Sharing Best-Practices in ADU Financing

Earlier this week, the Federal City Council co-hosted a convening to highlight opportunities to scale the development of ADUs—which should help ease DC’s housing affordability and shortage problem. ADUs can be someone’s garage, their guest cottage or even their basement that is converted into a small apartment. ADUs are a relatively easy way of creating more housing density, particularly in low-density neighborhoods. Back in 2016, the DC government made it easier for homeowners to build ADUs “by right” across the city. But progress has been slow and there are few ADUs being produced.

That’s why FC2 convened experts from DC, Los Angeles, Portland, Seattle, Denver and the Bay Area to discuss how cities can make it easier to finance and build ADUs. Los Angeles, for example, is testing an ADU construction loan product and in Portland an ADU second mortgage product. There may also be ways to speed up the building process or reduce costs—could DCRA approve permits more quickly or waive some fees? Could ADU owners receive a tax break for the first 5 years? Could the building code have more flexibility for ADUs?

We are excited to be part of a growing network of ADU advocates, stakeholders and experts. And we are delighted that the city is actively engaged. Several senior DC government officials participated in this week’s meetings, including the Director of DCRA Ernest Chrappah and staff from the DC Office of Planning and Department of Housing and Community Development.

We look forward to working closely with the DC government to bring ADUs to scale.