City full conversions will cost nearly $100,000 — but how much can be subsidized?
The city of Kissimmee continues to study a plan to help subsidize city homeowners who want to turn their two-car garages into studio apartments, in order to provide more affordable housing.
In May, Commissioner Angela Eady asked the city about the feasibility of allowing those who those homes are their primary residence (homesteaded) who are not governed by a homeowners association to be permitted to do so, with city funds helping pay the cost. If the homeowners use city funds, they’d pay a portion of the rent generated back to the city for a certain period of time.
The City Commission asked its staff to study the matter, and at Tuesday’s Commission meeting, Development Services Director Craig Holland provided some ideas and background on what that plan might look like.
Accessory Dwelling Units of at least 500 square feet are allowed by city code, but they must have a kitchen, bathroom and bedroom or sleeping area separate from the primary housing, along with a minimum of a paved on-street parking space. To fit code, they must have their own power and water meters, and all work must be permitted by the city.
“They are a dwelling unit, it’s the same for any other house or apartment,” Holland said, noting fires responders can be in peril if they don’t know it’s there. “Just because something is listed affordable, doesn’t mean it should be less than any other unit in the city.”
If the ADU increases the home’s value — it likely would — its property taxes would also increase, Holland said. The cost of and ADU was central to Holland’s presentation.
With construction (about $175 per square foot), materials, permits, utility development impact fees, he estimated the full cost of a build would come to just under $100,000, with detached units costing slightly more.
“Some of the city fees can be waived,” Holland said.
“Affordable rent” in Kissimmee is defined at $845 a month for those making less than half of the city’s annual median income, and $1,350 for those at 80% of AMI. Prospective tenants, who must be approved by the city, must have lived in Osceola County for at least a year, and would be income-approved annually.
The homestead requirement would prevent an outside investor buying a house, installing an ADU and renting both units, and provide oversight by the owner.
If the city were to subsidize those costs, he said a portion of the city’s annual SHIP (State Housing Initiatives Partnership) funds allocation would be a logical use. The 2024 allocation was about $628,000, and with percentages of that money already allocated, would leave about $87,500 available for the ADU program.
Holland said ADUs are already present in Kissimmee, grandfathered in under former codes. He said he would come back again in about a month to give a concrete structure for the program to make it attractive for homeowners. Eady asked Holland to run number to be able to add one unit to the housing roll this year.
“I’m going to consult with a contractor, but I think they can be built for less than ($98,849),” Eady said. “As for increased taxes, at $1,300 per month, that’s $15,600 a year. If your property taxes go up because you add an ADU, you wouldn’t even see it for what you’re getting back.”
