Tempe, AZ Accessory Structures: ADU Rental Restrictions (2026)

Section 3-402(G) lets a residential lot of one acre or more add a third accessory dwelling unit beyond the normal one-attached, one-detached cap, but only if one of the three ADUs is designated a "restricted-affordable dwelling unit." That unit may only be rented to households earning up to 80 percent of area median income, with rent set according to household size and the rent-and-income limits the Arizona Department of Housing publishes. The property owner must sign and record a deed restriction, in a form the Community Development Department reviews and authorizes, before the City will issue building permits for the third ADU.

Once the restricted unit is occupied, the owner carries an ongoing reporting duty: an annual report and supporting proof must go to the City each year from the date the deed restriction was recorded, covering the full twelve months preceding that anniversary. At minimum, the report must show the period the unit was rented and how the occupant qualified under the deed restriction, the monthly rent actually paid or received, and the taxes, special assessments, HOA dues, management fees, and any other charges included in that rent. Failing to submit the annual report on time, or failing to otherwise comply with the deed-restriction terms, exposes the owner to a civil sanction under Section 1-201 and can trigger forfeiture of the restricted-affordable dwelling unit itself, the code's most severe ADU penalty.