Author Topic: In Seattle waiting out the invevitable rezoning of SF5000 to smaller lots...  (Read 17506 times)

Mu206Stach

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Hey, new to the forums, hoping find other property owners in Seattle that might have thoughts like my own.

I have a small house on a large lot in a Seattle neighborhood that is currently zoned "single family 5000".  This is a corner lot and the house footprint sits on one side -- there is plenty of room for a second house here -- and in fact -- many lots in the neighborhood are exactly half the size of mine -- and have one house on each lot.

I've always wanted to subdivide the lot, and sell half, and keep the other half, but the city tells me I can not because the resulting lot sizes would be below the 5000 sf minimum -- it doesn't matter than 80% of the lots in the neighborhood are already under that size, they are all grandfathered in because they were established as lots before the sf5000 rule. I've spoken to the city land planning dept a number of times over the years, and spoken to a couple of real estate attorneys, and everybody else I can think of, and looked at all of the known variances, and haven't found any way to divide under today's zoning rules (I'm very close, but just under the required sf size -- and my single neighbor will not sell any of their property to get me over the minimum limit).  I really have no option other than waiting for the day that Seattle realizes it will have to allow more density in order to meet the extreme demand it has for housing.   

Everybody I know in the fields of real estate, urban planning, architecture, Washington state environmental planning, etc, all believe Seattle will eventually get to denser zoning for single family neighborhoods -- it is just a matter of time -- which could still be 10 - 20 years away.

I'm tired of waiting and looking to help jump start the process.  I've been somewhat active in the neighborhood community council, have contacted area bloggers that are pro density, but I still see this being a long battle given the entrenched old time Seattle home owners that love their neighborhoods of extremely large lots and do whatever they can to prevent smaller lots in their 'hood.

Unfortunately, the city also had a recent backlash against developers that were building large & tall houses on tiny lots they were creating by searching through old lot/plat records, and I fear that this sweeping response to that has hurt all short-term effort, for more density in single family neighborhoods.

My one viable option today -- which I'm not a fan of -- is that I could build what the city calls a backyard cottage, and I could then rent that out (or live in it and rent out the main house), but I'm not all that interested in being a landlord.  I'm really interested in just selling half -- pocketing that profit -- and living in a modest house on one of the resulting smaller lots, which in turn would reduce the real-estate portion of my total net worth (and reduce, by half, the size of yard I maintain).

My other thought, is that I could find an investor that wants to own 1/2 of this property, and basically share it -- I get one structure, the investor gets the other -- but this seems very complex and risky.

Curious what other Seattle land/home owners have done or thought of?



 









pdxbator

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Portland is in somewhat a similar situation as Seattle. I think that getting density on smaller lots is a good thing, but I don't think rezoning is going to happen any time in the near future. The backlash against the demolition of older smaller houses and building big houses on lots is going to cause just the opposite. Rezoning to smaller sized lots will be a hot button issue and very few homeowners feel the way I do. I think that density is a great thing in that it makes things more walkable. However with increased density comes more parking problems, etc. and homeowners want to find a space for their car right out front. Good luck in your work though!

Mu206Stach

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Thanks. Portland is awesome by the way, love it there.

Glad you agree.  I suspect many do, but I think many that do are the younger, less established crowd.  Many of the older crowd -- that have owned and lived in these houses for 25+ years -- seem much less interested in it.

From an urban planning perspective though, it makes complete sense, at least to me.  Areas zoned for apartments and condos are fine -- but not everybody wants to live in a condo -- some folks want a yard -- even a small modest yard -- and they want to own the place -- not rent (which is what the backyard cottage trend is all about).

There are some places zoned sf3000, but those are in areas that the city zoned as urban villages a while ago. It is a step in the right direction -- but I think even that took 10 years to get through the city bureaucracy.



babysteps

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Hey, new to the forums, hoping find other property owners in Seattle that might have thoughts like my own.
...
My one viable option today -- which I'm not a fan of -- is that I could build what the city calls a backyard cottage, and I could then rent that out (or live in it and rent out the main house), but I'm not all that interested in being a landlord.  I'm really interested in just selling half -- pocketing that profit -- and living in a modest house on one of the resulting smaller lots, which in turn would reduce the real-estate portion of my total net worth (and reduce, by half, the size of yard I maintain).

My other thought, is that I could find an investor that wants to own 1/2 of this property, and basically share it -- I get one structure, the investor gets the other -- but this seems very complex and risky.

Curious what other Seattle land/home owners have done or thought of?

I don't live in Seattle now, but I grew up there.
Not sure if I would ever call anything zoning-related "inevitable" ;)

some thoughts:

Are you interested in downsizing?  Build the cottage, then sell your home with a long-term lease for yourself in the cottage (could even make it a life tenancy, although most buyers would shy away from that I would guess).  This would both avoid your being a landlord & would drastically reduce the weight of real estate assets in your portfolio (have fun valuing a life tenancy!).

