Senator Wiener Introduces Bill To Delay Fees Limiting Housing Production & Extend Permits, Amid Challenging Market Conditions

SACRAMENTO – Today, Senator Scott Wiener (D-San Francisco) introduced SB 937, legislation to temporarily defer cities’ collection of development fees (also known as impact fees), allowing more projects to pencil out. The legislation also extends entitlements, allowing projects on pause due to high interest rates to retain a key permit until market conditions improve. SB 937 provides builders with the flexibility to navigate challenging market conditions, while protecting a key source of revenue for local governments.

“SB 937 is all about timing. California is experiencing a deep housing shortage, and we must not allow high interest rates to grind housing production to a halt,” said Senator Wiener. “Delaying impact fee payments until the completion of the project and extending entitlements are common sense measures to keep projects afloat while we wait for interest rates to fall. SB 937 allows cities to continue making progress toward state housing goals while protecting vital streams of revenue that fund basic services and infrastructure.”

Cities vary widely in the development fees they charge for new homes in California, often for reasons that can seem arbitrary. Los Angeles reports a multifamily development fee of $12,000 per unit, while Fremont reports $75,000. The state contains more than its share of cities charging high development fees, with the six jurisdictions charging the highest recorded fees in the nation all located in California.

Many cities have deferred the collection of development fees during periods of economic hardship to prevent housing production from grinding to a halt. During the Great Recession, Fremont was one of many cities that deferred fees, and in 2023 it announced it would revive the program. With today’s high interest rates and rising costs driven by COVID-related inflation, developers are facing a similar challenge to make projects pencil. Developers need the flexibility of both fee deferrals and entitlement extensions to meet state housing goals amid challenging market conditions.

SB 937 builds on these efforts by delaying the payment of development fees imposed by a local government until the certificate of occupancy is issued. Local governments may not charge interest rates on any deferred fees.

During periods of economic volatility, some projects also die because their entitlements expire before the developer can raise the money to complete the project. Cities grant entitlements to developers as the last step before construction begins, but they are typically only valid for a limited period before expiring. SB 937 provides developers with much-needed wiggle room by extending housing entitlements issued prior to Jan. 1, 2024 and set to expire on or before Dec. 31, 2025 by 18 months.

Senate Bill 937 is sponsored by the California Housing Consortium and the Housing Action Coalition. It is co-authored by Assemblymember Tim Grayson (D-Concord).

“Increased construction costs and high interest rates are making it too expensive to finance and build new housing. This legislation gives home builders significant relief, as well as incentive to propose new projects so we can get back on track when it comes to building the housing supply we need. This is a big deal and we thank Senator Wiener for his continued commitment to making it easier to build more homes,” said Corey Smith, the Executive Director of the Housing Action Coalition.