Cities and towns face new limits on development fees, including caps for accessory dwelling units, a general ban on charging single-family homes more based on size or bedroom count, and a changed 24-month window before new or higher fees apply, while some new water and wastewater growth fees must follow development fee rules.
Official title: municipalities; counties; development fees
- September 12, 2026
- Applies to water and wastewater growth fees adopted or increased after December 31, 2026: Requirement that growth-related water and wastewater fees follow the development fee law
- Size- or bedroom-based fees adopted before this change takes effect may continue: Ban on basing single-family development fees on home size or bedroom count
What changes
BeforeA city or town could set different development fees for different categories of residential development, with no stated limit on basing single-family fees on home size or bedrooms.
NowA city or town may not set different fees for single-family homes based on the size of the home or the number of bedrooms. A city or town that adopted size- or bedroom-based fees before this change may keep that distinction in later fee updates.
BeforeA new or increased development fee could not be charged for 24 months after final approval (commercial, industrial or multifamily) or after the first building permit (residential), if the approved plan was not changed to add service units.
NowA new or increased development fee may not be charged against a residential, commercial, industrial or multifamily development for 24 months after the effective date of the fee ordinance that creates it, if no later changes to the approved site plan or final subdivision plat increase the number of service units.
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NowA city or town may charge development fees on accessory dwelling units (ADUs), with caps: water and wastewater fees may not exceed the added demand the ADU causes, whether it shares a meter with the main home or has its own; fees for all other services may not exceed the lesser of 25% of the total development fees or the share that applies to a single-family home for those services.
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NowFor the part of a city water or wastewater fee adopted or increased after December 31, 2026 to pay for capital improvements to facilities that serve new growth, the city must adopt those growth-related fees under the development fee law. For cities that provide water and wastewater service, a fee 'service area' now includes their water or wastewater service territory, even outside city limits.
BeforeWater and wastewater rates or rate components were exempt from the general state notice rules for new or higher city taxes and fees on businesses.
NowThe exemption covers water and wastewater rates, fees or rate components that are adopted under the state's municipal water and wastewater rate law.
Who it affects
- Property owners building accessory dwelling units
- People building single-family homes
- Developers and home builders
- Commercial, industrial and multifamily developers
- Water and wastewater customers of city-run utilities, including those outside city limits
- Cities and towns that charge development fees or run water or wastewater utilities
What you need to do
Nothing.
What the law doesn't answer
- How much fees for any particular home, ADU or project will change
- What 'accessory dwelling unit' means for this law
- How a city must measure the 'incremental increase in demand' from an ADU
- Whether existing water or wastewater fees adopted before 2027 must be changed
- Whether the new 24-month rule applies to projects approved before this law took effect
This summary describes the law as enacted. Later laws, court rulings or referendum petitions can change the picture. Check the official text for the current wording.