Legislation introduced along with a set of bills to reduce impact fees and incentivize housing production
Sacramento, CA—Assemblymember David Chiu (D-San Francisco) announced a bill today to reduce the impact fees paid on affordable housing units in order to spur production of affordable housing. Assembly Bill 3148, announced today along with a number of other bills aimed at lessening the burden of high impact fees, would cut down on the amount of impact fees housing developers pay on affordable housing units built using state density bonus law.
“We have to face facts—it is extremely expensive and difficult to build housing in California,” said Assemblymember Chiu. “When it costs upwards of $750,000 to build a single unit of housing in San Francisco and California has a 3.5 million housing unit shortage, we have to find ways to encourage housing production, particularly affordable housing production.”
California’s housing and homelessness crisis is driven in large part by a huge shortage in the amount of housing available. Some estimates conclude the state would need to build 3.5 million housing units in order to adequately address the shortage. Currently, production of new housing in California is less than half the amount needed to close the deficit.
Building housing in California is expensive with some estimates approaching $750,000 needed to build a single unit of housing. Some of those costs are due to market factors like high land values, materials, and labor. However, self-imposed measures like lengthy approval processes and hefty impact fees also contribute to high costs and an overall lack of production. A 2018 study conducted UC Berkeley’s Terner Center for Housing Innovation found that impact fees account for over one-sixth of the overall home price in some localities.
Impact fees are levied by local governments to address the “impact” of adding additional housing units to a particular community. Housing developers pay impact fees on every individual unit of housing that is built, including below market rate affordable units. The types and amounts of impact fees vary from city to city, but they are commonly used to pay for transportation, infrastructure, and open space.
AB 3148 would reduce impact fees on affordable housing units built using the state’s density bonus program, which allows for higher density and additional units on projects that have an affordable housing component.
The reduction in impact fees would be proportional to the affordability of the unit with a 75 percent reduction on units built for very low-income residents, a 50 percent reduction on units built for low-income residents, and a 25 percent reduction on units built for moderate-income residents. AB 3148 would only be applicable to units that are not already required under a local inclusionary housing ordinance.
Assemblymember Chiu joined Assemblymembers Tim Grayson (D-Concord), Rob Bonta (D-Oakland), Todd Gloria (D-San Diego), and Jesse Gabriel (D-San Fernando Valley) to announce AB 3148 and a number of bills to address high impact fees. The following measures were announced today along with AB 3148:
· AB 1484 by Assemblymember Grayson provides a comprehensive reform of the nexus standards that cities and counties use to determine their fees.
· AB 1924 by Assemblymember Grayson requires jurisdictions to assess fees on a per-square-foot basis, giving developers the option to build smaller, more affordable units without being penalized with multiple fees.
· AB 3144 by Assemblymember Grayson provides state funding to reimburse local governments who waive impact fees on affordable projects.
· AB 3145 by Assemblymember Grayson establishes a ceiling for development fees based on the median home price in a jurisdiction. Cities and counties that exceed this ceiling will be required to seek approval from the Department of Housing and Community Development and justify the need to do so.
· AB 3146 by Assemblymembers Bonta and Grayson requires cities and counties to report a wide variety of essential housing data to the Department of Housing and Community Development, including the number of new housing units that have been issued a completed entitlement, a building permit, or a certificate of occupancy. Housing data that is accurate, valuable, and timely will support smart solutions to our housing affordability crisis.
· AB 3147 by Assemblymember Gabriel ensures that certain impact fees are payable under protest. This allows for a developer to pay a fee they consider to be unreasonably high so they can continue construction, even as they negotiate for a more reasonable amount.
· AB 3149 by Assemblymember Gloria modernizes the way that local agencies notify interested parties prior to levying a new fee or service charge or prior to approving an increase in an existing fee or service charge.
AB 3148 is expected to be heard in the Assembly Housing and Community Development Committee this spring.