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- [00:00]
Rachel
Hi, it's Rachel here, program director at Strong Towns. I'm popping in to invite you to our upcoming Locomotive Training sessions, a series of live workshops or you can watch the recordings afterwards. Focused on equipping advocates with the tools they need to make their places stronger, these workshops take place every Thursday at 12pm Central starting September 12th and ending October 31st. Join for one session or pick up a round trip ticket to attend them all. We're covering everything from getting kids to school more safely to investing in housing that strengthens neighborhoods without pushing people out, to building third places through Tactical Urbanism. And we've got a whole range of guest speakers coming at you from organizations like Better Block Blue Zones, Incremental Development alliance and more. Plus, every session includes a featured Strongtown staff speaker. You can hear from Carly, Chuck, Norm, Ed, so many cool people. So join me on this tour by grabbing a ticket today@strongtowns.org local motive. Tickets are $25 for a single session or 1,25 for all eight sessions in the round trip, plus a couple extra bonuses. And all of that cost goes to supporting the Strong Towns mission, educating local advocates like you to make your cities and towns more resilient. Also, members get that cool member discount. So head to strungtowns.org locomotive to get your ticket today. Thank you so much.
- [01:32]
Abby Newsham
This is Abby and you are listening to Upzoned. Hey everyone, thanks for listening to another episode of Upzoned, a show where we take a big story from the news each week that touches the Strong Town's conversation and we upzone it, we talk about it in depth. I'm Abby Newsham, a planner in Kansas City and today I am joined by my friend John Anderson, who is a builder and developer out of the Atlanta, Georgia region. John, welcome. Thanks for joining.
- [02:11]
John Anderson
Well, thanks for Abby.
- [02:12]
Abby Newsham
I'm a big fan, so thank you very much. I was hoping since this is the first time you've been on this show if you could maybe tell listeners a little bit about yourself and what your background is from like the point of being electrician and small scale developer and all the things that you have been involved with.
- [02:32]
John Anderson
I didn't end up here on any kind of a straight track. I started out in the trades, ended up actually drafting in an architect's office after a job site accident was part of my rehab and then from there I went to work for contractors and development project owners and the like. Kind of always a bigger project to bigger project and particularly working for owners that they have a business and they need to build or renovate a building and it's like the, it'll be the only time they do it for the next 10 years. So the. So a lot of owners rep and project management for them. And eventually I stumbled into a gig as one of the project managers for a big mall developer doing the Mall of America in Minneapolis. So I did that for four years. And during that time I was living in a little Sears and Roebuck house in a streetcar expansion of St. Paul. And so, you know, five days a week I would get my little car and I would drive through every successive generation of development until I got to, you know, 4 million square feet of retail at the intersection of two freeways by the airport. And after a day of, of retail development, I would reverse the process. And I was active on the neighborhood CDC and the like. So when I. We finally got done with that project, I hung out of Shangol and started doing just contract project management. And one of my clients was a fellow who was doing infill townhouses in Minneapolis. And just before he went to the second gathering of the cnu, the Congress for the New Urbanism. So he came back from that and said we need to start a town planning company. And I said, because I just met a guy who's going to move to the Twin Cities from, and used to work for dpz. And I said what's a town planning company and who are dpz? You know, and so Dwani Gliders, Eiber. So, so we ended up doing that. He was the developer, I was the builder, and Rich McLaughlin, our partner was the design, urban design guy. And we worked on a bunch of counter projects in and around the Twin Cities while I, I maintained a day job at the Minnesota dot, did three years there. It was not a good fit as you might imagine. And so started working on working with builders on small infill projects in the Carolinas and Texas and Florida and ended up moving out to California to kind of work on in Northern California to Chico, which is a college town, kind of a blue dot in a red county to find a place to do a project on the ground, take it all the way through. So I was there for 15 years until 2008. And since then I've lived a couple years in Albuquerque and a couple years in Portland. And we came here in 2019 and we're able to kind of poke around in the Atlanta area for a year before COVID landed on us. So, but also from. I was real active with the Incremental Development alliance from the formation in 2015 until basically until Covid. And these days I've got a Facebook page. It's a private group where called Neighborhood Development and there's a lot of good questions being posted there. The, the culture is pretty good. There's nobody trolling or creating problems and there are a lot of, A lot of people, you know, with. In some ways we see a lot of the same questions again and again from different people. And often there's somebody who had. That was going through that same problem a year ago. And so the. You can just see these folks would. They would crawl across broken glass to help somebody avoid their learning curve. The. And so it's a, it's a good resource and I've done a lot of site planning and pro formas and stuff for kind of emerging developers as they go from. They. They do their first project, maybe a renovation or an ADU and then they want to tackle maybe a cottage court or something.
