A suite of 8 proposals drafted by California Democrats aims to create more affordable housing by reducing certain local construction fees.

The building fees they target often tack on tens of thousands of dollars per house. That charge, in turn, passes onto the homebuyer when they make the purchase. As a result, many home builders prefer to focus on more expensive properties where margins justify the added cost.

The proposals tackle the issue in different ways. For example, one ties such fees proportionately to the size of the house. Units with less square footage, therefore, incur a smaller fee levied against them. Another directs state funding to local governments when they waive linkage fees for cheaper units. Linkage fees, or impact fees, collect funds from new housing construction to ensure communities retain adequate public services.

Impact Fees Affect Affordable Housing Supply

Such fees have contributed to skyrocketing housing costs. Last year, the average cost for a house in the state was $592,450, a 4 percent increase from 2019. New supply dwindled year over year, as well, falling 6 percent between 2018 and 2019.

With hurdles like impact fees increasing the cost of construction, state officials seek remove as many barriers as possible. Governor Gavin Newsom wants to build 3.5 million new units by 2025. That pace requires intense measures to attain.

Assemblymember David Chui, who chairs the Assembly Housing Committee, spoke to the state’s desperation. “During the worst housing crisis in California’s history — when housing units can cost upwards of $800,000 per door in my city of San Francisco, and impact fees can account for up to one-sixth of the cost of each unit — we have to think differently,” he said.

He believes cutting impact fees by as much as half dramatically helps speed up construction of new units. Chui, along with other California Democrats, hope the passage of these proposals increases available affordable housing in the state.