ITEM NO. 15
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CITY COUNCIL STAFF REPORT |
| TO: |
Honorable Mayor and Members of the City Council |
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| FROM: |
Arron Brown, City Manager |
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| BY: |
Ruby Manzano, Community Development Manager |
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| DATE: |
06/10/2026 |
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| SUBJECT: | Introduction and First Reading of Ordinance No. 282 - An Ordinance of the City Council of the City of Canyon Lake, California, Repealing and Replacing Chapter 9.32 (Accessory Dwelling Units) of the Canyon Lake Municipal Code to bring the City’s Accessory Dwelling Unit Ordinance into Compliance with Current State ADU Law
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Recommendation:
(1) Waive full reading and introduce by title only Ordinance No. 282 - An Ordinance of the City Council of the City of Canyon Lake, California, Repealing and Replacing Chapter 9.32 (Accessory Dwelling Units) of the Canyon Lake Municipal Code to bring the City’s Accessory Dwelling Unit Ordinance into Compliance with Current State ADU Law; and (2) direct staff to submit the adopted ordinance to the California Department of Housing and Community Development (HCD) for review in response to the May 11, 2026, Technical Assistance Letter.
Background/Analysis:
The City of Canyon Lake's ADU Ordinance is codified at Chapter 9.32 of the Canyon Lake Municipal Code. The Ordinance was originally adopted by Ordinance No. 197 (March 4, 2020) and has been amended on several occasions, most recently by Ordinance No. 245 (April 10, 2024). On May 11, 2026, HCD's Division of Housing Policy Development transmitted a Letter of Technical Assistance to the City.
The letter advises that the most recent ADU ordinance on file with HCD for the City of Canyon Lake is from 2023, and that given the numerous changes to State ADU Law since the adoption of that ordinance, the ordinance may be outdated and out of compliance with State ADU Law. HCD has requested a response by June 10, 2026, with either (1) a description of how the ADU ordinance continues to comply with State ADU Law despite recent changes, or (2) a plan and timeline to repeal the current ordinance or adopt an amended, compliant ordinance and submit it to HCD for review.
California Government Code § 66316 provides that if an existing ADU ordinance fails to meet the requirements of State ADU Law, the ordinance is "null and void" and the local jurisdiction must apply State ADU Law standards until it adopts a compliant ordinance. HCD further recommends that a local jurisdiction with a noncompliant ADU ordinance repeal the ordinance to provide clarity for ADU applicants who may otherwise rely on an outdated ordinance.
Discussion
Based on staff's review of the HCD Technical Assistance Letter and a comparison against the City's current Chapter 9.32, the following amendments are required to bring the Ordinance into compliance with State ADU Law:
A. 2025 State Law Changes
The proposed amendment incorporates the following changes required by 2025 amendments to State ADU Law:
The letter advises that the most recent ADU ordinance on file with HCD for the City of Canyon Lake is from 2023, and that given the numerous changes to State ADU Law since the adoption of that ordinance, the ordinance may be outdated and out of compliance with State ADU Law. HCD has requested a response by June 10, 2026, with either (1) a description of how the ADU ordinance continues to comply with State ADU Law despite recent changes, or (2) a plan and timeline to repeal the current ordinance or adopt an amended, compliant ordinance and submit it to HCD for review.
California Government Code § 66316 provides that if an existing ADU ordinance fails to meet the requirements of State ADU Law, the ordinance is "null and void" and the local jurisdiction must apply State ADU Law standards until it adopts a compliant ordinance. HCD further recommends that a local jurisdiction with a noncompliant ADU ordinance repeal the ordinance to provide clarity for ADU applicants who may otherwise rely on an outdated ordinance.
Discussion
Based on staff's review of the HCD Technical Assistance Letter and a comparison against the City's current Chapter 9.32, the following amendments are required to bring the Ordinance into compliance with State ADU Law:
A. 2025 State Law Changes
The proposed amendment incorporates the following changes required by 2025 amendments to State ADU Law:
- The definition of a junior accessory dwelling unit (JADU) in § 9.32.010(b) has been revised to specify that the 500 square foot size limit applies to interior livable space, consistent with Government Code § 66313, subdivision (d).
