Cities Keep Forcing ADUs Onto Separate Utility Hookups. State Law Bans It

You're turning the garage into an ADU, or carving a unit out of the back of the house. The framing barely changes — you're working inside space that already exists. Then the plan check comes back with a line item that stops you cold: run a separate water, sewer, or electrical connection for the new unit, or pay a connection fee or capacity charge for one.

Here's the thing: for an ADU built inside existing space, HCD's stated position is that a city can't do that. State ADU Law doesn't let a local agency, special district, or water corporation force a separate hookup — or bill you a related connection fee or capacity charge — on that kind of unit.

What Menifee's ordinance said

Menifee's ADU ordinance carried a provision — Section 9.295.020(E)(1)(c)(7) — that read, in the ordinance's own words:

"Notwithstanding Government Code Section 65852.2(f)(2)(A), if requested by a utility providing service to the primary residence, the accessory dwelling unit has a separate water, sewer, or electrical connection to that utility."

HCD reviewed the ordinance and, in a June 30, 2025 findings letter, flagged that clause as one of nine defects — and told the City to remove the "unlawful and ambiguous language."

Verified against: HCD ADU Ordinance Findings Letter to the City of Menifee, June 30, 2025.

The rule HCD is pointing to

HCD grounded its finding in Government Code section 66324, subdivision (d) — the section renumbered to § 66311.5(d) effective January 1, 2026 under SB 543. In the Menifee letter's own words, that section "provides that ADUs and JADUs created on lots with proposed or existing single family dwellings, cannot be required to install a new or separate connection unless the ADU is constructed concurrently with a new single-family dwelling, or upon a separate conveyance of the ADU."

The boundary matters. The protection runs to ADUs and JADUs described in Gov. Code § 66323(a)(1) — the ones built within the existing (or proposed) space of a single-family home or an accessory structure. For those, HCD's position is that there is no separate connection and no related connection fee or capacity charge. Two narrow exceptions: the ADU is built with a new single-family dwelling, or it is sold separately from the main house.

For ADUs that fall outside that category — a detached, new-construction unit, say — a separate connection can be required. But even then, HCD notes, the charge has to stay tethered to reality: the connection "may be subject to a connection fee or capacity charge as long as that fee or charge is proportionate to the burden" of the new unit.

Same defect, five cities

Menifee isn't a one-off. HCD flagged the same problem in ordinance after ordinance:

• South Gate used almost the identical sentence — "If requested by a utility providing service to the primary dwelling, the accessory dwelling unit shall have a separate water, sewer, and/or electrical connection to that utility" — and HCD told the City to exempt § 66323(a)(1) units.
• West Sacramento buried the exemption behind a checklist: its ordinance made an ADU satisfy a "list of requirements" to escape a separate connection or "a related connection fee or capacity charge." HCD's position was blunt — "The requirements included in the Ordinance exceed what is required by State ADU Law."
• Garden Grove looked compliant until the fine print: an ADU could share the primary dwelling's connections unless a separate one was "determined by the City's Public Works Director to be necessary." HCD told the City to clarify that § 66323(a)(1) units are exempt.
• Coronado required ADUs to "provide a new or separate utility connection directly between the accessory dwelling unit and the utility," with an exemption cross-reference that pointed at the wrong subsection — fire sprinklers. HCD told the City to correct and clarify the reference.

What to do with this

If your ADU lives inside existing space and a plan-check comment or a utility demands a separate connection, a connection fee, or a capacity charge, that demand is worth challenging in writing — point to § 66323(a)(1) and the connection rule now at § 66311.5(d).

Two cautions. These are HCD's interpretive findings, not a court ruling — an HCD letter states the department's position, and courts remain the final word on what State ADU Law requires. And the exceptions are real: a unit built with a new house, or one sold off separately, can be treated differently, and "other" ADUs can still face proportionate charges. Confirm how the rule applies to your project with your jurisdiction and your own counsel before you rely on it. Nothing here is legal advice.

What CrossBeam does with it

When the letter lands on your desk, CrossBeam turns it around the same day: what each item is actually asking, the code or law behind it, and a written response you can hand to your team or your attorney — the back-and-forth that used to eat weeks, done in a couple of hours.