Build Now or Wait Until 2027? A Decision Framework for California's 4 Pending ADU Bills

Four California ADU bills are still moving through the 2026 legislative session: SB 1117 (impact fees on ADUs larger than 750 sq ft), SB 1196 (utility connection deadlines with daily penalties), AB 1738 (remote inspections), and AB 2601 (parallel processing for SB 9 lot splits and ADUs). Each promises a meaningful improvement. None is signed yet, and the homeowner-level question is whether to delay a project that could break ground now. This guide walks through the four bills, the realistic odds and timing for each, and a profile-based framework for deciding. Information current as of May 14, 2026.

Bottom Line

Three of the four bills will not change anything you can act on before mid-2027 at the earliest, and one (SB 1117) helps only homeowners building ADUs larger than 750 square feet. For most California ADU projects, the math favors building now:

SB 1117 caps impact fees on ADUs over 750 sq ft and is closest to becoming law (already on the Senate Floor). Savings range from roughly $3,000 in lower-fee cities to about $20,000 in high-fee cities like San Jose or San Francisco. [1]
SB 1196 would impose a 30-day energization deadline on PG&E, SCE, and SDG&E with $10,000-per-day penalties for non-compliance. The bill is stuck on Senate Appropriations suspense file as of May 2026, and utility opposition is organized. [2]
AB 1738 would mandate remote inspections for ADUs under 800 sq ft. Even if signed, the effective date is July 1, 2027, not January 1. [3]
AB 2601 allows SB 9 lot splits, SB 9 home applications, and ADU applications to run in parallel. It already cleared the Assembly 46–14 but faces a harder Senate vote. [4]

The cost of waiting roughly 9 months for these bills to take effect is real: construction cost inflation, lost rental income, and carry cost on locked-up equity typically add up to $45,000–$65,000 on a $300,000 project, far more than the most realistic upside from any single pending bill. [10][11]

This article is structured in three parts: what each bill actually does, the four axes that determine whether waiting makes sense, and concrete profiles for matching your situation to a build-now or wait recommendation.

The Baseline: What You Already Have in May 2026

Before deciding whether to wait for what is pending, it helps to be honest about what is already law. The 2026 ADU rules that took effect January 1 are not minor:

SB 543 (2025) codified a 60-day permit approval clock, a 15-business-day completeness review, and the impact fee exemption for ADUs under 750 sq ft (school fees exempt under 500 sq ft). [6]
AB 1332 (2024) requires every California city to offer pre-approved plans by January 1, 2026, which can compress permit timelines to roughly 30 days. [15]
AB 462 (urgency, October 2025) imposed a 60-day shot clock on Coastal Development Permits for ADUs.
AB 1154 (2025) removed JADU owner-occupancy requirements when independent sanitation facilities are provided. [16]

In other words, the 2026 framework already gives most homeowners a faster, cheaper, and more predictable ministerial-review path than what existed twelve months ago. The pending 2026 bills extend the trend, but the marginal benefit for an individual project is narrower than the headline summaries suggest. The full baseline is covered in our California ADU laws 2026 complete guide.

The Four Pending Bills, At a Glance

Bill	What It Would Do	Status (May 14, 2026)	Earliest Effective Date
SB 1117	Impact fees on >750 sq ft ADUs charged proportionally on the area above 750 only	Ordered to Senate Floor; passed committees with zero opposition	Jan 1, 2027
SB 1196	15-day completeness + 15-day load review + 30-day energization for ADUs; up to $10,000/day penalty for IOU non-compliance	Senate Appropriations suspense file	Jan 1, 2027 (likely with phase-in)
AB 1738	Mandatory remote video inspection option for 1–2 unit homes and ADUs under 800 sq ft	Assembly Appropriations suspense file	July 1, 2027
AB 2601	SB 9 lot splits, SB 9 homes, and ADU applications processed in parallel; SB 9 condo-ization for separate sale	Passed Assembly 46–14; pending Senate Housing and Local Government	Jan 1, 2027

Each of these warrants a closer look, because the headline summaries obscure how narrow the practical benefit is.

SB 1117 — Impact Fees on Larger ADUs

The most common misreading of SB 1117 is that it eliminates impact fees on "the first 750 sq ft" of any ADU. That is not what the bill does, and it is not what current law says either.

