South Orange Village officials held a virtual Town Hall on Wednesday to encourage more residents to consider adding Accessory Dwelling Units on their property, saying that the Village is evaluating the feasibility of providing some short-term tax incentives to offset the cost for those who build them.
The Village has had an ordinance permitting ADUs for nearly three years, but only seven residents have applied for permits with only three ADUs having been built so far, so officials wanted to provide information, answer questions and extoll the benefits of ADUs to the community.
“Building of Accessory Dwelling Units is relatively a new phenomenon,” said South Orange Mayor Sheena Collum. “In New Jersey, South Orange is one of a handful of communities that have actually adopted an Accessory Dwelling Unit ordinance. Other towns include Asbury Park, our neighboring towns of Maplewood, Montclair. And so we’re doing this [Town Hall] really because … we’re not seeing the type of production that we would love to see throughout South Orange.”
The Village presented its case for ADUs with a slideshow outlining the benefits: ADUs diversify a community’s housing stock with small scale buildings that don’t change a neighborhood’s character; create housing opportunities for seniors to remain in their home or reside in an ADU; create access to housing for broader socioeconomic groups; repurpose existing accessory structures for more usable space; increase property value; and increase tax revenue for the Village.
Director of Planning and Zoning Greer Patras walked the audience through the application process for a zoning permit and the overall process of building an ADU, as well as the range of construction costs for structures that have been converted into ADUs in town so far — $59,000 to $220,000 with an average construction cost of $116,000, not including fees or architectural designs. And she reminded people that what they should also take into consideration if they plan on living in it, having a family member live in it or renting it, is the typical rent for a one-bedroom in town.
But when it comes to renting them out, no short term rentals or AirBnB rentals are allowed and 90 days is the minimum time an ADU can be rented for.
Collum said that the ADU ordinance was created as part of the Village’s mission as “an age-friendly community,” noting that AARP is a “real champion of this issue.”
Beyond that, she said, not only are ADUs a practical solution that “promotes aging in place, reduces isolation and supports multi-generational living,” they also create access to housing for broader socioeconomic groups.
“ADUs can open doors for people who otherwise couldn’t afford to live in a high cost community, such as South Orange, whether that’s a Seton Hall student, a young adult starting their career, a local teacher, a municipal employee or someone transitioning through life changes,” she said. “These smaller units tend to naturally be more affordable simply because of their size.”
Resident Wendy Lewis asked about how improving one’s property with an ADU impacts property taxes, saying that she would be interested in building an ADU, but only if there are tax incentives.
“The idea of [taxes] being any higher — I can see how that can end up sort of neutralizing a lot of folks,” Lewis said.
The average property tax increase for those three properties with ADUs is $2,869 a year (the range being from $1,000 to $3,870, and Petras and Collum both said the Village is looking into the feasibility creating tax incentives for residents to build ADUs.
Petras also encouraged those interested to consider the market value of the rental income from an ADU or the rental savings if a family member resides in it.
“If we’re really talking about aging people or even family situations where there may be a disability, those kind of things, it doesn’t mean that the person who’s going to occupy that space is going to be in a position to create a revenue,” Lewis said. “And if we’re really talking about making things more affordable, the assumption should not be that that’s going to really increase the revenue. Therefore, someone like myself making this investment, it’ll just be more cost.”
Collum said one of the ideas they’ve thinking about for incentives is “offering kind of a five-year tax abatement that we would do that steps up each year recognizing the upfront costs that you’re putting into this investment and you’re helping us achieve a goal that we want community-wise in the overall housing production and different types of housing that we offer.”
Resident Dan Dietrich said the construction costs have derailed his plans for an ADU that would replace an old barn on his property. He said he has been going through the process, spending $2,000 on a topographical survey and $20,000 on architectural plans, but the estimates he’s received for construction, including tearing down the barn, have come in around $500,000 making it cost prohibitive.
“Now, mine’s a standalone project. I’m taking down a decrepit barn that I couldn’t possibly reuse and putting up a building that my wife and I want to be able to live in. And that’s the key. I’m not trying to build the cheapest building out there. I am building an energy-efficient, environmentally responsible building, which is part of my core belief and part of the way my wife and I live,” he said. “I simply can’t do it. I mean, my budget was around $350,000.”
Collum thanked him for sharing his costs and estimates, saying that construction costs are what the Village is hearing is the biggest barrier across the state.
The creation of South Orange’s ADU ordinance was part of the community master plan process, which included participation by thousands of residents, Collum said.
“One big component of our master plan was housing production and diversity of housing production. So, at the time when ADU discussions were happening at the State House and at local levels to talk about affordability and more ways of adding housing stock, this was at the forefront.”
And for some, Collum said, the rental income generated by an ADU can be used to offset rising property taxes or mortgage costs. “It’s also worth noting that this can help long-term residents remain in our communities, despite the increased cost of living — something we all hear about very regularly.”
For the municipality, she said, ADUs “modestly, and I mean, very modestly, expand the tax base without requiring large expansion of infrastructure services It’s very incremental, but across multiple properties, it becomes more meaningful.”
Council member, Jen Greenberg, a real estate broker in town, walked the audience through the interior of one of the three recently completed ADUs, with the help of a video created by the owner. She noted where it once had space for cars and personal storage, it now features an open kitchen and living space and stairs leading to the bedroom and the bathroom.
“A reminder that the tenant of an ADU does not need to be a family member. It can be rented to whoever you’d like,” she said. “Many other communities that allow ADUs require some familiar relationship like a mother-in-law suite, but that’s not the case here in South Orange.”
Petras mentioned that people in town who are already using existing carriage houses should submit an application and have it become a legal ADU.
“If you have a non-permitted illegally existing structure, you are subject to fines and violations. We don’t want to be at that point. We want this to be permissive, and we want everyone to live in the best and safest units.”
Council member Steve Schnall, who advocated for the ADU ordinance and hosted the Town Hall, said Village leaders are proud of the ordinance and of being among the minority of communities in the country that allow ADUs. “We were, quite frankly, a little surprised that more people have not applied.,” he said. “Now, granted, it’s only been a few years since we passed the ordinance, but the intention. once again, comes back to, I believe, the culture of South Orange and how we run and try to set policies. We’re a culture of inclusiveness, and I think we were looking to enable our community to have as many alternative options as possible, within reason, that would work for our entire community.”
