ADU Programs in the USA

Flexible ADU Housing Options for Homeowners

Author

Tim Robertson
September 05, 2024

Accessory dwelling units (ADUs) are increasingly recognized as a viable solution to the housing crisis in the United States, as they offer flexible housing options that can accommodate family members, serve as rental properties, or be used as home offices. [1][2]

ADU Friendly States

Acceptance and regulation of ADUs vary widely among states and communities, with certain regions such as California, Florida, Texas, and Georgia having particularly favorable conditions for their development. These differences are largely due to local regulations, permitting processes and incentives that either facilitate or hinder the construction of ADUs, making the landscape complex and multi-layered. [3][4]

California has emerged as a leader in ADU initiatives, accounting for more than half of the ADUs in the U.S., largely due to pressing housing affordability issues. Nationwide action has been taken to streamline the permitting process and reduce restrictive zoning regulations, encouraging local governments to adopt similar reforms. [5][6]

ADU Friendly Cities

Meanwhile, cities such as Seattle and Grand Rapids are also making progress by introducing local ordinances aimed at increasing zoning flexibility and encouraging community support for ADU projects. [7][8]

Cities such as Los Angeles, Pasadena and Los Angeles County report that ADUs will account for more than two-thirds of all building permits issued between 2020 and 2022 [9]. This growth indicates strong interest from homeowners and a standardization of financing, design and building practices.

However, despite these positive trends, obstacles such as financial constraints and lack of public awareness continue to hinder broader adoption of ADUs in various communities. [4][8]

Notable controversies surrounding ADUs include concerns about gentrification, neighborhood character, and the potential of increased density leading to infrastructure congestion.

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While ADUs are often marketed as "naturally affordable" housing options, they often arise in more affluent neighborhoods, raising questions about their effectiveness in meeting the needs of very low-income renters. [9][10]  

Balancing the promotion of affordable housing with maintaining community integrity remains a critical challenge as communities continue to navigate the regulatory landscape of ADUs. [11]

ADUs in the United States

The popularity and implementation of ADUs vary significantly by state and municipality and are influenced by local regulations, permitting processes and incentives.

ADU Community Initiatives and Ordinances

Several communities have actively supported the development of ADUs through favorable regulations and initiatives. Santa Cruz, for example, has established informative resources for prospective ADU builders, including basic requirements, standards and fee estimates.

The city also offers the Safe Structures Program to facilitate inspections and permitting of unpermitted structures to improve the safety and viability of ADUs in the community [11]. Similarly, ADU ordinance discussions in cities like Bellingham reflect a growing willingness to revise and improve zoning regulations to allow freestanding ADUs, which could further expand housing options [12].

ADU Financial Considerations

The financial aspects of ADU development also play a crucial role in its acceptance. Potential investors are advised to conduct thorough cost-benefit analyzes to determine the viability of building ADUs, which can serve multiple purposes, including rental income and family housing [13].

Local governments are increasingly recognizing the need for tailored financing solutions to assist homeowners with their ADU projects, as a well-planned financial strategy can allay concerns and promote successful construction [14].

Addressing ADU Affordability Challenges

Despite the promise of ADUs as a "small solution to a big problem" in the housing market, there are affordability challenges. Although ADUs are often referred to as "naturally affordable," they are typically built in more affluent neighborhoods and may not meet the needs of very low-income renters.

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In the U.S., there is an urgent need for nearly 7 million units of housing for renters earning 30 percent or less of the median income [10].

Although trends indicate a positive move toward ADU adoption, affordability remains a critical issue for many communities.

ADU State Level Regulations

Washington State

Washington State has enacted several laws to encourage the development of accessory dwelling units (ADUs). These laws provide a regulatory framework for homeowners and local governments that facilitates the construction and use of ADUs.

Key aspects include restrictions on size and occupancy, with state laws generally limiting ADUs to a certain square footage and number of bedrooms [1]. However, local authorities retain the power to enact their own building codes and regulations, which may impose specific requirements such as setback distances, height limits and design guidelines [1].

ADU Local Zoning and Permits

In Washington State, local building codes have a significant impact on the construction of ADUs. For example, cities like Seattle have made sweeping changes to increase development density by eliminating parking requirements and relaxing owner-occupancy rules, providing homeowners with more flexibility to build detached dwelling units (DADUs) [15].

Cities like Spokane, on the other hand, impose special regulations, such as height restrictions depending on proximity to neighboring properties, to preserve privacy while encouraging densification [15].

The permitting process also varies by jurisdiction, so homeowners must contact local building departments to ensure compliance with local building codes and obtain the necessary permits. This is critical to the safety and legality of the ADU project, as requirements can vary from location to location [1].

Comparison with other states

Compared to other states, Washington's approach to ADUs is generally more progressive. States such as California and Oregon have also adopted positive policies towards ADUs by cutting red tape and encouraging local authorities to formulate flexible policies.

For example, California has proactively eased restrictions and expedited permitting processes for ADU construction, while Oregon is promoting housing diversity through pilot programs in cities like Portland [15]. This trend reflects a broader movement on the West Coast to address the housing shortage through innovative housing solutions like ADUs.

ADU City-level initiatives

Seattle's Reforms

Seattle has made sweeping changes to encourage the development of accessory dwelling units by removing parking requirements and relaxing property regulations. These reforms aim to increase density in a city facing significant housing problems and high rates of homelessness, and to use ADUs as a means to address these problems in a sustainable way [16][15].

