Council adopts middle housing ordinance to meet state law, removes proposed in‑lieu fee

Newcastle — The Newcastle City Council on June 17 adopted Ordinance 2025-671 updating local land-use code to implement state-mandated middle housing and accessory dwelling unit (ADU) reforms, while excluding the staff-proposed affordable housing fee-in-lieu policy.

Councilmember Quigg introduced and later amended his motion to adopt the ordinance as presented but explicitly excluding the in‑lieu fee provision; the council approved that motion 4–3. The planning commission had forwarded the ordinance after review; the commission had been unanimous on most changes but split 3–3 on the affordable-housing provision.

What the ordinance does The ordinance implements the state’s 2023–2024 middle housing and ADU requirements that take effect July 1. Among the key changes adopted: - Allow duplexes in areas zoned for single-family housing as required by state law. - Permit two ADUs on a lot that has a single-family dwelling in accordance with state law; ADUs will be saleable, subject to limitations in the adopted code. - Modify ADU dimensional standards to reduce some setbacks (staff recommended reducing side setbacks to 5 feet in specific situations and reducing rear setbacks for detached ADUs) and to lower the maximum height for detached ADUs to 24 feet; attached ADUs remain subject to the existing 30-foot limit. - Add unit-lot subdivision language allowing separate fee-simple ownership of side-by-side units while preserving parent-lot dimensional standards.

What the council removed Councilmembers debated a staff proposal that would have required larger developments (four units or more, counting units ≥1,600 sq ft) to provide 10% of units as affordable (80% AMI for ownership, 70% AMI for rentals) or pay a fee-in-lieu (staff-modeled fee: $13/sq ft, to be set in the fee schedule). The planning commission was divided (3–3) on that provision. At council, members argued about whether the fee would raise housing costs or would be a modest tool to increase affordable units. The council ultimately removed the in‑lieu fee from the adopted ordinance.

Council debate and context Council debate referenced a planning commission-conducted resident survey in which about 75% of respondents said the city already offered sufficient housing variety; some councilmembers argued that additional local mandates would change neighborhood character and potentially increase local property values. Supporters of the ordinance said the changes were largely required by the state and that several staff refinements were intended to make compliance workable while protecting neighbors’ privacy (for example, semi-translucent windows on second-floor ADU façades when closer than 15 feet to a rear lot line).

Implementation and next steps The adopted ordinance meets state deadlines for ADU and middle housing rules effective July 1. Staff will return with fee-schedule updates (the in‑lieu fee was excluded) and guidance for applicants on the new ADU and middle-housing provisions.

Votes at a glance - Ordinance 2025-671 (middle housing and related code updates) as presented minus the in‑lieu fee: adopted 4–3.