First, I’ll preface this post with my belief that there are plenty of ethical, professionals in the field of appraising. Nevertheless, I’ve come to the conclusion that there are some serious flaws with the process, many of which are being highlighted by the mortgage meltdown.

Here’s the problem: appraisers are in the business of making an appraisal “work” for the bank or mortgage office who has hired them. While one would hope they’d maintain a degree of objectivity, let’s be clear: appraisers make their living, in large part, from the business that banks/brokers deliver to them. If deals fall through due to an appraisal, it’s highly likely the bank/broker will look for another appraiser. So, in a nutshell, the incentive is for the appraiser to value the property at the amount specified by the lender or broker.

Let’s get specific as to how I managed to lose $600.

Several month back, I was working with a broker to obtain financing. He pushed hard for us to get an appraisal and recommended a business that supposedly had new construction appraisal experience. The appraisal was more expensive than most, since we were paying for their “expertise” and ability to value a project based on plans.

Fast forward a month or so. We received the appraisal an lo-and-behold! It came in at nearly exactly the amount we were hoping for! Miracle of miracles!

So what’s the problem? Well, the problem goes back to an earlier contractor. One who low-balled the initial estimate He estimated the project at $120. I told the loan office we’d need $150k. Sadly, when the rubber hit the road, the contractor’s final estimate came in at nearly $200k, making the appraisal meaningless.

So, two lessons were learned from this experience: 1) Don’t trust a “ballpark” figure and 2) Know for SURE what your costs will be before you approach an appraiser or loan officer.

Back to the story….

Once we realized that the appraisal was far below the cost to build, I began to take a second look at the actual appraisal document. As it turned out, the comps used to value the property were so far off the mark that the appraisal was way too low. Normally, this wouldn’t be an issue – if we needed $150k, we would have been fine. However, now that we need MORE money, our appraisal is nearly worthless.

Sadly, when I confronted the loan officer and appraiser about the problems with the appraisal they both said “well, it is what it is.” They are loathe to change anything – even if it’s to correct factual errors – because of the fear that it will be perceived as unethical. Sadly, it’s the lack of ethics (and effort) that brought us to this situation. A useless, inaccurate appraisal and $600 flushed down the drain.

Ironically, the neighbor who complained most vehemently is one who is himself a small-scale developer who has divided his lot and placed multiple buildings on the land. And, nimbyism has its price – nearly $1000 in design fees and a month delay.

Lessons learned:

1) Broaden the circle when approaching neighbors. Get as many on board before the city comment period. Also, it’s clear that the neighbor who objected had many incorrect assumptions about the building. I’ve since spoken with him and mostly ironed things out, but the damage is done. Fortunately, he didn’t appeal the city’s decision.

2) When talking to the city, get them to WRITE THINGS DOWN. Somewhere. Anywhere. When I began the process, they indicated I could probably get the 800 sq. ft. increase. However, later in the process, they said that they wanted the project to be closer to 700 sq. ft. If I had known this from the get-go, I would have saved a ton of time and money.

3) Shoot for the moon. Sadly, one of my take-aways from this process is that it’s more about the PERCEPTION of compromise than it is about true sacrifice. I reduced the size of the building, moved it off the property line, etc…but at the end of the day, these changes will have almost no impact on the overall building. This is why developers often ask for outrageous zoning adjustments – it allows them to “scale back” their plans, putting the designs where they wanted them all along.

4) Get it in writing. It would have been better if I could have provided written testimony and support from my neighbors who were in agreement with the project. In fact, it would have really helped to have the neighbor to the south on record – she supported the project then flipped once the nimby-neighbor riled her up.

Ok, now for the funny part: Here’s the most colorful of the letters: Gaile’s Letter

What this means: According to the letter, the city has 28 days to publish their decision. The letter gives neighbors 21 days (June 15th) to provide written comments on the project. The city must make a ruling by June 19th. UPDATE: due to design changes and neighbor complaints, the process was put on hold. The new date for their ruling is now July 12th.

Click on the image for a full copy of the city’s letter (4mb PDF)

Here’s a helpful document that shows the city’s timeline: Land Use Review Timeline (PDF)

On Tuesday, Suzanne came by the house this week to look at the property and discuss the process. She gave us kudos for a thorough presentation, and suggested that I go into ADU consulting.

Her two concerns were the permeable pathway (wanted to make sure it wasn’t a driveway) and that construction may damage the laurel hedge. I’m not particularly concerned about the laurels, since they seem to be nearly indestructible.

Suzanne says she’ll be mailing out public input notices later this week (the 31st) and that she’ll let me know if there are any objections from the neighbors. All in all, it was a very positive meeting and I look forward to working with her. She seems very approachable.

After discussing my project with contractor Eli Spevak, Patrick is recommending against the concrete second floor. He and Eli both think it would be difficult and expensive. As a result, the floor joists will be thicker, thus changing the height of the ceilings. In addition, Patrick looked into the code further and there is some question whether shed roofs are measured from the mid-point or from the top. Eli has had planners interpret it as the top.

