Encouraging Factory-Built ADUs

1. Complete an analysis of existing regulations. Conduct a comprehensive review of local building and planning regulations to identify barriers to factory-built ADUs. This includes evaluating design standards, inspection requirements, and utility connection policies.
2. Assess the existing review process. Conduct a review of current application, review, and inspections processes for factory-built ADUs, paying particular attention to the process for utility tie-ins. 
3. Conduct stakeholder engagement. Collaborate with local stakeholders, including manufacturers, homeowners, local government staff, and community groups, to identify priorities and challenges related to factory-built ADUs.
4. Update local code and internal processes to remove barriers. Relevant options for code and procedural changes include:
   • Expressly allowing both HUD-certified and DOH-certified factory-built units where ADUs are permitted.
   • Amending design requirements to provide flexibility for factory-built units, such as allowing exterior materials and roof slopes to not match those of the primary home.
   • Simplifying foundation requirements for standard soil conditions and making clear the locations in which standard foundations are allowed. 
   • Removing site-specific requirements (e.g., requirement to install noise reducing windows) that do not implicate life and safety issues but make it more challenging to install a singular design across an entire city or county. 
   • Streamlining the process for securing encroachment permits.
   • Providing clear guidelines for utility tie-ins without mandating upgrades that are not essential for health and safety.
   • Update internal processes to ensure factory-built ADUs are not subject to unnecessary review and inspection. (This effort is also mentioned in Additional Opportunities to Streamline ADU Approval.)
5. Utilize available external resources to assist with code updates. DOLA provides a Template Land Development Code (formerly known as the Model Land Use Code) that includes helpful language. 
6. Conduct a feasibility assessment. Analyze the administrative, financial, and operational implications of proposed changes, ensuring they align with local goals and capacity.
7. Coordinate with other jurisdictions. Consider coordinating these efforts with other jurisdictions, to promote consistent rules and regulations throughout the State. 
8. Prepare for implementation and internal communication. Develop clear guidelines, informational resources, and communication strategies to support homeowners and factory-built ADU developers and ensure smooth adoption of any new laws. Provide any necessary training to local government staff to ensure they are informed of regulatory updates and can consistently implement them.

Local officials and the public may have a limited understanding of factory-built ADUs.

• Provide training sessions and public outreach to educate stakeholders about the benefits and standards of factory-built ADUs.
• Consider state-level partnerships and resources, such as the DOH, to support education efforts.

Community members may resist factory-built ADUs due to misconceptions or aesthetic concerns.

• Highlight successful examples of factory-built ADUs and incorporate design flexibility to address aesthetic considerations.

Updating and enforcing new laws can add administrative burden.

• Streamline administrative processes and ensure adequate staffing and resources to support implementation.

HOAs and Common Interest Ownership Associations (i.e. condominium associations) may want to place particular limitations on factory-built ADUs. 

• For HOAs, HB24-1152 states that HOAs in Subject Jurisdictions or ADU Supportive Jurisdictions cannot restrict ADUs in any of the ways that HB24-1152 prohibits (which includes a prohibition on applying more restrictive standards to factory-built ADUs). While it does allow HOAs to apply “reasonable restrictions,” such restrictions cannot “unreasonably increase the cost to construct, effectively prohibit the construction of, or extinguish the ability to otherwise construct, an accessory dwelling unit.”
• SB24-174 (passed by the General Assembly during its 2024 session) prohibits Common Interest Ownership Associations from adopting new regulations that prohibit or restrict the construction of ADUs if the zoning laws of the local jurisdiction would otherwise allow ADUs.

• Golden: Factory-built homes that meet the definition of a manufactured home are allowed as ADUs. Temporary housing such as RVs and campers is explicitly prohibited. The zoning code specifically mentions that mobile homes not meeting that definition, along with other types of temporary housing (campers, trailers, etc.), cannot be used as ADUs.
• Superior: The City’s Land Use Code prohibits mobile homes for use as an ADU, but allows manufactured homes to be used.

Note: Ensuring Factory-Built Units Receive Efficient Review overlaps with this strategy, but refers specifically to the review and approval process, staff training, and communication rather than a broader update to local ADU code.

• ADU Technical Assistance for Homeowners: Provide clear guidance for property owners on what is and is not required as part of a permitting process for factory-built units. Note where there is a difference in fees, applications, inspections, and other important parts of the application and review process.
• Providing a Vendor Registry or other Connections to Local ADU Professionals: Building and maintaining a vendor list or registry can connect property owners to factory-built ADU companies that operate in your area, paying particular attention to companies with ADUs that meet special requirements (see notes about Accessible ADUs and Climate-Resilient ADUs, below). Before publishing this list, please consult with your municipal attorney, communications team, and/or procurement specialist.
• Waiving or Reducing ADU-related fees for Low- and Moderate-Income Households
  Waiving or Reducing ADU-Related Fees for All Applicants: See these strategies for details on fee waiver/reduction mechanisms that could also be used as incentives for factory-built ADUs. 
• Partnering with Lenders to Provide Loans and Financing Opportunities: Traditional financing opportunities may not be as readily available for factory-built units, but financial partnerships may make it easier to finance a factory-built unit. 
• Incentivizing Accessible ADUs: Some factory-built ADUs are designed to meet accessibility requirements, with features like wide doorways and hallways, low-threshold shower entry, grab bars, and roll-up vanities, counters, and workspaces. Homeowners utilizing accessible ADU incentives for units that support tenants with disabilities or tenants who are aging in place may find it easier to start with a factory-built unit that meets certain standards or has a package of features already in place.
• Incentivizing Climate-Resilient ADUs: Likewise, some factory-built ADUs may be a good means of achieving a variety of climate-resiliency standards, including higher energy efficiency standards, electrification of heating/cooling, renewable energy generation, fire-resistant building materials, and net zero (including balancing energy needs with on-site energy generation). Pairing climate-resiliency incentives with encouragement for factory-built units may help achieve both goals.