ADU Creation Forgivable Loan

Note: All funds for this loan product are currently obligated. If you are interested in being notified if more funds become available, please email housing@townoftruckee.gov.

Forgivable Loan for ADU Creation

This loan product provides eligible homeowners in the Town of Truckee with forgivable loan funds of up to $50,000 to develop ADUs and JADUs on their existing property. Applicants must apply to the program and complete the project within this two-year period to qualify for a loan. The program requires that the applicant long-term rent the newly constructed ADU or JADU for a period of seven or ten, year round to qualified tenants. The program may be layered with the Town's PLHA-funded ADU Low Interest Loan Program. This program applies to new ADUs and existing, unpermitted ADUs.

Following is a summary of requirements for this loan:

  • Each loan is for a maximum of $50,000, with up to $25,000 towards predevelopment costs and up to $25,000 toward development costs.
  • There are two options for loan term and forgiveness:
    • A 1% annual (simple) 7-year loan will be forgiven at 14.3% per year, contingent upon receipt of a building permit for the ADU and continued compliance with the deed restriction requiring the ADU be rented to tenant(s) making 60% AMI or below who meet the local employment qualification.
    • A 2% annual (simple) 10-year loan will be forgiven at 10% per year, contingent upon receipt of a building permit for the ADU and continued compliance with the deed restriction requiring the ADU be rented to tenant(s) making 120% AMI or below who meet the local employment qualification.
  • If the property is sold before the term matures, the property owner is responsible for paying the remaining balance of the loan, including both the principal and the interest, at the time of the sale.
  • Requires long-term renting (12-month minimum lease) to an income qualified local employee.
  • Requires that rent be charged at a rate that is affordable to a household making either 60% or 120% AMI, based on the loan term selected.
  • No unit size restrictions other than required by the Development Code.
  • Can be used for both standard and junior ADUs.
  • Not eligible to apply for the $1,000 mini-grant or Lease to Locals.
  • Loan is funded by Town of Truckee General Fund & Measure K.
  • Contractors are not subject to prevailing wage requirements.

See the full ADU Creation Forgivable Loan Program Guidelines here (PDF).

Click here to download the ADU Creation Forgivable Loan intake form (PDF).

Application and Loan Process 

Applicants may submit the ADU Loan Intake Form before or after applying for a Building Permit from the Town of Truckee. Staff recommend contacting Jaime LaChance, Senior Planner, to learn about project viability before submitting the ADU Loan Intake Form. 

  1. Submit a completed ADU Loan Intake Form to Town staff for review. 
  2. If the ADU project meets the preliminary criteria for the loan, applicant will be notified and will receive a request for financial and project documents from the Town's Program Administrator. Loan funds are NOT reserved at this time. 
  3. Program Administrator will review documentation and will issue a loan approval or denial. If approved, applicant will receive loan acceptance documents that must be returned to program administrator within 7 days. Loan funds will be held at this point and Applicants will become Borrowers. 
  4. Borrowers sign Deed Restriction, Promissory Note, and Deed of Trust. Town staff will ensure recordation with Nevada County.  
  5. Payments are made as laid out in the Program Guidelines in Section 19. 
  6. At Certificate of Occupancy (COO), 10% contingency is released.  

Construction Milestone Requirements 

To ensure responsible use of Town funds, borrowers must adhere to the following timeline in order to receive all loan funds. 

  1. Applicant must submit building permit application within 6 months of loan approval 
  2. Building permit must be issued within 12 months of loan approval 
  3. First inspection must be scheduled within 18 months of loan approval 
  4. Certificate of Occupancy issuance: 
    • COO issued within 30 months of loan approval for new construction 
    • COO issued within 24 months of loan approval for conversion of existing space or an existing, unpermitted ADU