Are "as-is" or "triple net" style leases legal for residential property there? If so, you could build the cottage & lease it to someone "as is" - they do all the maintenance, yard work, etc. on their "part" of your undivided lot, so minimal landlord responsibilities.  Then you could get a mortgage and invest in some non-real estate assets.  If you already have a mortgage, you don't have as much weight in real estate as you think :)  You could even offer the cottage tenant an option or right-of-first refusal on the whole property to encourage them to think like home owners.

What are the regulations for co-op corporations? I know co-ops used to be quite rare in Seattle, but they do exist (my grandparents lived in one in the U district from 1962-1980 or so).  You could create a 2-unit co-op, one share for the cottage and one for the main house.  Even if possible, that's likely more work (and legal fees) than you want.  If condo regulations are quite lax, a 2-unit condo could be an option (in NY, condo's are if anything more difficult to set up than co-ops. in CT, condo's were very easy to set up and lots of people did newbuild duplexes as condo's).

You could move to a home on a smaller lot & sell your existing home - would make most financial sense if you could find someone looking for a home on a larger lot to swap with (saves real estate commissions and, depending on structure, possibly some other transaction costs).

Have fun!

Another Reader

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I can't tell you anything specific about Seattle, but I can tell you a little about land use in similar neighborhoods here in Silicon Valley.

First, If you try to decrease minimum lot size in a single family neighborhood like yours with an eye to subdividing lots like yours, you will stir up a hornet's nest.  Your neighbors will be out in force trying to stop the change.  They are already tired of traffic and parking hassles and they will turn out at every single planning hearing to oppose this.  The only neighborhoods that will be considered for higher density will be infill projects or brownfields.  No serious, organized, voting opposition there.

Second, if you are allowed to build a second unit to rent, do it.  Place the unit in such a way that it maximizes your chances of a lot split if they are ever allowed.  You will likely increase the value of your property well beyond the cost.  Once the neighborhoods see large numbers of these sprouting, they will be down at City Hall, trying to stop it.  We had a few years here where you could build ADU's.  That got stopped as more people did the math and applied to build.  I have a 15,000 sf lot, a three car garage and three driveway parking spaces.  Ideal for an ADU.  There are several people in the subdivision that got in while these units were allowed and are paying a large portion of their mortgages with the rental income.  I'm stopped out.

Don't count on the "inevitability" of any zoning change.  Zoning is driven by politics and money.  Follow those two things to understand what is likely to happen.  Often they are opposed, and the result cannot always be predicted.

Mu206Stach

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Thank you both.

Yes, I am interested in downsizing, at some point (but maybe 5 year away).  I'm also interested in maximizing the return on this property that I've owned for a very long time -- and I think subdividing the land is the best way to do that -- though I'm open to being shown that I'm wrong about that. 

The city council & major and many organizations are in favor of more density.  The detached ADU legislation they passed a few years ago had some opposition from some of the very old affluent neighborhoods -- but they are in the minority in the city, and the legislation passed anyway in spite of a small but fierce opposition.  People around the city are building these.  In fact, the city is doing what it can to encourage these DADUs, and finding that fewer people are applying for permits than they had originally thought would.  They are creating incentives -- such as expedited permit reviews, etc.

I see the DADU route for me as a last resort, mainly because I don't want the hassle of being a landlord and would prefer to avoid the risk & complexity of doing some kind of partnership -- though I have toyed with both ideas.  Also, building a detached ADU would be fairly expensive -- and I'm trying to make money here, not spend more :)

The idea of just selling this place, and buying a place on a smaller lot is one idea, but I don't think I'd realize maximum return on this property that way.  I really think that wold best be achieved by the subdivide.  My thinking is basically this... if I could sell this place today for 500K, a similar place that just happens to be on a smaller lot won't be that much cheaper (in today's market)... maybe 425K.  But with a subdivide -- pretty sure I can get at least 200K for the 2nd lot, and the remaining house & lot would easily be worth 450K (more once I finish the basement which will add 2 more bedrooms and a full bath (converted from a 1/2 bath).  Of course, I'm not accounting for all of the fees & hassle of getting the subdivide through the department of planning, so there would be some expense there. 

I realize politics are what they are, but the city IS inching towards greater density (those in office in our fairly liberal government are all in favor of it), so I feel pretty confident that it is inevitable -- it is just just moving at too slow of a pace and so I'm trying to brainstorm ideas.  I don't want to wait 20 years.

I may just have to try and get more involved in the grass roots politics here.

former player

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Another way forward for you might be to sell subject to a condition that if permission is ever granted to split the lot the increase in valuation, or a proportion of it, goes to you.   The benefit is that you get rid of the hassle of managing a too-large lot but don't lose out on the potential financial uplift if the zoning change does ever happen.  You would need to see a lawyer about getting the right phrasing on the condition (you need to have the point at which the condition crystalises nailed down, and also the means for assessing the increase in value) and ensuring that it can be enforced.

