Senate Passes Bill to Boost Housing Production

Photo by Sandy Millar on Unsplash

Special to the Vanguard

Sacramento, CA – On Monday, the California Senate passed SB 937, which would boost housing production by deferring impact fees until a project is complete, instead of at the beginning of the project, on a 36-0 vote.

They also passed another Senator Wiener measure, SB 988, to provide basic labor protections for freelance workers.

“I’m delighted to see the Senate advance these crucial measures to provide stability for Californians,” said Senator Wiener. “By giving freelancers the protections they deserve and making it easier to build homes under volatile market conditions, these bills provide the support Californians need to flourish.”

Cities vary widely in the development fees they charge for new homes in California, often for reasons that can seem arbitrary. Los Angeles reports a multifamily development fee of $12,000 per unit, while Fremont reports $75,000. The state contains more than its share of cities charging high development fees, with the six jurisdictions charging the highest recorded fees in the nation all located in California.

Some cities have deferred the collection of development fees during periods of economic hardship to prevent housing production from grinding to a halt. During the Great Recession, Fremont was one of many cities that deferred fees, and in 2023 it announced it would revive the program. With today’s high interest rates and rising costs driven by COVID-related inflation, developers are facing a similar challenge to make projects pencil. Developers need the flexibility of both fee deferrals and entitlement extensions to meet state housing goals amid challenging market conditions.

SB 937 builds on these efforts by delaying the payment of development fees imposed by a local government until the certificate of occupancy is issued. Local governments may not charge interest rates on any deferred fees.

The bill was amended in the Senate Local Government committee to prioritize mixed income housing.

During periods of economic volatility, some projects also die because their entitlements expire before the developer can raise the money to complete the project. Cities grant entitlements to developers as the last step before construction begins, but they are typically only valid for a limited period before expiring. SB 937 provides developers with much-needed wiggle room by extending certain housing entitlements issued prior to Jan. 1, 2024 and set to expire on or before Dec. 31, 2025 by 24 months.

Senate Bill 937 is sponsored by the California Housing Consortium, California YIMBY, and the Housing Action Coalition. It is co-authored by Assemblymember Tim Grayson (D-Concord).

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