Newly-Passed Legislation Would Reduce the Cost of Housing

SB 937 Would Lower Finance Costs for New Homes – Heads to Governor’s Desk

“We have to do everything we can to reduce housing costs, and SB 937 is an important step”

SACRAMENTO — On Wednesday, the California State Legislature passed SB 937, a bill by Senator Scott Wiener (San Francisco) that would reduce housing construction costs by shifting when local jurisdictions collect the impact fees on new homes. California YIMBY, the California Housing Consortium, and the Housing Action Coalition co-sponsored the bill.

Most local jurisdictions charge homebuilders a menu of fees when they apply for a building permit. These fees cover a wide variety of items, from administration and inspection costs to schools, parks, libraries, and other local amenities. In some jurisdictions, these fees can reach as much as $150,000 per home.

The timing of when these fees are collected impacts the final cost of housing: If jurisdictions collect fees when the homes are first permitted, builders must finance the cost of the fees with high-interest construction loans – adding tens of thousands of dollars to the cost of housing. By delaying the collection of fees until the homes are built, SB 937 would allow builders to cover the cost of fees from rental revenues, or mortgage loans, which have much lower interest rates than construction loans.

“Giving homebuilders more flexibility to build housing is a win for all Californians,” said Senator Wiener. “I’m thrilled to see progress to ensure impact fees provide the least obstructions possible for housing development. California YIMBY’s partnership has been invaluable and I look forward to working together to remove barriers to housing for many years to come.”

“Californians know that housing costs too much, but the impact of housing fees are not broadly understood,” said Brian Hanlon, CEO of California YIMBY. “By making this subtle shift in housing finance, SB 937 will lower the costs of new homes, while still allowing local jurisdictions to collect the fees they use to fund local services. It’s a win-win.”

In addition to the ongoing restrictions on homebuilding in most California cities, construction costs and high interest rates have added fuel to the fire of high housing costs. These increased costs, coupled with local impact fees, make it even more expensive to build new housing. In many cases, high fees and construction costs are enough to severely delay or even cancel much-needed housing projects. 

SB 937 would save tens of thousands of dollars in financing costs for new homes without reducing local revenues.

About California YIMBY

California YIMBY is a community of neighbors who welcome more neighbors. We believe that an equitable California begins with abundant, secure, affordable housing. We focus on housing and land use policy at the state and local level to ensure grassroots organizers and city leaders have the tools they need to accelerate home building. Learn more: https://cayimby.org/