- [07:28]
Abby Newsham
So yeah, that Facebook group, I've been a member of it for a few years now called Neighborhood Development and it is one of the best resources. I mean there's so many forums and questions, many of which come up a lot and it's a great place to just hear other people's experiences in different parts of the country. I think last time I checked there was several thousand.
- [07:52]
John Anderson
Yes, like 10,000. Well there's 10,000. 10,000 people in it, but there's about three or 400 that are like actively very active.
- [08:00]
Abby Newsham
Yeah. And you can search it and I mean I've searched it before for certain topics and so you can get a lot of really good like real insight about the feasibility of different projects and experiences people have had.
- [08:16]
John Anderson
Well and I, to this day my, my finger wagging pet peeve is that someone will take the trouble to post a drawing or a site plan or something and then there'll be 12 text posts describing what ought to be done differently or have you considered. And I'm like just print it out or put it on your ipod and draw a sketch. You know, like it's going to communicate a lot better. And there are some folks that, that just is just not on their, in their wheelhouse or not comfortable with it or whatever. But it's pretty clear that even the most crude grid paper sketch does a lot better than painting a word picture about. Well I think that I can do this as a flag lot and keep the existing building and then there's an alley and it's like so you got everybody that's. That's reading it basically either drawing that in their mind or maybe on a post it note next to their computer. So you may as well just put up a, put up a drawing.
- [09:17]
Abby Newsham
So yeah, take a picture of it or something. Put it up totally well. So today we're going to be talking about a topic that I think is kind of interesting. I don't think that I ever covered it on here. So this is an article that was published in BBC by Roan Bridge entitled Can selling off homes for $1 solve urban bl? So what I didn't realize is that urban or dollar home programs had been around for quite a while. They were first piloted in Baltimore through the leadership of their former housing director Jay Brody in 1976. That program ended in the 1980s. But many cities, including my own city of Kansas City, have implemented similar dollar home programs as a way of putting blighted property back into use. And in fact, this has spread internationally. Liverpool had begun their own program some decades ago and similar schemes have been introduced in other countries like Spain and Italy. And so now Baltimore is coming full circle. They're relaunching a dollar home program as part of a broader initiative to address urban blight. The catch is that individuals must live in the city. They must reside in the property for five years, and they must be able to show that they have $90,000 for renovation. And we can talk about what that might mean. I don't really know the details of how you prove that. Alternatively, nonprofits can buy these houses, I believe for a dollar. So Community Land Trust could buy a house and rehab it for profit. Developers can also participate, but they can buy the properties for $3,000, which might be a good deal depending on what the land value is in these areas. But that's, that's the gist kind of the overview of this program. And John, as a builder, developer, someone who has experience with development finance, I'm curious if you've come across programs like this, if you've ever participated in any. And what kind of your initial thoughts are on, on this, what's being presented here in this article?
