Salt Lake City Council members will allocate millions of dollars in city funds for West Side homeowners as part of a program to promote building accessory dwelling units — a first in the city’s history.
The city’s Community Reinvestment Agency adopted a resolution Tuesday afternoon that sets aside $2.9 million to be used for loans of up to $200,000 per household for building ADUs.
The resolution sets aside just over $1.9 million specifically for homeowners in the 9 Line Community Reinvestment Area, which is centered around 900 South and extends into portions of the Poplar Grove and Glendale neighborhoods. The remaining $1 million will be available for ADU development anywhere in Salt Lake City limits to the west of Interstate 15.
The funds are available only to West Side residents, as that’s where the funds originated. In 2021 when Salt Lake City and Salt Lake County created the 9 Line Community Reinvestment Area, the two entities agreed to use part of the RDA’s tax increment revenue to create an ADU program, according to the CRA’s staff report.
The ADU loan program will be administered by the nonprofit Community Development Corporation of Utah, as the CRA began accepting proposals from third parties last year and found that CDCU was the best option. When the program begins, the CDCU will likely be the entity accepting applications.
Austin Taylor, a project manager for the CRA, said the program could finance between 15 to 20 ADUs — which could be internal, attached or detached. Taylor said there are certain deed restrictions based on income for those who get the ADU loans.
He said the loans were available to homeowners in two ways. If a homeowner’s income is at or below 80% AMI, their ADU can be rented at market rate. But if a homeowner’s income is above 80% AMI, the ADU must be rented out at an affordable rate to renters earning 80% AMI or less. The 80% AMI renter requirement would last until the loan is paid off, Taylor said during the Tuesday meeting. It’s also possible in this program to have a property owner live in the ADU while renting the main home.
The city has an owner-occupant requirement in order to build and rent out an ADU.
Homeowners who qualify could receive “a loan of up to $200,000 with a 30-year amortization, a five-year term, and a 3% fixed interest rate,” according to a CRA staff report. If the ADU is rent-restricted to 80% AMI or lower, the homeowner could be eligible for up to 10% of the loan balance being forgiven.
To be eligible, homeowners must also participate in the city’s good landlord training and CDCU’s financial counseling programs. Taylor told the council that CDCU will conduct affordability compliance to ensure the homeowner and ADU tenant’s incomes are within the terms of the loan agreement, and the homeowner would be responsible for paying a $200 yearly fee for this compliance check.
Construction costs are a major hurdle for homeowners looking to build ADUs, and with interest rates remaining high, a 3% interest rate on a city-backed loan would be a boon for homeowners looking to build another unit on their property.
A search of Salt Lake City’s citizen access portal shows citizens filed 98 permits for ADUs in 2024 alone, though that doesn’t mean all of those ADUs were built. Since the beginning of the year, residents have filed another 15 permit requests for ADUs in Salt Lake City.
Before unanimously approving the program, City Council Members voiced their enthusiasm for the program getting off the ground, especially Council Member Alejandro Puy, who represents the Glendale and Poplar Grove neighborhoods.
“It’s very exciting to see this program start on the West Side that allows our families to stay on the West Side,” Puy said. “It also adds gentle density to these neighborhoods — there are all sorts of amazing things about this program, so I’m very excited.”
Council Member Dan Dugan, who represents neighborhoods on the city’s east side, said if the ADU loan program is a success, he hopes to expand it to other areas of the city.
“I think it’d be nice to look at (the program’s success) in the future after this two year program, to see maybe expand this beyond what we have here,” Dugan said.
How to apply for the ADU loan program
Taylor told Building Salt Lake he expects the program will open applications sometime this summer, adding he’s already heard people interested in the loan program. Once the application is available, the city and CDCU will begin marketing the program on a broad scale.
The program is set to last two years, or until the loan funds are gone. The deadline for allocating the funds is June 2027.
For additional questions regarding the ADU loan program, you can contact Taylor at Austin.Taylor@slc.gov.
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