Encinitas now charges its development impact fees by the square foot. The rule took effect July 20, 2026, so this is the first fall that buyers looking at older Encinitas homes are pricing a remodel, rebuild or ADU under it. The single-family rate is $27.55 per square foot. An ADU of 749 square feet owes nothing in City impact fees. One of 750 square feet owes $20,662.50.
The same schedule also exempts residential additions entirely and charges a teardown-and-rebuild only on the difference from the house it replaces. Put those rules together and the dated ranch on a good Encinitas lot carries a value that never appears in a listing. Its existing square footage is a credit against what the City would otherwise charge to build.
What changed on July 20
The City Council approved the new fees on May 20, 2026, under Resolution No. 2026-34, and the City's Development Services page lists July 20 as the effective date. The fees had last been formally updated in 2015. The May 20 staff report and nexus study says the move to per-square-foot pricing follows AB 602, a state law that requires housing fees to be proportionate to the size of the units unless certain findings are made.
The increase is large. Converted to a per-square-foot basis, the old single-family fees came to $9.13. The new total is $27.55, up 202%, and it includes a new 1.31-per-square-foot administrative charge. Park development alone went from $2.28 to $13.56. Using the City's average home size, the study estimates the total for a typical new single-family home at $53,227. Under the old schedule it was $15,478, a difference of $37,749 per home.
These are City impact fees only. Other agencies can charge their own fees on the same project.
One finished house, three different fee bills
Because the rate applies only to square footage the City counts as new, the route to a finished home matters more than its final size. Take a lot with an existing 1,800-square-foot house and a 2,800-square-foot goal. The figures below are simple arithmetic using the adopted rate, not quotes for any particular property.
| Path to 2,800 sq ft | What the City counts | City impact fee at $27.55/sq ft |
|---|---|---|
| Keep the house and add 1,000 sq ft | Residential addition, which is exempt | $0 |
| Demolish and rebuild at 2,800 sq ft | Only the 1,000 sq ft difference | $27,550 |
| Build 2,800 sq ft on a vacant or newly split lot | All new square footage | $77,140 |
The rebuild discount applies "to the extent that the size and use of the rebuilt structure are the same" as the one demolished, and a smaller rebuild gets no refund. The study also says the City will review reuse, expansion and density-increasing projects case by case. In practice, the existing house's recognized size is worth asking the City about early, because in the example above those 1,800 square feet offset $49,590 in fees.
This is the friction that surfaces in a transaction. Two listings at the same price can carry very different build costs depending on how much permitted house already sits on the lot.
The 750-square-foot line
ADUs follow a different rule with a sharper edge. Under 750 square feet, they are exempt from City impact fees. At 750 square feet or more, the whole ADU is charged at the single-family rate, not just the footage above the threshold. A 749-square-foot unit costs $0 in City impact fees. A 750-square-foot unit costs $20,662.50, and an 800-square-foot unit costs $22,040.
ADUs are already the main way Encinitas adds housing on existing lots. The City's 2025 Housing Element Annual Progress Report counts 85 ADU building permits issued and 91 ADUs completed in calendar year 2025. The pace has continued into October. The City's development services public notices list a detached ADU approved on October 16 and another ADU application whose review period ended October 19.
For a buyer weighing a home partly for ADU potential, the City's fee math favors a unit that stays under 750 square feet.
Why new lots pay the full rate
SB 9 lot splits are where the fee structure hits hardest. A home on a newly created lot has no existing structure to credit, so every square foot counts as new.
Lot splits remain uncommon. The 2025 progress report lists one SB 9 residential lot-split project for the year, against dozens of ADUs. The two SB 9 decisions issued in the past two weeks show the range.
On October 14, the City approved The Summit at Lake Drive in Cardiff-by-the-Sea. The project includes an SB 9 urban lot split and nine detached primary homes plus three detached ADUs across five adjacent lots at 1245 and 1255 Lake Drive and 1205 Santa Fe Drive. The decision document approves the project but gives no construction start date.
On October 16, the City approved an SB 9 split of a 3.32-gross-acre residential lot in Olivenhain into two parcels. The decision states that no development is proposed on the new parcel at this time.
The Olivenhain case shows that creating a lot and building on it can happen years apart. Whatever is built on the new parcel later will owe fees as new square footage, at whatever the rate is by then.
Timing: which year's rate, and when it is paid
That last point matters because the rate will not stay at $27.55. The nexus study builds in annual adjustments tied to the Engineering News-Record Construction Cost Index, and City staff recommended applying them each July.
State law sets the timing. Under SB 937, the staff report says applicable fees are generally set by the schedule in effect when a complete or preliminary application is submitted. For qualifying residential projects, payment is deferred until the certificate of occupancy. Projects of ten or fewer units are among those that qualify. Fees can come due earlier if construction does not begin within five years of the building permit being issued. The application date therefore helps decide which year's rate applies, and completion decides when the bill arrives.
A separate set of fees took effect on October 25. On August 26, the Council adopted Resolutions 2026-069 and 2026-070, which update user fees for Development Services, Land Development Engineering, and Fire Prevention and Marine Safety. The City lists their effective date as October 25, 2026. These are the charges for planning and engineering review, not impact fees. In the fee study presented to Council, the proposed Engineering review fee for a residential building item of 500 to 2,000 square feet rose from $522 to $1,228. The San Diego Union-Tribune reported that the changes could bring in nearly $1.5 million more a year. According to the same report, Council unanimously backed Mayor Bruce Ehlers' proposal to set the Planning Commission appeal fee at $500 instead of staff's proposed $1,400. The paper quoted City Manager Jennifer Campbell on the City's fee levels: "We are definitely very low."
Where the fees sit in a $2.3 million market
At current prices, the new fees are a small share of the purchase. In September 2026, the detached median sale price in 92024 was $2,300,000, up 5.6% from September 2025, according to the Greater San Diego Association of REALTORS® local market update. The year-to-date median through September was $2,400,000. A typical new home's $53,227 in City impact fees is a little over 2% of that September median.
The fees matter more for the choice between properties than for the purchase price. A buyer comparing a house with expansion room against a smaller lot that would need a rebuild or a split is comparing different fee outcomes, along with different construction budgets. The September 2026 numbers also show buyers had more room to compare than in recent years. The 92024 area had 65 detached homes for sale, 2.6 months of supply, a median of 31 days on market, and sellers receiving 94.1% of original list price, down from 96.1% a year earlier. Cardiff's 92007 was much tighter, with 4 detached homes for sale and 1.0 month of supply. Its $2,350,000 September median comes from only 3 closed sales.
Quick answers on the fee rules
Does a kitchen remodel or second-story addition trigger these impact fees? Under the adopted study, residential additions or expansions to existing homes are not subject to City of Encinitas impact fees. Permit and review fees still apply.
Do buyers of an existing home pay any of this at closing? No. These are one-time charges on new development, and their purpose is to pay for capital facilities that serve growth.
Where can the full schedule be read? The rates, exemptions and rebuild rules are all in the May 20, 2026 City Council agenda report, which the City links from its Development Services page.
This post is general information, not legal, tax or financial advice. Fees for a specific property should be confirmed with the City of Encinitas and the appropriate professionals before you rely on them.
If you are weighing an Encinitas home for what it could become, the existing house, its size and the lot's ADU potential deserve a close look before you write an offer. Renée Burnette can help you work through those questions with your architect and the City early in your search. Let's connect.