- [11:30]
John Anderson
Well, I think the dollar house programs often are operated in the shadow of blight demolition programs where these houses aren't quite as bad. But you know, we've scheduled 40 houses in this neighborhood to be demoed because they're in bad shape. And sometimes the dollar house program is a, it's a good piece of theater for the folks in the neighborhood that are kind of asking the obvious question, can't some of these houses be saved? Some years ago I was in Detroit and you could see like one or two houses for three or four blocks surrounded by, you know, waving grass fields and deer crossing the street. So we get to the point where you only have a few, few buildings standing. That's, that's a rough place to start doing new work because sometimes the demolition wasn't done competently. There's still a, underneath the, the BlackBerry bushes, there's a foundation still or a fuel oil tank or God knows what, or you know, the house burned and fell into the foundation and that mound of, of weeds that's growing over it kind of hides that. So you might have 10 or $20,000 to get that back to kind of just a regular finished lot. And how committed a municipality is to redevelopment using dollar houses is usually reflected in who they have staff. It. This is a great place for someone who drives their boss crazy. You know, just a total maverick black sheep. Their days are numbered and in on the public sector side or they're going to become a planning director someday because they're, they're that good. But if you've got folks in the planning department that have been kind of clerking zoning applications and writing staff reports and the like, this is a very different thing. And so the, and if you don't know anything about housing finance and, or you haven't bought a house yourself, so you haven't even met through the process of getting a mortgage for a house that's in great shape. So if you have a fairly junior person who doesn't know their way around on it, some houses might get renovated. But I think you miss the opportunity to think about this not as one here, one there, but to think about the revitalization project if you can think about it at the scale of the entire neighborhood instead of the individual building. And there's a lot of discretionary capital budget money floating around every municipality. Never enough to do all the sidewalks and handicap ramps all at once. But you know, if you just say, okay, well these four blocks that have seven houses on them, we will do handicap ramps and we'll repair the sidewalks that have been heaved up by the trees and we'll would replace the trees are in bad shape or have been butchered by the power company with new street trees. So that's something that municipality is doing already somewhere in town. So just to kind of redirect that kind of energy there. But, but to look at like if, if this could be a catalyst and rather than folks who have their financial house in order to the point where they've got $90,000 in some places you just have, you have some cash and you have a commitment letter, a pre approval level letter for maybe a purchase rehab loan from FHA, Fannie Mae or Freddie Mac or VA. So you've got the, you've got money to do $90,000 worth of work or the promise of getting some from a lender. But this is often really attractive to well intentioned, optimistic young folks in their 20s and early 30s. And if my own experience being in my 20s and 30s is any indication, that part of my life was defined by not knowing what I didn't know, but doing stuff anyway and learning hard lessons.
- [16:23]
Abby Newsham
So yeah, to me this seems like a perfect program for somebody who is young and optimistic. Although, I mean, I'm young and optimistic, I, I might be interested in something like this, but I also think that it would be good for cities to be thinking about technical support for people who may have no background in this. And you know, just thinking about the alt alternative. If this is kind of a program that's operated in the shadow of, of blight demolition programs, as you said, how much does it cost to demo a house? Maybe $50,000. I wonder if.
- [17:05]
John Anderson
No, it's typically 10 to 20, depending on.
- [17:08]
Abby Newsham
10 to 20. Okay, so what if, what if the city were to take that 10 to 20 and put it in as a grant as part of that 90,000 that's needed or apply it in some way that can help to make this more of a catalyst program and provide financial support so that people can get the loans that they need in order to participate in a program like this or maybe technical support as well?
- [17:33]
John Anderson
Well, I think that if you kind of line out, this is a little bit like a development project where you, you have an idea and you talk to some people that say they might be interested in investing in that project. Could you give us a little more detail than this napkin sketch you have? Sure. We'll meet again. I'm glad you're interested. So you kind of work both ends against the middle and you look at, in some ways I don't think it's a good idea to take money that's set up for demolition and redirected into this because I think you can find other money. Because if a city has that demo budget in the system already, there's probably houses that are too far gone that need to be demoed, that they're, they go out and do all those and still not have enough money to do that because the, because once the roof goes then things are going to be a problem. Trying to Bring that house back. But imagine if you had maybe at a local cdc, housing authority or whatever the, that wanted to put together a hub for a cohort of people that were going to do dollar houses. So you have a support group and people that you can have adult beverages with and ask for help and tell war stories, right? These would be people that you would know for the next 10 years. You know, you having a common experience. And I think also for that cohort to be welcoming to other folks in the neighborhood that they inherited their mom's house. But the titles really jammed up because it had been adhered by from family member to family member. So they can't get a loan to rehab it, but they don't have enough cash to do it. So. And the whole process is really intimidating because they've never done renovation, you know, so I mean, there are folks like that in my neighborhood and a lot of that work gets done because there's a, a church group that has a large contingent of drywall contractors in it. You know, the, so I think the, you could do a lot of things with that group that has as its main mission the technical assistance and support for folks that are doing the dollar houses. And a lot of CDCs have renovation, are tapping into renovation money to be able to deliver houses at an affordable level for sale. But I think the, if you can, and one of the, one of the other problems is that a lot of banks won't even write a mortgage for less than $80,000. So if somebody already has a house and has a bunch of equity in it, then, you know, they could move that equity into the dollar house and do the work and sell the previous house. But that's kind of a bank shot. Those folks might do better just to build an ADU in their backyard. That's still an adventure. But to look at some down payment assistance. There are resources like the Fannie Mae Community Express, which is a loan program intended to be operated for. The loan comes to the housing authority, the cdc, the city, the, the church group or whatever that's going to take on these sort of projects. If you could do a, what's called a soft second where it's say you had $20,000 for due diligence and sorting out. Do you have to do foundation repairs or the like? Or to that you could allocate some of your CDC's budget for Janine, the structural engineer, master's student who can, you know, work part time and help do an assessment of the, of the houses that are there or local architecture. So you get basically every dollar house has kind of a medical chart that hangs on the foot of the bed. It's like, oh, yeah, well, your cholesterol is off the charts and you might lose that leg. And you know, so, but so that you don't have a parade of individuals and couples going through the house trying to figure out what's wrong with it and not. And that very strong sense of I don't know what, I don't know about this.
