Midland City staff asked council guidance Nov. 6 about how to bill utilities for detached accessory dwelling units (ADUs). The code currently references charging a base water and sewer rate for detached ADUs but staff said that, in practice, the city had been billing no additional base fees for several existing detached ADUs and that billing practice needs policy clarity.

Staff outlined options: (1) charge no additional base utility fees for detached ADUs when the ADU is on the same meter and lot, (2) charge a reduced (for example, half) base fee for certain utility line items (stormwater, EMS/911 communication fees, etc.), or (3) require a separate meter and full impact/fee treatment. Staff noted administrative complications when multiple units share meters and the city’s existing approach for townhouses and multifamily complexes (individual metering where feasible, reduced impact fees for attached units).

Councilors asked about policy goals — whether ADUs should be treated as tools to expand affordable housing or simply as accessory living space. Multiple council members said they favored removing an additional base utility charge for detached ADUs on the same lot and asked staff to produce ordinance text to implement that approach. Staff also noted one incentive the city has offered previously: a partial impact fee rebate if the ADU is rented at an affordable rate; staff said there have been no applicants for that rebate to date.

Next steps: Staff will draft ordinance language consistent with the council’s direction, clarifying meter/impact fee rules for ADUs, and return for council consideration.