Lawmakers eye changes to the ‘builder’s remedy’ and development fees

By Brady Guertin, legislative affairs lobbyist, and Jason Rhine, director of legislative affairs

Lawmakers for the past few years have focused on tweaking local zoning laws — often to the chagrin of cities updating their housing elements. But this year, they’re focused on areas with farther-reaching consequences: the so-called "builder’s remedy" and development fees.

Builder’s remedy changes  

Cities work with the Department of Housing and Community Development (HCD) to draft housing plans that encourage housing at all income levels. These complex plans take years to develop and include lengthy outreach and environmental reviews.

Cities make great efforts to ensure that their plans substantially comply with the law, even if HCD disagrees. The law acknowledges this by allowing cities to self-certify their housing plan or have a judge make the final determination.

AB 1886 (Alvarez) would end self-certification and encourage developers to pursue builder’s remedy projects. This once-obscure provision allows developers to bypass local zoning laws if a city does not have a compliant housing element and if the project includes a certain number of low-income units.

The recently amended AB 1893 (Wicks) also proposes several changes to the provision. It would reduce the number of required affordable units to 10% and exempt small developments from the requirement entirely. It would also clarify where these projects can go and establish size, density, and permit processing standards.

Cal Cities has raised many concerns about both measures. It has taken an oppose position on AB 1886 and an oppose unless amended position on AB 1893.

Possible fee fiasco

Development fees are also in the limelight, both at the state and federal levels. California has the highest impact fees in the nation, in part because local governments cannot raise property taxes. With very few ways to fund services, they must rely on impact fees to build new roads, sewer lines, fire stations, and even affordable housing.

Under AB 1820 (Schiavo), cities would have to provide an itemized list and the total sum of all fees and exactions for a project during the preliminary application process within 20 days of a developer’s request. This is long before a city can determine which fees apply to the project.

Cal Cities supports transparency and predictability when assessing development fees. However, AB 1820 is unworkable in its current form and will result in an inability to provide essential infrastructure and services. Cal Cities will oppose the measure unless the author provides a longer timeline, clarifies which fees it affects, and states that such estimations are nonbinding.  

Other bills to watch

Lawmakers are also debating AB 1657 (Wicks), a $10 billion affordable housing bond slated for the November 2024 ballot. The Cal Cities-supported measure would help fund the state’s oversubscribed multifamily housing program, affordable housing programs, supportive services, eviction and displacement protection, and federal housing vouchers.  

Cal Cities is opposing SB 1037 (Wiener), a measure that would allow the state attorney general to take legal action against a city. The attorney general could seek fines up to $50,000 a month if a city fails to adopt a compliant housing element or disregards state laws that require ministerial approval of certain housing projects. SB 1037 is extreme and a significant departure from existing law as it would apply to cities genuinely acting in good faith.

What’s next?

Many bills are now winding their way through policy committees and to appropriations. Legislators in both houses have until April 26 to get any bills with notable fiscal impacts through appropriations.

Policy committee hearings are great opportunities for city officials to voice their support or opposition to a particular bill. For more information about upcoming policy committee hearings, check out Cal Cities’ recurring State Bills in Brief column.