- [22:33]
Abby Newsham
Exactly. That actually makes a ton of sense. If somebody's participating in a program like this for, you know, a city to do a little bit of due diligence on, on the behalf of the people who are about to take on this project to help guide them in a direction that doesn't waste money.
- [22:52]
John Anderson
Well, and you're, that's why, you know, one step removed either, you know, Housing authority, Community development Corporation, faith based group, Land Bank. Because the, this is, this is not the sort of thing that people took a job at the city to do. You know, in a lot of ways I have a good friend who kind of divides the world into people that are reality managers and people that are reality shapers. And you typically need both. But something like this, you would need, you need to weight your team heavily with people that kind of see what's going on on the ground and can imagine what could happen and rally the troops to make it happen and support the earnest but less experienced people that are taking the risk to participate. But things like a tool library, the, A bookkeeper that helps you with the construction draw. And I think also you need a fair amount of network and gossip to find out, you know, where can I find a plumber? I only have this one house. I don't have 80 units for this person to work on. And when I done with this one house, I don't have any more work for the plumber. So you can sort of imagine what plumber would be available. It's basically someone who's in someone else's extended family or they went to high school with somebody or, you know, you need a personal connection to get on that person's calendar. The. In my, my, my, my plumber retired without passing his business on. So I'm in a position right now where I'm going to need a plumber in a couple of months and I have no idea what I'm going to do because we have a big shortage of people in the construction trades all over the country right now because there was no work for five years during the Great Recession.
- [25:00]
Abby Newsham
Yeah. And Calling a big company for a little house like this may not make any sense.
- [25:06]
John Anderson
No. And basically you'll end up feeling really discouraged about the decision you made to buy this house or you're going to try to. You're going to watch 76 YouTube videos about, about plumbing.
- [25:20]
Abby Newsham
Right. Become a plumber yourself.
- [25:24]
John Anderson
Yeah. And then, you know, and acquire the specialized tools necessary and then you're done, hopefully. Yeah. Well, no, it's like you've, you could, you know, you put them up on Facebook, Marketplace or whatever. Yeah, that's actually a good place to pick up used tools. Things like table saws and chop saws.
- [25:43]
Abby Newsham
Yeah.
- [25:43]
John Anderson
People did one, one project and now they're done.
- [25:47]
Abby Newsham
Absolutely.
- [25:48]
John Anderson
But to have a tool library, to have a web repository for people that are shooting video of their work, to have somebody that's good with social media to help, kind of. I think it comes slightly competitive where you could have people in the cohort that are trying to outdo each other about how much work gets done and how many TikTok posts went up.
- [26:18]
Abby Newsham
So, yeah, I think that there's definitely a way to make this kind of fun and social and I'm sure there, that there would be people interested in doing that if they were to participate in a program like this to actually collaborate and work with other people who are involved. I know if I bought a dollar home and I was working on this project, I would love to be able to meet with all of the other people working on a dollar home once a month at a, you know, coffee shop or somewhere where everyone can get a beer and talk about what they're doing. You can trade plumbers, you could trade information. I think that would be really valuable.
- [26:57]
John Anderson
Well, also to, to, to be able to, to walk through houses at various stages of work. It's like, okay, we have gutted this house. We've removed all of the plaster in the lath and let's walk through the house and see what we've learned. Now that, you know, it's been gutted and then a couple weeks later, we've got plumbing and electrical roughed in. So if you're just about to start filling a dumpster with plaster and lath, you know, it's a little intimidating the first time you haul a couple of, you know, 50 gallon trash cans out the door and dump them into the dumpster, it just feels like this is going to on forever.
