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California Department of
Housing and Community Development

Fees and Exactions

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(916) 263-2911

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Government Code Section 65583(a) requires “An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels…including…fees and other exactions required of developers, and local processing and permit procedures…”.

Housing development is typically subject to two types of fees or exactions:

These fees and exactions can impact the cost and feasibility of developing the housing as well as its affordability. They can also involve issues of private property rights. High planning and site development fees can impact property owners’ ability to make improvements or repairs, especially for lower-income households. Development projects are subject to fees and exactions from a growing number of public entities, ranging from special districts to regional agencies. In order to create a viable development proposal, it is important to estimate the cumulative amount of fees to which the housing development will be subject. (Information about the city or county’s fees and exactions is among the most critical.) For both processing fees and impact fees, state law specifies procedural and nexus requirements:

Requisite Analysis

Topics to Consider in Analyzing Fees and Exactions

As the market conditions and circumstances affecting a jurisdiction’s fee structure vary, the analysis should consider a variety of factors to determine the extent to which fees pose a constraint to housing. In the analysis of fees, the jurisdiction could consider the following factors:

Inclusionary Ordinance

Like other ordinances related to the development of housing, the housing element must include a description and analysis of the inclusionary framework. For example, the housing element should describe the types of incentives the jurisdiction has or will adopt to encourage and facilitate compliance with inclusionary requirements, what options are available for developers to meet affordability requirements, how the ordinance interacts with density bonus law, the amount of any in-lieu fee, and what finding a developer must make in order to choose to pay the in-lieu fee. If the jurisdiction has established a housing fund to collect any in-lieu fees, the housing element should describe the total amount available for housing production and any planned uses for the funds.

Sample Tables

The following are sample tables help organize critical fee and exaction information. The information provided in the tables should be tailored to the jurisdiction and followed by appropriate analysis. (Note: These sample tables are not intended to be a substitute for addressing the analytical requirements described in the statute.)

FEE CATEGORY FEE AMOUNT
Planning and Application Fees Single-Family Multifamily
Annexation    
Variance    
Conditional Use Permit    
General Plan Amendment    
Zone Change    
Site Plan Review    
Architectural Review    
Planned Unit Development    
Specific Plan    
Development Agreement    
Other    
SUBDIVISION
Certificate of Compliance    
Lot Line Adjustment    
Tentative Tract Map    
Final Parcel Map    
Vesting Tentative Map    
Other    
ENVIRONMENTAL
Initial Environmental Study    
Environmental Impact Report    
Negative Declaration    
Mitigated Negative Declaration    
Other    
IMPACT
Police    
Fire    
Parks    
Water and Sewer    
Sewer Hook-up    
Solid Waste    
Traffic    
Flood    
School    
Special District    
Habitat    
Other    
TOTAL    
Estimated proportion of total development cost    
PROPORTION OF FEE IN OVERALL DEVELOPMENT COST FOR A TYPICAL RESIDENTIAL DEVELOPMENT
Development Cost for a Typical Unit Single-Family Multifamily
Total estimated fees per unit    
Typical estimated cost of development per unit    
Estimated proportion of fee cost to overall development cost per unit    

Nexus Requirements

State law requires establishment of a nexus between the projected development impacts and the public facilities for which impact fees are imposed. Government Code Section 66001(a) of the Mitigation Fee Act (Section 66000-66025) requires that any city or county that establishes, imposes, or increases a fee as a condition of development approval do all of the following: (1) identify the purpose of the fee, (2) identify the use to which the fee is to be put, (3) determine how there is a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed, and (4) determine how there is a reasonable relationship between the need for the public facility and the type of development project upon which the fee is imposed.

Government Code Section 66001(b) further requires the locality to determine whether there is a reasonable relationship between the specific amount the fee imposed and the costs of building, expanding, or upgrading public facilities. Such determinations, also known as nexus studies, are made in written form and must be updated whenever new fees are imposed or existing fees are increased.

The Mitigation Fee Act also requires jurisdictions to segregate fee revenues from other municipal funds and requires the local agency to make certain enumerated findings with respect to any funds remaining unexpended, whether committed or uncommitted, within five years of the original deposit and every five years thereafter. If the findings are not made as required by the Act, the local agency is mandated to refund the moneys in the fund in accordance with the Act. Any person may request an audit to determine whether any fee or charge levied by the city or county exceeds the amount reasonably necessary to cover the cost of the service provided (Government Code Section 66006(d). Under Government Code Section 66014, fees charged for zoning changes, use permits, building permits, and similar processing fees are subject to the same nexus requirements as development fees. Lastly, under Government Code Section 66020, agencies collecting fees must provide project applicants with a statement of the amounts and purposes of all fees at the time of fee imposition or project approval.

Helpful Hints

Information regarding the impact of local fees and total typical development costs can be found by contacting local for- and nonprofit developers. In addition, affordable housing developers can provide insight related to the timing of fee payments and strategies to reduce the overall effect of fees on the cost and supply of housing. Examples include mitigating school impact fees for senior housing or deferring fees until financing is in place for affordable housing.

Sample Analyses


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