ADUs legal everywhere?

ADUs legal everywhere?

Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes

FACT SHEET: Biden-⁠Harris Administration Announces Immediate Steps to Increase Affordable Housing Supply

https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/01/fact-sheet-biden-harris-administration-announces-immediate-steps-to-increase-affordable-housing-supply/

Will local governments change zoning to allow for ADUs/bypass existing zoning variance processes? ——- I could see it happening in Philadelphia, where the new progressive city council has their eyes on housing and tenants rights.

At some point will it come from the Fed, similar to how California did nationwide. ——— I don’t know if the current administration has the political capital to pull it off, but it seems like they have the will.

What do you think?

If it happens near you will you pivot your business to take advantage of it? How would that look for you? ———- for me I think it means I would convert my primary into a duplex, but wait until my family is ready to move (5+ years). It is the only SFH I have that is big enough to split.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
5y

Manufactured homes are the #1 solution to the affordable housing issue, but government won't allow anyone to build more manufactured home parks. It's already extremely difficult to find a place to park one, especially a nice one.

More four-plexes for "black and brown people"? Guess which investors are most likely to be hurt by government policies? I think the majority of mom-and-pop Landlords that are losing their shirts due to the eviction moratorium are minorities. 

I didn't read the whole thing but I can tell you this: there is a major disconnect between what they put on paper and what happens in reality. I wouldn't bet on any helpful changes in the near future.

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  • Michael WalkerPro Member
    Rental Property Investor · Puyallup, WA · Member since 2018 · 2 posts · 2 votes
    5y

    Thanks Max, this is a very interesting development and could definitely change the margins of cash flow to favor the investor. Tarl had a recent video highlighting the idea of converting detached garages into DADU's. Looking at the tenant side, I really believe that it would create housing options at a more affordable price point.. Win-Win.

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    Manufactured homes are the #1 solution to the affordable housing issue, but government won't allow anyone to build more manufactured home parks. It's already extremely difficult to find a place to park one, especially a nice one.

    More four-plexes for "black and brown people"? Guess which investors are most likely to be hurt by government policies? I think the majority of mom-and-pop Landlords that are losing their shirts due to the eviction moratorium are minorities. 

    I didn't read the whole thing but I can tell you this: there is a major disconnect between what they put on paper and what happens in reality. I wouldn't bet on any helpful changes in the near future.

    The DIY Landlord Book4.7248 Reviews
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Nathan Gesner:

    Manufactured homes are the #1 solution to the affordable housing issue, but government won't allow anyone to build more manufactured home parks. It's already extremely difficult to find a place to park one, especially a nice one.

    More four-plexes for "black and brown people"? Guess which investors are most likely to be hurt by government policies? I think the majority of mom-and-pop Landlords that are losing their shirts due to the eviction moratorium are minorities. 

    I didn't read the whole thing but I can tell you this: there is a major disconnect between what they put on paper and what happens in reality. I wouldn't bet on any helpful changes in the near future.

    Oregon passed these ADU laws a long time ago. and you see basements converted and some new builds ( we have done it) but its not affordable housing.. its housing for those that can afford 1500 to 2500 a month for a one bed room in a great neighborhoods.

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y
    Originally posted by @Jay Hinrichs:

    Most people can barely afford what they've got, so it's typically only people with money that can afford to build an ADU and then they'll rent it for a high price.

    I'm a fan of less-restrictive laws, but have reservations about the long-term impact. When you double the number of residents on 25% of the lots, that's a big increase in parking. How does it impact traffic flow? Pollution? Landfill? Water and electric demands? Wastewater treatment? And it may work well in an upper-class community where people are better citizens. Population density and low-income do not produce good results.

    Anway, I hope it works.

    The DIY Landlord Book4.7248 Reviews
  • Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    5y

    Zoning and Land use policy is (and should always be) regulated at the State and/or local level, the Fed would at best simply be incentivising States to implement ADU legislation. These decisions should be local, not federal. Even here in CA they've made it a State decision and there are many cities residents that are opposed, and rightly shouldn't have this shoved onto them. And I say that as someone that does think the ability to add density with ADUs is a great start, just like they commonly did in the late 1800s and early 1900s in every city that experienced major growth.

    Overall the solution to housing affordability is 15 years out. It is places that get built today and eventually 'age' into a more affordable tranche of renters. It costs what it costs to build and you can't 'wish' that it is any other way. If you look at just about any area and find the most affordable rentals they have to offer, and then explore the replacement cost I can almost guarantee that every time  it is cheaper to buy existing than to build new. 