- [27:39]
Abby Newsham
Yeah, totally.
- [27:40]
John Anderson
Not that I'm bitter, but, you know.
- [27:43]
Abby Newsham
Well, hey, I did want to ask you what your thoughts are on the financing even needed to start a program like this. Not everybody has $90 in equity in an existing house that they own or $90 in cash just on hand that they could use. They probably need to get some kind of home renovation loan on a house that is worth $1 and may not comp for $90 when it's done or $90,000 rather. So what are your thoughts there?
- [28:17]
John Anderson
Well, FHA, Fannie Mae and Freddie Mac all have what are called purchase rehab loans and they'll lend you. Well, the lowest down payment is 3.5% from FHA and they'll lend you what would that be? 96.5% of the finished value of the house. Right. So the, and the FHA's that that program is the oldest and most encumbered with barnacles and nonsense. It, it takes a long time to get an FHA purchase rehab loan underwritten. And the way that they're chartered, progress payments have to be reviewed by an FHA certified compliance consultant. And the fees that are paid that are, that are part of their charter to pay that are really low. So sometimes you can be waiting 3, 4 weeks to finally get someone to sign off on your pay application. In the meantime your plumber is waiting to get paid. So his enthusiasm to work on another one of these FHA loans is not going to be very high. So the other, beyond the underwriting issue and the kind of the construction draw issues with the FHA program, their regular mortgage is called the 203 parenthesis B. That's the regular 30 year FHA. The 203K is the purchase rehab and the 203H is for disaster recovery. So I'm just learning about that lately. So if you're the 203k has only a couple of advantages. The slightly lower down payment than the 5% down you'd see at Freddie Mac or Fannie Mae, the VA loan is zero down. But the fact that you have to get because you're doing less than 20% down, you, you have to do private mortgage insurance, PMI and you can't fha, you have to maintain that private mortgage insurance for the life of the loan. The only way you get out of that payment is to refinance. Whereas with the Freddie and Fannie programs, once you get to 20% equity and the appraiser agrees with you, you can cancel the PMI without having to refinance. So the, and both of those Fannie and Freddie have three and a half percent down programs that are geographically limited areas that have been underserved for a long time. So dollar houses might qualify for those. So the, so I would personally, I would only do an FHA loan after maybe a close head injury or, or a substance abuse problem. I would not recommend doing it because these other loans are more readily available.
- [31:33]
Abby Newsham
Yeah, there's other alternatives.
- [31:35]
John Anderson
Yep. So the. Now all of these agency loans that are federally insured are good for one to four units plus a certain amount of non residential. So for somebody that's a little more seasoned to do more than just one dwelling unit in the house, or it's a big house and you're one person and you could turn that house into a duplex and house hack and basically live rent free. So that could be pretty great. Imagine what kind of financial stability you would have if you didn't have to write a big rent check or a big mortgage check every month.
- [32:17]
Abby Newsham
Totally.
- [32:18]
John Anderson
You might be more interested in going out on your own than staying with the planning firm you're with now.
- [32:23]
Abby Newsham
Yeah, right. Yeah, it's, it definitely occurs to me, at least in Kansas City, when I see houses that are, you know, on the dangerous buildings list, a lot of them are humongous houses. And to entice somebody to buy it for a dollar and live there, maybe they're a young single person. It makes a lot of sense if you can invest that money and make it a duplex or even a house with an internal adu, which is basically a duplex, a sneaky duplex or, or a triplex. It would be great to be able to convert these buildings into multiple units if it makes sense so that that person who's getting a dollar house can actually build a lot more wealth than just owning the house as an individual.
