Provide Opportunity: New Affordable Housing With Accessory Dwelling Units

Demand for affordable housing is outpacing supply in metro areas all across the country. This forces families to spend a greater share of their income on housing and limits housing choice. In response, cities are exploring new ways, such as Accessory Dwelling Units (ADUs), to increase the affordable housing supply while preserving neighborhood character and creating opportunity for homeowners. Accessory Dwelling Units, sometimes referred to as “granny flats,” are additional living quarters on single-family lots that are separate from (but often contiguous to) the primary dwelling unit such as converted garages or carriage houses.

Some municipalities have adopted ADU programs to permit the use and construction of accessory units as an inexpensive way to increase affordable housing. ADUs help increase a community’s housing supply quickly and affordably because they cost less than new housing units to construct. They also benefit homeowners by providing extra income that can mitigate housing and property tax costs. Creating ADUs can be a cost-effective way to create affordable housing in communities of opportunity. An ADU can be constructed as an interior, attached, or detached unit. Interior units are located within the primary structure, attached units are connected to the primary structure, and detached units are separate—for example, built above a detached garage. Attached and detached units, which are visible on the exterior of the house, are typically designed to blend in with the primary structure and neighborhood architecture. Allowing the construction of ADUs offers an alternative to rental projects that would create large and expensive buildings, altering the characteristics of a neighborhood.

Case Study: Minneapolis

On December 5, 2014, the Minneapolis City Council voted 10 to 1 to approve an amendment to the zoning code that expanded the ability to build ADUs from one pilot neighborhood to any lot with single or two-unit homes. Council Member Lisa Bender, who introduced the ordinance, said, “The great thing about this ordinance is that it really fits people at all ages and different life points….It creates more affordable rental options in the city, and rental income can help homeowners stay in their homes.”

Barriers to ADU Development

There are a few common but significant challenges with ADU development. Many people say they were challenged in either obtaining financing or paying for construction or permitting fees. Another challenge is design constraints such as setbacks and height limits. Other barriers include working through the planning and permitting process.

If you are interested in using HOME or CDBG for ADUs, please contact your local HUD CPD Field Office.