ADU Affordability Program Checklist

Part A: Trends and Opportunities

The first step in setting up a program is researching the current landscape for ADU production in your jurisdiction or region. Understanding who builds ADUs, where and why they are built, what they rent for, who wants to but can’t, and what the barriers are to building and renting ADUs ensures a program will address real needs. Just as important is assessing who might administer a new program.

1. How many ADUs were produced annually for the past 3-4 years? 
2. Make a map of where ADUs were built. Look for patterns. Are certain neighborhoods under- or over-represented? Who is building ADUs?
3. Interview permit staff. Who is coming in with questions about ADUs? What are the barriers that people are encountering to permitting their ADUs? What are their recommendations to make the ADU permitting process easier for applicants?
4. Talk to housing advocates and housing nonprofits. What are the barriers that people are encountering to building ADUs? Are there groups of homeowners who don’t know about ADUs?
5. What are current ADU rents in your jurisdiction? A typical rule of thumb is that ADUs rent for 20% less than units in comparable apartment buildings. Start with Zillow, Trulia, Realtor.com, Craigslist and other typical housing listings if you do not have other data.
6. Are there nonprofits operating in your jurisdiction who might be interested in collaborating on an ADU affordability program? Have initial conversations with them. Do any nonprofits currently offer ADU affordability programs in the region? In some parts of the state community foundations have sponsored these programs.
7. Does your jurisdiction monitor affordable units to ensure compliance with any inclusionary ordinance? Would it be possible to use this existing system to monitor ADU affordability?
8. Are there other jurisdictions or regional governments to partner with? County governments and COGs have sometimes shown interest in these programs.

Part B: Organizational Fundamentals

In this section, jurisdictions consider their organizational, staffing, and financial capacity to run the program.

1. Who will administer the program? Will it be administered by a jurisdiction, regional or county government, nonprofit or someone else? Is there sufficient staff to administer the program?
2. How much budget is there? Be sure to consider the budget necessary to administer and publicize the program. If there is insufficient budget, consider using zoning changes, partnering with a nonprofit, or using existing monitoring systems. If there is sufficient budget, consider setting up financial incentives.

Part C: Setting Program Goals

In this section, jurisdictions think through who they want the program to serve and how to structure the program to meet the needs of that demographic.

1. Who do you want to serve? Low-income homeowners, tenants, or both?
   • To serve low- and moderate-income homeowners (i.e., provide an opportunity to build wealth), set up programs with generous incentives and minimal or no requirements to rent affordably (and income restrict the applicants).
   • To serve tenants (i.e., provide lower rents), set up programs with requirements to rent the ADU affordably for five or more years. These programs will still need generous incentives for homeowners to participate.
   • To serve both, as many programs do, you can structure your program to be more generous/less burdensome to low income homeowners or for homeowners in specific neighborhoods, or prioritize your outreach to those groups.
2. High bar/high expectation or low bar/low expectation. The key to setting up a program is to balance the incentives and requirements. Many programs do not attract interest because the requirements are too high and the incentives are too low.

Part D: Setting the Incentive

Based on the goals and target audience identified in the previous section, jurisdictions should identify incentives (balanced with requirements) that meet the needs of the program.

• Deferred Loans
• Low interest loans
• Forgivable loans
• Fee Waiver Program
• Grants
• Zoning Incentives
• Project Management Services
• Nonprofit Development

Part E: Setting the Requirement

Jurisdictions should consider at a more granular level the requirements for participating in the program.

1. Who can participate/who is prioritized? Is it open to nonprofits or anyone? Does the homeowner need to be low income? If so, what level? Does the tenant need to be low income? If so, what level? Does the homeowner need to live in their home? Does the home need to be in a certain neighborhood?
2. What rent can be charged? What AMI do you want to target? How will the rent be monitored? Consider using Section 8 or other existing monitoring programs.
3. When does it end? How long does the unit have to be rented affordably? Can the homeowner opt out early? Can the homeowner condo-ize and sell the unit after renting it affordably?