Another Reader

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Look at what the politicians do, not what they say. 

You can only "maximize the return"  as you describe if the use is a permitted use.  Splitting the lot is not permitted, so including a lot split in determining the maximum return is a pointless exercise now and for the foreseeable future.  No one will pay you a dime for a speculative lot split that might occur years or decades from now, if at all.  Highest and best use of your property under current law is a single family with an ADU.  Your choices are to continue to wait, build the ADU and collect the income, or sell and move on.

Mu206Stach

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I think there is at least 4th option-- which is getting more involved in local politics -- which is different than just waiting.  I've just been too busy the last 5 years because I've been working so much. 

It isn't just the city politicians that lead here. Our city has a network of neighborhood community councils -- and as younger people begin to fill the seats of those neighborhood councils, change is happening.  We are getting more bicycle lanes, we are getting better transit diversity, and we are getting more density.

So it isn't just about waiting -- it is about participating in the process (if I can make the time).  At least that is how I see it.

But thanks for all of the ideas. I appreciate them.

Regards


PawPrint3520

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While I have nothing to help you with the situation, I do "feel your pain." My father had a 11,500 sq.ft. lot in the West Seattle area with a house built in 1957. All around him were large houses on small lots that were built in the 1990s in an area that used to be woods and fields (great for us to play in!). However, his property was in a small area of the street that was zoned for over 6,500 s.f. lots so we could not sell the house and lot as two separate parcels. We sold in 2005 so I'm not sure what the deal is now, but I'm guessing it hasn't changed. Luckily, he didn't need the additional income that would have come from dividing the parcel. It would have been a nice option to have and wouldn't have changed the neighborhood at all.

sol

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I'd just sell the whole thing as "possible lot subdivision to two units, buyer to verify" and then move elsewhere. You probably won't get as much as you want out of it, but you might get more than selling as a single lot and then it's somebody else's problem.

Seriously, if you want a smaller house/lot, just move. Your current plan just sounds like sour grapes over not being able to realize extra profit by breaking current law.

You can make a bunch of money selling weed, too, but also probably illegal for now and likely to be legal in the future.  Don't try to get rich by breaking the law.

Mu206Stach

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While I have nothing to help you with the situation, I do "feel your pain." My father had a 11,500 sq.ft. lot in the West Seattle area with a house built in 1957. All around him were large houses on small lots that were built in the 1990s in an area that used to be woods and fields (great for us to play in!). However, his property was in a small area of the street that was zoned for over 6,500 s.f. lots so we could not sell the house and lot as two separate parcels. We sold in 2005 so I'm not sure what the deal is now, but I'm guessing it hasn't changed. Luckily, he didn't need the additional income that would have come from dividing the parcel. It would have been a nice option to have and wouldn't have changed the neighborhood at all.

Hmm very interesting.  It wouldn't be hard to see the current zoning there, if you are curious.  Seattle has a very nice web based GIS site that lists all that info by address & neighborhood, viewed through a map interface.

In my case as well, it would not change the neighborhood at all, because my house is surrounded on 3 street sides (it is a corner lot), by houses on lots exactly half the size of my lot.  But they were all built before the area was rezoned in the 80s as sf5000.

I've had many people wander by when I'm out working in the yard, that have inquired about the "vacant lot" next to my lot.  I had to explain to them it was part of my lot.  When they see all of the small lots around me, they are as surprised as I am that the current zoning rules prevent me from subdividing. 
« Last Edit: March 11, 2015, 04:25:28 PM by Mu206Stach »

Mu206Stach

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I'd just sell the whole thing as "possible lot subdivision to two units, buyer to verify" and then move elsewhere. You probably won't get as much as you want out of it, but you might get more than selling as a single lot and then it's somebody else's problem.

Seriously, if you want a smaller house/lot, just move. Your current plan just sounds like sour grapes over not being able to realize extra profit by breaking current law.

You can make a bunch of money selling weed, too, but also probably illegal for now and likely to be legal in the future.  Don't try to get rich by breaking the law.

Sorry not following your logic.  I'm not trying to break any laws.  I'm potentially interested in helping to change them.  What is the harm in that?

Your weed example is an interesting one, because weed is now legal in Washington, as the result of a number of grass roots political movements.  The same is also true in Colorado, Oregon, and possibly a few other places now.
« Last Edit: March 11, 2015, 04:28:03 PM by Mu206Stach »

waltworks

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If your goal is to make money and keep your sanity, move, or at least move on.

If you love NIMBYs and endless public hearings dominated by the finest elderly/bored/verbose/all of the above members of your neighborhood, by all means, get on it. I'm sure you'll make at least a few bucks an hour if your quest is successful and you eventually get to subdivide.

-W

Mu206Stach

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If your goal is to make money and keep your sanity, move, or at least move on.

