Assembly Local Government Committee Passes Senator Wiener Bill Delay Fees Limiting Housing Production & Extend Permits, Amid Challenging Market Conditions

SACRAMENTO – The Assembly Local Government Committee passed Senator Scott Wiener’s (D-San Francisco) Senate Bill 937. SB 937 will boost housing production by deferring impact fees until a project is complete, instead of at the beginning of the project, and passed 8-0 and heads next to the Housing and Community Development Committee.

“High impact fees and high interest rates pose a serious challenge to building new homes, and we need to give builders of new housing flexibility to navigate these tough market conditions,” said Senator Wiener. “We’ve worked closely with a range of stakeholders to ensure SB 937 grants this flexibility while keeping cities, schools, and fire districts whole. I thank the Committee for their support and look forward to advancing the bill and continuing to boost housing production across the state.”

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.

Some 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.

SB 937 passed out of the Assembly Local Government Committee with amendments to provide that a developer has 5 years from when their building permit is issued to start construction before losing their fee deferral.

The bill was amended in the Senate Local Government committee to prioritize mixed income housing. 

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 certain housing entitlements issued prior to Jan. 1, 2024 and set to expire on or before Dec. 31, 2025 by 24 months.

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

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