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April 24, 2007 > Affordable housing bill clears local government committee

Affordable housing bill clears local government committee

Assembly Member Alberto Torrico's bill to defer the payment of local development fees on affordable housing projects was approved by the Assembly Local Government Committee 5-0 late yesterday.

AB 641 would require local governments to defer the payment of local fees until the developer has received a certificate of occupancy for any housing development in which at least 49 percent of the units are affordable to low and or very low-income households.

"By delaying the costs associated with these fees until construction is completed, affordable housing developers can improve their financing and reduce the amount they pay on loans," Assembly Member Torrico said. "We have a severe shortage of affordable housing partly because developers have such a difficult time arranging their financing for projects. By deferring these fees, they can direct their funds toward construction first and the fees second. It provides the opportunity for more financing upfront."

Ever since the passage of Proposition 13, local governments have increasingly relied on residential development fees to pay for a growing list of uses. Typically, local governments might assess about two-dozen various residential development fees. On an affordable apartment project, the total fees can range from $300,000 to almost $1 million.

Among some of the typical impact fees that would be deferred under AB 641 are: Electricity and gas service connection fees, Sewer connection and impact fees, Storm drainage fees, Water connection and impact fees, Special district fees and Community/Capital Facilities fees

AB 641 would not apply to school fees, Quimby Park fees, fees collected under development agreements and certain processing fees. The bill is supported by affordable housing advocate organizations throughout California and now moves to the Assembly Housing and Community Development Committee.

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