Lakewood has approved construction of Additional Dwelling Units (ADUs) that are up to 1400 square feet large, bigger than the original house in some areas, in an effort to “remove barriers” to affordability. ADUs are sometimes known as “mother-in-law” suites, a separate apartment that can be rented out on your primary residence. Councilor Stewart made the original request to research increasing ADU use in Lakewood, over a year before the motion passed on June 10, 2024. The two main barriers are the concept of single-family zoning (R1 vs R2) and infrastructure costs. By passing these revisions, Lakewood has densified single-family zoning into dual-family zoning, for every property that can fit an additional dwelling unit onto the land. According to research conducted by the Planning Commission, most people say they do not build an ADU after they find out they would need to pay more for additional water and sewer infrastructure. There seems to be a common belief that because there is room on the land, there should be extra room in the pipes, which is not true. Rather than acknowledge that water districts set those infrastructure fees, Planning Commissioner and Chair Kolkmeier suggested doubling the size of an allowable ADU, from 700 sq. ft. to 1400 sq. ft., so that the infrastructure cost would be a lesser percentage. So overall costs would go up in the name of affordability.

Custom-built ADUs are already expensive compared to commercial apartment buildings that are mass produced. However, an economic analysis of construction costs or rental profits was not researched. Among the ADU proponents, including Councilor Stewart and Shahrezaei, there seemed to be an understanding that someone who went to the expense of building an ADU would be happy to rent the unit at- or below-market price, to a family member or friend.

Others, including Councilor Nystrom and Olver, questioned whether these units would be available for investors, therefore not guaranteeing it would be “affordable”. Nystrom said she was in favor of creating more ownership situations, not rental situations. Olver quoted the real estate mantra “Location location location” and said that creating more supply will not lower housing prices in a desirable location such as Lakewood. Olver’s point has been proved because Lakewood has excess supply yet housing costs have not come down.

Councilor David Rein proposed an amendment to make owner-occupancy required. The motion failed on a 5-5 vote, with the ayes being Councilors Rein, Olver, Nystrom, LaBure and Mayor Strom. The nays were Councilors: Shahrezaei, Low, Mayott-Guerrero, and Sinks. (Councilor Cruz absent).  

Without this amendment, the ADU and property can be used for two, full-time rental properties, making them attractive to investors.

Planning Commission Chair Kolkmeier explained that even though these revisions might not increase ADU construction, our current ordinance strangles growth and our residential development is in a death spiral but did not offer evidence. He argues the changes are one way to bring back families and possibly schools but he did not explain how if he believes the changes would be largely ineffective. No one offered evidence, just beliefs that some kind of change by someone was necessary.

Even though housing may be more expensive with these changes, the goal of “liberalizing” the code was achieved.

Councilor Sinks pointed out that these revisions seem like a work around to getting a property subdivided. The property could not be subdivided for separate ownership. A property with two houses would be much more expensive to sell.

If these changes are successful in increasing ADUs, the Councilors who voted for ADUs will be responsible for increasing property prices.

The other barrier, infrastructure costs, was discussed at some length during Planning Commission and Council meetings. The infrastructure fees are set by water districts individually and are not under city control. Rather than acknowledging this fact, Planning Commission Chair Kolkmeier and Councilor Roger Low enlisted the help of State Representative Chris DeGruy-Kennedy to change state law, asking to restrict a district’s ability to set infrastructure costs. This would make existing customers responsible for paying for necessary capacity increases to accommodate new building. That proposed legislation, HB24-1463, was largely defeated. No one at the state or city level explained, or even seemed to know, what the infrastructure fee would pay for, despite explanations available from resident water districts (see below).

Councilor Jacob LaBure picked up the gauntlet of problematic costs by suggesting the creation of a housing fund that the city can use to pay for people’s infrastructure costs. This suggestion was heard before during meetings on Strategic Housing. Lakewood has already subsidized tap fees before through the Community Grant Program.

The State of Colorado also passed new legislation regarding ADUs this year. That bill, HB24-1152, will require that Lakewood remove owner-occupancy provisions. However, as a home-rule city, Lakewood always has the option to challenge state law for the right to local government.  As Lakewood attorney Lauren Stanec said, “if the city decided they wanted to comply with the state ADU bill….”, presumably meaning that as a home-rule city, Lakewood always has the option to fight for its right to local government. The city could remove the owner-occupancy provision now. Lakewood did not, and passed all changes as originally proposed by the Planning commission.

Scorecard: Expanding Additional Dwelling Unit Possibilities in all R1 zones

Strom: Aye

Olver: Nay

Mayott-Guerrero: Aye

Stewart: Aye

Rein: Aye

Shahrezaei: Aye

Labure: Aye

Nystrom: Nay

Low: Aye

Cruz: absent

Sinks: Aye