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A Quick Guide to Impact Fees | ADU.Works

David Reyes
David Reyes

The process of building an ADU can be overwhelming, but it’s important to know exactly what you’re getting into before starting. You need to understand the various costs and fees that come with it. Aside from the construction fees and building permits, you also have to be sure to look out for impact fees.

What are Impact Fees For?

When new properties are being developed, they bring in more residents to their respective areas. This puts additional stress on the load capacity of the city’s groundwork facilities like roads and power lines as well as the city’s service centers like schools, libraries, recreational parks, water and sewerage, law enforcement and fire protection services. Local government units charge these impact fees to developers as a way to help cover the cost of maintaining and developing these services

How are these Fees Rated?

A jurisdiction can charge impact fees to either residential or commercial projects, or even both. But before they do this, there must first have a proven link correlating these charges with particular impacts like increased traffic on roads due to more people living nearby and the like. 

To ensure that impact fees are inclusive of those who need it most, an affordable housing nexus study is required. Based on the analysis in this report and the current trends within your community or region – including how much construction there has been recently as well as the number of jobs the project generates and wages paid to workers once they’re hired, the maximum impact fee level is established. This is done so developers can charge appropriately high prices without deterring future development altogether but rather providing incentives tailored towards meeting specific needs while also being realistic given all factors considered together at once.

Impact Fee structures vary depending on what type and how much development is planned for an area, but they all have several traits in common: they’re based on a per-square footage rate or a similar measure like the number of occupants or bedrooms in a dwelling unit; the fee must be paid before construction can begin or simultaneously along with the building permits; and if approved by residents within zones where developments will occur then these charges also ensure that any additional services offered like sewer capacity upgrades don’t come at too high a cost.

In California, the state government has imposed policies that restrict local taxes which made it challenging for local governments to fund infrastructure and various projects. This made municipalities more and more reliant with impact fees. However, California ADU Laws protect accessory dwelling units from these increasing fees. Varying on the size and scale of your ADU, you may even be exempted from paying any impact fees altogether.

What does the California ADU Law say about Impact Fees?

In many cases, ADU construction won’t be subjected to impact fees like other developments. According to AB-68, the California law provides an exemption for small-scale units under 750 square feet. Though school districts can charge their own unique rates to any ADU under 500 square feet (Section 17620 of the Education Code), they are not required by the law  to do so. In addition, local agencies and other service center facilities can choose to omit charging impact fees to ADUs with their own discretion. 

On the other hand, for ADU models beyond 750 square feet in size, the law states that impact fees must be imposed “proportionally in relation to the square footage of the ADU to the square footage of the primary dwelling unit”. This means that the impact fee amount cannot exceed what is paid for the primary dwelling unit on the lot but instead should be lower. 

This legislation was created to encourage the development of affordable housing in the state making it easier and more feasible for homeowners to have a secondary unit on their property.

Where can I get the latest Impact Fee Rates in my area?

To know how much your impact fees will be or whether you’ll be charged an amount for your ADU, make sure to get in touch with your local planning and building departments. You can also prepare ADU plans ahead of time so that when speaking with engineers or architects, they are able to use these as reference points right away to come up with a rough estimate. 

As an example, here’s a list of all the inclusions in the impact fees of the City of San Mateo:

  • Wastewater Treatment Plant Phase II Expansion Fee
    • The 2006-07 Comprehensive Fee Schedule established a Wastewater Treatment Plant Phase II Expansion Fee that is imposed on all development that results in a change of use and that adds more sewage to the City’s sewage treatment system.
  • Transportation Improvement Fee
    • San Mateo Municipal Code Chapter 27.13 established a transportation improvement fee for new development to fund City-wide traffic improvements to mitigate the cumulative impacts of new development and to accommodate future development.
  • South Trunk Area Sewer Improvement Fee
    • San Mateo Municipal Code Chapter 3.54 established a development impact fee for the South Trunk area sewer improvements. The fee is imposed on all development and redevelopment served by the South Trunk line.
  • Park Impact Fee
    • San Mateo Municipal Code Chapter 13.05 established a park impact fee on the construction of new residential units to accommodate the increased demand on park and recreation facilities.

To know more, you can visit: www.cityofsanmateo.org/4162/Mitigation-Fee-Act-Reports

Also, here’s a comprehensive fees guide from the City of San Mateo: San Mateo City Impact Fee Guide

Conclusion

Impact fees are a one-time payment imposed by local governments on property developers. They’re determined based on the size and cost of implementing your new development, as well as how much it will impact its surrounding community.

If you’re looking for a large ADU without the impact fees, we highly recommend our Maverick 748.

With a price of only $182,400, the M748 features:

  • 2 Bedrooms and 2 Bathrooms 
  • Ample closet space allocation
  • Energy-Star Rated Appliances
  • High-Quality Solar Panels
  • Open Floor Plan and Large Windows
  • Inclusive of Exterior Matching

Whether you’re looking for a place to call your own or an investment property that will provide a return on your investment, this is the perfect place for you. 

To know more, you can look at our M748 page and download our Spec Sheet Catalog by entering your email in the lower part of the page here: www.adu.works/M748

If you’re interested in a quick but comprehensive demo, please don’t hesitate to book a consultation with us or give us a quick call through our number +1 (650) 227-4810. Our team looks forward to hearing from you.

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