The Hidden Challenges of Building an ADU in California (Even With New Laws)

Over the past several years, California has enacted a series of laws aimed at making it easier to build accessory dwelling units, or ADUs. These efforts are part of the state’s broader strategy to address the ongoing housing shortage by encouraging small-scale residential infill.

The legislative push began with Senate Bill 1069 in 2016, which limited cities' ability to impose excessive parking requirements and utility connection fees for ADUs. This was followed by Assembly Bill 68 and Assembly Bill 881 in 2019, which further streamlined the approval process by requiring local jurisdictions to review ADU applications ministerially and within 60 days. These laws also prohibited minimum lot size requirements and reduced required setbacks for side and rear yards to four feet. More recently, Senate Bill 897 and Assembly Bill 2221, both passed in 2022, reinforced the state’s position by clarifying height limits, expanding allowances for multiple ADUs, and reducing discretionary review at the local level. Together, these changes have contributed to the perception that building an ADU in California is now straightforward. Public messaging, city outreach, and media coverage have often framed ADUs as a fast and affordable solution for homeowners seeking to add rental income or housing flexibility.

In practice, however, the process is more complex. While zoning restrictions may no longer be the primary barrier, many of the underlying challenges remain. Financing can be difficult to secure, especially for homeowners without significant equity. Infrastructure limitations, such as inadequate utility capacity or poor site access, can introduce unexpected costs. Building code compliance and jurisdiction-specific requirements often complicate permitting. These issues are not always visible in early feasibility reviews, but they can affect both the timeline and the overall viability of a project.

This article looks beyond state policy to examine the realities of ADU development in California. While the legal framework has improved, the path from entitlement to construction still requires careful planning, site-specific analysis, and an understanding of how local agencies interpret and apply the law.

The Policy Shift

To encourage small-scale infill housing, California has introduced a series of statewide reforms designed to remove local barriers to ADU construction. These efforts reflect the state’s broader strategy to expand housing supply by simplifying development on single-family and multifamily residential lots. The first major step came with Senate Bill 1069, enacted in 2016. This bill limited local governments from requiring excessive parking or high utility connection fees for ADUs. It also clarified that ADUs could be built on any lot already developed with a residential structure.

The momentum continued in 2019 with Assembly Bill 68 and Assembly Bill 881. These measures required cities to approve ADU applications through a ministerial process, with decisions due within 60 days. They also eliminated minimum lot size requirements, reduced side and rear setbacks to as little as four feet, and permitted both an ADU and a junior ADU on the same lot.

In 2022, the legislature passed Senate Bill 897 and Assembly Bill 2221, which further clarified height limits, expanded state preemption over local restrictions, and reduced the potential for discretionary delays. These laws also addressed inconsistencies in how local agencies interpret development standards, reinforcing the idea that ADU approvals should rely on objective criteria.

The cumulative effect of these reforms has been a strong shift in policy, signaling that ADUs should be broadly allowed and more accessible to property owners. Many cities have updated their ordinances accordingly, and public messaging has echoed this intent. As a result, there is now a widespread perception that ADUs can be approved quickly, at relatively low cost, and with fewer regulatory complications.

However, that perception does not always align with project-level experience. While the legal framework has improved, the ability to deliver an ADU still depends on practical considerations such as site layout, utility access, financing, and local administrative practices. These are the challenges that continue to affect whether a project can move from entitlement to construction.

The Hidden Challenges of Building an ADU

While recent legislation has improved the approval process for accessory dwelling units, many of the core challenges involved in actually building one remain. State law may establish the right to build, but that does not eliminate the site-specific and financial hurdles that determine whether a project can move forward. Real-world feasibility still depends on local conditions, project economics, and physical constraints that are often overlooked in early planning.

Financing Remains a Barrier

Access to capital continues to be a limiting factor for many homeowners. ADUs are not always eligible for conventional mortgage products, and many property owners are not prepared to finance construction out of pocket. While home equity lines of credit, cash-out refinancing, and renovation loans can help, these financing tools often come with strict qualifications and higher rates. In a higher interest rate environment, borrowing costs can further erode project viability. Although specialized ADU loan products are starting to emerge, they remain limited and may not be widely available across markets. Without reliable access to financing, many ADU proposals do not advance beyond the conceptual phase. 

Source: Freddie Mac, Understanding ADU Financing, 2023.

Construction Costs Are Often Higher Than Expected

ADUs are frequently promoted as affordable housing solutions, but affordability in terms of policy does not always translate to affordability in construction. Building a detached ADU often requires substantial site work, utility extensions, and independent permitting. These fixed costs mean that the cost per square foot is typically higher than for larger single-family homes. Depending on the scope, materials, and local labor rates, total project costs for a detached unit can exceed $300,000 to $400,000. When projected rental income or resale value does not support those costs, the return on investment may be difficult to justify, particularly in lower-income or rent-stabilized areas.

