What is an Accessory Dwelling Unit (ADU)?

An Accessory Dwelling Unit (ADU) is an independent and rentable dwelling unit located on the same lot as an existing, stand-alone single-family home. ADUs come in many forms. They can be attached or detached from the main residence, or sometimes are converted as an ADU from existing portions of the home.

 

Why did Tempe update ADU regulations?

Arizona House Bill 2720 required municipalities with population 75,000 or larger to adopt regulations for Accessory Dwelling Units by January 1, 2025.

ADUs are intended to help increase the supply and affordability of housing, promote sustainability in infrastructure, enhance diversity in housing types provide housing options for aging family members, and offer potential additional income for eligible homeowners.

The adopted ADU code text amendment is available here.

For a step-by-step guide to determine eligibility, allowable size, and other requirements view the ADU Development Guide.

Where are ADUs allowed?

All lots where current zoning allows for a single-family use and contains a single-family dwelling, is allowed one attached and one detached ADU. If the lot is one acre (43,560 s.f.) or larger, one additional ADU is permitted if at least one of the ADUs on the property is identified as an income-restricted affordable dwelling unit. Renter qualifications and rental rate for such units are based on those applicable for households which earn up to 80% of Area Median Income.

 

What if my property has a duplex?

To be eligible for the ADU regulations the property must have a single-family residence. Properties that already have an existing duplex, triplex or similar are not eligible for ADUs. To determine if an existing multifamily property can accommodate an additional unit, refer to the development standards of the underlying zoning district.

 

What is the maximum square footage allowed for an ADU?

The maximum livable floor area of the ADU on lots with less than one acre in area is limited to 75% of the interior habitable floor area of the main single-family dwelling on the lot, OR 1,000 square feet, whichever is less. For lots that are one (1) acre or more in size, the maximum size of an ADU is 75% of the interior habitable floor area of the main dwelling, OR two thousand (2,000) square feet interior habitable floor area, whichever is less.

Note that lot coverage standards for the underlying zoning district will still apply.

 

What are the development standards (setbacks, height, lot coverage) for an Accessory Dwelling Unit?

Under House Bill 2720, the City cannot set restrictions for ADUs that are more restrictive than those that exist in the zoning district for single-family homes.

• Setbacks: For attached and detached ADUs, the rear, side, and street side yard setback shall be a minimum of five (5) feet in all districts, unless a lesser setback is established by the district or overlay. The front yard setback shall be consistent with the front yard setback required for buildings and open structures, as identified within the district setback tables, pursuant to Section 4-202, development standards for residential districts. If adjacent to a dedicated public alley, side and rear setbacks are measure from the midpoint of the alley.

• Height: The height of an ADU, attached or detached is limited to that allowed in the zoning district (typically 30’), see Section 4-202.

• Lot Coverage: Lot coverage standards for the district apply. See Section 4-202 to determine lot coverage requirements.

 

Will additional parking be required for an Accessory Dwelling Unit?

No. House Bill 2720 prohibits municipalities from requiring additional parking spaces and/or payment of fees instead of additional parking spaces for an ADU. However, the homeowner can voluntarily choose to provide additional parking area for the ADU if desired.

 

Will the ADUs be required to match the design of the main structure?

No. The state legislation prohibits a municipality from requiring the ADU to match the exterior design of the single-family dwelling.  Homeowners should check if they are in an HOA or have CC&Rs that may require approval by the HOA’s Architectural Review Committee.

What are guest quarters in Tempe?

According to Tempe’s Zoning and Development Code, a guest quarter is an independent sleeping/living area used by guests of the occupants of the main residence. Guest quarters were permitted in single-family residential districts on certain sized properties. Prior to this code update, guest quarters were not allowed to be rented separately from the main residence. Only one guest quarters was allowed and limited in floor area.

 

What changes have been made to the quest quarters in the adopted ADU amendments?

The guest quarters section of the code has been repealed. All new submittals for separate living spaces on a single-family property will be evaluated based on the requirements of the adopted ADU code. Guest quarters are still allowed in Tempe but are allowed under the provisions of the ADU regulations.

 

What if I have an existing guest quarters or ADU?

