Advocates caution ADU building costs can be high as Chicago considers expanding 'granny flat' pilot program

Beth Malloy’s social pod at the height of the pandemic was her son and daughter-in-law. Their bi-weekly visits were a much-needed respite from her feelings of isolation until the young couple shared that they wanted to move, possibly further away to the suburbs.

Malloy was living alone in a recently rehabbed condo in Goose Island. Her son, Zach, and daughter-in-law, also named Beth, were her only family in Chicago.

“They were kind of my fly into the world,” she said. “And they were young. So they kind of keep you young, in some ways.”

When the couple started searching for their first home, Malloy was eager to offer a solution that could benefit everyone: Finding a house where they could construct an accessory dwelling unit so Malloy could live independently but still close to offer support as they started a family.

Malloy, a Microsoft sales lead who also served as chief information officer for former Mayor Richard M. Daley’s administration, was closely watching the city’s debate over ADUs, sometimes called granny flats. In December 2020, the Chicago City Council passed the additional dwelling unit ordinance — lifting a more than 60-year ban on ADUs in the city.

The family soon closed on a Wicker Park home with a detached garage in April 2021.

The plan was to build a second-story apartment above the garage, Malloy said. Due to fortification issues with the garage, adding a second floor wasn’t possible without major structural and mechanical work. The result was a unit she calls “The Snug,” a 520-square-foot coach house stacked on top of a newly constructed two-car garage.

“It’s like living in an upscale hotel suite,” Malloy said.

Under the pilot program, the construction of ADUs such as coach houses and in-law apartments are allowed in five zones as long as they meet certain building and safety requirements. Now the pilot program could be expanded citywide this year — to the delight of housing advocates and real estate professionals.

Proponents say an expansion would combat the city's affordable housing shortage and add density to neighborhoods as the city grows. And the proposal to ease restrictions on an ADU's size could make building them more affordable for homeowners. It would give property owners a chance to make extra income by renting the dwellings or allow for multi-generational living like with Malloy.

As of July 3, the city's Department of Housing issued 596 pre-approvals for ADUs. The number of ADU building permits, filed after a property owner receives an approval, is 251 with the latest permit issued June 20, according to data from real estate information service Chicago Cityscape, which sorts through city permit records. It also reported that an overwhelming majority of permits were in the North and Northwest pilot zones.

Constructing a coach house

Malloy said she likes to be on the “cutting edge” of things in life, something reflected in the modern design of her ADU. It's also why she wanted to be one of the first to build under the city’s pilot program.

She wanted something special that didn’t feel like an old-school granny flat.

“I wanted it to feel very elegant, and because it's small I wanted it to feel kind of peaceful in some ways,” Malloy said. “I needed it to be kind of stripped down and streamlined.”

Malloy worked with the architecture firm Via Chicago Architects + Diseñadores, based in Chicago and Panama, and interior designer Anne Rezac.

Via owner and architect Cristina Gallo is a fervent supporter of the city’s ADU pilot program, and expressed her support of its expansion last month at a zoning committee meeting.

Gallo said Mallory's ADU was a success, but if it was constructed based on the guidelines of the proposed expanded program, the firm could’ve built Mallory a larger unit.

Under the pilot program, ADUs can't exceed 700 square feet or encroach on more than 60% of a property’s required rear setback. Depending on a lot's size, Gallo said the setback restriction can make things difficult — even cost prohibitive — and that's why Malloy’s unit couldn’t be more than 520 square feet.

“The program was advertised as a means to bring more affordable units,” Gallo said. “After designing a few coach houses for clients that truly wanted to bring for-rent units, more affordable units to Logan Square, Humboldt Park … it was just too high.”

Malloy’s initial construction budget was $350,000. But with new construction costs like landscaping added in, The Snug cost nearly $700,000 to build. Furniture was an additional cost.

Monica Chadha, founder and principal architect of Civic Projects Architecture in Chicago, has had similar frustrations. She’s worked on projects where the setback requirement restricted an ADU's size, making the project too expensive for property owners to pursue.

In many cases, the small footprint of an ADU raises the price per square foot, and fast.

“It's so unequal,” Chadha said. “You can't get your return on investment on a 325-square-foot construction. Even renting it out … you can't make the payoff of the original cost.”

Creating ‘the same opportunities’

The expanded ADU program was proposed by acting zoning committee chair and Ald. Bennett Lawson (44th). It would bring several changes to the pilot program such as dropping the 700-square-foot cap on coach houses. It would also require a primary residence on the lot before an ADU could be developed. The program awaits an approval by the Committee on Zoning, Landmarks and Building Standards.

Chadha said dropping the square footage cap would be “huge.”

“The square footage obviously limits how many people can live there, and [how] you can live comfortably ... that's where that cost per square footage comes back in,” she said. “The ability to have more flexibility in the units would be great so I could accommodate a variety of family structures and living styles.”

If the 700-square-foot cap is removed, construction still would have to comply with other limitations, such as the setback restrictions. That means exceeding 700 square feet would mostly happen on oversized lots, Patrick Murphey, first deputy for the Department of Planning and Development, said during a zoning committee meeting last month.

Ald. Pat Dowell (3rd) supports the expanded program but had expressed uncertainty over the cost challenges during a zoning committee meeting in June.

She told the Sun-Times that the ADU program could help address the affordable housing crisis. In Chicago, there’s a 120,000-unit shortage of affordable housing, the Sun-Times previously reported.

But Dowell wants to see a companion ordinance with financial incentives for those on the South and West sides. She said she’s expressed her concerns to the committee chair and the Department of Housing.

Chadha has seen a lot of interest in ADUs in the Far South Side. She’s had potential clients contact her about building an ADU only to find out that they’re not in a pilot zone.

“If you look at the geography of them, it's really not well distributed throughout the city,” Chadha said. “It's just not providing the same opportunities for people in every neighborhood.”

All in the family

The program is a great way to add gentle density across the city, Gallo said. ADUs are able to add housing without changing the neighborhood context, according to a June presentation from the Department of Housing.

Ald. Daniel La Spata (1st) said while the pilot program isn't the only tool to add housing, expanding it could be a powerful one to help address the affordable housing crisis.

“We have the potential to create thousands of units of housing without actually building new buildings,” he said.

Malloy said her coach house cost twice as much as she planned, but it was worth it. She was able to move in days before the birth of her granddaughter, Rosie.

Now, Malloy gets to see her granddaughter every day.

“Every day I think, ‘This is a really good life,’’’ Malloy said.