On February 26th, members of all four relevant legislative housing committees – Senate Housing, Senate Governance and Finance, Assembly Housing and Community Development, and Assembly Local Government, convened a joint informational hearing to discuss “The Price of Civilization: The Benefits and Costs of Impact Fees on Housing in California” The chairs of each committee spoke about the need to address California’s housing crisis and the desire to better understand how impact fees have played and continue to play a role in such a complex issue. The panel topics explored a variety of issues, the first looking at the history of impact fees, “How did we get here? An overview of local fiscal constraints” and discussed the colorful history of ballot measures such as Props 13 and 218 as well as noting state and federal cases, such as Nolan and Dolan, to better explain how and why local governments have become so reliant on impact fees today. The second panel focused on how impact fees are spent. Speakers spent time discussing the various challenges special districts encounter as it relates to their limited ability to leverage critical funding for necessary community services – including parks, fire districts, and water and sewage. Panel three looked at good practices and innovative jurisdictions – cities like Sacramento and Santa Rosa, which are tackling the issue head on. Both cities have programs to reduce or waive fees for affordable developers and for ADUs, eliminating parking requirements, and assessing fees by square foot versus by unit (incentivizing smaller more affordable units). As members noted, while these are great models, it is also important to work to identify methods to backfill the lost revenues and realistically find ways for the state to provide support if reforms are made to the fee calculations. Lastly, panel four looked at how impact fees affect builders; both nonprofit and affordable developers. Both spoke about the need for better transparency and certainty in fee assessments and also spoke about the reduction in units built as directly attributed to the increased cost, not only in the fees themselves but also in litigating many of the fees imposed by cities often abusing current state law. Members asked for side-by-side comparisons of the cost to build in California and in other states to better understand the variances, particularly in places that have robust city services without high fees.
As all members noted at the onset, this hearing was educational and informational without reference to current legislation. We will continue to monitor the progress of the impact fee bill package along with the hundreds of additional housing bills moving through the process.