What Happened

SB 1117, by Senator Sabrina Cervantes (D-Riverside), was sponsored by California YIMBY. It passed the Assembly 70-0 on August 20, 2026, and the Senate agreed to the final version 38-0 on August 25. Governor Newsom signed it on September 29, 2026, the same day he signed AB 956, which allows two detached ADUs per single-family lot. SB 1117 is not an urgency bill, so it takes effect on January 1, 2027.

The “Fee Cliff” SB 1117 Fixes

Under current California law, a city, special district or water company cannot charge impact fees on an ADU of 750 square feet or less, or on a junior ADU of 500 square feet or less. Impact fees are the one-time charges for parks, roads, sewer and water infrastructure and other public facilities. For an ADU over 750 square feet, the fees must be charged “proportionately in relation to the square footage of the primary dwelling unit.”

The problem is what happens at 751 square feet. According to California YIMBY, some cities charged the fee on the entire ADU once it crossed 750 square feet, including the first 750 square feet that would otherwise be exempt. In its support letter, the sponsor called this an arbitrary “fee cliff.” It said that where fees run $10 to $30 per square foot, a slightly bigger ADU can cost thousands of dollars more.

What SB 1117 Changes

• Fees only on the area above 750 square feet. For up to two ADUs on a lot, impact fees on an ADU over 750 square feet are still charged proportionately to the size of the main house, but only on the square footage above 750.
• Lots with more than two ADUs keep the old formula. If a property has more than two ADUs (for example, on multifamily lots), fees on ADUs over 750 square feet stay proportional to the main home, without the 750 square foot deduction.
• The exemptions stay. ADUs of 750 square feet or less and junior ADUs of 500 square feet or less still pay no impact fees.
• It applies everywhere. The Legislature declared it a matter of statewide concern, so it applies to all California cities, including charter cities like Los Angeles.

How Much Could You Save?

The savings depend on your city’s fee schedule and the size of your main house. The clearest number comes from the bill’s opponents. A coalition led by the League of California Cities told the Legislature that, for a hypothetical 1,000 square foot ADU, impact fees would drop from $2,500 under the current formula to $625 under SB 1117. That is a $1,875 saving per ADU. They estimated the change could cut local fee revenue by up to $52 million a year statewide.

The logic is simple: on a 1,000 square foot ADU, only 250 square feet (the area above 750) is counted. That is one quarter of the unit, so the fee drops by three quarters.

Impact fees are only one line of your budget. Building permit and plan check fees are separate and still apply. For a full picture of what an LA ADU costs, see our ADU cost guide for Los Angeles.

What It Means for Your ADU Design

• The penalty for going over 750 square feet gets much smaller. Many homeowners squeezed their ADU down to 750 square feet just to avoid fees. Starting in 2027, an 800 square foot unit is charged on 50 square feet, not 800. That makes a real second bedroom or a bigger kitchen easier to justify.
• It pairs with AB 956. The new formula covers up to two ADUs on a lot, which matches AB 956’s new limit of two detached ADUs on a single-family lot. Both laws take effect on January 1, 2027.
• Timing can matter. If you are planning an ADU over 750 square feet and your permit is close to the January 1, 2027 date, ask when your city will calculate and collect impact fees. We can help you plan the timeline.

Who Opposed It

The League of California Cities, the California State Association of Counties, the California Special Districts Association and other local government groups opposed SB 1117. They argued that capping fees would leave cities without enough money to build the parks, roads and utilities that new ADU residents need. Supporters included apartment and rental housing associations, Abundant Housing Los Angeles, YIMBY Los Angeles and Zillow Group.

Frequently Asked Questions

Sources

• Assembly Committee on Local Government – SB 1117 bill analysis (hearing July 1, 2026)
• CalMatters Digital Democracy – SB 1117 bill text, votes and status
• Office of the Governor – “Governor Newsom signs housing legislation” (September 29, 2026)

Related Reading

• AB 956 Signed: Two Detached ADUs Starting January 1, 2027
• How Much Does It Cost to Build an ADU in Los Angeles?
• California 2026 ADU Laws Guide