If you love NIMBYs and endless public hearings dominated by the finest elderly/bored/verbose/all of the above members of your neighborhood, by all means, get on it. I'm sure you'll make at least a few bucks an hour if your quest is successful and you eventually get to subdivide.

-W

:-)  Yes. I know.  Great points, and I've considered those.  Perhaps I'm being just a bit suborn because I've lived here for 20 years and I'm attached to the place and area.  Moving on, feels a bit like... giving up.

Regarding NIMBYs, the king of them all just announced his retirement from our neighborhood community council, and those of us that have been waiting for him to leave (he was also standing in the way of new bike lanes that were put in over his objections) are pretty happy about it. 

His retirement announcement is actually part of my increased interest in this now.  The guy was unemployed (or self employed) and seemed to work on his pet projects -- non-stop -- nobody ran against him for the office because nobody had the time he did to do the job.  I heard he single handily forced Trader Joe's to find a different location for their planned new store in North Seattle, and so instead of their intended Northgate location (on 105th) -- they are building a new one way on the edge of the city at 145th -- though that could be an urban myth told by those that have been in community council meetings with him, and then stopped going because he ran the meetings like a dictator. 

The hope I have, is that people like him are in a quickly shrinking minority.  More and more of the majority are favoring density.  Case in point -- the DADU legislation that was put in a few year ago -- over the cries of the NIMBYs.  With all of the investment here going into light rail (passes right through our area, with new stations to the south and north) and new bike lanes... just makes sense that more density will follow. 
« Last Edit: March 11, 2015, 04:49:12 PM by Mu206Stach »

Another Reader

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There's a fifth option if all the surrounding vacant properties were rezoned to sub-5,000 square foot lots and then built on and the lots with existing homes were not rezoned.  You could apply for a variance or a full rezone, based on the surrounding uses being residential zoned for less than 5,000 sf lots.  It's certainly worth a conversation with the planning folks. 

Especially helpful would be preliminary plans to develop the lot with a house that would meet all the setback requirements and fit into the neighborhood.  You could grant an option on the proposed lot to someone experienced in getting projects through the planning process that wants to build there.  You might not get the full $200k if the option is exercised, but you would probably get lot value minus the costs to get the split approved and some profit to the buyer for the effort.  Or you could ask around to find the land use consultant that always seems to get difficult residential projects through the process and work with them to get the split done.  That's upfront costs for an uncertain outcome, and you would want to see a plan and a track record before you go that route.




sol

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Your weed example is an interesting one, because weed is now legal in Washington, as the result of a number of grass roots political movements.  The same is also true in Colorado, Oregon, and possibly a few other places now.

I live in Washington.  I'm familiar with new law.

Are you familiar with the Kettle Falls Five?

In short, this a group of five people with medical marijuana licenses, growing as a collective in a way that is totally legal in Washington State right now.  Marijuana of any sort is still illegal by federal law.  They were arrested by federal agents, tried and (last week) convicted in a federal court, and now they await federal sentencing. 

See what I mean by still illegal?  Nevermind that the law is changing around us as we speak, they broke a current law.  What you're proposing is roughly analogous.  Despite your personal disagreement with current law, and your expectation that it will change in the future, you are still obligated to follow it.  Sorry.

Mu206Stach

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Your weed example is an interesting one, because weed is now legal in Washington, as the result of a number of grass roots political movements.  The same is also true in Colorado, Oregon, and possibly a few other places now.

I live in Washington.  I'm familiar with new law.

Are you familiar with the Kettle Falls Five?

In short, this a group of five people with medical marijuana licenses, growing as a collective in a way that is totally legal in Washington State right now.  Marijuana of any sort is still illegal by federal law.  They were arrested by federal agents, tried and (last week) convicted in a federal court, and now they await federal sentencing. 

See what I mean by still illegal?  Nevermind that the law is changing around us as we speak, they broke a current law.  What you're proposing is roughly analogous.  Despite your personal disagreement with current law, and your expectation that it will change in the future, you are still obligated to follow it.  Sorry.

Zoning regulations change all the time.  Working within the system to change zoning is not "breaking the law", or anywhere close.  I'm not talking about breaking any laws, or bending any laws.  You might mean well, but your analogy makes no sense.  The pot growers were breaking the law (federal, if not state) because they had too many plants in their operation, which is 100% different from what I'm describing -- which is working to change the law (and subdivide after the law or zoning rule is changed). Sorry, back at you.   
« Last Edit: March 11, 2015, 08:37:57 PM by Mu206Stach »

Mu206Stach

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There's a fifth option if all the surrounding vacant properties were rezoned to sub-5,000 square foot lots and then built on and the lots with existing homes were not rezoned.  You could apply for a variance or a full rezone, based on the surrounding uses being residential zoned for less than 5,000 sf lots.  It's certainly worth a conversation with the planning folks. 

