"There's two different approval processes," Phoenix attorney Jonathan Dessaules told AZFamily in July 2025. "On one hand, you have to go to the city of Phoenix, Mesa, Scottsdale to get permission from them, but permission from them doesn't equal permission from an HOA."
The same AZFamily story noted that a Peoria homeowner had raised concerns about a large two-story structure going up nearby. In the same report, Susan Felt of Arizona Casita Builders said business had been booming since the state's casita law passed, with families building for aging parents, college students and extended family.
Then on September 12, 2026, the city side got cheaper. A new state law now limits what cities can charge in development fees for an accessory dwelling unit. In Peoria, the savings depend heavily on where the lot sits, and the second approval Dessaules described hasn't changed at all. If you're shopping for a Peoria home with a casita in mind, you're really weighing a fee zone and a set of CC&Rs.
What Peoria Has to Allow
Arizona's 2024 law, HB 2720, requires cities with more than 75,000 residents to allow casitas on single-family lots. Peoria adopted its version as Ordinance 2024-20 on December 17, 2024. It now sits in Section 21-316 of the city's zoning code. Here's what that section allows and limits:
- One attached and one detached ADU per single-family lot. Lots of an acre or more can add a second detached unit if one of the detached units is restricted-affordable, meaning it's rented to households earning up to 80% of area median income.
- A size cap of 75% of the main home's interior living area or 1,000 square feet, whichever is smaller.
- Side and rear setbacks of five feet. Height and lot coverage follow the same rules as the main house.
- No extra parking, and no requirement that the casita match the main home's style, roof pitch or materials.
- No selling the casita separately from the main home, and no using an RV or mobile home as the unit.
- No building over an existing or planned public utility easement without written consent from each easement holder and each affected utility.
That list explains what the city has to approve. Cost and covenants decide whether a particular backyard ever gets a casita.
The Fee Rule That Changed on September 12
In 2026 the Legislature passed HB 2946, and the governor signed it on June 4 as Chapter 121. The Legislature adjourned on June 13, so the law took effect on the general effective date, September 12, 2026. The enacted text adds this language to the state's development-fee statute:
"For development fees assessed on the development of an accessory dwelling unit for all necessary public services other than water and wastewater, the development fees assessed for such accessory dwelling unit shall not exceed the lesser of twenty-five percent of the total development fees or the proportionate share for those same necessary public services applicable to a single-family home."
The bill started out bigger. Executive-committee minutes from the League of Arizona Cities and Towns say it was "significantly scaled back through negotiations," and the League dropped its opposition after those changes.
Peoria's own fee materials help show why the cap matters. The city's impact fee FAQ says that "anyone who builds a new residence, commercial building, or changes the use of an existing building will be assessed impact fees," payable when the building permit is issued. Peoria doesn't publish a separate ADU line, and its fee pages haven't posted an ADU-specific update since the law changed. The general development fee schedule is still labeled "New Fees Effective 9/5/2025."
Why North Peoria Gains the Most
Peoria charges its residential impact fees per housing unit, and the amount depends on which of five service areas the lot falls in. Here's the current single-family schedule, effective December 15, 2024, with a revision dated August 26, 2026. The right-hand column is simply 25% of each total. It's our arithmetic on the new cap, not a figure Peoria has published.
| Peoria impact fee service area | Single-family total per unit | 25% of that total |
|---|---|---|
| Saddleback Heights Master Planned Community | $15,414 | about $3,854 |
| West of Agua Fria, south of SR 74, excluding Saddleback Heights | $14,839 | about $3,710 |
| East of Agua Fria, between SR 74 and Happy Valley Rd | $12,533 | about $3,133 |
| East of Agua Fria, between Happy Valley Rd and Deer Valley Rd | $10,448 | about $2,612 |
| East of Agua Fria, south of Deer Valley Rd | $3,031 | about $758 |
Most of that spread comes from one line item. Streets account for $10,349 of each northern total and $7,417 in the two central zones, while the zone south of Deer Valley Road has no streets fee at all. Parks fees run between $2,041 and $2,667 north of Happy Valley Road, compared with $582 in the two southern zones.
