The Afternoon News with Kitty O'Neal

The Afternoon News with Kitty O'Neal

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BIA CEO on High Local Government Fees on Homebuilders in Sacramento Region

Listen: Michael Strech, CEO of the North State BIA

A comprehensive study by housing economics experts found that local governments in the Sacramento region charge homebuilders fees averaging $95,000 per new home – a full $40,000 more than fees charged in comparable housing markets in California’s Central Valley and Inland Empire regions, the North State Building Industry Association reported today.

Michael Stretch, CEO, North State BIA

Sacramento Supervisor Patrick Kennedy acknowledged there is a lack of affordable housing in Sacramento and gave KFBK this comment:

Sac County Supervisor Patrick Kennedy

When financing a new home, an additional $40,000 in fees costs the new homebuyer

  • $175 extra a month
  • $2,000 extra a year
  • and an incredible $60,000 more over the course of a 30-year mortgage.

The National Association of Home Builders calculates that every $1,000 price increase prevents 936 families from affording an average home in the Sacramento region, meaning excessive fees make it impossible for some 37,000 local families to be able to buy a new home.

And in a state where the lack of new home construction over many years has been a major factor in driving up housing prices, higher fees can determine whether a new home community can even be built. A recent study of major California builders by USC found that half had abandoned proposed projects due to fees.

The study recommends that local jurisdictions should:

  • Cut fees to incentivize desired building types or projects.
  • Reduce or remove optional or unnecessary amenities to bring fees down.
  • And use local funds for larger community amenities that benefit the entire community.

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