Jonathon Yu is not a professional developer, but he is interested in building new housing.
In 2023, the 29-year-old product manager submitted plans to Sunnyvale to raze the modest 1,000-square-foot bungalow he bought a year earlier and replace it with a three-story, five-unit multifamily building.
He paid a few thousand dollars for an architect to draw up plans, then a few thousand more to the city for application fees. His parents called him insane for spending so much, but Yu had the money, and he wanted to build housing.
He didn’t have the funds for what Sunnyvale demanded next: To get the permit for the $3 million project, he would need to pay $300,000 in impact fees, one-time charges imposed by local governments to fund improvements to infrastructure like roads, parks and schools.
“What stopped me were the impact fees,” Yu said. “If I would have completed the structure, it would’ve been the most affordable new housing in the area.”
Across the Bay Area, impact fees like those Yu encountered often surpass six figures per unit — and developers have had little leeway to challenge them.
But a recent ruling by the U.S. Supreme Court could limit the impact fees that California can levy, which some say could lower the barriers to building new housing.
The case involved California landowner George Sheetz, who challenged the $23,420 fee El Dorado County required to fund road expansions the county said were necessitated by the small home he wanted to build. Sheetz sued, arguing the Constitution’s taking clause limits what the government can take without fair compensation.
Previous cases have required such fees to be “roughly proportional” to a development’s impact. But California courts have held local governments to a lower standard
In a unanimous decision, the Supreme Court found that was incorrect, and remanded the case to the state court for reconsideration. It’s unclear what new standards the California court will.. Read More