Two casitas of the same size can therefore face very different city fee ceilings depending only on location. South of Deer Valley Road, the full single-family total was already $3,031, which is less than the 25% ceiling in any northern zone. So the cap can only shave a small amount off a fee that was already small. Northern lots are where the new limit could make a real difference. A $14,839 single-family total in the zone west of the Agua Fria works out to about $3,700 at 25%. That reading assumes Peoria applies the cap to these per-unit totals, and the city hasn't said how it will calculate ADU fees. Before you count on any number in that column, confirm it with Peoria's Development and Engineering Department.
Water and Sewer Follow Different Rules
The 25% ceiling doesn't cover water and sewer. For those, HB 2946 says ADU fees "shall not exceed the incremental increase in demand caused by the development of each accessory dwelling unit," whether the casita shares the main home's meter or gets its own.
That matters because Peoria's water and sewer charges are large and also vary by area. For a ¾-inch meter, the residential schedule lists a $404 water resource fee, water expansion fees from $453 to $6,318, and sewer expansion fees from $1,516 to $8,968, depending on the service area. Meter costs and account setup charges come on top of those. The law doesn't set a dollar amount or a percentage for water and sewer. The ceiling is based on how much extra demand the casita adds, so how Peoria measures that demand will drive the bill. Peoria's code doesn't require a separate meter for a casita in general. It only requires separate utility services when a lot with a casita is split so the casita ends up on its own parcel.
What the Legislature Left Alone
The 2024 law is explicit about private covenants. Subsection C of the state ADU statute says it "does not prohibit restrictive covenants concerning accessory dwelling units entered into between private parties." It also says a city can't require such a covenant as a condition of a permit.
So the state limited what cities can do, and HOAs kept their say. If a community's CC&Rs prohibit two-story structures or cap the size of an addition, Dessaules told AZFamily that neighbors can take legal action to stop the project. He also said most HOAs require owners to ask permission before building anything.
That's why a lower fee doesn't make every Peoria lot casita-ready. A north Peoria buyer may now face a much smaller city fee ceiling than before, and still find that the community's design guidelines settle the question first. Utility easements limit where a casita can sit regardless of who approves the design. When you compare two homes, the HOA's governing documents and the plat's easement lines tell you more about casita potential than the lot size does.
Casitas That Already Exist
Plenty of Peoria resale homes already have a casita, and Section 21-316 covers that case. Owners of unpermitted units that existed before September 15, 2024, can apply for a building permit to legalize them. The unit has to meet the section's standards and the building code in effect when the application is filed. For a buyer, that makes "Is it permitted?" a real question to ask about any listing that advertises a guest house. The legalization path exists, and the answer affects what happens after closing.
Rental use has a rule of its own. The state ADU law bars cities from prohibiting a casita or the main house from being leased separately as long-term rental housing. Short-term rentals are different. A 2025 amendment, HB 2928, lets a city require the owner to live on the property when an ADU built on or after September 14, 2024, is used as a vacation or short-term rental.
Quick Answers
Does the fee cap apply to a casita I already built? The cap limits fees a city charges when a casita is developed. HB 2946 took effect on September 12, 2026, and Peoria hasn't published how it applies to permits that were already in progress or already issued. Ask the city about your specific permit.
Can my HOA block a casita the city would approve? State law keeps private restrictive covenants about ADUs in force, so city approval and HOA approval are separate. Your community's CC&Rs and design guidelines control the private side.
How big can a Peoria casita be? Up to 75% of the main home's interior living area or 1,000 square feet, whichever is smaller. Height and lot coverage follow the rules for the main house.
This post is general information, not legal, tax or financial advice. Please confirm fees, permits and HOA rules for your property with the City of Peoria, your HOA and the right licensed professional.
If you're comparing Peoria homes because a casita is part of the plan, for a parent, a grown child or a long-term tenant, Walsh Real Estate Group can help you get each property's fee zone, easements and HOA documents in hand before you write an offer. Start with your Instant Home Valuation, then book a consult and we'll compare those details home by home.
