Introduction
Accessory Dwelling Units(ADUs) continue to play a vital role in addressing San Diego’s housing shortage. However, in mid‑June 2025, the City Council approved reforms that roll back certain ADU incentives—aiming to balance housing growth with neighborhood character, infrastructure capacity, and fire safety. This blog explores the full landscape of ADU policies—bonus incentives, financial support, and the latest regulatory updates.
1. ADU Bonus Program: How It Works
Built-in by SDHC in 2022, the ADU Bonus Program offers an additional market-rate ADU for each deed-restricted affordable ADU.
In Transit Priority Areas (TPAs), there's no cap on the number of bonus units, based only on FAR, lot coverage, and height limits.
Outside TPAs, homeowners may get up to two bonus ADUs—one restricted, one unrestricted—subject to physical limits.
Income tiers: deed restrictions last 10 years (very‑low income) or 15 years (low/moderate income); units must match market-rate ones in size/amenities.
Process: apply via SDHC with ~$600 fee, income vetting, annual monitoring ($150/year).
2. Financing & Technical Assistance
The SDHC ADU Finance Program supports moderate-income homeowners through:
Construction-to-permanent loans up to $250,000, with owner-occupied primary homes and minimum credit score of 680.
No funding in FY 2025 (July 2024–June 2025), though leftover FY 24 dollars are allocated on a first-come basis.
Free technical help—from design, permitting to leasing—combined with affordable rent requirements for seven years.
3. 2025 Reforms & Incentive Rollback
In June 2025, the City Council passed 25 reforms, effective ~mid-July (outside Coastal Zone; Coastal Commission review in 2026):
Caps by lot size: Small Single-Family lots (≤8,000 ft²) limited to 4 ADUs; larger lots tiered up to 6.
Fire safety:
New setbacks in High/Very High Fire Hazard Zones (4–5 ft side/rear).
Two evacuation routes and sprinkler systems required in fire-prone zones.
Parking: One off-street space per (bonus or affordable) ADU if outside ½ mile of transit.
Infrastructure fee: Community enhancement fee payable for units under 750 ft², funding local services.
Scale and zone limits:
Elimination of program in lowest-density single-family zones.
Height max of 2 stories and 1,200 ft² for detached ADUs.
Unit sale: Implementation of AB 1033 allows ADUs to be sold separately as condos.
Penalty increases: Fines minimum $10,000/month for violating affordable-rent deed restrictions.
4. What This Means for YOU
You can still build one ADU and one JADU by right, plus bonus units depending on lot size and zone.
Location matters: TPAs offer more flexibility and fewer parking rules; low-density zones now limited.
Compliance essential: Meeting fire setbacks, parking, infrastructure fee, and deed restrictions is non-negotiable.
Timing tip: Submit applications before reforms go into effect (~August 2025) to secure current incentives.
Seek help: SDHC finance and tech assistance helps with complex processes, especially affordable unit provisions.
