DENVER–The Colorado Department Local Affairs (DOLA) doled out nearly $1 million in state tax dollars to seven municipalities between August and October of this year in an effort to jump start construction of accessory dwelling units (ADUs).
ADUs (also known as granny flats) are secondary housing units on a single-family home lot. They can range from 400-1,200 square feet and can be attached to the primary home, constructed in the backyard, above a garage, or can be converted from a garage or basement.
The grants are part of the Polis administration’s push to increase the number of ADU’s across the state by subsidizing things such as pre-approval costs, technical assistance, and waiving, reducing, or otherwise helping with various fees.
“Colorado is leading the way on the freedom to build an accessory dwelling unit on your own property,” Gov. Polis said in DOLA’s announcement of the grants.
Joshua Sharf, senior fellow in fiscal policy at the free-market Independence Institute* says that while ADUs may be a good investment for property owners, the grant program amounts to unnecessary state spending.
“ADUs are, in principle, a way of gently creating more housing without having to pound down drastic increases in density on a neighborhood,” Sharf told Complete Colorado, “That said, the right way to do this isn’t to spend more taxpayer money to pay local governments for the barriers they’ve imposed on these units, it’s to remove the barriers.”
ADU mandate
House Bill 1152, passed in 2024 as part of a Polis-backed package of land-use and zoning requirements, mandates that certain local governments allow construction of ADUs where zoning laws already permit single-family homes. The law went into effect this June and encompasses some 67 jurisdictions.
According to DOLA, 82% of those jurisdictions are complying with HB-1152, while those that are resisting what they consider an intrusion into local control are facing state funding threats from not just DOLA, but also the Colorado Energy Office, the Colorado Dept. of Transportation and the Office of Economic Development and International Affairs.
As for the actual popularity of building ADUs, records obtained by Complete Colorado show that Denver, which already allowed construction of the units in many parts of the city prior to the state mandate, has issued a total of only 231 ADU permits in the last three years (none of the grant money given out between August and October went to Denver.)
DOLA handed out $325,000 to the Grand Junction, $225,000 to Superior, $105,000 to Larimer County, $84,000 to Glenwood Springs, $75,000 to Fruita, $38,025 to Brighton, and $37,500 to Longmont.
“The cities most in need of this kind of thing aren’t outlying or rural areas where there should be plenty of room to build, they’re in the Denver-area which, which with the exception of Brighton, is left untouched by these grants,” Sharf noted.
The next round of ADU grant funding will open up February 2, 2026.
*Independence Institute is the publisher of Complete Colorado.
