City Council votes to slash fees to spur more affordable housing construction in Sacramento

The Sacramento City Council Tuesday took an important step toward creating more affordable housing by unanimously voting to cut many City development fees to $0 for qualified affordable units.

The fee reduction is designed to reduce barriers for new construction and spur more – and faster – development of affordable units across the city. The resolution shows “the City is willing to do whatever it takes to get units that are affordable built in Sacramento,” said Vice Mayor Steve Hansen.

Like other cities in California, Sacramento has a severe shortage of affordable housing. In addition, rents have been rising in recent years, making it difficult for residents to find housing they can afford.

For developers creating lower-rent housing units, every cent can count. The new fee reduction would trim costs for developers by nearly $10,000 per unit in the central city — money that then could be used to develop and build more affordable units. In the 65th Street area, the fee reduction would save developers more than $13,000 per unit.

For multi-family projects with 200 qualifying units, that savings would total nearly $2 million in the central city and more than $2.6 million in the 65th Street area.

“It’s important that we send a signal to everyone who wants to help with this housing crisis that we want you to build here in the city of Sacramento,” Mayor Darrell Steinberg said.

Fees to be reduced to $0 include the Sewer Development Fee, the Water System Development Fee and the Park Development Impact Fee. Certain fees, such as the Citywide Transportation Impact Fee, already are exempted from units that qualify as affordable housing.

Affordable units will continue to be charged certain processing fees and development impact fees that the City does not control (such as school fees and Sacramento Area Flood Control Agency fees).

The City will evaluate the fee reduction annually to determine if the $0 rate is effectively incentivizing affordable housing development. The fee reduction goes into effect Dec. 30.

In addition, the Council on Tuesday was given an update by the City’s Community Development Department on in-the-works action items that would streamline the creation of more affordable housing. Following direction from the Council, the City already has reduced its plan-review time by 25 percent for housing developments of 25 or more units.

New action items previewed Tuesday include: reducing parking requirements for housing near transit stations; evaluating the potential to create higher densities citywide to allow smaller, more affordable units; and establishing a process for construction of alternative housing types such as tiny homes.

“We need to create more naturally affordable housing opportunities by making it easier to build housing of all types,” said City Planning Director Tom Pace.

The City will continue its ongoing efforts to streamline the development process for all affordable housing options, he said. It also will pursue more financing opportunities to deliver projects.