February 27, 2020

Residential development impact fees were the topic of a joint hearing of the Assembly Local Government and Housing and Community Development Committees, as well as the Senate Housing and Governance and Finance Committees in the State Capitol this week. The hearing came on the heels of the announcement of several bills seeking to limit the authority of local agencies to impose fees and requiring increased transparency and state oversight.

While housing developers have long sought legislative changes to shift the costs of the infrastructure improvements required by new development to taxpayers at-large, impact fees are a core component of counties’ ability to provide new residents with the infrastructure they need, including transportation, sanitation, public safety and health, libraries, and parks. As noted by the Legislative Analyst’s Office, limitations on local governments’ taxation authority appear to make counties and other agencies increasingly reliant on impact fees to pay for the costs associated with new development.

Assembly Members have introduced several bills related to impact fees on residential development:

• AB 1484 (Grayson) would change nexus standards that cities and counties use to determine their fees. The bill would also cap the level of service for infrastructure on which fees can be based (e.g. acres of parks per capita).

• AB 1924 (Grayson) would require jurisdictions to assess fees on a per-square-foot basis.

• AB 3144 (Grayson) would provide state funding to reimburse local governments who waive impact fees on affordable projects.

• AB 3145 (Grayson) would impose an arbitrary cap for development fees based on the median home price in a jurisdiction, after which fees would require approval from the Department of Housing and Community Development (HCD).

• AB 3147 (Gabriel) would allow certain impact fees to be payable under protest.

• AB 3148 (Chiu) would mandate the reduction of local government impact fees on any affordable housing units built using the state’s density bonus program. The required reductions would be on a sliding scale from 25% for moderate income units to 75% for very-low income units.

• AB 3149 (Gloria) would change notification requirements and require online posting prior to a city or county levying a new fee or service charge or approving an increase in an existing fee or service charge.

As the conversation on impact fees continues and as these measures move through the legislative process, CSAC will work to advance the policy principles adopted by the Board of Directors. These principles include opposing caps on fees/level of service, encouraging “affordability by design,” encouraging options for fee deferral, and encouraging transparency without overly burdensome reporting requirements. CSAC will oppose any arbitrary limitations or waivers on impact fees that do not backfill local costs to provide necessary infrastructure and public facility needs. CSAC will encourage consideration of fee schedules that promote “affordability by design,” avoiding impediments to smaller units that are often more affordable. CSAC will support options for fee deferral to provide opportunities for developers to defer housing development fees while also ensuring that jurisdictions receive the funding they need to address impacts. Finally, CSAC will encourage transparency, and for any new reporting or disclosure requirements, will advocate that they be narrowly tailored with funding provided for implementation.