Accessory Dwelling Unit (ADU) Grant Program

The Accessory Dwelling Unit Grant Program (ADUG), administered by the Colorado Department of Local Affairs (DOLA) through its Community Development Office, is a state-funded initiative aimed at supporting the construction and development of accessory dwelling units (ADUs) across Colorado. Established by HB24-1152, the program provides financial assistance to local and tribal governments certified as ADU Supportive Jurisdictions. These jurisdictions must demonstrate compliance with relevant state legislation and implement at least one supportive strategy that facilitates ADU development within their communities. The ADUG program is structured to accommodate both planning and development activities related to ADUs. Planning grants may be used for technical assistance, development of incentive programs, or the creation of pre-approved ADU designs. Development grants are designed to help offset costs such as permit fees and other financial burdens associated with new ADU construction. Notably, there is a statutory funding cap of $15,000 per ADU for the development category, based on the number of permitted ADUs during a specified evaluation period. For the Fiscal Year 2025–2026, approximately $1.6 million was allocated to the program, with $700,000 remaining for the current funding cycle. Applications for this second round of funding open on February 2, 2026, and close on February 27, 2026, at 5:00 PM. Eligible applicants must submit proposals through the Division of Local Government (DLG) Online Grants Portal. A mandatory 25% local match is required, which may include federal, state, or nonprofit/private funds. Exceptions for reduced match amounts may be considered in cases of financial hardship, pending consultation with DOLA staff. To be eligible, jurisdictions must focus their proposals on supporting low-, moderate-, or medium-income households, as defined by HUD. Additionally, grant funds must support the development of affordable, accessible, or workforce housing ADUs. Ineligible uses include general operating expenses, lobbying, entertainment, and indirect costs, among others. Applications must show a robust stakeholder engagement strategy and a detailed plan for implementing the grant-funded activities. Evaluation criteria for ADUG applications are rigorous and comprise two components: the Project Score (80% of total) and the Strategic Growth Compliance Score (20%). The Project Score assesses project impact, use of ADU supportive strategies, local support, readiness, capacity, and engagement efforts. Extra points may be awarded for proposals that include accessible ADUs, modular construction, or demonstrate strong compliance with strategic growth goals. Applicants are encouraged to review DOLA’s ADU Toolkit and consult with their regional DOLA representatives before submitting applications. Award decisions are expected within two months of the deadline, with grant agreements finalized shortly thereafter. For inquiries, applicants can contact Jack Wolflink, Housing & Transit Grant Program Manager, or Nicola Donaven, Housing & Transit Program Assistant. The program emphasizes long-term ADU program development and aims to promote sustainable, community-specific solutions to Colorado’s housing challenges.

Demonstrate local support, ADU permit count, and clear workplan for implementation.