Physical and Site Constraints Still Matter

Even if the zoning allows an ADU, the physical characteristics of the site often determine whether it is feasible to build. Lots with irregular shapes, steep slopes, or limited open space may not accommodate the required setbacks or access. In other cases, mature trees, existing structures, or utility locations interfere with the layout. Soil conditions, grading, and stormwater drainage can also introduce complications. These issues may not be visible from an initial desktop review but can result in major design changes, delays, or added costs once the project moves into plan development.

Design and Access Requirements Are Frequently Underestimated

Many applicants are unaware that ADUs must still meet all applicable building codes, including local requirements for fire access, egress, and structural separation. For example, detached ADUs may be subject to minimum path-of-travel widths for emergency personnel or require a clear line of sight from the street to the entrance. Certain jurisdictions also impose architectural compatibility standards or enforce specific requirements for light, ventilation, and privacy. On small or constrained lots, these rules can significantly affect unit size, layout, and placement.

While ADU legislation has expanded entitlement rights, it has not removed the practical constraints that define what can actually be built. Each of these factors—financing, construction costs, site conditions, and design requirements—must be considered during the feasibility stage. The legal right to build is important, but success depends on aligning that right with the physical and financial realities of the site.

The Local Layer Still Matters

Although California’s ADU laws have limited the power of local governments to impose certain restrictions, cities and counties still play a significant role in how state policy is implemented. Even with a consistent legal framework at the state level, the process of designing, entitling, and permitting an ADU can vary considerably depending on the jurisdiction. Understanding this variation is essential for evaluating whether a project is feasible in a given location.

Local Interpretation of State Law

State legislation requires cities to approve qualifying ADUs through a ministerial process, which means the review should rely only on objective standards. However, the interpretation of what qualifies as objective can differ across jurisdictions. Some cities apply broad standards that encourage ADU development, while others use more restrictive readings of height limits, lot coverage, fire access, and privacy requirements. These differences in interpretation can influence design options, project timelines, and even overall feasibility. What is permitted by one jurisdiction may be delayed or denied by another, even under similar circumstances.

Additional Design, Utility, and Fire Requirements

Many jurisdictions impose local requirements that go beyond those specified in state law. These may include design guidelines for materials and rooflines, compatibility standards with the primary dwelling, or minimum separation distances between structures. Some cities also require additional utility connections or upgrades that are not explicitly mandated by state policy. In hillside areas or communities located in fire hazard zones, stricter access and clearance requirements may limit where a unit can be placed or whether it is permitted at all. These types of conditions often appear during plan check or construction and can introduce unexpected costs or design limitations, even after a project is deemed eligible under state rules.

Variability in Timelines, Fees, and Inspections

Although California law requires that most ADU applications be approved within 60 days, actual processing times often differ in practice. Some jurisdictions adhere closely to the 60-day standard and have adopted clear checklists and internal workflows to meet it. Others require multiple plan revisions or coordinate with outside agencies such as fire departments or public works, which can extend review timelines significantly. Permit fees, utility connection charges, and required inspections also vary by jurisdiction and can affect both budgeting and scheduling. Without specific knowledge of how a city handles ADU permits, it can be difficult to predict the true cost or duration of a project.

Understanding the local review process is critical. While state law provides a foundation, the way each jurisdiction interprets and enforces that law will influence your project’s design, budget, and schedule. Before investing in drawings or permit applications, it is worth reviewing local ordinances, talking to planning staff, and consulting professionals who have worked on ADUs in the same area. These conversations can provide insight into what is likely to be approved, how long it may take, and whether there are discretionary hurdles not visible in the zoning code.

Early awareness of local conditions can save time, reduce risk, and improve your chances of completing a project that meets both policy goals and practical constraints.

Case Examples

Even with favorable state laws, many ADU projects continue to face significant delays or fail to move forward entirely. In most of these cases, the obstacles are not about whether the project qualifies under California law. Instead, they stem from site-specific limitations, conflicting interpretations of policy, or procedural breakdowns within local agencies.

The following examples show how challenges can emerge during implementation, even when a project appears to meet the legal criteria for approval.

Example 1: Inadequate Access on a Conforming Lot (Los Angeles)

In Los Angeles, a homeowner designed a detached ADU that complied with all zoning and setback requirements. However, the Los Angeles Fire Department required that the access path from the street to the unit maintain a clear width of at least 20 feet and provide unobstructed vertical clearance. The project site did not meet this standard. As a result, the owner was required to modify the layout, resulting in a smaller unit and several months of delays in redesign and plan check.

Source: Los Angeles Fire Department – Hydrants and Access

Example 2: Permits Delayed Due to Utility Conflicts (San Diego)

In San Diego, a homeowner attempted to convert a detached garage into an ADU under the city’s streamlined permitting process. Although the project met all zoning and setback criteria, city staff flagged the electrical system as insufficient to support the new unit. San Diego Gas & Electric required the service to be upgraded. This involved trenching and a full panel replacement. The coordination with utility providers added several months to the project and increased the overall cost by more than $18,000.

