Money and Risk | Impact Fees

California Impact Fees on an ADU, Duplex or Fourplex

An impact fee is a one-time charge a city, county, school district or utility collects on new construction to pay for public facilities, such as roads, parks, schools and water and sewer lines. Each local agency sets its own amounts, so this page covers the state rules that limit every agency: which homes are exempt, how fees must be calculated, when you pay, and the two fee changes that start January 1, 2027. Amounts appear only where they come from an adopted schedule.

The State Rules on Fees

Sources: Gov. Code 66001, 66016.5, 65940.1, 66007, 66013, 66311.5, AB 1820, SB 1117 and SB 1036.

How a Fee Must Be Justified

The Mitigation Fee Act is the state law on local development fees. Under Government Code 66001, an agency that adopts a fee must identify its purpose and what the money will pay for. It must then show a reasonable relationship in three places: between the fee's use and the type of project, between the need for the facility and the type of project, and between the amount and the cost of the facility the project needs. In the statute's words, the agency "shall determine how there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the fee is imposed."

The study that makes this case is called a nexus study. Since AB 602 (Chapter 347, Statutes of 2021), Government Code 66016.5 says: "A nexus study adopted after July 1, 2022, shall calculate a fee imposed on a housing development project proportionately to the square footage of proposed units of the development." An agency can use another method only with findings that explain why it fits and that small projects are not overcharged. Nexus studies must be updated at least every eight years.

The money is tracked. Each year, within 180 days after its fiscal year ends, an agency must publish a report for each fee fund (Government Code 66006). For fees still unspent in the fifth fiscal year after the first deposit, and every five years after that, it must make findings about the unspent money. Water and sewer connection fees have their own cap under Government Code 66013: they "shall not exceed the estimated reasonable cost of providing the service" unless two-thirds of voters approve more.

Finding Your Fees Before You Apply

Two laws help you learn the fees early. First, Government Code 65940.1 requires every city, county and special district with a website to post "A current schedule of fees, exactions, and affordability requirements" that apply to a housing project, along with its zoning and development standards, its five most recent annual fee reports, and nexus studies done since January 1, 2018. Updates are due within 30 days of a change. An exaction is something a city requires in return for approval, such as land or public works. The schedule must show which fees apply to each parcel and to each new water and sewer connection.

Second, AB 1820 (Chapter 358, Statutes of 2024) lets you ask for a "preliminary fee and exaction estimate" when you file a preliminary application, the early filing that locks in the rules in effect that day. The city must provide it within 30 business days. Once your full application is complete, the city must give an itemized good-faith estimate of all fees within 30 business days. Both estimates are for information only and do not bind the city, so check the final figures before you commit to a budget.

When You Pay

For residential projects, Government Code 66007 says a local agency "shall not require the payment of those fees or charges ... until the date of the final inspection, or the date the certificate of occupancy is issued, whichever occurs first." The certificate of occupancy is the city's sign-off that a building can be lived in. Utility connection fees are the exception: they can be collected when you apply for service. An agency may also collect earlier when the facility is already funded and scheduled. SB 499 (Chapter 543, Statutes of 2025) adjusted those early-collection exceptions for water, sewer and fire or public safety facilities, effective January 1, 2026.

The timing affects how much cash you need while you build. Under the general rule, public improvement fees come due at the end of construction. Ask your city which of its fees, if any, it collects at permit issuance under the exceptions.

School Fees

School districts may levy fees on new residential construction under Education Code 17620. The statutory maximum, called the Level I fee, is in Government Code 65995(b) and is adjusted every two years by the State Allocation Board each January. At its January 28, 2026 meeting, the Board raised the maximum by 4.06 percent.

The fee applies to "assessable space," which leaves out garages, carports, covered walkways, patios and detached accessory structures. A district may charge less than the maximum. Higher Level II and Level III fees exist only when extra legal conditions are met. As a worked example, a fourplex with 4,000 square feet of assessable space would pay at most $21,520 at the 2026 Level I maximum (4,000 times $5.38), if the district charges the full maximum. For ADUs, school districts may charge only on an ADU larger than 500 square feet.

ADUs: The 750 Square Foot Rule

State ADU law protects small accessory dwelling units (ADUs), the second homes on a lot. Under Government Code 66311.5, as HCD puts it: "An ADU is exempt from incurring impact fees from local agencies, special districts, and water corporations if it contains 750 square feet of interior livable space or less." A junior ADU of 500 square feet or less is also exempt. Above 750 square feet, fees must be in proportion to the size of the main home. HCD's example: "a 2,000 square-foot primary dwelling with a proposed 1,000 square-foot ADU could result in 50 percent of the impact fee."

Utilities face a related limit: they cannot treat an ADU or junior ADU converted from existing space as a new use for connection fees, unless it is built at the same time as a new house. Starting January 1, 2027, SB 1117 (Chapter 809, Statutes of 2026) changes the rule for lots with up to two ADUs: fees on an ADU over 750 square feet are charged "only on the area in excess of 750 square feet of interior livable space." Lots with more than two ADUs keep the current proportional rule. See the ADU law page for the rest of ADU law.

SB 9, SB 684, SB 79 and Builder's Remedy Projects

SB 9 (2021) and SB 684 do not exempt their primary homes from fees. The SB 9 statutes, Government Code 65852.21 and 66411.7, contain no fee clause. What SB 9 does bar is a demand for land or construction outside the lot: a city "shall not impose regulations that require dedications of rights-of-way or the construction of offsite improvements for the parcels being created." A right-of-way dedication means giving land for a street or sidewalk.

Two laws stop cities from charging more because a project uses them. Under Government Code 65912.157, a city cannot adopt "increased fees or inclusionary zoning requirements" that apply to a project because it uses SB 79, the 2025 law for homes near transit. Under Government Code 65589.5, the same applies to builder's remedy projects, which can exceed local zoning when a city's housing plan is out of compliance. Ordinary fees that every project pays still apply.

Starting January 1, 2027: Credit for What You Demolish

SB 1036 (Chapter 54, Statutes of 2026) was chaptered June 30, 2026 and has no urgency clause, so it takes effect January 1, 2027. Its summary says it requires "the amount of a fee that is imposed on a development project that demolishes or changes an existing use to be offset to account for the demolition or change so that the amount of the fee is attributable only to the development project's incremental impact on public facilities or services." A water or sewer capacity charge on a changed connection may cover only the change in capacity.

This matters for teardown projects. If you replace one house with four homes, a fee under the Mitigation Fee Act should reflect only the net added impact once SB 1036 is in force. Before then, ask the city whether its own fee rules already give credit for an existing home.

Local Fees From Adopted Schedules

Local amounts differ by city. Two examples come from schedules and bulletins read for this hub. Los Angeles charges an Affordable Housing Linkage Fee: under its schedule dated April 22, 2026, a residential project of 2 to 5 units pays $1.28 per square foot in the Low, Medium and Medium-High Market Areas and $23.20 in the High Market Area. San Diego says SB 9 homes there pay "School Fees, Development Impact Fees, and the Regional Transportation Congestion Improvement Program Fees," listed in its Information Bulletins 501 and 502. See the Los Angeles and San Diego pages.

Where to Go Next

Related on VanPlex: California ADU law and the permit deadlines page.

Frequently Asked Questions

Official sources (checked October 2026)