So, to get both more head room and alleviate the roof-measure issue, we’re going to a modified gable, inspired by traditional salt box house design.

Click this link for the PDF of the designs…more elevations to come.

First Floor (PDF)

Second Floor
Patrick will use these plans, as well as our discussion and feedback, to produce a set of elevation drawings.

Here’s both designs:

In the end, option one actually felt a little confined. I didn’t like the idea of entering the living area through the kitchen, and felt that the kitchen actually fractured the space more than the other design. What I like about the “mid stair” design is that you enter the living space and the first thing you see is the couch/living room area. I also felt there were some better design options with how you could handle the stairs – by using the space above the stairs as “open” space, you can make the volume of the interior living area feel larger. Int he other design, the stairs would be hidden behind a wall, negating that opportunity.

One of the challenges of the split roof design is that you have one side of the house with a low ceiling, and another side of the house with a high ceiling. This means that the options for the placement of the staircase is dictated somewhat by the roof line. Stairs need headroom, so they must land on the “high” side of the building.

Another “problem” with option 2 was the orientation of the bathroom and bedroom. By heaving the bedroom on the north (low) side of the building, you’d lose the natural light from southern-facing windows. In addition, the bathroom – the one area that doesn’t really need high ceilings, it placed on the side with the high ceilings. We discussed this and decided to see if we could flip-flop the bath and bedroom.

Another issue we discussed was the placement of the fireplace and entertaining area. We decided to use the west staircase wall (which might be rough-faced brick) as our backdrop for the fireplace. The texture of the brick would provide a nice contrast to the smooth surface of the fireplace. It’s also fire-resistant, which is an added bonus.

Dining and kitchen areas were discussed and we ultimately decided to try putting a “u” or island in the dining area. We really like our current kitchen bar, and even though it will breakup the space, it’s too important to forgo. I also think there’s some merit in delineating the kitchen space from the rest of the living area.

Spoke with Chuck Banta of Homes123 today. Good News! It looks like I may be able to wrap my design expenses into the loan. Here’s how it would work:

• I pay design costs out of pocket
• Communitecture creates a set of drawings to apply for the loan. I’m not sure how complete these drawings need to be, but I’m guessing we’ll need a fair level of detail for approval of the loan as well as an accurate bid. Possibly permit-level drawings.
• We apply for the loan; the loan is approved and is used to pay for the permit process and any future design/build costs.
• I can then be reimbursed from the loan for my out of pocket design expenses.

The only tricky part is coming up with the funding before the loan. All of these costs are out-of-pocket.

• Building design didn’t present any big red flags. We can present the split-roof design, though there is no guarantee we won’t get a planner that requires a standard gable-roof design. She suggests that we apply with what we WANT, and make adjustments as necessary.
• The main concern among group members was the relationship of the secondary building to the small size of the primary residence. It would be “better” if the ADU were smaller.
• One suggestion was to expand the size of the main house to decrease the amount of adjustment needed. We discussed creating additional living space by converting the garage.
• The placement of the ADU may be problematic. One solution would be to push it closer to the main house.
• She said to make sure we were happy with whatever design we submitted – we’re effectively stuck with whatever we propose. This differs somewhat from what Patrick reported previously.
• The proposal was impressive.

At the end of the day, Marguerite said it’s a coin toss – we could get a planner who signs off on it or we could get a planner who objects to the size/scale relationship. It’s a very subjective decision. Neighbor input could play heavily into this decision.

I asked Marguerite about the review process and how flexible the planners are. For example, can we make “compromises” as part of the process in order to get approval? She says that yes, that’s part of it. We might, for instance, offer to move the ADU further from the property line to mitigate privacy issues. And, there’s always the appeal process as a last resort (though this is NOT something I’m eager to embark on).

From here, I see our next steps being:

• Contacting neighbors about the process. If possible, get their support. Possibly in writing.
• Developing elevations to submit to the city of Land Use Review.

Preliminary Land Use Review Proposal

I used a local printer (Rhino Digital) in Portland to print and bind the proposal. They did a great job and did it in almost no time. The meeting at the city went well. Marguerite had a few suggestions:

• Show setbacks on the new site map
• Make it more obvious that the adjacent property is a multi-dwelling zone. The idea here is to show that my property would be a “transition” or “buffer” lot between the higher density R2 zone, and the single-dwelling R7 zone.
• Change the language on the accessory unit. Eliminate the name “garage” from all the plans and proposals.

Several key points seemed to resonate with her regarding my proposal including:

• Lot abutting the R2 zone
• Lack of development in adjacent lots (no privacy issues)
• Existing Landscaping

I left the proposal with Marguerite – she’s going to share it with the planners who meet each Thursday morning. The hope is that they can provide feedback as to what’s missing or how I can improve the proposal. In particular, I’m hoping they will approve the “shed roof” design that Patrick worked up below.



If this design is too “modern”, then we have a fallback design (though I feel the shed-roof is vastly superior and mitigates the building scale much more effectively):



]]> http://www.shawnbusse.com/private/houseblog/preliminary-land-use-review-meeting/feed 0