Especially helpful would be preliminary plans to develop the lot with a house that would meet all the setback requirements and fit into the neighborhood.  You could grant an option on the proposed lot to someone experienced in getting projects through the planning process that wants to build there.  You might not get the full $200k if the option is exercised, but you would probably get lot value minus the costs to get the split approved and some profit to the buyer for the effort.  Or you could ask around to find the land use consultant that always seems to get difficult residential projects through the process and work with them to get the split done.  That's upfront costs for an uncertain outcome, and you would want to see a plan and a track record before you go that route.

Yes, that was the tack I thought of a number of years ago -- and it might be worth trying again now that I'm older and have more resources and now that the city has naturally become more dense. 

Don't know how this works in other cities, but in Seattle, lots are made up of 1 or more plats.  My lot happens to be be 2 long plats, and the house straddles them.  If the house didn't straddle them, but was on one or the other, the DPD tells me I could subdivide with the existing zoning rules, but it does straddle them, so I can't do that. 

Some of the lots around me are the long skinny kind (exactly half of mine) and they have tall skinny houses on them.  Other lots are divided the other direction, but still exactly half the size of mine.  A handful are on lots that are 4000sf (80% of the sf5000 rule).  But all of them were built between the late 40s and mid 80s -- before the sf5000 zoning rule was put it. The sf5000 zoning happened in the mid 80s, because there was a backlash against tall skinny houses on narrow lots. 

As I've said, the vast majority of the lots in my neighborhood are smaller than sf5000, but they all existed before the rule was put into place. 

I haven't take the time yet, but I've considered doing some GIS work and finding what the average lot size is in my neighborhood -- I'd bet it is below sf5000.  At the very least, I think it would be useful information in any grassroots effort to rezone.

I've thought of letting a developer try it -- but I'd prefer to do it myself so that I have some control over what gets built there.  I know, sounds like I'm trying to have my cake and eat it too. 



Another Reader

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Can you design a house that meets all the setbacks if your house straddles the two paper lots?  If not, your chances of getting this through are slim.

If you sell the subdivided lot, you can't control what is built there, unless there is a development agreement that encumbers the sold lot.  That likely means a lower price.  Better to find someone that can get a house built with the setbacks and do the option approach.  Sale contingent on getting approval of the split.  Highest price and get the deal done or wait for the right buyer to build what you want.

Of course, you could get the lot split and have the house built yourself.  Then you can profit from two houses.

Mu206Stach

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Can you design a house that meets all the setbacks if your house straddles the two paper lots?  If not, your chances of getting this through are slim.

If you sell the subdivided lot, you can't control what is built there, unless there is a development agreement that encumbers the sold lot.  That likely means a lower price.  Better to find someone that can get a house built with the setbacks and do the option approach.  Sale contingent on getting approval of the split.  Highest price and get the deal done or wait for the right buyer to build what you want.

Of course, you could get the lot split and have the house built yourself.  Then you can profit from two houses.

Yes there is room on the western half of the lot, with all of the setback requirements.  The lot to the east of mine has that exact configuration.  But it was done before the zoning was set to sf5000 in the 80s. 

I've talked to 2 different real estate attorney's about this over the years though, and a couple of aggressive real estate agent developers -- they all thought the odds of getting a variance under current zoning regulations was close to 0% -- though the attorney's were certainly willing to take my money at their hourly bill rate and try...

I do think the best approach is to work with the tide that is favoring density, but try and find a way to speed it up, instead of trying to get a variance -- but I should look at the variance idea again.  It has been a few years.

And now that I think about it... I recently noticed a 2nd house going up on another corner lot, half a dozen blocks from me, and within our sf5000 zoning.
« Last Edit: March 12, 2015, 09:35:52 AM by Mu206Stach »

Mu206Stach

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Okay, your suggestion made me do some quick online research using Seattle's DPD GIS site on the house I noticed a few weeks ago.

It is in my neighborhood, about 8 blocks from me.  They are doing almost exactly what I want to do, but the mirror reverse.  From looking at the DPD site, their lot (and the 2 resulting new lots) are both smaller than mine. Either these were already separate legal plats.... or they got a variance.  It is the lot 1010 and the green border -- the new lot is to the left.  The 1010 that straddles the lot line leads me to believe that lot line is new, but the system that renders the the house numbers was never updated.  That lot has been one small house on one large lot for ever... and now a second house is being built on that new lot... not exactly sure where to look online to see if I can find the variance paperwork... but it gives me something to go on.

[edit]
Wow, in fact I just found this house's for sale listing from last year on the JohnLScott site (a PNW broker):
http://www.johnlscott.com/Home/667371/NWM/1010-NE-80TH-St-Seattle-WA-98115/
It even states that the house sits on a large lot (6,600 sf) that can not be legally subdivided under current zoning laws...
I need to find the real estate attorney they used.





« Last Edit: March 11, 2015, 09:19:37 PM by Mu206Stach »

sol

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It even states that the house sits on a large lot (6,600 sf) that can not be legally subdivided under current zoning laws...
I need to find the real estate attorney they used.

