Chico City Council approves 3% increase in development impact fees after public hearing

During the recent City Council meeting on June 17, 2025, the council approved a significant amendment to the city's fee schedule, opting for a 3% increase in development impact fees rather than the previously proposed 23.4% hike. This decision comes in response to concerns from local builders and real estate professionals about the potential impact on housing affordability in Chico.

The council's finance committee had previously recommended the lower increase after reviewing the volatility of the highway construction cost index, which had initially suggested a much larger fee increase. The committee's analysis indicated that the 23.4% jump was an anomaly, and they aimed to align the fee adjustments more closely with inflation rates observed over the past five years.

Katie Toma, executive director of the Chico Builders Association, expressed gratitude for the reconsideration of the fee increase, highlighting that the original proposal would have significantly raised costs for new developments, including a potential $3,000 increase for a typical three-bedroom home. Adam Fadeling, chair of the Local Government Relations Committee of the Sierra North Valley Association of Realtors, echoed these sentiments, urging caution in fee increases to avoid further straining housing affordability.

Council members discussed the implications of the fee adjustments, with some advocating for a more gradual increase to better balance the needs of the city’s infrastructure funding and the financial realities faced by developers and homebuyers. The council ultimately voted to adopt the 3% increase, which is expected to be implemented within 60 days.

This decision reflects the council's ongoing commitment to addressing community concerns about housing costs while ensuring that the city can adequately fund necessary infrastructure improvements. The council plans to revisit the fee structure in the coming months as part of a broader review process, which will include a nexus study to evaluate the actual costs associated with development in Chico.