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Denver City Council Approves Accessory Dwelling Unit Loan Program

Forgivable loans of up to $25,000 available to moderate-income homeowners who build ADUs in West Denver

Moderate-income homeowners on Denver’s westside who aspire to build accessory dwelling units now have a new tool to help them do so, thanks to a Denver City Council vote. Tonight, the council approved a forgivable loan program, to help broaden the pool of homeowners who can participate in the new West Denver Single Family Plus (WDSF+) pilot program, launched in late 2018 by the West Denver Renaissance Collaborative (WDRC).

“ADUs are stabilization and wealth building tools for our hard-working residents, and we’re proud to be able to increase accessibility to this affordable housing tool,” Mayor Michael B. Hancock said. “By improving affordability in more neighborhoods through this program, we can provide greater equity and improve access to opportunity for more families and communities that need some relief.”

Homeowners earning up to 80 percent of the area median income in nine neighborhoods may be eligible to apply for a loan of up to $25,000 to cover a portion of the costs of building an ADU through the WDSF+ program. The loan is essentially a grant, so long as the homeowner fulfills affordability requirements that ensure they or the secondary tenant earn less than 80 percent of the area median income and that the ADU or primary house rent does not exceed the 80 percent area median income maximum rent for 25 years. 

The ADU pilot program provides moderate- and low-income qualified homeowners with development, design, financing and construction resources to develop a detached ADU. The program is offered to households earning up to 120 percent of the area median income with ADU zoning in the following neighborhoods: Athmar Park, Barnum, Barnum West, La Alma/Lincoln Park, Sun Valley, West Colfax, Westwood, Valverde and Villa Park.

New housing created through the program will be designated as affordable housing, to be occupied or rented at a rate no higher than the 80 percent area median income maximum rent. Deed restrictions will be placed on the entire property of participating households, requiring the second occupant household of either the ADU or the primary home to earn up to 80 percent of the area median income.

“We’re grateful to our partners with the West Denver Renaissance Collaborative for bringing this housing innovation forward,” said Britta Fisher, chief housing officer with Denver Economic Development & Opportunity (DEDO). “In addition to helping households maintain their existing homes, the ADU pilot program underscores our efforts in delivering more affordable units. This is a creative approach to increase and integrate affordable housing at a more neighborhood scale that’s consistent with the character of our west Denver neighborhoods.”

Designed to mitigate involuntary displacement in West Denver by providing homeowners with an additional income stream, the program offers a process for low-cost ADU development. Denver Community Planning and Development will be working with WDRC to help streamline permitting for eligible residents who choose one of WDRC’s ADU designs, ranging from studios to 3-bedroom units. WDRC has partnered with Habitat for Humanity of Metro Denver to build an estimated 40 homes during the two-year pilot period.

“Across the west Denver neighborhoods, homeowners want to stay in their homes and grow home equity, while also providing a new and much needed affordable home,” said Renee Martinez-Stone, WDRC director. “The City's ADU loan funding bolsters the WDSF+ Pilot Program goal to ensure moderate- and low-income homeowners have equitable access to ADU development.”

Tonight’s action by City Council approves an ordinance request to provide $500,000 to WDRC to fund up to 20 forgivable loans during the pilot. DEDO allocated $500,000 from Denver’s Affordable Housing Fund to the forgivable ADU loans.

Recognizing that obtaining financing to build an ADU can be challenging, WDRC provides access to housing counseling services and referrals to aligned lenders including the Fannie Mae HomeStyle loan and similar refinance and construction mortgages.

Financing resources also include a new $3 million loan fund established by FirstBank specifically for the ADU pilot program.

“FirstBank is honored to provide financing for a program that won’t only preserve affordable housing in Denver, but increase the number of affordable housing units on the market,” said Amber Hills, Market President at FirstBank. “More importantly, we recognize this pilot can help prevent displacement among low income families, and ensure folks have an equitable place to live and work. This is about doing what’s best for our communities, and while we have a long way to go, we believe this gets us one step closer to mitigating our affordable housing crisis.”

A total of five households are currently moving forward through the program, with the first groundbreaking to take place in June.

For more information on the ADU pilot program visit or call 720-932-3136.