Current law under Gov. Code §66313(f) already exempts ADUs under 750 sq ft of interior livable space from impact fees entirely. [5] SB 1117 modifies Gov. Code §66311.5 so that an ADU above 750 sq ft is charged impact fees only on the portion above 750, proportional to the total project size. [1][5] As an illustration: if you are building a 1,000 sq ft ADU in a jurisdiction with $25,000 in impact fees for new units, today you typically pay the full $25,000. Under SB 1117, the fee is charged on the area above 750 sq ft only, proportional to the project. The exact calculation method will depend on how cities and HCD interpret the language, but a defensible read produces savings in the $15,000–$19,000 range for that scenario. In a lower-fee jurisdiction with $8,000 in baseline fees, the same 1,000 sq ft ADU would save roughly $5,000–$6,000.

The bill passed Senate Local Government 10–0 and Senate Appropriations 7–0 with no organized opposition, and is now on Senate Floor. Author Senator Cervantes sits on the Senate Housing Committee. Passage probability is high, with January 1, 2027 the realistic effective date for any non-urgency bill signed in fall 2026. [1]

Who actually benefits: homeowners planning ADUs larger than 750 sq ft in jurisdictions that levy significant per-unit impact fees. For projects at or under 750 sq ft, SB 1117 changes nothing. For analysis of how the 750 sq ft and 500 sq ft thresholds work in current law, see our California ADU impact fees guide.

SB 1196 — Utility Energization Deadlines

This is the bill where the gap between political theater and physical reality is widest, and where the "wait or build" decision gets the most attention from PG&E-territory homeowners who have lived through 9–12 month connection delays. [9]

SB 1196 would require investor-owned utilities to determine application completeness within 15 days, complete load review within another 15 days, and energize the service within 30 days of construction completion. Non-compliance penalties run up to $10,000 per day. [2] The bill cleared Senate Energy, Utilities and Communications 14–2 (the two no votes are the signal: utility-aligned members) and is now on Senate Appropriations suspense file.

SB 1196 is not breaking new ground. SB 410 (Becker, signed 2023) already gave the CPUC authority to set energization timelines, and the CPUC implemented it in Decision 24-09-020 on September 12, 2024, with target timelines of 30 business days (no infrastructure upgrade required) or up to 357 calendar days for projects needing Rule 15 distribution work. [7][8] PG&E's own June 2025 SB 410 Assessment, filed in CPUC docket R.24-01-018, reports that its on-time energization rate moved from roughly 5 percent in late 2023 to roughly 50 percent by mid-2025, and that the company will need another two years to fully comply with the existing decision. [9] This is the fact most homeowners do not see in the bill summaries.

What this means for SB 1196: even if the bill becomes law, it adds enforcement teeth ($10,000/day penalties) to a framework whose physical bottleneck (transformer capacity, distribution upgrades, internal IOU staffing) the CPUC already conceded will not be cleared until 2027 at the earliest. A homeowner who delays a project waiting for SB 1196 will likely face roughly the same connection timeline as one who breaks ground in 2026, because the binding constraint is not the law but the substation.

Passage probability: moderate. Suspense file is where housing bills with non-trivial state cost go to be amended or held. CalMatters reported that California's 2025 Senate Appropriations killed 29 percent of suspense bills and Assembly Appropriations killed 35 percent, with budget pressure tilting the rate higher in deficit years. [12] Most housing bills bypass suspense entirely; being on suspense is itself a negative signal. Expect the daily penalty to be reduced or phased in if the bill survives.

AB 1738 — Remote Inspections

AB 1738 would require every California city and county, including charter cities, to offer remote video or recorded video inspection as an option for permitted work on one- and two-unit residences and ADUs or JADUs under 800 sq ft. Foundation and framing inspections are excluded. The effective date written into the bill is July 1, 2027, not January 1. [3]

The bill passed Assembly Housing & Community Development 12–0 and Assembly Local Government 10–0, and is on Assembly Appropriations suspense file. Assemblymember Wicks and Senator Wiener have signed on as co-authors, which signals a Senate pathway exists. Opposition typically comes from public-sector building inspector groups, which have historically resisted remote inspection mandates; that opposition tends to surface on suspense rather than in policy committees.

Practical implication: AB 1738 saves time, not money. A homeowner who waits for it gives up a full construction season in exchange for the ability to do drywall and final inspections via video starting July 2027. The arithmetic only works if your jurisdiction is notorious for slow inspection scheduling and your project is structured to start drywall in late 2027 or beyond. For most projects, the savings are measured in weeks, not months.

