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FINANCIAL STATEMENT No fiscal impact to the City or public service is anticipated with this amendment to the municipal code. The City would not receive impact fees for ADUs 749 square feet or less and would receive reduced impact fees for accessory dwelling units 750 square feet or greater as required by state law. BACKGROUND For the past several years,the State has adopted a series of new laws intended to encourage the production of ADUs, principally by reducing regulatory barriers to property owners being able to construct these units. In 2017,the City updated the PMC in response to a significant set of changes in state law governing ADUs.An additional series of regulations were adopted by the State in 2019,effective in January 2020,for which additional updates to the PMC are required. Further minor"clean-up"revisions were adopted by the State in 2020,effective in January 2021. ADUs, also known as granny flats, in-law units, and second dwelling units, are often cited as a beneficial form of housing, provided they are constructed legally and meet applicable standards.ADUs are conducive to on-site independent living space for family members or aging relatives, a convenient place of residence for care givers; and provide a way for less-abled or aging homeowners to stay in their homes,or simply as another option for rental housing.Other benefits include providing a source of affordable housing,while maintaining the character of single-family neighborhoods,and providing a source of rental income to offset the cost of buying or owning a home.ADUs and JADUs cannot be subdivided and subsequently sold separately from the primary dwelling. Unlike a duplex, an ADU is subordinate to the single-family dwelling in both function and design.ADUs are permitted in various forms. An ADU may be completely within an existing single-family home or may be built as an extension of a single-family dwelling or as a detached unit. And with the latest update to the state law,an ADU may now be located within a multifamily structure or as a detached unit within a multifamily development. JADUs must be completely within a single-family dwelling and are limited to 500 square feet in size. While much of the new ADU legislation that went into effect in January 2020 and January 2021 is complex and difficult to interpret, it is clear on its intent: provide greater flexibility for the construction and conversion of existing space to ADUs or JADUs, limit the imposition of impact fees, and streamline approvals by eliminating discretionary review of ADUs and JADUs. The draft amendments to the PMC included as Attachment 1 are proposed to implement the state law within the context of the City's existing regulations while retaining the City's authority over ADUs and JADUs to the maximum extent permitted by state law. Page 2 of 10