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 related to the development of an ADU. All City fees directly (including pre-development costs) related to the development of the ADU are eligible for reimbursement. An example of an indirect cost would be the fees to restore a driveway or landscaping after the installation of 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 discretion of Rochester Community Development Department. A review of the performance of this pilot program will be conducted once all the program funding has been used and a potential extension of the program with additional funding will be considered. 

View the ADU Pilot Program Guidelines.

For more information, please contact Adam Froke (afroke@rochestermn.gov).

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 by, the following:
  • All income earned by head of household, spouse, and other family member’s age 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, MFIP (Minnesota Families Investment Program).
  • Average net income for self-employed applicants being 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 renters’ gross household income tabulation includes:
  • Earned income of family members under 18 years of age.
  • Income of family members who are full-time students may or may not be counted as income, as is identified by HUD income determination requirements.
• There is no asset limit in this program, however 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.

Applications

View the Application. 

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. 

1. Detached ADUs: These are standalone structures that exist independently of the primary dwelling. Detached ADUs can be small cottages or converted garages.
   • Advantages: Offer privacy and a sense of separation from the main house. Provide flexibility in terms of design and use.
2. Attached ADUs: Attached ADUs are connected to the main house and may share walls or a common entryway. They are generally built as additions to the existing structure but can also be conversions of existing rooms.
   • Advantages: Convenient access to the main residence, making it suitable for families who want to stay close while having independent living spaces.
3. Interior ADUs: These ADUs are created by converting existing interior spaces within the main house, such as basements, attics, or unused rooms. They may have a separate entrance or share common areas with the main residence.
   • Advantages: Utilizes existing space efficiently and often involves lower construction costs compared to building a separate structure.

To build an ADU on your property, you will need to create a design concept for your project. Here are some questions you should consider when adding an ADU to your property: 

• Do I want the ADU to be attached or detached from the primary residence?
• What is my budget for building the ADU?
• Who will be living in the ADU once it’s completed?
• How large does the ADU need to be to meet the needs of future occupants?

Site Plan 

After answering these questions, you'll need to develop a site plan for the project.  The site plan should include:

• The location of the primary structure and ADU
• Gross square footage
• Setbacks
• Access points
• Other relevant information

The initial site plan you submit to City staff can be informal, but the final design and construction documents must be prepared by a licensed architect in the State of Minnesota.

Pre-Development Meeting

Once you have a site plan and a basic design concept prepared, it is recommended that you request a Pre-Development meeting with City staff.

• Meetings are held every Thursday afternoon, starting at 1 pm.
• Meetings serve as an opportunity for City staff to provide advice and inform applicants about procedural requirements for new development projects.
• During the meeting, project-related issues are discussed, and information is exchanged.
• You must submit the meeting request and any required documents by 5 pm on the Thursday of the week prior to the desired meeting.
• Please refrain from submitting a Pre-Development Meeting Request Form until you have, at a minimum, a site plan prepared to submit.
• Additional information on Pre-Development Meetings and the request form are available at www.rochestermn.gov/planning.

The following document outlines the minimum code requirements applicable to a detached ADU. While not comprehensive, it serves to inform about some of the codes that must be adhered to. Read the Detached Accessory Dwelling Units Minimum Code Requirements.

1. Rental Income: One of the main motivations for building an ADU is the potential for generating rental income. An ADU can be used as a rental unit, providing a steady stream of extra income, which can help offset mortgage payments, property taxes, and other housing-related expenses.
2. Multigenerational Living: ADUs offer an ideal solution for multigenerational living arrangements. Families can use the ADU to accommodate aging parents, adult children, or other relatives while maintaining privacy and independence. This setup fosters close family bonds while allowing everyone to have their own space.
3. Increased Property Value: Adding an ADU can significantly enhance the overall value of a property. The additional living space and versatility appeal to potential buyers, making the property more attractive on the real estate market. This can lead to a higher resale value and a better return on investment.
4. Home Office or Studio Space: The rise of remote and hybrid work has increased the demand for home office spaces. An ADU can serve as a dedicated workspace, providing a quiet and separate environment away from the main residence. Similarly, it can be utilized as an art studio, music room, or any other creative space.
5. Housing Flexibility: ADUs offer flexibility in housing arrangements. Property owners can use the space for various purposes, such as hosting guests, providing accommodations for short-term rentals (e.g., Airbnb), or creating a private retreat for family and friends.
6. Affordable Housing/Housing Shortage Solution: ADUs can address the shortage of housing units and affordable housing in Rochester. The 2020 Comprehensive Housing Needs Analysis for Olmsted County identified a demand for over 14,000 additional housing units by 2030 to accommodate the growing population. While ADUs may not fully bridge this gap, they serve as a strategy to increase housing density and provide affordable dwelling units.
7. Environmental Benefits: In many cases, ADUs can be designed with sustainable features, promoting eco-friendly living. Smaller living spaces generally have a smaller environmental footprint, and homeowners may choose to incorporate energy-efficient technologies, green building materials, and renewable energy sources.