BILL ANALYSIS
AB 641
Page 1
ASSEMBLY THIRD READING
AB 641 (Torrico)
As Introduced February 21, 2007
Majority vote
LOCAL GOVERNMENT 6-0 HOUSING 5-1
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|Ayes:|Caballero, Houston, De La |Ayes:|Saldana, Garcia, Bass, |
| |Torre, Lieber, La | |Hancock, |
| |Malfa, Ma | |Mullin |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Sharon Runner |
| | | | |
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SUMMARY : Prohibits local governments from requiring the payment
of local developer fees before the developer has received a
certificate of occupancy, pursuant to a specified exemption, for
any housing development in which at least 49% of the units are
affordable to low- or very low-income households.
EXISTING LAW :
1)Prohibits a local government that imposes any fees or charges on
a residential development for the construction of public
improvements or facilities from requiring the payment of those
fees or charges until the date of the final inspection, or the
date the certificate of occupancy is issued, whichever occurs
first.
2)Exempts a local government from the above prohibition if it
determines that the fees or charges will be collected for public
improvements or facilities for which an account has been
established and funds appropriated, and for which the local
government has adopted a proposed construction schedule or plan
prior to final inspection or issuance of the certificate of
occupancy; or, the fees or charges are to reimburse the local
government for expenditures previously made.
FISCAL EFFECT : None
COMMENTS : While local governments are generally prohibited from
requiring payment of residential development fees until the date
AB 641
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of final inspection or the issuance of a certificate of occupancy,
they may collect these fees as early as the initial application
filing if they find that the fees are for public improvements or
facilities (e.g., lighting, sidewalks, and other infrastructure),
or are reimbursement for expenditure already made by the local
government. According to the author, these fees range from
$300,000 to nearly $1 million for affordable housing projects, and
can account for up to 25% of the cash needed up front for the
project.
According to the author, the requirement to pay development fees
before a certificate of occupancy is issued creates a powerful
disincentive for the construction of affordable housing.
Developers are required to borrow more money during construction,
which exerts upward pressure on the price of the housing in the
development. This bill's supporters believe that deferring fee
payment until the issuance of a certificate of occupancy on
affordable housing projects would result in lower housing costs
and an added incentive to undertake such development projects.
Analysis Prepared by : J. Stacey Sullivan / L. GOV. / (916)
319-3958
FN: 0000664