Subject
title
Accessory Dwelling Units and Small-Scale Development
end
Department
Housing and Community Development
Recommendation
Staff requests that the Mayor and Council review the information in this report and provide direction on the following three policy questions:
• 1. Pre-Approved Plans - Should staff investigate the development of a pre-approved ADU (and small-scale infill) building plan program?
• 2. ADU Financing - Should staff develop a pilot ADU financing program funded through the Housing Opportunities Fund (HOF)?
• 3. Developer Ecosystem - Should staff engage regional partners to host an Incremental Development Alliance (IncDev Alliance) Bootcamp to help build an ecosystem of small-scale developers in the Rockville area?
Based on the Mayor and Council's feedback, staff will proceed with implementation accordingly.
Discussion
Background
Housing is one of the Mayor and Council's five focus areas. Accessory Dwelling Units (ADUs) were added to the Zoning Ordinance in 1990 as Attached ADUs only and approvable by Special Exception. An estimated 28 units were approved in 20+ years. In 2023 and 2024, the Mayor and Council approved two zoning text amendments allowing ADUs in single-family neighborhoods, consistent with the Rockville 2040 Comprehensive Plan's policy to “allow diversification of the residential land use pattern…to meet varied needs, market dynamics, and high demand for all types of housing.” This legislation (ZTA TXT2023-00263) went into effect on April 9, 2024, and is codified in Chapter 25, Article 9 of the Zoning Ordinance.
Since that time, staff have undertaken a sustained, multi-track effort to understand how the City can move beyond simply legalizing ADUs and small-scale infill housing types to actively enabling their construction. That effort has included three complementary components:
• GARE Upward Mobility Cohort. In 2018, the Gates Foundation convened national experts to study what it would take to dramatically increase mobility from poverty, publishing its findings that year. The initiative's next phase engaged three anchor organizations, Opportunity Insights, Results for America, and the Urban Institute, to translate that research into practical toolkits built around five interrelated strategies: changing the narrative, creating access to good jobs, ensuring zip code is not destiny, providing support that empowers, and transforming data use. Race Forward/GARE (RF/GARE) was subsequently awarded funding to refine these tools with a specific focus on centering race and is now leading a national learning cohort to test and distribute them to practitioners.
Building on the Washington, DC region's demonstrated commitment to racial equity, RF/GARE, with support from the Metropolitan Washington Council of Governments (COG), invited jurisdictions across the DMV region to collectively field-test and help refine these tools. The engagement is structured in two phases: a Phase I workshop introducing the Opportunity Atlas and helping each jurisdiction identify and prioritize its own upward mobility challenges, followed by a Phase II regional action-learning cohort (January-December 2025) in which participating jurisdictions exchange local findings, identify a shared regional priority challenge, and co-design a workshop series to test targeted implementation tools.
In spring 2025, City staff joined a nine-month training cohort convened by the Government Alliance for Racial Equity (GARE), in partnership with the Urban Institute and the Metropolitan Washington Council of Governments (COG). The cohort applied the Urban Institute's Upward Mobility Framework to help participating jurisdictions design a project to enhance upward mobility and , whenever possible, racial equity. Rockville's interdepartmental project team - comprising staff from the Department of Community Planning and Development Services, the Department of Housing and Community Development, the Department of Communications and Community Engagement, the Office of Justice, Equity, Diversity, and Inclusion, the Department of Recreation and Parks, and the Department of Public Works, along with Rockville Economic Development, Inc. and Nonprofit Montgomery - selected a Small-Scale Development Program as its project, focused on using ADUs and the small-scale housing types allowed under the forthcoming Residential Infill zone (duplexes, triplexes, quads, cottage clusters, and townhomes) to build wealth for low-income homeowners and expand housing options. The cohort concluded in February 2026 with a project narrative outlining the program's goals, target audiences, logic model, and measurement plan.
