Signed: SB 1117 Cuts ADU Impact Fees Over 750 Square Feet in 2027

Photography via Dwell.

A new California law fixes one of the odder math problems in ADU cost planning. SB 1117, introduced by Senator Cervantes on February 17, 2026, amends Government Code Section 66311.5 to change how impact fees are calculated for accessory dwelling units above 750 square feet. Instead of basing fees on the full ADU footprint (proportional to the primary dwelling), the law limits the fee base to only the square footage exceeding 750 square feet. Governor Newsom signed SB 1117 on September 29, 2026 (Chapter 809, Statutes of 2026); it takes effect January 1, 2027. A July amendment limits the new formula to lots with up to two ADUs.

What the current impact fee law says

California's Mitigation Fee Act governs how local agencies charge impact fees for new construction. For accessory dwelling units, Government Code Section 66311.5 sets three tiers. The 750-square-foot exemption and the proportional rule are not new: SB 543, effective January 1, 2026, moved them into this section from former Section 66324, measured them in interior livable space, and extended the exemption to junior ADUs of 500 square feet or less.

750 square feet or less. No impact fees. A local agency, special district, or water corporation cannot impose any impact fee on an ADU with 750 square feet of interior livable space or less. This exemption is already law.

JADUs at 500 square feet or less. Also exempt. Junior ADUs (units converted entirely within the existing single-family structure) face no impact fees up to 500 square feet of interior livable space.

ADUs above 750 square feet. Here is where the current law, in force through December 31, 2026, creates a sharp discontinuity. Any impact fees for an ADU over 750 square feet must be charged proportionately in relation to the square footage of the primary dwelling unit. In practice, a 900-square-foot ADU on a property with a 1,800-square-foot primary dwelling carries fees proportional to half the primary dwelling's full impact fee exposure. The entire 900 square feet goes into the calculation, not just the 150 square feet that exceeds the exemption threshold.

That proportionality rule makes the jump from 749 to 751 square feet expensive in jurisdictions with meaningful development impact fees. Transportation, parks, libraries, and fire or police development fees can all fall under the Section 66311.5 umbrella, which covers fees defined under Government Code Section 66000 and Quimby Act park fees under Section 66477. School fees run on a separate track: an ADU is exempt from them only below 500 square feet of interior livable space, so a 700-square-foot unit can owe school fees while paying no impact fees.

What SB 1117 changes

The bill adds a short phrase to the existing fee formula in subdivision (c)(1) of Section 66311.5: "and only on the area in excess of 750 square feet of interior livable space." That phrase, inserted directly into the Government Code text, shifts the fee base from the full ADU footprint to only the portion above the 750-square-foot line.

Using the same 900-square-foot example on a 1,800-square-foot property: the proportionality calculation moves from 900 divided by 1,800 (50 percent of the primary dwelling's fee exposure) to 150 divided by 1,800 (roughly 8 percent). For that unit, the impact fee burden drops by more than 80 percent. The closer a unit is to the 750-square-foot line, the sharper that drop becomes. A 760-square-foot ADU on a 1,500-square-foot primary dwelling currently carries fees on the full 760 square feet. Starting January 1, 2027, on a lot with no more than two ADUs, the same unit carries fees on only 10 square feet.

The bill explicitly applies to all cities, including charter cities, through a statewide-concern finding. That matters for Los Angeles, San Francisco, and other charter jurisdictions that sometimes assert separate authority over development fee structures.

What this means if you are planning a build over 750 square feet

If you are a first-time ADU client pricing a unit right now, the 750-square-foot mark is already a key decision point. One of the most common design moves to avoid impact fees entirely is capping the unit at 749 square feet, sometimes at the cost of a second full bathroom or a meaningful dining area. SB 1117 softens that constraint considerably starting January 1, 2027.

Under current law, that 900-square-foot example unit (on a 1,800-square-foot property) carries fees proportional to half the primary dwelling's full exposure. Under the new formula, starting January 1, 2027, the same unit is assessed fees on only 150 square feet, as long as the lot has no more than two ADUs. That is a real planning number worth running before you commit to a floor plan. The two-bedroom, two-bath ADU that your contractor quotes at 880 square feet moves from a fee base of 880 square feet to a fee base of 130 square feet. If your fees will be assessed close to the turn of the year, ask your city which formula it will apply.

The bill also preserves an important existing protection: utility connection fees and capacity charges are separate from impact fees and handled under subsection (b) of the same code section. An ADU is generally not treated as a new residential use for water and sewer connection fees unless it was built alongside a new single-family dwelling. SB 1117 does not disturb that provision.

Where the law stands and what happens next

SB 1117 was introduced on February 17, 2026, passed both houses, and was presented to the Governor on August 30, 2026. Governor Newsom signed it on September 29, 2026, and it was chaptered as Chapter 809, Statutes of 2026. It carries no urgency clause, so it takes effect January 1, 2027. The law requires no state reimbursement, so local agencies absorb any reduction in fee revenues.

Until then, the current rule applies: a fee on an ADU above 750 square feet is proportional to the primary dwelling and charged on the whole unit, with no 750-square-foot deduction. Cities, counties, and special districts that charge ADU impact fees will need to update their fee schedules to the new formula by January 1, 2027. Read the chaptered text of SB 1117 on leginfo, and revisit your unit's target square footage before locking in construction documents.

For homeowners working through permit cost estimates under current law, A-du's permit fee calculator lets you model current-law impact fee exposure by city, the rule that applies through December 31, 2026.