California Legislature Votes to Lower ADU Costs
SB 1117 Eliminates Arbitrary “Fee Cliff” ; Homeowners to Save Thousands
“This is an important step toward lowering the cost of new homes.”
Los Angeles – Today, the California Legislature voted to approve SB 1117, a bill which eliminates arbitrary fees on accessory dwelling units (ADUs) and will lower the cost of constructing this popular type of housing. The bill now heads to Governor Newsom’s desk for signature into law.
“Homeowners and builders across California have made accessory dwelling units a success story, but many cities continue to charge excessive fees,” said Brian Hanlon, CEO of California YIMBY. “By eliminating an arbitrary fee cliff, the legislature will help create more family-sized ADUs. Thanks to Senator Sabrina Cervantes for her leadership.”
Under current law, an ADU of 750 square feet or less is exempt from most local impact fees. However, in many jurisdictions, ADUs over 750 square feet must pay the full impact fee per square foot – including the first 750 square feet that would otherwise be exempt. The inconsistency makes many ADUs more expensive to build than they would otherwise be.
SB 1117 fixes this by switching to a marginal fee structure. Instead of charging fees based on the entire ADU’s size once it exceeds 750 square feet, local governments can only charge proportionally for the square footage above 750 square feet for the first two ADUs on a property; additional ADUs will be assessed for the entire home. This reduces a cost barrier that has limited ADU flexibility.