Maybe they're building a "backyard cottage"?

Mu206Stach

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It even states that the house sits on a large lot (6,600 sf) that can not be legally subdivided under current zoning laws...
I need to find the real estate attorney they used.

Maybe they're building a "backyard cottage"?

:-) 

I don't think they are, I've seen the foundation for the new house, it is quite large. Backyard cottages are limited to 800sf.

Also, if you look at the image I embedded, that lot has been subdivided, and recently.

Some clever soul did what I've been wanting to do.  Now I just have to track them down and ask them to help me.  I'll even pay them a fee.

Another Reader

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I don't know how Seattle works, but here we have a searchable database with all planning and permit applications on line.  Well, supposedly on line because the money is not earmarked to complete this project so some things have not been uploaded.  You can search by street address or assessor's parcel number (APN).  You should be able to get the pertinent details, including the consultant's name, on the similar project if you have such a database there.

ShortInSeattle

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I'm not sure if this is helpful or not, but I've heard from a few acquaintances that the city planning department is staffed with friendly and helpful people. You might reach out to them to learn more about strategies for changing zoning rules, I'm sure they've seen and heard it all.


dragoncar

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My other thought, is that I could find an investor that wants to own 1/2 of this property, and basically share it -- I get one structure, the investor gets the other -- but this seems very complex and risky.


It's not that complex.  It's called TIC (tenants in common), and there are a ton of them in SF.  Banks now even do fractional financing for half (or less) ownership in a property.  Usually used for old mansions divided into upstairs/downstairs units in situations where the city won't allow condo conversion.  Check out this $100 million TIC in SF:

http://sf.curbed.com/archives/2015/01/26/park_lane_sfs_100m_tic_finally_shows_off_pics_of_its_units.php

Mu206Stach

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My other thought, is that I could find an investor that wants to own 1/2 of this property, and basically share it -- I get one structure, the investor gets the other -- but this seems very complex and risky.


It's not that complex.  It's called TIC (tenants in common), and there are a ton of them in SF.  Banks now even do fractional financing for half (or less) ownership in a property.  Usually used for old mansions divided into upstairs/downstairs units in situations where the city won't allow condo conversion.  Check out this $100 million TIC in SF:

http://sf.curbed.com/archives/2015/01/26/park_lane_sfs_100m_tic_finally_shows_off_pics_of_its_units.php

Wow, cool place.  And I had never heard of TIC before.  Knowing that it is standard enough that banks will do mortgages for partial ownership opens up a lot of possibilities... had no idea anything was that established yet. 

Thanks for the tip, this is awesome. 

ShoulderThingThatGoesUp

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It even states that the house sits on a large lot (6,600 sf) that can not be legally subdivided under current zoning laws...
I need to find the real estate attorney they used.

Maybe they're building a "backyard cottage"?

:-) 

I don't think they are, I've seen the foundation for the new house, it is quite large. Backyard cottages are limited to 800sf.

Also, if you look at the image I embedded, that lot has been subdivided, and recently.

Some clever soul did what I've been wanting to do.  Now I just have to track them down and ask them to help me.  I'll even pay them a fee.

Presumably they got a variance, the terms of which should now be public record.

Mu206Stach

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Morning update -- did a bit more digging through the city's permit database and found the name of the guy who wrote the variance request letter.  They did a ton of research on the property dating back to 1910 and cited a number of permits, and were able to establish that the lot has effectively been divided since the 50s (effectively, but not legally as far as the county tax auditor was concerned). They made a compelling case to the city and their request was granted.  His phone # was on the application letter and I just got off the phone with him (I also found his company's website).  He works for a company that many NIMBYS around here hate -- which makes me like them even more. 

He took a quick look at my lot while on the phone with me... he and his colleagues aren't for hire though -- they only do work for this company -- so would only help me if I was interested in potentially selling half to them.  I said I'm interested in exploring this further -- so they are going to do some more research.

Between this, and the TIC response above.... feeling like there is some good potential. 

Thanks for the responses everyone.

dragoncar

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My other thought, is that I could find an investor that wants to own 1/2 of this property, and basically share it -- I get one structure, the investor gets the other -- but this seems very complex and risky.


It's not that complex.  It's called TIC (tenants in common), and there are a ton of them in SF.  Banks now even do fractional financing for half (or less) ownership in a property.  Usually used for old mansions divided into upstairs/downstairs units in situations where the city won't allow condo conversion.  Check out this $100 million TIC in SF:

http://sf.curbed.com/archives/2015/01/26/park_lane_sfs_100m_tic_finally_shows_off_pics_of_its_units.php

Wow, cool place.  And I had never heard of TIC before.  Knowing that it is standard enough that banks will do mortgages for partial ownership opens up a lot of possibilities... had no idea anything was that established yet. 

Thanks for the tip, this is awesome.

