More than 1,000 ADUs have been approved in SLO County since 2020. Is it helping?
AI-generated summary reviewed by our newsroom.
- San Luis Obispo County permitted over 1,200 ADUs between 2020 and 2024.
- Fees and construction costs keep ADUs expensive despite state-level incentives.
- Policy shifts boost ADU approvals, but impact on affordability remains unclear.
The past half decade has seen the state of California push hard to make accessory dwelling units a part of its solution to the housing crisis — but even as laws become easier to navigate and incentives pile up, is it working?
In San Luis Obispo County, the actual effect of California’s push for more ADUs appears to be making a dent in the amount of housing coming online — though it’s unclear whether those tiny homes are actually contributing to the amount of available housing stock.
Across San Luis Obispo County, ADU production has accelerated in the past five years as the state Legislature has prioritized making ADUs easier to build thanks to a streamlined permitting process.
Lindy Hatcher, executive director of Home Builders Association of the Central Coast, said these expansions in ADU accessibility have made them more attractive as a tool for local governments to hit their housing cycle goals, but whether ADUs will be successful in the long run all comes down to property owners having the will to build them.
“I think if the jurisdictions were producing housing at the rate that they’re supposed to, which is in our county a 1% growth rate, then we wouldn’t have the state mandating ADUs and other laws to bring about more housing,” Hatcher said. “The onus is on us for not producing the housing, and the state stepped in and said, ‘Hey, if you’re not going to do it, we’re going to mandate it for you to do,’ and that’s how all these housing laws are coming online.”
Data shows spike in ADU production since 2020
Between 2020 and 2024, more than 1,200 ADUs were permitted in San Luis Obispo County, with the city of San Luis Obispo leading the way in new ADU permits issued with 435.
In many cities, ADU permitting reached its most recent peak between 2022 and 2024; Paso Robles, for example, went from permitting 28 ADUs in 2022 to 129 in 2024.
Erich Schaefer, a San Luis Obispo-based developer, said while his company has experience designing and building ADUs, they make up a relatively small part of their homebuilding, suggesting that traditional home construction still far outstrips ADU production as a priority for developers.
Though ADUs have been billed as a cheaper alternative to conventional homebuilding, Schaefer said they’re still subject to the famously high housing construction cost bottleneck that defines the California housing market’s inability to produce homes fast enough to meet demand.
“I think most people hope it’s going to cost a couple hundred thousand (dollars) and when we’ve talked to a lot of local architects and such, they’ll all say you’re not going to get one built for less than half a million by the time you factor in every penny you’re going to spend on it,” Schaefer said.
Part of that comes down to the compact form factor of ADUs, Schaefer said.
Schaefer said for all of the progress that has been made in making ADUs faster and easier to produce, the architectural fees don’t change much as a building’s footprint shrinks.
“You have to realize that the smaller the building, the higher the cost per square foot when you get down to that small,” Schaefer said. “For example, a kitchen is the most expensive room in the house, and you have to be able to spread it out over the square footage, and so if you have less square footage to spread it out over, the cost per foot is going to go up.”
Schaefer said because so much of home value in San Luis Obispo is dictated by how much the home could be rented for, when a property owner adds an ADU to their property, they’re adding value — but not necessarily lowering the cost for renters down the line.
“What I don’t hear anyone talking about is the long-term problem it’s going to cause, that it already has caused — an increase in property value,” Schaefer said. “If the objective was to long-term be able to have more people that can afford to live here, they’ve accomplished the opposite.”
Have state ADU expansions yielded enough growth?
The state Legislature’s push for more ADUs goes back nearly a decade to 2016, when Senate Bill 1069 and Assembly Bill 2299 reduced parking requirements for ADUs, reduced utility connection fees and prohibited local governments from imposing anti-ADU development standards.
In 2019, Assembly Bills 68 and 881 further simplified the approval process, removing setback requirements, reducing minimum lot size requirements and reducing the amount of required parking. Those bills also prohibited owner-occupancy requirements for a five-year period, making ADUs viable as long-term rentals.
That same year, Assembly Bill 670 invalidated deed restrictions that prohibit the construction of ADUs on single-family residential lots, stripping back homeowners associations’ limits on construction, while Assembly Bill 671 required local governments to incentivize the production of ADUs in their housing plans.
Since those initial expansions, more bills have allowed homeowners to subdivide single-family residential lots, allowing for up to four units on what were previously single-family lots.
Thanks to 2023’s Assembly Bill 1033, ADUs can be sold separately from a primary residence and can be evaluated for property taxes separately from the primary residence, further encouraging ADUs to be used as long-term dwellings.
The ability to use ADUs as rental dwellings was further expanded by Assembly Bill 976, which prohibits local governments from requiring owner occupancy of ADUs or the primary property they sit on, meaning both primary dwelling and ADU can be rented out by the property owner.
More recently, Senate Bill 1211 increased the number of detached ADUs that can be put on the same lot as a multifamily dwelling, raising the number from two to eight.
However, even with the passage of those ADU laws, that doesn’t mean that building or planning an ADU is cheap by any means.
Building permit fees vary across the county, with ADU building permits for the unincorporated parts of the county running between $1,180 to $3,370 depending on size, according to San Luis Obispo County Department of Planning and Building long-range planning division manager Cory Hanh.
Other fees such as minor or major grading can tack on another $720 to $1,805, respectively, while development impact fees can range wildly depending on the ADU’s location, Hanh said.
Those fees can vary between the unincorporated county and different cities within the county.
In the city of San Luis Obispo, if a homeowner wants to add an ADU to a single-family residential lot, they can expect to pay plan review fees, meter installation fees and other utility connection fees related to ADU permits in the city, with those costs adding up to around $2,000-$5,000 depending on final scope, according to city communications manager Whitney Szentesi.
Depending on location, some ADUs within the Coastal Zone require a Coastal Development Permit in addition to a building permit, which usually run around $2,600, according to Morro Bay community development intern Lee Ackerman.
In Pismo Beach, an ADU under 750 square feet with a valuation of approximately $40,000 would pay $4,610 in fees, according to city community development director Scot Graham. Increasing that same ADU’s size to over 750 square feet triggers impact fees; an ADU over 750 square feet with a valuation of $40,000 would pay $26,098 in fees, with most of the cost driven by more than $20,000 in impact fees, Graham said.
Hatcher said the most recent ADU laws have been “definitely helpful, but they’re not the silver bullet” for filling in housing at all income levels — a goal not all ADUs will accomplish.
“I don’t think anything is overall easier and cheaper to build with supply chain issues and material costs continuing to rise,” Hatcher said.
This story was originally published June 29, 2025 at 5:00 AM.
