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Essentials of Land Leasing for Owners

Why lease out your land? 

The challenge is that we are very short on housing for working families.  One reason is that when land becomes available private developers often focus on the “highest and best use” which around here often means building $400,000 condos for retirees.

The problem is that our essential workers, in healthcare, education, public safety, and manufacturing, cannot find affordable housing.  This limits everyone’s ability to prosper in our fair valley, employees have a hard time saving or take jobs elsewhere while employers struggle to hire the staff they need.

We have lots of land, but many landowners (families, churches, fraternal organizations, and businesses) do not want to sell their land even if they don’t want to develop it in the near future.  Leasing lets the owner own and a developer build with lower upfront costs.

Benefits to the landowner

  • Retain ownership and future appreciation of land
  • Regular income
  • Avoid capital gains that a sale might trigger
  • Little to no upfront costs to create cash flow
  • Can support the community by making land available for a great cause

Benefits to the community

  • More housing faster with lower upfront costs
  • Secures the land for the life of the building
  • More people willing to lease than to sell
  • Prime locations become more accessible – walkability and transit are key

How does it work?

  • Most land leases are quite straightforward and last 60+ years
  • Owner agrees to allow the developer to use the property to build and operate housing for upto 99 years
  • All zoning rules and regular escrow processes are followed

Land Lease Essentials

Ground leases have been particularly popular in Hawaii and in Agriculture

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Accessory Dwelling Unit

What is an ADU?

ADU is short for Accessory Dwelling Unit.  It can be accessory to detached single-family homes, townhouses, manufactured homes and duplex dwellings on their own lot.

Examples of ADU’s

Jump to your town’s ADU rules: MedfordPhoenixTalentAshland Central PointJackson County

If you are a professional homebuilder, see this set of ideas.

Why ADUs are important for you and your community

  • Creates more housing density at lower costs within the Urban Growth Boundaries that maintain our wide open spaces for ag and wildlife.  
  • Serves people and places according to AARP by creating attainable housing for elders and people starting out.
  • Supports aging in place, generational wealth building, and housing for extended family or friends.
  • Adds affordable “missing middle” housing options in a moment of critical shortage/ opportunity.  Missing middle is everything from ADUs to 8 unit complexes. 
  • Generates income – what does a 1 bedroom unit rent for in your area?
  • Increases property values 25% to 34%. A 2012  study from Portland.
  • Accelerates mortgage payoff at a time when 24% of Oregon homeowners are mortgage burdened and of that 9% are severely cost burdened- Oregon Center for Public Policy
  • Reduces the need for cars and increases walking, biking, and transit use.

How an ADU could work for you

  • ADUs are extremely valuable when it’s time to sell your home. 
    • Studies show that ADUs can increase property values and make homes more desirable to potential buyers, especially those interested in aging-in-place.
  • Estimate your gains using this handy calculator.  Scroll down the calculator to adjust assumptions. Or try this calculator.

Here’s Derek Sherrell, local ADU developer who offers a lot of great advice and encouragement to anyone interested in ADUs. 

See more tips from Derek, That ADU Guy, on YouTube and on his website.

Pre-approved ADU Plans

Here’s Carlos Delgado, the architect who designed the ADU plans pre approved in the city of Medford talking about his approach to ADUs.

When ADUs might not work

  • Zoning  restrictions – most single family lots can now include an ADU
  • Not enough space on your lot – buildable area of your lot, set backs, etc.
  • Access to utilities is expensive – is there enough slope for the sewer line?
  • Upfront costs of planning and permits
  • Financing ADU’s can be tricky – check with your banker
  • The form of your existing house  may not make an attached ADU easy – attached ADU example

Check with your local community development staff before you give up on the ADU idea. More info below

How to get started

Here’s Kristen Maze, Director of Community Development at the City of Talent helping you think about preparing to apply for permits to build an ADU.

Trying to Make the Complex Simpler

This process is NOT simple. We are trying to help you get started, but know that there are many options and potential roadblocks along the way.  But, as Derek says, the hard work is definitely worth it!

Lots of good materials on these websites:

A Few Key Details About ADUs In Your Area

This is only a few key pieces of a much larger puzzle.  Check with your local planning department, their contact information is at the top of this table. On your phone, click on the phone number to dial it.