• Duke University Graduate Research Partnership. To supplement the cohort's work with a deeper, independent policy analysis, staff engaged a graduate student researcher from Duke University's Sanford School of Public Policy. That engagement produced a capstone report, Attachment A: Enabling Incremental Development: Policy and Implementation Strategies for Rockville, Maryland (May 2026), along with a companion implementation guidebook, Attachment B: A Guide to Incremental Development for Cities. The research drew on comparative case studies of four peer communities - Fayetteville, Arkansas; Kalamazoo, Michigan; Portland, Oregon; and South Bend, Indiana - and semi-structured interviews with eleven practitioners, including city staff, national nonprofit leaders, and small-scale developers. The research organized its findings into six elements necessary for a supportive incremental development ecosystem: building the ecosystem itself, clarifying purpose and goals, reforming zoning, streamlining permitting, expanding access to financing, and defining metrics for success.
• Staff Research. In parallel, staff conducted independent research into pre-approved planning regimes, ADU financing models, and small-scale developer ecosystem programs in other jurisdictions, including the City of Los Angeles' ADU Accelerator Program, Portland's Hacienda Community Development Corporation Small Homes Northwest Program, Seattle's BLOCK Project, Montgomery County's ADU zoning changes, Sacramento's Small Developer Incubator Program, and the Incremental Development Alliance's national bootcamp model.
Together, this research confirms that Rockville has already taken meaningful steps - through its ADU zoning amendments, the Rockville 2040 Comprehensive Plan, and the Zoning Ordinance Rewrite (final adoption occurred on June 29, 2026) - to legalize small-scale housing types. However, practitioners consistently emphasized that zoning reform alone does not create a functioning ecosystem for incremental development; it must be paired with reduced design and permitting costs, accessible financing, and an active pipeline of small-scale developers and homeowners with the capacity to build. The three initiatives described below respond directly to those findings.
Part One: Pre-Approved Building Plans
Across the four peer cities studied, practitioners identified permitting - not just zoning - as one of the most significant barriers to small-scale development, and each city has responded by developing a library of pre-approved building plans. These are standardized architectural plans reviewed and approved in advance by the local jurisdiction; because the design has already been vetted, projects using a pre-approved plan can bypass individualized design review and move directly into a streamlined permitting track, so long as the building type is allowed under the zoning ordinance. This reduces design costs, shortens timelines, and lowers the risk and uncertainty that disproportionately affect small-scale builders and homeowners.
The table below summarizes how the four peer cities have structured their pre-approved plan programs:
|
Municipality |
Program Name |
Core Components |
|
Fayetteville, AR |
Permit-Ready Building Design Program |
Step-by-step instructions; program plans and parcel look-up; permit requirements |
|
Kalamazoo, MI |
Pre-Approved Housing Plans |
Pre-approved building catalog; interactive zoning map; pro forma templates |
|
Portland, OR |
Accessory Dwelling Units Program |
Step-by-step instructions; pre-approved plans; Field Issuance Remodel (FIR) program for licensed contractors |
|
South Bend, IN |
Build South Bend |
Pre-approved building plan application; pre-approved plans catalog; pre-approved buildings process; ADU permit application |
Consistent with the Strong Towns Housing-Ready City Toolkit - a framework cited repeatedly by practitioners interviewed for the Duke research - a pre-approved plan program is most effective when paired with by-right approval for the underlying building type (e.g., duplex or triplex conversions and ADUs), so that a homeowner or small developer using a pre-approved plan is not still subject to case-by-case discretionary review. Rockville's Zoning Ordinance Rewrite is designed to support this approach through its accessory structure and RMD-Infill provisions.
Should the Mayor and Council support this direction, staff would investigate the development of a pre-approved plan catalog for ADUs (and, potentially in the longer term, for other Residential Infill housing types). The investigation will allow CPDS staff to conduct a coordinated deep dive on program design and permitting requirements to ensure program design will best align with current zoning, building code, and internal processes.
