Imagine creating hundreds of units of legal, regulated, and affordable housing units in housing-starved New York City—with the stroke of a pen. The catch, if there is one? The units are mostly in basements.
In New York, renting out basement units is illegal. That doesn’t mean people don’t do it, however. According to Chhaya Community Development Corp, a Jackson Heights-based organization advocating for the housing needs of New York City, there are at least 114,000 unauthorized housing units in basements and cellars throughout the city. Chhaya estimates 35 percent of them are safe and could be brought into regulation with minor modifications.
The issue of illegal dwelling units has been a priority for Chhaya since 2008, when it started its Basement Apartment Safe for Everyone (BASE) campaign. The campaign proposes that basements less than 50 percent below ground should be legalized—by creating an “Accessory Dwelling Unit” (ADU) category within the building and zoning codes. Back in 2000, the agency completed a needs assessment survey of the South Asian immigrant community around the city. The survey revealed that 50 percent of the people surveyed didn’t have a lease. A percentage of those tenants already live in basements.
It is hard to quantify how many illegal basements exist and what they look like in New York City. Owners are unwilling to reveal that they have rented out unlawful basements for fear of being cited with a violation and tenants not daring to report their unsafe living conditions to avoid eviction orders and possible displacement.
But Chhaya says the organization is moving toward presenting an accessory dwelling units proposal to the City Council. “We have created a coalition to work with administration as well as city council members to see if they would be interested to push forward a legislation that help these homeowners to legalize basements,” said Tenzing Chadotsang, the interim executive director of Chhaya. “We are seeing a renewed interest under the mayor’s housing plan to legalize the basement and bring to the affordable housing stock.”
Here is some background on the basement proposal.
What’s an Accessory Dwelling Unit?
An accessory dwelling unit, according to the legal definition, is a self-contained residential structure that exists on the same property as a single-family home. The unit has its own entrance, as well as cooking and bathing facilities. The units are configured in various architectural forms: some may be attached, such as a basement apartment, and some may be separate from the primary house, as in the case of a backyard cottage. The units have the same owner as the primary dwelling.
The BASE campaign seeks to create a pilot program to allow safe basements and cellars to be brought up to code on a case-by-case basis. The campaign is led by seven-organization steering committee and has been endorsed by two New York City council members, Daniel Dromm (District 25) and Brad Lander (District 39), according to Chhaya.
“We are not looking for blanket legalization,” said Chadotsang, “We don’t want to put tenants in unsafe circumstances. The units need to meet mandatory standards for light, air, ceiling heights, size of room, sanitation and egress.”
Do other cities allow basement and other accessory housing units?
The accessory dwelling unit is not a new concept. Since 2000, plenty of municipalities including Santa Cruz, California; Portland, Oregon; Denver, Colorado; Seattle, Washington; and Arlington, Virginia have implemented policies that encourage accessory dwelling units.
“When someone wants to create an accessory dwelling unit, they often do think of basement because that is an obvious candidate for conversation” said Martin John Brown, a researcher and consultant on environment and housing with a specialty on accessory dwelling units. He lives in Portland, Oregon, a city that leads the accessory dwelling unit movement.
According to Brown, the two primary motivations for people creating an accessory dwelling unit are financial gain through rental income and the need to housing a family member or a friend.
Do people already live in basements?
New York City’s housing crisis has already forced many to live underground, housing experts note. Even with the concerns of safety and instability, basements have become desirable residences for low-income tenants because the financial constraints have priced them out of the tight legal housing market.
“Many of the new-coming immigrants can’t afford to have a one-bedroom apartment. So they are left with very few options but to go to a flyer that says we have a basement to rent,” said Christian Cassagnol, district manager of Queens Community Board 4. He gave an example of a situation in Corona in his district. The average rent for a one-bedroom apartment in Corona is between $1200-$1400, while a basement unit in the same area costs $700-$1000.
“The illegal basements have rippling effect on tenants, homeowners and neighborhood,” Chadotsang said. “A lot of our clients face foreclosures and they rent basements in their apartments to make the ends meet.”
On the other hand, living in unpermitted units carries lots of hazards for tenants. There is little oversight governing the safety of the tenants in illegal units. Moreover, tenants have few enforceable rights compared to residents living in legal housing and are often reluctant to seek help from authorities. Neighbors can file anonymous complaints related to illegal apartments through 311, then the tenants can be displaced after the department of buildings sends out an inspector.
