They’re called accessory dwelling units, or ADUs – small housing units built on the same property of an existing home. The small flats are also called “granny flats” or “backyard cottages,” and are only allowed on properties that have a single-family home.
ADUs have been allowed in Madison for almost a decade. But until recently, homeowners had to get special approval from the city. Last December, the city streamlined that approval process.
Linette Rhodes is a grants supervisor with the city’s development department. She says that, despite cutting red tape, residents are still facing barriers to try and build their own granny flats.
“We have gotten more interest in building granny flats, or accessory dwelling units, but one of the barriers we heard from people was the lack of available financing to start the construction process,” Rhodes says.
Enter the Backyard Homes Project. It’s a loan program to help a handful of Madison homeowners build their own backyard cottage. The project will supply a small number of homeowners with low-interest, city loans to help with construction, labor costs, or solar panels.
These loans are not intended to cover the full cost of the ADU. And they can’t be used for landscaping, furniture, or appliances. They’re intended to help kickstart homeowners to begin the project.
“We are going to offer the financing as an installment loan with a very low interest rate of 2%. It gives people an opportunity, especially if they are facing barriers in the normal private market, access to some type of funding to start that construction,” Rhodes says.
The city has budgeted $400,000 for the program, enough to cover around five to seven ADUs. The max loan that someone can apply for is $130,000.
The cost to actually build an ADU can vary greatly depending on whether it is built within the house itself, or if it is built as an addition.
“We have seen prices anywhere from $100,000 if they were building within their own building unit, up to around $230,000. It really comes down to the design of the building that someone is going with. We are also using this as an opportunity to collect information as we are providing these loans to see what the average costs are in our community,” Rhodes says.
There are still some restrictions as to who can build the ADUs. The ADUs must be built on the property of a single family home, and can be a maximum of 900 square feet, with a maximum of two bedrooms.
The loans are available on a first come first serve basis. Applications are available on the city’s Department of Planning and Community and Economic Development website, under the home loans tab.
The Backyard Homes Project comes as Madison continues to struggle with housing. Late last year mayor Satya Rhodes-Conway added ADUs to her Housing Forward plan, to help find new ways to increase housing in Madison. It is estimated that the city could see 70,000 new residents by 2040.
Photo courtesy: Karl JK Hedin / UNSPLASH