Accessory Apartments – Montpelier

Case Studies

Accessory Apartments – Montpelier

Community overview

Nestled along the banks of the Winooski River, Montpelier’s downtown is a compact, bustling center of activity.  Historic neighborhoods spread out from the downtown, with homes of varying sizes on mostly small lots.  With the Winooski River running through downtown and mountains on all sides, Montpelier is always on the lookout for creative new ways to add to its housing options.  One of the best strategies for a compact community is the development of accessory apartments, which add new housing within the footprint of existing buildings.

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Montpelier’s accessory apartment bylaw language

Vermont state statute (24 VSA §4412) limits the authority of municipalities to regulate accessory apartments.  The intent of this law is to increase the number of affordable homes available by ensuring that homeowners who wish to turn a portion of their home into an apartment are allowed to do so.  In compliance with state law, the City of Montpelier has incorporated language into its zoning bylaw that makes accessory apartments a permitted use if certain conditions are met.

In Montpelier, accessory apartments can occupy up to 40 percent of an existing  single-family home.  Alternatively, they can be located in an existing accessory building.  The bylaw exempts houses with accessory units from “lot area per dwelling unit” requirements, which makes it possible even for a home that is on a very small lot to build an accessory apartment so long as the overall size of the building remains the same.

In 2006, the city went beyond the requirements of the law and began actively promoting the creation of accessory apartments with a grant program called “One More Home.”  This program offered interested homeowners grants of up to $4,000 to offset the cost of architectural fees, engineering work, and other “soft” expenses associated with converting a part of their home into an accessory apartment.  The city also made available zero-interest deferred-repayment loans of up to $4,000 for construction costs and up to $1,000 for sprinkler systems, both from a city revolving loan fund.

As part of the program, the city developed an “Accessory Apartment Handbook” for interested homeowners.  This handbook outlined the process for creating an accessory apartment and included a variety of resources for interested homeowners.  Its goal was to make more housing units available in the city at a reasonable cost by helping homeowners turn “extra space into extra cash.”

By the time the One More Home program wrapped up in early 2009, a total of five new accessory apartments had been created in Montpelier, all of them with assistance from the program.  (Two other property owners got grants to assess the possiblity of creating accessory apartments, but ultimately decided not to proceed with construction.)  As a condition of the program, the units created were required to meet state affordability guidelines for at least five years.

Lessons Learned

  • Soft costs — permit fees, architectural design, and the like — are a relatively small part of the costs typically associated with building an accessory apartment.  Therefore, a community that sets up a grant program like Montpelier’s should consider offering interested property owners the option of using grant money for hard costs (actual construction) so as to make the incentive program more financially attractive.
  • Zero interest loans whose repayment is deferred until the property is sold or transferred are much less expensive to make available than grants, but are nearly as effective at getting accessory apartments built.  Municipalities that are considering using financial incentives to promote the creation of accessory apartments should err on the side of putting more money into a revolving loan fund and less into outright grants.
  • Many units that, from a commonsense perspective, ought to be eligible for a program of this sort in fact are not if the program is limited to “accessory apartments.”  Broadening eligibility to include, for example, the addition of a third unit to a duplex would result in more opportunities for housing creation than would a program focused strictly on accessory apartments.

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