AB 2601 — SB 9 + ADU + Lot Split Parallel Processing

AB 2601 is the bill most likely to genuinely shift project feasibility for a narrow but identifiable set of owners. It does three things. First, it amends Gov. Code §65852.21 and §66411.7 so that an SB 9 lot split application and the SB 9 housing development application can be processed in parallel rather than sequentially. Second, it allows the same parallel processing for housing development applications and subdivision maps under a new §66499.41. Third, it permits SB 9 units to be sold as separate condominium interests, enabling four-unit lot configurations where each unit can transfer independently. [4]

The bill passed the Assembly Floor 46–14 and is in Senate Housing and Local Government committees. Senate Housing chair Senator Wiener has been favorable to SB 9 expansions historically. The 46–14 vote, with Republicans and some moderate Democrats opposing, signals that further amendment in the Senate is likely.

Who benefits: owners actively pursuing combined SB 9 + ADU projects on lots over roughly 2,400 sq ft, which is a small slice of the ADU market. For owners not doing a lot split, AB 2601 is irrelevant.

The Four Axes of the Wait-or-Build Decision

A qualitative framework beats a probability spreadsheet here, because the values that matter most are project-specific and not quantifiable from public data. Four axes:

1. Probability of passage. SB 1117 is highest; AB 2601 next (already past Assembly); AB 1738 and SB 1196 lowest because both are stuck on suspense and both carry organized opposition (inspectors for AB 1738, utilities for SB 1196). The aggregate suspense survival rate (Senate Appropriations advanced about 71 percent of bills in 2025; Assembly Appropriations advanced about 65 percent) is misleading for housing bills with fiscal notes, which typically face below-average odds in deficit years. [12][13][14]

2. Time-to-effect for your project. A bill signed in September 2026 is effective January 1, 2027 (or July 1, 2027 for AB 1738) for new applications. If your permit is already pulled or your application is already complete, you cannot retroactively benefit. The decision is between starting now under existing law and pausing your application until after the effective date.

3. Magnitude for your specific situation. SB 1117 maxes out around $20,000 on a large ADU in a high-fee jurisdiction and is closer to $3,000–$6,000 in lower-fee areas. SB 1196 saves time but not money, and only if utility capacity is the binding constraint on your project. AB 1738 saves inspection scheduling friction. AB 2601 only matters if you are doing a lot split.

4. Cost of waiting. This is the axis homeowners most often underweight. Construction cost inflation is running roughly 4.7 percent annualized per the Turner Building Cost Index Q4 2025, and the April 2025 NAHB tariff impact estimate added roughly $10,900 to typical new home costs from lumber and steel duties. [10][11] For a $300,000 ADU project, a 9-month delay typically carries:

Construction cost inflation: roughly $10,500 (industry estimate)
Lost rental income (LA-area $2,200–$2,800/month): roughly $20,000–$25,000 (industry estimate)
Carry cost on $300K equity at 6 percent opportunity: roughly $13,500 (calculation)
Material and tariff risk: $5,000–$15,000 (industry estimate)

Composite estimated cost of waiting 9 months: roughly $45,000–$65,000 per project. This is a constructed estimate from the cited inputs, not a published figure from any single source. The upside ceiling from SB 1117, the single most likely-to-pass bill, is at most one third of the cost of waiting in a high-fee jurisdiction building a large ADU, and typically less than one tenth in lower-fee jurisdictions or smaller projects.

Profile-Based Recommendations

Match your situation to one of the following profiles. None of these is legal or financial advice; they are heuristics for ordering your own analysis.

Profile 1 — Building an ADU under 750 sq ft

Recommendation: build now. None of the four bills materially changes your project. Current law already exempts you from impact fees, school fees, and (under AB 1332) much of the design review burden. SB 543's 60-day permit clock applies today. The cost of waiting is large and the benefit is essentially zero.

Profile 2 — Building a 750–1,200 sq ft detached ADU in a high-fee city

Recommendation: build now unless your permit application is more than 60 days from being submitted. SB 1117 would save you somewhere between $3,000 and $20,000 on impact fees, depending on your jurisdiction's fee schedule, but only if your application is submitted after the effective date (January 1, 2027 if signed in fall 2026). If you are within 6 months of breaking ground, the holding cost dwarfs even the high-end savings. If you are 12+ months out (architect not yet engaged, financing not arranged), you can monitor SB 1117 without explicitly delaying.

Profile 3 — PG&E territory, project depends on a new electrical service

Recommendation: build now and budget for the worst case. SB 1196 does not solve the physical capacity problem. Even if the bill is signed in fall 2026, PG&E's own filings indicate full compliance with existing CPUC energization timelines will take until 2027 or beyond. The realistic move is to factor a 6–9 month connection wait into your construction schedule and break ground in parallel.