The City's Housing Action Plan includes a public participation process and initiatives to streamline the permitting process for transit-oriented development, which will include options for mixed-income housing and incentives for affordable housing developers [17][18].

Spokane's Unique Regulations

Spokane, Washington, has enacted special regulations for ADUs, such as height restrictions based on proximity to neighboring homes, to ensure privacy while encouraging redensification. This approach demonstrates how suburban areas can effectively integrate accessory dwelling units into their communities, preserving neighborhood character while addressing housing shortages [15].

ADU Regional Collaboration in Boston

In Greater Boston, 15 mayors have worked together to develop regional solutions to housing problems, including zoning reforms to increase housing supply. Arlington, Massachusetts has proposed density bonuses for affordable housing and higher density development in the city center as part of this initiative, demonstrating how cities can work together to address regional housing issues [18].

Innovative programs for ADUs in West Denver

West Denver has introduced the West Denver Single Family Plus (WDSF+) pilot program to help low- and moderate-income homeowners finance ADUs. This initiative also includes work sessions to guide homeowners through the ADU construction process, emphasizing community support to address housing needs [16].

ADU Statewide Policy in California

California is leading the way in adopting progressive policies for ADUs, easing restrictions and expediting permitting processes. Local governments in the state have been encouraged to adopt flexible policies tailored to their specific housing issues, resulting in innovative local policies that incentivize the construction of ADUs [15].

This commitment at the state level underscores the importance of local jurisdictional flexibility in improving housing opportunities in diverse communities.

Municipal Perspectives

The Role of Community Planning

The Community Planning Collaborative, in partnership with the Santa Clara County Planning Collaborative, plays an important role in providing long-term support for Accessory Dwelling Unit (ADU) resources.

This collaboration is essential as local housing trends evolve and enable City staff to effectively address emerging challenges. The Community Planning Collaborative works closely with various jurisdictions to ensure that ADU tools remain accessible and relevant to communities in Santa Clara County [19].

Impact of Regulations and Initiatives

The importance of proactive regulatory action cannot be overstated. When the homebuilding community, builders, and the building industry are concerned about the safety of the review procedures and deadlines, they react positively.

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For example, around 2,300 new affordable homes were created last year, an increase of 80 on the previous year — the highest figures since 2005 [20].

This underscores the need to implement effective programs that educate stakeholders, including homeowners, designers and builders, about ADUs.

ADU Regulatory Challenges

While the popularity of ADUs continues to grow, they face a complicated regulatory landscape. The laws governing ADUs vary widely across states and cities.

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For example, one report found that 47% of developers are interested in building ADUs, highlighting the growing demand amid regulatory challenges [8].

In addition, cities like Seattle have taken steps to simplify the permitting process for ADUs as part of broader housing affordability initiatives, underscoring the need to remove barriers to ADU construction [22].

ADU Case Studies

ADU Development Landscape

Accessory dwelling units are increasingly being recognized as a solution to the housing shortage in various states across the United States. Different states have taken different approaches to facilitate the development of ADUs, with some allowing simplified permitting processes and offering incentives to encourage construction.

California, for example, has adopted various legislative measures that simplify the building process to encourage the production of ADUs [23][24].

ADU Regulatory Environment

The regulatory environment for ADUs varies widely by state and local jurisdiction. While some states, such as California and Oregon, have enacted laws that preempt local restrictions, allowing for greater development of ADUs, others leave the final decision to local governments, which can lead to inconsistencies and challenges for potential developers [24][25].

These case studies illustrate how targeted design solutions and supportive regulatory frameworks can effectively meet housing needs while promoting the efficient use of existing properties.

ADU Financial Incentives and ADU Grants

Various financial incentives and grant programs exist in the United States to encourage the construction of ADUs, particularly in states like California where demand for housing is high.

ADU Grant Program in California

The California Housing Finance Agency (CalHFA) offers a significant grant program for homeowners who want to build ADUs. Eligible homeowners can apply for up to $40,000 to cover pre-construction costs and one-time closing costs, which include essential expenses such as site preparation, architectural designs, permits, and fees for construction [5][26][27].

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In 2021, the CalHFA ADU Grant Program received a total of $100 million in funding, with a focus on assisting low- and moderate-income families, particularly in socially disadvantaged areas [28][26].

Additional ADU financial support

In addition to the CalHFA program, there are other financing options in California. For example, the San Diego Housing Commission offers construction loans of up to $200,000 as well as technical assistance to help homeowners build ADUs [29].

In addition, various non-profit organizations such as the California Community Economic Development Association (CCEDA) offer grants independently or in conjunction with second mortgages, making it easier for homeowners to access[30].

Other state programs for ADU development

While California stands out for its robust grant offerings, other states have also developed similar initiatives. For example, Vermont has created the Vermont Housing Improvement Program (VHIP), which provides grants of up to $50,000 to qualified homeowners for the construction of ADUs, provided they are rented [27].

Federal assistance and zoning incentives

At the federal level, grants and incentives can encourage local governments to adopt zoning reforms that facilitate the construction of ADUs. Programs that tie funding to zoning adjustments are a strong incentive for communities to embrace denser development and affordable housing initiatives [31].

Disclaimer: This briefing document is intended for informational purposes only and does not substitute for reviewing the official Municipal Code and consulting with your Community and Economic Development Department in the community you reside in.