    This is an aside, but there was a scene in the show 'West Wing' about the economy etc. The context was politicians trying to 'fix whatever problem was coming:

    President Bartlet: Okay, let's get on coming up with a language plan for talking more realistically about the economy. That session this morning with the advisors; everybody's got a magic lever they want you to push. I studied economics all my life but in this job only a fool is ever certain. You don't push any one lever; you wanna push a little on them all.

    There's no magic bullet...just a general shift in perspective by pushing a little bit on all the levers that can help resolve the issue over time. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Nathan Gesner:
    Originally posted by @Jay Hinrichs:

    Most people can barely afford what they've got, so it's typically only people with money that can afford to build an ADU and then they'll rent it for a high price.

    I'm a fan of less-restrictive laws, but have reservations about the long-term impact. When you double the number of residents on 25% of the lots, that's a big increase in parking. How does it impact traffic flow? Pollution? Landfill? Water and electric demands? Wastewater treatment? And it may work well in an upper-class community where people are better citizens. Population density and low-income do not produce good results.

    Anway, I hope it works.

    Nathan as for the new ADU rules Portland is the poster child for this as well as most of Oregon.. I can do an ADU here in Lake Oswego and if I put a covenant on it that its a true granny unit direct relative going to live in it then NO permit fee's If I am going to rent it permit for a ADU is about 50k in our market so thats before you put a spade in the ground. Portland Metro has very high density rules and has had for years so its already here.. I built 3 homes in city of Portland in 2019/2020 it was a 40X100 lot and I put 3 SFR's on it 2 were attached and one was free standing.. zoning did NOT ALLOW for any off road parking.. I wanted to go under and have parking below but that was not allowed the city planners want people to take metro and ride bikes .. so yes you look at the street and its a mess when those 3 units bring 3 to 6 cars with them and no place to park .. the laws are changing now to get even more density in these areas of SFR.. Every lot now can have a duplex.. So you can imagine in areas were you have stately 1 to 3 million dollar homes and someone all of a sudden wants to build a duplex LOL.. not popular.. I just sold one in the Historic district close to downtown and the investors is putting ADU in Basement building a garage with ADU above then on the side lot another ADU.. and that house was basically a tear down I sold for 700k.. so to make the math work he is going to be in this 1.2 at least and now you have the main house an adu above garage an Adu in basement and the other adu.. so rents will all be well over 2k per door to make that work.. so affordable Na planners and city fathers puff their chest out about how great they are doing proving additional housing YA..

  • Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
    5y

    If you think housing is expensive now wait until it is a right.

  • Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes
    5y

    @Max T., After having seen the first wave of ADU's coming online near me, I'm convinced it's not anything that's going to make a dent on the housing problem in the Bay Area. ADU's are being used to get around local FAR/zoning rules and they're mostly being used to house family members or for offices. Not to mention I'm still wary about what will happen to your property value here if you start treating an SFR as a duplex.

    I think the ADU law was passed because there is no political will to eliminate single family residential zoning even though that's really what housing advocates want to do. I've also been thinking about how this idea of the "missing middle" housing is also misguided in how it's being implemented. The missing middle policies should address 2-4 units AND all those 5-20 unit apartment buildings that developers used to be incentivized to build. But a lot of those areas have been down zoned in favor of huge apartment complexes downtown.

  • Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Nathan Gesner:

    Manufactured homes are the #1 solution to the affordable housing issue, but government won't allow anyone to build more manufactured home parks. It's already extremely difficult to find a place to park one, especially a nice one.

    More four-plexes for "black and brown people"? Guess which investors are most likely to be hurt by government policies? I think the majority of mom-and-pop Landlords that are losing their shirts due to the eviction moratorium are minorities. 

    I didn't read the whole thing but I can tell you this: there is a major disconnect between what they put on paper and what happens in reality. I wouldn't bet on any helpful changes in the near future.

    Oregon passed these ADU laws a long time ago. and you see basements converted and some new builds ( we have done it) but its not affordable housing.. its housing for those that can afford 1500 to 2500 a month for a one bed room in a great neighborhoods.

    It's an additional supply of doors. Legally allowing ADUs produces a shift in the supply curve to the right, which means equilibrium prices decrease. However it's not as though converting basements is going to change the world. It's still the same overall square footage.

  • Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    @Jay Hinrichs

    I think the idea is that by increasing the total supply, housing overall gets more affordable. Not necessarily that the new ADUs are affordable.

  • Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    @Nathan G.

    This is why we pay urban planners!

  • Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    @Robert C.

