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Proposal to limit impact fees on state‑funded affordable housing draws sharp questions from senators
Summary
HCD presented a trailer bill that would prohibit local impact fees on state‑funded multifamily affordable housing in some cases and incentivize voluntary fee reductions as local match; committee members and local government representatives warned waiving or capping impact fees could underfund essential infrastructure, disproportionately harm under‑resourced communities, and legally conflict with nexus requirements.
The subcommittee examined a trailer bill proposal from the Department of Housing and Community Development to reduce the imposition of local development impact fees on state‑funded affordable housing projects when jurisdictions are applying for competitive multifamily state funding.
Spike Friedman, assistant deputy director of legislation at HCD, said the two‑pronged approach would (1) prohibit charging development impact fees for affordable housing projects in narrow cases where the local government is the applicant for competitive state funding and (2) incentivize voluntary local fee reductions or waivers by allowing those reductions to qualify as local contributions for scoring in state competitive programs. He argued reducing these costs can improve project feasibility. “Turner Center research has found that local impact fees can add up to $20,000 per unit,” Friedman said.
Committee members and analysts raised steep cautions. The Legislative Analyst's Office and several senators pointed out impact fees fund infrastructure — sewer, water, fire and parks — and are subject to nexus and proportionality rules under state law. Senator Cabaldon warned that limiting fees without ensuring alternative infrastructure financing could leave critical gaps and disadvantage communities with historic underinvestment. The League of California Cities, county associations and special districts told the committee the proposal risks shifting infrastructure costs to other sources and could disincentivize cities from partnering on state projects where they would be required to waive fees.
HCD said the proposal is narrowly tailored — applying only to certain state competitive programs and not to special district fees — and emphasized that much of the approach is incentive‑based and would be developed through program guidelines with public comment.
Members said the subject is complex and better suited to full policy committee review rather than a trailer bill in the budget process; the subcommittee held the item open for further discussion and refinement.
No votes were taken.
