Report: Impact Fees Add 18 Percent to the Cost of Housing in California

A new study recommends reform for impact fees as a necessary step in response to the housing shortage and housing affordability crisis in California, according to an article by Louis Hansen.

The report [pdf], created by the Terner Center for Housing Innovation at the University of California, Berkeley and published on August 5, 2019 by the state Department of Housing and Community Development, will inform state legislators expected to debate the state's development fees.

"Cities depend on impact fees to build roads, schools and maintain parks and water systems," according to Hansen. "The money also allows municipalities to recoup costs for staff time spent on the projects. In an earlier study, Terner Center researchers found impact fees increased the cost of new units in some cities by up to 18 percent. California’s fees were nearly triple the national average."

"The report also recognized that California cities, limited in raising property taxes by Prop 13, lean heavily on impact fees to pay for services and upgrades to roads and utilities."

Assemblymember Tim Grayson, D-Concord, "plans to amend a bill on impact fee reform, AB 1484, to include recommendations from the report." The bill is on a tight schedule, according to the article—it has to get to Governor Gavin Newsom's desk by September.

Liam Dillon provides additional coverage of the report.