Santa Cruz County

Agenda Item
Approved with additional direction
Oct 30, 2018 9:00 AM

Adopt resolution amending the Unified Fee Schedule to enact a three-year pilot program to waive specified Planning fees for Accessory Dwelling Units (ADUs) not more than 640 square feet in floor area, and take related actions, as recommended by the Planning Director


Department:Planning: HousingSponsors:Planning Director Kathleen Molloy
Category:PLNHOUSING - Board LetterProjects:Master Calendar
Functions:Land Use & Community Services

Financial Impact

The recommended fee waiver program may result in a loss of revenue to the General Fund of between $55,000 to $67,000 annually, depending on the number of permits received. This range is based on an analysis of all ADU permits processed (submitted and fees paid) in calendar year 2017 through 9/30/18 for ADU's of 640 square feet or less, consistent with the fee waiver proposal.

Board Letter

Recommended Action(s):

1.              Adopt Fee Resolution (Attachment A) to create three-year pilot program to waive specified Planning Department permitting fees for Accessory Dwelling Units (ADUs) of 640 square feet or less.


2.              Direct Clerk of the Board to publish the amended Unified Fee Schedule.


Executive Summary

The attached Fee Resolution has been prepared to waive specified fees for eligible ADUs for a three-year pilot program ("Program") as directed by the Board on September 25, 2018.



On September 25, the Board considered and approved a proposal submitted by Supervisor Friend to create this Program. The Board directed the County Administrative Officer to return on October 30 with a draft resolution to authorize the Planning Department to waive certain permit processing fees for ADUs of 640 square feet or less in floor area. This proposal follows several years of State and County efforts to encourage development of ADUs, streamline the ADU permitting process, minimize permitting fees, and provide technical assistance to interested homeowners.


In support of those efforts, the Planning Department has created a website with interactive tools to help homeowners learn about the ADU permitting process and design options, find helpful resources, and estimate project costs for fees and construction. The County also recently created a forgivable ADU loan program to help homeowners finance up to $40,000 in ADU development costs in exchange for restricting the ADU as an affordable rental unit for a limited term. The County also recently entered into a partnership with Habitat for Humanity to provide larger, non-forgivable loans to lower-income senior homeowners for ADU development.   


The Program is part of these wider efforts to encourage the development or permitting of ADUs in the unincorporated areas of Santa Cruz County as a way to increase the stock of relatively affordable housing in the County.



The Program does not waive any impact fees or fees levied by other agencies, such as school districts or water districts, or those charged by County departments other than the Planning Department. The specific Planning Department fees to be waived for ADUs of not more than 640 square feet in area are:

1.              Permit Processing

2.              Building Plan Check

3.              Permit Fee

4.              Soils Report Waiver Fee

5.              Environmental Plan Check

6.              Environmental Inspections

7.              Address Review

8.              Zoning Review

9.              General Plan and Technology Fee


On average, the sum of these fees was approximately $4,100 for ADUs of 640 square feet or less, based on ADU fee revenue data for 2017 and 2018 through September, a total of 21 months. A majority of those permits were for conversion ADUs, which are those created through conversion of existing accessory structures, such as a garage or other habitable accessory structure, or a portion of an existing home. The fees for conversion ADUs tend to be less than those for new ADUs, which is likely why this average cost is slightly lower than that estimated in the September 25, 2018 proposal ($7,300).

The purpose of the Program is to encourage development of smaller ADUs, which are considered “affordable by design” and can contribute to filling the gap known as the “missing middle” in the housing stock. This is considered a public purpose, consistent with County and State housing policy, and a legitimate reason for the County to waive these fees. The Program is consistent with policies in the Housing Element of the General Plan related to ADUs and/or fee waivers:

Section 4.7, Goal 2: Encourage and Assist in the Development of Housing

Program 2.5: Explore the feasibility of fee waiver, reduction, or deferral programs to assist the creation of affordable housing.

The waived fee revenues are not projected to create a significant impact on the Planning Department's operating budget, because the work associated with anticipated activity can be performed without increasing staff.  Based on fee data noted above, staff estimates the reduction will be very minimal:  about one-half of one percent of total permit-related fee revenues for the Department for each year of the pilot program.

If the revenue impacts are ultimately determined to be more significant, or the Program is otherwise not performing as desired, the Board is not compelled to continue it past the third year. The Department will report annually to the Board on the number of ADU permits issued annually and the total amount of fees waived pursuant to the program, as directed by the Board on September 25.



Strategic Plan Element(s)

The recommended pilot program supports Strategic Plan Elements 2B:  Community Development and 2C: Local Inventory, by encouraging the development of modestly-sized, relatively affordable ADUs on existing single-family properties.    

Meeting History

Oct 30, 2018 9:00 AM Video Board of Supervisors Regular Meeting

Additional direction:

At the conclusion of this three-year pilot, staff to do a survey of the rents of those who participated in the program, so we can get a sense of what they're renting for and whether the affordable by design is actually happening

Resolution No. 241-2018

MOVER:Ryan Coonerty, Vice Chair, Third District Supervisor
SECONDER:John Leopold, First District Supervisor
AYES:John Leopold, Zach Friend, Ryan Coonerty, Greg Caput, Bruce McPherson