As the City of Boulder considers how to revise accessory dwelling unit (ADU) regulations to encourage more homeowners to build them, it’s enlightening to note what other cities are doing to offer greater flexibility and support for this housing option. A timely new report, The West Denver Single-Family Plus (WDSF+) ADU Pilot Program documents how this program is helping low and middle-income homeowners stay in their neighborhoods, provide affordable living space for their families, earn income from their properties, and build intergenerational wealth.
In 2019, after years of intense housing pressures and displacement in west Denver due to rising housing costs and lack of affordable housing, the West Denver Renaissance Collaborative (WDRC) launched the ADU pilot program to encourage qualified low and moderate-income homeowners to build detached ADUs (separated from the primary residence) in nine west Denver neighborhoods, an area that historically was redlined and has a majority of Latinx residents with limited financial resources and the city’s highest rate of “doubled-up” households with two or more families living in single-family homes. The program was designed and funded with four goals: to stabilize homeowners and minimize displacement, provide wealth-building opportunity, create new long-term affordable units, and promote equitable access to ADU zoning and development.
ADUs have been shown to provide multiple benefits for homeowners, but for low and moderate-income households the costs and challenges often push ADU development beyond their reach. The pilot program makes building an ADU more predictable, more affordable, and thus more accessible and equitable by offering technical support that simplifies design and construction of ADUs and by providing financial incentives in exchange for long-term affordability. Technical support includes housing and counseling, pre-development services such as soil testing, pre-approved architectural models, site planning and permitting, and access to custom ADU financing, as many financial institutions do not make loans for ADUs. Financial incentives include $30,000 in a forgivable loan from the city for homeowners who agree to keep their units within affordable limits for 25 years.
The program’s architecture and construction partner, Habitat for Humanity of Metro Denver, produced the 2021 units at costs ranging from $116,000 for a studio to $188,000 for a three-bedroom ADU, an average savings of $50,000 to $75,000 compared to market-rate ADU construction, because of Habitat’s design and construction efficiencies, including ordering materials in bulk, off-site construction approaches, and volunteer labor. The program’s other partners include the Denver Housing Authority, SPARCC (Strong, Prosperous And Resilient Communities Challenge), Fannie Mae, the Colorado Housing and Finance Authority, and the City and County of Denver.
Viewed as a model for Denver and other cities, the pilot program met its target of developing 10 ADUs by December 2021, with five in construction and five in the permitting process. WDRC plans to have 50 ADUs completed or in development by the end of 2023.
For a deeper dive on the ADU pilot program, as well as a handbook and virtual ADU tour: https://www.mywdrc.org/adu-pilot-program.