New law legalizes ADUs, aims to lower housing costs

(COLORADO) — Governor Jared Polis signed a law on Monday, May 13 that will keep money in Coloradans’ pockets while building new housing.

The newest bill legalizes Accessory Dwelling Units (ADUs), a secondary residential unit that is located on a property that contains a separate main home.

“Coloradans have demanded solutions that will reduce the cost of housing and I’m proud that we have worked together to deliver real results,” said Governor Polis. “Accessory dwelling units are a lower-cost option that can help increase housing choices for Coloradans. Coloradans are overwhelmingly supportive of ADUs and this legislation gives many Coloradans the freedom to build them on their property if they choose to. I appreciate the work of the bill sponsors and look forward to seeing Coloradans take advantage of this new freedom.”

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HB24-1152 allows homeowners in certain jurisdictions to build an ADU with fewer obstacles.

The grant also creates a new $5 million state grant program to help local governments implement policies to promote and streamline the construction of ADUs. It will allow local governments to support lower and middle-income Coloradans to build an ADU, property owners to rent their ADU at an affordable rate, and the construction of accessible ADUs.

“Colorado families and communities are desperate for solutions to help address the housing crisis and build more homes for working Coloradans,” said Senator Kyle Mullica. “Our bill will give more Coloradans the freedom and support they need to build ADUs on their property, allow more older Coloradans to age in place, and create more affordable housing options in our communities.”

The bill will provide $8 million in funding through the Colorado Housing and Finance Authority to help homeowners in ADU-supportive jurisdictions build ADUs, including with down payment assistance, affordable loans, and buying down interest rates on loans for the conversion and construction of the ADU.

“Everyone deserves a safe and comfortable place to live, but too many families are struggling to afford the cost of housing in our state,” said Senator Tony Exum. “By giving folks the flexibility to build ADUs on their property, as well as providing grant funding to help cover construction costs, we can bring down housing prices and keep more Coloradans in the communities they call home.”

On Monday, May 13, the Governor also signed HB23-1313, a new law that encourages communities to build more housing near transit which will improve the air quality and reduce time and money spent in the car.

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