Published: 29 Oct 2026 · Last verified: 29 Oct 2026 · Next review: Jan 2027
On September 29, 2026, Governor Newsom signed a stack of housing bills. Three of them rewrite the economics of building an ADU — and all three take effect January 1, 2027, barely two months from now.
Here is what each one does, in the order it hits your budget.
1. SB 1117 — the 750 sq ft cliff gets a staircase
What: Impact fees on the first two ADUs per lot may now be charged only on the livable square footage above 750 sq ft — not the entire unit. (Chapter 809, Statutes of 2026; amends Gov. Code §66311.5.)
Before: Cross 750 sq ft and many cities charged the full per-square-foot impact fee on the entire ADU — including the first 750 feet that would have been exempt. An 800 sq ft ADU paid on 800.
After: That 800 sq ft ADU pays on 50 square feet. The 751st square foot stops being the most expensive one on the drawing.
Dollar impact (illustrative): In Palo Alto, where the proportional DIF runs $8,000–$20,000 on an 800 sq ft ADU under current practice, the post-2027 figure drops to roughly $500–$1,250. In Anaheim ($10,411 DIF), the savings are similarly dramatic. Cities with $0 ADU impact fees (Oakland, Salinas, Oceanside) are unaffected — there is nothing to reduce.
What does not change: School fees (separate Ed. Code regime), building permit fees, utility connection charges, and permits pulled in 2026 (assessed under 2026 rules).
2. SB 1196 — the utility wait gets a deadline
What: The California Public Utilities Commission must establish clear timelines for utility service connection requests for ADUs — and penalties for utilities that miss them. (Signed Sep 29–30, 2026; supported by the Casita Coalition.)
The problem it targets: ADU owners waiting 9–12 months after construction completes for power — the subject of our SB 1196 Short. The building is done; the meter is not.
What changes on your block: Starting 2027, you can submit the utility hookup request at the same time as the building permit application — running the two queues in parallel instead of in sequence. For small energization projects not requiring grid upgrades (which covers most ADUs), the CPUC timelines plus penalties should compress the post-construction wait substantially.
Caveat: The law directs the CPUC to write the rules; the actual timelines depend on that rulemaking. The direction is set, the numbers are not yet.
3. AB 956 — two detached ADUs per lot
What: Cities must ministerially approve (no discretionary review, no CEQA) up to two detached, new-construction ADUs on a lot with an existing or proposed single-family home — up from one. (Chapter 791, Statutes of 2026; amends Gov. Code §66323.)
The details:
- Each unit: up to 800 sq ft (city may cap), 16-foot height (18’ near major transit), 4-foot side/rear setbacks.
- The state-guaranteed maximum stays at main house + three ADUs — what changes is the mix: you can now trade the in-home JADU for a second backyard cottage. Build two detached ADUs and the city is no longer required to approve a JADU.
- Fee interaction: SB 1117’s marginal fee break applies only to lots with up to two ADUs. Three ADUs (two detached + a conversion, say) lose the break on the third — unless each unit stays at or under 750 sq ft.
What changes on your block: If your lot has the yard — roughly 2,700–3,100 sq ft of clear space behind the house for two 800 sq ft cottages — you can now build two where the old law allowed one detached plus one JADU. On a standard 50×120 lot, that means tight gaps and likely fire sprinklers. On a hillside, geotechnical reality still governs.
Should you wait for January?
| Your situation | Verdict |
|---|---|
| ADU is 750–900 sq ft | Consider waiting — SB 1117 savings are real and immediate |
| ADU is under 750 sq ft | No reason to wait — already exempt from impact fees |
| Utility connection is your bottleneck | Watch the CPUC — timelines help, but rules are still being written |
| You want two detached ADUs | Wait for Jan 1 — AB 956 is not effective until then |
| Permit ready now, ADU under 750 sq ft | Pull it — nothing in these laws improves your position by waiting |
The bottom line
Three bills, one date, three different levers: fees (SB 1117), time (SB 1196), and how many (AB 956). Together they make the 800 sq ft detached ADU — this site’s benchmark — cheaper to fee, faster to connect, and no longer the maximum you can build. January 1 is 64 days away.