San Diego scales back ADU incentives: What you need to know

In a closely watched vote on Monday night, the San Diego City Council approved a set of new restrictions on accessory dwelling units (ADUs), capping off months of debate over how to balance the region's housing needs with concerns about neighborhood character, wildfire safety, and infrastructure strain.

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The 5–4 vote marks the city's first major revision to its ADU Bonus Program, which since 2020 has helped San Diego become one of the most ADU-friendly cities in California. Supporters say the changes will prevent overdevelopment in low-density neighborhoods, while critics argue they could slow progress on desperately needed housing.

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For San Diego homeowners and potential ADU builders the message is clear: The door to backyard housing is still open, but the path through has become a little narrower.

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Why the City Made Changes

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Over the past five years, San Diego's incentive-driven program has made it easier and faster for homeowners to add multiple ADUs to their properties. As a result, ADU permits skyrocketed, from fewer than 500 in 2019 to more than 2,700 in 2023, according to permit data from the City of San Diego’s Development Services Department. A 2022 report from UC Berkeley’s Terner Center for Housing Innovation found that by 2024, nearly 20% of all new homes built in San Diego were ADUs, a rate that outpaced Los Angeles, San Jose, and most other large California cities.

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However, as more ADUs began appearing in neighborhoods like Normal Heights, City Heights, and Mira Mesa, so did concerns. Residents began speaking out about what they saw as an unintended consequence of the ADU Bonus Program—small apartment-style complexes replacing single-family homes. Critics argued that "backyard buildings" were never meant to be four-to-six-unit developments, especially in narrow cul-de-sacs or wildfire-prone areas. (Source: https://www.sandiegopost.com/2025/01/02/san-diego-residents-do-what-they-can-to-keep-10-new-units-out-of-backyard-of-a-single-home/)

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"The people who live here, who have lived here for decades, are not against housing," said Councilmember Jennifer Campbell during the hearing, as reported by NBC 7 San Diego. "But they are against speculative development that undermines public safety and livability."

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At the same time, housing advocates, including the California Department of Housing and Community Development (HCD), warned the city not to go too far. In an earlier letter, HCD had flagged elements of the city’s proposed changes that could violate state law by indirectly restricting ADU development in certain zones.

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Monday night's decision attempted to find a middle ground: still encouraging ADUs, but with a few more guardrails.

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What’s Changing for Property Owners

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One of the most significant updates is a cap on how many units can be built per lot. Property owners can still build one ADU and one junior ADU (JADU) by right, but the Bonus Program’s previous pathway to four-to-six units on a single-family parcel is now tied to lot size and zoning. Under the revised rules, lots must be at least 10,000 square feet to qualify for multiple bonus ADUs, and even then, only in multi-family zones. In single-family zones, those larger-scale ADU developments are no longer allowed, effectively limiting most homeowners to two units unless they’re in a designated zone that permits higher density.

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Height limits were another key point of debate. Under the revised rules, ADUs must be limited to two stories and a maximum of 1,200 square feet. This change effectively eliminates the possibility of three-story ADU structures, which some developers had built to maximize density under the Bonus Program. In many low-rise neighborhoods, these taller builds were seen as out of scale and inconsistent with the surrounding character, prompting the city to draw a clearer line.

The Council also voted to prohibit ADUs in high fire-risk cul-de-sacs, areas that already struggle with evacuation access and limited road width. This decision was based on safety recommendations from the city’s Fire-Rescue Department and reflects broader goals around wildfire resilience.

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Parking requirements are also changing. In neighborhoods that aren't within a half mile of a major transit stop, homeowners must now provide one off-street parking space per ADU. Supporters say this rule helps reduce curbside congestion and brings San Diego's policy back in line with earlier statewide standards. (Source:https://timesofsandiego.com/business/2025/06/17/san-diego-city-council-bans-backyard-adu-apartment-towers/)

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Finally, the Council approved the introduction of a new infrastructure fee to support upgrades to public systems like water, sewer, and roadways. Exact figures will be finalized later this year, but the intent is to ensure that growing neighborhoods have the infrastructure they need.

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When Will These Rules Take Effect?

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The changes require a second reading and final approval by the San Diego City Council, expected in mid-July. If the ordinance passes again and is signed by Mayor Todd Gloria, the new rules could go into effect as early as August 2025. According to the City of San Diego Development Services Department, applications submitted before the effective date may still qualify under existing rules.

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The Future of ADUs in San Diego

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Despite rolling back some of the Bonus Program's incentives, ADUs remain central to San Diego’s long-term housing strategy. As noted in Greater San Diego Association of REALTORS® 2024 Market Reports, backyard units remain one of the most cost-effective ways to add housing without expanding the city’s physical footprint.

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"I'm disappointed we're stepping back," said Councilmember Raul Campillo, who voted against the changes, in an interview with ABC 10News San Diego. “But I hope we continue to support working families who want to build for their kids or aging parents."

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Industry experts agree that ADUs will continue to play a big role. Builders are offering faster, prefabricated solutions, financing options are expanding, and permit review times have dropped below 60 days for standard units, according to the City of San Diego Development Services Department’s June 2025 ADU Bonus Program Update.

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The Bottom Line

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If you’re considering building an ADU in San Diego, now is the time to get informed. With fewer bonus incentives, stricter height limits, and new fire-zone restrictions, it’s more important than ever to understand your lot’s zoning and eligibility. 

But make no mistake: the opportunity is still there. The rules might be shifting, but ADUs remain a practical, flexible way to build more housing, one backyard at a time.  

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Quick Tip: Rules can vary depending on where your property is and how it’s zoned. Before making any plans to build an ADU, it’s a good idea to check in with the City of San Diego or talk to a local ADU professional.

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Xavier Rodriguez is the CEO of ADU Geeks, San Diego’s leading ADU consulting and project management firm. In 2024, the company was ranked No. 1 on the San Diego Business Journal’s Fastest Growing Private Companies list in the Small Business category, achieving 594.3% revenue growth.