California family wins settlement after City charges $55K to build ADU

The Yu family of East Palo Alto has reached a settlement with the city after challenging nearly $55,000 in fees imposed for building an accessory dwelling unit on their property.

Wesley Yu filed a federal lawsuit against the City of East Palo Alto after officials refused to issue a building permit unless he either dedicated his planned ADU as affordable housing or paid the substantial "in-lieu" fee under the city's inclusionary zoning ordinance.

The Yu family had planned to build multi-generational housing to accommodate their growing family and visiting relatives.

Under California's SB 9 law, which allows property owners to split single-family lots and build additional housing units, the Yus intended to divide their property into two lots and construct an ADU on the newly created parcel.

However, the city's inclusionary zoning requirements applied the affordable housing mandate to residential projects with fewer than five units, including the Yus' two-unit development.

Following the lawsuit filed by Pacific Legal Foundation, East Palo Alto withdrew the fees and amended its ordinance to exclude similar ADU projects.

The settlement represents a significant win for California property owners, particularly as accessory dwelling units have become increasingly popular for addressing the state's housing shortage while allowing families to create affordable housing options on their existing properties.