California Fees May Hinder Housing Growth

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The LA Times reports today that local governments typically charge developers high fees if they want to build new housing and that these fees may slow the growth of new housing stock. This will come as a surprise to exactly no one in the state. But you have to read down to literally the last paragraph to find out why California’s fees are so high:

While the study recommends that lawmakers examine ways to reduce fees, it warns that cities and counties often need the revenue to pay for services because of property tax restrictions put in place by Proposition 13 in 1978. The initiative limits taxes for homes and businesses to 1% of a property’s taxable value.

….“If the state wishes to lower impact fees but also ensure sufficient infrastructure funding, it should consider pathways to adjust Proposition 13 in order to expand the capacity of localities to generate their own revenue,” the report says.

Ha ha ha. The state should “consider pathways” to “adjust” Prop 13. Good luck with that. In the past 40 years, Californians haven’t even been willing to adjust the ridiculous way that Prop 13 allows businesses to keep their assessed property values at 1978 levels forever. There’s no way they’ll be willing to adjust it for their own precious houses.

In the end, Prop 13 accomplished little except to prompt an explosion of fees; move budgeting power almost entirely to Sacramento; and allow businesses to pay lower property taxes.¹ One way or another, though, everything has to be paid for. Taxes, fees, or fines, take your pick. Would reducing one and increasing another really do much to spur housing development in California?

¹The alleged justification behind Prop 13 was that skyrocketing property values were forcing seniors on fixed incomes to sell their lifelong homes because they could no longer afford to pay the taxes on them. I don’t know how widespread this problem really was, but I hardly need to point out that if this was the real issue, there were lots of easy ways to deal with it that didn’t destroy local budgets.