    Could that be because the supply/demand balance there is so out of whack already?

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Max T.:

    @Jay Hinrichs

    I think the idea is that by increasing the total supply, housing overall gets more affordable. Not necessarily that the new ADUs are affordable.

    Might be the idea but in practice in high priced markets does not solve the affordability issue which for instance in PDX caused the state and city to enact rent control over the entire state and a further enhanced version in the city of Roses.

  • Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    @Jay Hinrichs

    Rent control seems crazy. But increasing supply has to be a step in the right direction? Not solving the problem overnight. But chipping away at it.

    I think Nathan said it best. Supply will go up fastest when constriction costs goes down. Modular is the way to go. But local building codes and unions are opposed to it.

  • Baltimore, MD · Member since 2018 · 431 posts · 281 votes
    5y
    Originally posted by @Nathan Gesner:

    Manufactured homes are the #1 solution to the affordable housing issue, but government won't allow anyone to build more manufactured home parks. It's already extremely difficult to find a place to park one, especially a nice one.

    More four-plexes for "black and brown people"? Guess which investors are most likely to be hurt by government policies? I think the majority of mom-and-pop Landlords that are losing their shirts due to the eviction moratorium are minorities. 

    I didn't read the whole thing but I can tell you this: there is a major disconnect between what they put on paper and what happens in reality. I wouldn't bet on any helpful changes in the near future.

     The prejudice against new manufactured housing really quite infuriates me.  They are so very needed and can look just like stick-built with the front-end porches, especially, and are now built to general housing standards.  Forget a MHP, they should be in regular neighborhoods.  And I'm not ever looking to live in one unless it's my summer home on a beach somewhere. lol.

  • Baltimore, MD · Member since 2018 · 431 posts · 281 votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Nathan Gesner:

    Manufactured homes are the #1 solution to the affordable housing issue, but government won't allow anyone to build more manufactured home parks. It's already extremely difficult to find a place to park one, especially a nice one.

    More four-plexes for "black and brown people"? Guess which investors are most likely to be hurt by government policies? I think the majority of mom-and-pop Landlords that are losing their shirts due to the eviction moratorium are minorities. 

    I didn't read the whole thing but I can tell you this: there is a major disconnect between what they put on paper and what happens in reality. I wouldn't bet on any helpful changes in the near future.

    Oregon passed these ADU laws a long time ago. and you see basements converted and some new builds ( we have done it) but its not affordable housing.. its housing for those that can afford 1500 to 2500 a month for a one bed room in a great neighborhoods.

    Who's going to go to all the bother of building an ADU unless it at least covers your substantial taxes, insurance, and utilities on your main house? I'm considering an ADU on our property--considering doing STR, since I'm pretty close in to DC, so you'd better believe I'd be going for more than $2000/mo.

    Most of these neighborhood also have very hard limits on rental levels.   So what can do is moving non-homeowners into an owner-heavy area while owners still maintain it, which actually does make rental areas less concentrated.  

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Max T.:

    @Jay Hinrichs

    Rent control seems crazy. But increasing supply has to be a step in the right direction? Not solving the problem overnight. But chipping away at it.

    I think Nathan said it best. Supply will go up fastest when constriction costs goes down. Modular is the way to go. But local building codes and unions are opposed to it.

    Ya it highly market specific to.. when in our area and much of the west were this is badly needed permits to put any structure up on.. run 30 to 75k or more.. so in reality you can crane in an ADU and plop it on a lot plenty of those companies produce those from Container homes ( here is a good friend of mines company) www.relevantbuildings.com by the time you even buy one of these and pay all the fee's and then the foundation and run utls etc. your going to be in it 200k at least..

    So the basement ADU I see those working you can do those like you said in the same Sq ft.. and of course depends on the basement configuration and if you need to add egress windows et.. but 50k should dial one of those in.

    I guess its competition to the apartment owners.

  • Baltimore, MD · Member since 2018 · 431 posts · 281 votes
    5y
    Originally posted by @Matt Devincenzo:

    Zoning and Land use policy is (and should always be) regulated at the State and/or local level, the Fed would at best simply be incentivising States to implement ADU legislation. These decisions should be local, not federal. Even here in CA they've made it a State decision and there are many cities residents that are opposed, and rightly shouldn't have this shoved onto them. And I say that as someone that does think the ability to add density with ADUs is a great start, just like they commonly did in the late 1800s and early 1900s in every city that experienced major growth.