- [33:10]
John Anderson
Well, and for someone, you know, let's say that somebody has a reliable W2 job, but they don't make much money. They're, they're elementary school teacher. Right. They don't make enough money to qualify for a loan to buy a house in great shape. If you were to do a purchase rehab loan that will let you do a duplex, the, the underwriting will allow you to use 75% of the gross rent for the one you're not living in to toward your income to qualify for the loan. So you know, if you're a single person and you have like the big two or three bedroom unit and then the little one bedroom unit and you live in the little one bedroom unit, the income coming off of the other is going to be to your advantage. But with all three of these, the fha, Fannie and Freddie loans, they've modified them last year so that in addition to renovating an existing building, you could add onto it, or you could build an ADU in the backyard if local zoning supports it. So if you have focused the creative juices of the municipality and the elected officials and local neighborhood groups and such toward this is going to be a pilot project place where we know some of these buildings are going to go to duplexes. And we have a special pilot project overlay that will allow them to have two freestanding ADUs in the backyard. So now a total of four units. So for someone who's already done at least one renovation or some new construction, to be able to bring in folks that are would be the equivalent of teaching assistants or mentors within the cohort. So you don't just have, like, someone who's not doing any work as sort of an administrative or, you know, a guide. You also have people that are doing work at a little higher level and probably have better access to plumbers and the like. So the. So if there were, let's just say there was a soft second, which is a second mortgage, which you do not make any interest, it doesn't accrue interest, and you're not making any payments on it. But it burns off incrementally over 10, 12, 15 years, but due on sale if you leave in five. So the idea is that if that were. And it's a demonstration, just kind of a partnership where the granting agency recognizes that if this, if we're incentivizing you to do this work and then stay in the neighborhood, there are a lot of benefits that come from that. But we understand that if you take a job and you want to take a job in Des Moines and you have to sell the house and leave that, the remaining balance that hasn't been burned off year by year can be recovered. Now, in that kind of situation, there's often kind of a push pull on the part of the municipality or maybe a. A foundation that's providing the money, they might want to say, okay, yes, we're going to provide this money, but if you're doing more than one unit, then we want that second unit to be affordable. So now you're like, okay, well, are we going one step forward and two step back? Can I. Will there. Will the rent be high enough at this level of affordability to be able to support the work that's necessary to create the second unit? Because if you can't get the rent, you shouldn't build the building, as a general rule of thumb. So I was looking at, and usually affordability is measured against the area median income. Right. So for Kansas City, both Kansas City, Missouri, and Kansas City, Kansas, that metro area, the median income at 100% would be $72,000 for one person household and 82,000 for two people. Now, 80% of that area median income is 56,000 for one and 65 for two. And the idea is that we're going to use the metric developed by Herbert hoover in the 30s that you shouldn't be spending more than 30% of your income on housing, which these days a lot of people consider that. Well, that's just adorable. You know, it's like we spend half our money on our housing or more, or we spend 40% on housing and we're willing to spend a little more because it lets us operate with just one vehicle or something or car light. So at 80% and 30% spend on your household, divide by 12 months. For one bedroom with one person in it, that's a $1,400 rent. And for two people, that's $1,600. So it would be for the purposes, for kind of the administrative purposes of make them affordable. I was looking at, you know, apartments.com for Kansas City, and $1,400 is market rate for a garden apartment that's been repainted but not renovated. So the. So to have a newly renovated apartment at fourteen hundred dollars, I don't think you have a problem finding those folks that only make $56,000. So I think that you can deliver affordability to folks that are in a position to rent, and you can provide affordability for the person renovating the house because they have this additional income. And you're expanding kind of the skill base of people who know what to do with old houses that need a lot of work. All those purchase rehab loans are set up so that you are. You have to occupy that house for a minimum of one year. Now you are eligible to get another. You can only have one FHA loan, just like you can only have one Veterans Administration loan. But there is not a. There's not a practical limit on. You could have two or three or five Fannie Mae or Freddie Mac loans. So again, if you're young and enterprising and addicted to plaster dust, you. You could, you know, you could move every 18 months.
- [40:25]
Abby Newsham
Hey, that's a strategy.
- [40:27]
John Anderson
Yeah. Well, the. And if, if what'll end up happening is the. After you do that twice, you probably be looking at, you know, I could do 4 units plus 35% non residential so I could have my office. There's also a strategy that we talk a lot about on the neighborhood development group called a guest suite. And this is something that happens in my neighborhood where we have a lot of 700-900s square foot little worker cottages. Because from this neighborhood you could walk to the foundry, the ice plant, the railroad. It's like a quarter to half mile away. So we have a lot of these little houses and you can get a use permit to build an ADU, but maximum 800 square feet or half the size of your principal house, whichever is less. So what folks are doing is they will add on a wing. So it's a two bedroom, one bath, 700 square foot house. They'll add on a, you know, six or 700 foot wing that is a really nice kind of primary suite with a big bathroom with room for a stack washer and, and a bedroom and a sitting area and a little porch with a direct door to outside. And the door that goes into the house is for some reason locked all the time and has a couple of IKEA bookshelves up against it. So the as that is, you haven't created a duplex because you haven't created a second kitchen with permanent cooking facilities.
