Happy Tuesday, and welcome to another edition of Rent Free. This week, we're going to jump right into it with a philosophical question: What is an accessory dwelling unit anyway? 

It's a question that officials in Somerville, Massachusetts, are realizing they didn't know the answer to after learning that a state law allowing ADUs in single-family neighborhoods could also require them to approve three-story backyard mini-apartments. 

As the Boston Globe reported on Sunday, Somerville's "deep ethos in favor of new housing" is being tested by the extent of the state law. Elected officials are describing the potential for three-story ADUs as a "joke," and the area's state lawmakers, including one who voted for the state law, are demanding reforms to stop them. 

The law in question was a statewide accessory dwelling unit (ADU) legalization tucked inside a major housing package of mostly new spending programs that passed in 2024. 

The bill required municipalities to allow ADUs of either 900 square feet or half the size of the primary dwelling (whichever is smaller) anywhere single-family homes are allowed. A subsequent rule issued by state regulators also forbade localities from imposing height and bulk limits on ADUs that are stricter than the limits imposed on primary dwellings. 

That latter rule is what's causing Somerville's freakout. 

Because the town allows triple-decker apartments (a three-story triplex common in New England) in all its single-family zones, the state rule means that it must also allow ADUs to be three stories tall. 

The Globe story notes that the mini-triple-deckers could still only be 900 square feet, meaning each floor of a mini-triple-decker would have to be pretty small. Thus far, no one has proposed building an ADU tower in Somerville. 

Even so, the town is worried that someone will eventually propose one of these "out-of-scale" units that it'll have to approve. Its officials are now agitating for changes to the state law to prevent this. 

On the one hand, one can perhaps understand why Somerville officials feel blindsided. 

The text of the 2024 ADU law allows localities to set "reasonable" height and bulk limits on accessory units. It was state regulators who decided after the law's passage that requiring ADUs to be shorter than the primary unit was "unreasonable." 

On the other hand, allowing a second home on a lot to be as tall as the first house sounds "reasonable" enough. Can one complain about out-of-scale development when the new unit is the same height as an existing home and a little bit smaller?

Somerville is not the first city where people's own colloquial definition of an accessory unit as "a tiny home that doesn't bother anyone" has clashed with official regulatory definitions that allow ADUs to be a fair bit bigger. 

San Diego's ADU Bonus program once allowed a technically unlimited number of ADUs to be built on single-family parcels near transit stops. (Height and bulk regulations imposed practical limits on how many units could fit on a site.) 

That enabled developers to build what were, in effect, ADU apartment complexes on large single-family lots throughout the city. This year, the city imposed new restrictions to stop these "monster" ADU developments, including a per-lot accessory unit cap. 

The latest dust-up in Somerville, like the San Diego controversy before it, provides several lessons about the realities of housing reform. 

The first is that the definition of "accessory dwelling unit" is completely arbitrary. 

In Massachusetts, an ADU is a 900-square-foot home that can be one story or three stories, depending on the town and zoning district it's being built in. 

In Montana, it's a 1,000-square-foot unit. In California, state law can require localities to allow ADUs as large as 1,200 square feet. Under certain conditions, these ADUs can even be sold separately from the main house. 

At a certain point, an accessory dwelling unit is just a dwelling unit. A house is a house. 

The second lesson is that any ADU reform that is actually intended to produce new housing units is going to cause controversy.  

State and local laws allowing ADUs have been one of the more common forms of housing reforms to pass. 

Supply-boosters see them as a way to get a modest number of new units. Supply skeptics don't see much to object to about allowing someone to install a kitchenette and bathroom in their garage.  

If the ADU regulations don't allow much more than the garage conversion, supply-boosters will be disappointed and push for expansions of the law. California passed dozens of ADU laws before they started enabling actual units to be built. 

If an ADU law actually allows more homes, the ADUs will look like homes, and the supply skeptics will be mad. 

No amount of branding or planning will resolve the inherent conflict of some people wanting more development while others oppose it in their neighborhoods. 

Thus far, Massachusetts' ADU law has been modestly productive. The state's ADU survey reports that 2,048 ADU permits have been issued since the state law went into effect in January 2025. About half of those units are attached ADUs (think the garage with the kitchenette). 

That's a little under 10 percent of Massachusetts total housing production during that time, per the Census Bureau's building permit survey.  

At 50 units permitted, Somerville has actually approved the second most ADUs of any jurisdiction in the state. (Boston has only approved 49.) 

But now that it's facing the prospect of allowing ADUs that look like actual homes, it's starting to get cold feet about the new law. 

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Quick Links

• Speaking of Massachusetts, the town of Marblehead (of "are we kind of being pricks?" fame) has at last had its rezoning plan, which allows apartments in more districts, accepted by state officials. 
• While Spain is tightening its tenant protections and rent controls in the face of housing protests, Portugal is trying to remove regulations on its rental housing industry. Either way, housing protesters are clashing with police. 
• Single-family homebuilder confidence continues to drop. 
• The Urban Institute has a new white paper on whether data center development is coming at the expense of housing development. 
• A new report on home construction in Chicago finds that the practice of aldermanic privilege (where individual aldermen can veto projects in their district) is strangling development. 

The post ADU Nihilism appeared first on Reason Magazine.

Happy Tuesday, and welcome to another edition of Rent Free. This week's newsletter includes stories on:

• The Trump administration's latest strategy for boosting manufactured housing construction.
• Anti-pot activists' use of California's environmental review law to stop new cannabis facilities.
• Yet another data center backlash in the heart of data center country.