- Section 9.32.120 has been amended to condition the owner-occupancy requirement on whether the JADU shares sanitation facilities with the primary structure, as now required by Government Code § 66333, subdivision (b), and to add a fire sprinkler clarification providing that fire sprinklers are not required for a JADU if the primary residence does not have fire sprinklers and that the addition of a JADU cannot trigger a fire sprinkler requirement, consistent with Government Code § 66323, subdivision (d).
- Section 9.32.130 has been updated to expressly require that JADUs, in addition to ADUs, be rented for terms longer than 30 days, consistent with Government Code § 66333, subdivision (g).
- A new impact fee provision has been added to the Ordinance prohibiting impact fees on ADUs with 750 square feet of interior livable space or less, and on JADUs with 500 square feet of interior livable space or less, and requiring that any impact fee on an ADU exceeding 750 square feet be charged proportionately in relation to the square footage of the primary dwelling unit, consistent with Government Code § 66311.5, subdivisions (a) through (d).
- Section 9.32.020 has been amended to require the permitting agency to determine whether an ADU or JADU application is complete and provide written notice of that determination within 15 business days of receipt, and to require that notice of an incomplete application include a list of incomplete items and a description of how the application can be made complete, consistent with Government Code § 66317, subdivisions (a)(2)(A) and (a)(2)(B).
- A new appeal provision has been added requiring the City to provide a process for applicants to appeal a denied or incomplete ADU or JADU application and to issue a final written determination within 60 business days of receipt of a written appeal, consistent with Government Code § 66317, subdivision (d)(1).
- A new provision has been added specifying that an ADU or JADU containing less than 500 square feet of interior livable space does not increase assessable space. Size limitations throughout the Ordinance have been revised to be based on the square footage of interior livable living space."
- Section 9.32.150(b)(1) has been reviewed for consistency with the number of allowable ADUs per lot with a proposed or existing single-family dwelling under Government Code § 66323, subdivision (a).
- A new provision has been added requiring the City to issue a certificate of occupancy for an ADU in a county subject to a gubernatorial proclamation of a state of emergency on or after February 1, 2025, even if the primary dwelling has not yet received a certificate of occupancy, provided the primary dwelling was substantially damaged or destroyed by the emergency event, consistent with Government Code § 66328.
- A new provision implementing Government Code § 66333.5 has been added to ensure that if the City fails to timely submit an adopted JADU ordinance to HCD or fails to respond to HCD's findings within the required timelines, the ordinance is null and void and the City must apply State ADU Law when processing ADU applications.
- For reference, although the City of Canyon Lake is not a coastal jurisdiction, the 2025 amendments also require local governments and the Coastal Commission to approve or deny a coastal development permit application for an ADU within 60 days of a completed application, pursuant to Government Code § 66329, subdivision (a).
B. 2024 State Law Changes
The proposed ordinance also incorporates the following changes required by 2024 amendments to State ADU Law:
The proposed ordinance also incorporates the following changes required by 2024 amendments to State ADU Law:
- SB 477 (Chapter 7, Statutes of 2024) renumbered the Government Code sections governing State ADU and JADU Law, and all cross-references throughout Chapter 9.32 have been updated to reflect the current, correct section numbers.
- A new definition of "livable space" has been added to § 9.32.010, defining it as a space in a dwelling intended for human habitation, consistent with Government Code §§ 66313, subdivision (e), and 66323, subdivision (a)(3)(A).
- Section 9.32.040(b) has been amended to provide that uncovered, off-street parking spaces demolished in conjunction with the construction of an ADU do not need to be replaced, consistent with Government Code § 66314, subdivision (d)(11).
