needs housing – would like to purchase a mobile tiny house to park on existing lot, visions for future infill development pending policy reforms/re-zone.
  • 100 Acre Wood ADU Rental – single family home with permitted attached garage conversion to aADU, below-market rental (by choice/ethics), KCLT board member
  • Columbia, KCLT Home – Being a CLT homeowner has been overall excellent homeownership experience but is frustrated with barriers to accessing accrued home equity to pay for needed home maintenance and repairs. Land Trust homeowners in Bellingham are unable to access equity/HELOC loans to pay for needed repair and maintenance. Discussed visions for potential infill development pending policy reforms/re-zone
  • Birchwood Co-Living – large ½ acre lot with existing primary dwelling, unpermitted structures, mobile structures, desire to convert to private co-op/cluster housing. One housemate is property owner, but would prefer to convert to co-ownership of housing co-op, frustrated with lack of mortgage and financial products to support this.
  • Sunnyland ADU for Elder Parents – single family house with permitted ADU detached garage conversion to housing for elder parents, mostly DIY labor
  • Goshen Co-Living – rural acreage with a spacious 6 bd home, several unpermitted structures, mobile structures, operated as a co-living collective. One housemate is the property owner but would prefer to convert to co-ownership as housing co-op, frustrated with lack of mortgage and financial products to support this.
Finding a Culture of Fear

Several homeowner participants agreed to sign a consent form giving permission to use their names in this research. There were also several participants who were only willing to participate on the condition of anonymity, and several more who declined to participate at all, specifically because of their concern about compromising the security of existing illegal or informal structures and building uses. Because of the overall atmosphere of fear that I observed amongst homeowner participants, I have decided to anonymize all content and input from interviews in this stakeholder category. One specific group that I hoped to interview is homeowners who purchased their home as tenants-in-common with friends; however, between the logistics of scheduling limitations and sentiments of fear regarding unpermitted structures, I was unable to interview any such households.

Bicycling through neighborhoods and alleys of Bellingham, one can spot obviously illegal, unpermitted, and outright prohibited structural forms scattered throughout the city. While it would no doubt be illuminating to this research, I was not comfortable conducting a windshield survey to document this, especially considering the atmosphere of fear I encountered when recruiting participants. A large portion of Bellingham households depend upon informal housing arrangements, illegal housing units, backyard sheds, and unregistered and unpermitted accessory units. It is common for a detached structure to be converted into an unpermitted dADU, or just a spare bedroom to extend the living space of a single-family home. A 10 ft by 12 ft ‘utility shed’ is the largest unpermitted structure a household is allowed to construct under Bellingham Municipal Code, and one can see a growing proliferation of 10 ft by 12 ft structures in covert use as additional bedrooms, with occupants using bathroom and kitchen facilities in the primary dwelling. One common characteristic is the fact that these structures do not have bathrooms or kitchens, but they extend the total living space of the household. The benefit provided by these “detached bedrooms” is the autonomy and privacy of having a separate space, while supporting relational housing arrangements for co-living. It is also a practice that seeks to cope with the mismatch between available housing inventory and current household demographics. This use strategy occurs primarily in relational housing arrangements – groups of friends, family and chosen family making the most of limited resources. Many of these households fall under the BMC household definition of a “Boarding or Rooming House”, but most would prefer to define themselves as informal Co-Housing or Co-Living arrangements. The term “Boarding House” currently defined in Bellingham Municipal Code implies a detached and transactional context that most renters find to be a distasteful and bleak housing arrangement.

One primary frustration expressed by several households interviewed was the city’s overall hostility towards tiny homes placed on single family properties. The city operates its code enforcement on a complaint-based system – meaning that households that can install a tiny home in a manner that is aesthetically pleasing to their neighbors, or at least hidden from view, might “get away” with hosting a tiny home. At the same time, a household hosting a tiny home that for one reason or the other triggers complaints from neighbors, might find itself in the unfortunate position of having to evict tenants that they would otherwise choose to continue hosting. The subsequent impact being that the tiny home tenants have to find a new housing arrangement and are likely forced to search for a host property somewhere outside city limits, increasing their commuting and transportation distances. The hosting household loses the opportunity for supplemental rent income. Complaints about the seemingly arbitrary and capricious impacts experienced under the current complaint-driven system was a primary topic in interviews with homeowner participants. Another frustration homeowner participants reported was the double-standard that it would be considered legal (or at least, not a code violation) to convert an existing detached garage into a living space to be rented out to a tenant, but it would be illegal to have a tiny home of comparable or better construction quality parked on a property within the exact same use and footprint.

The business of illegal dwelling units and unregistered rentals

In addition to 10 x 12 “sheds” in covert use as accessory bedrooms, there is a proliferation of illegal dwelling units in Bellingham – defined under Bellingham Municipal Code as “any unpermitted residence within a building or a portion of a building that includes sleeping, sanitation, and cooking facilities”. These illegal dwelling units run the gamut between basement or attic units, existing detached garages converted into one-room studios, and new structures permitted as a garage or utility structure with interior spaces finished into an apartment unit without an ADU permit. For homeowners with the skills and knowledge to be their own general contractors – meaning they manage the overall project design and permitting themselves, hire each specialty contractor directly rather than paying one contractor to run the whole project, and perform portions of the construction labor themselves – overall project costs were reported at nearly 1/3 the cost of turn-key construction services for a comparable permitted structure. Considering that the bottom end of the market to build a safe, healthy, and livable housing unit is around $300/sq ft from most contractors and developers (separate from land value and retail markups), it is significant that small-scale DIY homeowner/developers can produce housing units at around $100/sq ft in out-of-pocket costs. It should be noted that a major portion of these cost savings occur in the form the of the homeowner’s DIY labor, the value of which is most easily realized by charging market rate or close to market rate rent for the units. DIY ADU builders do have far more flexibility to make these units available to friends and family at steeply discounted rental rates, or to negotiate work-trade rent with tenants who are able to perform property maintenance. Two of the couples I interviewed were retired. Most homeowners who had completed a DIY ADU build were married couples with dual income that allowed one partner to take time off work to conduct the bulk of the project work.

