City Committee to Consider ADU Fee Reductions to Boost Housing Production

Pasadena’s Economic Development and Technology Committee (known as EDTech) is set to review a proposal this week that would significantly reduce fees for Accessory Dwelling Units, potentially removing financial barriers for homeowners seeking to build additional housing on their properties.

The committee will meet on March 18 to consider recommendations that would exempt smaller ADUs from certain fees and provide substantial discounts for units dedicated to affordable housing or family members.

City staff have proposed a tiered approach to fee reductions after analyzing ADU permitting trends showing that 90 percent of these units in Pasadena are smaller than 900 square feet, with an average size of 600 square feet.

The proposal would expand the Residential Impact Fee exemption threshold from the current 750 square feet to 900 square feet, effectively eliminating this substantial charge for the vast majority of new ADUs in the city.

“A study of Accessory Dwelling Unit (ADU) fees was requested when Pasadena’s ADU Ordinance was updated in 2024,” the Department of Planning and Community Development said in a memorandum.

The plan recommends waiving Residential Impact Fees entirely for ADUs that are designated as affordable housing, reserved for Section 8 voucher recipients, or occupied by family members, regardless of size, with a minimum commitment of 7 years by the property owner.

For ADUs using the city’s Standard Plans Program or those with affordability covenants, the proposal includes a 50 percent reduction in plan check fees, which would lower costs by approximately $1,400 for a typical unit.

Covenanted Affordable ADUs are defined as those that enter into an Affordability Covenant with the Housing Department committing the ADU to be occupied only by households whose annual income does not exceed 120% of the Area Median Income.

An analysis of permitting data showed that since 2021, a total of 559 ADUs have been built or are under construction in Pasadena, demonstrating significant interest in this housing option among property owners.

The average house size in Pasadena is 1,600 square feet according to the last census data, meaning most ADUs are significantly smaller than the primary dwellings they accompany.

City staff estimate the proposed fee reductions would decrease annual Residential Impact Fee collection for ADUs by approximately 50 percent, from $105,000 to $52,000, directly affecting funds available for parks and recreational facilities.

The Construction and Demolition Performance Deposit would be reduced to a flat rate of $1,000 for all ADUs, decreasing initial out-of-pocket expenses for homeowners while still ensuring compliance with debris removal requirements.

School District Impact Fees, collected on behalf of Pasadena Unified School District, are exempt for ADUs that are less than 500 square feet, providing additional savings for very small units.

Over the past several years, the city has implemented several programs to encourage ADU production, including revised regulations, complimentary virtual consultations, and the availability of standard ADU plans.

The EDTech Committee meeting will also address other items including a Tech Marketing Campaign and an Economic Development Update by David A. Klug, Economic Development Director.

“Overall, staff finds this could aid in the construction of ADUs and increase housing options in the City,” the report concludes, while acknowledging the fiscal impact of reduced revenue for the city’s Building Fund and Parks and Recreation Department.