Click to jump to your town: MedfordPhoenixTalentCentral PointJackson County

Ashland

Planning department contact information

ADUs are allowed in zones

R-1, R-1-3.5, RR, WR, R-2, R-3, NN, NM

Setbacks and coverage ratios

Set back and coverage ratios vary for different zones. Find the requirements for your zone here.

Other rules

Just a start here, look at more info links for the complete picture

Off-street parking is NOT required

Accessory Residential Units (ARU) and in the Single-Family Residential Zones (R-1-5/R-1-7.5 & R-1-10) ARUs require a Conditional Use Permit.

More info here

Link to building permits

Permits, Forms, & Fees

Central Point

Planning department contact information

541-664-3321

stephanie.holtey@centralpointoregon.gov

ADUs are allowed in zones

R-L, R-1, R-2
LMR, MMR, HM

Setbacks and coverage ratios

Rear Yard Setback: 5 ft
800 sq ft or 50% of the gross floor area of the primary dwelling, whichever is less

Other rules

– just a start here, look at more info links for the complete picture

Off street parking is NOT required.
Separate utility connections are not required

More info here

Link to building permits

Permits

Medford

Planning department contact information

541-774-2380

planning@cityofmedford.org

ADUs are allowed in zones

MFR-30, MFR-20, MFR-15, SFR-10, SFR-6, SFR-4, SFR-2

Setbacks and coverage ratios

Up to 75% of the primary dwelling’s Gross Habitable Floor Area (GHFA)
Detached ADUs cannot be larger than 900 sq. ft.; attached ADUs converted from existing space in the primary home cannot be larger than 50% of the primary dwelling

Other rules

– just a start here, look at more info links for the complete picture

Off street parking is NOT required

More Info here

Link to building permits

Applying for a permit
ADU Fee Waiver

Phoenix

Planning department contact information

ADUs are allowed in zones

R-1

Setbacks and coverage ratios

Maximum lot coverage 40%
Minimum lot size 6,000sqft

Other rules

– just a start here, look at more info links for the complete picture

Off street parking is NOT required

More info here

Link to building permits

Building permit information here

Talent

Planning department contact information

ADUs are allowed in zones

RLD, RMD, RHD, RMH, CN

Setbacks and coverage ratios

Not to exceed 800 square feet of floor area, or 75 percent of the primary dwelling’s floor area, whichever is smaller.

Other rules

– just a start here, look at more info links for the complete picture

Off street parking is NOT required
More info here

Link to building permits

Permits

Jackson County

Planning department contact information

ADUs are allowed in zones

Unlikely outside the UGB, White City allows ADUs.

Rural areas are unlikely to allow ADUs. That is under review in the state wildfire risk map that is to be completed in Fall 2022.

Depends on your zoning because the County considers an ADU a separate dwelling on the lot.

See question 2 in their FAQs

Setbacks and coverage ratios

Depends on your zoning.

Other rules

Consult with planners at the County.

Link to building permits

Checklist

Permits

Fees

How to finance your ADU construction

  • Local banks you currently work with – equity line of credit, cash out refinance, etc.
  • Craft3 ADU finance program
  • In Portland, some developers who lease your land and build an ADU for you
  • There is a lot of useful data around cost assumptions and financing options in this document from Santa Cruz County in California.  Of course, our fees are different, but many of the construction cost estimates, financing options, etc. are still useful.

Oregon State ADU Code

Oregon Statue on Accessory Dwelling Units in Rural Residential Areas

ADUs are an important way to fill in the missing middle in our housing supply.

A fun tiny house village in Portland. h/t buildinganadu.com

What Home Builders Can Do to Simplify Later ADU Development

Professional home builders can make ADU development much easier by planning ahead. This video offers a few good ideas.

One creative idea for affordable homes with ADUs is for builders to build the ADU first and sell the large lot with its approved larger home site left for future development.  This allows buyers to get started on homeownership more easily while they can look forward to building their larger home once they have built equity in their starter home.

Other Ways to Encourage Missing Middle Development

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Expand Access to Spanish Adult Literacy Project

R3V has been honored to help facilitate a conversation among community partners seeking to expand opportunities for Spanish-speaking adults to gain basic literacy and numeracy skills to improve their work prospects.

