Is an Accessory Dwelling Unit (ADU) for You?

By Kathryn White

The Denver Planning Board voted Sept. 7 to move a rezoning application for the majority of West Highland on to Denver City Council, which would allow nearly 4,000 additional properties to build an accessory dwelling unit.

The application to allow the construction of accessory dwelling units (ADUs) now goes before the council’s Land Use and Transportation committee, and a City Council public hearing is tentatively scheduled for Nov. 7.

The proposed zoning would add 3,265 parcels in North Denver to the 3,929 already rezoned to allow ADUs in Regis, Chaffee Park, and Sloan’s Lake. While interest and new zoning for the structures has increased, the city issues only 60-70 permits a year for them.

According to an Aug. 16 update to City Council from senior city planner Joshua Palmeri, 72,425 city parcels currently allow ADUs, but fewer than 400 permits were issued from 2010 to 2021.

Why so few?

The small number of successfully permitted ADUs can be explained, in part, by complicated zoning and permitting requirements associated with their construction. Even when a lot is zoned to allow an ADU, there are a host of other criteria impacting whether it ultimately can or will be used for one. For example, minimum lot size.

If a lot’s zone district allows an ADU, but the lot size does not meet the current requirement for minimum size, it is ruled out for a permit. Given that other aspects of code constrain an ADU’s size and placement on a property, a minimum lot size requirement may be redundant.

When Councilwoman Amanda Sandoval learned that the minimum lot size requirement ruled out a third of Sloan’s Lake properties that had just been rezoned to allow ADUs, she asked Denver Community Planning and Development (CPD) to convene a task force geared toward examining this and other barriers to ADU construction.

In late 2021 CPD launched a community- driven update to the Denver Zoning Code called ADUs in Denver.

Per its website, “This project will not change where in the city ADUs are allowed, but will look at how they are designed, how they fit in with different types of neighborhoods and block patterns, and how updates to the zoning code may reduce barriers to creating ADUs.”

The project’s goals point directly to Blueprint Denver, a citywide land use and transportation plan first adopted in 2002 and updated in 2019. Of two Blueprint Denver policy recommendations pertaining to ADUs, one is directly within the scope of ADUs in Denver. The other, not directly addressed but on the minds of many, would diversify housing choices across the city through the expansion of ADUs in all residential areas.

This recommendation contains strategies specific to alleviating strain on homeowners at risk for involuntary displacement.

ADUs in Denver Community Advisory Committee

The project’s Community Advisory Committee began meeting in March 2022, with North Denver represented by six residents with a range of connections to city planning and zoning processes.

Renee Martinez-Stone is the Director of West Denver Renaissance Collaborative (WDRC), an initiative of the Denver Housing Authority. WDRC’s ADU Pilot Program team, along with other ADU builders, developed a spreadsheet of obstacles prior to Martinez-Stone joining the Advisory Committee.

“Expanding access to ADUs can help homeowners cope with change and rising housing costs in their neighborhood,” Martinez- Stone said. “We’ve learned that removing barriers doesn’t necessarily lead to an inundation of ADUs. But it can be very important to a few who want to stay.”

Tom Malone’s ADU in the West Highland neighborhood has been licensed for short-term rentals from the city since at least 2019, according to his license number. Photo courtesy of Tom Malone

CPD staff explored potential barriers with community and committee members during the project’s first months, and have now turned their attention to developing alternatives to current zoning code. In the Aug. 16 LUTI briefing, Palmeri shared a list of 10 barriers the alternatives seek to address, starting first with the minimum lot size requirement. Another pertained to the re-use of existing structures, a common consideration in North Denver.

The city is looking at greater flexibility around setbacks and other limits when a homeowner would like to convert a current structure—provided it is safe to do so—into an ADU. Charles Cook is familiar with the challenges of meeting numerous zoning requirements that apply to ADUs.

Last year he was denied a zoning variance to construct an ADU atop a current garage behind his home on Meade Street. His variance request asked that his proposed ADU be allowed to encroach “2 feet 8 1/2 inches into the 5 foot north side interior setback.”