Part Two: A Pilot ADU Financing Program
Financing was identified, across both the GARE cohort's work and the Duke research, as one of the most persistent barriers to ADU construction, particularly for the low- and moderate-income homeowners the Small-Scale Development Program is intended to benefit. Traditional lenders are often reluctant to finance ADUs and small multifamily projects because they perceive them as unfamiliar, higher-risk, or too small to justify underwriting costs. Appraisers frequently lack comparable sales data for ADUs and missing-middle housing types, which can result in these units being undervalued - limiting a homeowner's ability to refinance, borrow against equity, or secure a construction loan in the first place. These barriers fall hardest on the low-income homeowners the program is designed to help build wealth.
Peer jurisdictions and practitioners identified several tools that cities can use to address these gaps:
• Community Development Financial Institutions (CDFIs) and mission-aligned local lenders, which provide fair, mission-driven lending in markets traditional banks often underserve.
• Community investment funds that blend public, private, and philanthropic capital to provide gap financing, construction loans, and down-payment assistance, spreading risk across multiple stakeholders.
• Community Reinvestment Act (CRA) coordination, encouraging banks to count ADU construction loans, home equity loans for ADUs, and support for first-time small-scale developers toward their federal reinvestment obligations.
• Developer agreements, negotiated contracts that allow a city to adjust fee timing and development conditions to improve project feasibility for small-scale builders.
Building on this research, staff propose exploring a pilot ADU financing program funded through the City's Housing Opportunities Fund (HOF). Consistent with the GARE cohort's proposed measurement plan - which specifically identifies “amount of financial supports for low-income homeowners used” and “amount of affordability incentives used” as metrics to be tracked by DHCD - a pilot program could provide gap financing, low-interest loans, or down-payment-style assistance to low-income homeowners building an ADU, potentially paired with an affordability incentive for homeowners who agree to rent the ADU at affordable rates.
Part Three: Building an Ecosystem of Small-Scale Developers
Practitioners in every peer city interviewed for the Duke research emphasized that changing zoning and streamlining permitting are necessary but not sufficient - as one interviewee put it, “Even if the policy is right, what are the barriers that still exist?” The talent and interest to build small-scale housing may exist in a community, but the ecosystem to support it - educated homeowners, trained small-scale developers, engaged lenders and contractors, and City staff who see themselves as partners rather than gatekeepers - has to be built deliberately.
South Bend, Indiana's small-scale developer “12-step group” was highlighted as a particularly effective model: cohorts of roughly 10-15 developers, City officials, contractors, and bankers meet monthly over a structured period, building shared capacity and relationships over time. This model builds directly on the training curriculum developed by the Incremental Development Alliance (IncDev Alliance), a national nonprofit that runs bootcamp-style trainings to help homeowners and aspiring small-scale developers learn the fundamentals of incremental, community-scaled real estate development.
Staff proposes engaging regional partners - including the Metropolitan Washington Council of Governments, Montgomery County, Rockville Economic Development, Inc., and Nonprofit Montgomery - to co-host an IncDev Alliance Bootcamp in Rockville or the surrounding region. Hosting a bootcamp regionally would help seed a pipeline of trained small-scale developers, connect them with City staff and local lenders, and lay the groundwork for an ongoing, locally sustained training cohort along the lines of South Bend's model - directly supporting both the pre-approved plan program and the ADU financing pilot described above by ensuring there are qualified builders and informed homeowners able to use them.
Mayor and Council History
Housing is one of the Mayor and Council's five focus areas. In June 2024, a high-level briefing was presented outlining the City's housing crisis and policy landscape.
• October 9, 2023 - Mayor and Council adopted ZTA allowing ADUs within or attached to single-unit detached homes.
• June 29, 2026 - Mayor and Council adopted the Zoning Ordinance Rewrite.
Public Notification and Engagement
Staff will develop an engagement plan and engage all stakeholders, including residents, small-scale developers, lenders, and community partners, as part of program design.
Next Steps
Following the direction received at this work session, staff will proceed with implementation accordingly.