Skip to content
CapRadio

CapRadio

listen live donate
listen live donate
listen live
donate
  • News
    • News

    • State Government
    • Environment
    • Health Care
    • Race and Equity
    • Business
    • Arts and Lifestyle
    • Food and Sustainability
    • PolitiFact California
    News
    • News

    • State Government
    • Environment
    • Health Care
    • Race and Equity
    • Business
    • Arts and Lifestyle
    • Food and Sustainability
    • PolitiFact California
  • Music
    • Music

    • Classical
    • Jazz
    • Eclectic

    • Daily Playlist
    Music
    • Music

    • Classical
    • Jazz
    • Eclectic

    • Daily Playlist
  • Podcasts & Shows
  • Schedules
  • Events
  • Support
    • Support
    • Ways to support
    • Evergreen Donation
    • One-Time Donation
    • Corporate Sponsorship
    • Vehicle Donation
    • Stock Giving
    • Legacy Giving
    • Endowment Support
    • Members
    • Member Benefits
    • Member FAQ
    • Member Newsletter

    • Fund drives
    • Drawing Winners
    • Thank You Gifts
    Support
    • Support
    • Ways to support
    • Evergreen Donation
    • One-Time Donation
    • Corporate Sponsorship
    • Vehicle Donation
    • Stock Giving
    • Legacy Giving
    • Endowment Support
    • Members
    • Member Benefits
    • Member FAQ
    • Member Newsletter

    • Fund drives
    • Drawing Winners
    • Thank You Gifts
  • About
  • Close Menu
 We Get Support From:
Become a Supporter 
 We Get Support From:
Become a Supporter 

Why Is It So Expensive To Build A Home In California? Developer Fees Could Be One Reason

  •  Chris Nichols 
Monday, August 12, 2019 | Sacramento, CA
Andrew Nixon / Capital Public Radio

A "for sale" sign hangs in a neighborhood in Folsom, Calif.

Andrew Nixon / Capital Public Radio

The residential “impact fees” that local governments charge developers are one reason it’s so expensive to build a home in California. They’re not only costly, they’re also unpredictable, lack transparency and can threaten a project’s viability, according to a new state-commissioned study by UC Berkeley’s Terner Center for Housing Innovation. 

The report concludes that, “[w]hile fees offer a flexible way to finance necessary infrastructure, overly burdensome fee programs can limit growth by impeding or disincentivizing new residential development, facilitate exclusion, and increase housing costs across the state.”

Researchers at the center worked with city planners in 10 different municipalities to gather fee schedules for typical apartment and housing projects.  

“And in many cases, that was very difficult information to obtain,” said David Garcia, the center’s policy director.

They also found the fees vary widely across the state. 

In Sacramento, for example, impact fees can total about $8,500 for a typical apartment unit, and $13,000 for a single family home, the study found. In the Bay Area suburb of Fremont, those costs were $22,000 for an apartment and $35,000 for a single family home. 

Cities and counties use impact fees to pay for the roads, schools, police and fire services needed for new communities. The fees are almost always passed on to the homebuyer in the form of a higher purchase or rental cost.

Garcia said the charges can also change unpredictably as a project moves forward. 

“Because of that lack of clarity, that can put a project in jeopardy, too and just raise the overall cost of housing,” Garcia said. “And so many times that can mean that projects simply don’t happen.”

The report comes as the state continues to struggle with an affordable housing crisis. Only 30 percent of California households that could afford the state’s median-priced home — now $608,000 — during the second quarter of this year, according to recent figures from the California Association of Realtors. That figure was down 2 percent from the first quarter, but up from 26 percent a year ago. 

In Sacramento County, 44 percent of households can afford the median-priced home, which was $385,000 during the second quarter. That share was unchanged from the first quarter. 

Andrew Kosydar, a legislative advocate for the California Building Industry Association, said the Terner study examined just one narrow set of fees developers must pay. He said there are many more. 

“Fees contribute to the housing crisis that we have here in the state of California. The higher the fees are on new houses, the more that it drives those prices up and the more expensive it becomes for people who want to buy a home,” Kosydar said. 

A 2018 Terner Center study found that impact fees, when combined with service fees, “can amount to anywhere from 6 percent to 18 percent of the median price of a new home depending on location.”