    Overall the solution to housing affordability is 15 years out. It is places that get built today and eventually 'age' into a more affordable tranche of renters. It costs what it costs to build and you can't 'wish' that it is any other way. If you look at just about any area and find the most affordable rentals they have to offer, and then explore the replacement cost I can almost guarantee that every time  it is cheaper to buy existing than to build new. 

    This is an aside, but there was a scene in the show 'West Wing' about the economy etc. The context was politicians trying to 'fix whatever problem was coming:

    President Bartlet: Okay, let's get on coming up with a language plan for talking more realistically about the economy. That session this morning with the advisors; everybody's got a magic lever they want you to push. I studied economics all my life but in this job only a fool is ever certain. You don't push any one lever; you wanna push a little on them all.

    There's no magic bullet...just a general shift in perspective by pushing a little bit on all the levers that can help resolve the issue over time. 

     The solution is factory-built modular and getting rid of all the "smart growth" fools--it's the next generation of Limits to Growth nonsense.  And West Wing was written by economic illiterates who think you can push a string.

  • Baltimore, MD · Member since 2018 · 431 posts · 281 votes
    5y
    Originally posted by @Robert C.:

    @Max T., After having seen the first wave of ADU's coming online near me, I'm convinced it's not anything that's going to make a dent on the housing problem in the Bay Area. ADU's are being used to get around local FAR/zoning rules and they're mostly being used to house family members or for offices. Not to mention I'm still wary about what will happen to your property value here if you start treating an SFR as a duplex.

    I think the ADU law was passed because there is no political will to eliminate single family residential zoning even though that's really what housing advocates want to do. I've also been thinking about how this idea of the "missing middle" housing is also misguided in how it's being implemented. The missing middle policies should address 2-4 units AND all those 5-20 unit apartment buildings that developers used to be incentivized to build. But a lot of those areas have been down zoned in favor of huge apartment complexes downtown.

    People are buying houses on much, much smaller lots than in the 50s and 60s now.  There's a demand for this, and not really a demand (demand-side) for any missing middle housing.  If I rent in a big apartment complex, I get the pool and the basketball court and the regular maintenance dude.  If I have a house, I have a house.  Only the people who don't care about the pool and basketball court and dog park or will take $X0 less a month for not having it want the fourplex.  If you're going to put up with a duplex, demand-side again, might as well get a townhouse.

    Supply-side demand (investors), there are good reasons for these, though, and there's enough people who don't value the big complex perks enough that it doesn't matter.  But let's all be honest.  What's more likely to get run down and nasty?  A court of six fourplexes, now owned by four different people, or a sterile corporate garden apartment complex?  Both can, but one is more likely than the other.

  • Baltimore, MD · Member since 2018 · 431 posts · 281 votes
    5y
    Originally posted by @Max T.:

    @Nathan G.

    This is why we pay urban planners!

     Urban planners are political actors these days and little more.  Urban planners pride themselves on their new disastrous policy fixing the last disaster they forced on everyone.  Been that way since the 1920s.

  • Baltimore, MD · Member since 2018 · 431 posts · 281 votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Nathan Gesner:
    Originally posted by @Jay Hinrichs:

    Most people can barely afford what they've got, so it's typically only people with money that can afford to build an ADU and then they'll rent it for a high price.

    I'm a fan of less-restrictive laws, but have reservations about the long-term impact. When you double the number of residents on 25% of the lots, that's a big increase in parking. How does it impact traffic flow? Pollution? Landfill? Water and electric demands? Wastewater treatment? And it may work well in an upper-class community where people are better citizens. Population density and low-income do not produce good results.

    Anway, I hope it works.

    Nathan as for the new ADU rules Portland is the poster child for this as well as most of Oregon.. I can do an ADU here in Lake Oswego and if I put a covenant on it that its a true granny unit direct relative going to live in it then NO permit fee's If I am going to rent it permit for a ADU is about 50k in our market so thats before you put a spade in the ground. Portland Metro has very high density rules and has had for years so its already here.. I built 3 homes in city of Portland in 2019/2020 it was a 40X100 lot and I put 3 SFR's on it 2 were attached and one was free standing.. zoning did NOT ALLOW for any off road parking.. I wanted to go under and have parking below but that was not allowed the city planners want people to take metro and ride bikes .. so yes you look at the street and its a mess when those 3 units bring 3 to 6 cars with them and no place to park .. the laws are changing now to get even more density in these areas of SFR.. Every lot now can have a duplex.. So you can imagine in areas were you have stately 1 to 3 million dollar homes and someone all of a sudden wants to build a duplex LOL.. not popular.. I just sold one in the Historic district close to downtown and the investors is putting ADU in Basement building a garage with ADU above then on the side lot another ADU.. and that house was basically a tear down I sold for 700k.. so to make the math work he is going to be in this 1.2 at least and now you have the main house an adu above garage an Adu in basement and the other adu.. so rents will all be well over 2k per door to make that work.. so affordable Na planners and city fathers puff their chest out about how great they are doing proving additional housing YA..

