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 housing development and its affordability, and 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. It is important to estimate the cumulative amount of fees housing development will be subject to for development of viable proposals; 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:
The Anaheim City Council recently approved an Economic Stimulus Package for Residential Development that will create incentives to promote the development, sale and rental of homes. The plan allows development companies to defer payment of development impact fees from permit issuance until occupancy, creates a streamlined discretionary entitlement process and provides incentives for the development of “green” projects and affordable housing. Learn more.
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:
Like other ordinances related to the development of housing, the element must include a description and analysis of the inclusionary framework. For example, the 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 element should describe the total amount available for housing production and any planned uses for the funds.
The following are sample tables to assist in organizing critical fee and exaction information. The information provided in the tables should be tailored to the jurisdiction and followed by appropriate analysis. These sample tables are not intended to be a substitute for addressing the analytical requirements described in the statute.
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 which 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 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 (5) years of the original deposit and every five (5) 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.
Information regarding the impact of local fees and total typical development costs can be found by contacting local for- and non-profit developers active within the market area. In addition, affordable housing developers can provide insight relating to 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.
To encourage homeowners to invest in repairs and maintenance of existing neighborhoods, the Anaheim instituted a “Home Improvement Holiday Program”, which granted residents a fee waiver for permits, inspections, re-inspections and other activities relating to the regulation of building and construction activities for alterations and additions to single-family residences. As a result of the Program, $28.3 million in improvements were made to single-family homes and the City's Planning Department issued 3,562 residential building permits.