A legal ruling Monday should clear the way for the Seattle City Council to consider easing restrictions on backyard cottages and mother-in-law apartments, also known as accessory-dwelling units.

The city’s environmental review of the potential changes was adequate, deputy hearing examiner Barbara Dykes Ehrlichman has decided, dismissing a legal challenge brought by a neighborhood group.

Councilmember Mike O’Brien has for years been working to loosen regulations on accessory units, describing them as a gentle way to add density.

Backyard cottages are stand-alone structures, while mother-in-law apartments are built inside houses. Mother-in-law apartments have been allowed across the city since 1994 and backyard cottages since 2010.

Under O’Brien’s proposal, Seattle would allow a cottage and a mother-in-law apartment on the same lot, would no longer require off-street parking for accessory units and would no longer require owners of properties with accessory units to live on site.

Cottages would be allowed on smaller lots, and up to 12 unrelated people would be allowed to live on a lot with a cottage and a mother-in-law, up from eight unrelated people.

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Seattle also would move aggressively to limit the size of new single-family houses. For example, the city would limit a new house to 2,500 square feet of aboveground floor area on a lot covering 5,000 square feet, excluding space devoted to mother-in-law apartments.

O’Brien has said he wants to encourage property owners to add accessory units rather than replace smaller houses with McMansions.

“I am thrilled,” O’Brien said Monday, reacting to the ruling. “It means the council can act early this summer to refine policies and provide a path for more people to build backyard cottages.”

Last October, Seattle released an environmental-impact statement that outlined how his plan could impact traffic, utilities, neighborhood aesthetics and housing and how negative impacts could be mitigated. The impact statement said the changes would make Seattle more affordable and reduce teardowns of older houses.

Under the plan, the city would add about 2,500 more accessory units over the next decade and see about 500 fewer houses torn down, the impact statement said.

The Queen Anne Community Council challenged that determination, calling the impact statement inadequate. The group alleged the changes could accelerate gentrification, lead trees to be cut down and exacerbate parking problems.

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The Queen Anne group had won an earlier challenge related to accessory units. But Dykes Ehrlichman sided with the city Monday. Whether O’Brien’s plan would help the city should be debated by the council, not decided by her, she said.

“Given the groundbreaking nature of some of the features of the proposed legislation, it is impossible to know whether none, some or all of the ill effects claimed by Appellant will come to pass,” the deputy hearing examiner wrote.

“The City has made a thorough and commendable effort to provide necessary information to policy makers regarding the potential impacts.”

Martin Kaplan, the Queen Anne Community Council’s land-use chair didn’t immediately return requests for comment.

Mayor Jenny Durkan joined O’Brien in hailing the ruling. “We need to use every tool in our toolbox to boost the supply of housing — and that includes knocking down barriers for homeowners to build more backyard cottages and in-law units.”

Some critics have argued removing the owner-occupancy requirement could lead developers to raze older houses and replace them with costly rental units. “We will continue listening to community on how we can best move forward,” Durkan added, saying she wants to help homeowners and renters — “not developers.”