Through outreach, case studies, interviews, and various other methods, HCD contracted with the Terner Center for Housing Innovation at the University of California, Berkeley to prepare the Residential Impact Fee Study (PDF), which provides an overview and analysis of impact fees in California and suggests findings and recommendations related to fee transparency, fee structure, fee design process, and alternative funding options. This study was commissioned by HCD pursuant to AB 879 (Grayson, Chapter 374, Statutes of 2017) to examine the reasonableness of local impact fees charged to new housing developments. The Terner Center is solely responsible for the content of this report.
Pursuant to AB 602 (Grayson, Chapter 347, Statutes of 2021), HCD contracted with the Terner Center for Housing Innovation to develop Impact Fee Nexus Studies Templates and Residential Feasibility Calculation Templates (PDF). These templates can assist local agencies, planners, and consultants in developing impact fee nexus studies, and assist in determining how fees impact the feasibility of residential development.
HCD will also be releasing further tools with regard to impact fee nexus studies. These will be released as they are completed throughout 2024.
Background
Local governments levy development impact fees to help fund the expansion of public facilities and infrastructure needed to support new housing development. These revenues support the construction of critical facilities, such as parks, public safety facilities, other civic and community facilities, and transportation infrastructure. To determine a reasonable relationship or nexus by which fees can be charged to new development, local governments must undertake a “nexus study.” Nexus studies are meant to quantify the impact of new development on public facilities and determine the cost of this impact, establishing the maximum fee amount that can be charged on the construction of new homes. They also provide the supporting documentation and justification that is used to establish the legal authority for jurisdictions to charge these fees.