Sorry, forgot to mention that tic usually fetches a lower price (do to being less conventional and also because I'm SF tics could be subject to rent control while condos are exempt)  and not sure if WA banks will be on board with fractional financing.  You could always carry the note yourself, of course.

Mu206Stach

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...
He took a quick look at my lot while on the phone with me... he and his colleagues aren't for hire though -- they only do work for this company -- so would only help me if I was interested in potentially selling half to them.  I said I'm interested in exploring this further -- so they are going to do some more research.


He did the research and called me back.  My lot can't be done without buying 60sf from the neighbor (and the neighbor doesn't want to sell).  The lot that this guy's company was able to subdivide (and it is about 1000 sf smaller than mine) had some very old plat lines going north south, where as mine go east west.  Using those, they were able to create to legal lots of about 3200sf (in a sf5000 neighborhood).

So back to:
1. DADU -- and waiting.  Build the DADU in such a way that I could subdivide if zoning changes.
2. TIC + DADU
3. Getting involved in local politics and grinding out a long battle.
4. Selling (giving up) and moving on.

sol

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4. Selling (giving up) and moving on.

I don't think selling is giving up.  Houses are property, and can be bought and sold at will. If this one doesn't suit your needs, just exchange it for another one.

It can even be another one in the same neighborhood, if you like.

Another Reader

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You need to chat with that neighbor again.  60 square feet is not much and if he understands the ADU is going up no matter what, he may be more amenable.  As they say in the real estate business, price fixes everything.

Mu206Stach

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You need to chat with that neighbor again.  60 square feet is not much and if he understands the ADU is going up no matter what, he may be more amenable.  As they say in the real estate business, price fixes everything.

I've talked to them a few times. They don't want me to subdivide and have a full size house go up on that spot. They also don't need the money (they inherited a mint).

I'm going to think more about the DADU, and use that as an interim solution until the day that the zoning changes.   

Mu206Stach

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It sounds to me like the real problem is not necessarily the zoning, per se, but rather the unfortunate position of your house. 

You are in an expensive neighborhood -- any chance a developer might be interested in buying your place as a teardown and putting up two new structures?  Probably not enough profit in that for you. 

It is both the zoning and where the house sits on the lot relative to the original plat lines. 

You can't tear down the house to split the lot -- I inquired about that. 

Personally, I would go the DADU route.  Being close to the UW you could pretty easily find long-term, reliable tenants (many, many of my grad school friends lived happily for many years in DADUs or MILs -- grad school typically lasts 5-10 years and grad students are quiet, reliable types).

Heck, if you put in a DADU and moved into that and were interested in renting out your main house, I might be a good tenant :)

I'm going to think more about the DADU route.  Maybe I can come up with a design for a small DADU that could be moved someday -- if the zoning changes. 

It is true that the place is in a great location for renting the house or the DADU. 

dilinger

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I have a 4080 sf lot, and while I don't want to subdivide, I do want to build a DADU (backyard cottage) for rental and potentially for my parents to move into in a few years.

We were pretty hung-ho on this; our lot is completely flat w/ lots of usable space, we satisfied all of the constraints, we even had the extra parking spot.  Unfortunately, the city's occupancy requirement made us decide to halt the plan.   It would require us to live here at least 6mo of the year, asking permission if we wanted to travel for longer, and is potentially a very real liability if we decide to sell.  The buyer would need to agree to the occupancy requirement, or we'd need to strip out the kitchen from the cottage; extra wasteful work for us, and it limits the potential buyers.

We were looking for a prefab passive house cottage, but local options are pretty limited probably because of the stupid laws making DADUs troublesome.

Councilmember O'Brien has talked about getting rid of the occupancy requirement law for ADU/DADUs, but it's still on the books.

Mu206Stach

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I have a 4080 sf lot, and while I don't want to subdivide, I do want to build a DADU (backyard cottage) for rental and potentially for my parents to move into in a few years.

We were pretty hung-ho on this; our lot is completely flat w/ lots of usable space, we satisfied all of the constraints, we even had the extra parking spot.  Unfortunately, the city's occupancy requirement made us decide to halt the plan.   It would require us to live here at least 6mo of the year, asking permission if we wanted to travel for longer, and is potentially a very real liability if we decide to sell.  The buyer would need to agree to the occupancy requirement, or we'd need to strip out the kitchen from the cottage; extra wasteful work for us, and it limits the potential buyers.

We were looking for a prefab passive house cottage, but local options are pretty limited probably because of the stupid laws making DADUs troublesome.

Councilmember O'Brien has talked about getting rid of the occupancy requirement law for ADU/DADUs, but it's still on the books.

Yeah, that is a disincentive, but at least for the next 5 years, I'd plan to live on the property anyway. Read a story about Seattle trying to find ways to get more people to build these (as they have in Portland and Vancouver BC), and I think that is one of the changes they are looking at making -- since neither Portland or Vancouver have that requirement.
 
