Press Release

ICYMI: New Report Spotlights Importance of Schools & Communities First on Affordable Housing [LA Times]

Schools & Communities First protects all homeowners and renters by maintaining Prop 13 protections on the residential side. Artificially low commercial taxes one reason for expensive housing developments, high cost of living.

In case you missed it, the Los Angeles Times reported on a new study commissioned by the California Department of Housing and Community Development on the impact of high development fees on the lack of affordable housing. In response to the report, Schools and Communities First Spokesman Tyler Law issued the following statement:

“Schools and Communities First is a huge step towards creating more affordable housing in California by creating a stable revenue source for schools and local communities, maintaining Prop 13 protections for homeowners, and strengthening protections for renters. California’s failed approach to taxing commercial property has made our state and local governments reliant on higher fees, which are often regressive and harmful to our economy.”

Key Section:

While the study recommends that lawmakers examine ways to reduce fees, it warns that cities and counties often need the revenue to pay for services because of property tax restrictions put in place by Proposition 13 in 1978. The initiative limits taxes for homes and businesses to 1% of a property’s taxable value. The initiative also restricts a property’s taxable value from increasing more than 2% each year, no matter how much its value rises on the market.

“If the state wishes to lower impact fees but also ensure sufficient infrastructure funding, it should consider pathways to adjust Proposition 13 in order to expand the capacity of localities to generate their own revenue,” the report says.

LOS ANGELES TIMES: One reason housing is so expensive in California? Cities, counties charge developers high fees

By Liam Dillon

AUG. 6, 2019

A long-awaited study detailing how much cities and counties charge developers to build housing in California found that such costs are often hidden, vary widely across the state and have slowed growth.

The report, released this week by the state Department of Housing and Community Development, comes as Gov. Gavin Newsom and state lawmakers continue to search for ways to lower construction costs to help remedy a shortage of available homes. The study recommends that legislators push cities and counties to make public their fees, set standards for services so that costs will be more predictable and take into account how they affect housing production.

“While 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,” said the report by researchers at UC Berkeley’s Terner Center for Housing Innovation.

In California, local government fees on housing construction, which can be used on parks, traffic control, water and sewer connections and other services, were nearly three times the national average in 2015, according to a 2018 Terner Center report. In some cities, researchers found, fees can amount to 18% of median home prices.

Costs also fluctuate from city to city. In the Bay Area suburb of Fremont, the study said, fees cost $22,000 per unit for apartment and condominium complexes and $35,000 per unit in single-family projects. In Sacramento, those same fees are $8,500 and $13,000 per unit, respectively.

[…]

In early July, The Times asked the governor’s office when the report would be released, and did not receive an answer. Last week, The Times submitted a public records request to the state housing department, which initially refused to release the study because it was awaiting approval from Newsom’s office. The department added that it would make the study public after that happened and one day after providing it to the Legislature for review. The Times contended there was no legal reason to withhold the report and told Newsom’s office it planned to write about the delay. The housing department then released the study late Monday.

Newsom’s office did not respond to a request for comment on why it did not release the report in June and whether the governor planned to act on the study’s findings.

While the study recommends that lawmakers examine ways to reduce fees, it warns that cities and counties often need the revenue to pay for services because of property tax restrictions put in place by Proposition 13 in 1978. The initiative limits taxes for homes and businesses to 1% of a property’s taxable value. The initiative also restricts a property’s taxable value from increasing more than 2% each year, no matter how much its value rises on the market.

“If the state wishes to lower impact fees but also ensure sufficient infrastructure funding, it should consider pathways to adjust Proposition 13 in order to expand the capacity of localities to generate their own revenue,” the report says.

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For additional information, please contact:

Tyler Law, AKPD Message & Media

[email protected]

510-326-1273