- [42:22]
Abby Newsham
Yeah, it's like a kitchenette.
- [42:24]
John Anderson
Well, it's a heck of a wet bar.
- [42:26]
Abby Newsham
Yeah.
- [42:27]
John Anderson
So the, a stove or a cooktop mounted in a counter or a wall oven. Those are all considered permanent cooking facilities. A George Foreman grill and a coffee pot and a microwave and an air fryer and you know, those are all things you can unplug and you know, put in the trunk of your car. So the. But again, there's some discretion on the part of the building official about whether or not it's like no, you've got all this counter and you got a sink and you have a dishwasher. I think you're making this a kitchen. Well, no, I have no permit. Well, yeah, but I'm not signing off. So they do have some discretion. So you might want to set it up basically as kind of the master suite or primary suite and then add the sink later. Or you put this, you put the sink outside of the bathroom like in a hotel room and you just don't have a sink in the bathroom. It's usually the sink that triggers the kind of the. Hey, wait a minute.
- [43:36]
Abby Newsham
But like what is this? Exactly?
- [43:38]
John Anderson
Yeah, so. So that's somebody's basically studio apartment or even one bedroom apartment with their own door to the outside. It's not a duplex. So they won't have their own utility meters. So you'd be providing, you know, electric and water and everything to them.
- [43:57]
Abby Newsham
Yeah, yeah, it's a true guest suite.
- [44:00]
John Anderson
Yeah. But also that the, that what was a 700 square foot is now 1400ft and is now a three bedroom, two bath, newly renovated. So its appraisal value is going to be up. Yeah, but now you got 1400ft. Half the size of that is 700. So that's a pretty good size adu that you can build now. So that's what's going on around here.
- [44:23]
Abby Newsham
Yeah, that's a very cool idea. Now we're running out of time, but I did want to ask you one more thing about how cities might be able to be more proactive about avoiding getting to this state. I mean obviously this is a situation where houses have deteriorated over many, many years, probably for all kinds of different reasons. Do you think that there are ideas or ways that cities should be thinking about this proactively so that they're not reviving another dollar home scheme in another 20, 30 years from now?
- [44:59]
John Anderson
If you have a land bank, not a land, not a community land trust, but just a land bank and their job is to, to take care of vacant property and get it back on the tax rolls if they have the working capital necessary to put a new roof on a house to keep it from. Once there's a problem with the roof, say a tree hits it, now there's a hole in the roof. And now that you know you're two years away from demoing that house, you know, but for five to seven grand you might be able to either repair or replace the roof. And if you have four or five roofing contractors kind of in your set, a land bank could stabilize board up roof repair. And also that's a good time to do things like inventorying. Are there cracks in the foundation? Is the sewer that you would be connecting to in the middle of the street is that clay pipe that's been crushed five years ago. All the things that, that are going to need attention and that's kind of the first. They could be like the emergency room to write up that chart that's going to hang on the bottom of your bed after surgery. So you could preserve buildings fairly inexpensively. You could operate a learn your trade, apprenticeship, internship program and you can keep things stabilized and you're out in the community and you're spreading the word. And if you're going to be launching a dollar house program, you're on the ground more as opposed to looking at a map in your office. So I would say land banks are well established for that because they could end up with properties that if they're well positioned, end up selling and generating revenue for the land bank. Usually they're basically stopgap measures that are kind of holding back the tide of stuff. And I've seen some land banks that are in no hurry to get rid of their inventory because their budget depends on how much inventory they have.
- [47:20]
Abby Newsham
That's terrible.
- [47:22]
John Anderson
Well, it's. You end up with folks that are incentivized to do the wrong thing if they don't see a bigger picture.
- [47:28]
Abby Newsham
Absolutely.
- [47:29]
John Anderson
I know this is coming as a surprise that sometimes people take jobs where they don't see the reason why they're supposed to see the bigger picture. Because every time you try that you get punished. So, you know.
- [47:42]
Abby Newsham
Yeah, yeah, absolutely. Well, John, I really appreciate your time, you taking the time to join me today and talk about this. It's been a lot of really good information and I hope that you'll do it again.
- [47:56]
John Anderson
Sure. Take care.
- [47:58]
Abby Newsham
Yeah, take care. Thank you. And thanks everyone for listening to another episode of Upzone. See you next time tonight.