These illegal and informal dwelling units and rentals fulfill an essential market function in the form of adaptive re-use of outdated architecture and providing affordable rental units to middle-income households. Moreover, illegal dwelling units play a crucial role in facilitating multi-generational households, creating opportunities for working family members to extend housing support to parents, elder family members, adult children, or disabled family members. As a result, they serve as a vital component of our housing landscape, addressing the diverse needs of our communities.

While the cost savings associated with an unpermitted and/or DIY dwelling unit can translate to discounted below market rent, it may also translate to greater housing insecurity for tenants. As reported by the Bellingham Tenant’s Union and supported by survey results discussed below, the homeowners of these informal rental units are the most likely to discriminate in selecting tenants, place behavioral restrictions on tenants with regards to property use and access, evict tenants in favor of friends and family in need, or simply select the first applicant with the highest income. These informal forms of housing arrangements are the most successful when there is a strong relational bond between the landlord and the tenant, or group of tenants. Otherwise, renters report best outcomes when the landlord is fully committed to operating the unit as a legal rental and chooses to follow established best practices with regards to landlord tenant laws. In the case of illegal and unregistered rental units, the rental tenants are exposed to far greater risk than the property owner. According to reports from renters and tenants, small holding rental property owners need to be regulated just as much as large holding property owners and large multifamily properties.

In conclusion, there is a pressing need to streamline and simplify the permitting process for remodels and additional dwelling units, and to facilitate cooperative and co-living households’ ability to engage in adaptive re-use of single-family properties. Simultaneously, it is imperative that robust regulations and policy interventions are put in place to ensure that small-scale landlords, particularly those with ADUs, adhere to safe and equitable business practices. Striking this balance will contribute to more inclusive and sustainable housing options for our communities.

Key Findings & Summary

Barriers to Housing Development

  • PERMITTING: Time that the permitting process adds to overall project timeline, as well as the level of plan detail required to be submitted for building permits.
  • BUILD COSTS: All builders are struggling to produce housing units at prices that are affordable to low- and middle-income households and also pay their staff and crew a high enough wage to afford local housing prices.
  • PLUMBING: Cost of lateral sewer connections, and the $7,000 fee to upgrade a water meter for additional fixtures.
  • FIRE SAFETY/Large Vehicle Utility Services: Fire safety requirements such as sprinkler systems and turnaround access for large fire/ambulance/garbage vehicles often add such high costs and physical space requirements to projects that infill development cannot be built, especially for owner-occupied infill projects.
  • ENERGY CODE: As energy efficiency requirements for homes are increased, overall housing construction costs are also increased. For these increased efficiency requirements to be equitable, they must be paired with funding for low-income housing development.
  • ZONING/CODE: Zoning and Municipal Code definitions do not reflect adaptive re-use or the housing forms that residents want to build.
  • FINANCING: Lack of access to mortgage and finance options for co-buying and multi-party land ownership.

Why Aren’t We Building More Middle Housing?

  • Existing municipal code limits opportunities for single family homes to be converted into multifamily, co-housing, cottage court, and other forms of co-operative shared housing.
  • Most residential zones where infill is needed are dominated by owner-occupied single-family homes. Current municipal code and affordable housing incentives prioritize industrial, commercial-scale development practices that require a property to be purchased, fully re-developed, and the re-sold to new occupants. These funding programs are not accessible to small-scale developers or owner-occupied infill development.
  • As a structure type, middle housing does not fit into housing developers’ standard business models and does not offer a high enough return on investment compared to building types currently being constructed.
  • Federally backed mortgage products still prioritize single family homes and individual or nuclear family home buyers. These mortgage products exclude all forms of co-buying and co-operative ownership, which are key tactics for existing community members to develop middle housing typologies for themselves to live in.

Affordability and Access

  • According to reports from renters and tenants, small holding rental property owners need to be regulated just as much as large holding property owners and large multifamily properties.
  • While shared housing and co-living has been an informal tactic for adult households to create affordable housing for decades, this practice has been largely ignored and marginalized by mainstream real estate and financial institutions, as well as municipal zoning and land use policies.

In conducting stakeholder interviews for this research, I mapped out relevant government bodies, non-profits, and community associations, initiating conversations with diverse stakeholders. Insights from planning staff, subject matter experts, and community land trusts illuminated critical housing policy structures and collaborative strategies. Advocacy groups and community organizations highlighted pressing concerns surrounding housing access, renters’ rights, and regulatory reforms. Engaging with stakeholders from real estate, finance, and construction sectors revealed challenges such as permitting barriers, escalating construction costs, and zoning limitations hindering affordable housing development. Homeowner perspectives underscored the need for programming supporting owner-occupied infill and balanced regulations catering to diverse housing needs. Key findings emphasize the urgency of addressing permitting complexities, building costs, and zoning constraints to foster inclusive and sustainable housing initiatives in Bellingham. The primary way to make Middle Housing more economically viable is for it to be developed by and for the people who are planning to live there, and to incentivize the conversion of existing single-family properties into middle housing types.

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