ADU Impact Fees: What They Are and How to Reduce Them

Impact fees are one-time charges imposed at the time of building permit issuance to fund schools, parks, roads and water/sewer infrastructure that new development demands. They can add $5,000–$50,000+ to an ADU project depending on the jurisdiction.

California's impact fee exemption

California law (Government Code 65852.2(f)(3)) requires that cities and counties NOT impose impact fees on ADUs that are less than 750 square feet. ADUs over 750 sq ft may have impact fees, but they must be proportional to the ADU's size relative to the primary dwelling — not treated as a full new unit. This saves thousands of dollars on smaller ADUs.

Utility connection fees are separate

The impact fee exemption in California does NOT apply to utility connection fees — water, sewer and electrical connection fees may still apply. These can range from $2,000 to $20,000+ depending on whether a new service connection must be run from the street. If you are converting a garage with an existing utility connection, these fees are often minimal.

Other states: no universal exemption

• Washington: no statewide impact fee exemption for ADUs; some cities have adopted local exemptions.
• Oregon: impact fees apply at local rates; some cities have reduced fees for ADUs to encourage construction.
• Florida, Texas and other states: impact fees for ADUs are set entirely by local government.

Impact fee amounts and exemptions change frequently. Confirm current fee schedules with your local building or planning department.