City of Grand Junction

Program Design and Considerations

Waiving or Reducing ADU-Related Fees for Low- and Moderate-Income Households / Regulating the Use of ADUs for Short-Term Rentals

The City’s ADU Production Program offers two tiers of incentives. 

• Tier 1, open to all ADU developers, requires that all units on the property remain a long-term rental for five years. In exchange, the City pays the impact fees (currently $9,097 in total). 
• Tier 2 is open to ADU developers who will commit to living on their property where the ADU is developed and who have household incomes below 140% Area Median Income (AMI). All units on the property must be kept as a long-term rental for seven years. In exchange, the City pays the impact fees and provides an additional direct financial incentive of nearly $6,000 (amounting to $15,000 of financial incentives in total). 

Both tiers disincentivize leaving the program early, charging those that do 20% of the Total Fee Payment fee plus an additional 20% of the Paid Impact Fees (and additional incentive) for each full or incomplete year left in term for early termination. The ADU Production Program is supported by General Fund dollars, with an annual allocation of $250,000. Funding is distributed on a first-come, first-served basis. In 2024, the City fully utilized the allocated funds and successfully requested additional support from City Council. To date, the program has not been competitive, and funding has remained accessible to eligible applicants.

Since the program’s introduction, the City has seen an increase in ADU development, with unit counts increasing from 17 units before 2023 to 34 in 2024. Community interest has been high, with unanimous council support and minimal public opposition.

To ensure program compliance, a Covenant agreement is placed on the property with outlined terms and is transferable to future owners of the property for the remaining term or could be cashed out at transfer of title. Additionally, property owners are required to provide a copy of any lease agreements with new tenants or on an annual basis.

Amending ADU Codes to Increase Development

• Updating Design and Dimensional Standards: They allow ADUs up to 900 square feet, but they must be smaller than the primary structure. 
• Allowing Multiple ADUs on the Same Lot: Grand Junction allows up to two ADUs per lot, but only one may be detached; both may be attached.

Homeowner Technical Assistance

To encourage development, City staff developed an ADU Toolkit, available in both English and Spanish, which describes the types of ADUs residents can build, breaks down the application process, and provides a Cost Estimator and a Requirements and Site Sketch worksheet. They also conduct quarterly workshops, with Spanish interpretation available, and use a detailed form to gather information from participants. 

Takeaways

City staff underscored several initial challenges to ADU development, including costs and fees and lack of homeowner experience, but that most of these issues have been resolved with new changes that have been made. City staff are closely monitoring new guidelines for Proposition 123—a 2022 measure that allocates existing state sales tax revenue to support affordable housing—due to concerns that some new units may not qualify toward the initiative’s housing production goals. City staff has found that flexibility for homeowners is key; for example, allowing extensions in meeting compliance requirements. 

In coming years, the City plans to release pre-approved ADU plans to streamline the development process. They are currently exploring program expansion, which may include a construction loan or grant program to reduce homeowners costs and construction delays, along with enhanced incentives for those who commit to offering affordable rents-at or below 60 % AMI – and to income-qualifying their tenants. 

Resources

• City of Grand Junction ADU Webpage includes information on the ADU Production Program and homeowner outreach materials
• ADU Ordinance effective April 16, 2023