The high expense of building new housing isn’t a novel concept to Californians, but impact fees tied to that development account for a large portion of budgets.
Across the state, studies show housing development fees in the Golden State were nearly three times the national average in 2015, which accounted for up to 18 percent of median home prices in some cities. Many local leaders have lamented that the outsized fees are causing housing developers to flee and build elsewhere.
But new statewide legislation aims to address housing affordability by making the scale of those steep costs more transparent, reasonable and predictable.
Assembly Bill 1483 will require local jurisdictions to post current development fees online. Introduced by Assemblymember Timothy Grayson (D-Concord), this sunshining of fees, exactions and affordability requirements aims to allow developers to better financially manage projects – ultimately creating a rise in development to alleviate the state’s housing shortage.
The law, which was signed by Gov. Gavin Newsom earlier this month, stems from research from the Terner Center for Housing Innovation at University of California, Berkeley, which found that fees are often not transparent, difficult to find and it’s hard for developers to figure out the full scope of the fees.
These funds often help fund city services, transit, infrastructure and other needs such as schools, parks, affordable housing, transportation and public safety. While the funds are intended to help offset the impacts of growth and development, the Terner Center report said the increase of the quantity and dollar amount of fees over time is one factor feeding the expensive residential development in the Bay Area, which ranks first nationally.
But for now, AB 1483 will only act as a stepping stone for Grayson to look at further legislation next year, as requiring transparency and standardization is needed before any data can be studied to identify issues. While there wasn’t much formal opposition to the bill, Grayson tweeted that some cities asked the governor to veto it to avoid disclosure.
Still, some Bay Area cities are ahead of others in terms of transparency and access to the city’s fee structure.
San Jose, for example, has listed its city fee schedules for housing development online for years, said James Son, a deputy director in the city’s building division.
“San Jose engaged in sunshine reforms back in 2008, and we have strong open government policies,” Son said. “Yes, we think it’s a good idea for all cities and agencies to likewise practice making fees easy to find and understand.”
The city also regularly meets with developers to discuss permitting operations, issues, policies and fees at regular Developer Roundtable meetings. Because of this, his office doesn’t think AB 1483 will have a dramatic impact on their work.
Some South Bay housing advocates think extra transparency around housing development fees is vital for the area’s continued development.
“Impact fees are a major cost component of a housing development, and I think to have that kind of transparency and predictability about what those fees are going to be so there aren’t surprises in the processes is really important,” [email protected] Deputy Director Michael Lane said, whose agency supported the bill.
While there’s been some discussion about combining these costs into one universal fee in the city, Lane said the disclosure is a great first step compared to the rest of California, especially for an area dubbed “the center of innovation and technology.”
“What we’re trying to do is just rationalize that whole process and make it readily available, particularly on websites so there’s full disclosure,” Lane said. “You don’t have to go walk to five different desks around City Hall and spend hours trying to just discover what fees you’re going to have to pay.”