    They want to zone out parking to force everyone into public transit, so they get to tell you where you can go and when you can go there.  Too many people who grew up playing Sim City with authoritarian aspirations.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Genny Li:
    Originally posted by @Matt Devincenzo:

    Zoning and Land use policy is (and should always be) regulated at the State and/or local level, the Fed would at best simply be incentivising States to implement ADU legislation. These decisions should be local, not federal. Even here in CA they've made it a State decision and there are many cities residents that are opposed, and rightly shouldn't have this shoved onto them. And I say that as someone that does think the ability to add density with ADUs is a great start, just like they commonly did in the late 1800s and early 1900s in every city that experienced major growth.

    Overall the solution to housing affordability is 15 years out. It is places that get built today and eventually 'age' into a more affordable tranche of renters. It costs what it costs to build and you can't 'wish' that it is any other way. If you look at just about any area and find the most affordable rentals they have to offer, and then explore the replacement cost I can almost guarantee that every time  it is cheaper to buy existing than to build new. 

    This is an aside, but there was a scene in the show 'West Wing' about the economy etc. The context was politicians trying to 'fix whatever problem was coming:

    President Bartlet: Okay, let's get on coming up with a language plan for talking more realistically about the economy. That session this morning with the advisors; everybody's got a magic lever they want you to push. I studied economics all my life but in this job only a fool is ever certain. You don't push any one lever; you wanna push a little on them all.

    There's no magic bullet...just a general shift in perspective by pushing a little bit on all the levers that can help resolve the issue over time. 

     The solution is factory-built modular and getting rid of all the "smart growth" fools--it's the next generation of Limits to Growth nonsense.  And West Wing was written by economic illiterates who think you can push a string.

    these already exist..  google Boxable North Las Vegas..  but even these premade little ADus on the west coast by the time to pay all the hookup fees  building fees etc plus run utls and foundation again going to be north of 100k per door.

  • Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    5y

    @Genny Li unfortunately factory built modular can only compete so much. I've explored the cost and the requirements both personally and professionally as a site and land use civil, and the biggest savings is in reduced construction time. Your transport and installation costs are higher which offsets some of the benefit of the construction savings. 

    The factory built manufactured homes on permanent foundations which meet the new MHadvantage or ChoiceHomes lending guidelines do offer construction cost savings, but these are HUD standard (1X top and bottom plates, smaller plumbing sizing, different materials allowed) not building code standard and they are constrained to single story etc. Site built will always be more flexible in being able to address a specific challenge a site may have because it can be built piece by piece to accommodate that challenge. I do think they could be a great option, but there isn't a magic bullet to this.

    As far as the WW quote, my point wasn't the accuracy or validity of the show it was the quote being relevant. People generally look for the one thing to fix this problem instead of creating smaller changes across the broad context and shifting the overall perspective associated with addressing the issue.  

  • Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes
    5y

    @Max T., Could be, which is why I'm only talking about my neck of the woods (real estate is local and all that). BUT, something to think about - people like to look at West Coast/California/Bay Area as some weird "never could happen to here" type of place. OR, maybe it's not far fetched to think that what's happened in the Bay Area in terms of politics/supply/demand/rent control is the natural progression of things. Other states have gotten a little taste during the pandemic of what happens when the money/demand spreads across the nation. Imagine what happens if Silicon Valley tech headquarters really do fully decentralize to other locations over time.

    @Genny Li, In my opinion, the demand side of the argument in the Bay Area is totally moot. It's about supply and solving some of the affordability problems - neither of which are really addressed by the ADU's - it's just incentivizing the wrong people to build for often the wrong purpose. Just to point out a few things... 1.) If you want the brand new, not nasty corporate apartment with the amenities, you need to afford anywhere from $4500-$6500/month for a 2 bedroom. 2.) Focusing on downtown development might solve some of the problem, but it also cuts out a lot of smaller developers that could be building apartment housing instead of luxury homes. 3.) The rest of the housing stock around here is already 50+ years old.

  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y

    The Federal Government should do exactly what it was designed to do.....take care of issues where states are not the appropriate authority.....borders/tariffs/military/national infrastructure. Let local municipalities deal with local issues as their constituents see fit...

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