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Chassis Gone but Not Forgotten

Building codes for traditional site-built housing are typically set by states or local governments. Manufactured housing, which is built in off-site factories and then delivered as a completed unit to its final destination, is controlled by building codes set by the U.S. Department of Housing and Urban Development (HUD).

One major piece of direct deregulation in the 21st Century Road to Housing Act, which became law in July, was the elimination of the HUD code's requirement that manufactured housing sit on a permanent steel chassis.

Wonks debate just how burdensome this rule was and how responsible it was for causing a major decline in the production of manufactured housing.

Regardless, no one believes that the requirement did anything but raise costs for what was once a major source of affordable housing.

While Congress' new housing law officially eliminates the chassis requirement, actually implementing this deregulatory change will require a number of additional federal rules and further local and state deregulation.

The Trump administration got the ball rolling on the former last week, when HUD unveiled its "Next Generation Manufactured Housing Action Plan."

It announced HUD's plan to begin crafting new construction safety and installation standards for now-permitted chassisless manufactured housing. The Road to Housing Act requires this rule change, but does not set a deadline for when it needs to be done.

Additionally, HUD announced its plan to begin rulemaking on creating new energy efficiency standards for manufactured housing, as required by the new housing law. This must be completed by July 2027.

That's the same deadline for states to submit certifications to the federal government that they've changed their own regulations on manufactured housing to conform to the new federal rules that no longer require a chassis.

These rule changes will all take time. We can at least be sure they will happen, given that the changes are required by the new housing law.

A potential bottleneck, as always, will be local zoning codes that are not directly impacted by Congress' reforms.

Many localities still define manufactured housing as a home that's built with a permanent chassis. That language could end up blocking manufactured homes constructed without a chassis under the new standards.

Another plank of HUD's action plan is to provide "stakeholders" with information on zoning for manufactured housing. The 21st Century Road to Housing Act also creates various financial incentives for localities to update their zoning codes to allow for more housing.

That is to say, carrots can still be brought to bear to ensure that local deregulation happens. But voluntary action on the part of localities or additional preemption of local zoning laws by states will still be required for federal chassis reform to be fully realized.

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Anti-Pot Group Uses Environmental Law To Block New Cannabusiness Zoning Rules

Recreational marijuana was legalized by California voters a decade ago. The rule changes needed to allow entrepreneurs to grow and sell the stuff are still a work in progress.

Back in August, after five years of work, San Diego County at last certified its environmental review of zoning changes that would dictate where commercial cannabusinesses like dispensaries and grow operations could set up shop in unincorporated areas.

That certification has merely led to another roadblock.

In September, the group No Skunk Butts filed a lawsuit under the California Environmental Quality Act (CEQA) to block implementation of the new zoning rules.

CEQA requires local governments to study the environmental impacts of discretionary actions they undertake, including zoning changes. Third parties are empowered by the law to sue if they believe a locality did not conduct a thorough enough review of a zoning change's environmental impacts.

As reported by Village News, No Skunk Butts alleges in its lawsuit that the county did not do enough to study cannabusinesses' potential impacts on water and air quality, as well as noise and odor.

This is hardly the first time that CEQA has been used to hamstring the expansion of California's legal cannabis industry. Local activists have frequently challenged individual permits for cannabusinesses and, as in San Diego County's case, cannabis zoning and licensing regimes.

In 2017, the California Legislature attempted to forestall some of this litigation by allowing localities to pass cannabis regulatory regimes without going through CEQA. But that reform merely shifted CEQA onto individual businesses, who'd have to do their own environmental analysis when applying for permits.

Despite legalization, California's heavy-handed regulation of the cannabis industry has enabled a large marijuana black market to persist. CEQA is a major, if underdiscussed, part of that story.

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A Data Center Backlash on the Edge of Data Center Alley

Last week, the Board of Supervisors of Fauquier County, Virginia, passed a raft of new restrictions on data center construction.

The new rules eliminate by-right zoning for data centers, meaning new projects will be required to obtain special, discretionary permits. The reforms also limit data center construction to a single zone within the county, reports InsideNoVa.

Prior to the changes, data centers were allowed to be built by right in business parks countywide.

The country is in the middle of a massive backlash against data center construction. It's thus not inherently surprising that a county government would pass new rules on data center construction.

It is conspicuous that Fauquier County would do so. The jurisdiction sits just to the south of Loudoun County, home to the world's largest concentration of data centers. (It's been nicknamed "data center alley.")

Data centers have been a massive economic driver in Northern Virginia and a massive fiscal boon to the Loudoun County government, which has taken in so much revenue from these facilities that it's been able to cut property taxes on homeowners.

Loudoun County itself recently eliminated by-right zoning for data centers, which it once regulated like office spaces.

It doesn't bode well for the industry if jurisdictions that once welcomed data centers with open arms, and profited handsomely from them, are moving to restrict new facilities.

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Quick Links

• Tim Carney on the surprising walkability of America's OG car-oriented suburb.
• The strange socialist-libertarian fusion that is Vancouver, Canada's First Nation housing developments.
• Texas landowners in the way of President Donald Trump's border wall fight the federal government's eminent domain efforts.
• A British charitable foundation calls on the government to use rent control to reduce the cost of affordable housing subsidies. Road to Serfdom, anyone?

The post Code Games 2.0 appeared first on Reason Magazine.