Impact & Development Fees

Impact fees (sometimes called development fees) are one-time charges that local governments levy on new construction to help pay for the public infrastructure that growth requires — roads, water and sewer capacity, schools, and parks, among others. The idea is that new development should contribute toward the added demand it places on shared systems. These fees are separate from the building permit fee itself and from plan-review charges, and they're typically collected before a permit is issued or before final approval.

For ADU projects, impact fees can be a meaningful line item — or nearly absent. Because creating a new dwelling unit can trigger several categories of impact fee, an ADU could in principle face significant charges. Recognizing that this discourages exactly the kind of gentle infill many places want, a number of jurisdictions have reduced, capped, or waived impact fees for ADUs, especially smaller ones. The result is wide variation: an ADU in one city may owe little, while a similar unit elsewhere faces more.

Impact fees are distinct from permit valuation-based permit fees, which scale with the estimated cost of construction; impact fees are usually set by fixed schedules tied to unit type, size, or use. They're also distinct from ongoing property taxes — impact fees are paid once, at the time of development. Because the categories, amounts, and any ADU reductions vary widely by jurisdiction and change over time, pull your city's current fee schedule rather than estimating, and budget for fees from the start. For how fees fit into a total ADU budget, see how much an ADU costs. This is a general overview, not financial advice.