If your property previously had a guest quarters or a legally constructed ADU before the effective date of the new ordinance, it may remain on a lot pursuant to ZDC Part 3 Chapter 5 – Non-Conforming Use or Development. Any modifications to the existing ADU or guest quarters would be required to conform to the adopted ADU ordinance.

 

Can I convert my existing guest quarters to an ADU?

Yes. If your property contains a legally constructed guest quarters, it may be converted to an ADU by applying for the appropriate building permits, subject to the regulations of the Section 3-402 – Accessory Dwelling Units, except that the interior habitable area may exceed the maximum described in Section 3-402(c)(2).

 

I have an existing guest quarters and would like to build an ADU, what do I need to know?

The existing guest quarters is allowed to remain but will be counted toward the total number of attached or detached ADUs allowed on the property.  The request for the new ADU may be made with the submission of a building permit application.

Does my Homeowners Association (HOA) allow ADUs?

Some homeowners’ associations allow ADUs while some have restrictions on them. If you live in an area governed by a Homeowners Association (HOA), please check the HOA requirements related to ADUs. Covenants, Conditions, and Restrictions (CC&Rs) can be more restrictive than local government regulations, and potentially restrict the ability to permit an ADU, even if city allows it. This is not an issue in most residential subdivisions in Tempe, which do not have HOAs or CC&Rs.

Will ADUs be allowed as short-term rentals?

The State Statute does not restrict an ADU for use as a short-term rental. The City of Tempe has adopted requirements for owner-occupancy when renting out an ADU as a licensed short-term rental if that ADU was constructed on or after December 20, 2024.

 

How are short-term rentals regulated?

Short term rentals are required to obtain a Short-Term Rental License from the City. More information can be found on the City of Tempe website.

 

Will the owner be required to reside on site?

House Bill 2720 prohibits a municipality from requiring pre-existing relationship status between the homeowner or occupant of a single-family dwelling and the occupant of an ADU. However, recent amendments to the Tempe City Code require the owner to reside on site if the property contains an ADU licensed as a short-term rental, if that ADU was constructed on or after December 20, 2024. See Tempe City Code Section 16A-213(k).

 

How are enforcement matters addressed with having an ADU on a property?

Like with any other residential property, the City of Tempe has enforcement tools in place to help address a myriad of complaints. Noise or loud parties are addressed with the Police Department; any excessive trash or overgrown weeds, or in the alley, are enforced by the Neighborhood Enhancement Division; and compliance with verifying permitted or unpermitted work are handled through the Building Safety Division’s Inspections Section, which may also involve Code Compliance Division. ADU’s must also comply with the Tempe City Code’s Rental Housing Code regulations, found in Chapter 21, Article II.

Do utilities for the ADU need to be sub metered from the main residence or can ADUs have their own metering?

Refer to your utility providers requirements.

 

Can the existing water and sewer infrastructure handle the increased capacity?

Yes. During the City’s internal outreach, Tempe’s Municipal Utilities Division confirmed that the existing infrastructure can accommodate the additional sewer and water demand from ADUs.

 

Does the addition of an ADU require grading and drainage?

Grading and drainage requirements depends on several site-specific factors and scope of construction. Contact the Permit Center at PermitCenter@tempe.gov for site specific inquiries.

Will the new code allow tiny home or alternative building types?

Yes. The ADU can utilize different building and construction types if they meet the appropriate codes and zoning code requirements. These may allow prefabricated/modular homes and tiny homes when placed on permanent foundations. The construction quality and minimum size of the ADU unit will also be evaluated by Tempe’s building codes and rental code requirements.

Are ADUs affordable for renters?

According to Wegmann and Chapple (2012), accessory dwelling units typically rent for less than other housing types in the same neighborhood. The American Association of Retired Persons (AARP), the leading advocacy organization for senior citizens, notes that ADUs can be an affordable housing option in most locations when the property owners rent them out. ADUs in Tempe are capped to a maximum livable area of 1,000 square feet in floor area for less than 1-acre sites, which could result in a lower cost of rent compared to larger dwelling units. However, the rent rates are set by the property owners.

