Merced, CA Accessory Structures: ADU Impact Fees (2026)
Key Facts
- Impact fee exemption threshold
- ADUs under 750 sq ft: no impact fees
- Larger ADU fee
- Charged proportionate to square footage
- Utility connection fee cap
- Cannot exceed actual cost of service
- Converted ADU utility fee
- No new connection fee required
- Governing section
- Merced Municipal Code Sec. 20.42.040(D)
Summary
Merced exempts accessory dwelling units under 750 square feet from all development impact fees. Larger ADUs pay impact fees prorated to their share of the primary home's square footage, and utility connection or capacity charges cannot exceed the actual cost of service under Municipal Code Section 20.42.040(D).
1.ADUs are not a new residential use for the purposes of calculating connection fees or capacity charges for utilities, including water and sewer service unless the ADU or JADU is constructed with a new single-family dwelling; and any utility fee or charge imposed on the creation of a detached ADU must not exceed the reasonable cost of providing the service.2.ADUs contained within the existing space of a single-family residence or accessory structure are not required to install a new or separate utility connection and cannot be charged for a related connection fee or capacity charge.3.A new ADU shall be required to pay all applicable fees, including impact fees. However, no impact fees shall be imposed on ADUs of less than seven hundred fifty (750) square feet. For an ADU larger than seven hundred fifty (750) square feet, any impact fee shall be charged proportionately in relation to the square footage of the single-family dwelling.
Official source re-checked September 7, 2026: no newer edition of the code had been published (publisher’s edition: Code of Ordinances: Supplement 85 - 1-26).
Full Breakdown
040(D), an accessory dwelling unit smaller than 750 square feet is exempt from every development impact fee the city otherwise charges new construction. Once an ADU exceeds 750 square feet, the Department of Development Services must calculate the impact fee proportionately, scaling it to the ADU's square footage relative to the primary single-family dwelling rather than charging the full new-construction rate. The code also treats ADUs as something other than a brand-new residential use for utility purposes: connection fees and capacity charges for water and sewer service cannot be imposed unless the ADU is built alongside a new single-family home, and any utility fee that is charged may not exceed the city's reasonable cost of providing that service.
An ADU built inside the existing footprint of a house or an existing accessory structure, such as a converted garage, is not required to install a new or separate utility connection at all and cannot be billed a connection fee or capacity charge for one. 040(D)(4). 040(D)(5).
Violations & Fines
The code does not create a separate penalty for fee miscalculation, but Section 20.42.040(D) itself is the compliance standard: if the Department of Development Services charges impact fees on an ADU under 750 square feet, or bills a full-rate utility connection fee for a converted ADU that added no new service line, that assessment conflicts with the ordinance and the applicant can seek correction from Development Services before pulling the building permit. Fee disputes are addressed through the permit review process rather than citation or fine.
Frequently Asked Questions
Do I have to pay impact fees for a small ADU in Merced?
Will Merced charge me for a new water or sewer connection for my ADU?
Does a garage-conversion ADU need its own utility hookup?
Sources & Official References
Other rules in Merced
California rules heatmap·Compare Merced to another location·View the California accessory structures overview
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