Source: City of San Diego – Accessory Dwelling Units

Example 3: Approval Delayed Despite Ministerial Requirements (San Mateo County)

A homeowner in San Mateo County submitted plans for a detached ADU that complied with all objective standards outlined in the county’s ADU ordinance. Under state law, the application should have been approved within 60 days. However, internal coordination issues between the planning and building departments caused the review process to stretch well beyond that timeline. The applicant faced multiple rounds of clarification requests, none of which were tied to code violations. While the project was ultimately approved, the delay added uncertainty and undermined the homeowner’s original schedule.

Source: San Mateo County — Accessory Dwelling Unit Ordinance

Section 5: How to Evaluate a Site for ADU Feasibility

Although California law has made it easier to entitle accessory dwelling units, that alone does not guarantee a site is ready for construction. Many of the factors that influence cost, timeline, and code compliance are tied to the physical characteristics of the property and the way local agencies administer the process. Understanding these variables early is critical to avoid delays, reduce risk, and ensure that a proposed ADU is financially and technically feasible.

Zoning Review

While state legislation sets broad standards, local zoning codes still shape how and where an ADU can be built. Development standards such as lot coverage limits, setbacks, and height restrictions still apply. Some lots may be subject to special overlays, hillside ordinances, or historic preservation guidelines that introduce additional requirements. Confirm whether the property qualifies for a detached or attached ADU, and whether it may also be eligible for a junior ADU. These designations come with different size and use limitations under state law. Reviewing these conditions early will help determine what is permitted on the site.

Utility Access

Every ADU will need access to water, sewer, electricity, and possibly gas. Some sites require utility upgrades, trenching, or service extensions to meet current code. In older neighborhoods, utility infrastructure may be undersized or located in hard-to-reach areas, which can complicate construction and increase costs. It is important to coordinate with local utility providers before submitting for permits. Doing so can help you confirm availability and avoid delays during construction.

Site Layout and Access

The physical layout of the property can influence where an ADU can be placed and how easily it can be constructed. Fire departments often require a clear path of travel for emergency access, which can restrict the size or location of a unit. Narrow lots, irregular shapes, or topographic features such as slopes may trigger additional planning or engineering requirements. It is also essential to consider construction logistics, such as whether there is enough space for equipment, staging, or delivery of prefabricated components.

Cost and Return Analysis

Construction costs for ADUs can vary widely depending on location, design, and site conditions. It is important to develop a comprehensive budget that includes not just materials and labor, but also soft costs like architectural design, engineering, permits, and utility connection fees. Once these costs are established, compare them to the expected return, whether from rental income or increased property value. If the projected return does not support the investment, consider scaling down the project or delaying it until conditions are more favorable.

Permitting and Local Review Timelines

Although state law requires that ADU applications be reviewed within 60 days, local implementation can vary. Some cities meet this requirement, while others may still require multiple rounds of corrections, department sign-offs, or third-party agency review. Understanding the typical permitting timeline in your jurisdiction will help you build a realistic project schedule. Speaking with architects or builders who are familiar with the local process can also give you a better sense of how long plan check and approval are likely to take.

A complete and honest feasibility assessment at the outset of the project can prevent unexpected complications later. By evaluating zoning, utilities, site constraints, and permitting processes in advance, you improve your ability to make informed decisions and move forward with greater confidence.

Final Thoughts

Accessory dwelling units continue to be one of the most practical ways to add housing within existing neighborhoods. They offer flexible options for homeowners, from long-term rental income to multigenerational living arrangements. ADUs can also support broader housing policy goals by increasing supply without requiring major redevelopment. However, they are not without complexity. Despite significant improvements in California’s legal framework, ADUs are not a plug-and-play solution. The process still requires careful planning, a realistic understanding of costs, and a detailed evaluation of site conditions. Many of the most common project delays result not from policy restrictions, but from overlooked issues related to utilities, site layout, or local permitting. Too often, decisions are based on headlines or state-level entitlement rights, without considering the full range of factors that affect buildability. Zoning may support an ADU, but access, fire code compliance, design limitations, and utility infrastructure will determine whether the project is viable in practice. For anyone considering an ADU, the first step is thorough due diligence. Use parcel-level tools to confirm development standards and identify constraints early. Engage local professionals who understand the permitting process in your jurisdiction. Conduct site studies that include fire access, construction feasibility, and utility availability. These steps will help you make informed decisions and avoid unexpected obstacles.

While California’s legislation has made ADUs more accessible in theory, success still depends on your ability to align policy with practical execution. A strong project is not just about whether you are allowed to build. It is about whether you can deliver a unit that performs as intended, fits your budget, and meets local requirements.

The most successful ADU projects start with the right question: not just "Can I build?" but "What will it take to build well?"