But the law just says that one of the owners has to live there 50% of the time -- and with the TIC idea that somebody else posted, that opens up some new ideas for me.

clarkfan1979

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You say that you are not interested in being a landlord, but you are preparing to take on the city of Seattle to create new building codes. I feel like being a landlord would be less work. I would rent out the main house and live in the cottage. You could customize the cottage to your specifications.

Mu206Stach

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You say that you are not interested in being a landlord, but you are preparing to take on the city of Seattle to create new building codes. I feel like being a landlord would be less work. I would rent out the main house and live in the cottage. You could customize the cottage to your specifications.

Not new building codes, just changes in zoning and required minimum lot sizes... the city is already moving in that direction, but is moving slow due to resistance from NIMBYs -- so I wouldn't be taking on the city -- I'd be joining forces with the populace that is in favor of density -- and we'd all be taking on the NIMBYs. It would be the new progressives vs the entrenched, old school, NIMBYs that don't like density or bike lanes. 

Anyway, I get your point. Being a landlord might be less total work, but it would an ongoing hassle that I'd rather not have to deal with long term.  The rezoning battle would be an upfront battle, and once it is done... it is over.

octavius

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Recent developments from the Mayor's office suggest that the city may soon be on your side. His housing committee of consultants released a 67 page document calling for more density, smaller lots, etc, etc.

Haven't seen a plan or timeline to get these changes enacted in city code, but it looks like many of the housing and urban planning experts are in favor of changes, the result of which, would allow you to split a lot like yours. 

Be patient.

sheepstache

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You need to chat with that neighbor again.  60 square feet is not much and if he understands the ADU is going up no matter what, he may be more amenable.  As they say in the real estate business, price fixes everything.

I've talked to them a few times. They don't want me to subdivide and have a full size house go up on that spot. They also don't need the money (they inherited a mint).

I'm going to think more about the DADU, and use that as an interim solution until the day that the zoning changes.

That's what I was wondering about. It seems to me that rich neighbors that really don't want you to do this might also factor into your estimation of how much of a headache this will be.

NoNonsenseLandlord

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Hang tight, with the recent Supreme Court decision, zoning laws could become unconstitutional.

MilwaukeeStubble

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Hang tight, with the recent Supreme Court decision, zoning laws could become unconstitutional.

Can you elaborate?  I don't recall seeing anything like that.

ShoulderThingThatGoesUp

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Maybe NNL is talking about the housing/disparate impact one? It's not a crazy argument to say that zoning minimum lot sizes prevents the construction of affordable housing, and that these laws keeping cheaper houses out of wealthy neighborhoods have a disparate impact on minorities.

I loathe Euclidean zoning and I'd love to see it go away, but I suspect the court is results-oriented rather than principle-oriented enough that they'd never do something so awesome as invalidating zoning codes. Liberals seem to love zoning because it lets them put lots of rules in place (and keeps the poor out of their neighborhoods), and conservatives seem to love it because it keeps the poor away (and lets them tell people what to do).

halleymarie

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I like building an ADU, then selling the house with the leaseback on the ADU. But I don't know what protection you have if the buyer of the property then sells it or undergoes some financial hardship. Do you get kicked out? Anyone know?

dilinger

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We were looking for a prefab passive house cottage, but local options are pretty limited probably because of the stupid laws making DADUs troublesome.

Councilmember O'Brien has talked about getting rid of the occupancy requirement law for ADU/DADUs, but it's still on the books.

Pretty bummed that 6mo later, Seattle has made 0 progress on this.  Thanks, Queen Anne Community Council! :(

We're even considering just downsizing at this point.  I'm tired of paying property tax on the massive lot without the ability to build a DADU; might as well just downsize to a smaller lot and get a second lot/house nearby for my parents when they move out here.

hollyluja

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Anyway, I get your point. Being a landlord might be less total work, but it would an ongoing hassle that I'd rather not have to deal with long term.  The rezoning battle would be an upfront battle, and once it is done... it is over.

Have you thought about giving the landlording over to a property management company?  The tenants don't need to know that you share a lot or even that you are the owner, especially if you put up a fence between the house and the ADU.  All the landlording issues with maintenance, screening, lockouts etc could be dealt with by someone else.

That would let you recoup some of the value while you fight the rezoning fight. 

dilinger

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Have you thought about giving the landlording over to a property management company?  The tenants don't need to know that you share a lot or even that you are the owner, especially if you put up a fence between the house and the ADU.  All the landlording issues with maintenance, screening, lockouts etc could be dealt with by someone else.

Yeah, but having a property management company isn't necessarily fuss-free, either. Here's someone on the forums who is having to take their management company to small claims court:
http://forum.mrmoneymustache.com/journals/ctrl_alt_delete/msg1259843/#msg1259843

At a condo I lived in for 5 years, they went through 3 property management companies.  The first two were useless.
« Last Edit: November 04, 2016, 01:45:56 AM by dilinger »