Development fees—which cities levy to pay for services needed to build new housing or to offset the impacts of growth on the community—make up a significant portion of the cost to build new housing in California cities. On average, these fees continue to rise, while nationally fees have decreased. As the supply of housing in the state continues to fall well short of demand and housing costs continue to skyrocket, the structure and total cost of development fees has emerged as an area ripe for policy attention and reform.
The Terner Center for Housing Innovation has undertaken a detailed analysis of development fees in seven sample cities across California—Berkeley, Oakland, Fremont, Los Angeles, Irvine, Sacramento and Roseville—to examine the total amount of fees charged in each city, the makeup of these fees, and the extent to which information on development fees is available to builders.
We found that development fees for multifamily housing range from a low of $12,000 per unit in Los Angeles to $86,000 per unit in Fremont. Fees for single family housing range from $28,000 per home in Sacramento to $171,000 per home in Fremont, over seven times as much.We also found that fees can amount to anywhere from 6 percent to 18 percent of the median home price depending on location.
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