ADU Policy Under Review

Accessory Dwelling Units — ADUs — have become one of the most talked-about solutions to California's housing shortage. But the regulatory landscape is shifting. Here's what homeowners in…

Accessory Dwelling Units — ADUs — have become one of the most talked-about solutions to California’s housing shortage. But the regulatory landscape is shifting. Here’s what homeowners in Santa Cruz County need to know.

What’s an ADU? An ADU is a secondary dwelling unit on a property that also has a primary home. It can be a converted garage, a basement unit, a detached backyard cottage, or an addition above the garage. ADUs can be rented for income, used for multigenerational housing, or serve as a private space for guests.

What’s Changing? California has passed a series of ADU-friendly laws in recent years, significantly streamlining permitting and reducing fees. But local jurisdictions are now reviewing how to implement state mandates while maintaining local oversight. Santa Cruz County and the City of Santa Cruz are both in the process of updating their ADU ordinances to align with current state law.

Key Current Rules (Subject to Update)

• Most single-family and multi-family lots can have at least one ADU and one Junior ADU (JADU — typically within the existing home structure)
• Setback requirements have been reduced (as little as 4 feet from rear/side property lines for detached ADUs under certain conditions)
• Owner-occupancy requirements for properties with only an ADU (not a JADU) have been eliminated through 2025
• Maximum ADU size varies based on lot size and configuration

Why It Matters for Homeowners

ADUs can add meaningful rental income ($1,500–$3,500+/month in Santa Cruz depending on size and location), increase property value, and provide housing options for family members. But permitting complexity, utility hookup costs, and construction costs ($150,000–$300,000+ for a detached unit) remain significant barriers.

The Bottom Line

If you’re considering adding an ADU, now is a good time to consult with a local contractor and the county/city planning department before the rules change. And watch this space — we’ll keep you updated as the policy review concludes.