Everything You Need to Know About Building an ADU in Chicago

By easing zoning restrictions, cities such as Portland, Minneapolis, Los Angeles, and Seattle have seen growing interest in accessory dwelling units (ADUs), or coach houses or backyard houses, as they’re often called.

Earlier this year, Chicago followed suit with a pilot program that aims to add density to neighborhoods while increasing access to affordable housing and providing more opportunities for multigenerational families to remain together. But out of the 342 intake applications for ADUs filed with the city’s Department of Housing thus far, only 158 have been deemed eligible for a building permit and just six permits have been granted.

So what’s the hold up?

"My suspicion for why projects are getting pushed out further is that things are just more expensive now—construction costs and materials," says Katherine Darnstadt, founding principal at the Chicago architecture and urban design firm Latent Design. "So are these projects viable right now? Or do they need to wait a year and see if prices regulate? Or do they have to get redesigned or scrapped altogether?"

Lack of public awareness could be another stumbling block.

"A lot of property owners do not know that this is possible," says Steven Vance, founder and CEO of the real estate information service Chicago Cityscape. "There are tens of thousands, if not hundreds of thousands of eligible properties in the five ADU pilot areas. And a lot of those are owned by owner occupants who are not paying attention necessarily to zoning matters that affect their properties." According to Cityscape’s data, there are currently 92,322 qualified lots.

But the deeper reality may be that ADU programs take time to take hold as architects, city officials, and residents negotiate design and lot setback standards, financial incentive programs, and parking restrictions. After seeing just 19 permits issued in 2015, Portland, Oregon, approved 531 permits in 2018, and Swasti Shah, director of community engagement at the Chicago chapter of the Urban Land Institute, says the flexibility of Chicago’s program could help it follow a similar upward path.

Launched May 1, 2021, as a three-year pilot, the ordinance allows homeowners in five areas of the city to convert attics or garden unit apartments into ADUs and legalizes the building of coach houses, a practice that has been outlawed in Chicago since 1957. The idea is to build back soft density into neighborhoods, where it is slowly eroding.

"The two- to four- to six-unit building is sort of a bread-and-butter housing type for many, many Chicago neighborhoods," says Daniel Hertz, the policy director at the Chicago Department of Housing. "It provides unsubsidized, sort of low-to-moderate-cost housing for a countless number of Chicagoans, but in a lot of higher cost markets, we’ve been losing many of those buildings to either deconversions—somebody keeps the shell of, say, a three unit building, but turns it into a single-family home—or just demolition, where they tear it down and build a single-family [home] in its place."

Here’s how the new program works: Inside the pilot areas, property owners with one to four units can add one coach house, or, if the property is at least twenty years old, one conversion unit. On properties with five or more units, coach houses are not permitted, but owners can increase leasable space by adding up to 33 percent more interior units as conversion units without increasing the lot size or adding extra off-street parking spaces. These units, however, can be difficult to squeeze onto standard 25-by-125-foot Chicago lots.

Those looking to add units for extra income should note that short-term rentals via Airbnb, for instance, are banned.

Also under the ordinance, every other new unit in converted buildings must be affordable for residents, meaning monthly housing costs "do not exceed 30 percent of income for a household making 60 percent of the area median income," which, at the time of this writing, is $55,920 for a family of four in Chicago.

"It’s not a complete affordable housing solution right now, but I do think it is one tool in sort of your larger affordable housing plan," Shah says. "A coach house in Lincoln Park is going to be out of reach for many, many people. But it potentially could be affordable compared to other units in Lincoln Park, and because these units are smaller than your primary spaces, they are naturally going to be more affordable."

The ordinance offers considerable design latitude, but tight living space and siting restrictions—and how these factor into the rental income that property owners hope to recoup from their investments—may hinder adoption, says Christina Gallo, the president and owner of Via Chicago Architects + Diseñadores. Coach houses may cover no more than 60 percent of a property’s required rear setback, contain no more than 700 square feet of living space, and be no more than 22 feet in height.

To get the math to work on a standard lot while maintaining existing on-site parking spaces as is required, Gallo, who is at work on several coach house projects, says she has had to perform some tricky spatial gymnastics. And even then, the result isn’t always optimal, resulting in coach houses with less than the maximum allowable living space.

Still, she is finding clients who are willing to take a leap of faith. In Chicago’s Logan Square neighborhood, she is working with a young expectant couple on a project to build a 525-square-foot coach house framed with a kit of modular panels designed by Wally Walls, a Wisconsin-based manufacturer. Behind a frame house set at the rear of a large front yard, the eclectic blue structure will peek onto the street as a deliberately conspicuous architectural curiosity.

"I think that people are looking for ways to have additional income sources so they can stay in their neighborhoods," Gallo said. On the flip side, "people are looking for affordable rental options, where they’re not left with the option to rent an apartment building with an incredibly small square footage that’s not doing enough for them, or is not in the right location—by the CTA, by a bus stop, by a Divvy [bike share] station. If we could build these as prefabricated modular structures, it would be incredibly exciting."

Related Reading:

Everything You Need to Know About Building an ADU in Portland, Oregon

Why Now, More Than Ever, the ADU Is the Future of Home

7 ADUs You Can Buy Right Now for Less Than $100,000