Its study this month on impact fees recommends that all local governments be required to clearly present the cost of the fees on their websites, and publish the studies that back them up.

It also says jurisdictions should confirm the availability of their fee schedules in annual reports and provide public guidance on how to calculate development fees. 

The study notes that cities and counties have limited ways they can raise revenue for needed community infrastructure due to state-imposed policies that restrict local taxes such as Proposition 13. Local governments have increasingly relied on impact fees to pay for these needs in recent decades. 

The report was required under Assembly Bill 879. That 2017 legislation, by Asm. Tim Grayson, D-Concord, focused on impact fee reforms. 

Correction: A previous version of this story misidentified the Assembly Bill that required the report. It was Assembly Bill 879.


Follow us for more stories like this

CapRadio provides a trusted source of news because of you.  As a nonprofit organization, donations from people like you sustain the journalism that allows us to discover stories that are important to our audience. If you believe in what we do and support our mission, please donate today.

Donate Today  

    Related Stories

  • Andrew Nixon / Capital Public Radio

    Some High-Rent California Cities Aren't Building Enough Apartments, And Zoning Is Part Of The Problem

    Tuesday, August 27, 2019
    Nine of the state’s 12 cities with the highest rents failed to build a single apartment over a four-year period, according to a recent Brookings Institution report.
  • KPBS Staff

    Rent Control Could Arrive In Sacramento As Backers Of Ballot Measure Agree To Compromise

    Thursday, August 8, 2019
    City Council members are proposing a new deal that would cap annual rent increases at 10 percent. If approved, proponents of a rent stabilization ballot initiative would decline to back it in 2020.

 Housing

Chris Nichols

Homelessness and Housing Affordability reporter

Chris covers homelessness and housing affordability across the Sacramento region with a focus on the local and statewide policies that shape these topics.  Read Full Bio 

 @christhejourno Email Chris Nichols

Sign up for ReCap and never miss the top stories

Delivered to your inbox every Friday.

 

Check out a sample ReCap newsletter.

Thanks for subscribing!

Thank you for signing up for the ReCap newsletter! We'll send you an email each Friday with the top stories from CapRadio.

Browse all newsletters

More Stories

Maddie McGarvey for NPR

Medicaid renewals are starting. Those who don't reenroll could get kicked off

March 21, 2023

Damian Dovarganes/AP

California enters a contract to make its own affordable insulin

March 20, 2023

Mario Tama/Getty Images

It's not just Adderall: The number of drugs in short supply rose by 30% last year

March 24, 2023

Most Viewed

California coronavirus updates: COVID-19 pandemic likely contributed to spread of a dangerous fungus, researchers say

CalFresh emergency benefits end this month — here’s what to know

State may scale down its new home loan program designed to assist first-time homebuyers

10 new California laws that go into effect in 2023

CSU faculty salary study shows wide dissatisfaction despite pay being at national averages

We Get Support From:
Become a Supporter

Most Viewed

California coronavirus updates: COVID-19 pandemic likely contributed to spread of a dangerous fungus, researchers say

CalFresh emergency benefits end this month — here’s what to know

State may scale down its new home loan program designed to assist first-time homebuyers

10 new California laws that go into effect in 2023

CSU faculty salary study shows wide dissatisfaction despite pay being at national averages

Back to Top

  • CapRadio

    7055 Folsom Boulevard
    Sacramento, CA 95826-2625

    •  
      (916) 278-8900
    •  
      (877) 480-5900
    •  Contact / Feedback
    •  Submit a Tip / Story Idea
  • About

    • Mission / Vision / Core Values
    • Stations & Coverage Map
    • Careers & Internships
    • Staff Directory
    • Board of Directors
    • Press
  • Listening Options

    • Mobile Apps
    • Smart Speakers
    • Podcasts & Shows
    • On-Air Schedules
    • Daily Playlist
    • Signal Status
  • Connect

    •  Facebook
    •  Twitter
    •  Instagram
    •  YouTube
  • Donate

  • Listen Live

  • Newsletters

CapRadio stations are licensed to California State University, Sacramento. © 2023, Capital Public Radio. All Rights Reserved. Privacy Policy | Website Feedback FCC Public Files: KXJZ KKTO KUOP KQNC KXPR KXSR KXJS. For assistance accessing our public files, please call 916-278-8900 or email us.