At some point "small" presumably becomes "too small".
If you are hiding your chickens in a garage or a basement, you are not allowing your chickens to behave like chickens. At this point, I don't see how this is
permaculture, where you can argue you are working with chickens as part of an ecosystem.
This doesn't seem to me to be a
permaculture question - more one about how you can get away with keeping chickens under the noses of the law.
In the interests of the perfect not being the enemy of the good, if you have a basement, and want to grow animal protein, I suppose you could try cockroaches, mealworms or one of the other edible insects suited to zone 1.