Are there other pluses and minuses of legalizing accessory units?
On the plus side, proponents say legal accessory dwelling units can benefit households beyond providing more housing options to them. Chhaya also argues that homeowners will benefit by receiving additional rent from basements to pay off the mortgage. Legalization also diminishes legal risks: Homeowners who rent out illegal basements are at risk of facing potential civil and criminal penalties if there is a loss of life, through, say, a fire because the egress is blocked due to illegal subdivision. In addition, owners who illegally rent their basement units can face fines of up to $15,000.
But there are minuses, too: Significant opposition can arise from neighborhoods where basements are located. As most neighborhoods are zoned for single-family district, they say the limited resources, such as schools, hospitals, sanitation, water pressure, and parking space, would be drained if basements become legalized.
However, supporters of accessory dwelling unit reform argue that since the character of the community are usually already altered—with unlawful basements—the focus should be to face and fix the problems.
“I think a lot of people are pretending that they don’t know the problems already exist,” said Cassagnol, district manager of Queens Community Board 4. “That’s why the city doesn’t want to touch it, because we failed to remove the problem all together so we just have to accept the problem and make it regulated.”
Supporters argue that legalizing basements can support the community economically by ongoing property taxes. So Chhaya contends that an increased burden on social services will be offset by increase on property taxes once basement apartments are legalized. Landlords would be encouraged to report actual rental income, and property tax will go up, then the city would potentially get enough revenues and appropriately allocated services accommodate the rising needs of the neighborhoods. “ The city is not gaining the revenues that it would have gotten if these were legal apartments,” Chadotsang said.
In New York, illegally subdivided or otherwise converted units are primarily located in the outer boroughs with large immigrant populations. Immigrants are willing to live in overcrowded conditions in these neighborhoods for a sense of shared culture and belongings. “Most immigrants like to live in neighborhoods where there are immigrants like themselves,” Chadotsang said. “They feel a sense of security. And it is so much more convenient.”
Regulatory and other challenges.
“It is hard to estimate exactly how many [illegal] basements can be conversed to meet the official standards because it very much depends on the design of the house, size, and structure of the basements,” said Sarah Watson, Deputy Director at Citizens Housing & Planning Council.
Watson outlined the regulatory barriers that impede the development of smaller, denser units: complicated building codes, confusing density regulations, and challenging procedural requirements to add an accessory dwelling units, including high permit costs and long-waiting time. “Local regulations in singe-family residential areas are designed to prevent the creation of any additional dwelling units,” Brown said.
The current building codes in New York City make legalization difficult. For example, the law defines a cellar as more than 50 percent below ground and a basement as more than 50 percent above. Cellars are totally prohibited to live in under current provisions. However, there are apartments that are more than 50 percent above ground at the front of the unit and below 50 at the back, Chhaya said.
Furthermore, daunting construction costs may financially discourage owners from reshaping their basements. Accessory dwelling units are very significant construction projects because they involve some level of structural changes to the building and major system modification, particularly pumping and electrical.
“Most homeowners are not qualified to do a good job on any of those things,” said Brown, researcher and consultant on environment and housing. “To make basements legal in New York City, owners are required to install hard-wired sprinkle system at their basements to prevent fire, which is expensive,” Watson said. “The key is to help homeowners to be able to do it. I think most owners who are doing it illegally would like the opportunity to do it legally.”
On the other hand, financing for accessory dwelling units can be difficult to obtain. The median cost of a major renovation of an attached dwelling unit in Portland is $45,500, usually tens or even hundreds of thousands of dollars can be spent reconstructing a basement apartment, drawn from a study Brown conducted, and that the small homeowners who expect to earn extra rent from building these units don’t normally have that extra amount of money to wind around.
“We did a survey and found that a lot of people who developed accessory dwelling units have paid for construction in cash,” Brown said. “So that suggests to me that they really had trouble getting financing. We know anecdotally people have trouble getting finance and they need to borrow money from a lender.”
The rules and practice of traditional lender in appraising pose another hurdle for accessory dwelling units development. According to the report, “Compact Units: Demand and Challenges” by the Furman Center at New York University, resistance among lenders emerge from unfamiliarity with accessory dwelling units and lack of market data. They also fear being blocked from renting the units out upon foreclosure.
“The appraiser does not think adding an ancillary unit would increase value to the property and they tell that to a lender, then the lender is very unlikely to give you a loan,” Brown said. “And the property doesn’t frequently appraised as high as they probably should.”