 

Are ADUs affordable for homeowners to build?

According to the Angi website, nationally, the cost of constructing an ADU can range between $60,000 to $225,000. However, according to some local builders who spoke with staff, the average cost of a high quality ADU in Tempe is likely to be between $180,000 - $260,000. The AARP opines that, since the land already belongs to the homeowner, the only cost for the ADU is the cost of construction, effectively making the cost of land free.

 

Are there housing voucher/affordable housing incentives?

The Section 8 Housing Vouchers are administered by Tempe’s Community Health and Human Services Department. As ADUs will be independently rentable, they can qualify for the Section 8 housing program if they meet the conditions. If the ADU owner is willing to rent the ADU to income eligible person or family, and if the unit meets the Housing and Urban Development (HUD) criteria for the program, the ADU can be rented to a Section 8 voucher holder.

 

How are Accessory Dwelling Units typically financed?

A Terner Center for Housing Innovation study of over 800 homeowners with permitted ADUs found that the most common ways of financing the ADU were:

1. Liquid Assets – 62%
2. Mortgages – 43%; of that:
   1. HELOC/Home Equity Loan – 56%
   2. Cash-out Refinance – 35%
   3. Renovation Loan or other Construction Loan – 6%
3. Unsecured Debt – 7%
4. Other – 3%

Note that these percentage do not add up to 100%, as most ADUs are financed through a combination of multiple funding sources.

 

What are some of the benefits and drawbacks of ADUs?

ADUs can increase a community’s affordable housing stock and add incremental density in the neighborhood while retaining the character of the primary residences. They provide opportunities for extra income for homeowners, which can be attractive for many families, especially for those on fixed incomes. The ADU can also be used as a multi-generational home, either to house elderly parents, or adult children on the same lot. If the family wishes to downsize, and still live on the lot, the primary residence becomes the rentable option if the homeowners decide to live in the ADU.

 

There can also be potentially some drawbacks of ADU as perceived by community members. These include concerns for overcrowding, increased traffic, parking shortage, and privacy concerns by neighbors. Access to the ADUs for public safety officials also needs to be made available.

 

How will an ADU impact my property value and classification for tax purposes?

The addition of an ADU in a lot will generally increase the value of the property as the site will have an additional dwelling unit that can house more people and generate additional income for the property owner.

Property taxes are assessed based on the Limited Property Value (LPV) which, by state law, cannot increase by more than 5% in any year.

Residential properties in Legal Class 3 and 4, including properties with an ADU, have a tax assessment rate of 10% using the Assessed Limited Property Value (LPV). The assessment ratio increases to 16% for duplexes, triplexes, apartments, or the like. A single-family home with an ADU is still a single-family use and is not considered a duplex.

Visit the Maricopa County Assessor website for more information on property taxes.

What are ADU Standard Plans?

ADU standard plans are ones that have been review for compliance with applicable Building Code and are kept on file with the city. Standard plans are typically purchased from the designer and can reduce the time and cost associated with plan development for an ADU.

 

Does the city have any ADU Standard Plans?

Not yet. The City hosted the ADU Design Challenge with funding from AARP. Winners will be announced at the October 21, 2025 Open House at the Tempe History Museum. More information will be included in this FAQ and the ADU webpage on availability of ADU standard plans in the future.

 

What are the limitations of standard plans?

Standard plans cannot be significantly altered or modified such that a full plan review would be required to approve the construction documents. Examples of these changes would include locations or door and windows, floor plan layouts, etc.

 

Pre-approved plans (What is the savings amount)?

Cities can have a list of pre-approved ADU plans that property owners can use. These plans are reviewed by the city in advance for compliance with building code and other permitting requirements. Permitting for an ADU that uses a pre-approved plan is quicker and may not require any plan review fees. This will save valuable cost and time for the applicant wishing to build an ADU. According to Maxablespace and GatherADU websites, the savings from pre-approved plans ranges from $2,000 to $6,000. Cost savings for pre-approved plans includes reduced time and cost for preparation of plans and construction documents, and expedited review of plans by the city. Cities often waive review fees for ADU application that use pre-approved plans further reducing costs to the applicants.