Related Fees for All Applicants

1. Evaluate the fees that apply to local ADU development and identify which ones can be easily waived or reduced, including application and plan check fees, permitting fees, and impact fees (including school district or other outside agency impact fees) and/or utility system/connection charges. Keep in mind there may be limitations on fees assessed by outside agencies such as utilities and school districts. If a significant percentage of fees are assessed by outside agencies, consider if there are any funding or partnership opportunities to subsidize costs.
   • This evaluation may include a “right-sizing” of fees for ADUs. Charging the same fees as for a single-family home may be outsized for ADUs given their size and other characteristics. Jurisdictions may conduct a study or investigation of the typical impacts of ADUs on a variety of fee systems, including inspections, plan review, utilities, transportation, school systems, and more and adjust fee schedules appropriately. It may be easier to justify fee reductions based on proportional impact (for example, shorter plan review times or demonstrable reductions in automobile traffic for ADU tenants compared to primary single-family homes). 
2. Determine program mechanics. This includes: 
   • Fees to Waive or Reduce - What fees are included.
   • When and by How Much to Reduce Fees - opportunities include:
     • Waiving or reducing certain fees entirely.
     • Waiving or reducing certain fees for ADUs under a certain size.
     • Calculating fees for ADUs based on size (either per square foot or per fixture or other feature) rather than a flat fee, designed in a way to significantly reduce the fees but still base them on relative cost/impact to the agency.
   • Applicable ADU Projects – What ADUs are eligible for waivers or reductions, such as only ADUs only with existing single-family dwellings or those being developed along with new construction homes, etc. Some jurisdictions only waive fees for deed-restricted ADUs or ADUs under certain square footage. Others offer different levels of fee reimbursement based on the ADU's size or income restrictions.
   • Note: if you do not provide an across-the-board reduction/waiver for all applications, you can also use fee waivers/reductions as incentive for other goals/policies, such as:
     • Encouraging Factory-Built ADUs
     • Providing Development Bonuses to Nonprofit Developers(ex: land trusts)
     • Providing Pre-Approved ADU Plans
     • Incentivizing Affordable ADU Rentals
     • Incentivizing Accessible ADUs
     • Regulating the Use of ADUs for Short-Term Rentals
     • Incentivizing Climate-Resilient ADUs
3. Identify the cost and potential sources of funding for the program. Estimate the financial benefit to a typical ADU project as well as the number of applicants you think might utilize the program in a typical year. Secure support from leadership for implementing the program
4. Consider implementing the program for a limited period of time to start. Offering a time-limited financial incentive functions like a sale, encouraging applications, and can be extended for a longer time if desired. This can also help with testing homeowner interest and estimating the financial commitment to the program during an initial pilot period, then refining and continuing the program based on experience and feedback.
5. Ensure homeowners are aware of the program and its benefits. Utilize existing communication channels (e.g., city newsletters, utility bill inserts, social media), local media, targeted mailings and/or presentations to groups like local non-profit organizations working with low and moderate income residents.

External agencies may charge some of the largest ADU fees. 

• Engage in discussions with external agencies (school districts, utility companies, fire marshals, etc.) about the benefits of ADUs and possible shared goals (examples: affordable housing for families with school-aged children, additional housing in existing developed areas rather than areas with potentially higher fire hazards). 

Agency fees address only a small part of ADU development costs, which can also include design, engineering, surveying, feasibility studies, septic consultation and other fees.

• Consider other financial support that can be coupled with the fee program, such as a low-interest ADU loan program that can be offered by a local lending partner like a community credit union or the upcoming Colorado Housing and Finance Authority grant program for ADU development.
• If your goal is affordability specifically for low- and moderate-income homeowners, see Waiving or Reducing ADU-related fees for Low- and Moderate-Income Households. 

Fees are typically based on the actual costs of providing a service. Costs will need to be covered in other ways since they typically cannot just be “waived.”

• Consider general funds, housing funds, the DOLA program, or other sources that can cover part or all of the cost. 
• Consider basing the fee(s) on ADU size or characteristics rather than a flat fee, reducing the cost to the applicant but still accounting for the costs of the service.

See Waiving or Reducing ADU-related fees for Low- and Moderate-Income Households for examples of income-based fee reduction/elimination.

• Fraser: Fraser adopted Ordinance 436 amending the Plant Investment Fee (PIF) Schedule to include, among other amendments, the following:
  • Reduced PIF for apartments, mixed-use developments, and accessory dwelling units (ADUs)
  • Collection of PIF at Certificate of Occupancy versus Building Permit
  • Reduced service fees during construction
• Erie: In Erie, new accessory dwelling units are not subject to impact fee charges.
• Montrose: The City offers a discounted utility connection fee for ADUs at just $300, providing a savings of approximately $6,800 compared to the standard water and sewer tap and investment charges.

• Supporting Homeowners to Bring Preexisting ADUs into Compliance: Lowering ADU-related fees is often limited to new or conversion ADUs, but could be expanded to lowering costs for permitting pre-existing ADUs (“ADU amnesty”). Use in conjunction with a program that helps owners permit pre-existing ADUs. 
• Partnering with Lenders to Provide Loans and Financing Opportunities: This fee waiver/reduction strategy addresses only a small part of ADU development costs. Coupling it with other financial support, such as a low-interest ADU loan program or offers from a lender who will take ADU rental income into consideration, can further affordability efforts.
• Providing an ADU Cost Estimator Tool: Cost estimation tools can help homeowners understand the fees they’ll need to pay (including waivers or reductions available) as part of their ADU project.

Note: Fee reductions/waivers like this one can be used as incentives for a variety of ADU programs or goals. You can refer back to this strategy to learn more about the potential mechanics and issues of instituting a fee waiver/reduction for: 

• Encouraging Factory-Built ADUs
• Providing Development Bonuses to Nonprofit Developers
• Providing Pre-Approved ADU Plans
• Incentivizing Affordable ADU Rentals
• Incentivizing Accessible ADUs
• Regulating the Use of ADUs for Short-Term Rentals
• Incentivizing Climate-Resilient ADUs