Setbacks—the distance between a structure and the property line—are currently greater for habitable spaces than they are for garages. Since Cook’s garage does not comply with the setback for habitable spaces, his request was denied.

“I’m not going to tear down a perfectly good structure just to build a new one a few feet over,” Cook said.

Next steps

The ADUs in Denver zoning code update plans to have proposals before City Council in late 2022, around the same time council will consider the West Highland zone district change.

During the Aug. 16 LUTI briefing, Councilmembers Sandoval and Clark encourage Palmeri to work inter-departmentally to explore how fees for water and sewage can be scaled more appropriately to the smaller structures. Beyond the environmental impact of demolishing his existing garage, Cook cited financial impacts.

“One particularly harsh aspect of the system today is that it can cost up to $5,000 just to get to the point of the BOA saying no,” he said.

ADU standards are highly complex and overlapping, Martinez-Stone said.

“But other barriers are one size fits all Permit and Use fees and development requirements that arise in permitting that add tens of thousands of dollars to the final ADU cost,” Martinez-Stone said.

For those looking at an ADU for a home office or to house a family member, the highly complicated process could end there. If rental income is a goal, there are additional considerations.

Short-term rental

Once permitted and constructed, an ADU that is rented out for stays of 29 or fewer days is subject to Denver’s short-term rental (STR) license requirement.

These are issued through the Department of Excise and Licenses and must be renewed annually. There are fees and taxes associated with maintaining a STR license, but some can be collected and paid to the city behind-thescenes through platforms like Airbnb and Vrbo.

The property must be the host’s primary residence. Tom Malone has lived on Stuart Street for 33 years, where a previous owner had obtained a permit to expand an 1890 carriage house. Malone has since renovated it.

Today it’s a permitted ADU as well as a licensed short-term rental. Malone enjoys hosting visitors to Denver through AirBnB.

In October, Malone will be 10 years retired from a 43-year career with the railroad. Hosting a STR provides income and gives Malone something enjoyable to do with his time.

“People from around the world and across the United States have stayed in my guest house. I enjoy meeting people who are visiting Denver, people from France, Italy, England, and every state in this country,” Malone said.

Obtaining and renewing the STR license “gets convoluted at times,” Malone said, “but city staff have been really helpful. I have nothing but the highest regard for city employees.”

Denver’s STR Advisory Committee (STRAC) meets quarterly to discuss the city’s STR licensing program and offer guidance to Denver Excise and Licenses. The committee includes STR hosts and non-hosts, people from related industries, city staff and City Council members.

Kayla Greathouse joined STRAC a few months ago and appreciates the range of experiences and viewpoints making up the committee. She understands that each neighborhood may have a different orientation toward STRs.

“I’m not in favor of short-term rentals where I live in Montbello and Green Valley Ranch,” Greathouse said. “I’m concerned short-term rentals take housing inventory away from the long-term rental market, where we are seeing a significant shortage.”

Cindy Sestrich has served on STRAC since its inception in 2016, the year a city ordinance was passed to require that STR owners live on the property. Sestrich, who lives in Cheesman Park, has been involved with city zoning and planning issues since the 1980s.

“I hope as access to ADUs expands in Denver, people will consider renting them out long term,” she said, “to address our housing shortage.”

When it comes to STRs, Sestrich added, “Be a good neighbor. Encourage your visitors to get to know the neighborhood. If it’s a quiet neighborhood, include that in your listing.”

Long-term rental ADUs

ADUs that are rented out for stays of 30 days or more will soon be subject to an ordinance requiring landlords to obtain a residential rental license. The ordinance sets out to maintain minimum housing standards like functioning toilets, kitchen sinks, bathtubs or showers, and living spaces free of pests such as cockroaches, mice, and bedbugs.

Beginning Jan. 1, 2023, landlords with two or more rental units on a property must submit a license application, to be renewed every four years.

By Jan. 1, 2024, single unit rentals will be required to have submitted the application. The process includes an inspection, so landlords are encouraged to visit the city website and begin the process in advance.

The application fee is $50 ($25 if you submit early) and a license fee that ranges from $50-$500, depending on the number of rental units per parcel.


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