The last few years have posed significant challenges to homebuilders. Inflation, soaring interest rates, and high construction costs have made it increasingly difficult to finance housing projects.
While the state of the market is out of our control, we can reform state and local housing policies to help create more favorable conditions for housing production.
That’s why HAC is partnering with Senator Scott Wiener (D-San Francisco) on legislation, Senate Bill 937, to jumpstart housing development by extending entitlements and temporarily deferring cities’ collection of development fees. The bill, co-sponsored by the Housing Action Coalition and California Housing Consortium, not only provides relief to builders facing challenging market conditions but also includes detailed provisions related to housing entitlements and development project fees.
Extending Housing Entitlements: A Crucial Lifeline
SB 937 addresses the time-sensitive nature of housing entitlements and proposes a substantial extension to their validity. The key details of this aspect of the legislation are as follows:
- Extends by 18 months the period for expiration, effectuation, or utilization of housing entitlements issued before January 1, 2024, and expiring before December 31, 2025.
- Tolls the 18-month extension during any legal challenge to the entitlement, ensuring that the clock doesn’t run out during legal proceedings.
This extension provides developers with the necessary flexibility to navigate legal challenges while safeguarding their entitlements, contributing to the overall resilience of housing projects.
Revamping Development Project Fees: A Detailed Overview
In addition to addressing entitlement timelines, SB 937 will tackle the intricacies of development project fees, introducing several crucial changes to the existing framework. The key modifications include:
- Prohibiting the requirement of payment for fees related to residential development public improvements until the certificate of occupancy issuance, a strategic move to ease the financial burden on developers during critical project stages.
- Eliminating the exemption for park/recreational fees from the Mitigation Fee Act definition, creating a more inclusive approach to fee regulations.
- Clarifying that water and sanitation districts are already included in the Act’s definition of a local agency, ensuring a comprehensive oversight of fees at the local level.
- Removing authorization for cities and counties to require a performance bond or letter of credit to exempt affordable housing units from early payment, streamlining the process for affordable housing development.
- Replacing the contract to pay fees, instead withholding the certificate of occupancy for non-payment, and introducing a more direct mechanism to ensure compliance with fee obligations.
- Making water/sewer connection fees and capacity charges subject to specified provisions of the Mitigation Fee Act, aligning these fees with established regulatory frameworks.
The comprehensive changes to the development project fee structure will create a more financially feasible environment for homebuilders, incentivizing new projects and facilitating the construction of much-needed housing in California.
With California in the midst of a severe housing shortage, SB 937 has the potential to reshape the landscape of housing development in the state. We’re proud to partner with Senator Wiener and champion legislation that addresses the pressing needs of both homebuilders and communities.