By Christina B. Farnsworth. A California Association of Realtors report found that the ability of Californians to afford a median-priced home decreased by 5 percent in June. Only 27 percent of Californians can afford to buy a home. In some areas, such as San Francisco (17 percent), the affordability situation is even worse.
Impact fees are a significant culprit, averaging $65,000 per house in most of the Bay area. Indeed, California Building Industry Association (CBIA) public affairs director John Frith reports that development fees have shattered the $100,000-per-home barrier, hitting $118,000 per home in the Alden Lane community in Livermore (in Alameda County) built by Standard Pacific Homes.
What are the buyers in Alden Lane funding? Each Alden Lane home has fees of $11,973 levied to subsidize housing for lower-income buyers and renters. Each house also has a $23,125 county water fee based on 1-inch water lines, because Livermore required installation of fire sprinklers. Without the sprinkler system, a 5/8-inch water line would have been sufficient, with a fee of $9,250. Thus the sprinkler system plus higher water permit fees cost Standard Pacific nearly $14,000 per home.
Over the 30-year life of a loan, the $118,000 in impact fees plus the mortgage loan interest on that amount means buyers will pay nearly $283,000.
"It's one thing for local governments to assess fees to cover costs like building inspections and a portion of new schools," says San Diego home builder and CBIA president Michael D. Pattinson. "It's quite another for them to levy tens of thousands of dollars in hidden taxes to promote broader goals that in many cases would take care of themselves if the government hadn't caused the problem in the first place."
Nickel and Dimed
It's not the basic building permit and mechanical fees that are out of line. Just get a gander at fees tagged onto Standard Pacific's 3,358-square-foot Alden Place Plan 4. By the time you read this, some of the fees will be even higher.
Tax on residential construction: $6,547
City and county storm: $2,156
Sanitary sewer: $9,353
County water: $23,125
In-lieu low-income housing fee: $11,973
Road improvement and traffic impact: $18,185
Transfer of development rights: $34,130
Agriculture mitigation: $4,030
Source: HBA of Northern California