San Diego ADU Bonus Program

On June 16, 2025, the San Diego City Council passed a major reform that scales back the city’s Accessory Dwelling Unit (ADU) Bonus Program—a policy that once made San Diego one of the most ADU-friendly cities in California. This change significantly impacts how investors, property owners, and developers can add density to multifamily and single-family lots.

If you’re active in San Diego multifamily real estate, here’s what you need to know about how the new ADU rules affect development, value-add strategies, and ROI.

What Was San Diego’s ADU Bonus Program?

The ADU Bonus Program allowed multiple units beyond state law, especially if one or more ADUs were deed-restricted as affordable housing. In many cases, developers could build 6–8 units on single-family lots—boosting cash flow and property value.

This positioned San Diego as a top market for ADU investment, particularly in high-demand zip codes like 92103, 92104, 92116, and 92102.

Key Changes in the June 2025 ADU Reform

The revised ordinance reduces the number of allowable units and introduces new restrictions on development. Highlights include:

• Maximum ADU counts based on lot size:

  • Up to 4 units for lots under 8,000 sq. ft.

  • 5–6 units max for larger parcels

• Parking requirements for bonus units not covered under state law

• Tighter setbacks and limits in fire zones

• Community Enhancement Fees for additional density

• Condo sale option under AB 1033, allowing for individual unit sales (subject to future implementation)

Transit Priority Areas Still Offer Development Potential

For investors focused on Transit Priority Areas (TPAs)—properties within ½ mile of major public transit—there are still advantages:

• Add a deed-restricted ADU at (up to) 110% AMI (Area Median Income) and qualify for:

  • 10% bonus in Floor Area Ratio (FAR)—more buildable square footage

  • No additional parking requirements

  • Streamlined approval process

This strategy is ideal for multifamily investors looking to maximize density in walkable San Diego neighborhoods like North Park, Normal Heights, Hillcrest, and Golden Hill.

What This Means for San Diego Multifamily Owners

• Recalculate ADU feasibility: Future developments may require more capital and planning

• Strategize around TPAs: These remain your best opportunity to add value and density under the revised ordinance

If your San Diego multifamily property has ADU potential, now is the time to evaluate it. The new policy limits density but still rewards strategic builds—especially in areas zoned for RM-1-1 or RM-2-5 with room for expansion.

Final Thoughts

The rollback of San Diego’s ADU Bonus Program represents a major shift for local apartment investors. It’s more important than ever to work with advisors who understand zoning, FAR bonuses, and multifamily valuation in San Diego.

At ACI Apartments, we specialize in helping buyers and sellers identify hidden value, especially when it comes to ADU and development opportunities. If you’re considering selling or expanding a multifamily property in San Diego, reach out for a custom valuation and market strategy.

Need help evaluating your San Diego multifamily property’s ADU potential?
Contact ACI Apartments to get expert guidance and insights on the latest zoning rules, 110% AMI strategies, and TPAs that still allow density.