The Accessory Dwelling Unit (ADU) Pilot Program supports property owners in the City of Rochester to develop ADUs on their properties. The program provides up to $20,000 in reimbursements for City fees and indirect costs associated with developing an ADU. All City fees, directly related to the development of the ADU (including pre-development costs), are eligible for reimbursement. An example of an indirect cost is the fee to restore a driveway or landscaping after installing a water service line to the ADU. The applicant will be required to provide documentation and rationale for any requests for the reimbursement of indirect costs.
At this time, the City has allocated $60,000 to the ADU Pilot Program. All fee reimbursements are subject to funding availability and are reviewed at the Rochester Community Development Department's discretion. A review of the pilot program's performance will be conducted once all program funding has been used, and a potential extension with additional funding will be considered.
For more information, please contact Adam Froke.
Property Eligibility
The constructed ADU can be attached or detached to the existing structure(s) on the property. To be eligible for reimbursements in this program, the ADU must be located within the City Limits or Near Term Urban Expansion areas per the City of Rochester’s Growth Management Map.
Additionally, the constructed ADU will need to meet the standards outlined in the City of Rochester’s Unified Development Code (UDC) and adopted building codes.
Applicant Eligibility
Either the property owner or the person(s) occupying the ADU after construction need meet the following eligibility requirements:
- Gross Annual household income cannot exceed 80% of the Area Median Income (AMI) as determined by the US Department of Housing and Urban Development, Section 8 Program. Gross annual household income includes, but is not limited to, the following:
- All income earned by the head of household, spouse, and other family members aged 18 years or older who reside at the residence.
- Any other income source (child support, alimony, food stamps, etc.)
- Income from Social Security, Pensions, Annuities, general relief, unemployment, and MFIP (Minnesota Families Investment Program).
- Average net income for self-employed applicants is the average annual income from the previous two years, excluding depreciation, as reported in the tax return.
- Income contributed or paid to the applicant on a regular basis by a person not living in the housing unit.
- Income not to be included in the renters’ gross household income tabulation includes:
- Earned income of family members under 18 years of age.
- The income of family members who are full-time students may or may not be counted as income, depending on HUD's income determination requirements.
- There is no asset limit in this program; income derived from assets will be considered towards the gross household income.
Fair Market Rents and Short-Term Rentals
The following fair market rents (FMR) and short-term rental requirements will apply to ADUs funded through this pilot program. Should the property owner elect to live in the ADU and rent the primary dwelling on the property, the same requirements listed below will apply to the primary dwelling.
- Owner Income Qualified
- No FMR requirements
- Short-term rentals are permitted
- Renter Income Qualified
- FMRs are required for a period of 3 years.
- Short-term rentals are not permitted for a period of 3 years.
In the event that FMRs are required, the property owner will sign a covenant agreeing to maintain the rental unit at the fair market rents for the Rochester, MN HUD FMR Area for a period of 3 years. Rental rates will be verified annually through a Certificate of Rent Paid submitted by the property owner to Community Development Staff by February 28th of each subsequent year.
Applications
An application for the ADU Pilot Program should be completed and submitted after:
- fees for which reimbursements are being requested have been paid in full;
- construction on the ADU is complete; and
- A Certificate of Occupancy has been issued by City Staff.
For more information, including application instructions, contact Adam Froke.