The goal is to create a feeder system to expansion of Head Start’s LISTO family literacy program.

Partners

  • LISTO program of Head Start
  • OnTrack
  • Rogue Community College
  • Southern Oregon University
  • Jackson County Library Services
  • LINC
  • Reimagine And Rebuild Rogue Valley

Video courtesy of LISTO

Our Approach

Here is a set of slides that summarizes our thinking so far.

Next Steps

  • Create a structure to allow interested students to connect with local tutors in an accessible, engaging, and encouraging way.
  • Collect a list of resources for students and tutors in their first steps towards greater literacy
  • Support the expansion of LISTO’s INEA primary and secondary education offerings to meet current need
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Find Land For Affordable and Attainable Housing

Goal

To work as a community to connect with land owners who might be interested in making To support mission-driven landowners (faith-based organizations, governments, educational institutions, business, etc.) in thoughtfully pursuing affordable and attainable housing development on their properties.

Context

As we know, the fires of 2020 destroyed nearly 1,700 affordable and attainable homes in Phoenix and Talent.  Private developers are meeting market demand for nice, new homes, but are  not building enough housing for our essential workers and those in lower earning periods of their lives.  Front line and middle managers, seniors, young couples, and those who cannot work. 

The Opportunity

Reimagine & Rebuild Rogue Valley and the Long Term Recovery Group can help support landowners’ planning for the use of surplus lands and facilitate conversations between landowners and mission driven developers willing to create more housing. We can also convene Community conversations and support of opportunities to develop more housing built into the greenway and traffic growth management projects as well

Our Approach

Our goal now is to begin conversations with people who own land and want to make a difference in their community, whether by selling, leasing, or donating the land into a mission-driven development opportunity. Here is a presentation of an approach we have developed based on best practices developed by MHCH’s congregational lands program in Pasadena, CA. Here’s a video explaining their program (starts at the substantive part)

To Get Started

We need to build two teams to support our land availability work. First, we need a team of local leaders who can connect with landowners and teach them about the need for housing and their potential role in solutions. Second, we need a team of technical experts to support landowners in thinking through their values and how housing development might further their goals.

  • Pro Housing Leaders – Build a group of pro housing community leaders who can connect with landowners – congregations, businesses, government entities, schools, and private citizens.
  • Technical Experts – Engage a team of volunteer local real estate and building experts to support landowners in thinking about how they might develop their land in service of their enlightened self interest.

Once the team is assembled, they will support the

Development Process

  • Support development of a clear vision for landowners and how a request for proposals can further their goals
  • Facilitate the collaboration of landowners and developers through a process that meets everyone’s needs with win/win/win solutions for landowners, developers, and the community

Here’s an illustration of how this process unfolds. Our teams will work as coordinators across the entire development process.

Click on this image or the link below for full explanation of how this program works.

Click here or on the image above to view the slide presentation

Types of development envisioned

The goal is permanent, owner-occupied housing wherever possible, not transitional housing.

  • Starter homes for sale
  • Cottage clusters
  • Duplexes to Quads
  • Multifamily apartments
  • Cooperatively owned mobile home parks

Ideal land characteristics

  • Inside urban growth boundary
  • 1 acre and larger
  • Zoned multifamily residential, commercial, religious, or single family residential
  • Near transit

Land owners of particular interest

We believe that mainline denomination faith-based organizations could align with both shared values and ownership of available land.

Long time landowners who have not sold out of a sense of stewardship for the land and our community could also be interested.

How you can help

  • Reach out and join our team as a Pro Housing Leader or a Technical Expert
  • Think of anyone in your circles who may own land and has a heart for this community and begin the conversation. We are happy to join the discussion as early as you feel comfortable.

If you have someone in mind

  • Show them this page and ask them if they would be willing to discuss making the land available for this type of development.
  • Begin a conversation to explore their level of interest and the land they might have available.
  • Introduce them to Stephen at R3V to continue the conversation and begin moving towards connecting with mission-driven developers.

Thank you, 

And the R3V Housing Working Group

Find a time on Stephen’s calendar to discuss Land Availability