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Accessory Dwelling Unit Requirements
For the purpose of removing the residency requirement for property owners who have an Accessory Dwelling Unit (ADU) on their residential property; defining "ownership" in Title 21; limiting short-term rentals to one of the two dwelling units on an ADU property; and generally related to Accessory Dwelling Unit requirements of Titles 21 and 17.
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City Council of the
City of Annapolis
Ordinance 15-25
Introduced by: Alderman Schandelmeier
Co-sponsored by:
Referred to: Planning Commission, Rules and City Government Committee
AN ORDINANCE concerning
Accessory Dwelling Unit Requirements
FOR the purpose of removing removing the residency requirement for property owners who have an Accessory Dwelling Unit (ADU) on their residential property; defining "ownership" in Title 21; limiting short-term rentals to one of the two dwelling units on an ADU property; and generally related to Accessory Dwelling Unit requirements of Titles 21 and 17.
BY repealing and reenacting with amendments the following portions of the Code of the City of Annapolis, 2025 Edition: 21.64.010, 21.72.010, 17.44.090.
WHEREAS: An Accessory Dwelling Unit (ADU) is a separate living space on a lot that can take the form of an independent building, a basement, or an addition to a house. However, regulations in the City of Annapolis (§ 21.64.010) require that the property owner reside in either the primary unit or the ADU on the property. Under these requirements, if the homeowner were to move, they would not have the option of leasing the ADU and their primary residence to separate tenants; and
WHEREAS: This ADU owner-occupancy rule limits the availability of rental housing in Annapolis, which suppresses housing supply, and increases rental costs because the City permits only one rental unit per lot;
WHEREAS Owner-occupancy regulations may restrict Federal Housing Administration (FHA) housing loans for properties with accessory dwelling units (ADUs):
• In November 2023, the FHA expanded its financing options to include loans for: purchasing properties that already have an ADU, building a new ADU, and renovating an existing dwelling to convert it into an ADU.
• To obtain loan approval, the FHA takes into account local restrictions that may adversely affect the rental income generated by both the primary dwelling and the accessory dwelling unit (ADU).
(U.S. Department of Housing and Urban Development, Mortgagee Letter 2023-17, “Revisions to Rental Income Policies, Property Eligibility, and Appraisal Protocols for Accessory Dwelling Units,” October 16, 2023);
WHEREAS: Owner-occupancy regulations may unfairly reduce home appraisals and property values:
• Appraisers rely on comparable sales; however, since accessory dwelling units (ADUs) are infrequent in Annapolis, appraisers are unlikely to include rental income from the ADU when determining a property's value.
• Furthermore, restricting both the primary and accessory dwellings from being rented ignores the potential total income that could be generated from a single lot, which in turn lowers both property valuations and city property tax revenue.
("A Taxonomy of State Accessory Dwelling Unit Laws 2024" by Emily Hamilton and Abigail Houseal, George Mason University's Mercatus Center);
WHEREAS: Eliminating the owner-occupancy rule can address local housing shortages by providing smaller, less expensive living spaces in Annapolis;
SECTION I: BE IT ESTABLISHED AND ORDAINED BY THE ANNAPOLIS CITY COUNCIL that the Code of the City of Annapolis shall be amended to read as follows:
City Code Title 21 - PLANNING AND ZONING
Chapter 21.64 - Standards for Uses Subject to Standards
Section 21.64.010 Accessory dwellings.
A. A maximum of one accessory dwelling unit may be established on any one lot.
B. An accessory dwelling unit may be established within a principal structure or within an accessory structure.
C. Each accessory dwelling unit shall have its own separate ingress and egress.
D. The addition of an impervious surface shall not be allowed on any lot containing an accessory dwelling unit, unless:
1. The Department has determined that the proposed surface will be treated or managed; or
2. The equivalent coverage of impervious surface will be removed elsewhere on the property.
E The maximum size of any accessory dwelling unit that is not established within the existing footprint of the principal structure is eight hundred fifty850 square feet of livable space.
F. A rental license for any accessory dwelling unit is required in accordance with Chapter 17.44.
G. An accessory dwelling unit and principal structure on any one lot shall be in common ownership and the owner shall reside in either the accessory dwelling unit or the principal structure.
City Code Title 21 - PLANNING AND ZONING
Chapter 21.64 - Standards for Uses Subject to Standards
Section 21.72.010 - Terms
"Overlay district" means a district established to respond to special features or conditions of a land area, such as historic value, physical characteristics, location, or other circumstances. An overlay district supplements the regulations of the underlying zoning district.
"Ownership" means any individual or group of individuals, corporation, partnership, or association who, alone, jointly or severally with others, holds legal or equitable title to the property.
"Perennial stream" is a stream that flows continuously throughout the year.
City Code Title 17 - BUILDINGS AND CONSTRUCTION
Chapter 17.44 - Rental Unit Licenses
Section 17.44.090 - Short-term rentals.
2. A licensee shall be allowed one short-term license, which shall apply to only one dwelling unit.
2. A licensee shall be allowed one short-term license.
a. The short-term license shall apply to only one dwelling unit.
b. An owner of an Accessory Dwelling Unit (ADU) may license either the primary dwelling or the ADU, as defined in § 21.64.010, as a short-term rental, but not both at the same time.
SECTION II: AND BE IT FURTHER ESTABLISHED AND ORDAINED BY THE ANNAPOLIS CITY COUNCIL that this ordinance shall take effect upon passage.