CalHDF Challenges Los Altos Impact Fees

The California Housing Defense Fund filed a lawsuit challenging fees charged on new housing development enacted by the City of Los Altos. The City enacted a new set of fees in June that would charge $51.26 per square foot for new multifamily housing, and $13.89 per square foot for single family housing. On top of this, the city would charge an additional 1% of overall project costs for the City’s public art fund.

While California allows cities to charge reasonable fees on new housing, these fees must be related and proportionate to the impacts of development on public services. The fees proposed by Los Altos are wildly out of proportion to any impacts of new development:

• The City fails to account for the actual cost of providing services to new development, and especially fails to account for the fact that multifamily development is more cost effective to provide services for.
• The City fails to account for the tax revenue generated by new development, instead assuming that fees must cover the entire cost of new city services.
• The parks impact fee in particular overestimates the cost of providing adequate parks service for new residents, because it assumes that the city will need to acquire land and develop 68 square feet of new parks for every new resident that moves to the city.

Beyond these issues, the City’s choice to charge multifamily development a rate nearly four times higher than single-family homes also violates state laws governing impact fees and fair housing. Assembly Bill 602 requires new impact fees establish a per-square-foot rate for all residential development, not unfairly penalize multifamily with a vastly higher fee. Further, the creation and promotion of dense multifamily housing is critical to promote fair housing and combat segregation in a city composed almost exclusively of multi-million dollar single family homes. In places like Los Altos, dense new multifamily development is critical to diversify the housing types available, undo historical segregation, and provide desperately needed housing options for families that can’t afford a three million dollar single family home. Establishing fees that disproportionately tax new multifamily housing violates the City’s duty to promote fair housing, and it also violates the city’s own housing plan, which promises to establish fees to promote multifamily development.

CalHDF is pursuing this lawsuit with co-petitioners Californians for Homeownership. If if we prevail with the legal arguments in this case, it will not only require Los Altos to reconsider its entire fee schedule relating to housing, it will require hundreds of other cities around the state to reconsider fee nexus methodologies and ease the burden on new housing.