Local fees trap state housing affordability reforms in a vicious circle

"The City presented plaintiffs with two bad choices: give up their property rights by acquiescing to a deed-restricted IU, or pay nearly $100,000, the March 4 lawsuit argued. Of course, there was an unspoken third option: don't build at all. The foundation argues that the fees violate the U.S. Constitution. It references Supreme Court rulings calling them extortion."

"While removing red tape and outdated zoning laws might formalize more homes on paper, local fee structures still decide whether those homes are actually built. Those collisions and the fees at their center in and of themselves loom as entitlement, business and project risk if they stall projects or layer on new costs beyond the point where their sponsors can keep their upfront dollar investments in place."

"The developer paid nearly $100,000 in inclusionary fees. Developers faced an alternative: a deed restriction on one parcel for income-restricted housing. That parcel with a house and ADU would have to sell for $450,000 with the city restriction. Each costs $1.325 million to build, according to the lawsuit."

Despite efforts to remove zoning barriers and red tape to increase housing supply, local fee structures remain significant obstacles to residential development. California exemplifies this challenge, where state reforms aimed at housing abundance collide with local fees that make projects financially unfeasible. San Luis Obispo's inclusionary zoning fees illustrate the problem: developers face choices between paying substantial fees, accepting deed restrictions that severely limit property value, or abandoning projects entirely. The Pacific Legal Foundation challenges these fees as unconstitutional, arguing they constitute extortion and violate property rights. Similar legal victories in other California cities suggest growing recognition that excessive local fees undermine housing production goals.

Read at www.housingwire.com