Impact Fees: Why ADUs Have a Cost Advantage Over New Single-Family Houses


When a new home is constructed in a city in California, the city typically charges impact fees to the home builder. Impact fees are used to pay for the expansion of public services required by increased population, such as schools, parks and transportation infrastructure. These impact fees can be quite expensive. In 2018, the Terner Center for Housing Innovation at UC Berkeley released a study that estimated the cost of impact fees for a new single-family house in six cities:

            Sacramento                             $17,354

            Los Angeles                             $23,796

            Roseville                                  $32,995

            Oakland                                   $35,348

            Irvine                                       $87,207

            Fremont                                  $144,896

Prior to 2020, some California cities charged impact fees when new accessory dwelling units (ADUs) were built. This discouraged some homeowners from adding an ADU to their properties. However, the new 2020 California ADU laws prohibit cities from charging impact fees when the newly constructed ADU is less than 750 square feet. This makes the construction of an ADU less expensive, and gives ADUs a cost advantage over new single-family houses!

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