- Sections 9.32.110(a) and 9.32.150(b)(4) have been amended to specify that up to eight detached ADUs are permitted on a lot with an existing multifamily dwelling, provided that the number of ADUs does not exceed the number of existing units on the lot, consistent with Government Code § 66323, subdivision (a)(4)(A)(ii).
- Section 9.32.100 has been reviewed and revised to remove any objective development standards imposed on 66323 Units that are not authorized by Government Code § 66323, subdivision (a), consistent with Government Code § 66323, subdivision (b).
- A new provision has been added prohibiting the City from denying a permit for an unpermitted ADU or JADU constructed before January 1, 2020, for building code violations, unless the City makes a finding that correcting the violation is necessary to prevent a substandard building condition, consistent with Government Code § 66332, subdivisions (a) through (c).
Unaddressed HCD Items
Three items referenced in the HCD Technical Assistance Letter are not separately addressed in the proposed ordinance amendment.
First, Government Code § 66326, subdivision (d) — which specifies that a local agency’s ADU ordinance is null and void and the agency must apply State ADU Law if it fails to timely submit the ordinance to HCD or respond to HCD’s findings within the required timelines — is a self-executing provision of state law that applies by operation of law without local codification.
A parallel provision applicable to JADU ordinances under Government Code § 66333.5 has been incorporated into the Ordinance; the Council may direct staff to add a corresponding local provision under § 66326, subdivision (d) for additional clarity if desired.
Second, Government Code § 66329, which specifies that no reimbursement is required for school service charges, fees, or assessments sufficient to pay for the program or level of service within the meaning of Government Code § 17556, is similarly self-executing and does not require amendment to the Municipal Code.
Third, Civil Code § 714.3, subdivision (b), which provides that reasonable restrictions in covenants, conditions, and restrictions shall not include any fees or other financial requirements related to ADUs, governs private parties and homeowners’ associations — not the City — and therefore does not require an amendment to the Canyon Lake Municipal Code.
Staff recommend that written notice of the Civil Code § 714.3(b) limitation be provided to the Canyon Lake POA separately.
Environmental Review
The proposed Ordinance amendment is not subject to environmental review under the California Environmental Quality Act (CEQA) pursuant to Government Code § 65852.2, which exempts ADU ordinances adopted in compliance with State ADU Law from CEQA review.
Three items referenced in the HCD Technical Assistance Letter are not separately addressed in the proposed ordinance amendment.
First, Government Code § 66326, subdivision (d) — which specifies that a local agency’s ADU ordinance is null and void and the agency must apply State ADU Law if it fails to timely submit the ordinance to HCD or respond to HCD’s findings within the required timelines — is a self-executing provision of state law that applies by operation of law without local codification.
A parallel provision applicable to JADU ordinances under Government Code § 66333.5 has been incorporated into the Ordinance; the Council may direct staff to add a corresponding local provision under § 66326, subdivision (d) for additional clarity if desired.
Second, Government Code § 66329, which specifies that no reimbursement is required for school service charges, fees, or assessments sufficient to pay for the program or level of service within the meaning of Government Code § 17556, is similarly self-executing and does not require amendment to the Municipal Code.
Third, Civil Code § 714.3, subdivision (b), which provides that reasonable restrictions in covenants, conditions, and restrictions shall not include any fees or other financial requirements related to ADUs, governs private parties and homeowners’ associations — not the City — and therefore does not require an amendment to the Canyon Lake Municipal Code.
Staff recommend that written notice of the Civil Code § 714.3(b) limitation be provided to the Canyon Lake POA separately.
Environmental Review
The proposed Ordinance amendment is not subject to environmental review under the California Environmental Quality Act (CEQA) pursuant to Government Code § 65852.2, which exempts ADU ordinances adopted in compliance with State ADU Law from CEQA review.
- Fiscal Impact Yes/No:
- No
Additional Fiscal Information:
Adoption of the amended ADU Ordinance is not anticipated to have a fiscal impact on the City. Implementation will be accommodated through existing departmental budgets.