Profile 4 — Considering an SB 9 lot split combined with one or more ADUs

Recommendation: wait if you have the patience, build phase one now if you do not. AB 2601 genuinely changes the sequencing of SB 9 plus ADU applications. The savings are not in dollars but in calendar time: parallel processing instead of sequential. If your project is large and slow-moving anyway, monitoring AB 2601 through fall 2026 costs you little. If you have one buyer waiting and a closing date, file under existing law and use a phased approach.

Profile 5 — In a jurisdiction with chronically slow inspection scheduling

Recommendation: build now. AB 1738's effective date is July 1, 2027. A project that breaks ground in summer 2026 will be deep in construction or finished before the law would help. A project that starts in late 2026 may reach final inspections after July 2027, in which case any benefit is incidental rather than worth waiting for.

Profile 6 — Already paid impact fees, already pulled the permit

Recommendation: build now. None of these bills creates a retroactive refund mechanism. Your sunk costs are sunk. The question is whether to break ground.

What to Watch Between Now and Year End

The next major decision points are:

Senate Appropriations suspense file hearings (May 14, 2026 onward). SB 1196's status will be clearer within days of this article's publication. If it survives and reaches the Senate Floor, the daily penalty amount is the variable to watch.
Assembly Appropriations suspense hearings (May 16, 2026 onward). Same question for AB 1738.
Senate Floor vote on SB 1117. Expected before summer recess. If it passes by a wide margin, signing is near-certain.
Senate Housing Committee hearings on AB 2601. Late spring through summer.
Governor's signing window: late August through September 30, 2026. Bills not signed by September 30 die at the end of session.

If you are within 90 days of breaking ground, none of these milestones should change your decision. If you are 9–12 months out, monitor the May–June suspense outcomes and the Senate Floor vote on SB 1117 before committing to delay.

For the broader 2026 ADU rule baseline, including pre-approved plans and permit timelines, see the California ADU laws 2026 complete guide. For financing during a wait-vs-build decision, see How to finance an ADU in California. For impact fee mechanics under current law, see the California ADU impact fees guide.

Disclaimer

This guide reflects bill statuses as of May 14, 2026. California legislative status changes frequently; bills can be amended, held, or signed at any point. Construction cost figures are industry estimates and not official HCD data. Always verify current bill status on leginfo.legislature.ca.gov before making project-timing decisions, and consult a licensed California real estate attorney, architect, or financial advisor for situation-specific guidance. Nothing in this article constitutes legal, financial, or construction advice.

References

[1] California Senate Bill 1117 (Cervantes, 2025–2026 session). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB1117

[2] California Senate Bill 1196 (McNerney, 2025–2026 session). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB1196

[3] California Assembly Bill 1738 (Carrillo, 2025–2026 session). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB1738

[4] California Assembly Bill 2601 (Lee, 2025–2026 session). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB2601

[5] California Government Code §66311.5 and §66313 (current law on ADU impact fee thresholds).

[6] California Senate Bill 543 (McNerney, 2025, signed). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB543

[7] California Senate Bill 410 (Becker, 2023, signed). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB410

[8] CPUC Decision 24-09-020, adopted September 12, 2024 (energization timelines). https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/infrastructure/energization

[9] PG&E June 2025 SB 410 Assessment, filed in CPUC R.24-01-018. https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmental-affairs-division/reports/2025/pge---june-energization-report_final.pdf

[10] Turner Building Cost Index, Q4 2025. https://www.turnerconstruction.com/insights/turner-building-cost-index-shows-growth-in-q4-2025-amid-strong-data-center-and-manufacturing-demand

[11] NAHB analysis of 2025 tariff impact on residential construction costs, April 2025. https://www.nahb.org/advocacy/top-priorities/building-materials-trade-policy/how-tariffs-impact-home-building

[12] CalMatters coverage of 2025 California Legislature Appropriations suspense file outcomes. https://calmatters.org/politics/2025/05/california-legislature-budget-deficit-suspense-file/

[13] CalMatters newsletter, suspense file outcomes, September 2025. https://calmatters.org/newsletter/suspense-file-september-2025-newsletter/

[14] California Senate Appropriations Committee FAQ on suspense file procedure. https://sapro.senate.ca.gov/FAQs

[15] California Assembly Bills 434 and 1332 (pre-approved ADU plans).

[16] California Assembly Bill 1154 (2025, signed). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB1154